II 

Calendar No. 230 

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, Mr. 

FRANKEN, Mrs. MCCASKILL, Mr. BLUNT, Mr. MORAN, Mrs. HAGAN, Mr. 

NELSON, Mr. JOHNSON of South Dakota, Mr. HEINRICH, Mr. GRASSLEY, 

Mr. INHOFE, Mrs. SHAHEEN, Mr. BOOZMAN, Mr. DONNELLY, Mr. ISAKSON, Mr. ENZI, Mr. CHAMBLISS, Mr. JOHANNS, Mr. COCHRAN, Mr. 

KIRK, Mr. WICKER, Mr. DURBIN, Mr. BARRASSO, Mr. WHITEHOUSE, Ms. 

MIKULSKI, Ms. STABENOW, Mr. PRYOR, Mr. THUNE, Mrs. FISCHER, Mr. 

UDALL of New Mexico, Ms. WARREN, and Mr. MANCHIN) introduced the 

following bill; which was read twice and referred to the Committee on 

Health, Education, Labor, and Pensions 

OCTOBER 30, 2013 

Reported by Mr. HARKIN, with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

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. 


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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: 

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. 

9 SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATIONS OF 

10 POLICY. 

11 Congress finds as follows: 

12 (1) Defined benefit pension plans are a cost-ef13 fective way for cooperative associations and charities 

14 to provide their employees with economic security in 

15 retirement. 

16 (2) Many cooperative associations and chari17 table organizations are only able to provide their em18 ployees with defined benefit pension plans because 

19 those organizations are able to pool their resources 

20 using the multiple employer plan structure. 


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1 (3) The pension funding rules should encourage 

2 cooperative associations and charities to continue to 

3 provide their employees with pension benefits. 

4 SEC. 3. DEFINITION OF COOPERATIVE AND SMALL EM5 PLOYER CHARITY PENSION PLANS. 

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

7 Employee Retirement Income Security Act of 1974 (29 

8 U.S.C. 1060) is amended by adding at the end the fol9 lowing new subsection: 

10 ‘‘(f) COOPERATIVE AND SMALL EMPLOYER CHARITY

11 PENSION PLANS.— 

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

13 except as provided in this subsection, a CSEC plan 

14 is a defined benefit plan (other than a multiemployer 

15 plan)— 

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

17 Protection Act of 2006 applies, without regard 

18 to— 

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

20 ‘‘(ii) the amendments to such section 

21 104 by section 202(b) of the Preservation 

22 of Access to Care for Medicare Bene23 ficiaries and Pension Relief Act of 2010; 

24 and 

25 ‘‘(iii) paragraph (3)(B); or 


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

2 maintained by more than one employer and all 

3 of the employers were organizations described 

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

5 Code of 1986. 

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

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

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

9 1986 shall be treated as a single employer for pur10 poses of determining if a plan was maintained by 

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

12 (b) AMENDMENT TO CODE.—Section 414 of the In13 ternal Revenue Code of 1986 is amended by adding at the 

14 end the following new subsection: 

15 ‘‘(y) COOPERATIVE AND SMALL EMPLOYER CHARITY

16 PENSION PLANS.— 

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

18 except as provided in this subsection, a CSEC plan 

19 is a defined benefit plan (other than a multiemployer 

20 plan)— 

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

22 Protection Act of 2006 applies, without regard 

23 to— 

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


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1 ‘‘(ii) the amendments to such section 

2 104 by section 202(b) of the Preservation 

3 of Access to Care for Medicare Bene4 ficiaries and Pension Relief Act of 2010; 

5 and 

6 ‘‘(iii) paragraph (3)(B); or 

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

8 maintained by more than one employer and all 

9 of the employers were organizations described 

10 in section 501(c)(3). 

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

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

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

14 of determining if a plan was maintained by more 

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

16 SEC. 4. FUNDING RULES APPLICABLE TO COOPERATIVE 

17 AND SMALL EMPLOYER CHARITY PENSION 

18 PLANS. 

19 (a) AMENDMENTS TO ERISA.— 

20 (1) MINIMUM FUNDING STANDARDS UNDER

21 ERISA.—Part 3 of title I of the Employee Retire22 ment Income Security Act of 1974 (29 U.S.C. 1081 

23 et seq.) is amended by adding at the end the fol24 lowing new section: 


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1 ‘‘SEC. 306. MINIMUM FUNDING STANDARDS. 

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

3 the term ‘accumulated funding deficiency’ for a CSEC 

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

5 standard account for all plan years (beginning with the 

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

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

8 of the total charges to the alternative minimum funding 

9 standard account for such plan years over the total credits 

10 to such account for such years. 

11 ‘‘(b) FUNDING STANDARD ACCOUNT.— 

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

13 this section applies shall establish and maintain a 

14 funding standard account. Such account shall be 

15 credited and charged solely as provided in this sec16 tion. 

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

18 the funding standard account shall be charged with 

19 the sum of— 

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

21 plan year, 

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

23 equal annual installments (until fully amor24 tized)— 

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

26 on January 1, 1974, the unfunded past 


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1 service liability under the plan on the first 

2 day of the first plan year to which section 

3 302 applies, over a period of 40 plan years, 

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

5 into existence after January 1, 1974, but 

6 before the first day of the first plan year 

7 beginning after December 31, 2013, the 

8 unfunded past service liability under the 

9 plan on the first day of the first plan year 

10 to which section 302 applies, over a period 

11 of 30 plan years, 

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

13 into existence on or after the first day of 

14 the first plan year beginning after Decem15 ber 31, 2013, the unfunded past liability 

16 under the plan on the first day of the first 

17 plan year to which section 302 applies, 

18 over a period of 15 years, 

19 ‘‘(iv) in the case of a plan that is sub20 ject to section 303 for the last plan year 

21 beginning before January 1, 2014, the sum 

22 of— 

23 ‘‘(I) the plan’s funding standard 

24 carryover balance and prefunding bal25 ance (as such terms are defined in 


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

2 plan year, and 

3 ‘‘(II) the unfunded past service 

4 liability under the plan for the first 

5 plan year beginning after December 

6 31, 2013, 

7 over a period of 15 years, 

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

9 plan year, the net increase (if any) in un10 funded past service liability under the plan 

11 arising from plan amendments adopted in 

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

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

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

15 under the plan, over a period of 5 plan 

16 years, and 

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

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

19 from changes in actuarial assumptions 

20 used under the plan, over a period of 10 

21 plan years, 

22 ‘‘(C) the amount necessary to amortize 

23 each waived funding deficiency (within the 

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


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1 plan year in equal annual installments (until 

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

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

4 equal annual installments (until fully amor5 tized) over a period of 5 plan years any amount 

6 credited to the funding standard account under 

7 paragraph (3)(D), and 

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

9 equal annual installments (until fully amor10 tized) over a period of 20 years the contribu11 tions which would be required to be made under 

12 the plan but for the provisions of section 

13 302(c)(7)(A)(i)(I) (as in effect on the day be14 fore the enactment of the Pension Protection 

15 Act of 2006). 

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

17 the funding standard account shall be credited with 

18 the sum of— 

19 ‘‘(A) the amount considered contributed by 

20 the employer to or under the plan for the plan 

21 year, 

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

23 equal annual installments (until fully amor24 tized)— 


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

2 plan year, the net decrease (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 ‘‘(ii) separately, with respect to each 

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

8 under the plan, over a period of 5 plan 

9 years, and 

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

11 plan year, the net gain (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 of the waived funding de16 ficiency (within the meaning of section 

17 302(c)(3)) for the plan year, 

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

19 the accumulated funding deficiency is deter20 mined under the funding standard account if 

21 such plan year follows a plan year for which 

22 such deficiency was determined under the alter23 native minimum funding standard, the excess 

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

25 standard account (determined without regard to 


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1 this subparagraph) over any debit balance in 

2 the alternative minimum funding standard ac3 count, and 

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

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

6 is subject to section 303 for the last plan year 

7 beginning before January 1, 2014, the sum of 

8 the plan’s funding standard carryover balance 

9 and prefunding balance (as such terms are de10 fined in section 302(f)) as of the end of the last 

11 plan year beginning before January 1, 2014. 

12 ‘‘(4) COMBINING AND OFFSETTING AMOUNTS

13 TO BE AMORTIZED.—Under regulations prescribed 

14 by the Secretary of the Treasury, amounts required 

15 to be amortized under paragraph (2) or paragraph 

16 (3), as the case may be— 

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

18 under such paragraph to be amortized over a 

19 period determined on the basis of the remaining 

20 amortization period for all items entering into 

21 such combined amount, and 

22 ‘‘(B) may be offset against amounts re23 quired to be amortized under the other such 

24 paragraph, with the resulting amount to be am25 ortized over a period determined on the basis of 


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1 the remaining amortization periods for all items 

2 entering into whichever of the two amounts 

3 being offset is the greater. 

4 ‘‘(5) INTEREST.— 

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

6 subparagraph (B), the funding standard ac7 count (and items therein) shall be charged or 

8 credited (as determined under regulations pre9 scribed by the Secretary of the Treasury) with 

10 interest at the appropriate rate consistent with 

11 the rate or rates of interest used under the plan 

12 to determine costs. 

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

14 for purposes of computing the amortization 

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

16 purposes of any arrangement under subsection 

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

18 percent of the Federal mid-term rate (as in ef19 fect under section 1274 of the Internal Revenue 

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

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

22 under subparagraph (A). 

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

24 Amortization schedules for amounts described in 

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


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1 last day of the last plan year beginning before Janu2 ary 1, 2014, by reason of section 104 of the Pension 

3 Protection Act of 2006 shall remain in effect pursu4 ant to their terms and this section, except that such 

5 amounts shall not be amortized again under this sec6 tion. In the case of a plan that is subject to section 

7 303 for the last plan year beginning before January 

8 1, 2014, any amortization schedules and bases for 

9 plan years beginning before such date shall be re10 duced to zero. 

11 ‘‘(c) SPECIAL RULES.— 

12 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

13 FUNDING METHOD.—For purposes of this section, 

14 normal costs, accrued liability, past service liabilities, 

15 and experience gains and losses shall be determined 

16 under the funding method used to determine costs 

17 under the plan. 

18 ‘‘(2) VALUATION OF ASSETS.— 

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

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

21 determined on the basis of any reasonable actu22 arial method of valuation which takes into ac23 count fair market value and which is permitted 

24 under regulations prescribed by the Secretary of 

25 the Treasury. 


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

2 Secretary of the Treasury may by regulations 

3 provide that the value of any dedicated bond 

4 portfolio of a plan shall be determined by using 

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

6 effect on the day before the enactment of the 

7 Pension Protection Act of 2006). 

8 ‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA9 SONABLE.—For purposes of this section, all costs, li10 abilities, rates of interest, and other factors under 

11 the plan shall be determined on the basis of actu12 arial assumptions and methods— 

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

14 into account the experience of the plan and rea15 sonable expectations) or which, in the aggre16 gate, result in a total contribution equivalent to 

17 that which would be determined if each such as18 sumption and method were reasonable, and 

19 ‘‘(B) which, in combination, offer the actu20 ary’s best estimate of anticipated experience 

21 under the plan. 

22 ‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX23 PERIENCE GAIN OR LOSS.—For purposes of this sec24 tion, if— 


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

2 Security Act or in other retirement benefits cre3 ated under Federal or State law, or 

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

5 ‘wages’ under section 3121 of the Internal Rev6 enue Code of 1986 or a change in the amount 

7 of such wages taken into account under regula8 tions prescribed for purposes of section 

9 401(a)(5) of such Code, 

10 results in an increase or decrease in accrued liability 

11 under a plan, such increase or decrease shall be 

12 treated as an experience loss or gain. 

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

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

15 funding methods available to CSEC plans under 

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

17 enactment of the Pension Protection Act of 

18 2006) shall continue to be available under this 

19 section. 

20 ‘‘(B) NOT AFFECTED BY CESSATION OF

21 BENEFIT ACCRUALS.—The availability of any 

22 funding method, including all spread gain fund23 ing methods, shall not be affected by whether 

24 benefit accruals under a plan have ceased. Ex25 cept as otherwise provided in subparagraph (C) 


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1 or in regulations prescribed by the Secretary of 

2 the Treasury, if benefit accruals have ceased 

3 under a plan, the spread gain funding methods 

4 may be applied by amortizing over the average 

5 expected future lives of all participants. 

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

7 plan amortizing over the average expected fu8 ture lives of all participants pursuant to sub9 paragraph (B), such amortization amount for 

10 any plan year shall not be less than the sum 

11 of— 

12 ‘‘(i) the amount determined by amor13 tizing, as of the first year for which the 

14 plan amortizes over the average future 

15 lives of all participants, the entire un16 funded past service liability in equal in17 stallments over 15 years, and 

18 ‘‘(ii) the amount determined by amor19 tizing any increase or decrease in such un20 funded past service liability in any subse21 quent year, other than an increase or de22 crease attributable to contributions or ex23 pected experience, in equal installments 

24 over 15 years. 


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

2 for a plan is changed, the new funding method 

3 shall become the funding method used to deter4 mine costs and liabilities under the plan only if 

5 the change is approved by the Secretary of the 

6 Treasury. The preceding sentence shall not 

7 apply to any change made pursuant to, or per8 mitted by, subparagraph (B) if such change is 

9 made for the first plan year beginning after De10 cember 31, 2013. Any such change may be 

11 made without the approval of the Secretary of 

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

13 changed, the new plan year shall become the 

14 plan year for the plan only if the change is ap15 proved by the Secretary of the Treasury. 

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

17 plan year, a plan would (without regard to this para18 graph) have an accumulated funding deficiency (de19 termined without regard to the alternative minimum 

20 funding standard account permitted under sub21 section (e)) in excess of the full funding limitation— 

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

23 credited with the amount of such excess, and 

24 ‘‘(B) all amounts described in paragraphs 

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1 section (b) which are required to be amortized 

2 shall be considered fully amortized for purposes 

3 of such paragraphs. 

4 ‘‘(7) FULL-FUNDING LIMITATION.—For pur5 poses of paragraph (6), the term ‘full-funding limita6 tion’ means the excess (if any) of— 

7 ‘‘(A) the accrued liability (including nor8 mal cost) under the plan (determined under the 

9 entry age normal funding method if such ac10 crued liability cannot be directly calculated 

11 under the funding method used for the plan), 

12 over 

13 ‘‘(B) the lesser of— 

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

15 plan’s assets, or 

16 ‘‘(ii) the value of such assets deter17 mined under paragraph (2). 

18 ‘‘(C) MINIMUM AMOUNT.— 

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

20 the full-funding limitation determined 

21 under subparagraph (A) be less than the 

22 excess (if any) of— 

23 ‘‘(I) 90 percent of the current li24 ability (determined without regard to 

25 paragraph (4) of subsection (h)) of 


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1 the plan (including the expected in2 crease in such current liability due to 

3 benefits accruing during the plan 

4 year), over 

5 ‘‘(II) the value of the plan’s as6 sets determined under paragraph (2). 

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

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

9 credit balance in the funding standard ac10 count. 

11 ‘‘(8) ANNUAL VALUATION.— 

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

13 section, a determination of experience gains and 

14 losses and a valuation of the plan’s liability 

15 shall be made not less frequently than once 

16 every year, except that such determination shall 

17 be made more frequently to the extent required 

18 in particular cases under regulations prescribed 

19 by the Secretary of the Treasury. 

20 ‘‘(B) VALUATION DATE.— 

21 ‘‘(i) CURRENT YEAR.—Except as pro22 vided in clause (ii), the valuation referred 

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

24 a date within the plan year to which the 


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1 valuation refers or within one month prior 

2 to the beginning of such year. 

3 ‘‘(ii) USE OF PRIOR YEAR VALU4 ATION.—The valuation referred to in sub5 paragraph (A) may be made as of a date 

6 within the plan year prior to the year to 

7 which the valuation refers if, as of such 

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

9 not less than 100 percent of the plan’s cur10 rent liability. 

11 ‘‘(iii) ADJUSTMENTS.—Information 

12 under clause (ii) shall, in accordance with 

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

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

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

18 unless as of the valuation date within the 

19 prior plan year, the value of the assets of 

20 the plan are not less than 125 percent of 

21 the plan’s current liability. 

22 ‘‘(9) TIME WHEN CERTAIN CONTRIBUTIONS

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

24 contributions for a plan year made by an employer 

25 during the period— 


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

2 day of such plan year, and 

‘‘(B) ending on the day which is 81 3 ⁄2

4 months after the close of the plan year, 

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

6 ‘‘(10) ANTICIPATION OF BENEFIT INCREASES

7 EFFECTIVE IN THE FUTURE.—In determining pro8 jected benefits, the funding method of a collectively 

9 bargained CSEC plan described in section 413(a) 

10 (other than a multiemployer plan) shall anticipate 

11 benefit increases scheduled to take effect during the 

12 term of the collective bargaining agreement applica13 ble to the plan. 

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

15 period of years required to amortize any unfunded liability 

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

17 plan may be extended by the Secretary of the Treasury 

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

19 Secretary determines that such extension would provide 

20 adequate protection for participants under the plan and 

21 their beneficiaries and if such Secretary determines that 

22 the failure to permit such extension would result in— 

23 ‘‘(1) a substantial risk to the voluntary continu24 ation of the plan, or 


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1 ‘‘(2) a substantial curtailment of pension ben2 efit levels or employee compensation. 

3 ‘‘(e) ALTERNATIVE MINIMUM FUNDING STAND4 ARD.— 

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

6 funding method that requires contributions in all 

7 years not less than those required under the entry 

8 age normal funding method may maintain an alter9 native minimum funding standard account for any 

10 plan year. Such account shall be credited and 

11 charged solely as provided in this subsection. 

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

13 For a plan year the alternative minimum funding 

14 standard account shall be— 

15 ‘‘(A) charged with the sum of— 

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

17 the funding method used under the plan or 

18 normal cost determined under the unit 

19 credit method, 

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

21 value of accrued benefits under the plan 

22 over the fair market value of the assets, 

23 and 

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

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1 imum standard account for all prior plan 

2 years over charges to such account for all 

3 such years, and 

4 ‘‘(B) credited with the amount considered 

5 contributed by the employer to or under the 

6 plan for the plan year. 

7 ‘‘(3) SPECIAL RULES.—The alternative min8 imum funding standard account (and items therein) 

9 shall be charged or credited with interest in the 

10 manner provided under subsection (b)(5) with re11 spect to the funding standard account. 

12 ‘‘(f) QUARTERLY CONTRIBUTIONS REQUIRED.— 

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

14 a funded current liability percentage for the pre15 ceding plan year of less than 100 percent fails to 

16 pay the full amount of a required installment for the 

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

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

19 with respect to the amount of the underpayment for 

20 the period of the underpayment shall be equal to the 

21 greater of— 

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

23 rate (as in effect under section 1274 of the In24 ternal Revenue Code of 1986 for the 1st month 

25 of such plan year), or 


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

2 plan in determining costs. 

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

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

5 ‘‘(A) AMOUNT.—The amount of the under6 payment shall be the excess of— 

7 ‘‘(i) the required installment, over 

8 ‘‘(ii) the amount (if any) of the in9 stallment contributed to or under the plan 

10 on or before the due date for the install11 ment. 

12 ‘‘(B) PERIOD OF UNDERPAYMENT.—The 

13 period for which interest is charged under this 

14 subsection with regard to any portion of the un15 derpayment shall run from the due date for the 

16 installment to the date on which such portion is 

17 contributed to or under the plan (determined 

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

19 ‘‘(C) ORDER OF CREDITING CONTRIBU20 TIONS.—For purposes of subparagraph (A)(ii), 

21 contributions shall be credited against unpaid 

22 required installments in the order in which such 

23 installments are required to be paid. 

24 ‘‘(3) NUMBER OF REQUIRED INSTALLMENTS; 

25 DUE DATES.—For purposes of this subsection— 


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1 ‘‘(A) PAYABLE IN 4 INSTALLMENTS.— 

2 There shall be 4 required installments for each 

3 plan year. 

4 ‘‘(B) TIME FOR PAYMENT OF INSTALL5 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. 

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

7 For purposes of this subsection— 

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

9 required installment shall be 25 percent of the 

10 required annual payment. 

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

12 purposes of subparagraph (A), the term ‘re13 quired annual payment’ means the lesser of— 

14 ‘‘(i) 90 percent of the amount re15 quired to be contributed to or under the 

16 plan by the employer for the plan year 

17 under section 302 (without regard to any 

18 waiver under subsection (c) thereof), or 

19 ‘‘(ii) 100 percent of the amount so re20 quired for the preceding plan year. 


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

2 year was not a year of 12 months. 

3 ‘‘(5) LIQUIDITY REQUIREMENT.— 

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

5 paragraph applies shall be treated as failing to 

6 pay the full amount of any required installment 

7 to the extent that the value of the liquid assets 

8 paid in such installment is less than the liquid9 ity shortfall (whether or not such liquidity 

10 shortfall exceeds the amount of such install11 ment required to be paid but for this para12 graph). 

13 ‘‘(B) PLANS TO WHICH PARAGRAPH AP14 PLIES.—This paragraph shall apply to a CSEC 

15 plan other than a plan described in section 

16 302(l)(6)(A) (as in effect on the day before the 

17 enactment of the Pension Protection Act of 

18 2006) which— 

19 ‘‘(i) is required to pay installments 

20 under this subsection for a plan year, and 

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

22 quarter during such plan year. 

23 ‘‘(C) PERIOD OF UNDERPAYMENT.—For 

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

25 installment that is treated as not paid under 


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1 subparagraph (A) shall continue to be treated 

2 as unpaid until the close of the quarter in 

3 which the due date for such installment occurs. 

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

5 amount of any required installment is increased 

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

7 shall such increase exceed the amount which, 

8 when added to prior installments for the plan 

9 year, is necessary to increase the funded cur10 rent liability percentage (taking into account 

11 the expected increase in current liability due to 

12 benefits accruing during the plan year) to 100 

13 percent. 

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

15 paragraph: 

16 ‘‘(i) LIQUIDITY SHORTFALL.—The 

17 term ‘liquidity shortfall’ means, with re18 spect to any required installment, an 

19 amount equal to the excess (as of the last 

20 day of the quarter for which such install21 ment is made) of the base amount with re22 spect to such quarter over the value (as of 

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

24 ‘‘(ii) BASE AMOUNT.— 


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1 ‘‘(I) IN GENERAL.—The term 

2 ‘base amount’ means, with respect to 

3 any quarter, an amount equal to 3 

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

6 months ending on the last day of such 

7 quarter. 

8 ‘‘(II) SPECIAL RULE.—If the 

9 amount determined under subclause 

10 (I) exceeds an amount equal to 2 

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

13 months ending on the last day of the 

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

23 ‘‘(iii) DISBURSEMENTS FROM THE

24 PLAN.—The term ‘disbursements from the 

25 plan’ means all disbursements from the 


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1 trust, including purchases of annuities, 

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

4 ‘‘(iv) ADJUSTED DISBURSEMENTS.— 

5 The term ‘adjusted disbursements’ means 

6 disbursements from the plan reduced by 

7 the product of— 

8 ‘‘(I) the plan’s funded current li9 ability percentage for the plan year, 

10 and 

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

12 annuities, payments of single sums, 

13 and such other disbursements as the 

14 Secretary of the Treasury shall pro15 vide in regulations. 

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

19 the Secretary of the Treasury in regula20 tions. 

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

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

24 month in which the due date for such in25 stallment occurs. 


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

2 Treasury may prescribe such regulations as are 

3 necessary to carry out this paragraph. 

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

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

6 subsection to a plan year beginning on any date 

7 other than January 1, there shall be substituted 

8 for the months specified in this subsection, the 

9 months which correspond thereto. 

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

11 shall be applied to plan years of less than 12 

12 months in accordance with regulations pre13 scribed by the Secretary of the Treasury. 

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

15 MAKE REQUIRED CONTRIBUTIONS.— 

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

17 which this section applies, if— 

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

19 installment under subsection (f) or any other 

20 payment required under this section before the 

21 due date for such installment or other payment, 

22 and 

23 ‘‘(B) the unpaid balance of such install24 ment or other payment (including interest), 

25 when added to the aggregate unpaid balance of 


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1 all preceding such installments or other pay2 ments for which payment was not made before 

3 the due date (including interest), exceeds 

4 $1,000,000, 

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

6 amount determined under paragraph (3) upon all 

7 property and rights to property, whether real or per8 sonal, belonging to such person and any other per9 son who is a member of the same controlled group 

10 of which such person is a member. 

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

12 This subsection shall apply to a CSEC plan for any 

13 plan year for which the funded current liability per14 centage of such plan is less than 100 percent. This 

15 subsection shall not apply to any plan to which sec16 tion 4021 does not apply (as such section is in effect 

17 on the date of the enactment of the Retirement Pro18 tection Act of 1994). 

19 ‘‘(3) AMOUNT OF LIEN.—For purposes of para20 graph (1), the amount of the lien shall be equal to 

21 the aggregate unpaid balance of required install22 ments and other payments required under this sec23 tion (including interest)— 

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

25 and 


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

2 made before the due date. 

3 ‘‘(4) NOTICE OF FAILURE; LIEN.— 

4 ‘‘(A) NOTICE OF FAILURE.—A person 

5 committing a failure described in paragraph (1) 

6 shall notify the Pension Benefit Guaranty Cor7 poration of such failure within 10 days of the 

8 due date for the required installment or other 

9 payment. 

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

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

12 the required installment or other payment and 

13 shall continue until the last day of the first plan 

14 year in which the plan ceases to be described in 

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

16 run without regard to whether such plan con17 tinues to be described in paragraph (2) during 

18 the period referred to in the preceding sentence. 

19 ‘‘(C) CERTAIN RULES TO APPLY.—Any 

20 amount with respect to which a lien is imposed 

21 under paragraph (1) shall be treated as taxes 

22 due and owing the United States and rules 

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

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


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1 a lien imposed by subsection (a) and the 

2 amount with respect to such lien. 

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

4 paragraph (1) may be perfected and enforced only 

5 by the Pension Benefit Guaranty Corporation, or at 

6 the direction of the Pension Benefit Guaranty Cor7 poration, by the contributing sponsor (or any mem8 ber of the controlled group of the contributing spon9 sor). 

10 ‘‘(6) DEFINITIONS.—For purposes of this sub11 section— 

12 ‘‘(A) DUE DATE; REQUIRED INSTALL13 MENT.—The terms ‘due date’ and ‘required in14 stallment’ have the meanings given such terms 

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

16 payment other than a required installment, the 

17 due date shall be the date such payment is re18 quired to be made under this section. 

19 ‘‘(B) CONTROLLED GROUP.—The term 

20 ‘controlled group’ means any group treated as 

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

22 (m), and (o) of section 414 of the Internal Rev23 enue Code of 1986. 

24 ‘‘(h) CURRENT LIABILITY.—For purposes of this sec25 tion— 


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

2 means all liabilities to employees and their bene3 ficiaries under the plan. 

4 ‘‘(2) TREATMENT OF UNPREDICTABLE CONTIN5 GENT EVENT BENEFITS.— 

6 ‘‘(A) IN GENERAL.—For purposes of para7 graph (1), any unpredictable contingent event 

8 benefit shall not be taken into account until the 

9 event on which the benefit is contingent occurs. 

10 ‘‘(B) UNPREDICTABLE CONTINGENT

11 EVENT BENEFIT.—The term ‘unpredictable 

12 contingent event benefit’ means any benefit 

13 contingent on an event other than— 

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

15 or disability, or 

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

17 reliably predictable (as determined by the 

18 Secretary of the Treasury). 

19 ‘‘(3) INTEREST RATE AND MORTALITY ASSUMP20 TIONS USED.— 

21 ‘‘(A) INTEREST RATE.—The rate of inter22 est used to determine current liability under 

23 this section shall be the third segment rate de24 termined under section 303(h)(2)(C). 

25 ‘‘(B) MORTALITY TABLES.— 


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1 ‘‘(i) COMMISSIONERS’ STANDARD

2 TABLE.—In the case of plan years begin3 ning before the first plan year to which the 

4 first tables prescribed under clause (ii) 

5 apply, the mortality table used in deter6 mining current liability under this sub7 section shall be the table prescribed by the 

8 Secretary of the Treasury which is based 

9 on the prevailing commissioners’ standard 

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

11 the Internal Revenue Code of 1986) used 

12 to determine reserves for group annuity 

13 contracts issued on January 1, 1993. 

14 ‘‘(ii) SECRETARIAL AUTHORITY.—The 

15 Secretary of the Treasury may by regula16 tion prescribe for plan years beginning 

17 after December 31, 1999, mortality tables 

18 to be used in determining current liability 

19 under this subsection. Such tables shall be 

20 based upon the actual experience of pen21 sion plans and projected trends in such ex22 perience. In prescribing such tables, the 

23 Secretary of the Treasury shall take into 

24 account results of available independent 


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1 studies of mortality of individuals covered 

2 by pension plans. 

3 ‘‘(iii) PERIODIC REVIEW.—The Sec4 retary of the Treasury shall periodically (at 

5 least every 5 years) review any tables in ef6 fect under this subsection and shall, to the 

7 extent the Secretary of the Treasury deter8 mines necessary, by regulation update the 

9 tables to reflect the actual experience of 

10 pension plans and projected trends in such 

11 experience. 

12 ‘‘(C) SEPARATE MORTALITY TABLES FOR

13 THE DISABLED.—Notwithstanding subpara14 graph (B)— 

15 ‘‘(i) IN GENERAL.—In the case of 

16 plan years beginning after December 31, 

17 1995, the Secretary of the Treasury shall 

18 establish mortality tables which may be 

19 used (in lieu of the tables under subpara20 graph (B)) to determine current liability 

21 under this subsection for individuals who 

22 are entitled to benefits under the plan on 

23 account of disability. The Secretary of the 

24 Treasury shall establish separate tables for 

25 individuals whose disabilities occur in plan 


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1 years beginning before January 1, 1995, 

2 and for individuals whose disabilities occur 

3 in plan years beginning on or after such 

4 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 of the Treasury. 

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 of the Treasury 

7 may prescribe such rules as are necessary or appropriate 

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

9 application of section 303 to the application of this sec10 tion.’’. 

11 (2) SPECIAL RULE.—Section 210(a) of the Em12 ployee Retirement Income Security Act of 1974 (29 

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

14 the following new paragraph: 

15 ‘‘(4) Notwithstanding any other provision of 

16 this section, in the case of a CSEC plan, the require17 ments of section 302 shall be determined as if all 

18 participants in the plan were employed by a single 

19 employer.’’. 

20 (3) SEPARATE RULES FOR CSEC PLANS.— 

21 (A) IN GENERAL.—Paragraph (2) of sec22 tion 302(a) of the Employee Retirement Income 

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

24 amended by striking ‘‘and’’ at the end of sub25 paragraph (B), by striking the period at the 


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

2 and by inserting at the end thereof the fol3 lowing 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 306 as of the end of the plan year.’’. 

10 (B) CONFORMING AMENDMENTS.—Section 

11 302 of the Employee Retirement Income Secu12 rity Act of 1974 (29 U.S.C. 1082) is amended 

13 by— 

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

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

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

17 it appears in paragraph (2) of subsection 

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

19 a CSEC plan’’, 

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

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

22 under 306(f)’’, 

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

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

10 amount of the waived funding deficiency 

11 and such amount shall be amortized as re12 quired under section 306(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 306(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 306(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 ‘‘304(d)’’ in subpara6 graph (A) of subsection (c)(7) and in para7 graph (2) of subsection (d) and inserting 

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

9 (ix) striking ‘‘and’’ at the end of sub10 clause (I) of subsection (c)(4)(C)(i) and 

11 adding ‘‘or the accumulated funding defi12 ciency under section 306, whichever is ap13 plicable,’’, 

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

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

16 ‘‘303(e)(2) or 306(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 306(d),’’, 

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

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

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

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

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

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

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

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

9 and inserting ‘‘single-employer plan (other 

10 than a CSEC plan)’’. 

11 (4) BENEFIT RESTRICTIONS.— 

12 (A) IN GENERAL.—Subsection (g) of sec13 tion 206 of the Employee Retirement Income 

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

15 amended by adding at the end thereof the fol16 lowing new paragraph: 

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

18 apply to a CSEC plan (as defined in section 

19 210(f)).’’. 

20 (B) EFFECTIVE DATE.—Any restriction 

21 under section 206(g) of the Employee Retire22 ment Income Security Act of 1974 that is in ef23 fect with respect to a CSEC plan as of the last 

24 day of the last plan year beginning before JanVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00043 Fmt 6652 Sfmt 6401 E:\BILLS\S1302.RS S1302

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1 uary 1, 2014, shall cease to apply as of the first 

2 day of the following plan year. 

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

4 section 204(i) of the Employee Retirement Income 

5 Security Act of 1974 (29 U.S.C. 1054(i)) is amend6 ed by striking ‘‘multiemployer plans’’ and inserting 

7 ‘‘multiemployer plans or CSEC plans’’. 

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

9 103(d)(8) of the Employee Retirement Income Secu10 rity Act of 1974 (29 U.S.C. 1023(d)(8)) is amended 

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

12 ‘‘303(h), 304(c)(3), and 306(c)(3)’’. 

13 (7) SECTION 4003.—Subparagraph (B) of sec14 tion 4003(e)(1) of the Employee Retirement Income 

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

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

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

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

19 and (B) or 306(g)(1)(A) and (B) of this Act or sec20 tion 430(k)(1)(A) and (B) or 433(g)(1)(A) and (B) 

21 of the Internal Revenue Code of 1986’’. 

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

23 4010(b) of the Employee Retirement Income Secu24 rity Act of 1974 (29 U.S.C. 1310(b)) is amended by 

25 striking ‘‘303(k)(1)(A) and (B) of this Act or secVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00044 Fmt 6652 Sfmt 6401 E:\BILLS\S1302.RS S1302

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1 tion 430(k)(1)(A) and (B) of the Internal Revenue 

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

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

4 430(k)(1)(A) and (B) or 433(g)(1)(A) and (B) of 

5 the Internal Revenue Code of 1986’’. 

6 (9) SECTION 4071.—Section 4071 of the Em7 ployee Retirement Income Security Act of 1974 (29 

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

9 303(k)(4)’’ and inserting ‘‘section 303(k)(4) or 

10 306(g)(4)’’. 

11 (b) AMENDMENTS TO CODE.— 

12 (1) MINIMUM FUNDING STANDARDS UNDER

13 THE INTERNAL REVENUE CODE.—Subpart A of part 

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

15 Internal Revenue Code of 1986 is amended by add16 ing at the end the following new section: 

17 ‘‘SEC. 433. MINIMUM FUNDING STANDARDS. 

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

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 412 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 

21 412 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 412 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 412 applies, 

11 over a period of 15 years, 

12 ‘‘(iv) in the case of a plan that is sub13 ject to section 430 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 430(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 412(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 

6 412(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 

10 412(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 430 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 430(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, amounts required to be amortized 

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

9 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) Except as provided in subparagraph 

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

25 therein) shall be charged or credited (as deterVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00051 Fmt 6652 Sfmt 6401 E:\BILLS\S1302.RS S1302

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1 mined under regulations prescribed by the Sec2 retary) with interest at the appropriate rate 

3 consistent with the rate or rates of interest 

4 used under the plan to determine costs. 

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

6 computing the amortization charge described in 

7 subsection (b)(2)(C) or for purposes of any ar8 rangement under subsection (d) for any plan 

9 year shall be greater of— 

10 ‘‘(i) 150 percent of the Federal mid11 term rate (as in effect under section 1274 

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

13 ‘‘(ii) the rate of interest determined 

14 under subparagraph (A). 

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

16 Amortization schedules for amounts described in 

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

18 last day of the last plan year beginning before Janu19 ary 1, 2014, by reason of section 104 of the Pension 

20 Protection Act of 2006 shall remain in effect pursu21 ant to their terms and this section, except that such 

22 amounts shall not be amortized again under this sec23 tion. In the case of a plan that is subject to section 

24 430 for the last plan year beginning before January 

25 1, 2014, any amortization schedules and bases for 


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1 plan years beginning before such date shall be re2 duced to zero. 

3 ‘‘(c) SPECIAL RULES.— 

4 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

5 FUNDING METHOD.—For purposes of this section, 

6 normal costs, accrued liability, past service liabilities, 

7 and experience gains and losses shall be determined 

8 under the funding method used to determine costs 

9 under the plan. 

10 ‘‘(2) VALUATION OF ASSETS.— 

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

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

13 determined on the basis of any reasonable actu14 arial method of valuation which takes into ac15 count fair market value and which is permitted 

16 under regulations prescribed by the Secretary. 

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

18 Secretary may by regulations provide that the 

19 value of any dedicated bond portfolio of a plan 

20 shall be determined by using the interest rate 

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

22 before the enactment of the Pension Protection 

23 Act of 2006). 

24 ‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA25 SONABLE.—For purposes of this section, all costs, liVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00053 Fmt 6652 Sfmt 6401 E:\BILLS\S1302.RS S1302

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1 abilities, rates of interest, and other factors under 

2 the plan shall be determined on the basis of actu3 arial assumptions and methods— 

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

5 into account the experience of the plan and rea6 sonable expectations) or which, in the aggre7 gate, result in a total contribution equivalent to 

8 that which would be determined if each such as9 sumption and method were reasonable, and 

10 ‘‘(B) which, in combination, offer the actu11 ary’s best estimate of anticipated experience 

12 under the plan. 

13 ‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX14 PERIENCE GAIN OR LOSS.—For purposes of this sec15 tion, if— 

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

17 Security Act or in other retirement benefits cre18 ated under Federal or State law, or 

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

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

21 amount of such wages taken into account under 

22 regulations prescribed for purposes of section 

23 401(a)(5), 


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1 results in an increase or decrease in accrued liability 

2 under a plan, such increase or decrease shall be 

3 treated as an experience loss or gain. 

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

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

6 funding methods available to CSEC plans under 

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

8 enactment of the Pension Protection Act of 

9 2006) shall continue to be available under this 

10 section. 

11 ‘‘(B) NOT AFFECTED BY CESSATION OF

12 BENEFIT ACCRUALS.—The availability of any 

13 funding method, including all spread gain fund14 ing methods, shall not be affected by whether 

15 benefit accruals under a plan have ceased. Ex16 cept as otherwise provided in subparagraph (C) 

17 or in regulations prescribed by the Secretary, if 

18 benefit accruals have ceased under a plan, the 

19 spread gain funding methods may be applied by 

20 amortizing over the average expected future 

21 lives of all participants. 

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

23 plan amortizing over the average expected fu24 ture lives of all participants pursuant to sub25 paragraph (B), such amortization amount for 


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1 any plan year shall not be less than the sum 

2 of— 

3 ‘‘(i) the amount determined by amor4 tizing, as of the first year for which the 

5 plan amortizes over the average future 

6 lives of all participants, the entire un7 funded past service liability in equal in8 stallments over 15 years, and 

9 ‘‘(ii) the amount determined by amor10 tizing any increase or decrease in such un11 funded past service liability in any subse12 quent year, other than an increase or de13 crease attributable to contributions or ex14 pected experience, in equal installments 

15 over 15 years. 

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

17 for a plan is changed, the new funding method 

18 shall become the funding method used to deter19 mine costs and liabilities under the plan only if 

20 the change is approved by the Secretary. The 

21 preceding sentence shall not apply to any 

22 change made pursuant to, or permitted by, sub23 paragraph (B) if such change is made for the 

24 first plan year beginning after December 31, 

25 2013. Any such change may be made without 


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1 the approval of the Secretary. If the plan year 

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

3 become the plan year for the plan only if the 

4 change is approved by the Secretary. 

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

6 plan year, a plan would (without regard to this para7 graph) have an accumulated funding deficiency (de8 termined without regard to the alternative minimum 

9 funding standard account permitted under sub10 section (e)) in excess of the full funding limitation— 

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

12 credited with the amount of such excess, and 

13 ‘‘(B) all amounts described in paragraphs 

14 (2)(B), (C), (D), and (E) and (3)(B) of sub15 section (b) which are required to be amortized 

16 shall be considered fully amortized for purposes 

17 of such paragraphs. 

18 ‘‘(7) FULL-FUNDING LIMITATION.—For pur19 poses of paragraph (6), the term ‘full-funding limita20 tion’ means the excess (if any) of— 

21 ‘‘(A) the accrued liability (including nor22 mal cost) under the plan (determined under the 

23 entry age normal funding method if such ac24 crued liability cannot be directly calculated 


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1 under the funding method used for the plan), 

2 over 

3 ‘‘(B) the lesser of— 

4 ‘‘(i) the fair market value of the 

5 plan’s assets, or 

6 ‘‘(ii) the value of such assets deter7 mined under paragraph (2). 

8 ‘‘(C) MINIMUM AMOUNT.— 

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

10 the full-funding limitation determined 

11 under subparagraph (A) be less than the 

12 excess (if any) of— 

13 ‘‘(I) 90 percent of the current li14 ability (determined without regard to 

15 paragraph (4) of subsection (h)) of 

16 the plan (including the expected in17 crease in such current liability due to 

18 benefits accruing during the plan 

19 year), over 

20 ‘‘(II) the value of the plan’s as21 sets determined under paragraph (2). 

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

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

24 credit balance in the funding standard ac25 count. 


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1 ‘‘(8) ANNUAL VALUATION.— 

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

3 section, a determination of experience gains and 

4 losses and a valuation of the plan’s liability 

5 shall be made not less frequently than once 

6 every year, except that such determination shall 

7 be made more frequently to the extent required 

8 in particular cases under regulations prescribed 

9 by the Secretary. 

10 ‘‘(B) VALUATION DATE.— 

11 ‘‘(i) CURRENT YEAR.—Except as pro12 vided in clause (ii), the valuation referred 

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

14 a date within the plan year to which the 

15 valuation refers or within one month prior 

16 to the beginning of such year. 

17 ‘‘(ii) USE OF PRIOR YEAR VALU18 ATION.—The valuation referred to in sub19 paragraph (A) may be made as of a date 

20 within the plan year prior to the year to 

21 which the valuation refers if, as of such 

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

23 not less than 100 percent of the plan’s cur24 rent liability. 


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1 ‘‘(iii) ADJUSTMENTS.—Information 

2 under clause (ii) shall, in accordance with 

3 regulations, be actuarially adjusted to re4 flect significant differences in participants. 

5 ‘‘(iv) LIMITATION.—A change in fund6 ing method to use a prior year valuation, 

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

8 unless as of the valuation date within the 

9 prior plan year, the value of the assets of 

10 the plan are not less than 125 percent of 

11 the plan’s current liability. 

12 ‘‘(9) TIME WHEN CERTAIN CONTRIBUTIONS

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

14 contributions for a plan year made by an employer 

15 during the period— 

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

17 day of such plan year, and 

‘‘(B) ending on the day which is 81 18 ⁄2

19 months after the close of the plan year, 

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

21 ‘‘(10) ANTICIPATION OF BENEFIT INCREASES

22 EFFECTIVE IN THE FUTURE.—In determining pro23 jected benefits, the funding method of a collectively 

24 bargained CSEC plan described in section 413(a) 

25 (other than a multiemployer plan) shall anticipate 


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1 benefit increases scheduled to take effect during the 

2 term of the collective bargaining agreement applica3 ble to the plan. 

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

5 period of years required to amortize any unfunded liability 

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

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

8 time (not in excess of 10 years) if such Secretary deter9 mines that such extension would provide adequate protec10 tion for participants under the plan and their beneficiaries 

11 and if such Secretary determines that the failure to permit 

12 such extension would result in— 

13 ‘‘(1) a substantial risk to the voluntary continu14 ation of the plan, or 

15 ‘‘(2) a substantial curtailment of pension ben16 efit levels or employee compensation. 

17 ‘‘(e) ALTERNATIVE MINIMUM FUNDING STAND18 ARD.— 

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

20 funding method that requires contributions in all 

21 years not less than those required under the entry 

22 age normal funding method may maintain an alter23 native minimum funding standard account for any 

24 plan year. Such account shall be credited and 

25 charged solely as provided in this subsection. 


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

2 For a plan year the alternative minimum funding 

3 standard account shall be— 

4 ‘‘(A) charged with the sum of— 

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

6 the funding method used under the plan or 

7 normal cost determined under the unit 

8 credit method, 

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

10 value of accrued benefits under the plan 

11 over the fair market value of the assets, 

12 and 

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

14 (if any) of credits to the alternative min15 imum standard account for all prior plan 

16 years over charges to such account for all 

17 such years, and 

18 ‘‘(B) credited with the amount considered 

19 contributed by the employer to or under the 

20 plan for the plan year. 

21 ‘‘(3) SPECIAL RULES.—The alternative min22 imum funding standard account (and items therein) 

23 shall be charged or credited with interest in the 

24 manner provided under subsection (b)(5) with re25 spect to the funding standard account. 


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1 ‘‘(f) QUARTERLY CONTRIBUTIONS REQUIRED.— 

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

3 a funded current liability percentage for the pre4 ceding plan year of less than 100 percent fails to 

5 pay the full amount of a required installment for the 

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

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

8 with respect to the amount of the underpayment for 

9 the period of the underpayment shall be equal to the 

10 greater of— 

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

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

13 month of such plan year), or 

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

15 plan in determining costs. 

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

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

18 ‘‘(A) AMOUNT.—The amount of the under19 payment shall be the excess of— 

20 ‘‘(i) the required installment, over 

21 ‘‘(ii) the amount (if any) of the in22 stallment contributed to or under the plan 

23 on or before the due date for the install24 ment. 


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1 ‘‘(B) PERIOD OF UNDERPAYMENT.—The 

2 period for which interest is charged under this 

3 subsection with regard to any portion of the un4 derpayment shall run from the due date for the 

5 installment to the date on which such portion is 

6 contributed to or under the plan (determined 

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

8 ‘‘(C) ORDER OF CREDITING CONTRIBU9 TIONS.—For purposes of subparagraph (A)(ii), 

10 contributions shall be credited against unpaid 

11 required installments in the order in which such 

12 installments are required to be paid. 

13 ‘‘(3) NUMBER OF REQUIRED INSTALLMENTS; 

14 DUE DATES.—For purposes of this subsection— 

15 ‘‘(A) PAYABLE IN 4 INSTALLMENTS.— 

16 There shall be 4 required installments for each 

17 plan year. 

18 ‘‘(B) TIME FOR PAYMENT OF INSTALL19 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. 

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

21 For purposes of this subsection— 


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

2 required installment shall be 25 percent of the 

3 required annual payment. 

4 ‘‘(B) REQUIRED ANNUAL PAYMENT.—For 

5 purposes of subparagraph (A), the term ‘re6 quired annual payment’ means the lesser of— 

7 ‘‘(i) 90 percent of the amount re8 quired to be contributed to or under the 

9 plan by the employer for the plan year 

10 under section 412 (without regard to any 

11 waiver under subsection (c) thereof), or 

12 ‘‘(ii) 100 percent of the amount so re13 quired for the preceding plan year. 

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

15 year was not a year of 12 months. 

16 ‘‘(5) LIQUIDITY REQUIREMENT.— 

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

18 paragraph applies shall be treated as failing to 

19 pay the full amount of any required installment 

20 to the extent that the value of the liquid assets 

21 paid in such installment is less than the liquid22 ity shortfall (whether or not such liquidity 

23 shortfall exceeds the amount of such install24 ment required to be paid but for this para25 graph). 


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

3 plan other than a plan described in section 

4 412(l)(6)(A) (as in effect on the day before the 

5 enactment of the Pension Protection Act of 

6 2006) which— 

7 ‘‘(i) is required to pay installments 

8 under this subsection for a plan year, and 

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

10 quarter during such plan year. 

11 ‘‘(C) PERIOD OF UNDERPAYMENT.—For 

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

13 installment that is treated as not paid under 

14 subparagraph (A) shall continue to be treated 

15 as unpaid until the close of the quarter in 

16 which the due date for such installment occurs. 

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

18 amount of any required installment is increased 

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

20 shall such increase exceed the amount which, 

21 when added to prior installments for the plan 

22 year, is necessary to increase the funded cur23 rent liability percentage (taking into account 

24 the expected increase in current liability due to 


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1 benefits accruing during the plan year) to 100 

2 percent. 

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

4 paragraph: 

5 ‘‘(i) LIQUIDITY SHORTFALL.—The 

6 term ‘liquidity shortfall’ means, with re7 spect to any required installment, an 

8 amount equal to the excess (as of the last 

9 day of the quarter for which such install10 ment is made) of the base amount with re11 spect to such quarter over the value (as of 

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

13 ‘‘(ii) BASE AMOUNT.— 

14 ‘‘(I) IN GENERAL.—The term 

15 ‘base amount’ means, with respect to 

16 any quarter, an amount equal to 3 

17 times the sum of the adjusted dis18 bursements from the plan for the 12 

19 months ending on the last day of such 

20 quarter. 

21 ‘‘(II) SPECIAL RULE.—If the 

22 amount determined under subclause 

23 (I) exceeds an amount equal to 2 

24 times the sum of the adjusted dis25 bursements from the plan for the 36 


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1 months ending on the last day of the 

2 quarter and an enrolled actuary cer3 tifies to the satisfaction of the Sec4 retary that such excess is the result of 

5 nonrecurring circumstances, the base 

6 amount with respect to such quarter 

7 shall be determined without regard to 

8 amounts related to those nonrecurring 

9 circumstances. 

10 ‘‘(iii) DISBURSEMENTS FROM THE

11 PLAN.—The term ‘disbursements from the 

12 plan’ means all disbursements from the 

13 trust, including purchases of annuities, 

14 payments of single sums and other bene15 fits, and administrative expenses. 

16 ‘‘(iv) ADJUSTED DISBURSEMENTS.— 

17 The term ‘adjusted disbursements’ means 

18 disbursements from the plan reduced by 

19 the product of— 

20 ‘‘(I) the plan’s funded current li21 ability percentage for the plan year, 

22 and 

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

24 annuities, payments of single sums, 


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1 and such other disbursements as the 

2 Secretary shall provide in regulations. 

3 ‘‘(v) LIQUID ASSETS.—The term ‘liq4 uid assets’ means cash, marketable securi5 ties and such other assets as specified by 

6 the Secretary in regulations. 

7 ‘‘(vi) QUARTER.—The term ‘quarter’ 

8 means, with respect to any required install9 ment, the 3-month period preceding the 

10 month in which the due date for such in11 stallment occurs. 

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

13 prescribe such regulations as are necessary to 

14 carry out this paragraph. 

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

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

17 subsection to a plan year beginning on any date 

18 other than January 1, there shall be substituted 

19 for the months specified in this subsection, the 

20 months which correspond thereto. 

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

22 shall be applied to plan years of less than 12 

23 months in accordance with regulations pre24 scribed by the Secretary. 


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

2 MAKE REQUIRED CONTRIBUTIONS.— 

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

4 which this section applies, if— 

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

6 installment under subsection (f) or any other 

7 payment required under this section before the 

8 due date for such installment or other payment, 

9 and 

10 ‘‘(B) the unpaid balance of such install11 ment or other payment (including interest), 

12 when added to the aggregate unpaid balance of 

13 all preceding such installments or other pay14 ments for which payment was not made before 

15 the due date (including interest), exceeds 

16 $1,000,000, 

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

18 amount determined under paragraph (3) upon all 

19 property and rights to property, whether real or per20 sonal, belonging to such person and any other per21 son who is a member of the same controlled group 

22 of which such person is a member. 

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

24 This subsection shall apply to a CSEC plan for any 

25 plan year for which the funded current liability perVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00070 Fmt 6652 Sfmt 6401 E:\BILLS\S1302.RS S1302

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1 centage of such plan is less than 100 percent. This 

2 subsection shall not apply to any plan to which sec3 tion 4021 of the Employee Retirement Income Secu4 rity Act of 1974 does not apply (as such section is 

5 in effect on the date of the enactment of the Retire6 ment Protection Act of 1994). 

7 ‘‘(3) AMOUNT OF LIEN.—For purposes of para8 graph (1), the amount of the lien shall be equal to 

9 the aggregate unpaid balance of required install10 ments and other payments required under this sec11 tion (including interest)— 

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

13 and 

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

15 made before the due date. 

16 ‘‘(4) NOTICE OF FAILURE; LIEN.— 

17 ‘‘(A) NOTICE OF FAILURE.—A person 

18 committing a failure described in paragraph (1) 

19 shall notify the Pension Benefit Guaranty Cor20 poration of such failure within 10 days of the 

21 due date for the required installment or other 

22 payment. 

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

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

25 the required installment or other payment and 


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1 shall continue until the last day of the first plan 

2 year in which the plan ceases to be described in 

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

4 run without regard to whether such plan con5 tinues to be described in paragraph (2) during 

6 the period referred to in the preceding sentence. 

7 ‘‘(C) CERTAIN RULES TO APPLY.—Any 

8 amount with respect to which a lien is imposed 

9 under paragraph (1) shall be treated as taxes 

10 due and owing the United States and rules 

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

12 (e) of section 4068 of the Employee Retirement 

13 Income Security Act of 1974 shall apply with 

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

15 the amount with respect to such lien. 

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

17 paragraph (1) may be perfected and enforced only 

18 by the Pension Benefit Guaranty Corporation, or at 

19 the direction of the Pension Benefit Guaranty Cor20 poration, by the contributing sponsor (or any mem21 ber of the controlled group of the contributing spon22 sor). 

23 ‘‘(6) DEFINITIONS.—For purposes of this sub24 section— 


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1 ‘‘(A) DUE DATE; REQUIRED INSTALL2 MENT.—The terms ‘due date’ and ‘required in3 stallment’ have the meanings given such terms 

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

5 payment other than a required installment, the 

6 due date shall be the date such payment is re7 quired to be made under this section. 

8 ‘‘(B) CONTROLLED GROUP.—The term 

9 ‘controlled group’ means any group treated as 

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

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

12 ‘‘(h) CURRENT LIABILITY.—For purposes of this sec13 tion— 

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

15 means all liabilities to employees and their bene16 ficiaries under the plan. 

17 ‘‘(2) TREATMENT OF UNPREDICTABLE CONTIN18 GENT EVENT BENEFITS.— 

19 ‘‘(A) IN GENERAL.—For purposes of para20 graph (1), any unpredictable contingent event 

21 benefit shall not be taken into account until the 

22 event on which the benefit is contingent occurs. 

23 ‘‘(B) UNPREDICTABLE CONTINGENT

24 EVENT BENEFIT.—The term ‘unpredictable 


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1 contingent event benefit’ means any benefit 

2 contingent on an event other than— 

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

4 or disability, or 

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

6 reliably predictable (as determined by the 

7 Secretary). 

8 ‘‘(3) INTEREST RATE AND MORTALITY ASSUMP9 TIONS USED.— 

10 ‘‘(A) INTEREST RATE.—The rate of inter11 est used to determine current liability under 

12 this section shall be the third segment rate de13 termined under section 430(h)(2)(C). 

14 ‘‘(B) MORTALITY TABLES.— 

15 ‘‘(i) COMMISSIONERS’ STANDARD

16 TABLE.—In the case of plan years begin17 ning before the first plan year to which the 

18 first tables prescribed under clause (ii) 

19 apply, the mortality table used in deter20 mining current liability under this sub21 section shall be the table prescribed by the 

22 Secretary which is based on the prevailing 

23 commissioners’ standard table (described 

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


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1 reserves for group annuity contracts issued 

2 on January 1, 1993. 

3 ‘‘(ii) SECRETARIAL AUTHORITY.—The 

4 Secretary may by regulation prescribe for 

5 plan years beginning after December 31, 

6 1999, mortality tables to be used in deter7 mining current liability under this sub8 section. Such tables shall be based upon 

9 the actual experience of pension plans and 

10 projected trends in such experience. In pre11 scribing such tables, the Secretary shall 

12 take into account results of available inde13 pendent studies of mortality of individuals 

14 covered by pension plans. 

15 ‘‘(iii) PERIODIC REVIEW.—The Sec16 retary shall periodically (at least every 5 

17 years) review any tables in effect under 

18 this subsection and shall, to the extent the 

19 Secretary determines necessary, by regula20 tion update the tables to reflect the actual 

21 experience of pension plans and projected 

22 trends in such experience. 

23 ‘‘(C) SEPARATE MORTALITY TABLES FOR

24 THE DISABLED.—Notwithstanding subpara25 graph (B)— 


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1 ‘‘(i) IN GENERAL.—In the case of 

2 plan years beginning after December 31, 

3 1995, the Secretary shall establish mor4 tality tables which may be used (in lieu of 

5 the tables under subparagraph (B)) to de6 termine current liability under this sub7 section for individuals who are entitled to 

8 benefits under the plan on account of dis9 ability. The Secretary shall establish sepa10 rate tables for individuals whose disabil11 ities occur in plan years beginning before 

12 January 1, 1995, and for individuals 

13 whose disabilities occur in plan years be14 ginning on or after such date. 

15 ‘‘(ii) SPECIAL RULE FOR DISABILITIES

16 OCCURRING AFTER 1994.—In the case of 

17 disabilities occurring in plan years begin18 ning after December 31, 1994, the tables 

19 under clause (i) shall apply only with re20 spect to individuals described in such sub21 clause who are disabled within the meaning 

22 of title II of the Social Security Act and 

23 the regulations thereunder. 

24 ‘‘(4) CERTAIN SERVICE DISREGARDED.— 


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1 ‘‘(A) IN GENERAL.—In the case of a par2 ticipant to whom this paragraph applies, only 

3 the applicable percentage of the years of service 

4 before such individual became a participant 

5 shall be taken into account in computing the 

6 current liability of the plan. 

7 ‘‘(B) APPLICABLE PERCENTAGE.—For 

8 purposes of this subparagraph, the applicable 

9 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. 

10 ‘‘(C) PARTICIPANTS TO WHOM PARAGRAPH

11 APPLIES.—This subparagraph shall apply to 

12 any participant who, at the time of becoming a 

13 participant— 

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

15 under any defined benefit plan (whether or 

16 not terminated) maintained by the em17 ployer or a member of the same controlled 

18 group of which the employer is a member, 

19 ‘‘(ii) who first becomes a participant 

20 under the plan in a plan year beginning 

21 after December 31, 1987, and 


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

2 the minimum years of service necessary for 

3 eligibility to participate in the plan. 

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

5 not to have this subparagraph apply. Such an 

6 election, once made, may be revoked only with 

7 the consent of the Secretary. 

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

9 For purposes of this section, the term ‘funded current li10 ability percentage’ means, with respect to any plan year, 

11 the percentage which— 

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

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

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

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

16 rules as are necessary or appropriate with respect to the 

17 transition of a CSEC plan from the application of section 

18 430 to the application of this section.’’. 

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

20 Revenue Code of 1986 is amended by adding at the 

21 end thereof the following new subsection: 

22 ‘‘(d) CSEC PLANS.—Notwithstanding any other pro23 vision of this section, in the case of a CSEC plan— 


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

2 412 shall be determined as if all participants in the 

3 plan were employed by a single employer. 

4 ‘‘(2) APPLICATION OF PROVISIONS.—Para5 graphs (1), (2), (3), and (5) of subsection (c) shall 

6 apply.’’. 

7 (3) SEPARATE RULES FOR CSEC PLANS.— 

8 (A) IN GENERAL.—Paragraph (2) of sec9 tion 412(a) of the Internal Revenue Code of 

10 1986 is amended by striking ‘‘and’’ at the end 

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

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

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

14 following new subparagraph: 

15 ‘‘(D) in the case of a CSEC plan, the em16 ployers make contributions to or under the plan 

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

18 sufficient to ensure that the plan does not have 

19 an accumulated funding deficiency under sec20 tion 433 as of the end of the plan year.’’. 

21 (B) CONFORMING AMENDMENTS.—Section 

22 412 of the Internal Revenue Code of 1986 is 

23 amended by— 

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

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


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

2 first place it appears in clause (i) of sub3 section (c)(1)(A), and in the last place it 

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

5 and inserting ‘‘multiemployer plan or a 

6 CSEC plan’’, 

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

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

9 under 433(f)’’, 

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

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

12 (II) striking the period at the end of 

13 clause (ii) of subsection (c)(1)(B), and in14 serting ‘‘, and’’, and 

15 (III) inserting the following new 

16 clause after clause (ii) of subsection 

17 (c)(1)(B): 

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

19 funding standard account shall be credited 

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

21 amount of the waived funding deficiency 

22 and such amount shall be amortized as re23 quired under section 433(b)(2)(C).’’, 

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

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1 serting ‘‘under paragraph (1) or for grant2 ing an extension under section 433(d)’’, 

3 (v) striking ‘‘waiver under this sub4 section’’ in subparagraph (B) of subsection 

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

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

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

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

9 and inserting ‘‘waiver, modification, or ex10 tension’’, 

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

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

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

14 or extensions’’, 

15 (viii) striking ‘‘431(d)’’ in subpara16 graph (A) of subsection (c)(7) and in para17 graph (2) of subsection (d) and inserting 

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

19 (ix) striking ‘‘and’’ at the end of sub20 clause (I) of subsection (c)(4)(C)(i) and in21 serting ‘‘or the accumulated funding defi22 ciency under section 433, whichever is ap23 plicable,’’, 

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

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


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1 ‘‘430(e)(2) or 433(b)(2)(C), whichever is 

2 applicable, and’’, 

3 (xi) adding immediately after sub4 clause (II) of subsection (c)(4)(C)(i) the 

5 following new subclause: 

6 ‘‘(III) the total amounts not paid 

7 by reason of an extension in effect 

8 under section 433(d),’’, 

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

10 clause (ii) of subsection (c)(4)(C) and in11 serting ‘‘for waivers or extensions with re12 spect to’’, and 

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

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

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

16 (4) BENEFIT RESTRICTIONS.— 

17 (A) IN GENERAL.—Paragraph (29) of sec18 tion 401(a) of the Internal Revenue Code of 

19 1986 is amended by striking ‘‘multiemployer 

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

21 CSEC plan’’. 

22 (B) CONFORMING CHANGE.—Subsection 

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

24 of 1986 is amended by striking ‘‘single-emVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00082 Fmt 6652 Sfmt 6401 E:\BILLS\S1302.RS S1302

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1 ployer plan’’ and inserting ‘‘single-employer 

2 plan (other than a CSEC plan)’’. 

3 (C) EFFECTIVE DATE.—Any restriction 

4 under sections 401(a)(29) and 436 of the Inter5 nal Revenue Code of 1986 that is in effect with 

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

7 the last plan year beginning before January 1, 

8 2014, shall cease to apply as of the first day of 

9 the following plan year. 

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

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

12 of 1986 is amended by striking ‘‘multiemployer 

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

14 plans’’. 

15 SEC. 5. TRANSPARENCY. 

16 (a) NOTICE TO PARTICIPANTS.— 

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

18 101(f) of the Employee Retirement Income Security 

19 Act of 1974 (29 U.S.C. 1021(f)) is amended by add20 ing at the end the following new subparagraph: 

21 ‘‘(E) EFFECT OF CSEC PLAN RULES ON

22 PLAN FUNDING.— 

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

24 CSEC plan, each notice under paragraph 

25 (1) shall include— 


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1 ‘‘(I) a statement that different 

2 rules apply to CSEC plans than apply 

3 to single-employer plans, 

4 ‘‘(II) for the first 2 plan years 

5 beginning after December 31, 2013, a 

6 statement that, as a result of changes 

7 in the law made by the Cooperative 

8 and Small Employer Charity Pension 

9 Flexibility Act, the contributions to 

10 the plan may have changed, and 

11 ‘‘(III) for the first 2 plan years 

12 beginning after December 31, 2013, a 

13 statement that participants and par14 ticipating employers may request a 

15 table which shows (determined both 

16 with and without regard to such dif17 ferent rules) the required minimum 

18 contributions to the plan for the appli19 cable plan year and each of the 2 pre20 ceding plan years. 

21 ‘‘(ii) APPLICABLE PLAN YEAR.—For 

22 purposes of this subparagraph, the term 

23 ‘applicable plan year’ means any plan year 

24 beginning after December 31, 2013, for 

25 which— 


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1 ‘‘(I) the plan has a funding 

2 shortfall (as defined in section 

3 303(c)(4)) greater than $1,000,000, 

4 and 

5 ‘‘(II) the plan had 50 or more 

6 participants on any day during the 

7 preceding plan year. 

8 For purposes of any determination under 

9 subclause (II), the aggregation rule under 

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

11 shall apply. 

12 ‘‘(iii) SPECIAL RULE FOR PLAN YEARS

13 BEGINNING BEFORE 2014.—In the case of 

14 a preceding plan year referred to in clause 

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

16 2014, the information described in such 

17 clause shall be provided only without re18 gard to the different rules applicable to 

19 CSEC plans.’’. 

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

21 may modify the model notice required to be pub22 lished under section 501(c) of the Pension Protec23 tion Act of 2006 to include the information de24 scribed in section 101(f)(2)(E) of the Employee ReVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00085 Fmt 6652 Sfmt 6401 E:\BILLS\S1302.RS S1302

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1 tirement Income Security Act of 1974, as added by 

2 this subsection. 

3 (b) NOTICE OF FAILURE TO MEET MINIMUM FUND4 ING STANDARDS.— 

5 (1) PENDING WAIVERS.—Paragraph (2) of sec6 tion 101(d) of the Employee Retirement Income Se7 curity Act of 1974 (29 U.S.C. 1021(d)) is amended 

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

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

10 101(d) of the Employee Retirement Income Security 

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

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

13 whichever is applicable’’. 

14 (c) ADDITIONAL REPORTING REQUIREMENTS.—Sec15 tion 103 of the Employee Retirement Income Security Act 

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

17 end the following new subsection: 

18 ‘‘(g) ADDITIONAL INFORMATION WITH RESPECT TO

19 CSEC PLANS.—With respect to any CSEC plan, an an20 nual report under this section for a plan year shall include 

21 a list of participating employers and a good faith estimate 

22 of the percentage of total contributions made by such par23 ticipating employers during the plan year.’’. 


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1 SEC. 6. ELECTIONS. 

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

3 PLAN.— 

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

5 section 210 of the Employee Retirement Income Se6 curity Act of 1974, as added by section 3, is amend7 ed by adding at the end the following new para8 graph: 

9 ‘‘(3) ELECTION.— 

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

11 the definition of a CSEC plan under this sub12 section (without regard to this paragraph), such 

13 plan shall be a CSEC plan unless the plan 

14 sponsor elects not later than the close of the 

15 first plan year of the plan beginning after De16 cember 31, 2013, not to be treated as a CSEC 

17 plan. An election under the preceding sentence 

18 shall take effect for such plan year and, once 

19 made, may be revoked only with the consent of 

20 the Secretary of the Treasury. 

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

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

23 section 104 of the Pension Protection Act of 

24 2006, as amended by the Preservation of Ac25 cess to Care for Medicare Beneficiaries and 

26 Pension Relief Act of 2010, shall cease to apply 


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

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

3 (2) AMENDMENT TO THE CODE.—Section 

4 414(y) of the Internal Revenue Code of 1986, as 

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

6 the following new paragraph: 

7 ‘‘(3) ELECTION.— 

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

9 the definition of a CSEC plan under this sub10 section (without regard to this paragraph), such 

11 plan shall be a CSEC plan unless the plan 

12 sponsor elects not later than the close of the 

13 first plan year of the plan beginning after De14 cember 31, 2013, not to be treated as a CSEC 

15 plan. An election under the preceding sentence 

16 shall take effect for such plan year and, once 

17 made, may be revoked only with the consent of 

18 the Secretary. 

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

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

21 section 104 of the Pension Protection Act of 

22 2006, as amended by the Preservation of Ac23 cess to Care for Medicare Beneficiaries and 

24 Pension Relief Act of 2010, shall cease to apply 


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

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

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

4 ELIGIBLE CHARITY PLAN.— 

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

6 104 of the Pension Protection Act of 2006, as added 

7 by section 202 of the Preservation of Access to Care 

8 for Medicare Beneficiaries and Pension Relief Act of 

9 2010, is amended by— 

10 (A) striking ‘‘For purposes of’’ and insert11 ing ‘‘(1) IN GENERAL.—For purposes of’’, and 

12 (B) adding at the end the following: 

13 ‘‘(2) ELECTION NOT TO BE AN ELIGIBLE CHAR14 ITY PLAN.—A plan sponsor may elect for a plan to 

15 cease to be treated as an eligible charity plan for 

16 plan years beginning after December 31, 2013. Such 

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

18 and manner as shall be prescribed by the Secretary 

19 of the Treasury. Any such election may be revoked 

20 only with the consent of the Secretary of the Treas21 ury. 

22 ‘‘(3) ELECTION TO USE FUNDING OPTIONS

23 AVAILABLE TO OTHER PLAN SPONSORS.— 

24 ‘‘(A) A plan sponsor that makes the elec25 tion described in paragraph (2) may elect for a 


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1 plan to apply the rules described in subpara2 graphs (B), (C), and (D) for plan years begin3 ning after December 31, 2013. Such election 

4 shall be made at such time and in such form 

5 and manner as shall be prescribed by the Sec6 retary of the Treasury. Any such election may 

7 be revoked only with the consent of the Sec8 retary of the Treasury. 

9 ‘‘(B) Under the rules described in this sub10 paragraph, for the first plan year beginning 

11 after December 31, 2013, a plan has— 

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

13 base, 

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

15 base, and 

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

17 base. 

18 ‘‘(C) Under the rules described in this sub19 paragraph, section 303(c)(2)(A) and (B) of the 

20 Employee Retirement Income Security Act of 

21 1974, and section 430(c)(2)(A) and (B) of the 

22 Internal Revenue Code of 1986 shall be applied 

23 by— 

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

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1 year period’ for ‘7-plan-year period’ wher2 ever such phrase appears, and 

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

4 amortization base, substituting ‘12-plan5 year period’ for ‘7-plan-year period’ wher6 ever such phrase appears. 

7 ‘‘(D) Under the rules described in this sub8 paragraph, section 303(c)(7) of the Employee 

9 Retirement Income Security Act of 1974, and 

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

11 of 1986 shall apply to a plan for which an elec12 tion has been made under subparagraph (A). 

13 Such provisions shall apply in the following 

14 manner: 

15 ‘‘(i) The first plan year beginning 

16 after December 31, 2013, shall be treated 

17 as an election year, and no other plan 

18 years shall be so treated. 

19 ‘‘(ii) All references in section 

20 303(c)(7) of such Act and section 

21 430(c)(7) of such Code to ‘February 28, 

22 2010’ or ‘March 1, 2010’ shall be treated 

23 as references to ‘February 28, 2013’ or 

24 ‘March 1, 2013’, respectively. 


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

2 11-year amortization base is an amount, deter3 mined for the first plan year beginning after 

4 December 31, 2013, equal to the unamortized 

5 principal amount of the shortfall amortization 

6 base (as defined in section 303(c)(3) of the Em7 ployee Retirement Income Security Act of 1974 

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

9 Code of 1986) that would have applied to the 

10 plan for the first plan beginning after Decem11 ber 31, 2009, if— 

12 ‘‘(i) the plan had never been an eligi13 ble charity plan, 

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

15 election described in section 

16 303(c)(2)(D)(i) of the Employee Retire17 ment Income Security Act of 1974 and in 

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

19 Revenue Code of 1986 to have section 

20 303(c)(2)(D)(i) of such Act and section 

21 430(c)(2)(D)(iii) of such Code apply with 

22 respect to the shortfall amortization base 

23 for the first plan year beginning after De24 cember 31, 2009, and 


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1 ‘‘(iii) no event had occurred under 

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

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

4 430(c) of such Code that, as of the first 

5 day of the first plan year beginning after 

6 December 31, 2013, would have modified 

7 the shortfall amortization base or the 

8 shortfall amortization installments with re9 spect to the first plan year beginning after 

10 December 31, 2009. 

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

12 12-year amortization base is an amount, deter13 mined for the first plan year beginning after 

14 December 31, 2013, equal to the unamortized 

15 principal amount of the shortfall amortization 

16 base (as defined in section 303(c)(3) of the Em17 ployee Retirement Income Security Act of 1974 

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

19 Code of 1986) that would have applied to the 

20 plan for the first plan beginning after Decem21 ber 31, 2010, if— 

22 ‘‘(i) the plan had never been an eligi23 ble charity plan, 

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

25 election described in section 


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1 303(c)(2)(D)(i) of the Employee Retire2 ment Income Security Act of 1974 and in 

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

4 Revenue Code of 1986 to have section 

5 303(c)(2)(D)(i) of such Act and section 

6 430(c)(2)(D)(iii) of such Code apply with 

7 respect to the shortfall amortization base 

8 for the first plan year beginning after De9 cember 31, 2010, and 

10 ‘‘(iii) no event had occurred under 

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

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

13 430(c) of such Code that, as of the first 

14 day of the first plan year beginning after 

15 December 31, 2013, would have modified 

16 the shortfall amortization base or the 

17 shortfall amortization installments with re18 spect to the first plan year beginning after 

19 December 31, 2010. 

20 ‘‘(G) For purposes of this paragraph, the 

21 7-year shortfall amortization base is an amount, 

22 determined for the first plan year beginning 

23 after December 31, 2013, equal to— 

24 ‘‘(i) the shortfall amortization base for 

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1 ber 31, 2013, without regard to this para2 graph, minus 

3 ‘‘(ii) the sum of the 11-year shortfall 

4 amortization base and the 12-year shortfall 

5 amortization base.’’. 

6 (c) DEEMED ELECTION.—For purposes of sections 

7 4(b)(2) and 4021(b)(3) of the Employee Retirement In8 come Security Act of 1974, and for all other purposes, 

9 a plan shall be deemed to have made an irrevocable elec10 tion under section 410(d) of the Internal Revenue Code 

11 of 1986 if— 

12 (1) the plan was established before January 1, 

13 2014; 

14 (2) the plan falls within the definition of a 

15 CSEC plan; 

16 (3) the plan sponsor does not make an election 

17 under section 210(f)(3)(B)(i) of the Employee Re18 tirement Income Security Act of 1974 and section 

19 414(y)(3)(B)(i) of the Internal Revenue Code of 

20 1986, as added by this Act; and 

21 (4) the plan, plan sponsor, administrator, or fi22 duciary remits one or more premium payments for 

23 the plan to the Pension Benefit Guaranty Corpora24 tion for a plan year beginning after December 31, 

25 2013. 


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

2 this section shall apply as of the date of enactment of this 

3 Act. 

4 SEC. 7. PENSION INSURANCE PROGRAM MODIFICATIONS. 

5 (a) FLAT-RATE PREMIUM.—Subparagraph (A) of 

6 section 4006(a)(3) of the Employee Retirement Income 

7 Security Act of 1974 (29 U.S.C. 1306(a)(3)) is amend8 ed— 

9 (1) in clause (i)— 

10 (A) by striking ‘‘in the case of a single-em11 ployer plan’’ and inserting ‘‘except as provided 

12 in clause (vi), in the case of a single-employer 

13 plan’’; and 

14 (B) in subclause (III), by striking the pe15 riod and inserting a comma; 

16 (2) in clause (iv), by striking ‘‘or’’ at the end; 

17 (3) in clause (v), by striking the period at the 

18 end and inserting ‘‘, or’’; and 

19 (4) by adding at the end thereof the following 

20 new clause: 

21 ‘‘(vi) in the case of a CSEC plan (as 

22 defined in section 210(f)), an amount for 

23 each individual who is a participant in 

24 such plan during the plan year equal to the 

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1 scribed under subparagraph (K) and 

2 $42.’’. 

3 (b) VARIABLE-RATE PREMIUM.—Paragraph (3) of 

4 section 4006(a) of such Act (29 U.S.C. 1306(a)) is 

5 amended by adding at the end the following: 

6 ‘‘(K)(i) The additional premium deter7 mined under this subparagraph with respect to 

8 any plan for any plan year— 

9 ‘‘(I) shall be an amount equal to the 

10 amount determined under clause (ii) di11 vided by the number of participants in 

12 such plan as of the close of the preceding 

13 year; and 

14 ‘‘(II) in the case of plan years begin15 ning in a calendar year after 2013, shall 

16 not exceed the dollar amount described in 

17 subparagraph (E)(i)(II) (without the appli18 cation of subparagraph (J)). 

19 ‘‘(ii) The amount determined under this 

20 clause for any plan shall be an amount equal to 

21 $9.00 for each $1,000 (or fraction thereof) of 

22 unfunded vested benefits under the plan as of 

23 the close of the preceding plan year. For this 

24 purpose, the term ‘unfunded vested benefits’ 


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1 shall have the meaning given such term under 

2 clauses (iii) and (iv) of subparagraph (E).’’. 

3 (c) STUDY OF CSEC PLANS.— 

4 (1) IN GENERAL.—The Pension Benefit Guar5 anty Corporation shall conduct a study to determine 

6 if there is empirical evidence to support modifying 

7 the premium structure under section 4006(a)(3) of 

8 the Employee Retirement Income Security Act of 

9 1974 (29 U.S.C. 1306(a)(3)(A)) for CSEC plans. 

10 (2) DATA.—The study under paragraph (1) 

11 shall include data with respect to— 

12 (A) the portion of the Pension Benefit 

13 Guaranty Corporation’s total liabilities that are 

14 attributable to CSEC plans; 

15 (B) the ratio of such portion to the total 

16 of the funding targets of CSEC plans; and 

17 (C) with respect to single-employer plans 

18 other than CSEC plans, the ratio of— 

19 (i) the portion of the Pension Benefit 

20 Guaranty Corporation’s total liabilities 

21 that are attributable to such plans, to 

22 (ii) the total of the funding targets of 

23 such plans. 

24 (3) ESTIMATES.—In carrying out paragraph 

25 (2), the Pension Benefit Guaranty Corporation shall 


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1 make such reasonable estimates as are necessary or 

2 appropriate in providing the data described in such 

3 paragraph. 

4 (4) REPORT.—The Pension Benefit Guaranty 

5 Corporation shall report the results of the study con6 ducted under paragraph (1), together with any rec7 ommendations for legislative changes, to the Com8 mittee on Health, Education, Labor, and Pensions 

9 of the Senate and the Committee on Education and 

10 the Workforce of the House of Representatives. 

11 (5) PARTICIPANT AND PLAN SPONSOR ADVO12 CATE.—The report described in paragraph (4) shall 

13 include a section prepared by the Participant and 

14 Plan Sponsor Advocate of the Pension Benefit Guar15 anty Corporation that includes a statement setting 

16 forth the position of such Participant and Plan 

17 Sponsor Advocate on the process underlying the 

18 study and the conclusions set forth in the report. 

19 (6) DEFINITIONS.—In this section— 

20 (A) the term ‘‘CSEC plan’’ has the mean21 ing given such term in section 210 of the Em22 ployee Retirement Income Security Act of 1974 

23 (as added by section 3); and 


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1 (B) the term ‘‘funding target’’ has the 

2 meaning given that term in section 303(d)(1) of 

3 such Act (29 U.S.C. 1083(d)(1)). 

4 SEC. 8. SPONSOR EDUCATION AND ASSISTANCE. 

5 (a) DEFINITION.—In this section, the term ‘‘CSEC 

6 plan’’ has the meaning given that term in subsection (f)(1) 

7 of section 210 of the Employee Retirement Income Secu8 rity Act of 1974 (as added by this Act). 

9 (b) EDUCATION.—Not later than 6 months after the 

10 date of the enactment of this Act, the Pension Benefit 

11 Guaranty Corporation shall take reasonable steps to make 

12 the sponsors of existing CSEC plans aware of— 

13 (1) the changes to the Employee Retirement In14 come Security Act of 1974 made by this Act; and 

15 (2) the help and assistance available through 

16 the Participant and Plan Sponsor Advocate estab17 lished under section 4004 of such Act (29 U.S.C. 

18 1304). 

19 SEC. 9. EFFECTIVE DATE. 

20 Unless otherwise specified in this Act, the provisions 

21 of this Act shall apply to years beginning after December 

22 31, 2013. 


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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the ‘‘Co3 operative and Small Employer Charity Pension Flexibility 

4 Act’’. 

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

6 Act is as follows: 

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. Sponsor education and assistance. 

Sec. 8. Effective date. 

7 SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATIONS OF 

8 POLICY. 

9 Congress finds as follows: 

10 (1) Defined benefit pension plans are a cost-effec11 tive way for cooperative associations and charities to 

12 provide their employees with economic security in re13 tirement. 

14 (2) Many cooperative associations and charitable 

15 organizations are only able to provide their employees 

16 with defined benefit pension plans because those orga17 nizations are able to pool their resources using the 

18 multiple employer plan structure. 

19 (3) The pension funding rules should encourage 

20 cooperative associations and charities to continue to 

21 provide their employees with pension benefits. 


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1 SEC. 3. DEFINITION OF COOPERATIVE AND SMALL EM2 PLOYER CHARITY PENSION PLANS. 

3 (a) AMENDMENT TO ERISA.—Section 210 of the Em4 ployee Retirement Income Security Act of 1974 (29 U.S.C. 

5 1060) is amended by adding at the end the following new 

6 subsection: 

7 ‘‘(f) COOPERATIVE AND SMALL EMPLOYER CHARITY

8 PENSION PLANS.— 

9 ‘‘(1) IN GENERAL.—For purposes of this title, ex10 cept as provided in this subsection, a CSEC plan is 

11 an employee pension benefit plan (other than a multi12 employer plan) that is a defined benefit plan— 

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

14 Protection Act of 2006 applies, without regard 

15 to— 

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

17 ‘‘(ii) the amendments to such section 

18 104 by section 202(b) of the Preservation of 

19 Access to Care for Medicare Beneficiaries 

20 and Pension Relief Act of 2010; and 

21 ‘‘(iii) paragraph (3)(B); or 

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

23 maintained by more than one employer and all 

24 of the employers were organizations described in 

25 section 501(c)(3) of the Internal Revenue Code of 

26 1986. 


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

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

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

4 1986 shall be treated as a single employer for pur5 poses of determining if a plan was maintained by 

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

7 (b) AMENDMENT TO CODE.—Section 414 of the Inter8 nal Revenue Code of 1986 is amended by adding at the end 

9 the following new subsection: 

10 ‘‘(y) COOPERATIVE AND SMALL EMPLOYER CHARITY

11 PENSION PLANS.— 

12 ‘‘(1) IN GENERAL.—For purposes of this title, ex13 cept as provided in this subsection, a CSEC plan is 

14 a defined benefit plan (other than a multiemployer 

15 plan)— 

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

17 Protection Act of 2006 applies, without regard 

18 to— 

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

20 ‘‘(ii) the amendments to such section 

21 104 by section 202(b) of the Preservation of 

22 Access to Care for Medicare Beneficiaries 

23 and Pension Relief Act of 2010; and 

24 ‘‘(iii) paragraph (3)(B); or 


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

2 maintained by more than one employer and all 

3 of the employers were organizations described in 

4 section 501(c)(3). 

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

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

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

8 of determining if a plan was maintained by more 

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

10 SEC. 4. FUNDING RULES APPLICABLE TO COOPERATIVE 

11 AND SMALL EMPLOYER CHARITY PENSION 

12 PLANS. 

13 (a) AMENDMENTS TO ERISA.— 

14 (1) MINIMUM FUNDING STANDARDS UNDER

15 ERISA.—Part 3 of title I of the Employee Retirement 

16 Income Security Act of 1974 (29 U.S.C. 1081 et seq.) 

17 is amended by adding at the end the following new 

18 section: 

19 ‘‘SEC. 306. MINIMUM FUNDING STANDARDS. 

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

21 the term ‘accumulated funding deficiency’ for a CSEC plan 

22 means the excess of the total charges to the funding standard 

23 account for all plan years (beginning with the first plan 

24 year to which section 302 applies) over the total credits to 

25 such account for such years or, if less, the excess of the total 


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1 charges to the alternative minimum funding standard ac2 count for such plan years over the total credits to such ac3 count for such years. 

4 ‘‘(b) FUNDING STANDARD ACCOUNT.— 

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

6 this section applies shall establish and maintain a 

7 funding standard account. Such account shall be cred8 ited and charged solely as provided in this section. 

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 

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1 funded past service liability under the plan 

2 on the first day of the first plan year to 

3 which section 302 applies, over a period of 

4 30 plan years, 

5 ‘‘(iii) in the case of a plan that is sub6 ject to section 303 for the last plan year be7 ginning before January 1, 2014, the sum 

8 of— 

9 ‘‘(I) the plan’s funding standard 

10 carryover balance and prefunding bal11 ance (as such terms are defined in sec12 tion 303(f)) as of the end of such plan 

13 year, and 

14 ‘‘(II) the unfunded past service li15 ability under the plan for the first 

16 plan year beginning after December 

17 31, 2013, 

18 over a period of 15 years, 

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

20 plan year, the net increase (if any) in un21 funded past service liability under the plan 

22 arising from plan amendments adopted in 

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

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

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


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1 under the plan, over a period of 5 plan 

2 years, and 

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

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

5 from changes in actuarial assumptions used 

6 under the plan, over a period of 10 plan 

7 years, 

8 ‘‘(C) the amount necessary to amortize each 

9 waived funding deficiency (within the meaning 

10 of section 302(c)(3)) for each prior plan year in 

11 equal annual installments (until fully amor12 tized) over a period of 5 plan years, 

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

14 equal annual installments (until fully amor15 tized) over a period of 5 plan years any amount 

16 credited to the funding standard account under 

17 paragraph (3)(D), and 

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

19 equal annual installments (until fully amor20 tized) over a period of 20 years the contributions 

21 which would be required to be made under the 

22 plan but for the provisions of section 

23 302(c)(7)(A)(i)(I) (as in effect on the day before 

24 the enactment of the Pension Protection Act of 

25 2006). 


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

2 the funding standard account shall be credited with 

3 the sum of— 

4 ‘‘(A) the amount considered contributed by 

5 the employer to or under the plan for the plan 

6 year, 

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

8 equal annual installments (until fully amor9 tized)— 

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

11 plan year, the net decrease (if any) in un12 funded past service liability under the plan 

13 arising from plan amendments adopted in 

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

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

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

17 under the plan, over a period of 5 plan 

18 years, and 

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

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

21 from changes in actuarial assumptions used 

22 under the plan, over a period of 10 plan 

23 years, 


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1 ‘‘(C) the amount of the waived funding defi2 ciency (within the meaning of section 302(c)(3)) 

3 for the plan year, 

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

5 the accumulated funding deficiency is deter6 mined under the funding standard account if 

7 such plan year follows a plan year for which 

8 such deficiency was determined under the alter9 native minimum funding standard, the excess (if 

10 any) of any debit balance in the funding stand11 ard account (determined without regard to this 

12 subparagraph) over any debit balance in the al13 ternative minimum funding standard account, 

14 and 

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

16 December 31, 2013, in the case of a plan that is 

17 subject to section 303 for the last plan year be18 ginning before January 1, 2014, the sum of the 

19 plan’s funding standard carryover balance and 

20 prefunding balance (as such terms are defined in 

21 section 302(f)) as of the end of the last plan year 

22 beginning before January 1, 2014. 

23 ‘‘(4) COMBINING AND OFFSETTING AMOUNTS TO

24 BE AMORTIZED.—Under regulations prescribed by the 

25 Secretary of the Treasury, amounts required to be 


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1 amortized under paragraph (2) or paragraph (3), as 

2 the case may be— 

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

4 under such paragraph to be amortized over a pe5 riod determined on the basis of the remaining 

6 amortization period for all items entering into 

7 such combined amount, and 

8 ‘‘(B) may be offset against amounts re9 quired to be amortized under the other such 

10 paragraph, with the resulting amount to be am11 ortized over a period determined on the basis of 

12 the remaining amortization periods for all items 

13 entering into whichever of the two amounts being 

14 offset is the greater. 

15 ‘‘(5) INTEREST.— 

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

17 subparagraph (B), the funding standard account 

18 (and items therein) shall be charged or credited 

19 (as determined under regulations prescribed by 

20 the Secretary of the Treasury) with interest at 

21 the appropriate rate consistent with the rate or 

22 rates of interest used under the plan to determine 

23 costs. 

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

25 for purposes of computing the amortization 


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

2 purposes of any arrangement under subsection 

3 (d) for any plan year shall be the greater of (i) 

4 150 percent of the Federal mid-term rate (as in 

5 effect under section 1274 of the Internal Revenue 

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

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

8 under subparagraph (A). 

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

10 Amortization schedules for amounts described in 

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

12 day of the last plan year beginning before January 

13 1, 2014, by reason of section 104 of the Pension Pro14 tection Act of 2006 shall remain in effect pursuant to 

15 their terms and this section, except that such amounts 

16 shall not be amortized again under this section. In 

17 the case of a plan that is subject to section 303 for 

18 the last plan year beginning before January 1, 2014, 

19 any amortization schedules and bases for plan years 

20 beginning before such date shall be reduced to zero. 

21 ‘‘(c) SPECIAL RULES.— 

22 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

23 FUNDING METHOD.—For purposes of this section, nor24 mal costs, accrued liability, past service liabilities, 

25 and experience gains and losses shall be determined 


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1 under the funding method used to determine costs 

2 under the plan. 

3 ‘‘(2) VALUATION OF ASSETS.— 

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

5 section, the value of the plan’s assets shall be de6 termined on the basis of any reasonable actu7 arial method of valuation which takes into ac8 count fair market value and which is permitted 

9 under regulations prescribed by the Secretary of 

10 the Treasury. 

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

12 Secretary of the Treasury may by regulations 

13 provide that the value of any dedicated bond 

14 portfolio of a plan shall be determined by using 

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

16 effect on the day before the enactment of the Pen17 sion Protection Act of 2006). 

18 ‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA19 SONABLE.—For purposes of this section, all costs, li20 abilities, rates of interest, and other factors under the 

21 plan shall be determined on the basis of actuarial as22 sumptions and methods— 

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

24 into account the experience of the plan and rea25 sonable expectations) or which, in the aggregate, 


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1 result in a total contribution equivalent to that 

2 which would be determined if each such assump3 tion and method were reasonable, and 

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

6 under the plan. 

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

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

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

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

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

16 such wages taken into account under regulations 

17 prescribed for purposes of section 401(a)(5) of 

18 such Code, 

19 results in an increase or decrease in accrued liability 

20 under a plan, such increase or decrease shall be treat21 ed as an experience loss or gain. 

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

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

24 funding methods available to CSEC plans under 

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1 actment of the Pension Protection Act of 2006) 

2 shall continue to be available under this section. 

3 ‘‘(B) NOT AFFECTED BY CESSATION OF BEN4 EFIT ACCRUALS.—The availability of any fund5 ing method, including all spread gain funding 

6 methods, shall not be affected by whether benefit 

7 accruals under a plan have ceased. Except as 

8 otherwise provided in subparagraph (C) or in 

9 regulations prescribed by the Secretary of the 

10 Treasury, if benefit accruals have ceased under a 

11 plan, the spread gain funding methods may be 

12 applied by amortizing over the average expected 

13 future lives of all participants. 

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

15 plan amortizing over the average expected future 

16 lives of all participants pursuant to the second 

17 sentence of subparagraph (B), such amortization 

18 amount for any plan year shall not be less than 

19 the sum of— 

20 ‘‘(i) the amount determined by amor21 tizing, as of the first year for which the 

22 plan amortizes over the average future lives 

23 of all participants, the entire unfunded past 

24 service liability in equal installments over 

25 15 years, and 


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1 ‘‘(ii) the amount determined by amor2 tizing any increase or decrease in such un3 funded past service liability in any subse4 quent year, other than an increase or de5 crease attributable to contributions or ex6 pected experience, in equal installments over 

7 15 years. 

8 ‘‘(D) CHANGES.—If the funding method for 

9 a plan is changed, the new funding method shall 

10 become the funding method used to determine 

11 costs and liabilities under the plan only if the 

12 change is approved by the Secretary of the 

13 Treasury. The preceding sentence shall not apply 

14 to any change made pursuant to, or permitted 

15 by, the second sentence of subparagraph (B) if 

16 such change is made for the first plan year be17 ginning after December 31, 2013. Any such 

18 change may be made without the approval of the 

19 Secretary of the Treasury. If the plan year for 

20 a plan is changed, the new plan year shall be21 come the plan year for the plan only if the 

22 change is approved by the Secretary of the 

23 Treasury. 

24 ‘‘(E) APPROVAL REQUIRED FOR CERTAIN

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1 EMPLOYER PLANS SUBJECT TO ADDITIONAL

2 FUNDING REQUIREMENT.— 

3 ‘‘(i) IN GENERAL.—No actuarial as4 sumption (other than the assumptions de5 scribed in subsection (h)(3)) used to deter6 mine the current liability for a plan to 

7 which this subparagraph applies may be 

8 changed without the approval of the Sec9 retary. 

10 ‘‘(ii) PLANS TO WHICH SUBPARAGRAPH

11 APPLIES.—This subparagraph shall apply 

12 to a plan only if— 

13 ‘‘(I) the plan is a CSEC plan, 

14 ‘‘(II) the aggregate unfunded vest15 ed benefits as of the close of the pre16 ceding plan year (as determined under 

17 section 4006(a)(3)(E)(iii)) of such plan 

18 and all other plans maintained by the 

19 contributing sponsors (as defined in 

20 section 4001(a)(13)) and members of 

21 such sponsors’ controlled groups (as de22 fined in section 4001(a)(14)) which are 

23 covered by title IV (disregarding plans 

24 with no unfunded vested benefits) ex25 ceed $50,000,000, and 


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1 ‘‘(III) the change in assumptions 

2 (determined after taking into account 

3 any changes in interest rate and mor4 tality table) results in a decrease in the 

5 funding shortfall of the plan for the 

6 current plan year that exceeds 

7 $50,000,000, or that exceeds $5,000,000 

8 and that is 5 percent or more of the 

9 current liability of the plan before such 

10 change. 

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

12 plan year, a plan would (without regard to this para13 graph) have an accumulated funding deficiency (de14 termined without regard to the alternative minimum 

15 funding standard account permitted under subsection 

16 (e)) in excess of the full funding limitation— 

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

18 credited with the amount of such excess, and 

19 ‘‘(B) all amounts described in paragraphs 

20 (2)(B), (C), and (D) and (3)(B) of subsection (b) 

21 which are required to be amortized shall be con22 sidered fully amortized for purposes of such 

23 paragraphs. 


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1 ‘‘(7) FULL-FUNDING LIMITATION.—For purposes 

2 of paragraph (6), the term ‘full-funding limitation’ 

3 means the excess (if any) of— 

4 ‘‘(A) the accrued liability (including nor5 mal cost) under the plan (determined under the 

6 entry age normal funding method if such accrued 

7 liability cannot be directly calculated under the 

8 funding method used for the plan), over 

9 ‘‘(B) the lesser of— 

10 ‘‘(i) the fair market value of the plan’s 

11 assets, or 

12 ‘‘(ii) the value of such assets deter13 mined under paragraph (2). 

14 ‘‘(C) MINIMUM AMOUNT.— 

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

16 the full-funding limitation determined 

17 under subparagraph (A) be less than the ex18 cess (if any) of— 

19 ‘‘(I) 90 percent of the current li20 ability (determined without regard to 

21 paragraph (4) of subsection (h)) of the 

22 plan (including the expected increase 

23 in such current liability due to benefits 

24 accruing during the plan year), over 


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1 ‘‘(II) the value of the plan’s assets 

2 determined under paragraph (2). 

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

4 (i), assets shall not be reduced by any credit 

5 balance in the funding standard account. 

6 ‘‘(8) ANNUAL VALUATION.— 

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

8 section, a determination of experience gains and 

9 losses and a valuation of the plan’s liability 

10 shall be made not less frequently than once every 

11 year, except that such determination shall be 

12 made more frequently to the extent required in 

13 particular cases under regulations prescribed by 

14 the Secretary of the Treasury. 

15 ‘‘(B) VALUATION DATE.— 

16 ‘‘(i) CURRENT YEAR.—Except as pro17 vided in clause (ii), the valuation referred 

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

19 a date within the plan year to which the 

20 valuation refers or within one month prior 

21 to the beginning of such year. 

22 ‘‘(ii) USE OF PRIOR YEAR VALU23 ATION.—The valuation referred to in sub24 paragraph (A) may be made as of a date 

25 within the plan year prior to the year to 


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1 which the valuation refers if, as of such 

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

3 not less than 100 percent of the plan’s cur4 rent liability. 

5 ‘‘(iii) ADJUSTMENTS.—Information 

6 under clause (ii) shall, in accordance with 

7 regulations, be actuarially adjusted to re8 flect significant differences in participants. 

9 ‘‘(iv) LIMITATION.—A change in fund10 ing method to use a prior year valuation, 

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

12 unless as of the valuation date within the 

13 prior plan year, the value of the assets of 

14 the plan are not less than 125 percent of the 

15 plan’s current liability. 

16 ‘‘(9) TIME WHEN CERTAIN CONTRIBUTIONS

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

18 contributions for a plan year made by an employer 

19 during the period— 

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

21 of such plan year, and 

‘‘(B) ending on the day which is 81 22 ⁄2

23 months after the close of the plan year, 

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


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1 ‘‘(10) ANTICIPATION OF BENEFIT INCREASES EF2 FECTIVE IN THE FUTURE.—In determining projected 

3 benefits, the funding method of a collectively bar4 gained CSEC plan described in section 413(a) of the 

5 Internal Revenue Code of 1986 (other than a multi6 employer plan) shall anticipate benefit increases 

7 scheduled to take effect during the term of the collec8 tive bargaining agreement applicable to the plan. 

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

10 period of years required to amortize any unfunded liability 

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

12 plan may be extended by the Secretary for a period of time 

13 (not in excess of 10 years) if such Secretary determines that 

14 such extension would carry out the purposes of this Act and 

15 provide adequate protection for participants under the plan 

16 and their beneficiaries, and if such Secretary determines 

17 that the failure to permit such extension would result in— 

18 ‘‘(1) a substantial risk to the voluntary continu19 ation of the plan, or 

20 ‘‘(2) a substantial curtailment of pension benefit 

21 levels or employee compensation. 

22 ‘‘(e) ALTERNATIVE MINIMUM FUNDING STANDARD.— 

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

24 funding method that requires contributions in all 

25 years not less than those required under the entry age 


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1 normal funding method may maintain an alternative 

2 minimum funding standard account for any plan 

3 year. Such account shall be credited and charged sole4 ly as provided in this subsection. 

5 ‘‘(2) CHARGES AND CREDITS TO ACCOUNT.—For 

6 a plan year the alternative minimum funding stand7 ard account shall be— 

8 ‘‘(A) charged with the sum of— 

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

10 funding method used under the plan or nor11 mal cost determined under the unit credit 

12 method, 

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

14 value of accrued benefits under the plan 

15 over the fair market value of the assets, and 

16 ‘‘(iii) an amount equal to the excess (if 

17 any) of credits to the alternative minimum 

18 standard account for all prior plan years 

19 over charges to such account for all such 

20 years, and 

21 ‘‘(B) credited with the amount considered 

22 contributed by the employer to or under the plan 

23 for the plan year. 

24 ‘‘(3) SPECIAL RULES.—The alternative min25 imum funding standard account (and items therein) 


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1 shall be charged or credited with interest in the man2 ner provided under subsection (b)(5) with respect to 

3 the funding standard account. 

4 ‘‘(f) QUARTERLY CONTRIBUTIONS REQUIRED.— 

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

6 a funded current liability percentage for the preceding 

7 plan year of less than 100 percent fails to pay the full 

8 amount of a required installment for the plan year, 

9 then the rate of interest charged to the funding stand10 ard account under subsection (b)(5) with respect to 

11 the amount of the underpayment for the period of the 

12 underpayment shall be equal to the greater of— 

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

14 rate (as in effect under section 1274 of the Inter15 nal Revenue Code of 1986 for the 1st month of 

16 such plan year), or 

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

18 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 


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1 ‘‘(ii) the amount (if any) of the install2 ment contributed to or under the plan on or 

3 before the due date for the installment. 

4 ‘‘(B) PERIOD OF UNDERPAYMENT.—The pe5 riod for which interest is charged under this sub6 section with regard to any portion of the under7 payment shall run from the due date for the in8 stallment to the date on which such portion is 

9 contributed to or under the plan (determined 

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

11 ‘‘(C) ORDER OF CREDITING CONTRIBU12 TIONS.—For purposes of subparagraph (A)(ii), 

13 contributions shall be credited against unpaid 

14 required installments in the order in which such 

15 installments are required to be paid. 

16 ‘‘(3) NUMBER OF REQUIRED INSTALLMENTS; DUE

17 DATES.—For purposes of this subsection— 

18 ‘‘(A) PAYABLE IN 4 INSTALLMENTS.—There 

19 shall be 4 required installments for each plan 

20 year. 

21 ‘‘(B) TIME FOR PAYMENT OF INSTALL22 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.—For 

2 purposes of this subsection— 

3 ‘‘(A) IN GENERAL.—The amount of any re4 quired installment shall be 25 percent of the re5 quired annual payment. 

6 ‘‘(B) REQUIRED ANNUAL PAYMENT.—For 

7 purposes of subparagraph (A), the term ‘required 

8 annual payment’ means the lesser of— 

9 ‘‘(i) 90 percent of the amount required 

10 to be contributed to or under the plan by 

11 the employer for the plan year under section 

12 302 (without regard to any waiver under 

13 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 shortVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00125 Fmt 6652 Sfmt 6203 E:\BILLS\S1302.RS S1302

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1 fall exceeds the amount of such installment re2 quired to be paid but for this paragraph). 

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(d)(6)(A) (as in effect on the day before the 

7 enactment of the Pension Protection Act of 2006) 

8 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 in15 stallment that is treated as not paid under sub16 paragraph (A) shall continue to be treated as 

17 unpaid until the close of the quarter in which the 

18 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 shall 

22 such increase exceed the amount which, when 

23 added to prior installments for the plan year, is 

24 necessary to increase the funded current liability 

25 percentage (taking into account the expected inVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00126 Fmt 6652 Sfmt 6203 E:\BILLS\S1302.RS S1302

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1 crease in current liability due to benefits accru2 ing during the plan year) to 100 percent. 

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

4 paragraph: 

5 ‘‘(i) LIQUIDITY SHORTFALL.—The term 

6 ‘liquidity shortfall’ means, with respect to 

7 any required installment, an amount equal 

8 to the excess (as of the last day of the quar9 ter for which such installment is made) of 

10 the base amount with respect to such quar11 ter over the value (as of such last day) of 

12 the plan’s liquid assets. 

13 ‘‘(ii) BASE AMOUNT.— 

14 ‘‘(I) IN GENERAL.—The term ‘base 

15 amount’ means, with respect to any 

16 quarter, an amount equal to 3 times 

17 the sum of the adjusted disbursements 

18 from the plan for the 12 months ending 

19 on the last day of such quarter. 

20 ‘‘(II) SPECIAL RULE.—If the 

21 amount determined under subclause (I) 

22 exceeds an amount equal to 2 times the 

23 sum of the adjusted disbursements from 

24 the plan for the 36 months ending on 

25 the last day of the quarter and an enVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00127 Fmt 6652 Sfmt 6203 E:\BILLS\S1302.RS S1302

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1 rolled actuary certifies to the satisfac2 tion of the Secretary of the Treasury 

3 that such excess is the result of non4 recurring circumstances, the base 

5 amount with respect to such quarter 

6 shall be determined without regard to 

7 amounts related to those nonrecurring 

8 circumstances. 

9 ‘‘(iii) DISBURSEMENTS FROM THE

10 PLAN.—The term ‘disbursements from the 

11 plan’ means all disbursements from the 

12 trust, including purchases of annuities, 

13 payments of single sums and other benefits, 

14 and administrative expenses. 

15 ‘‘(iv) ADJUSTED DISBURSEMENTS.— 

16 The term ‘adjusted disbursements’ means 

17 disbursements from the plan reduced by the 

18 product of— 

19 ‘‘(I) the plan’s funded current li20 ability percentage for the plan year, 

21 and 

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

23 annuities, payments of single sums, 

24 and such other disbursements as the 


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1 Secretary of the Treasury shall provide 

2 in regulations. 

3 ‘‘(v) LIQUID ASSETS.—The term ‘liq4 uid assets’ means cash, marketable securi5 ties and such other assets as specified by the 

6 Secretary of the Treasury in regulations. 

7 ‘‘(vi) QUARTER.—The term ‘quarter’ 

8 means, with respect to any required install9 ment, the 3-month period preceding the 

10 month in which the due date for such in11 stallment occurs. 

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

13 Treasury may prescribe such regulations as are 

14 necessary to carry out this paragraph. 

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

16 ‘‘(A) FISCAL YEARS.—In applying this sub17 section to a plan year beginning on any date 

18 other than January 1, there shall be substituted 

19 for the months specified in this subsection, the 

20 months which correspond thereto. 

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

22 shall be applied to plan years of less than 12 

23 months in accordance with regulations pre24 scribed by the Secretary of the Treasury. 


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1 ‘‘(g) IMPOSITION OF LIEN WHERE FAILURE TO MAKE

2 REQUIRED CONTRIBUTIONS.— 

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

4 which this section applies, if— 

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

6 installment under subsection (f) or any other 

7 payment required under this section before the 

8 due date for such installment or other payment, 

9 and 

10 ‘‘(B) the unpaid balance of such installment 

11 or other payment (including interest), when 

12 added to the aggregate unpaid balance of all pre13 ceding such installments or other payments for 

14 which payment was not made before the due date 

15 (including interest), exceeds $1,000,000, 

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

17 amount determined under paragraph (3) upon all 

18 property and rights to property, whether real or per19 sonal, belonging to such person and any other person 

20 who is a member of the same controlled group of 

21 which such person is a member. 

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

23 This subsection shall apply to a CSEC plan for any 

24 plan year for which the funded current liability per25 centage of such plan is less than 100 percent. This 


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1 subsection shall not apply to any plan to which sec2 tion 4021 does not apply (as such section is in effect 

3 on the date of the enactment of the Retirement Protec4 tion Act of 1994). 

5 ‘‘(3) AMOUNT OF LIEN.—For purposes of para6 graph (1), the amount of the lien shall be equal to the 

7 aggregate unpaid balance of required installments 

8 and other payments required under this section (in9 cluding interest)— 

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

11 and 

12 ‘‘(B) for which payment has not been made 

13 before the due date. 

14 ‘‘(4) NOTICE OF FAILURE; LIEN.— 

15 ‘‘(A) NOTICE OF FAILURE.—A person com16 mitting a failure described in paragraph (1) 

17 shall notify the Pension Benefit Guaranty Cor18 poration of such failure within 10 days of the 

19 due date for the required installment or other 

20 payment. 

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

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

23 the required installment or other payment and 

24 shall continue until the last day of the first plan 

25 year in which the plan ceases to be described in 


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

2 run without regard to whether such plan con3 tinues to be described in paragraph (2) during 

4 the period referred to in the preceding sentence. 

5 ‘‘(C) CERTAIN RULES TO APPLY.—Any 

6 amount with respect to which a lien is imposed 

7 under paragraph (1) shall be treated as taxes 

8 due and owing the United States and rules simi9 lar to the rules of subsections (c), (d), and (e) of 

10 section 4068 shall apply with respect to a lien 

11 imposed by subsection (a) and the amount with 

12 respect to such lien. 

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

14 paragraph (1) may be perfected and enforced only by 

15 the Pension Benefit Guaranty Corporation, or at the 

16 direction of the Pension Benefit Guaranty Corpora17 tion, by any contributing employer (or any member 

18 of the controlled group of the contributing employer). 

19 ‘‘(6) DEFINITIONS.—For purposes of this sub20 section— 

21 ‘‘(A) DUE DATE; REQUIRED INSTALL22 MENT.—The terms ‘due date’ and ‘required in23 stallment’ have the meanings given such terms 

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

25 payment other than a required installment, the 


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1 due date shall be the date such payment is re2 quired to be made under this section. 

3 ‘‘(B) CONTROLLED GROUP.—The term ‘con4 trolled group’ means any group treated as a sin5 gle employer under subsections (b), (c), (m), and 

6 (o) of section 414 of the Internal Revenue Code 

7 of 1986. 

8 ‘‘(h) CURRENT LIABILITY.—For purposes of this sec9 tion— 

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

11 means all liabilities to employees and their bene12 ficiaries under the plan. 

13 ‘‘(2) TREATMENT OF UNPREDICTABLE CONTIN14 GENT EVENT BENEFITS.— 

15 ‘‘(A) IN GENERAL.—For purposes of para16 graph (1), any unpredictable contingent event 

17 benefit shall not be taken into account until the 

18 event on which the benefit is contingent occurs. 

19 ‘‘(B) UNPREDICTABLE CONTINGENT EVENT

20 BENEFIT.—The term ‘unpredictable contingent 

21 event benefit’ means any benefit contingent on 

22 an event other than— 

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

24 or disability, or 


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

2 reliably predictable (as determined by the 

3 Secretary of the Treasury). 

4 ‘‘(3) INTEREST RATE AND MORTALITY ASSUMP5 TIONS USED.— 

6 ‘‘(A) INTEREST RATE.—The rate of interest 

7 used to determine current liability under this 

8 section shall be the third segment rate deter9 mined under section 303(h)(2)(C). 

10 ‘‘(B) MORTALITY TABLES.— 

11 ‘‘(i) SECRETARIAL AUTHORITY.—The 

12 Secretary of the Treasury may by regula13 tion prescribe mortality tables to be used in 

14 determining current liability under this 

15 subsection. Such tables shall be based upon 

16 the actual experience of pension plans and 

17 projected trends in such experience. In pre18 scribing such tables, the Secretary of the 

19 Treasury shall take into account results of 

20 available independent studies of mortality 

21 of individuals covered by pension plans. 

22 ‘‘(ii) PERIODIC REVIEW.—The Sec23 retary of the Treasury shall periodically (at 

24 least every 5 years) review any tables in ef25 fect under this subsection and shall, to the 


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1 extent the Secretary of the Treasury deter2 mines necessary, by regulation update the 

3 tables to reflect the actual experience of pen4 sion plans and projected trends in such ex5 perience. 

6 ‘‘(C) SEPARATE MORTALITY TABLES FOR

7 THE DISABLED.—Notwithstanding subparagraph 

8 (B)— 

9 ‘‘(i) IN GENERAL.—In the case of plan 

10 years beginning after December 31, 1995, 

11 the Secretary of the Treasury shall establish 

12 mortality tables which may be used (in lieu 

13 of the tables under subparagraph (B)) to de14 termine current liability under this sub15 section for individuals who are entitled to 

16 benefits under the plan on account of dis17 ability. The Secretary of the Treasury shall 

18 establish separate tables for individuals 

19 whose disabilities occur in plan years begin20 ning before January 1, 1995, and for indi21 viduals whose disabilities occur in plan 

22 years beginning on or after such date. 

23 ‘‘(ii) SPECIAL RULE FOR DISABILITIES

24 OCCURRING AFTER 1994.—In the case of dis25 abilities occurring in plan years beginning 


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1 after December 31, 1994, the tables under 

2 clause (i) shall apply only with respect to 

3 individuals described in such subclause who 

4 are disabled within the meaning of title II 

5 of the Social Security Act and the regula6 tions thereunder. 

7 ‘‘(4) CERTAIN SERVICE DISREGARDED.— 

8 ‘‘(A) IN GENERAL.—In the case of a partici9 pant to whom this paragraph applies, only the 

10 applicable percentage of the years of service be11 fore such individual became a participant shall 

12 be taken into account in computing the current 

13 liability of the plan. 

14 ‘‘(B) APPLICABLE PERCENTAGE.—For pur15 poses of this subparagraph, the applicable per16 centage 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. 

17 ‘‘(C) PARTICIPANTS TO WHOM PARAGRAPH

18 APPLIES.—This subparagraph shall apply to 

19 any participant who, at the time of becoming a 

20 participant— 


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

2 under any defined benefit plan (whether or 

3 not terminated) maintained by the em4 ployer or a member of the same controlled 

5 group of which the employer is a member, 

6 ‘‘(ii) who first becomes a participant 

7 under the plan in a plan year beginning 

8 after December 31, 1987, and 

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

10 the minimum years of service necessary for 

11 eligibility to participate in the plan. 

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

13 not to have this subparagraph apply. Such an 

14 election, once made, may be revoked only with 

15 the consent of the Secretary of the Treasury. 

16 ‘‘(i) FUNDED CURRENT LIABILITY PERCENTAGE.—For 

17 purposes of this section, the term ‘funded current liability 

18 percentage’ means, with respect to any plan year, the per19 centage which— 

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

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

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

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

24 prescribe such rules as are necessary or appropriate with 


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1 respect to the transition of a CSEC plan from the applica2 tion of section 303 to the application of this section.’’. 

3 (2) SEPARATE RULES FOR CSEC PLANS.— 

4 (A) IN GENERAL.—Paragraph (2) of section 

5 302(a) of the Employee Retirement Income Secu6 rity Act of 1974 (29 U.S.C. 1082(a)) is amended 

7 by striking ‘‘and’’ at the end of subparagraph 

8 (B), by striking the period at the end of subpara9 graph (C) and inserting ‘‘, and’’, and by insert10 ing at the end thereof the following new subpara11 graph: 

12 ‘‘(D) in the case of a CSEC plan, the em13 ployers make contributions to or under the plan 

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

15 sufficient to ensure that the plan does not have 

16 an accumulated funding deficiency under section 

17 306 as of the end of the plan year.’’. 

18 (B) CONFORMING AMENDMENTS.—Section 

19 302 of the Employee Retirement Income Security 

20 Act of 1974 (29 U.S.C. 1082) is amended— 

21 (i) by striking ‘‘multiemployer plan’’ 

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

23 subsection (c)(1)(A) and the last place it 

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


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1 and inserting ‘‘multiemployer plan or a 

2 CSEC plan’’, 

3 (ii) by striking ‘‘303(j)’’ in paragraph 

4 (1) of subsection (b) and inserting ‘‘303(j) 

5 or under 306(f)’’, 

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

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

8 (II) by striking the period at the end 

9 of clause (ii) of subsection (c)(1)(B), and 

10 inserting ‘‘, and’’, and 

11 (III) by inserting the following new 

12 clause after clause (ii) of subsection 

13 (c)(1)(B): 

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

15 funding standard account shall be credited 

16 under section 306(b)(3)(C) with the amount 

17 of the waived funding deficiency and such 

18 amount shall be amortized as required 

19 under section 306(b)(2)(C).’’, 

20 (iv) by striking ‘‘under paragraph (1)’’ 

21 in clause (i) of subsection (c)(4)(A) and in22 serting ‘‘under paragraph (1) or for grant23 ing an extension under section 306(d)’’, 

24 (v) by striking ‘‘waiver under this sub25 section’’ in subparagraph (B) of subsection 


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1 (c)(4) and inserting ‘‘waiver under this sub2 section or an extension under 306(d)’’, 

3 (vi) by striking ‘‘waiver or modifica4 tion’’ in subclause (I) of subsection 

5 (c)(4)(B)(i) and inserting ‘‘waiver, modi6 fication, or extension’’, 

7 (vii) by striking ‘‘waivers’’ in the 

8 heading of subsection (c)(4)(C) and of 

9 clause (ii) of subsection (c)(4)(C) and in10 serting ‘‘waivers or extensions’’, 

11 (viii) by striking ‘‘section 304(d)’’ in 

12 subparagraph (A) of subsection (c)(7) and 

13 in paragraph (2) of subsection (d) and in14 serting ‘‘section 304(d) or section 306(d)’’, 

15 (ix) by striking ‘‘and’’ at the end of 

16 subclause (I) of subsection (c)(4)(C)(i) and 

17 adding ‘‘or the accumulated funding defi18 ciency under section 306, whichever is ap19 plicable,’’, 

20 (x) by striking ‘‘303(e)(2),’’ in sub21 clause (II) of subsection (c)(4)(C)(i) and in22 serting ‘‘303(e)(2) or 306(b)(2)(C), which23 ever is applicable, and’’, 


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1 (xi) by adding immediately after sub2 clause (II) of subsection (c)(4)(C)(i) the fol3 lowing new subclause: 

4 ‘‘(III) the total amounts not paid 

5 by reason of an extension in effect 

6 under section 306(d),’’, 

7 (xii) by striking ‘‘for waivers of’’ in 

8 clause (ii) of subsection (c)(4)(C) and in9 serting ‘‘for waivers or extensions with re10 spect to’’, and 

11 (xiii) by striking ‘‘single-employer 

12 plan’’ in subparagraph (A) of subsection 

13 (a)(2) and in clause (i) of subsection 

14 (c)(1)(B) and inserting ‘‘single-employer 

15 plan (other than a CSEC plan)’’. 

16 (3) BENEFIT RESTRICTIONS.— 

17 (A) IN GENERAL.—Subsection (g) of section 

18 206 of the Employee Retirement Income Security 

19 Act of 1974 (29 U.S.C. 1056) is amended by 

20 adding at the end thereof the following new 

21 paragraph: 

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

23 apply to a CSEC plan (as defined in section 

24 210(f)).’’. 


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1 (B) EFFECTIVE DATE.—Any restriction 

2 under section 206(g) of the Employee Retirement 

3 Income Security Act of 1974 that is in effect 

4 with respect to a CSEC plan as of the last day 

5 of the last plan year beginning before January 

6 1, 2014, shall cease to apply as of the first day 

7 of the following plan year. 

8 (4) BENEFIT INCREASES.—Paragraph (3) of sec9 tion 204(i) of the Employee Retirement Income Secu10 rity Act of 1974 (29 U.S.C. 1054(i)) is amended by 

11 striking ‘‘multiemployer plans’’ and inserting ‘‘multi12 employer plans or CSEC plans’’. 

13 (5) SECTION 103.—Subparagraph (B) of section 

14 103(d)(8) of the Employee Retirement Income Secu15 rity Act of 1974 (29 U.S.C. 1023(d)(8)) is amended 

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

17 ‘‘303(h), 304(c)(3), and 306(c)(3)’’. 

18 (6) SECTION 4003.—Subparagraph (B) of section 

19 4003(e)(1) of the Employee Retirement Income Secu20 rity Act of 1974 (29 U.S.C. 1303(e)(1)) is amended 

21 by striking ‘‘303(k)(1)(A) and (B) of this Act or sec22 tion 430(k)(1)(A) and (B) of the Internal Revenue 

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

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


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

2 Internal Revenue Code of 1986’’. 

3 (7) SECTION 4010.—Paragraph (2) of section 

4 4010(b) of the Employee Retirement Income Security 

5 Act of 1974 (29 U.S.C. 1310(b)) is amended by strik6 ing ‘‘303(k)(1)(A) and (B) of this Act or section 

7 430(k)(1)(A) and (B) of the Internal Revenue Code of 

8 1986’’ and inserting ‘‘303(k)(1)(A) and (B) or 

9 306(g)(1)(A) and (B) of this Act or section 

10 430(k)(1)(A) and (B) or 433(g)(1)(A) and (B) of the 

11 Internal Revenue Code of 1986’’. 

12 (8) SECTION 4071.—Section 4071 of the Em13 ployee Retirement Income Security Act of 1974 (29 

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

15 303(k)(4)’’ and inserting ‘‘section 303(k)(4) or 

16 306(g)(4)’’. 

17 (b) AMENDMENTS TO CODE.— 

18 (1) MINIMUM FUNDING STANDARDS UNDER THE

19 INTERNAL REVENUE CODE.—Subpart A of part III of 

20 subchapter D of chapter 1 of subtitle A of the Internal 

21 Revenue Code of 1986 is amended by adding at the 

22 end the following new section: 

23 ‘‘SEC. 433. MINIMUM FUNDING STANDARDS. 

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

25 the term ‘accumulated funding deficiency’ for a CSEC plan 


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1 means the excess of the total charges to the funding standard 

2 account for all plan years (beginning with the first plan 

3 year to which section 412 applies) over the total credits to 

4 such account for such years or, if less, the excess of the total 

5 charges to the alternative minimum funding standard ac6 count for such plan years over the total credits to such ac7 count for such years. 

8 ‘‘(b) FUNDING STANDARD ACCOUNT.— 

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

10 this section applies shall establish and maintain a 

11 funding standard account. Such account shall be cred12 ited and charged solely as provided in this section. 

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

14 the funding standard account shall be charged with 

15 the sum of— 

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

17 plan year, 

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

19 equal annual installments (until fully amor20 tized)— 

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

22 on January 1, 1974, the unfunded past 

23 service liability under the plan on the first 

24 day of the first plan year to which section 

25 412 applies, over a period of 40 plan years, 


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

2 into existence after January 1, 1974, but 

3 before the first day of the first plan year be4 ginning after December 31, 2013, the un5 funded past service liability under the plan 

6 on the first day of the first plan year to 

7 which section 412 applies, over a period of 

8 30 plan years, 

9 ‘‘(iii) in the case of a plan that is sub10 ject to section 430 for the last plan year be11 ginning before January 1, 2014, the sum 

12 of— 

13 ‘‘(I) the plan’s funding standard 

14 carryover balance and prefunding bal15 ance (as such terms are defined in sec16 tion 430(f)) as of the end of such plan 

17 year, and 

18 ‘‘(II) the unfunded past service li19 ability under the plan for the first 

20 plan year beginning after December 

21 31, 2013, 

22 over a period of 15 years, 

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

24 plan year, the net increase (if any) in un25 funded past service liability under the plan 


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1 arising from plan amendments adopted in 

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

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

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

5 under the plan, over a period of 5 plan 

6 years, and 

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

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

9 from changes in actuarial assumptions used 

10 under the plan, over a period of 10 plan 

11 years, 

12 ‘‘(C) the amount necessary to amortize each 

13 waived funding deficiency (within the meaning 

14 of section 412(c)(3)) for each prior plan year in 

15 equal annual installments (until fully amor16 tized) over a period of 5 plan years, 

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

18 equal annual installments (until fully amor19 tized) over a period of 5 plan years any amount 

20 credited to the funding standard account under 

21 paragraph (3)(D), and 

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

23 equal annual installments (until fully amor24 tized) over a period of 20 years the contributions 

25 which would be required to be made under the 


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1 plan but for the provisions of section 

2 412(c)(7)(A)(i)(I) (as in effect on the day before 

3 the enactment of the Pension Protection Act of 

4 2006). 

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

6 the funding standard account shall be credited with 

7 the sum of— 

8 ‘‘(A) the amount considered contributed by 

9 the employer to or under the plan for the plan 

10 year, 

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

12 equal annual installments (until fully amor13 tized)— 

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

15 plan year, the net decrease (if any) in un16 funded past service liability under the plan 

17 arising from plan amendments adopted in 

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

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

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

21 under the plan, over a period of 5 plan 

22 years, and 

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

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

25 from changes in actuarial assumptions used 


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1 under the plan, over a period of 10 plan 

2 years, 

3 ‘‘(C) the amount of the waived funding defi4 ciency (within the meaning of section 412(c)(3)) 

5 for the plan year, 

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

7 the accumulated funding deficiency is deter8 mined under the funding standard account if 

9 such plan year follows a plan year for which 

10 such deficiency was determined under the alter11 native minimum funding standard, the excess (if 

12 any) of any debit balance in the funding stand13 ard account (determined without regard to this 

14 subparagraph) over any debit balance in the al15 ternative minimum funding standard account, 

16 and 

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

18 December 31, 2013, in the case of a plan that is 

19 subject to section 430 for the last plan year be20 ginning before January 1, 2014, the sum of the 

21 plan’s funding standard carryover balance and 

22 prefunding balance (as such terms are defined in 

23 section 430(f)) as of the end of the last plan year 

24 beginning before January 1, 2014. 


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1 ‘‘(4) COMBINING AND OFFSETTING AMOUNTS TO

2 BE AMORTIZED.—Under regulations prescribed by the 

3 Secretary, amounts required to be amortized under 

4 paragraph (2) or paragraph (3), as the case may 

5 be— 

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

7 under such paragraph to be amortized over a pe8 riod determined on the basis of the remaining 

9 amortization period for all items entering into 

10 such combined amount, and 

11 ‘‘(B) may be offset against amounts re12 quired to be amortized under the other such 

13 paragraph, with the resulting amount to be am14 ortized over a period determined on the basis of 

15 the remaining amortization periods for all items 

16 entering into whichever of the two amounts being 

17 offset is the greater. 

18 ‘‘(5) INTEREST.— 

19 ‘‘(A) Except as provided in subparagraph 

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

21 therein) shall be charged or credited (as deter22 mined under regulations prescribed by the Sec23 retary) with interest at the appropriate rate con24 sistent with the rate or rates of interest used 

25 under the plan to determine costs. 


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

2 computing the amortization charge described in 

3 subsection (b)(2)(C) or for purposes of any ar4 rangement under subsection (d) for any plan 

5 year shall be the greater of— 

6 ‘‘(i) 150 percent of the Federal mid7 term rate (as in effect under section 1274 

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

9 ‘‘(ii) the rate of interest determined 

10 under subparagraph (A). 

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

12 Amortization schedules for amounts described in 

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

14 day of the last plan year beginning before January 

15 1, 2014, by reason of section 104 of the Pension Pro16 tection Act of 2006 shall remain in effect pursuant to 

17 their terms and this section, except that such amounts 

18 shall not be amortized again under this section. In 

19 the case of a plan that is subject to section 430 for 

20 the last plan year beginning before January 1, 2014, 

21 any amortization schedules and bases for plan years 

22 beginning before such date shall be reduced to zero. 

23 ‘‘(c) SPECIAL RULES.— 

24 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

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1 mal costs, accrued liability, past service liabilities, 

2 and experience gains and losses shall be determined 

3 under the funding method used to determine costs 

4 under the plan. 

5 ‘‘(2) VALUATION OF ASSETS.— 

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

7 section, the value of the plan’s assets shall be de8 termined on the basis of any reasonable actu9 arial method of valuation which takes into ac10 count fair market value and which is permitted 

11 under regulations prescribed by the Secretary. 

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

13 Secretary may by regulations provide that the 

14 value of any dedicated bond portfolio of a plan 

15 shall be determined by using the interest rate 

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

17 before the enactment of the Pension Protection 

18 Act of 2006). 

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

22 plan shall be determined on the basis of actuarial as23 sumptions and methods— 

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

25 into account the experience of the plan and reaVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00151 Fmt 6652 Sfmt 6203 E:\BILLS\S1302.RS S1302

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1 sonable expectations) or which, in the aggregate, 

2 result in a total contribution equivalent to that 

3 which would be determined if each such assump4 tion and method were reasonable, and 

5 ‘‘(B) which, in combination, offer the actu6 ary’s best estimate of anticipated experience 

7 under the plan. 

8 ‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX9 PERIENCE GAIN OR LOSS.—For purposes of this sec10 tion, if— 

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

12 Security Act or in other retirement benefits cre13 ated under Federal or State law, or 

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

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

16 amount of such wages taken into account under 

17 regulations prescribed for purposes of section 

18 401(a)(5), 

19 results in an increase or decrease in accrued liability 

20 under a plan, such increase or decrease shall be treat21 ed as an experience loss or gain. 

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

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

24 funding methods available to CSEC plans under 

25 section 412 (as in effect on the day before the enVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00152 Fmt 6652 Sfmt 6203 E:\BILLS\S1302.RS S1302

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1 actment of the Pension Protection Act of 2006) 

2 shall continue to be available under this section. 

3 ‘‘(B) NOT AFFECTED BY CESSATION OF BEN4 EFIT ACCRUALS.—The availability of any fund5 ing method, including all spread gain funding 

6 methods, shall not be affected by whether benefit 

7 accruals under a plan have ceased. Except as 

8 otherwise provided in subparagraph (C) or in 

9 regulations prescribed by the Secretary, if benefit 

10 accruals have ceased under a plan, the spread 

11 gain funding methods may be applied by amor12 tizing over the average expected future lives of all 

13 participants. 

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

15 plan amortizing over the average expected future 

16 lives of all participants pursuant to the second 

17 sentence of subparagraph (B), such amortization 

18 amount for any plan year shall not be less than 

19 the sum of— 

20 ‘‘(i) the amount determined by amor21 tizing, as of the first year for which the 

22 plan amortizes over the average future lives 

23 of all participants, the entire unfunded past 

24 service liability in equal installments over 

25 15 years, and 


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1 ‘‘(ii) the amount determined by amor2 tizing any increase or decrease in such un3 funded past service liability in any subse4 quent year, other than an increase or de5 crease attributable to contributions or ex6 pected experience, in equal installments over 

7 15 years. 

8 ‘‘(D) CHANGES.—If the funding method for 

9 a plan is changed, the new funding method shall 

10 become the funding method used to determine 

11 costs and liabilities under the plan only if the 

12 change is approved by the Secretary. The pre13 ceding sentence shall not apply to any change 

14 made pursuant to, or permitted by, the second 

15 sentence of subparagraph (B) if such change is 

16 made for the first plan year beginning after De17 cember 31, 2013. Any such change may be made 

18 without the approval of the Secretary. If the 

19 plan year for a plan is changed, the new plan 

20 year shall become the plan year for the plan only 

21 if the change is approved by the Secretary. 

22 ‘‘(E) APPROVAL REQUIRED FOR CERTAIN

23 CHANGES IN ASSUMPTIONS BY CERTAIN SINGLE24 EMPLOYER PLANS SUBJECT TO ADDITIONAL

25 FUNDING REQUIREMENT.— 


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1 ‘‘(i) IN GENERAL.—No actuarial as2 sumption (other than the assumptions de3 scribed in subsection (h)(3)) used to deter4 mine the current liability for a plan to 

5 which this subparagraph applies may be 

6 changed without the approval of the Sec7 retary. 

8 ‘‘(ii) PLANS TO WHICH SUBPARAGRAPH

9 APPLIES.—This subparagraph shall apply 

10 to a plan only if— 

11 ‘‘(I) the plan is a CSEC plan, 

12 ‘‘(II) the aggregate unfunded vest13 ed benefits as of the close of the pre14 ceding plan year (as determined under 

15 section 4006(a)(3)(E)(iii) of the Em16 ployee Retirement Income Security Act 

17 of 1974) of such plan and all other 

18 plans maintained by the contributing 

19 sponsors (as defined in section 

20 4001(a)(13) of such Act) and members 

21 of such sponsors’ controlled groups (as 

22 defined in section 4001(a)(14) of such 

23 Act) which are covered by title IV (dis24 regarding plans with no unfunded 

25 vested benefits) exceed $50,000,000, and 


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1 ‘‘(III) the change in assumptions 

2 (determined after taking into account 

3 any changes in interest rate and mor4 tality table) results in a decrease in the 

5 funding shortfall of the plan for the 

6 current plan year that exceeds 

7 $50,000,000, or that exceeds $5,000,000 

8 and that is 5 percent or more of the 

9 current liability of the plan before such 

10 change. 

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

12 plan year, a plan would (without regard to this para13 graph) have an accumulated funding deficiency (de14 termined without regard to the alternative minimum 

15 funding standard account permitted under subsection 

16 (e)) in excess of the full funding limitation— 

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

18 credited with the amount of such excess, and 

19 ‘‘(B) all amounts described in paragraphs 

20 (2)(B), (C), and (D) and (3)(B) of subsection (b) 

21 which are required to be amortized shall be con22 sidered fully amortized for purposes of such 

23 paragraphs. 


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1 ‘‘(7) FULL-FUNDING LIMITATION.—For purposes 

2 of paragraph (6), the term ‘full-funding limitation’ 

3 means the excess (if any) of— 

4 ‘‘(A) the accrued liability (including nor5 mal cost) under the plan (determined under the 

6 entry age normal funding method if such accrued 

7 liability cannot be directly calculated under the 

8 funding method used for the plan), over 

9 ‘‘(B) the lesser of— 

10 ‘‘(i) the fair market value of the plan’s 

11 assets, or 

12 ‘‘(ii) the value of such assets deter13 mined under paragraph (2). 

14 ‘‘(C) MINIMUM AMOUNT.— 

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

16 the full-funding limitation determined 

17 under subparagraph (A) be less than the ex18 cess (if any) of— 

19 ‘‘(I) 90 percent of the current li20 ability (determined without regard to 

21 paragraph (4) of subsection (h)) of the 

22 plan (including the expected increase 

23 in such current liability due to benefits 

24 accruing during the plan year), over 


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1 ‘‘(II) the value of the plan’s assets 

2 determined under paragraph (2). 

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

4 (i), assets shall not be reduced by any credit 

5 balance in the funding standard account. 

6 ‘‘(8) ANNUAL VALUATION.— 

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

8 section, a determination of experience gains and 

9 losses and a valuation of the plan’s liability 

10 shall be made not less frequently than once every 

11 year, except that such determination shall be 

12 made more frequently to the extent required in 

13 particular cases under regulations prescribed by 

14 the Secretary. 

15 ‘‘(B) VALUATION DATE.— 

16 ‘‘(i) CURRENT YEAR.—Except as pro17 vided in clause (ii), the valuation referred 

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

19 a date within the plan year to which the 

20 valuation refers or within one month prior 

21 to the beginning of such year. 

22 ‘‘(ii) USE OF PRIOR YEAR VALU23 ATION.—The valuation referred to in sub24 paragraph (A) may be made as of a date 

25 within the plan year prior to the year to 


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1 which the valuation refers if, as of such 

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

3 not less than 100 percent of the plan’s cur4 rent liability. 

5 ‘‘(iii) ADJUSTMENTS.—Information 

6 under clause (ii) shall, in accordance with 

7 regulations, be actuarially adjusted to re8 flect significant differences in participants. 

9 ‘‘(iv) LIMITATION.—A change in fund10 ing method to use a prior year valuation, 

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

12 unless as of the valuation date within the 

13 prior plan year, the value of the assets of 

14 the plan are not less than 125 percent of the 

15 plan’s current liability. 

16 ‘‘(9) TIME WHEN CERTAIN CONTRIBUTIONS

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

18 contributions for a plan year made by an employer 

19 during the period— 

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

21 of such plan year, and 

‘‘(B) ending on the day which is 81 22 ⁄2

23 months after the close of the plan year, 

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


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1 ‘‘(10) ANTICIPATION OF BENEFIT INCREASES EF2 FECTIVE IN THE FUTURE.—In determining projected 

3 benefits, the funding method of a collectively bar4 gained CSEC plan described in section 413(a) (other 

5 than a multiemployer plan) shall anticipate benefit 

6 increases scheduled to take effect during the term of 

7 the collective bargaining agreement applicable to the 

8 plan. 

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

10 period of years required to amortize any unfunded liability 

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

12 plan may be extended by the Secretary of Labor for a period 

13 of time (not in excess of 10 years) if such Secretary deter14 mines that such extension would carry out the purposes of 

15 the Employee Retirement Income Security Act of 1974 and 

16 provide adequate protection for participants under the 

17 plan, and their beneficiaries and if such Secretary deter18 mines that the failure to permit such extension would result 

19 in— 

20 ‘‘(1) a substantial risk to the voluntary continu21 ation of the plan, or 

22 ‘‘(2) a substantial curtailment of pension benefit 

23 levels or employee compensation. 

24 ‘‘(e) ALTERNATIVE MINIMUM FUNDING STANDARD.— 


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

2 funding method that requires contributions in all 

3 years not less than those required under the entry age 

4 normal funding method may maintain an alternative 

5 minimum funding standard account for any plan 

6 year. Such account shall be credited and charged sole7 ly as provided in this subsection. 

8 ‘‘(2) CHARGES AND CREDITS TO ACCOUNT.—For 

9 a plan year the alternative minimum funding stand10 ard account shall be— 

11 ‘‘(A) charged with the sum of— 

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

13 funding method used under the plan or nor14 mal cost determined under the unit credit 

15 method, 

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

17 value of accrued benefits under the plan 

18 over the fair market value of the assets, and 

19 ‘‘(iii) an amount equal to the excess (if 

20 any) of credits to the alternative minimum 

21 standard account for all prior plan years 

22 over charges to such account for all such 

23 years, and 


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1 ‘‘(B) credited with the amount considered 

2 contributed by the employer to or under the plan 

3 for the plan year. 

4 ‘‘(3) SPECIAL RULES.—The alternative min5 imum funding standard account (and items therein) 

6 shall be charged or credited with interest in the man7 ner provided under subsection (b)(5) with respect to 

8 the funding standard account. 

9 ‘‘(f) QUARTERLY CONTRIBUTIONS REQUIRED.— 

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

11 a funded current liability percentage for the preceding 

12 plan year of less than 100 percent fails to pay the full 

13 amount of a required installment for the plan year, 

14 then the rate of interest charged to the funding stand15 ard account under subsection (b)(5) with respect to 

16 the amount of the underpayment for the period of the 

17 underpayment shall be equal to the greater of— 

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

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

20 month of such plan year), or 

21 ‘‘(B) the rate of interest used under the plan 

22 in determining costs. 

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

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


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1 ‘‘(A) AMOUNT.—The amount of the under2 payment shall be the excess of— 

3 ‘‘(i) the required installment, over 

4 ‘‘(ii) the amount (if any) of the install5 ment contributed to or under the plan on or 

6 before the due date for the installment. 

7 ‘‘(B) PERIOD OF UNDERPAYMENT.—The pe8 riod for which interest is charged under this sub9 section with regard to any portion of the under10 payment shall run from the due date for the in11 stallment to the date on which such portion is 

12 contributed to or under the plan (determined 

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

14 ‘‘(C) ORDER OF CREDITING CONTRIBU15 TIONS.—For purposes of subparagraph (A)(ii), 

16 contributions shall be credited against unpaid 

17 required installments in the order in which such 

18 installments are required to be paid. 

19 ‘‘(3) NUMBER OF REQUIRED INSTALLMENTS; DUE

20 DATES.—For purposes of this subsection— 

21 ‘‘(A) PAYABLE IN 4 INSTALLMENTS.—There 

22 shall be 4 required installments for each plan 

23 year. 

24 ‘‘(B) TIME FOR PAYMENT OF INSTALL25 MENTS.— 


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‘‘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. 

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

2 purposes of this subsection— 

3 ‘‘(A) IN GENERAL.—The amount of any re4 quired installment shall be 25 percent of the re5 quired annual payment. 

6 ‘‘(B) REQUIRED ANNUAL PAYMENT.—For 

7 purposes of subparagraph (A), the term ‘required 

8 annual payment’ means the lesser of— 

9 ‘‘(i) 90 percent of the amount required 

10 to be contributed to or under the plan by 

11 the employer for the plan year under section 

12 412 (without regard to any waiver under 

13 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 


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1 paid in such installment is less than the liquid2 ity shortfall (whether or not such liquidity short3 fall exceeds the amount of such installment re4 quired to be paid but for this paragraph). 

5 ‘‘(B) PLANS TO WHICH PARAGRAPH AP6 PLIES.—This paragraph shall apply to a CSEC 

7 plan other than a plan described in section 

8 412(l)(6)(A) (as in effect on the day before the 

9 enactment of the Pension Protection Act of 2006) 

10 which— 

11 ‘‘(i) is required to pay installments 

12 under this subsection for a plan year, and 

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

14 quarter during such plan year. 

15 ‘‘(C) PERIOD OF UNDERPAYMENT.—For 

16 purposes of paragraph (1), any portion of an in17 stallment that is treated as not paid under sub18 paragraph (A) shall continue to be treated as 

19 unpaid until the close of the quarter in which the 

20 due date for such installment occurs. 

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

22 amount of any required installment is increased 

23 by reason of subparagraph (A), in no event shall 

24 such increase exceed the amount which, when 

25 added to prior installments for the plan year, is 


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1 necessary to increase the funded current liability 

2 percentage (taking into account the expected in3 crease in current liability due to benefits accru4 ing during the plan year) to 100 percent. 

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

6 paragraph: 

7 ‘‘(i) LIQUIDITY SHORTFALL.—The term 

8 ‘liquidity shortfall’ means, with respect to 

9 any required installment, an amount equal 

10 to the excess (as of the last day of the quar11 ter for which such installment is made) of 

12 the base amount with respect to such quar13 ter over the value (as of such last day) of 

14 the plan’s liquid assets. 

15 ‘‘(ii) BASE AMOUNT.— 

16 ‘‘(I) IN GENERAL.—The term ‘base 

17 amount’ means, with respect to any 

18 quarter, an amount equal to 3 times 

19 the sum of the adjusted disbursements 

20 from the plan for the 12 months ending 

21 on the last day of such quarter. 

22 ‘‘(II) SPECIAL RULE.—If the 

23 amount determined under subclause (I) 

24 exceeds an amount equal to 2 times the 

25 sum of the adjusted disbursements from 


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1 the plan for the 36 months ending on 

2 the last day of the quarter and an en3 rolled actuary certifies to the satisfac4 tion of the Secretary that such excess is 

5 the result of nonrecurring cir6 cumstances, the base amount with re7 spect to such quarter shall be deter8 mined without regard to amounts re9 lated to those nonrecurring cir10 cumstances. 

11 ‘‘(iii) DISBURSEMENTS FROM THE

12 PLAN.—The term ‘disbursements from the 

13 plan’ means all disbursements from the 

14 trust, including purchases of annuities, 

15 payments of single sums and other benefits, 

16 and administrative expenses. 

17 ‘‘(iv) ADJUSTED DISBURSEMENTS.— 

18 The term ‘adjusted disbursements’ means 

19 disbursements from the plan reduced by the 

20 product of— 

21 ‘‘(I) the plan’s funded current li22 ability percentage for the plan year, 

23 and 

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

25 annuities, payments of single sums, 


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1 and such other disbursements as the 

2 Secretary shall provide in regulations. 

3 ‘‘(v) LIQUID ASSETS.—The term ‘liq4 uid assets’ means cash, marketable securi5 ties and such other assets as specified by the 

6 Secretary in regulations. 

7 ‘‘(vi) QUARTER.—The term ‘quarter’ 

8 means, with respect to any required install9 ment, the 3-month period preceding the 

10 month in which the due date for such in11 stallment occurs. 

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

13 prescribe such regulations as are necessary to 

14 carry out this paragraph. 

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

16 ‘‘(A) FISCAL YEARS.—In applying this sub17 section to a plan year beginning on any date 

18 other than January 1, there shall be substituted 

19 for the months specified in this subsection, the 

20 months which correspond thereto. 

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

22 shall be applied to plan years of less than 12 

23 months in accordance with regulations pre24 scribed by the Secretary. 


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1 ‘‘(g) IMPOSITION OF LIEN WHERE FAILURE TO MAKE

2 REQUIRED CONTRIBUTIONS.— 

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

4 which this section applies, if— 

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

6 installment under subsection (f) or any other 

7 payment required under this section before the 

8 due date for such installment or other payment, 

9 and 

10 ‘‘(B) the unpaid balance of such installment 

11 or other payment (including interest), when 

12 added to the aggregate unpaid balance of all pre13 ceding such installments or other payments for 

14 which payment was not made before the due date 

15 (including interest), exceeds $1,000,000, 

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

17 amount determined under paragraph (3) upon all 

18 property and rights to property, whether real or per19 sonal, belonging to such person and any other person 

20 who is a member of the same controlled group of 

21 which such person is a member. 

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

23 This subsection shall apply to a CSEC plan for any 

24 plan year for which the funded current liability per25 centage of such plan is less than 100 percent. This 


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1 subsection shall not apply to any plan to which sec2 tion 4021 of the Employee Retirement Income Secu3 rity Act of 1974 does not apply (as such section is in 

4 effect on the date of the enactment of the Retirement 

5 Protection Act of 1994). 

6 ‘‘(3) AMOUNT OF LIEN.—For purposes of para7 graph (1), the amount of the lien shall be equal to the 

8 aggregate unpaid balance of required installments 

9 and other payments required under this section (in10 cluding interest)— 

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

12 and 

13 ‘‘(B) for which payment has not been made 

14 before the due date. 

15 ‘‘(4) NOTICE OF FAILURE; LIEN.— 

16 ‘‘(A) NOTICE OF FAILURE.—A person com17 mitting a failure described in paragraph (1) 

18 shall notify the Pension Benefit Guaranty Cor19 poration of such failure within 10 days of the 

20 due date for the required installment or other 

21 payment. 

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

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

24 the required installment or other payment and 

25 shall continue until the last day of the first plan 


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1 year in which the plan ceases to be described in 

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

3 run without regard to whether such plan con4 tinues to be described in paragraph (2) during 

5 the period referred to in the preceding sentence. 

6 ‘‘(C) CERTAIN RULES TO APPLY.—Any 

7 amount with respect to which a lien is imposed 

8 under paragraph (1) shall be treated as taxes 

9 due and owing the United States and rules simi10 lar to the rules of subsections (c), (d), and (e) of 

11 section 4068 of the Employee Retirement Income 

12 Security Act of 1974 shall apply with respect to 

13 a lien imposed by subsection (a) and the amount 

14 with respect to such lien. 

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

16 paragraph (1) may be perfected and enforced only by 

17 the Pension Benefit Guaranty Corporation, or at the 

18 direction of the Pension Benefit Guaranty Corpora19 tion, by any contributing employer (or any member 

20 of the controlled group of the contributing employer). 

21 ‘‘(6) DEFINITIONS.—For purposes of this sub22 section— 

23 ‘‘(A) DUE DATE; REQUIRED INSTALL24 MENT.—The terms ‘due date’ and ‘required in25 stallment’ have the meanings given such terms 


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

2 payment other than a required installment, the 

3 due date shall be the date such payment is re4 quired to be made under this section. 

5 ‘‘(B) CONTROLLED GROUP.—The term ‘con6 trolled group’ means any group treated as a sin7 gle employer under subsections (b), (c), (m), and 

8 (o) of section 414. 

9 ‘‘(h) CURRENT LIABILITY.—For purposes of this sec10 tion— 

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

12 means all liabilities to employees and their bene13 ficiaries under the plan. 

14 ‘‘(2) TREATMENT OF UNPREDICTABLE CONTIN15 GENT EVENT BENEFITS.— 

16 ‘‘(A) IN GENERAL.—For purposes of para17 graph (1), any unpredictable contingent event 

18 benefit shall not be taken into account until the 

19 event on which the benefit is contingent occurs. 

20 ‘‘(B) UNPREDICTABLE CONTINGENT EVENT

21 BENEFIT.—The term ‘unpredictable contingent 

22 event benefit’ means any benefit contingent on 

23 an event other than— 

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

25 or disability, or 


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

2 reliably predictable (as determined by the 

3 Secretary). 

4 ‘‘(3) INTEREST RATE AND MORTALITY ASSUMP5 TIONS USED.— 

6 ‘‘(A) INTEREST RATE.—The rate of interest 

7 used to determine current liability under this 

8 section shall be the third segment rate deter9 mined under section 430(h)(2)(C). 

10 ‘‘(B) MORTALITY TABLES.— 

11 ‘‘(i) SECRETARIAL AUTHORITY.—The 

12 Secretary may by regulation prescribe mor13 tality tables to be used in determining cur14 rent liability under this subsection. Such 

15 tables shall be based upon the actual experi16 ence of pension plans and projected trends 

17 in such experience. In prescribing such ta18 bles, the Secretary shall take into account 

19 results of available independent studies of 

20 mortality of individuals covered by pension 

21 plans. 

22 ‘‘(ii) PERIODIC REVIEW.—The Sec23 retary shall periodically (at least every 5 

24 years) review any tables in effect under this 

25 subsection and shall, to the extent the SecVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00173 Fmt 6652 Sfmt 6203 E:\BILLS\S1302.RS S1302

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1 retary determines necessary, by regulation 

2 update the tables to reflect the actual experi3 ence of pension plans and projected trends 

4 in such experience. 

5 ‘‘(C) SEPARATE MORTALITY TABLES FOR

6 THE DISABLED.—Notwithstanding subparagraph 

7 (B)— 

8 ‘‘(i) IN GENERAL.—In the case of plan 

9 years beginning after December 31, 1995, 

10 the Secretary shall establish mortality tables 

11 which may be used (in lieu of the tables 

12 under subparagraph (B)) to determine cur13 rent liability under this subsection for indi14 viduals who are entitled to benefits under 

15 the plan on account of disability. The Sec16 retary shall establish separate tables for in17 dividuals 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 dis24 abilities occurring in plan years beginning 

25 after December 31, 1994, the tables under 


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1 clause (i) shall apply only with respect to 

2 individuals described in such subclause who 

3 are disabled within the meaning of title II 

4 of the Social Security Act and the regula5 tions thereunder. 

6 ‘‘(4) CERTAIN SERVICE DISREGARDED.— 

7 ‘‘(A) IN GENERAL.—In the case of a partici8 pant to whom this paragraph applies, only the 

9 applicable percentage of the years of service be10 fore such individual became a participant shall 

11 be taken into account in computing the current 

12 liability of the plan. 

13 ‘‘(B) APPLICABLE PERCENTAGE.—For pur14 poses of this subparagraph, the applicable per15 centage 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. 

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

15 purposes of this section, the term ‘funded current liability 

16 percentage’ means, with respect to any plan year, the per17 centage 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 may prescribe such 

22 rules as are necessary or appropriate with respect to the 

23 transition of a CSEC plan from the application of section 

24 430 to the application of this section.’’. 

25 (2) SEPARATE RULES FOR CSEC PLANS.— 


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

2 412(a) of the Internal Revenue Code of 1986 is 

3 amended by striking ‘‘and’’ at the end of sub4 paragraph (B), by striking the period at the end 

5 of subparagraph (C) and inserting ‘‘, and’’, and 

6 by inserting at the end thereof the following new 

7 subparagraph: 

8 ‘‘(D) in the case of a CSEC plan, the em9 ployers make contributions to or under the plan 

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

11 sufficient to ensure that the plan does not have 

12 an accumulated funding deficiency under section 

13 433 as of the end of the plan year.’’. 

14 (B) CONFORMING AMENDMENTS.—Section 

15 412 of the Internal Revenue Code of 1986 is 

16 amended— 

17 (i) by striking ‘‘multiemployer plan’’ 

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

19 clause (i) of subsection (c)(1)(B), the first 

20 place it appears in clause (i) of subsection 

21 (c)(1)(A), and the last place it appears in 

22 paragraph (2) of subsection (d), and insert23 ing ‘‘multiemployer plan or a CSEC plan’’, 


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

2 (1) of subsection (b) and inserting ‘‘430(j) 

3 or under 433(f)’’, 

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

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

6 (II) by striking the period at the end 

7 of clause (ii) of subsection (c)(1)(B) and in8 serting ‘‘, and’’, and 

9 (III) by inserting the following new 

10 clause after clause (ii) of subsection 

11 (c)(1)(B): 

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

13 funding standard account shall be credited 

14 under section 433(b)(3)(C) with the amount 

15 of the waived funding deficiency and such 

16 amount shall be amortized as required 

17 under section 433(b)(2)(C).’’, 

18 (iv) by striking ‘‘under paragraph (1)’’ 

19 in clause (i) of subsection (c)(4)(A) and in20 serting ‘‘under paragraph (1) or for grant21 ing an extension under section 433(d)’’, 

22 (v) by striking ‘‘waiver under this sub23 section’’ in subparagraph (B) of subsection 

24 (c)(4) and inserting ‘‘waiver under this sub25 section or an extension under 433(d)’’, 


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1 (vi) by striking ‘‘waiver or modifica2 tion’’ in subclause (I) of subsection 

3 (c)(4)(B)(i) and inserting ‘‘waiver, modi4 fication, or extension’’, 

5 (vii) by striking ‘‘waivers’’ in the 

6 heading of subsection (c)(4)(C) and of 

7 clause (ii) of subsection (c)(4)(C) and in8 serting ‘‘waivers or extensions’’, 

9 (viii) by striking ‘‘section 431(d)’’ in 

10 subparagraph (A) of subsection (c)(7) and 

11 in paragraph (2) of subsection (d) and in12 serting ‘‘section 431(d) or section 433(d)’’, 

13 (ix) by striking ‘‘and’’ at the end of 

14 subclause (I) of subsection (c)(4)(C)(i) and 

15 inserting ‘‘or the accumulated funding defi16 ciency under section 433, whichever is ap17 plicable,’’, 

18 (x) by striking ‘‘430(e)(2),’’ in sub19 clause (II) of subsection (c)(4)(C)(i) and in20 serting ‘‘430(e)(2) or 433(b)(2)(C), which21 ever is applicable, and’’, 

22 (xi) by adding immediately after sub23 clause (II) of subsection (c)(4)(C)(i) the fol24 lowing new subclause: 


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1 ‘‘(III) the total amounts not paid 

2 by reason of an extension in effect 

3 under section 433(d),’’, and 

4 (xii) by striking ‘‘for waivers of’’ in 

5 clause (ii) of subsection (c)(4)(C) and in6 serting ‘‘for waivers or extensions with re7 spect to’’. 

8 (3) BENEFIT RESTRICTIONS.— 

9 (A) IN GENERAL.—Paragraph (29) of sec10 tion 401(a) of the Internal Revenue Code of 1986 

11 is amended by striking ‘‘multiemployer plan’’ 

12 and inserting ‘‘multiemployer plan or a CSEC 

13 plan’’. 

14 (B) CONFORMING CHANGE.—Subsection (a) 

15 of section 436 of the Internal Revenue Code of 

16 1986 is amended by striking ‘‘single-employer 

17 plan’’ and inserting ‘‘single-employer plan (other 

18 than a CSEC plan)’’. 

19 (C) EFFECTIVE DATE.—Any restriction 

20 under sections 401(a)(29) and 436 of the Inter21 nal Revenue Code of 1986 that is in effect with 

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

23 last plan year beginning before January 1, 2014, 

24 shall cease to apply as of the first day of the fol25 lowing plan year. 


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1 (4) BENEFIT INCREASES.—Subparagraph (C) of 

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

3 1986 is amended by striking ‘‘multiemployer plans’’ 

4 and inserting ‘‘multiemployer plans or CSEC plans’’. 

5 SEC. 5. TRANSPARENCY. 

6 (a) NOTICE TO PARTICIPANTS.— 

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

8 101(f) of the Employee Retirement Income Security 

9 Act of 1974 (29 U.S.C. 1021(f)) is amended by add10 ing at the end the following new subparagraph: 

11 ‘‘(E) EFFECT OF CSEC PLAN RULES ON

12 PLAN FUNDING.— 

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

14 CSEC plan, each notice under paragraph 

15 (1) shall include— 

16 ‘‘(I) a statement that different 

17 rules apply to CSEC plans than apply 

18 to single-employer plans, and 

19 ‘‘(II) for the first 2 plan years be20 ginning after December 31, 2013, a 

21 statement that, as a result of changes 

22 in the law made by the Cooperative 

23 and Small Employer Charity Pension 

24 Flexibility Act, the contributions to the 

25 plan may have changed. 


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1 ‘‘(ii) APPLICABLE PLAN YEAR.—For 

2 purposes of this subparagraph, the term 

3 ‘applicable plan year’ means any plan year 

4 beginning after December 31, 2013, for 

5 which— 

6 ‘‘(I) the plan has a funding short7 fall (as defined in section 303(c)(4)) 

8 greater than $1,000,000, and 

9 ‘‘(II) the plan had 50 or more 

10 participants on any day during the 

11 preceding plan year. 

12 For purposes of any determination under 

13 subclause (II), the aggregation rule under 

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

15 shall apply. 

16 ‘‘(iii) SPECIAL RULE FOR PLAN YEARS

17 BEGINNING BEFORE 2014.—In the case of a 

18 preceding plan year referred to in clause 

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

20 2014, the information described in such 

21 clause shall be provided only without regard 

22 to the different rules applicable to CSEC 

23 plans.’’. 

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

25 may modify the model notice required to be published 


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1 under section 501(c) of the Pension Protection Act of 

2 2006 to include the information described in section 

3 101(f)(2)(E) of the Employee Retirement Income Se4 curity Act of 1974, as added by this subsection. 

5 (b) NOTICE OF FAILURE TO MEET MINIMUM FUNDING

6 STANDARDS.— 

7 (1) PENDING WAIVERS.—Paragraph (2) of sec8 tion 101(d) of the Employee Retirement Income Secu9 rity Act of 1974 (29 U.S.C. 1021(d)) is amended by 

10 striking ‘‘303’’ and inserting ‘‘303 or 306’’. 

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

12 101(d) of the Employee Retirement Income Security 

13 Act of 1974 (21 U.S.C. 1021(d)) is amended by strik14 ing ‘‘303(j)’’ and inserting ‘‘303(j) or 306(f), which15 ever is applicable’’. 

16 (c) ADDITIONAL REPORTING REQUIREMENTS.—Sec17 tion 103 of the Employee Retirement Income Security Act 

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

19 the following new subsection: 

20 ‘‘(g) ADDITIONAL INFORMATION WITH RESPECT TO

21 CSEC PLANS.—With respect to any CSEC plan, an annual 

22 report under this section for a plan year shall include a 

23 list of participating employers and a good faith estimate 

24 of the percentage of total contributions made by such par25 ticipating employers during the plan year.’’. 


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1 SEC. 6. ELECTIONS. 

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

3 PLAN.— 

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

5 section 210 of the Employee Retirement Income Secu6 rity Act of 1974, as added by section 3, is amended 

7 by adding at the end the following new paragraph: 

8 ‘‘(3) ELECTION.— 

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

10 the definition of a CSEC plan under this sub11 section (without regard to this paragraph), such 

12 plan shall be a CSEC plan unless the plan spon13 sor elects not later than the close of the first plan 

14 year of the plan beginning after December 31, 

15 2013, not to be treated as a CSEC plan. An elec16 tion under the preceding sentence shall take effect 

17 for such plan year and, once made, may be re18 voked only with the consent of the Secretary of 

19 the Treasury. 

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

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

22 section 104 of the Pension Protection Act of 

23 2006, as amended by the Preservation of Access 

24 to Care for Medicare Beneficiaries and Pension 

25 Relief Act of 2010, shall cease to apply to such 


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1 plan as of the first date as of which such plan 

2 is treated as a CSEC plan.’’. 

3 (2) AMENDMENT TO THE CODE.—Section 414(y) 

4 of the Internal Revenue Code of 1986, as added by 

5 section 3, is amended by adding at the end the fol6 lowing new paragraph: 

7 ‘‘(3) ELECTION.— 

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

9 the definition of a CSEC plan under this sub10 section (without regard to this paragraph), such 

11 plan shall be a CSEC plan unless the plan spon12 sor elects not later than the close of the first plan 

13 year of the plan beginning after December 31, 

14 2013, not to be treated as a CSEC plan. An elec15 tion under the preceding sentence shall take effect 

16 for such plan year and, once made, may be re17 voked only with the consent of the Secretary. 

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

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

20 section 104 of the Pension Protection Act of 

21 2006, as amended by the Preservation of Access 

22 to Care for Medicare Beneficiaries and Pension 

23 Relief Act of 2010, shall cease to apply to such 

24 plan as of the first date as of which such plan 

25 is treated as a CSEC plan.’’. 


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1 (b) ELECTION TO CEASE TO BE TREATED AS AN ELI2 GIBLE CHARITY PLAN.— 

3 (1) IN GENERAL.—Subsection (d) of section 104 

4 of the Pension Protection Act of 2006, as added by 

5 section 202 of the Preservation of Access to Care for 

6 Medicare Beneficiaries and Pension Relief Act of 

7 2010, is amended by— 

8 (A) striking ‘‘For purposes of’’ and insert9 ing ‘‘(1) IN GENERAL.—For purposes of’’, and 

10 (B) adding at the end the following: 

11 ‘‘(2) ELECTION NOT TO BE AN ELIGIBLE CHAR12 ITY PLAN.—A plan sponsor may elect for a plan to 

13 cease to be treated as an eligible charity plan for plan 

14 years beginning after December 31, 2013. Such elec15 tion shall be made at such time and in such form and 

16 manner as shall be prescribed by the Secretary of the 

17 Treasury. Any such election may be revoked only with 

18 the consent of the Secretary of the Treasury. 

19 ‘‘(3) ELECTION TO USE FUNDING OPTIONS AVAIL20 ABLE TO OTHER PLAN SPONSORS.— 

21 ‘‘(A) A plan sponsor that makes the election 

22 described in paragraph (2) may elect for a plan 

23 to apply the rules described in subparagraphs 

24 (B), (C), and (D) for plan years beginning after 

25 December 31, 2013. Such election shall be made 


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1 at such time and in such form and manner as 

2 shall be prescribed by the Secretary of the Treas3 ury. Any such election may be revoked only with 

4 the consent of the Secretary of the Treasury. 

5 ‘‘(B) Under the rules described in this sub6 paragraph, for the first plan year beginning 

7 after December 31, 2013, a plan has— 

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

9 base, 

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

11 base, and 

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

13 base. 

14 ‘‘(C) Under the rules described in this sub15 paragraph, section 303(c)(2)(A) and (B) of the 

16 Employee Retirement Income Security Act of 

17 1974, and section 430(c)(2)(A) and (B) of the 

18 Internal Revenue Code of 1986 shall be applied 

19 by— 

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

21 amortization base, substituting ‘11-plan22 year period’ for ‘7-plan-year period’ wher23 ever such phrase appears, and 

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

25 amortization base, substituting ‘12-planVerDate Mar 15 2010 21:14 Oct 30, 2013 Jkt 039200 PO 00000 Frm 00187 Fmt 6652 Sfmt 6203 E:\BILLS\S1302.RS S1302

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1 year period’ for ‘7-plan-year period’ wher2 ever such phrase appears. 

3 ‘‘(D) Under the rules described in this sub4 paragraph, section 303(c)(7) of the Employee Re5 tirement Income Security Act of 1974, and sec6 tion 430(c)(7) of the Internal Revenue Code of 

7 1986 shall apply to a plan for which an election 

8 has been made under subparagraph (A). Such 

9 provisions shall apply in the following manner: 

10 ‘‘(i) The first plan year beginning after 

11 December 31, 2013, shall be treated as an 

12 election year, and no other plan years shall 

13 be so treated. 

14 ‘‘(ii) All references in section 303(c)(7) 

15 of such Act and section 430(c)(7) of such 

16 Code to ‘February 28, 2010’ or ‘March 1, 

17 2010’ shall be treated as references to ‘Feb18 ruary 28, 2013’ or ‘March 1, 2013’, respec19 tively. 

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

21 11-year amortization base is an amount, deter22 mined for the first plan year beginning after De23 cember 31, 2013, equal to the unamortized prin24 cipal amount of the shortfall amortization base 

25 (as defined in section 303(c)(3) of the Employee 


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1 Retirement Income Security Act of 1974 and sec2 tion 430(c)(3) of the Internal Revenue Code of 

3 1986) that would have applied to the plan for 

4 the first plan beginning after December 31, 2009, 

5 if— 

6 ‘‘(i) the plan had never been an eligible 

7 charity plan, 

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

9 election described in section 303(c)(2)(D)(i) 

10 of the Employee Retirement Income Secu11 rity Act of 1974 and in section 

12 430(c)(2)(D)(i) of the Internal Revenue 

13 Code of 1986 to have section 303(c)(2)(D)(i) 

14 of such Act and section 430(c)(2)(D)(iii) of 

15 such Code apply with respect to the shortfall 

16 amortization base for the first plan year be17 ginning after December 31, 2009, and 

18 ‘‘(iii) no event had occurred under 

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

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

21 430(c) of such Code that, as of the first day 

22 of the first plan year beginning after De23 cember 31, 2013, would have modified the 

24 shortfall amortization base or the shortfall 

25 amortization installments with respect to 


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1 the first plan year beginning after December 

2 31, 2009. 

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

4 12-year amortization base is an amount, deter5 mined for the first plan year beginning after De6 cember 31, 2013, equal to the unamortized prin7 cipal amount of the shortfall amortization base 

8 (as defined in section 303(c)(3) of the Employee 

9 Retirement Income Security Act of 1974 and sec10 tion 430(c)(3) of the Internal Revenue Code of 

11 1986) that would have applied to the plan for 

12 the first plan beginning after December 31, 2010, 

13 if— 

14 ‘‘(i) the plan had never been an eligible 

15 charity plan, 

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

17 election described in section 303(c)(2)(D)(i) 

18 of the Employee Retirement Income Secu19 rity Act of 1974 and in section 

20 430(c)(2)(D)(i) of the Internal Revenue 

21 Code of 1986 to have section 303(c)(2)(D)(i) 

22 of such Act and section 430(c)(2)(D)(iii) of 

23 such Code apply with respect to the shortfall 

24 amortization base for the first plan year be25 ginning after December 31, 2010, and 


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1 ‘‘(iii) no event had occurred under 

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

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

4 430(c) of such Code that, as of the first day 

5 of the first plan year beginning after De6 cember 31, 2013, would have modified the 

7 shortfall amortization base or the shortfall 

8 amortization installments with respect to 

9 the first plan year beginning after December 

10 31, 2010. 

11 ‘‘(G) For purposes of this paragraph, the 7- 

12 year shortfall amortization base is an amount, 

13 determined for the first plan year beginning 

14 after December 31, 2013, equal to— 

15 ‘‘(i) the shortfall amortization base for 

16 the first plan year beginning after December 

17 31, 2013, without regard to this paragraph, 

18 minus 

19 ‘‘(ii) the sum of the 11-year shortfall 

20 amortization base and the 12-year shortfall 

21 amortization base.’’. 

22 (c) DEEMED ELECTION.—For purposes of sections 

23 4(b)(2) and 4021(b)(3) of the Employee Retirement Income 

24 Security Act of 1974, a plan shall be deemed to have made 


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1 an irrevocable election under section 410(d) of the Internal 

2 Revenue Code of 1986 if— 

3 (1) the plan was established before January 1, 

4 2014; 

5 (2) the plan falls within the definition of a 

6 CSEC plan; 

7 (3) the plan sponsor does not make an election 

8 under section 210(f)(3)(A) of the Employee Retire9 ment Income Security Act of 1974 and section 

10 414(y)(3)(A) of the Internal Revenue Code of 1986, as 

11 added by this Act; and 

12 (4) the plan, plan sponsor, administrator, or fi13 duciary remits one or more premium payments for 

14 the plan to the Pension Benefit Guaranty Corpora15 tion for a plan year beginning after December 31, 

16 2013. 

17 (d) EFFECTIVE DATE.—The amendments made by this 

18 section shall apply as of the date of enactment of this Act. 

19 SEC. 7. SPONSOR EDUCATION AND ASSISTANCE. 

20 (a) DEFINITION.—In this section, the term ‘‘CSEC 

21 plan’’ has the meaning given that term in subsection (f)(1) 

22 of section 210 of the Employee Retirement Income Security 

23 Act of 1974 (29 U.S.C. 1060(f)(1)) (as added by this Act). 

24 (b) EDUCATION.—The Participant and Plan Sponsor 

25 Advocate established under section 4004 of the Employee 


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1 Retirement Income Security Act of 1974 (29 U.S.C. 1304) 

2 shall make itself available to assist CSEC plan sponsors 

3 and participants as part of the duties it performs under 

4 the general supervision of the Board of Directors under sec5 tion 4004(b) of such Act (29 U.S.C. 1304(b)). 

6 SEC. 8. EFFECTIVE DATE. 

7 Unless otherwise specified in this Act, the provisions 

8 of this Act shall apply to years beginning after December 

9 31, 2013. 


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Calendar No. 230 

113TH CONGRESS 

1ST SESSION S. 1302 

A BILL 

To amend the Employee Retirement Income Secuployer charity pension plans. of 1986 to provide for cooperative and small em- rity Act of 1974 and the Internal Revenue Code 

OCTOBER 30, 2013 

Reported with an amendment 


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