I 

115TH CONGRESS 

2D SESSION H. R. 4997 

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

Internal Revenue Code of 1986 to authorize a new composite multiemployer pension plan design, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 13, 2018 

Mr. ROE of Tennessee (for himself and Mr. NORCROSS) introduced the following bill; which was referred to the Committee on Education and the 

Workforce, and in addition to the Committee on Ways and Means, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Employee Retirement Income Security Act 

of 1974 and the Internal Revenue Code of 1986 to 

authorize a new composite multiemployer pension plan 

design, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Giving Retirement Op5 tions to Workers Act of 2018’’ or the ‘‘GROW Act’’. 


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1 SEC. 2. COMPOSITE PLANS. 

2 (a) AMENDMENT TO THE EMPLOYEE RETIREMENT

3 INCOME SECURITY ACT OF 1974.— 

4 (1) IN GENERAL.—Title I of the Employee Re5 tirement Income Security Act of 1974 (29 U.S.C. 

6 1001 et seq.) is amended by adding at the end the 

7 following: 

8 ‘‘PART 8—COMPOSITE PLANS AND LEGACY 

9 PLANS 

10 ‘‘SEC. 801. COMPOSITE PLAN DEFINED. 

11 ‘‘(a) IN GENERAL.—For purposes of this Act, the 

12 term ‘composite plan’ means a pension plan— 

13 ‘‘(1) which is a multiemployer plan that is nei14 ther a defined benefit plan nor a defined contribu15 tion plan; 

16 ‘‘(2) the terms of which provide that the plan 

17 is a composite plan for purposes of this title with re18 spect to which not more than one multiemployer de19 fined benefit plan is treated as a legacy plan within 

20 the meaning of section 805, unless there is more 

21 than one legacy plan following a merger of composite 

22 plans under section 806; 

23 ‘‘(3) which provides systematically for the pay24 ment of benefits— 

25 ‘‘(A) objectively calculated pursuant to a 

26 formula enumerated in the plan document with 


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1 respect to plan participants after retirement, 

2 for life; and 

3 ‘‘(B) in the form of life annuities, except 

4 for benefits which under section 203(e) may be 

5 immediately distributed without the consent of 

6 the participant; 

7 ‘‘(4) for which the plan contributions for the 

8 first plan year are at least 120 percent of the nor9 mal cost for the plan year; 

10 ‘‘(5) which requires— 

11 ‘‘(A) an annual valuation of the liability of 

12 the plan as of a date within the plan year to 

13 which the valuation refers or within one month 

14 prior to the beginning of such year; 

15 ‘‘(B) an annual actuarial determination of 

16 the plan’s current funded ratio and projected 

17 funded ratio under section 802(a); 

18 ‘‘(C) corrective action through a realign19 ment program pursuant to section 803 when20 ever the plan’s projected funded ratio is below 

21 120 percent for the plan year; and 

22 ‘‘(D) an annual notification to each partici23 pant describing the participant’s benefits under 

24 the plan and explaining that such benefits may 

25 be subject to reduction under a realignment 


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1 program pursuant to section 803 based on the 

2 plan’s funded status in future plan years; and 

3 ‘‘(6) the board of trustees of which includes at 

4 least one retiree or beneficiary in pay status during 

5 each plan year following the first plan year in which 

6 at least 5 percent of the participants in the plan are 

7 retirees or beneficiaries in pay status. 

8 ‘‘(b) TRANSITION FROM A MULTIEMPLOYER DE9 FINED BENEFIT PLAN.— 

10 ‘‘(1) IN GENERAL.—The plan sponsor of a de11 fined benefit plan that is a multiemployer plan may, 

12 subject to paragraph (2), amend the plan to incor13 porate the features of a composite plan as a compo14 nent of the multiemployer plan separate from the 

15 defined benefit plan component, except in the case of 

16 a defined benefit plan for which the plan actuary has 

17 certified under section 305(b)(3) that the plan is or 

18 will be in critical status for the plan year in which 

19 such amendment would become effective or for any 

20 of the succeeding 5 plan years. 

21 ‘‘(2) REQUIREMENTS.—Any amendment pursu22 ant to paragraph (1) to incorporate the features of 

23 a composite plan as a component of a multiemployer 

24 plan shall— 


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1 ‘‘(A) apply with respect to all collective 

2 bargaining agreements providing for contribu3 tions to the multiemployer plan on or after the 

4 effective date of the amendment; 

5 ‘‘(B) apply with respect to all participants 

6 in the multiemployer plan for whom contribu7 tions are made to the multiemployer plan on or 

8 after the effective date of the amendment; 

9 ‘‘(C) specify that the effective date of the 

10 amendment is— 

11 ‘‘(i) the first day of a specified plan 

12 year following the date of the adoption of 

13 the amendment, except that the plan spon14 sor may alternatively provide for a sepa15 rate effective date with respect to each col16 lective bargaining agreement under which 

17 contributions to the multiemployer plan 

18 are required, which shall occur on the first 

19 day of the first plan year beginning after 

20 the termination, or if earlier, the re-open21 ing, of each such agreement, or such ear22 lier date as the parties to the agreement 

23 and the plan sponsor of the multiemployer 

24 plan shall agree to; and 


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1 ‘‘(ii) not later than the first day of the 

2 fifth plan year beginning on or after the 

3 date of the adoption of the amendment; 

4 ‘‘(D) specify that, as of the amendment’s 

5 effective date, no further benefits shall accrue 

6 under the defined benefit component of the 

7 multiemployer plan; and 

8 ‘‘(E) specify that, as of the amendment’s 

9 effective date, the plan sponsor of the multiem10 ployer plan shall be the plan sponsor of both 

11 the composite plan component and the defined 

12 benefit plan component of the plan. 

13 ‘‘(3) SPECIAL RULES.—If a multiemployer plan 

14 is amended pursuant to paragraph (1)— 

15 ‘‘(A) the requirements of this title and title 

16 IV shall be applied to the composite plan com17 ponent and the defined benefit plan component 

18 of the multiemployer plan as if each such com19 ponent were maintained as a separate plan; and 

20 ‘‘(B) the assets of the composite plan com21 ponent and the defined benefit plan component 

22 of the plan shall be held in a single trust form23 ing part of the plan under which the trust in24 strument expressly provides— 


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1 ‘‘(i) for separate accounts (and appro2 priate records) to be maintained to reflect 

3 the interest which each of the plan compo4 nents has in the trust, including separate 

5 accounting for additions to the trust for 

6 the benefit of each plan component, dis7 bursements made from each plan compo8 nent’s account in the trust, investment ex9 perience of the trust allocable to that ac10 count, and administrative expenses (wheth11 er direct expenses or shared expenses allo12 cated proportionally), and permits, but 

13 does not require, the pooling of some or all 

14 of the assets of the two plan components 

15 for investment purposes; and 

16 ‘‘(ii) that the assets of each of the two 

17 plan components shall be held, invested, 

18 reinvested, managed, administered and dis19 tributed for the exclusive benefit of the 

20 participants and beneficiaries of each such 

21 plan component, and in no event shall the 

22 assets of one of the plan components be 

23 available to pay benefits due under the 

24 other plan component. 


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1 ‘‘(4) NOT A TERMINATION EVENT.—Notwith2 standing section 4041A, an amendment pursuant to 

3 paragraph (1) to incorporate the features of a com4 posite plan as a component of a multiemployer plan 

5 does not constitute termination of the multiemployer 

6 plan. 

7 ‘‘(5) NOTICE TO THE SECRETARY.— 

8 ‘‘(A) NOTICE.—The plan sponsor of a 

9 composite plan shall provide notice to the Sec10 retary of the intent to establish the composite 

11 plan (or, in the case of a composite plan incor12 porated as a component of a multiemployer 

13 plan as described in paragraph (1), the intent 

14 to amend the multiemployer plan to incorporate 

15 such composite plan) at least 30 days prior to 

16 the effective date of such establishment or 

17 amendment. 

18 ‘‘(B) CERTIFICATION.—In the case of a 

19 composite plan incorporated as a component of 

20 a multiemployer plan as described in paragraph 

21 (1), such notice shall include a certification by 

22 the plan actuary under section 305(b)(3) that 

23 the effective date of the amendment occurs in 

24 a plan year for which the multiemployer plan is 


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1 not in critical status for that plan year and any 

2 of the succeeding 5 plan years. 

3 ‘‘(6) REFERENCES TO COMPOSITE PLAN COM4 PONENT.—As used in this part, the term ‘composite 

5 plan’ includes a composite plan component added to 

6 a defined benefit plan pursuant to paragraph (1). 

7 ‘‘(7) RULE OF CONSTRUCTION.—Paragraph 

8 (2)(A) shall not be construed as preventing the plan 

9 sponsor of a multiemployer plan from adopting an 

10 amendment pursuant to paragraph (1) because some 

11 collective bargaining agreements are amended to 

12 cease any covered employer’s obligation to contribute 

13 to the multiemployer plan before or after the plan 

14 amendment is effective. Paragraph (2)(B) shall not 

15 be construed as preventing the plan sponsor of a 

16 multiemployer plan from adopting an amendment 

17 pursuant to paragraph (1) because some partici18 pants cease to have contributions made to the multi19 employer plan on their behalf before or after the 

20 plan amendment is effective. 

21 ‘‘(c) COORDINATION WITH FUNDING RULES.—Ex22 cept as otherwise provided in this title, sections 302, 304, 

23 and 305 shall not apply to a composite plan. 

24 ‘‘(d) TREATMENT OF A COMPOSITE PLAN.—For pur25 poses of this Act (other than sections 302 and 4245), a 


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1 composite plan shall be treated as if it were a defined ben2 efit plan unless a different treatment is provided for under 

3 applicable law. 

4 ‘‘SEC. 802. FUNDED RATIOS; ACTUARIAL ASSUMPTIONS. 

5 ‘‘(a) CERTIFICATION OF FUNDED RATIOS.— 

6 ‘‘(1) IN GENERAL.—Not later than the one7 hundred twentieth day of each plan year of a com8 posite plan, the plan actuary of the composite plan 

9 shall certify to the Secretary, the Secretary of the 

10 Treasury, and the plan sponsor the plan’s current 

11 funded ratio and projected funded ratio for the plan 

12 year. 

13 ‘‘(2) DETERMINATION OF CURRENT FUNDED

14 RATIO AND PROJECTED FUNDED RATIO.—For pur15 poses of this section: 

16 ‘‘(A) CURRENT FUNDED RATIO.—The cur17 rent funded ratio is the ratio (expressed as a 

18 percentage) of— 

19 ‘‘(i) the value of the plan’s assets as 

20 of the first day of the plan year; to 

21 ‘‘(ii) the plan actuary’s best estimate 

22 of the present value of the plan liabilities 

23 as of the first day of the plan year. 

24 ‘‘(B) PROJECTED FUNDED RATIO.—The 

25 projected funded ratio is the current funded 


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1 ratio projected to the first day of the fifteenth 

2 plan year following the plan year for which the 

3 determination is being made. 

4 ‘‘(3) CONSIDERATION OF CONTRIBUTION RATE

5 INCREASES.—For purposes of projections under this 

6 subsection, the plan sponsor may anticipate con7 tribution rate increases beyond the term of the cur8 rent collective bargaining agreement and any agreed9 to supplements, up to a maximum of 2.5 percent per 

10 year, compounded annually, unless it would be un11 reasonable under the circumstances to assume that 

12 contributions would increase by that amount. 

13 ‘‘(b) ACTUARIAL ASSUMPTIONS AND METHODS.— 

14 For purposes of this part: 

15 ‘‘(1) IN GENERAL.—All costs, liabilities, rates 

16 of interest and other factors under the plan shall be 

17 determined for a plan year on the basis of actuarial 

18 assumptions and methods— 

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

20 into account the experience of the plan and rea21 sonable expectations); 

22 ‘‘(B) which, in combination, offer the actu23 ary’s best estimate of anticipated experience 

24 under the plan; and 


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1 ‘‘(C) with respect to which any change 

2 from the actuarial assumptions and methods 

3 used in the previous plan year shall be certified 

4 by the plan actuary and the actuarial rationale 

5 for such change provided in the annual report 

6 required by section 103. 

7 ‘‘(2) FAIR MARKET VALUE OF ASSETS.—The 

8 value of the plan’s assets shall be taken into account 

9 on the basis of their fair market value. 

10 ‘‘(3) DETERMINATION OF NORMAL COST AND

11 PLAN LIABILITIES.—A plan’s normal cost and liabil12 ities shall be based on the most recent actuarial 

13 valuation required under section 801(a)(5)(A) and 

14 the unit credit funding method. 

15 ‘‘(4) TIME WHEN CERTAIN CONTRIBUTIONS

16 DEEMED MADE.—Any contributions for a plan year 

17 made by an employer after the last day of such plan 

18 year, but not later than two and one-half months 

19 after such day, shall be deemed to have been made 

20 on such last day. For purposes of this paragraph, 

21 such two and one-half month period may be ex22 tended for not more than six months under regula23 tions prescribed by the Secretary of the Treasury. 

24 ‘‘(5) ADDITIONAL ACTUARIAL ASSUMPTIONS.— 

25 Except where otherwise provided in this part, the 


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1 provisions of section 305(b)(3)(B) shall apply to any 

2 determination or projection under this part. 

3 ‘‘SEC. 803. REALIGNMENT PROGRAM. 

4 ‘‘(a) REALIGNMENT PROGRAM.— 

5 ‘‘(1) ADOPTION.—In any case in which the plan 

6 actuary certifies under section 802(a) that the plan’s 

7 projected funded ratio is below 120 percent for the 

8 plan year, the plan sponsor shall adopt a realign9 ment program under paragraph (2) not later than 

10 210 days after the due date of the certification re11 quired under such section 802(a). The plan sponsor 

12 shall adopt an updated realignment program for 

13 each succeeding plan year for which a certification 

14 described in the preceding sentence is made. 

15 ‘‘(2) CONTENT OF REALIGNMENT PROGRAM.— 

16 ‘‘(A) IN GENERAL.—A realignment pro17 gram adopted under this paragraph is a written 

18 program which consists of all reasonable meas19 ures, including options or a range of options to 

20 be undertaken by the plan sponsor or proposed 

21 to the bargaining parties, formulated, based on 

22 reasonably anticipated experience and reason23 able actuarial assumptions, to enable the plan 

24 to achieve a projected funded ratio of at least 

25 120 percent for the following plan year. 


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1 ‘‘(B) INITIAL PROGRAM ELEMENTS.—Rea2 sonable measures under a realignment program 

3 described in subparagraph (A) may include any 

4 of the following: 

5 ‘‘(i) Proposed contribution increases. 

6 ‘‘(ii) A reduction in the rate of future 

7 benefit accruals, so long as the resulting 

8 rate is not less than 1 percent of the con9 tributions on which benefits are based as 

10 of the start of the plan year (or the equiva11 lent standard accrual rate as described in 

12 section 305(e)(6)). 

13 ‘‘(iii) A modification or elimination of 

14 adjustable benefits of participants that are 

15 not in pay status before the date of the no16 tice required under subsection (b)(1). 

17 ‘‘(iv) Any other lawfully available 

18 measures not specifically described in this 

19 subparagraph or subparagraph (C) or (D) 

20 that the plan sponsor determines are rea21 sonable. 

22 ‘‘(C) ADDITIONAL PROGRAM ELEMENTS.— 

23 If the plan sponsor has determined that all rea24 sonable measures available under subparagraph 

25 (B) will not enable the plan to achieve a proVerDate Sep 11 2014 03:27 Feb 15, 2018 Jkt 079200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H4997.IH H4997

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1 jected funded ratio of at least 120 percent for 

2 the following plan year, such reasonable meas3 ures may also include— 

4 ‘‘(i) a reduction of accrued benefits 

5 that are not in pay status by the date of 

6 the notice required under subsection 

7 (b)(1); or 

8 ‘‘(ii) a reduction of any benefits of 

9 participants that are in pay status before 

10 the date of the notice required under sub11 section (b)(1) other than core benefits as 

12 defined in paragraph (4). 

13 ‘‘(D) ADDITIONAL REDUCTIONS.—In the 

14 case of a composite plan for which the plan 

15 sponsor has determined that all reasonable 

16 measures available under subparagraphs (B) 

17 and (C) will not enable the plan to achieve a 

18 projected funded ratio of at least 120 percent 

19 for the following plan year, such reasonable 

20 measures may also include— 

21 ‘‘(i) a further reduction in the rate of 

22 future benefit accruals without regard to 

23 the limitation applicable under subpara24 graph (B)(ii); or 

25 ‘‘(ii) a reduction of core benefits; 


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1 provided that such reductions shall be equitably 

2 distributed across the participant and bene3 ficiary population, taking into account factors, 

4 with respect to participants and beneficiaries 

5 and their benefits, that may include one or 

6 more of the factors listed in subclauses (I) 

7 through (X) of section 305(e)(9)(D)(vi), to the 

8 extent necessary to enable the plan to achieve 

9 a projected funded ratio of at least 120 percent 

10 for the following plan year, or at the election of 

11 the plan sponsor, a projected funded ratio of at 

12 least 100 percent for the following plan year 

13 and a current funded ratio of at least 90 per14 cent. 

15 ‘‘(3) ADJUSTABLE BENEFIT DEFINED.—For 

16 purposes of this part, the term ‘adjustable benefit’ 

17 means— 

18 ‘‘(A) benefits, rights, and features under 

19 the plan, including post-retirement death bene20 fits, 60-month guarantees, disability benefits 

21 not yet in pay status, and similar benefits; 

22 ‘‘(B) any early retirement benefit or retire23 ment-type subsidy (within the meaning of sec24 tion 204(g)(2)(A)) and any benefit payment opVerDate Sep 11 2014 03:27 Feb 15, 2018 Jkt 079200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H4997.IH H4997

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1 tion (other than the qualified joint and survivor 

2 annuity); and 

3 ‘‘(C) benefit increases that were adopted 

4 (or, if later, took effect) less than 60 months 

5 before the first day such realignment program 

6 took effect. 

7 ‘‘(4) CORE BENEFIT DEFINED.—For purposes 

8 of this part, the term ‘core benefit’ means a partici9 pant’s accrued benefit payable in the normal form of 

10 an annuity commencing at normal retirement age, 

11 determined without regard to— 

12 ‘‘(A) any early retirement benefits, retire13 ment-type subsidies, or other benefits, rights, or 

14 features that may be associated with that ben15 efit; and 

16 ‘‘(B) any cost-of-living adjustments or ben17 efit increases effective after the date of retire18 ment. 

19 ‘‘(5) COORDINATION WITH CONTRIBUTION IN20 CREASES.— 

21 ‘‘(A) IN GENERAL.—A realignment pro22 gram may provide that some or all of the ben23 efit modifications described in the program will 

24 only take effect if the bargaining parties fail to 


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1 agree to specified levels of increases in contribu2 tions to the plan, effective as of specified dates. 

3 ‘‘(B) INDEPENDENT BENEFIT MODIFICA4 TIONS.—If a realignment program adopts any 

5 changes to the benefit formula that are inde6 pendent of potential contribution increases, 

7 such changes shall take effect not later than 

8 180 days after the first day of the first plan 

9 year that begins following the adoption of the 

10 realignment program. 

11 ‘‘(C) CONDITIONAL BENEFIT MODIFICA12 TIONS.—If a realignment program adopts any 

13 changes to the benefit formula that take effect 

14 only if the bargaining parties fail to agree to 

15 contribution increases, such changes shall take 

16 effect not later than the first day of the first 

17 plan year beginning after the third anniversary 

18 of the date of adoption of the realignment pro19 gram. 

20 ‘‘(D) REVOCATION OF CERTAIN BENEFIT

21 MODIFICATIONS.—Benefit modifications de22 scribed in subparagraph (C) may be revoked, in 

23 whole or in part, and retroactively or prospec24 tively, when contributions to the plan are in25 creased, as specified in the realignment proVerDate Sep 11 2014 03:27 Feb 15, 2018 Jkt 079200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\H4997.IH H4997

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1 gram, including any amendments thereto. The 

2 preceding sentence shall not apply unless the 

3 contribution increases are to be effective not 

4 later than the fifth anniversary of the first day 

5 of the first plan year that begins after the 

6 adoption of the realignment program. 

7 ‘‘(b) NOTICE.— 

8 ‘‘(1) IN GENERAL.—In any case in which it is 

9 certified under section 802(a) that the projected 

10 funded ratio is less than 120 percent, the plan spon11 sor shall, not later than 30 days after the date of 

12 the certification, provide notification of the current 

13 and projected funded ratios to the participants and 

14 beneficiaries, the bargaining parties, and the Sec15 retary. Such notice shall include— 

16 ‘‘(A) an explanation that contribution rate 

17 increases or benefit reductions may be nec18 essary; 

19 ‘‘(B) a description of the types of benefits 

20 that might be reduced; and 

21 ‘‘(C) an estimate of the contribution in22 creases and benefit reductions that may be nec23 essary to achieve a projected funded ratio of 

24 120 percent. 

25 ‘‘(2) NOTICE OF BENEFIT MODIFICATIONS.— 


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1 ‘‘(A) IN GENERAL.—No modifications may 

2 be made that reduce the rate of future benefit 

3 accrual or that reduce core benefits or adjust4 able benefits unless notice of such reduction has 

5 been given at least 180 days before the general 

6 effective date of such reduction for all partici7 pants and beneficiaries to— 

8 ‘‘(i) plan participants and bene9 ficiaries; 

10 ‘‘(ii) each employer who has an obliga11 tion to contribute to the composite plan; 

12 and 

13 ‘‘(iii) each employee organization 

14 which, for purposes of collective bar15 gaining, represents plan participants em16 ployed by such employers. 

17 ‘‘(B) CONTENT OF NOTICE.—The notice 

18 under subparagraph (A) shall contain— 

19 ‘‘(i) sufficient information to enable 

20 participants and beneficiaries to under21 stand the effect of any reduction on their 

22 benefits, including an illustration of any 

23 affected benefit or subsidy, on an annual 

24 or monthly basis that a participant or ben25 eficiary would otherwise have been eligible 


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1 for as of the general effective date de2 scribed in subparagraph (A); and 

3 ‘‘(ii) information as to the rights and 

4 remedies of plan participants and bene5 ficiaries as well as how to contact the De6 partment of Labor for further information 

7 and assistance, where appropriate. 

8 ‘‘(C) FORM AND MANNER.—Any notice 

9 under subparagraph (A)— 

10 ‘‘(i) shall be provided in a form and 

11 manner prescribed in regulations of the 

12 Secretary of Labor; 

13 ‘‘(ii) shall be written in a manner so 

14 as to be understood by the average plan 

15 participant. 

16 ‘‘(3) MODEL NOTICES.—The Secretary shall— 

17 ‘‘(A) prescribe model notices that the plan 

18 sponsor of a composite plan may use to satisfy 

19 the notice requirements under this subsection; 

20 and 

21 ‘‘(B) by regulation enumerate any details 

22 related to the elements listed in paragraph (1) 

23 that any notice under this subsection must in24 clude. 


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1 ‘‘(4) DELIVERY METHOD.—Any notice under 

2 this part shall be provided in writing and may also 

3 be provided in electronic form to the extent that the 

4 form is reasonably accessible to persons to whom the 

5 notice is provided. 

6 ‘‘SEC. 804. LIMITATION ON INCREASING BENEFITS. 

7 ‘‘(a) LEVEL OF CURRENT FUNDED RATIOS.—Except 

8 as provided in subsections (c), (d), and (e), no plan 

9 amendment increasing benefits or establishing new bene10 fits under a composite plan may be adopted for a plan 

11 year unless— 

12 ‘‘(1) the plan’s current funded ratio is at least 

13 110 percent (without regard to the benefit increase 

14 or new benefits); 

15 ‘‘(2) taking the benefit increase or new benefits 

16 into account, the current funded ratio is at least 100 

17 percent and the projected funded ratio for the cur18 rent plan year is at least 120 percent; 

19 ‘‘(3) in any case in which, after taking the ben20 efit increase or new benefits into account, the cur21 rent funded ratio is less than 140 percent and the 

22 projected funded ratio is less than 140 percent, the 

23 benefit increase or new benefits are projected by the 

24 plan actuary to increase the present value of the 


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1 plan’s liabilities for the plan year by not more than 

2 3 percent; and 

3 ‘‘(4) expected contributions for the current plan 

4 year are at least 120 percent of normal cost for the 

5 plan year, determined using the unit credit funding 

6 method and treating the benefit increase or new ben7 efits as in effect for the entire plan year. 

8 ‘‘(b) ADDITIONAL REQUIREMENTS WHERE CORE

9 BENEFITS REDUCED.—If a plan has been amended to re10 duce core benefits pursuant to a realignment program 

11 under section 803(a)(2)(D), such plan may not be subse12 quently amended to increase core benefits unless the 

13 amendment— 

14 ‘‘(1) increases the level of future benefit pay15 ments only; and 

16 ‘‘(2) provides for an equitable distribution of 

17 benefit increases across the participant and bene18 ficiary population, taking into account the extent to 

19 which the benefits of participants were previously re20 duced pursuant to such realignment program. 

21 ‘‘(c) EXCEPTION TO COMPLY WITH APPLICABLE

22 LAW.—Subsection (a) shall not apply in connection with 

23 a plan amendment if the amendment is required as a con24 dition of qualification under part I of subchapter D of 


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1 chapter 1 of the Internal Revenue Code of 1986 or to com2 ply with other applicable law. 

3 ‘‘(d) EXCEPTION WHERE MAXIMUM DEDUCTIBLE

4 LIMIT APPLIES.—Subsection (a) shall not apply in con5 nection with a plan amendment if and to the extent that 

6 contributions to the composite plan would not be deduct7 ible for the plan year under section 404(a)(1)(E) of the 

8 Internal Revenue Code of 1986 if the plan amendment is 

9 not adopted. 

10 ‘‘(e) EXCEPTION FOR CERTAIN BENEFIT MODIFICA11 TIONS.—Subsection (a) shall not apply in connection with 

12 a plan amendment under section 803(a)(5)(C), regarding 

13 conditional benefit modifications. 

14 ‘‘(f) TREATMENT OF PLAN AMENDMENTS.—For pur15 poses of this section— 

16 ‘‘(1) if two or more plan amendments increas17 ing benefits or establishing new benefits are adopted 

18 in a plan year, such amendments shall be treated as 

19 a single amendment adopted on the last day of the 

20 plan year; 

21 ‘‘(2) all benefit increases and new benefits 

22 adopted in a single amendment are treated as a sin23 gle benefit increase, irrespective of whether the in24 creases and new benefits take effect in more than 

25 one plan year; and 


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1 ‘‘(3) increases in contributions or decreases in 

2 plan liabilities which are scheduled to take effect in 

3 future plan years may be taken into account in con4 nection with a plan amendment if they have been 

5 agreed to in writing or otherwise formalized by the 

6 date the plan amendment is adopted. 

7 ‘‘SEC. 805. COMPOSITE PLAN RESTRICTIONS TO PRESERVE 

8 LEGACY PLAN FUNDING. 

9 ‘‘(a) TREATMENT AS A LEGACY PLAN.— 

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

11 and parts 2 and 3, a defined benefit plan shall be 

12 treated as a legacy plan with respect to the com13 posite plan under which the employees who were eli14 gible to accrue a benefit under the defined benefit 

15 plan become eligible to accrue a benefit under such 

16 composite plan. 

17 ‘‘(2) COMPONENT PLANS.—In any case in 

18 which a defined benefit plan is amended to add a 

19 composite plan component pursuant to section 

20 801(b), paragraph (1) shall be applied by sub21 stituting ‘defined benefit component’ for ‘defined 

22 benefit plan’ and ‘composite plan component’ for 

23 ‘composite plan’. 

24 ‘‘(3) ELIGIBLE TO ACCRUE A BENEFIT.—For 

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1 ered eligible to accrue a benefit under a composite 

2 plan as of the first day in which the employee com3 pletes an hour of service under a collective bar4 gaining agreement that provides for contributions to 

5 and accruals under the composite plan in lieu of ac6 cruals under the legacy plan. 

7 ‘‘(4) COLLECTIVE BARGAINING AGREEMENT.— 

8 As used in this part, the term ‘collective bargaining 

9 agreement’ includes any agreement under which an 

10 employer has an obligation to contribute to a plan. 

11 ‘‘(5) OTHER TERMS.—Any term used in this 

12 part which is not defined in this part and which is 

13 also used in section 305 shall have the same mean14 ing provided such term in such section. 

15 ‘‘(b) RESTRICTIONS ON ACCEPTANCE BY COMPOSITE

16 PLAN OF AGREEMENTS AND CONTRIBUTIONS.— 

17 ‘‘(1) IN GENERAL.—The plan sponsor of a com18 posite plan shall not accept or recognize a collective 

19 bargaining agreement (or any modification to such 

20 agreement), and no contributions may be accepted 

21 and no benefits may be accrued or otherwise earned 

22 under the agreement— 

23 ‘‘(A) in any case in which the plan actuary 

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1 posite plan has certified under section 

2 305(b)(3) that such defined benefit plan is or 

3 will be in critical status for the plan year in 

4 which such agreement would take effect or for 

5 any of the succeeding 5 plan years; and 

6 ‘‘(B) unless the agreement requires each 

7 employer who is a party to such agreement, in8 cluding employers whose employees are not par9 ticipants in the legacy plan, to provide contribu10 tions to the legacy plan with respect to such 

11 composite plan in a manner that satisfies the 

12 transition contribution requirements of sub13 section (d). 

14 ‘‘(2) NOTICE.—Not later than 30 days after a 

15 determination by a plan sponsor of a composite plan 

16 that an agreement fails to satisfy the requirements 

17 described in paragraph (1), the plan sponsor shall 

18 provide notification of such failure and the reasons 

19 for such determination— 

20 ‘‘(A) to the parties to the agreement; 

21 ‘‘(B) to active participants of the com22 posite plan who have ceased to accrue or other23 wise earn benefits with respect to service with 

24 an employer pursuant to paragraph (1); and 


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1 ‘‘(C) to the Secretary, the Secretary of the 

2 Treasury, and the Pension Benefit Guaranty 

3 Corporation. 

4 ‘‘(3) LIMITATION ON RETROACTIVE EFFECT.— 

5 This subsection shall not apply to benefits accrued 

6 before the date on which notice is provided under 

7 paragraph (2). 

8 ‘‘(c) RESTRICTION ON ACCRUAL OF BENEFITS

9 UNDER A COMPOSITE PLAN.— 

10 ‘‘(1) IN GENERAL.—In any case in which an 

11 employer, under a collective bargaining agreement 

12 entered into after February 5, 2018, ceases to have 

13 an obligation to contribute to a multiemployer de14 fined benefit plan, no employees employed by the 

15 employer may accrue or otherwise earn benefits 

16 under any composite plan, with respect to service 

17 with that employer, for a 60-month period beginning 

18 on the date on which the employer entered into such 

19 collective bargaining agreement. 

20 ‘‘(2) NOTICE OF CESSATION OF OBLIGATION.— 

21 Within 30 days of determining that an employer has 

22 ceased to have an obligation to contribute to a leg23 acy plan with respect to employees employed by an 

24 employer that is or will be contributing to a com25 posite plan with respect to service of such employees, 


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1 the plan sponsor of the legacy plan shall notify the 

2 plan sponsor of the composite plan of that cessation. 

3 ‘‘(3) NOTICE OF CESSATION OF ACCRUALS.— 

4 Not later than 30 days after determining that an 

5 employer has ceased to have an obligation to con6 tribute to a legacy plan, the plan sponsor of the 

7 composite plan shall notify the bargaining parties, 

8 the active participants affected by the cessation of 

9 accruals, the Secretary, the Secretary of the Treas10 ury, and the Pension Benefit Guaranty Corporation 

11 of the cessation of accruals, the period during which 

12 such cessation is in effect, and the reasons therefor. 

13 ‘‘(4) LIMITATION ON RETROACTIVE EFFECT.— 

14 This subsection shall not apply to benefits accrued 

15 before the date on which notice is provided under 

16 paragraph (3). 

17 ‘‘(d) TRANSITION CONTRIBUTION REQUIREMENTS.— 

18 ‘‘(1) IN GENERAL.—A collective bargaining 

19 agreement satisfies the transition contribution re20 quirements of this subsection if the agreement— 

21 ‘‘(A) authorizes payment of contributions 

22 to a legacy plan at a rate or rates equal to or 

23 greater than the transition contribution rate es24 tablished by the legacy plan under paragraph 

25 (2); and 


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1 ‘‘(B) does not provide for— 

2 ‘‘(i) a suspension of contributions to 

3 the legacy plan with respect to any period 

4 of service; or 

5 ‘‘(ii) any new direct or indirect exclu6 sion of younger or newly hired employees 

7 of the employer from being taken into ac8 count in determining contributions owed to 

9 the legacy plan. 

10 ‘‘(2) TRANSITION CONTRIBUTION RATE.— 

11 ‘‘(A) IN GENERAL.—The transition con12 tribution rate for a plan year is the contribution 

13 rate that, as certified by the actuary of the leg14 acy plan in accordance with the principles in 

15 section 305(b)(3)(B), is reasonably expected to 

16 be adequate— 

17 ‘‘(i) to fund the normal cost for the 

18 plan year; 

19 ‘‘(ii) to amortize the plan’s unfunded 

20 liabilities in level annual installments over 

21 25 years, beginning with the plan year in 

22 which the transition contribution rate is 

23 first established; and 

24 ‘‘(iii) to amortize any subsequent 

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1 ability due to experience gains or losses 

2 (including investment gains or losses, gains 

3 or losses due to contributions greater or 

4 less than the contributions made under the 

5 prior transition contribution rate, and 

6 other actuarial gains or losses), changes in 

7 actuarial assumptions, changes to the leg8 acy plan’s benefits, or changes in funding 

9 method over a period of 15 plan years be10 ginning with the plan year in which such 

11 change in unfunded liability is incurred. 

12 The transition contribution rate for any plan 

13 year may not be less than the transition con14 tribution rate for the plan year in which such 

15 rate is first established. 

16 ‘‘(B) MULTIPLE RATES.—If different rates 

17 of contribution are payable to the legacy plan 

18 by different employers or for different classes of 

19 employees, the certification shall specify a tran20 sition contribution rate for each such employer. 

21 ‘‘(C) RATE APPLICABLE TO EMPLOYER.— 

22 ‘‘(i) IN GENERAL.—Except as pro23 vided by clause (ii), the transition con24 tribution rate applicable to an employer for 

25 a plan year is the rate in effect for the 


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1 plan year of the legacy plan that com2 mences on or after 180 days before the 

3 earlier of— 

4 ‘‘(I) the effective date of the col5 lective bargaining agreement pursuant 

6 to which the employer contributes to 

7 the legacy plan; or 

8 ‘‘(II) 5 years after the last plan 

9 year for which the transition contribu10 tion rate applicable to the employer 

11 was established or updated. 

12 ‘‘(ii) EXCEPTION.—The transition 

13 contribution rate applicable to an employer 

14 for the first plan year beginning on or 

15 after the commencement of the employer’s 

16 obligation to contribute to the composite 

17 plan is the rate in effect for the plan year 

18 of the legacy plan that commences on or 

19 after 180 days before such first plan year. 

20 ‘‘(D) EFFECT OF LEGACY PLAN FINANCIAL

21 CIRCUMSTANCES.—If the plan actuary of the 

22 legacy plan has certified under section 305 that 

23 the plan is in endangered or critical status for 

24 a plan year, the transition contribution rate for 

25 the following plan year is the rate determined 


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1 with respect to the employer under the legacy 

2 plan’s funding improvement or rehabilitation 

3 plan under section 305, if greater than the rate 

4 otherwise determined, but in no event greater 

5 than 75 percent of the sum of the contribution 

6 rates applicable to the legacy plan and the com7 posite plan for the plan year. 

8 ‘‘(E) OTHER ACTUARIAL ASSUMPTIONS

9 AND METHODS.—Except as provided in sub10 paragraph (A), the determination of the transi11 tion contribution rate for a plan year shall be 

12 based on actuarial assumptions and methods 

13 consistent with the minimum funding deter14 minations made under section 304 (or, if appli15 cable, section 305) with respect to the legacy 

16 plan for the plan year. 

17 ‘‘(F) ADJUSTMENTS IN RATE.—The plan 

18 sponsor of a legacy plan from time to time may 

19 adjust the transition contribution rate or rates 

20 applicable to an employer under this paragraph 

21 by increasing some rates and decreasing others 

22 if the actuary certifies that such adjusted rates 

23 in combination will produce projected contribu24 tion income for the plan year beginning on or 

25 after the date of certification that is not less 


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1 than would be produced by the transition con2 tribution rates in effect at the time of the cer3 tification. 

4 ‘‘(G) NOTICE OF TRANSITION CONTRIBU5 TION RATE.—The plan sponsor of a legacy plan 

6 shall provide notice to the parties to collective 

7 bargaining agreements pursuant to which con8 tributions are made to the legacy plan of 

9 changes to the transition contribution rate re10 quirements at least 30 days before the begin11 ning of the plan year for which the rate is effec12 tive. 

13 ‘‘(H) NOTICE TO COMPOSITE PLAN SPON14 SOR.—Not later than 30 days after a deter15 mination by the plan sponsor of a legacy plan 

16 that a collective bargaining agreement provides 

17 for a rate of contributions that is below the 

18 transition contribution rate applicable to one or 

19 more employers that are parties to the collective 

20 bargaining agreement, the plan sponsor of the 

21 legacy plan shall notify the plan sponsor of any 

22 composite plan under which employees of such 

23 employer would otherwise be eligible to accrue 

24 a benefit. 


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1 ‘‘(3) CORRECTION PROCEDURES.—Pursuant to 

2 standards prescribed by the Secretary, the plan 

3 sponsor of a composite plan shall adopt rules and 

4 procedures that give the parties to the collective bar5 gaining agreement notice of the failure of such 

6 agreement to satisfy the transition contribution re7 quirements of this subsection, and a reasonable op8 portunity to correct such failure, not to exceed 180 

9 days from the date of notice given under subsection 

10 (b)(2). 

11 ‘‘(4) SUPPLEMENTAL CONTRIBUTIONS.—A col12 lective bargaining agreement may provide for supple13 mental contributions to the legacy plan for a plan 

14 year in excess of the transition contribution rate de15 termined under paragraph (2), regardless of whether 

16 the legacy plan is in endangered or critical status for 

17 such plan year. 

18 ‘‘(e) NONAPPLICATION OF COMPOSITE PLAN RE19 STRICTIONS.— 

20 ‘‘(1) IN GENERAL.—The provisions of sub21 sections (a), (b), and (c) shall not apply with respect 

22 to a collective bargaining agreement, to the extent 

23 the agreement, or a predecessor agreement, provides 

24 or provided for contributions to a defined benefit 

25 plan that is a legacy plan, as of the first day of the 


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1 first plan year following a plan year for which the 

2 plan actuary certifies that the plan is fully funded, 

3 has been fully funded for at least three out of the 

4 immediately preceding 5 plan years, and is projected 

5 to remain fully funded for at least the following 4 

6 plan years. 

7 ‘‘(2) DETERMINATION OF FULLY FUNDED.—A 

8 plan is fully funded for purposes of paragraph (1) 

9 if, as of the valuation date of the plan for a plan 

10 year, the value of the plan’s assets equals or exceeds 

11 the present value of the plan’s liabilities, determined 

12 in accordance with the rules prescribed by the Pen13 sion Benefit Guaranty Corporation under sections 

14 4219(c)(1)(D) and 4281 for multiemployer plans 

15 terminating by mass withdrawal, as in effect for the 

16 date of the determination, except the plan’s reason17 able assumption regarding the starting date of bene18 fits may be used. 

19 ‘‘(3) OTHER APPLICABLE RULES.—Except as 

20 provided in paragraph (2), actuarial determinations 

21 and projections under this section shall be based on 

22 the rules in section 305(b)(3) and section 802(b). 


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1 ‘‘SEC. 806. MERGERS AND ASSET TRANSFERS OF COM2 POSITE PLANS. 

3 ‘‘(a) IN GENERAL.—Assets and liabilities of a com4 posite plan may only be merged with, or transferred to, 

5 another plan if— 

6 ‘‘(1) the other plan is a composite plan; 

7 ‘‘(2) the plan or plans resulting from the merg8 er or transfer is a composite plan; 

9 ‘‘(3) no participant’s accrued benefit or adjust10 able benefit is lower immediately after the trans11 action than it was immediately before the trans12 action; and 

13 ‘‘(4) the value of the assets transferred in the 

14 case of a transfer reasonably reflects the value of the 

15 amounts contributed with respect to the participants 

16 whose benefits are being transferred, adjusted for al17 locable distributions, investment gains and losses, 

18 and administrative expenses. 

19 ‘‘(b) LEGACY PLAN.— 

20 ‘‘(1) IN GENERAL.—After a merger or transfer 

21 involving a composite plan, the legacy plan with re22 spect to an employer that is obligated to contribute 

23 to the resulting composite plan is the legacy plan 

24 that applied to that employer immediately before the 

25 merger or transfer. 


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1 ‘‘(2) MULTIPLE LEGACY PLANS.—If an em2 ployer is obligated to contribute to more than one 

3 legacy plan with respect to employees eligible to ac4 crue benefits under more than one composite plan 

5 and there is a merger or transfer of such legacy 

6 plans, the transition contribution rate applicable to 

7 the legacy plan resulting from the merger or trans8 fer with respect to that employer shall be determined 

9 in accordance with the provisions of section 

10 805(d)(2)(B).’’. 

11 (2) PENALTIES.— 

12 (A) CIVIL ENFORCEMENT OF FAILURE TO

13 COMPLY WITH REALIGNMENT PROGRAM.—Sec14 tion 502(a) of such Act (29 U.S.C. 1132(a)) is 

15 amended— 

16 (i) in paragraph (10), by striking ‘‘or’’ 

17 at the end; 

18 (ii) in paragraph (11), by striking the 

19 period at the end and inserting ‘‘; or’’; and 

20 (iii) by adding at the end the fol21 lowing: 

22 ‘‘(12) in the case of a composite plan required 

23 to adopt a realignment program under section 803, 

24 if the plan sponsor— 


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1 ‘‘(A) has not adopted a realignment pro2 gram under that section by the deadline estab3 lished in such section; or 

4 ‘‘(B) fails to update or comply with the 

5 terms of the realignment program in accordance 

6 with the requirements of such section, 

7 by the Secretary, by an employer that has an obliga8 tion to contribute with respect to the composite plan, 

9 or by an employee organization that represents ac10 tive participants in the composite plan, for an order 

11 compelling the plan sponsor to adopt a realignment 

12 program, or to update or comply with the terms of 

13 the realignment program, in accordance with the re14 quirements of such section and the realignment pro15 gram.’’. 

16 (B) CIVIL PENALTIES.—Section 502(c) of 

17 such Act (29 U.S.C. 1132(c)) is amended— 

18 (i) by moving paragraphs (8), (10), 

19 and (12) each 2 ems to the left; 

20 (ii) by redesignating paragraphs (9) 

21 through (12) as paragraphs (12) through 

22 (15), respectively; and 

23 (iii) by inserting after paragraph (8) 

24 the following: 


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1 ‘‘(9) The Secretary may assess against any plan 

2 sponsor of a composite plan a civil penalty of not 

3 more than $1,100 per day for each violation by such 

4 sponsor— 

5 ‘‘(A) of the requirement under section 

6 802(a) on the plan actuary to certify the plan’s 

7 current or projected funded ratio by the date 

8 specified in such subsection; or 

9 ‘‘(B) of the requirement under section 803 

10 to adopt a realignment program by the deadline 

11 established in that section and to comply with 

12 its terms. 

13 ‘‘(10)(A) The Secretary may assess against any 

14 plan sponsor of a composite plan a civil penalty of 

15 not more than $100 per day for each violation by 

16 such sponsor of the requirement under section 

17 803(b) to provide notice as described in such section, 

18 except that no penalty may be assessed in any case 

19 in which the plan sponsor exercised reasonable dili20 gence to meet the requirements of such section 

21 and— 

22 ‘‘(i) the plan sponsor did not know that the 

23 violation existed; or 

24 ‘‘(ii) the plan sponsor provided such notice 

25 during the 30-day period beginning on the first 


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1 date on which the plan sponsor knew, or in ex2 ercising reasonable due diligence should have 

3 known, that such violation existed. 

4 ‘‘(B) In any case in which the plan sponsor ex5 ercised reasonable diligence to meet the require6 ments of section 803(b)— 

7 ‘‘(i) the total penalty assessed under this 

8 paragraph against such sponsor for a plan year 

9 may not exceed $500,000; and 

10 ‘‘(ii) the Secretary may waive part or all of 

11 such penalty to the extent that the payment of 

12 such penalty would be excessive or otherwise in13 equitable relative to the violation involved. 

14 ‘‘(11) The Secretary may assess against any 

15 plan sponsor of a composite plan a civil penalty of 

16 not more than $100 per day for each violation by 

17 such sponsor of the notice requirements under sec18 tions 801(b)(5) and 805(b)(2).’’. 

19 (3) CONFORMING AMENDMENT.—The table of 

20 contents in section 1 of such Act (29 U.S.C. 1001 

21 note) is amended by inserting after the item relating 

22 to section 734 the following: 

‘‘PART 8—COMPOSITE PLANS AND LEGACY PLANS

‘‘Sec. 801. Composite plan defined. 

‘‘Sec. 802. Funded ratios; actuarial assumptions. 

‘‘Sec. 803. Realignment program. 

‘‘Sec. 804. Limitation on increasing benefits. 

‘‘Sec. 805. Composite plan restrictions to preserve legacy plan funding. 

‘‘Sec. 806. Mergers and asset transfers of composite plans.’’. 


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1 (b) AMENDMENT TO THE INTERNAL REVENUE CODE

2 OF 1986.— 

3 (1) IN GENERAL.—Part III of subchapter D of 

4 chapter 1 of the Internal Revenue Code of 1986 is 

5 amended by adding at the end the following: 

6 ‘‘Subpart C—Composite Plans and Legacy Plans 

‘‘Sec. 437. Composite plan defined. 

‘‘Sec. 438. Funded ratios; actuarial assumptions. 

‘‘Sec. 439. Realignment program. 

‘‘Sec. 440. Limitation on increasing benefits. 

‘‘Sec. 440A. Composite plan restrictions to preserve legacy plan funding. 

‘‘Sec. 440B. Mergers and asset transfers of composite plans. 

7 ‘‘SEC. 437. COMPOSITE PLAN DEFINED. 

8 ‘‘(a) IN GENERAL.—For purposes of this title, the 

9 term ‘composite plan’ means a pension plan— 

10 ‘‘(1) which is a multiemployer plan that is nei11 ther a defined benefit plan nor a defined contribu12 tion plan, 

13 ‘‘(2) the terms of which provide that the plan 

14 is a composite plan for purposes of this title with re15 spect to which not more than one multiemployer de16 fined benefit plan is treated as a legacy plan within 

17 the meaning of section 440A, unless there is more 

18 than one legacy plan following a merger of composite 

19 plans under section 440B, 

20 ‘‘(3) which provides systematically for the pay21 ment of benefits— 


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1 ‘‘(A) objectively calculated pursuant to a 

2 formula enumerated in the plan document with 

3 respect to plan participants after retirement, 

4 for life, and 

5 ‘‘(B) in the form of life annuities, except 

6 for benefits which under section 411(a)(11) 

7 may be immediately distributed without the 

8 consent of the participant, 

9 ‘‘(4) for which the plan contributions for the 

10 first plan year are at least 120 percent of the nor11 mal cost for the plan year, 

12 ‘‘(5) which requires— 

13 ‘‘(A) an annual valuation of the liability of 

14 the plan as of a date within the plan year to 

15 which the valuation refers or within one month 

16 prior to the beginning of such year, 

17 ‘‘(B) an annual actuarial determination of 

18 the plan’s current funded ratio and projected 

19 funded ratio under section 438(a), 

20 ‘‘(C) corrective action through a realign21 ment program pursuant to section 439 when22 ever the plan’s projected funded ratio is below 

23 120 percent for the plan year, and 

24 ‘‘(D) an annual notification to each partici25 pant describing the participant’s benefits under 


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1 the plan and explaining that such benefits may 

2 be subject to reduction under a realignment 

3 program pursuant to section 439 based on the 

4 plan’s funded status in future plan years, and 

5 ‘‘(6) the board of trustees of which includes at 

6 least one retiree or beneficiary in pay status during 

7 each plan year following the first plan year in which 

8 at least 5 percent of the participants in the plan are 

9 retirees or beneficiaries in pay status. 

10 ‘‘(b) TRANSITION FROM A MULTIEMPLOYER DE11 FINED BENEFIT PLAN.— 

12 ‘‘(1) IN GENERAL.—The plan sponsor of a de13 fined benefit plan that is a multiemployer plan may, 

14 subject to paragraph (2), amend the plan to incor15 porate the features of a composite plan as a compo16 nent of the multiemployer plan separate from the 

17 defined benefit plan component, except in the case of 

18 a defined benefit plan for which the plan actuary has 

19 certified under section 432(b)(3) that the plan is or 

20 will be in critical status for the plan year in which 

21 such amendment would become effective or for any 

22 of the succeeding 5 plan years. 

23 ‘‘(2) REQUIREMENTS.—Any amendment pursu24 ant to paragraph (1) to incorporate the features of 


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1 a composite plan as a component of a multiemployer 

2 plan shall— 

3 ‘‘(A) apply with respect to all collective 

4 bargaining agreements providing for contribu5 tions to the multiemployer plan on or after the 

6 effective date of the amendment, 

7 ‘‘(B) apply with respect to all participants 

8 in the multiemployer plan for whom contribu9 tions are made to the multiemployer plan on or 

10 after the effective date of the amendment, 

11 ‘‘(C) specify that the effective date of the 

12 amendment is— 

13 ‘‘(i) the first day of a specified plan 

14 year following the date of the adoption of 

15 the amendment, except that the plan spon16 sor may alternatively provide for a sepa17 rate effective date with respect to each col18 lective bargaining agreement under which 

19 contributions to the multiemployer plan 

20 are required, which shall occur on the first 

21 day of the first plan year beginning after 

22 the termination, or if earlier, the re-open23 ing, of each such agreement, or such ear24 lier date as the parties to the agreement 


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1 and the plan sponsor of the multiemployer 

2 plan shall agree to, and 

3 ‘‘(ii) not later than the first day of the 

4 fifth plan year beginning on or after the 

5 date of the adoption of the amendment, 

6 ‘‘(D) specify that, as of the amendment’s 

7 effective date, no further benefits shall accrue 

8 under the defined benefit component of the 

9 multiemployer plan, and 

10 ‘‘(E) specify that, as of the amendment’s 

11 effective date, the plan sponsor of the multiem12 ployer plan shall be the plan sponsor of both 

13 the composite plan component and the defined 

14 benefit plan component of the plan. 

15 ‘‘(3) SPECIAL RULES.—If a multiemployer plan 

16 is amended pursuant to paragraph (1)— 

17 ‘‘(A) the requirements of this title shall be 

18 applied to the composite plan component and 

19 the defined benefit plan component of the mul20 tiemployer plan as if each such component were 

21 maintained as a separate plan, and 

22 ‘‘(B) the assets of the composite plan com23 ponent and the defined benefit plan component 

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1 ing part of the plan under which the trust in2 strument expressly provides— 

3 ‘‘(i) for separate accounts (and appro4 priate records) to be maintained to reflect 

5 the interest which each of the plan compo6 nents has in the trust, including separate 

7 accounting for additions to the trust for 

8 the benefit of each plan component, dis9 bursements made from each plan compo10 nent’s account in the trust, investment ex11 perience of the trust allocable to that ac12 count, and administrative expenses (wheth13 er direct expenses or shared expenses allo14 cated proportionally), and permits, but 

15 does not require, the pooling of some or all 

16 of the assets of the two plan components 

17 for investment purposes, and 

18 ‘‘(ii) that the assets of each of the two 

19 plan components shall be held, invested, 

20 reinvested, managed, administered and dis21 tributed for the exclusive benefit of the 

22 participants and beneficiaries of each such 

23 plan component, and in no event shall the 

24 assets of one of the plan components be 


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1 available to pay benefits due under the 

2 other plan component. 

3 ‘‘(4) NOT A TERMINATION EVENT.—Notwith4 standing section 4041A of the Employee Retirement 

5 Income Security Act of 1974, an amendment pursu6 ant to paragraph (1) to incorporate the features of 

7 a composite plan as a component of a multiemployer 

8 plan does not constitute termination of the multiem9 ployer plan. 

10 ‘‘(5) NOTICE TO THE SECRETARY.— 

11 ‘‘(A) NOTICE.—The plan sponsor of a 

12 composite plan shall provide notice to the Sec13 retary of the intent to establish the composite 

14 plan (or, in the case of a composite plan incor15 porated as a component of a multiemployer 

16 plan as described in paragraph (1), the intent 

17 to amend the multiemployer plan to incorporate 

18 such composite plan) at least 30 days prior to 

19 the effective date of such establishment or 

20 amendment. 

21 ‘‘(B) CERTIFICATION.—In the case of a 

22 composite plan incorporated as a component of 

23 a multiemployer plan as described in paragraph 

24 (1), such notice shall include a certification by 

25 the plan actuary under section 432(b)(3) that 


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1 the effective date of the amendment occurs in 

2 a plan year for which the multiemployer plan is 

3 not in critical status for that plan year and any 

4 of the succeeding 5 plan years. 

5 ‘‘(6) REFERENCES TO COMPOSITE PLAN COM6 PONENT.—As used in this subpart, the term ‘com7 posite plan’ includes a composite plan component 

8 added to a defined benefit plan pursuant to para9 graph (1). 

10 ‘‘(7) RULE OF CONSTRUCTION.—Paragraph 

11 (2)(A) shall not be construed as preventing the plan 

12 sponsor of a multiemployer plan from adopting an 

13 amendment pursuant to paragraph (1) because some 

14 collective bargaining agreements are amended to 

15 cease any covered employer’s obligation to contribute 

16 to the multiemployer plan before or after the plan 

17 amendment is effective. Paragraph (2)(B) shall not 

18 be construed as preventing the plan sponsor of a 

19 multiemployer plan from adopting an amendment 

20 pursuant to paragraph (1) because some partici21 pants cease to have contributions made to the multi22 employer plan on their behalf before or after the 

23 plan amendment is effective. 


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1 ‘‘(c) COORDINATION WITH FUNDING RULES.—Ex2 cept as otherwise provided in this title, sections 412, 431, 

3 and 432 shall not apply to a composite plan. 

4 ‘‘(d) TREATMENT OF A COMPOSITE PLAN.—For pur5 poses of this title (other than sections 412 and 418E), 

6 a composite plan shall be treated as if it were a defined 

7 benefit plan unless a different treatment is provided for 

8 under applicable law. 

9 ‘‘SEC. 438. FUNDED RATIOS; ACTUARIAL ASSUMPTIONS. 

10 ‘‘(a) CERTIFICATION OF FUNDED RATIOS.— 

11 ‘‘(1) IN GENERAL.—Not later than the one12 hundred twentieth day of each plan year of a com13 posite plan, the plan actuary of the composite plan 

14 shall certify to the Secretary, the Secretary of 

15 Labor, and the plan sponsor the plan’s current fund16 ed ratio and projected funded ratio for the plan 

17 year. 

18 ‘‘(2) DETERMINATION OF CURRENT FUNDED

19 RATIO AND PROJECTED FUNDED RATIO.—For pur20 poses of this section— 

21 ‘‘(A) CURRENT FUNDED RATIO.—The cur22 rent funded ratio is the ratio (expressed as a 

23 percentage) of— 

24 ‘‘(i) the value of the plan’s assets as 

25 of the first day of the plan year, to 


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1 ‘‘(ii) the plan actuary’s best estimate 

2 of the present value of the plan liabilities 

3 as of the first day of the plan year. 

4 ‘‘(B) PROJECTED FUNDED RATIO.—The 

5 projected funded ratio is the current funded 

6 ratio projected to the first day of the fifteenth 

7 plan year following the plan year for which the 

8 determination is being made. 

9 ‘‘(3) CONSIDERATION OF CONTRIBUTION RATE

10 INCREASES.—For purposes of projections under this 

11 subsection, the plan sponsor may anticipate con12 tribution rate increases beyond the term of the cur13 rent collective bargaining agreement and any agreed14 to supplements, up to a maximum of 2.5 percent per 

15 year, compounded annually, unless it would be un16 reasonable under the circumstances to assume that 

17 contributions would increase by that amount. 

18 ‘‘(b) ACTUARIAL ASSUMPTIONS AND METHODS.— 

19 For purposes of this part— 

20 ‘‘(1) IN GENERAL.—All costs, liabilities, rates 

21 of interest, and other factors under the plan shall be 

22 determined for a plan year on the basis of actuarial 

23 assumptions and methods— 


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

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

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

6 under the plan, and 

7 ‘‘(C) with respect to which any change 

8 from the actuarial assumptions and methods 

9 used in the previous plan year shall be certified 

10 by the plan actuary and the actuarial rationale 

11 for such change provided in the annual report 

12 required by section 6058. 

13 ‘‘(2) FAIR MARKET VALUE OF ASSETS.—The 

14 value of the plan’s assets shall be taken into account 

15 on the basis of their fair market value. 

16 ‘‘(3) DETERMINATION OF NORMAL COST AND

17 PLAN LIABILITIES.—A plan’s normal cost and liabil18 ities shall be based on the most recent actuarial 

19 valuation required under section 437(a)(5)(A) and 

20 the unit credit funding method. 

21 ‘‘(4) TIME WHEN CERTAIN CONTRIBUTIONS

22 DEEMED MADE.—Any contributions for a plan year 

23 made by an employer after the last day of such plan 

24 year, but not later than two and one-half months 

25 after such day, shall be deemed to have been made 


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1 on such last day. For purposes of this paragraph, 

2 such two and one-half month period may be ex3 tended for not more than six months under regula4 tions prescribed by the Secretary. 

5 ‘‘(5) ADDITIONAL ACTUARIAL ASSUMPTIONS.— 

6 Except where otherwise provided in this subpart, the 

7 provisions of section 432(b)(3)(B) shall apply to any 

8 determination or projection under this subpart. 

9 ‘‘SEC. 439. REALIGNMENT PROGRAM. 

10 ‘‘(a) REALIGNMENT PROGRAM.— 

11 ‘‘(1) ADOPTION.—In any case in which the plan 

12 actuary certifies under section 438(a) that the plan’s 

13 projected funded ratio is below 120 percent for the 

14 plan year, the plan sponsor shall adopt a realign15 ment program under paragraph (2) not later than 

16 210 days after the due date of the certification re17 quired under section 438(a). The plan sponsor shall 

18 adopt an updated realignment program for each suc19 ceeding plan year for which a certification described 

20 in the preceding sentence is made. 

21 ‘‘(2) CONTENT OF REALIGNMENT PROGRAM.— 

22 ‘‘(A) IN GENERAL.—A realignment pro23 gram adopted under this paragraph is a written 

24 program which consists of all reasonable meas25 ures, including options or a range of options to 


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1 be undertaken by the plan sponsor or proposed 

2 to the bargaining parties, formulated, based on 

3 reasonably anticipated experience and reason4 able actuarial assumptions, to enable the plan 

5 to achieve a projected funded ratio of at least 

6 120 percent for the following plan year. 

7 ‘‘(B) INITIAL PROGRAM ELEMENTS.—Rea8 sonable measures under a realignment program 

9 described in subparagraph (A) may include any 

10 of the following: 

11 ‘‘(i) Proposed contribution increases. 

12 ‘‘(ii) A reduction in the rate of future 

13 benefit accruals, so long as the resulting 

14 rate shall not be less than 1 percent of the 

15 contributions on which benefits are based 

16 as of the start of the plan year (or the 

17 equivalent standard accrual rate as de18 scribed in section 432(e)(6)). 

19 ‘‘(iii) A modification or elimination of 

20 adjustable benefits of participants that are 

21 not in pay status before the date of the no22 tice required under subsection (b)(1). 

23 ‘‘(iv) Any other legally available meas24 ures not specifically described in this sub25 paragraph or subparagraph (C) or (D) 


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1 that the plan sponsor determines are rea2 sonable. 

3 ‘‘(C) ADDITIONAL PROGRAM ELEMENTS.— 

4 If the plan sponsor has determined that all rea5 sonable measures available under subparagraph 

6 (B) will not enable the plan to achieve a pro7 jected funded ratio of at least 120 percent the 

8 following plan year, such reasonable measures 

9 may also include— 

10 ‘‘(i) a reduction of accrued benefits 

11 that are not in pay status by the date of 

12 the notice required under subsection 

13 (b)(1), or 

14 ‘‘(ii) a reduction of any benefits of 

15 participants that are in pay status before 

16 the date of the notice required under sub17 section (b)(1) other than core benefits as 

18 defined in paragraph (4). 

19 ‘‘(D) ADDITIONAL REDUCTIONS.—In the 

20 case of a composite plan for which the plan 

21 sponsor has determined that all reasonable 

22 measures available under subparagraphs (B) 

23 and (C) will not enable the plan to achieve a 

24 projected funded ratio of at least 120 percent 


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1 for the following plan year, such reasonable 

2 measures may also include— 

3 ‘‘(i) a further reduction in the rate of 

4 future benefit accruals without regard to 

5 the limitation applicable under subpara6 graph (B)(ii), or 

7 ‘‘(ii) a reduction of core benefits, 

8 provided that such reductions shall be equitably 

9 distributed across the participant and bene10 ficiary population, taking into account factors, 

11 with respect to participants and beneficiaries 

12 and their benefits, that may include one or 

13 more of the factors listed in subclauses (I) 

14 through (X) of section 432(e)(9)(D)(vi), to the 

15 extent necessary to enable the plan to achieve 

16 a projected funded ratio of at least 120 percent 

17 for the following plan year, or at the election of 

18 the plan sponsor, a projected funded ratio of at 

19 least 100 percent for the following plan year 

20 and a current funded ratio of at least 90 per21 cent. 

22 ‘‘(3) ADJUSTABLE BENEFIT DEFINED.—For 

23 purposes of this subpart, the term ‘adjustable ben24 efit’ means— 


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1 ‘‘(A) benefits, rights, and features under 

2 the plan, including post-retirement death bene3 fits, 60-month guarantees, disability benefits 

4 not yet in pay status, and similar benefits, 

5 ‘‘(B) any early retirement benefit or retire6 ment-type subsidy (within the meaning of sec7 tion 411(d)(6)(B)(i)) and any benefit payment 

8 option (other than the qualified joint and sur9 vivor annuity), and 

10 ‘‘(C) benefit increases that were adopted 

11 (or, if later, took effect) less than 60 months 

12 before the first day such realignment program 

13 took effect. 

14 ‘‘(4) CORE BENEFIT DEFINED.—For purposes 

15 of this subpart, the term ‘core benefit’ means a par16 ticipant’s accrued benefit payable in the normal form 

17 of an annuity commencing at normal retirement age, 

18 determined without regard to— 

19 ‘‘(A) any early retirement benefits, retire20 ment-type subsidies, or other benefits, rights, or 

21 features that may be associated with that ben22 efit, and 

23 ‘‘(B) any cost-of-living adjustments or ben24 efit increases effective after the date of retire25 ment. 


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1 ‘‘(5) COORDINATION WITH CONTRIBUTION IN2 CREASES.— 

3 ‘‘(A) IN GENERAL.—A realignment pro4 gram may provide that some or all of the ben5 efit modifications described in the program will 

6 only take effect if the bargaining parties fail to 

7 agree to specified levels of increases in contribu8 tions to the plan, effective as of specified dates. 

9 ‘‘(B) INDEPENDENT BENEFIT MODIFICA10 TIONS.—If a realignment program adopts any 

11 changes to the benefit formula that are inde12 pendent of potential contribution increases, 

13 such changes shall take effect not later than 

14 180 days following the first day of the first 

15 plan year that begins following the adoption of 

16 the realignment program. 

17 ‘‘(C) CONDITIONAL BENEFIT MODIFICA18 TIONS.—If a realignment program adopts any 

19 changes to the benefit formula that take effect 

20 only if the bargaining parties fail to agree to 

21 contribution increases, such changes shall take 

22 effect not later than the first day of the first 

23 plan year beginning after the third anniversary 

24 of the date of adoption of the realignment pro25 gram. 


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1 ‘‘(D) REVOCATION OF CERTAIN BENEFIT

2 MODIFICATIONS.—Benefit modifications de3 scribed in paragraph (3) may be revoked, in 

4 whole or in part, and retroactively or prospec5 tively, when contributions to the plan are in6 creased, as specified in the realignment pro7 gram, including any amendments thereto. The 

8 preceding sentence shall not apply unless the 

9 contribution increases are to be effective not 

10 later than the fifth anniversary of the first day 

11 of the first plan year that begins after the 

12 adoption of the realignment program. 

13 ‘‘(b) NOTICE.— 

14 ‘‘(1) IN GENERAL.—In any case in which it is 

15 certified under section 438(a) that the projected 

16 funded ratio is less than 120 percent, the plan spon17 sor shall, not later than 30 days after the date of 

18 the certification, provide notification of the current 

19 and projected funded ratios to the participants and 

20 beneficiaries, the bargaining parties, and the Sec21 retary. Such notice shall include— 

22 ‘‘(A) an explanation that contribution rate 

23 increases or benefit reductions may be nec24 essary, 


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1 ‘‘(B) a description of the types of benefits 

2 that might be reduced, and 

3 ‘‘(C) an estimate of the contribution in4 creases and benefit reductions that may be nec5 essary to achieve a projected funded ratio of 

6 120 percent. 

7 ‘‘(2) NOTICE OF BENEFIT MODIFICATIONS.— 

8 ‘‘(A) IN GENERAL.—No modifications may 

9 be made that reduce the rate of future benefit 

10 accrual or that reduce core benefits or adjust11 able benefits unless notice of such reduction has 

12 been given at least 180 days before the general 

13 effective date of such reduction for all partici14 pants and beneficiaries to— 

15 ‘‘(i) plan participants and bene16 ficiaries, 

17 ‘‘(ii) each employer who has an obliga18 tion to contribute to the composite plan, 

19 and 

20 ‘‘(iii) each employee organization 

21 which, for purposes of collective bar22 gaining, represents plan participants em23 ployed by such employers. 

24 ‘‘(B) CONTENT OF NOTICE.—The notice 

25 under subparagraph (A) shall contain— 


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1 ‘‘(i) sufficient information to enable 

2 participants and beneficiaries to under3 stand the effect of any reduction on their 

4 benefits, including an illustration of any 

5 affected benefit or subsidy, on an annual 

6 or monthly basis that a participant or ben7 eficiary would otherwise have been eligible 

8 for as of the general effective date de9 scribed in subparagraph (A), and 

10 ‘‘(ii) information as to the rights and 

11 remedies of plan participants and bene12 ficiaries as well as how to contact the De13 partment of Labor for further information 

14 and assistance, where appropriate. 

15 ‘‘(C) FORM AND MANNER.—Any notice 

16 under subparagraph (A)— 

17 ‘‘(i) shall be provided in a form and 

18 manner prescribed in regulations of the 

19 Secretary of Labor, 

20 ‘‘(ii) shall be written in a manner so 

21 as to be understood by the average plan 

22 participant. 

23 ‘‘(3) MODEL NOTICES.—The Secretary shall— 

24 ‘‘(A) prescribe model notices that the plan 

25 sponsor of a composite plan may use to satisfy 


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1 the notice requirements under this subsection, 

2 and 

3 ‘‘(B) by regulation enumerate any details 

4 related to the elements listed in paragraph (1) 

5 that any notice under this subsection must in6 clude. 

7 ‘‘(4) DELIVERY METHOD.—Any notice under 

8 this part shall be provided in writing and may also 

9 be provided in electronic form to the extent that the 

10 form is reasonably accessible to persons to whom the 

11 notice is provided. 

12 ‘‘SEC. 440. LIMITATION ON INCREASING BENEFITS. 

13 ‘‘(a) LEVEL OF CURRENT FUNDED RATIOS.—Except 

14 as provided in subsections (c), (d), and (e), no plan 

15 amendment increasing benefits or establishing new bene16 fits under a composite plan may be adopted for a plan 

17 year unless— 

18 ‘‘(1) the plan’s current funded ratio is at least 

19 110 percent (without regard to the benefit increase 

20 or new benefits), 

21 ‘‘(2) taking the benefit increase or new benefits 

22 into account, the current funded ratio is at least 100 

23 percent and the projected funded ratio for the cur24 rent plan year is at least 120 percent, 


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1 ‘‘(3) in any case in which, after taking the ben2 efit increase or new benefits into account, the cur3 rent funded ratio is less than 140 percent or the 

4 projected funded ratio is less than 140 percent, the 

5 benefit increase or new benefits are projected by the 

6 plan actuary to increase the present value of the 

7 plan’s liabilities for the plan year by not more than 

8 3 percent, and 

9 ‘‘(4) expected contributions for the current plan 

10 year are at least 120 percent of normal cost for the 

11 plan year, determined using the unit credit funding 

12 method and treating the benefit increase or new ben13 efits as in effect for the entire plan year. 

14 ‘‘(b) ADDITIONAL REQUIREMENTS WHERE CORE

15 BENEFITS REDUCED.—If a plan has been amended to re16 duce core benefits pursuant to a realignment program 

17 under section 439(a)(2)(D), such plan may not be subse18 quently amended to increase core benefits unless the 

19 amendment— 

20 ‘‘(1) increases the level of future benefit pay21 ments only, and 

22 ‘‘(2) provides for an equitable distribution of 

23 benefit increases across the participant and bene24 ficiary population, taking into account the extent to 


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1 which the benefits of participants were previously re2 duced pursuant to such realignment program. 

3 ‘‘(c) EXCEPTION TO COMPLY WITH APPLICABLE

4 LAW.—Subsection (a) shall not apply in connection with 

5 a plan amendment if the amendment is required as a con6 dition of qualification under part I of subchapter D of 

7 chapter 1 or to comply with other applicable law. 

8 ‘‘(d) EXCEPTION WHERE MAXIMUM DEDUCTIBLE

9 LIMIT APPLIES.—Subsection (a) shall not apply in con10 nection with a plan amendment if and to the extent that 

11 contributions to the composite plan would not be deduct12 ible for the plan year under section 404(a)(1)(E) if the 

13 plan amendment is not adopted. The Secretary of the 

14 Treasury shall issue regulations to implement this para15 graph. 

16 ‘‘(e) EXCEPTION FOR CERTAIN BENEFIT MODIFICA17 TIONS.—Subsection (a) shall not apply in connection with 

18 a plan amendment under section 439(a)(5)(C), regarding 

19 conditional benefit modifications. 

20 ‘‘(f) TREATMENT OF PLAN AMENDMENTS.—For pur21 poses of this section— 

22 ‘‘(1) if two or more plan amendments increas23 ing benefits or establishing new benefits are adopted 

24 in a plan year, such amendments shall be treated as 


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1 a single amendment adopted on the last day of the 

2 plan year, 

3 ‘‘(2) all benefit increases and new benefits 

4 adopted in a single amendment are treated as a sin5 gle benefit increase, irrespective of whether the in6 creases and new benefits take effect in more than 

7 one plan year, and 

8 ‘‘(3) increases in contributions or decreases in 

9 plan liabilities which are scheduled to take effect in 

10 future plan years may be taken into account in con11 nection with a plan amendment if they have been 

12 agreed to in writing or otherwise formalized by the 

13 date the plan amendment is adopted. 

14 ‘‘SEC. 440A. COMPOSITE PLAN RESTRICTIONS TO PRE15 SERVE LEGACY PLAN FUNDING. 

16 ‘‘(a) TREATMENT AS A LEGACY PLAN.— 

17 ‘‘(1) IN GENERAL.—For purposes of this sub18 chapter, a defined benefit plan shall be treated as a 

19 legacy plan with respect to the composite plan under 

20 which the employees who were eligible to accrue a 

21 benefit under the defined benefit plan become eligi22 ble to accrue a benefit under such composite plan. 

23 ‘‘(2) COMPONENT PLANS.—In any case in 

24 which a defined benefit plan is amended to add a 

25 composite plan component pursuant to section 


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1 437(b), paragraph (1) shall be applied by sub2 stituting ‘defined benefit component’ for ‘defined 

3 benefit plan’ and ‘composite plan component’ for 

4 ‘composite plan’. 

5 ‘‘(3) ELIGIBLE TO ACCRUE A BENEFIT.—For 

6 purposes of paragraph (1), an employee is consid7 ered eligible to accrue a benefit under a composite 

8 plan as of the first day in which the employee com9 pletes an hour of service under a collective bar10 gaining agreement that provides for contributions to 

11 and accruals under the composite plan in lieu of ac12 cruals under the legacy plan. 

13 ‘‘(4) COLLECTIVE BARGAINING AGREEMENT.— 

14 As used in this subpart, the term ‘collective bar15 gaining agreement’ includes any agreement under 

16 which an employer has an obligation to contribute to 

17 a plan. 

18 ‘‘(5) OTHER TERMS.—Any term used in this 

19 subpart which is not defined in this part and which 

20 is also used in section 432 shall have the same 

21 meaning provided such term in such section. 

22 ‘‘(b) RESTRICTIONS ON ACCEPTANCE BY COMPOSITE

23 PLAN OF AGREEMENTS AND CONTRIBUTIONS.— 

24 ‘‘(1) IN GENERAL.—The plan sponsor of a com25 posite plan shall not accept or recognize a collective 


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1 bargaining agreement (or any modification to such 

2 agreement), and no contributions may be accepted 

3 and no benefits may be accrued or otherwise earned 

4 under the agreement— 

5 ‘‘(A) in any case in which the plan actuary 

6 of any defined benefit plan that would be treat7 ed as a legacy plan with respect to such com8 posite plan has certified under section 

9 432(b)(3) that such defined benefit plan is or 

10 will be in critical status for the plan year in 

11 which such agreement would take effect or for 

12 any of the succeeding 5 plan years, and 

13 ‘‘(B) unless the agreement requires each 

14 employer who is a party to such agreement, in15 cluding employers whose employees are not par16 ticipants in the legacy plan, to provide contribu17 tions to the legacy plan with respect to such 

18 composite plan in a manner that satisfies the 

19 transition contribution requirements of sub20 section (d). 

21 ‘‘(2) NOTICE.—Not later than 30 days after a 

22 determination by a plan sponsor of a composite plan 

23 that an agreement fails to satisfy the requirements 

24 described in paragraph (1), the plan sponsor shall 


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1 provide notification of such failure and the reasons 

2 for such determination to— 

3 ‘‘(A) the parties to the agreement, 

4 ‘‘(B) active participants of the composite 

5 plan who have ceased to accrue or otherwise 

6 earn benefits with respect to service with an 

7 employer pursuant to paragraph (1), and 

8 ‘‘(C) the Secretary of Labor, the Secretary 

9 of the Treasury, and the Pension Benefit Guar10 anty Corporation. 

11 ‘‘(3) LIMITATION ON RETROACTIVE EFFECT.— 

12 This subsection shall not apply to benefits accrued 

13 before the date on which notice is provided under 

14 paragraph (2). 

15 ‘‘(c) RESTRICTION ON ACCRUAL OF BENEFITS

16 UNDER A COMPOSITE PLAN.— 

17 ‘‘(1) IN GENERAL.—In any case in which an 

18 employer, under a collective bargaining agreement 

19 entered into after February 5, 2018, ceases to have 

20 an obligation to contribute to a multiemployer de21 fined benefit plan, no employees employed by the 

22 employer may accrue or otherwise earn benefits 

23 under any composite plan, with respect to service 

24 with that employer, for a 60-month period beginning 


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1 on the date on which the employer entered into such 

2 collective bargaining agreement. 

3 ‘‘(2) NOTICE OF CESSATION OF OBLIGATION.— 

4 Within 30 days of determining that an employer has 

5 ceased to have an obligation to contribute to a leg6 acy plan with respect to employees employed by an 

7 employer that is or will be contributing to a com8 posite plan with respect to service of such employees, 

9 the plan sponsor of the legacy plan shall notify the 

10 plan sponsor of the composite plan of that cessation. 

11 ‘‘(3) NOTICE OF CESSATION OF ACCRUALS.— 

12 Not later than 30 days after determining that an 

13 employer has ceased to have an obligation to con14 tribute to a legacy plan, the plan sponsor of the 

15 composite plan shall notify the bargaining parties, 

16 the active participants affected by the cessation of 

17 accruals, the Secretary, the Secretary of Labor, and 

18 the Pension Benefit Guaranty Corporation of the 

19 cessation of accruals, the period during which such 

20 cessation is in effect, and the reasons therefor. 

21 ‘‘(4) LIMITATION ON RETROACTIVE EFFECT.— 

22 This subsection shall not apply to benefits accrued 

23 before the date on which notice is provided under 

24 paragraph (3). 

25 ‘‘(d) TRANSITION CONTRIBUTION REQUIREMENTS.— 


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1 ‘‘(1) IN GENERAL.—A collective bargaining 

2 agreement satisfies the transition contribution re3 quirements of this subsection if the agreement— 

4 ‘‘(A) authorizes for payment of contribu5 tions to a legacy plan at a rate or rates equal 

6 to or greater than the transition contribution 

7 rate established under paragraph (2), and 

8 ‘‘(B) does not provide for— 

9 ‘‘(i) a suspension of contributions to 

10 the legacy plan with respect to any period 

11 of service, or 

12 ‘‘(ii) any new direct or indirect exclu13 sion of younger or newly hired employees 

14 of the employer from being taken into ac15 count in determining contributions owed to 

16 the legacy plan. 

17 ‘‘(2) TRANSITION CONTRIBUTION RATE.— 

18 ‘‘(A) IN GENERAL.—The transition con19 tribution rate for a plan year is the contribution 

20 rate that, as certified by the actuary of the leg21 acy plan in accordance with the principles in 

22 section 432(b)(3)(B), is reasonably expected to 

23 be adequate— 

24 ‘‘(i) to fund the normal cost for the 

25 plan year, 


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1 ‘‘(ii) to amortize the plan’s unfunded 

2 liabilities in level annual installments over 

3 25 years, beginning with the plan year in 

4 which the transition contribution rate is 

5 first established, and 

6 ‘‘(iii) to amortize any subsequent 

7 changes in the legacy plan’s unfunded li8 ability due to experience gains or losses 

9 (including investment gains or losses, gains 

10 or losses due to contributions greater or 

11 less than the contributions made under the 

12 prior transition contribution rate, and 

13 other actuarial gains or losses), changes in 

14 actuarial assumptions, changes to the leg15 acy plan’s benefits, or changes in funding 

16 method over a period of 15 plan years be17 ginning with the plan year in which such 

18 change in unfunded liability is incurred. 

19 The transition contribution rate for any plan 

20 year may not be less than the transition con21 tribution rate for the plan year in which such 

22 rate is first established. 

23 ‘‘(B) MULTIPLE RATES.—If different rates 

24 of contribution are payable to the legacy plan 

25 by different employers or for different classes of 


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1 employees, the certification shall specify a tran2 sition contribution rate for each such employer. 

3 ‘‘(C) RATE APPLICABLE TO EMPLOYER.— 

4 ‘‘(i) IN GENERAL.—Except as pro5 vided by clause (ii), the transition con6 tribution rate applicable to an employer for 

7 a plan year is the rate in effect for the 

8 plan year of the legacy plan that com9 mences on or after 180 days before the 

10 earlier of— 

11 ‘‘(I) the effective date of the col12 lective bargaining agreement pursuant 

13 to which the employer contributes to 

14 the legacy plan, or 

15 ‘‘(II) 5 years after the last plan 

16 year for which the transition contribu17 tion rate applicable to the employer 

18 was established or updated. 

19 ‘‘(ii) EXCEPTION.—The transition 

20 contribution rate applicable to an employer 

21 for the first plan year beginning on or 

22 after the commencement of the employer’s 

23 obligation to contribute to the composite 

24 plan is the rate in effect for the plan year 


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1 of the legacy plan that commences on or 

2 after 180 days before such first plan year. 

3 ‘‘(D) EFFECT OF LEGACY PLAN FINANCIAL

4 CIRCUMSTANCES.—If the plan actuary of the 

5 legacy plan has certified under section 432 that 

6 the plan is in endangered or critical status for 

7 a plan year, the transition contribution rate for 

8 the following plan year is the rate determined 

9 with respect to the employer under the legacy 

10 plan’s funding improvement or rehabilitation 

11 plan under section 432, if greater than the rate 

12 otherwise determined, but in no event greater 

13 than 75 percent of the sum of the contribution 

14 rates applicable to the legacy plan and the com15 posite plan for the plan year. 

16 ‘‘(E) OTHER ACTUARIAL ASSUMPTIONS

17 AND METHODS.—Except as provided in sub18 paragraph (A), the determination of the transi19 tion contribution rate for a plan year shall be 

20 based on actuarial assumptions and methods 

21 consistent with the minimum funding deter22 minations made under section 431 (or, if appli23 cable, section 432) with respect to the legacy 

24 plan for the plan year. 


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1 ‘‘(F) ADJUSTMENTS IN RATE.—The plan 

2 sponsor of a legacy plan from time to time may 

3 adjust the transition contribution rate or rates 

4 applicable to an employer under this paragraph 

5 by increasing some rates and decreasing others 

6 if the actuary certifies that such adjusted rates 

7 in combination will produce projected contribu8 tion income for the plan year beginning on or 

9 after the date of certification that is not less 

10 than would be produced by the transition con11 tribution rates in effect at the time of the cer12 tification. 

13 ‘‘(G) NOTICE OF TRANSITION CONTRIBU14 TION RATE.—The plan sponsor of a legacy plan 

15 shall provide notice to the parties to collective 

16 bargaining agreements pursuant to which con17 tributions are made to the legacy plan of 

18 changes to the transition contribution rate re19 quirements at least 30 days before the begin20 ning of the plan year for which the rate is effec21 tive. 

22 ‘‘(H) NOTICE TO COMPOSITE PLAN SPON23 SOR.—Not later than 30 days after a deter24 mination by the plan sponsor of a legacy plan 

25 that a collective bargaining agreement provides 


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1 for a rate of contributions that is below the 

2 transition contribution rate applicable to one or 

3 more employers that are parties to the collective 

4 bargaining agreement, the plan sponsor of the 

5 legacy plan shall notify the plan sponsor of any 

6 composite plan under which employees of such 

7 employer would otherwise be eligible to accrue 

8 a benefit. 

9 ‘‘(3) CORRECTION PROCEDURES.—Pursuant to 

10 standards prescribed by the Secretary of Labor, the 

11 plan sponsor of a composite plan shall adopt rules 

12 and procedures that give the parties to the collective 

13 bargaining agreement notice of the failure of such 

14 agreement to satisfy the transition contribution re15 quirements of this subsection, and a reasonable op16 portunity to correct such failure, not to exceed 180 

17 days from the date of notice given under subsection 

18 (b)(2). 

19 ‘‘(4) SUPPLEMENTAL CONTRIBUTIONS.—A col20 lective bargaining agreement may provide for supple21 mental contributions to the legacy plan for a plan 

22 year in excess of the transition contribution rate de23 termined under paragraph (2), regardless of whether 

24 the legacy plan is in endangered or critical status for 

25 such plan year. 


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1 ‘‘(e) NONAPPLICATION OF COMPOSITE PLAN RE2 STRICTIONS.— 

3 ‘‘(1) IN GENERAL.—The provisions of sub4 sections (a), (b), and (c) shall not apply with respect 

5 to a collective bargaining agreement, to the extent 

6 the agreement, or a predecessor agreement, provides 

7 or provided for contributions to a defined benefit 

8 plan that is a legacy plan, as of the first day of the 

9 first plan year following a plan year for which the 

10 plan actuary certifies that the plan is fully funded, 

11 has been fully funded for at least three out of the 

12 immediately preceding 5 plan years, and is projected 

13 to remain fully funded for at least the following 4 

14 plan years. 

15 ‘‘(2) DETERMINATION OF FULLY FUNDED.—A 

16 plan is fully funded for purposes of paragraph (1) 

17 if, as of the valuation date of the plan for a plan 

18 year, the value of the plan’s assets equals or exceeds 

19 the present value of the plan’s liabilities, determined 

20 in accordance with the rules prescribed by the Pen21 sion Benefit Guaranty Corporation under sections 

22 4219(c)(1)(D) and 4281 of Employee Retirement 

23 Income and Security Act for multiemployer plans 

24 terminating by mass withdrawal, as in effect for the 

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1 able assumption regarding the starting date of bene2 fits may be used. 

3 ‘‘(3) OTHER APPLICABLE RULES.—Except as 

4 provided in paragraph (2), actuarial determinations 

5 and projections under this section shall be based on 

6 the rules in section 432(b)(3) and section 438(b). 

7 ‘‘SEC. 440B. MERGERS AND ASSET TRANSFERS OF COM8 POSITE PLANS. 

9 ‘‘(a) IN GENERAL.—Assets and liabilities of a com10 posite plan may only be merged with, or transferred to, 

11 another plan if— 

12 ‘‘(1) the other plan is a composite plan, 

13 ‘‘(2) the plan or plans resulting from the merg14 er or transfer is a composite plan, 

15 ‘‘(3) no participant’s accrued benefit or adjust16 able benefit is lower immediately after the trans17 action than it was immediately before the trans18 action, and 

19 ‘‘(4) the value of the assets transferred in the 

20 case of a transfer reasonably reflects the value of the 

21 amounts contributed with respect to the participants 

22 whose benefits are being transferred, adjusted for al23 locable distributions, investment gains and losses, 

24 and administrative expenses. 

25 ‘‘(b) LEGACY PLAN.— 


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1 ‘‘(1) IN GENERAL.—After a merger or transfer 

2 involving a composite plan, the legacy plan with re3 spect to an employer that is obligated to contribute 

4 to the resulting composite plan is the legacy plan 

5 that applied to that employer immediately before the 

6 merger or transfer. 

7 ‘‘(2) MULTIPLE LEGACY PLANS.—If an em8 ployer is obligated to contribute to more than one 

9 legacy plan with respect to employees eligible to ac10 crue benefits under more than one composite plan 

11 and there is a merger or transfer of such legacy 

12 plans, the transition contribution rate applicable to 

13 the legacy plan resulting from the merger or trans14 fer with respect to that employer shall be determined 

15 in accordance with the provisions of section 

16 440A(d)(2)(B).’’. 

17 (2) CLERICAL AMENDMENT.—The table of sub18 parts for part III of subchapter D of chapter 1 of 

19 the Internal Revenue Code of 1986 is amended by 

20 adding at the end the following new item: 

‘‘SUBPART C. COMPOSITE PLANS AND LEGACY PLANS’’. 

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

22 this section shall apply to plan years beginning after the 

23 date of the enactment of this Act. 


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1 SEC. 3. APPLICATION OF CERTAIN REQUIREMENTS TO 

2 COMPOSITE PLANS. 

3 (a) AMENDMENTS TO THE EMPLOYEE RETIREMENT

4 INCOME SECURITY ACT OF 1974.— 

5 (1) TREATMENT FOR PURPOSES OF FUNDING

6 NOTICES.—Section 101(f) of the Employee Retire7 ment Income Security Act of 1974 (29 U.S.C. 

8 1021(f)) is amended— 

9 (A) in paragraph (1) by striking ‘‘title IV 

10 applies’’ and inserting ‘‘title IV applies or which 

11 is a composite plan’’; and 

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

13 ‘‘(5) APPLICATION TO COMPOSITE PLANS.—The 

14 provisions of this subsection shall apply to a com15 posite plan only to the extent prescribed by the Sec16 retary in regulations that take into account the dif17 ferences between a composite plan and a defined 

18 benefit plan that is a multiemployer plan.’’. 

19 (2) TREATMENT FOR PURPOSES OF ANNUAL

20 REPORT.—Section 103 of the Employee Retirement 

21 Income Security Act of 1974 (29 U.S.C. 1023) is 

22 amended— 

23 (A) in subsection (d) by adding at the end 

24 the following sentence: ‘‘The provisions of this 

25 subsection shall apply to a composite plan only 

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1 ulations that take into account the differences 

2 between a composite plan and a defined benefit 

3 plan that is a multiemployer plan.’’; 

4 (B) in subsection (f) by adding at the end 

5 the following: 

6 ‘‘(3) ADDITIONAL INFORMATION FOR COM7 POSITE PLANS.—With respect to any composite 

8 plan— 

9 ‘‘(A) the provisions of paragraph (1)(A) 

10 shall apply by substituting ‘current funded ratio 

11 and projected funded ratio (as such terms are 

12 defined in section 802(a)(2))’ for ‘funded per13 centage’ each place it appears; and 

14 ‘‘(B) the provisions of paragraph (2) shall 

15 apply only to the extent prescribed by the Sec16 retary in regulations that take into account the 

17 differences between a composite plan and a de18 fined benefit plan that is a multiemployer 

19 plan.’’; and 

20 (C) by adding at the end the following: 

21 ‘‘(h) COMPOSITE PLANS.—A multiemployer plan that 

22 incorporates the features of a composite plan as provided 

23 in section 801(b) shall be treated as a single plan for pur24 poses of the report required by this section, except that 

25 separate financial statements and actuarial statements 


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1 shall be provided under paragraphs (3) and (4) of sub2 section (a) for the defined benefit plan component and for 

3 the composite plan component of the multiemployer 

4 plan.’’. 

5 (3) TREATMENT FOR PURPOSES OF PENSION

6 BENEFIT STATEMENTS.—Section 105(a) of the Em7 ployee Retirement Income Security Act of 1974 (29 

8 U.S.C. 1025(a)) is amended by adding at the end 

9 the following: 

10 ‘‘(4) COMPOSITE PLANS.—For purposes of this 

11 subsection, a composite plan shall be treated as a 

12 defined benefit plan to the extent prescribed by the 

13 Secretary in regulations that take into account the 

14 differences between a composite plan and a defined 

15 benefit plan that is a multiemployer plan.’’. 

16 (b) AMENDMENTS TO THE INTERNAL REVENUE

17 CODE OF 1986.—Section 6058 of the Internal Revenue 

18 Code of 1986 is amended by redesignating subsection (f) 

19 as subsection (g) and by inserting after subsection (e) the 

20 following: 

21 ‘‘(f) COMPOSITE PLANS.—A multiemployer plan that 

22 incorporates the features of a composite plan as provided 

23 in section 437(b) shall be treated as a single plan for pur24 poses of the return required by this section, except that 

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1 fined benefit plan component and for the composite plan 

2 component of the multiemployer plan.’’. 

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

4 this section shall apply to plan years beginning after the 

5 date of the enactment of this Act. 

6 SEC. 4. TREATMENT OF COMPOSITE PLANS UNDER TITLE 

7 IV. 

8 (a) DEFINITION.—Section 4001(a) of the Employee 

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

10 1301(a)) is amended by striking the period at the end of 

11 paragraph (21) and inserting a semicolon and by adding 

12 at the end the following: 

13 ‘‘(22) COMPOSITE PLAN.—The term ‘composite 

14 plan’ has the meaning set forth in section 801.’’. 

15 (b) COMPOSITE PLANS DISREGARDED FOR CALCU16 LATING PREMIUMS.—Section 4006(a) of such Act (29 

17 U.S.C. 1306(a)) is amended by adding at the end the fol18 lowing: 

19 ‘‘(9) The composite plan component of a multi20 employer plan shall be disregarded in determining 

21 the premiums due under this section from the multi22 employer plan.’’. 

23 (c) COMPOSITE PLANS NOT COVERED.—Section 

24 4021(b)(1) of such Act (29 U.S.C. 1321(b)(1)) is amend25 ed by striking ‘‘Act’’ and inserting ‘‘Act, or a composite 


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1 plan, as defined in paragraph (43) of section 3 of this 

2 Act’’. 

3 (d) NO WITHDRAWAL LIABILITY.—Section 4201 of 

4 such Act (29 U.S.C. 1381) is amended by adding at the 

5 end the following: 

6 ‘‘(c) Contributions by an employer to the composite 

7 plan component of a multiemployer plan shall not be taken 

8 into account for any purpose under this title.’’. 

9 (e) NO WITHDRAWAL LIABILITY FOR CERTAIN

10 PLANS.—Section 4201 of such Act (29 U.S.C. 1381) is 

11 further amended by adding at the end the following: 

12 ‘‘(d) Contributions by an employer to a multiem13 ployer plan described in the except clause of section 3(35) 

14 of this Act pursuant to a collective bargaining agreement 

15 that specifically designates that such contributions shall 

16 be allocated to the separate defined contribution accounts 

17 of participants under the plan shall not be taken into ac18 count with respect to the defined benefit portion of the 

19 plan for any purpose under this title (including the deter20 mination of the employer’s highest contribution rate under 

21 section 4219), even if, under the terms of the plan, partici22 pants have the option to transfer assets in their separate 

23 defined contribution accounts to the defined benefit por24 tion of the plan in return for service credit under the deVerDate Sep 11 2014 03:27 Feb 15, 2018 Jkt 079200 PO 00000 Frm 00083 Fmt 6652 Sfmt 6201 E:\BILLS\H4997.IH H4997

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1 fined benefit portion, at rates established by the plan 

2 sponsor. 

3 ‘‘(e) A legacy plan created under section 805 shall 

4 be deemed to have no unfunded vested benefits for pur5 poses of this part, for each plan year following a period 

6 of 5 consecutive plan years for which— 

7 ‘‘(1) the plan was fully funded within the mean8 ing of section 805 for at least 3 of the plan years 

9 during that period, ending with a plan year for 

10 which the plan is fully funded; 

11 ‘‘(2) the plan had no unfunded vested benefits 

12 for at least 3 of the plan years during that period, 

13 ending with a plan year for which the plan is fully 

14 funded; and 

15 ‘‘(3) the plan is projected to be fully funded 

16 and to have no unfunded vested benefits for the fol17 lowing four plan years.’’. 

18 (f) NO WITHDRAWAL LIABILITY FOR EMPLOYERS

19 CONTRIBUTING TO CERTAIN FULLY FUNDED LEGACY

20 PLANS.—Section 4211 of such Act (29 U.S.C. 1382) is 

21 amended by adding at the end the following: 

22 ‘‘(g) No amount of unfunded vested benefits shall be 

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1 tion 4201 for each plan year for which such subsection 

2 applies.’’. 

3 (g) NO OBLIGATION TO CONTRIBUTE.—Section 

4 4212 of such Act (29 U.S.C. 1392) is amended by adding 

5 at the end the following: 

6 ‘‘(d) NO OBLIGATION TO CONTRIBUTE.—An em7 ployer shall not be treated as having an obligation to con8 tribute to a multiemployer defined benefit plan within the 

9 meaning of subsection (a) solely because— 

10 ‘‘(1) in the case of a multiemployer plan that 

11 includes a composite plan component, the employer 

12 has an obligation to contribute to the composite plan 

13 component of the plan; 

14 ‘‘(2) the employer has an obligation to con15 tribute to a composite plan that is maintained pur16 suant to one or more collective bargaining agree17 ments under which the multiemployer defined ben18 efit plan is or previously was maintained; or 

19 ‘‘(3) the employer contributes or has contrib20 uted under section 805(d) to a legacy plan associ21 ated with a composite plan pursuant to a collective 

22 bargaining agreement but employees of that em23 ployer were not eligible to accrue benefits under the 

24 legacy plan with respect to service with that em25 ployer.’’. 


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1 (h) NO INFERENCE.—Nothing in the amendment 

2 made by subsection (e) shall be construed to create an in3 ference with respect to the treatment under title IV of the 

4 Employee Retirement Income Security Act of 1974, as in 

5 effect before such amendment, of contributions by an em6 ployer to a multiemployer plan described in the except 

7 clause of section 3(35) of such Act that are made before 

8 the effective date of subsection (e) specified in subsection 

9 (h)(2). 

10 (i) EFFECTIVE DATE.— 

11 (1) IN GENERAL.—Except as provided in sub12 paragraph (2), the amendments made by this section 

13 shall apply to plan years beginning after the date of 

14 the enactment of this Act. 

15 (2) SPECIAL RULE FOR SECTION 414(k) MULTI16 EMPLOYER PLANS.—The amendment made by sub17 section (e) shall apply only to required contributions 

18 payable for plan years beginning after the date of 

19 the enactment of this Act. 

20 SEC. 5. CONFORMING CHANGES. 

21 (a) DEFINITIONS.—Section 3 of the Employee Re22 tirement Income Security Act of 1974 (29 U.S.C. 1002) 

23 is amended— 


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1 (1) in paragraph (35), by inserting ‘‘or a com2 posite plan’’ after ‘‘other than an individual account 

3 plan’’; and 

4 (2) by adding at the end the following: 

5 ‘‘(43) The term ‘composite plan’ has the mean6 ing given the term in section 801(a).’’. 

7 (b) SPECIAL FUNDING RULE FOR CERTAIN LEGACY

8 PLANS.— 

9 (1) AMENDMENT TO EMPLOYEE RETIREMENT

10 INCOME SECURITY ACT OF 1974.—Section 304(b) of 

11 the Employee Retirement Income Security Act of 

12 1974 (29 U.S.C. 1084(b)) is amended by adding at 

13 the end the following: 

14 ‘‘(9) SPECIAL FUNDING RULE FOR CERTAIN

15 LEGACY PLANS.—In the case of a multiemployer de16 fined benefit plan that has adopted an amendment 

17 under section 801(b), in accordance with which no 

18 further benefits shall accrue under the multiem19 ployer defined benefit plan, the plan sponsor may 

20 combine the outstanding balance of all charge and 

21 credit bases and amortize that combined base in 

22 level annual installments (until fully amortized) over 

23 a period of 25 plan years beginning with the plan 

24 year following the date all benefit accruals ceased.’’. 


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1 (2) AMENDMENT TO INTERNAL REVENUE CODE

2 OF 1986.—Section 431(b) of the Internal Revenue 

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

4 following: 

5 ‘‘(9) SPECIAL FUNDING RULE FOR CERTAIN

6 LEGACY PLANS.—In the case of a multiemployer de7 fined benefit plan that has adopted an amendment 

8 under section 437(b), in accordance with which no 

9 further benefits shall accrue under the multiem10 ployer defined benefit plan, the plan sponsor may 

11 combine the outstanding balance of all charge and 

12 credit bases and amortize that combined base in 

13 level annual installments (until fully amortized) over 

14 a period of 25 plan years beginning with the plan 

15 year following the date on which all benefit accruals 

16 ceased.’’. 

17 (c) BENEFITS AFTER MERGER, CONSOLIDATION, OR

18 TRANSFER OF ASSETS.— 

19 (1) AMENDMENT TO EMPLOYEE RETIREMENT

20 INCOME SECURITY ACT OF 1974.—Section 208 of the 

21 Employee Retirement Income Security Act of 1974 

22 (29 U.S.C. 1058) is amended— 

23 (A) by striking so much of the first sen24 tence as precedes ‘‘may not merge’’ and insert25 ing the following: 


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1 ‘‘(1) IN GENERAL.—Except as provided in para2 graph (2), a pension plan may not merge, and’’; and 

3 (B) by striking the second sentence and 

4 adding at the end the following: 

5 ‘‘(2) SPECIAL REQUIREMENTS FOR MULTIEM6 PLOYER PLANS.—Paragraph (1) shall not apply to 

7 any transaction to the extent that participants either 

8 before or after the transaction are covered under a 

9 multiemployer plan to which title IV of this Act ap10 plies or a composite plan.’’. 

11 (2) AMENDMENTS TO INTERNAL REVENUE

12 CODE OF 1986.— 

13 (A) QUALIFICATION REQUIREMENT.—Sec14 tion 401(a)(12) of the Internal Revenue Code 

15 of 1986 is amended— 

16 (i) by striking ‘‘(12) A trust’’ and in17 serting the following: 

18 ‘‘(12) BENEFITS AFTER MERGER, CONSOLIDA19 TION, OR TRANSFER OF ASSETS.— 

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

21 subparagraph (B), a trust’’; 

22 (ii) by striking the second sentence; 

23 and 

24 (iii) by adding at the end the fol25 lowing: 


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1 ‘‘(B) SPECIAL REQUIREMENTS FOR MULTI2 EMPLOYER PLANS.—Subparagraph (A) shall 

3 not apply to any multiemployer plan with re4 spect to any transaction to the extent that par5 ticipants either before or after the transaction 

6 are covered under a multiemployer plan to 

7 which title IV of the Employee Retirement In8 come Security Act of 1974 applies or a com9 posite plan.’’. 

10 (B) ADDITIONAL QUALIFICATION REQUIRE11 MENT.—Paragraph (1) of section 414(l) of such 

12 Code is amended— 

13 (i) by striking ‘‘(1) IN GENERAL’’ and 

14 all that follows through ‘‘shall not con15 stitute’’ and inserting the following: 

16 ‘‘(1) BENEFIT PROTECTIONS: MERGER, CON17 SOLIDATION, TRANSFER.— 

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

19 subparagraph (B), a trust which forms a part 

20 of a plan shall not constitute’’; and 

21 (ii) by striking the second sentence; 

22 and 

23 (iii) by adding at the end the fol24 lowing: 


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1 ‘‘(B) SPECIAL REQUIREMENTS FOR MULTI2 EMPLOYER PLANS.—Subparagraph (A) does not 

3 apply to any multiemployer plan with respect to 

4 any transaction to the extent that participants 

5 either before or after the transaction are cov6 ered under a multiemployer plan to which title 

7 IV of the Employee Retirement Income Secu8 rity Act of 1974 applies or a composite plan.’’. 

9 (d) REQUIREMENTS FOR STATUS AS A QUALIFIED

10 PLAN.— 

11 (1) REQUIREMENT THAT ACTUARIAL ASSUMP12 TIONS BE SPECIFIED.—Section 401(a)(25) of the In13 ternal Revenue Code of 1986 is amended by insert14 ing ‘‘(in the case of a composite plan, benefits objec15 tively calculated pursuant to a formula)’’ after ‘‘defi16 nitely determinable benefits’’. 

17 (2) MISSING PARTICIPANTS IN TERMINATING

18 COMPOSITE PLAN.—Section 401(a)(34) of the Inter19 nal Revenue Code of 1986 is amended by striking ‘‘, 

20 a trust’’ and inserting ‘‘or a composite plan, a 

21 trust’’. 

22 (e) DEDUCTION FOR CONTRIBUTIONS TO A QUALI23 FIED PLAN.—Section 404(a)(1) of the Internal Revenue 

24 Code of 1986 is amended by redesignating subparagraph 


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1 (E) as subparagraph (F) and by inserting after subpara2 graph (D) the following: 

3 ‘‘(E) COMPOSITE PLANS.— 

4 ‘‘(i) IN GENERAL.—In the case of a 

5 composite plan, subparagraph (D) shall 

6 not apply and the maximum amount de7 ductible for a plan year shall be the excess 

8 (if any) of— 

9 ‘‘(I) 160 percent of the greater 

10 of— 

11 ‘‘(aa) the current liability of 

12 the plan determined in accord13 ance with the principles of sec14 tion 431(c)(6)(D), or 

15 ‘‘(bb) the present value of 

16 plan liabilities as determined 

17 under section 438, over 

18 ‘‘(II) the fair market value of the 

19 plan’s assets, projected to the end of 

20 the plan year. 

21 ‘‘(ii) SPECIAL RULES FOR PREDE22 CESSOR MULTIEMPLOYER PLAN TO COM23 POSITE PLAN.— 

24 ‘‘(I) IN GENERAL.—Except as 

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1 ployer contributes to a composite plan 

2 with respect to its employees, con3 tributions by that employer to a mul4 tiemployer defined benefit plan with 

5 respect to some or all of the same 

6 group of employees shall be deductible 

7 under sections 162 and this section, 

8 subject to the limits in subparagraph 

9 (D). 

10 ‘‘(II) TRANSITION CONTRIBU11 TION.—The full amount of a contribu12 tion to satisfy the transition contribu13 tion requirement (as defined in sec14 tion 440A(d)) and allocated to the 

15 legacy defined benefit plan for the 

16 plan year shall be deductible for the 

17 employer’s taxable year ending with or 

18 within the plan year.’’. 

19 (f) MINIMUM VESTING STANDARDS.— 

20 (1) YEARS OF SERVICE UNDER COMPOSITE

21 PLANS.— 

22 (A) EMPLOYEE RETIREMENT INCOME SE23 CURITY ACT OF 1974.—Section 203 of the Em24 ployee Retirement Income Security Act of 1974 


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1 (29 U.S.C. 1053) is amended by inserting after 

2 subsection (f) the following: 

3 ‘‘(g) SPECIAL RULES FOR COMPUTING YEARS OF

4 SERVICE UNDER COMPOSITE PLANS.— 

5 ‘‘(1) IN GENERAL.—In determining a qualified 

6 employee’s years of service under a composite plan 

7 for purposes of this section, the employee’s years of 

8 service under a legacy plan shall be treated as years 

9 of service earned under the composite plan. For pur10 poses of such determination, a composite plan shall 

11 not be treated as a defined benefit plan pursuant to 

12 section 801(d). 

13 ‘‘(2) QUALIFIED EMPLOYEE.—For purposes of 

14 this subsection, an employee is a qualified employee 

15 if the employee first completes an hour of service 

16 under the composite plan (determined without re17 gard to the provisions of this subsection) within the 

18 12-month period immediately preceding or the 24- 

19 month period immediately following the date the em20 ployee ceased to accrue benefits under the legacy 

21 plan. 

22 ‘‘(3) CERTIFICATION OF YEARS OF SERVICE.— 

23 For purposes of paragraph (1), the plan sponsor of 

24 the composite plan shall rely on a written certifi25 cation by the plan sponsor of the legacy plan of the 


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1 years of service the qualified employee completed 

2 under the defined benefit plan as of the date the em3 ployee satisfies the requirements of paragraph (2), 

4 disregarding any years of service that had been for5 feited under the rules of the defined benefit plan be6 fore that date. 

7 ‘‘(h) SPECIAL RULES FOR COMPUTING YEARS OF

8 SERVICE UNDER LEGACY PLANS.— 

9 ‘‘(1) IN GENERAL.—In determining a qualified 

10 employee’s years of service under a legacy plan for 

11 purposes of this section, and in addition to any serv12 ice under applicable regulations, the employee’s 

13 years of service under a composite plan shall be 

14 treated as years of service earned under the legacy 

15 plan. For purposes of such determination, a com16 posite plan shall not be treated as a defined benefit 

17 plan pursuant to section 801(d). 

18 ‘‘(2) QUALIFIED EMPLOYEE.—For purposes of 

19 this subsection, an employee is a qualified employee 

20 if the employee first completes an hour of service 

21 under the composite plan (determined without re22 gard to the provisions of this subsection) within the 

23 12-month period immediately preceding or the 24- 

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1 ployee ceased to accrue benefits under the legacy 

2 plan. 

3 ‘‘(3) CERTIFICATION OF YEARS OF SERVICE.— 

4 For purposes of paragraph (1), the plan sponsor of 

5 the legacy plan shall rely on a written certification 

6 by the plan sponsor of the composite plan of the 

7 years of service the qualified employee completed 

8 under the composite plan after the employee satisfies 

9 the requirements of paragraph (2), disregarding any 

10 years of service that has been forfeited under the 

11 rules of the composite plan.’’. 

12 (B) INTERNAL REVENUE CODE OF 1986.— 

13 Section 411(a) of the Internal Revenue Code of 

14 1986 is amended by adding at the end the fol15 lowing: 

16 ‘‘(14) SPECIAL RULES FOR DETERMINING

17 YEARS OF SERVICE UNDER COMPOSITE PLANS.— 

18 ‘‘(A) IN GENERAL.—In determining a 

19 qualified employee’s years of service under a 

20 composite plan for purposes of this subsection, 

21 the employee’s years of service under a legacy 

22 plan shall be treated as years of service earned 

23 under the composite plan. For purposes of such 

24 determination, a composite plan shall not be 


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1 treated as a defined benefit plan pursuant to 

2 section 437(d). 

3 ‘‘(B) QUALIFIED EMPLOYEE.—For pur4 poses of this paragraph, an employee is a quali5 fied employee if the employee first completes an 

6 hour of service under the composite plan (deter7 mined without regard to the provisions of this 

8 paragraph) within the 12-month period imme9 diately preceding or the 24-month period imme10 diately following the date the employee ceased 

11 to accrue benefits under the legacy plan. 

12 ‘‘(C) CERTIFICATION OF YEARS OF SERV13 ICE.—For purposes of subparagraph (A), the 

14 plan sponsor of the composite plan shall rely on 

15 a written certification by the plan sponsor of 

16 the legacy plan of the years of service the quali17 fied employee completed under the legacy plan 

18 as of the date the employee satisfies the re19 quirements of subparagraph (B), disregarding 

20 any years of service that had been forfeited 

21 under the rules of the defined benefit plan be22 fore that date. 

23 ‘‘(15) SPECIAL RULES FOR COMPUTING YEARS

24 OF SERVICE UNDER LEGACY PLANS.— 


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1 ‘‘(A) IN GENERAL.—In determining a 

2 qualified employee’s years of service under a 

3 legacy plan for purposes of this section, and in 

4 addition to any service under applicable regula5 tions, the employee’s years of service under a 

6 composite plan shall be treated as years of serv7 ice earned under the legacy plan. For purposes 

8 of such determination, a composite plan shall 

9 not be treated as a defined benefit plan pursu10 ant to section 437(d). 

11 ‘‘(B) QUALIFIED EMPLOYEE.—For pur12 poses of this paragraph, an employee is a quali13 fied employee if the employee first completes an 

14 hour of service under the composite plan (deter15 mined without regard to the provisions of this 

16 paragraph) within the 12-month period imme17 diately preceding or the 24-month period imme18 diately following the date the employee ceased 

19 to accrue benefits under the legacy plan. 

20 ‘‘(C) CERTIFICATION OF YEARS OF SERV21 ICE.—For purposes of subparagraph (A), the 

22 plan sponsor of the legacy plan shall rely on a 

23 written certification by the plan sponsor of the 

24 composite plan of the years of service the quali25 fied employee completed under the composite 


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1 plan after the employee satisfies the require2 ments of subparagraph (B), disregarding any 

3 years of service that has been forfeited under 

4 the rules of the composite plan.’’. 

5 (2) REDUCTION OF BENEFITS.— 

6 (A) EMPLOYEE RETIREMENT INCOME SE7 CURITY ACT OF 1974.—Section 203(a)(3)(E)(ii) 

8 of the Employee Retirement Income Security 

9 Act of 1974 (29 U.S.C. 1053(a)(3)(E)(ii)) is 

10 amended— 

11 (i) in subclause (I) by striking 

12 ‘‘4244A’’ and inserting ‘‘305(e), 803,’’; 

13 and 

14 (ii) in subclause (II) by striking 

15 ‘‘4245’’ and inserting ‘‘305(e), 4245,’’. 

16 (B) INTERNAL REVENUE CODE OF 1986.— 

17 Section 411(a)(3)(F) of the Internal Revenue 

18 Code of 1986 is amended— 

19 (i) in clause (i) by striking ‘‘section 

20 418D or under section 4281 of the Em21 ployee Retirement Income Security Act of 

22 1974’’ and inserting ‘‘section 432(e) or 

23 439 or under section 4281 of the Em24 ployee Retirement Income Security Act of 

25 1974’’; and 


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1 (ii) in clause (ii) by inserting ‘‘or 

2 432(e)’’ after ‘‘section 418E’’. 

3 (3) ACCRUED BENEFIT REQUIREMENTS.— 

4 (A) EMPLOYEE RETIREMENT INCOME SE5 CURITY ACT OF 1974.—Section 204(b)(1)(B)(i) 

6 of the Employee Retirement Income Security 

7 Act of 1974 (29 U.S.C. 1054(b)(1)(B)(i)) is 

8 amended by inserting ‘‘, including an amend9 ment reducing or suspending benefits under 

10 section 305(e), 803, 4245 or 4281,’’ after ‘‘any 

11 amendment to the plan’’. 

12 (B) INTERNAL REVENUE CODE OF 1986.— 

13 Section 411(b)(1)(B)(i) of the Internal Revenue 

14 Code of 1986 is amended by inserting ‘‘, includ15 ing an amendment reducing or suspending ben16 efits under section 418E, 432(e) or 439, or 

17 under section 4281 of the Employee Retirement 

18 Income Security Act of 1974,’’ after ‘‘any 

19 amendment to the plan’’. 

20 (4) ADDITIONAL ACCRUED BENEFIT REQUIRE21 MENTS.— 

22 (A) EMPLOYEE RETIREMENT INCOME SE23 CURITY ACT OF 1974.—Section 204(b)(1)(H)(v) 

24 of the Employee Retirement Income Security 

25 Act of 1974 (29 U.S.C. 1053(b)(1)(H)(v)) is 


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1 amended by inserting before the period at the 

2 end the following: ‘‘, or benefits are reduced or 

3 suspended under section 305(e), 803, 4245, or 

4 4281’’. 

5 (B) INTERNAL REVENUE CODE OF 1986.— 

6 Section 411(b)(1)(H)(iv) of the Internal Rev7 enue Code of 1986 is amended— 

8 (i) in the heading by striking ‘‘BEN9 EFIT’’ and inserting ‘‘BENEFIT AND THE

10 SUSPENSION AND REDUCTION OF CERTAIN

11 BENEFITS’’; and 

12 (ii) in the text by inserting before the 

13 period at the end the following: ‘‘, or bene14 fits are reduced or suspended under sec15 tion 418E, 432(e), or 439, or under sec16 tion 4281 of the Employee Retirement In17 come Security Act of 1974’’. 

18 (5) ACCRUED BENEFIT NOT TO BE DECREASED

19 BY AMENDMENT.— 

20 (A) EMPLOYEE RETIREMENT INCOME SE21 CURITY ACT OF 1974.—Section 204(g)(1) of the 

22 Employee Retirement Income Security Act of 

23 1974 (29 U.S.C. 1053(g)(1)) is amended by in24 serting after ‘‘302(d)(2)’’ the following: ‘‘, 

25 305(e), 803, 4245,’’. 


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1 (B) INTERNAL REVENUE CODE OF 1986.— 

2 Section 411(d)(6)(A) of the Internal Revenue 

3 Code of 1986 is amended by inserting after 

4 ‘‘412(d)(2),’’ the following: ‘‘418E, 432(e), or 

5 439,’’. 

6 (g) CERTAIN FUNDING RULES NOT APPLICABLE.— 

7 (1) EMPLOYEE RETIREMENT INCOME SECURITY

8 ACT OF 1974.—Section 305 of the Employee Retire9 ment Income Security Act of 1974 (29 U.S.C. 1085) 

10 is amended by adding at the end the following: 

11 ‘‘(k) LEGACY PLANS.—Sections 302, 304, and 305 

12 shall not apply to an employer that has an obligation to 

13 contribute to a plan that is a legacy plan within the mean14 ing of section 805(a) solely because the employer has an 

15 obligation to contribute to a composite plan described in 

16 section 801 that is associated with that legacy plan.’’. 

17 (2) INTERNAL REVENUE CODE OF 1986.—Sec18 tion 432 of the Internal Revenue Code of 1986 is 

19 amended by adding at the end the following: 

20 ‘‘(k) LEGACY PLANS.—Sections 412, 431, and 432 

21 shall not apply to an employer that has an obligation to 

22 contribute to a plan that is a legacy plan within the mean23 ing of section 440A(a) solely because the employer has an 

24 obligation to contribute to a composite plan described in 

25 section 437 that is associated with that legacy plan.’’. 


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1 (h) TERMINATION OF COMPOSITE PLAN.—Section 

2 403(d) of the Employee Retirement Income Security Act 

3 of 1974 (29 U.S.C. 1103(d) is amended— 

4 (1) in paragraph (1), by striking ‘‘regulations 

5 of the Secretary.’’ and inserting ‘‘regulations of the 

6 Secretary, or as provided in paragraph (3).’’; and 

7 (2) by adding at the end the following: 

8 ‘‘(3) Section 4044(a) of this Act shall be ap9 plied in the case of the termination of a composite 

10 plan by— 

11 ‘‘(A) limiting the benefits subject to para12 graph (3) thereof to benefits as defined in sec13 tion 802(b)(3)(B); and 

14 ‘‘(B) including in the benefits subject to 

15 paragraph (4) all other benefits (if any) of indi16 viduals under the plan that would be guaran17 teed under section 4022A if the plan were sub18 ject to title IV.’’. 

19 (i) GOOD FAITH COMPLIANCE PRIOR TO GUID20 ANCE.—Where the implementation of any provision of law 

21 added or amended by this Act is subject to issuance of 

22 regulations by the Secretary of Labor, the Secretary of 

23 the Treasury, or the Pension Benefit Guaranty Corpora24 tion, a multiemployer plan shall not be treated as failing 

25 to meet the requirements of any such provision prior to 


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1 the issuance of final regulations or other guidance to carry 

2 out such provision if such plan is operated in accordance 

3 with a reasonable, good faith interpretation of such provi4 sion. 

5 SEC. 6. EFFECTIVE DATE. 

6 Unless otherwise specified, the amendments made by 

7 this Act shall apply to plan years beginning after the date 

8 of the enactment of this Act. 

Æ 


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