H. R. 3962 

One Hundred Eleventh Congress 

of the 

United States of America 

AT THE SECOND SESSION 

Begun and held at the City of Washington on Tuesday, 

the fifth day of January, two thousand and ten 

An Act 

To provide a physician payment update, to provide pension funding relief, and 

for other purposes. 

Be it enacted by the Senate and House of Representatives of 

the United States of America in Congress assembled, 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Preservation of Access to Care 

for Medicare Beneficiaries and Pension Relief Act of 2010’’. 

TITLE I—HEALTH PROVISIONS 

SEC. 101. PHYSICIAN PAYMENT UPDATE. 

(a) IN GENERAL.—Section 1848(d) of the Social Security Act 

(42 U.S.C. 1395w–4(d)) is amended— 

(1) in paragraph (10), in the heading, by striking ‘‘PORTION’’ 

and inserting ‘‘JANUARY THROUGH MAY ’’; and 

(2) by adding at the end the following new paragraph: 

‘‘(11) UPDATE FOR JUNE THROUGH NOVEMBER OF 2010.— 

‘‘(A) IN GENERAL.—Subject to paragraphs (7)(B), (8)(B), 

(9)(B), and (10)(B), in lieu of the update to the single 

conversion factor established in paragraph (1)(C) that 

would otherwise apply for 2010 for the period beginning 

on June 1, 2010, and ending on November 30, 2010, the 

update to the single conversion factor shall be 2.2 percent. 

‘‘(B) NO EFFECT ON COMPUTATION OF CONVERSION

FACTOR FOR REMAINING PORTION OF 2010 AND SUBSEQUENT

YEARS.—The conversion factor under this subsection shall 

be computed under paragraph (1)(A) for the period beginning on December 1, 2010, and ending on December 31, 

2010, and for 2011 and subsequent years as if subparagraph (A) had never applied.’’. 

(b) STATUTORY PAYGO.—The budgetary effects of this Act, for 

the purpose of complying with the Statutory Pay-As-You-Go Act 

of 2010, shall be determined by reference to the latest statement 

titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this Act, jointly 

submitted for printing in the Congressional Record by the Chairmen 

of the House and Senate Budget Committees, provided that such 

statement has been submitted prior to the vote on passage in 

the House acting first on this conference report or amendment 

between the Houses. 
H. R. 3962—2 

SEC. 102. CLARIFICATION OF 3-DAY PAYMENT WINDOW. 

(a) IN GENERAL.—Section 1886 of the Social Security Act (42 

U.S.C. 1395ww) is amended— 

(1) by adding at the end of subsection (a)(4) the following 

new sentence: ‘‘In applying the first sentence of this paragraph, 

the term ‘other services related to the admission’ includes all 

services that are not diagnostic services (other than ambulance 

and maintenance renal dialysis services) for which payment 

may be made under this title that are provided by a hospital 

(or an entity wholly owned or operated by the hospital) to 

a patient— 

‘‘(A) on the date of the patient’s inpatient admission; 

or 

‘‘(B) during the 3 days (or, in the case of a hospital 

that is not a subsection (d) hospital, during the 1 day) 

immediately preceding the date of such admission unless 

the hospital demonstrates (in a form and manner, and 

at a time, specified by the Secretary) that such services 

are not related (as determined by the Secretary) to such 

admission.’’; and 

(2) in subsection (d)(7)— 

(A) in subparagraph (A), by striking ‘‘and’’ at the end; 

(B) in subparagraph (B), by striking the period and 

inserting ‘‘, and’’; and 

(C) by adding at the end the following new subparagraph: 

‘‘(C) the determination of whether services provided 

prior to a patient’s inpatient admission are related to the 

admission (as described in subsection (a)(4)).’’. 

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

(a) shall apply to services furnished on or after the date of the 

enactment of this Act. 

(c) NO REOPENING OF PREVIOUSLY BUNDLED CLAIMS.— (1) IN GENERAL.—The Secretary of Health and Human 

Services may not reopen a claim, adjust a claim, or make 

a payment pursuant to any request for payment under title 

XVIII of the Social Security Act, submitted by an entity 

(including a hospital or an entity wholly owned or operated 

by the hospital) for services described in paragraph (2) for 

purposes of treating, as unrelated to a patient’s inpatient admission, services provided during the 3 days (or, in the case of 

a hospital that is not a subsection (d) hospital, during the 

1 day) immediately preceding the date of the patient’s inpatient 

admission. 

(2) SERVICES DESCRIBED.—For purposes of paragraph (1), 

the services described in this paragraph are other services 

related to the admission (as described in section 1886(a)(4) 

of the Social Security Act (42 U.S.C. 1395ww(a)(4)), as amended 

by subsection (a)) which were previously included on a claim 

or request for payment submitted under part A of title XVIII 

of such Act for which a reopening, adjustment, or request 

for payment under part B of such title, was not submitted 

prior to the date of the enactment of this Act. 

(d) IMPLEMENTATION.—Notwithstanding any other provision of 

law, the Secretary of Health and Human Services may implement 

the provisions of this section (and amendments made by this section) 

by program instruction or otherwise. 
H. R. 3962—3 

(e) RULE OF CONSTRUCTION.—Nothing in the amendments made 

by this section shall be construed as changing the policy described 

in section 1886(a)(4) of the Social Security Act (42 U.S.C. 

1395ww(a)(4)), as applied by the Secretary of Health and Human 

Services before the date of the enactment of this Act, with respect 

to diagnostic services. 

SEC. 103. ESTABLISH A CMS–IRS DATA MATCH TO IDENTIFY FRAUDULENT PROVIDERS. 

(a) AUTHORITY TO DISCLOSE RETURN INFORMATION CONCERNING

OUTSTANDING TAX DEBTS FOR PURPOSES OF ENHANCING MEDICARE

PROGRAM INTEGRITY.— 

(1) IN GENERAL.—Section 6103(l) of the Internal Revenue 

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

new paragraph: 

‘‘(22) DISCLOSURE OF RETURN INFORMATION TO DEPARTMENT

OF HEALTH AND HUMAN SERVICES FOR PURPOSES OF ENHANCING

MEDICARE PROGRAM INTEGRITY.— 

‘‘(A) IN GENERAL.—The Secretary shall, upon written 

request from the Secretary of Health and Human Services, 

disclose to officers and employees of the Department of 

Health and Human Services return information with 

respect to a taxpayer who has applied to enroll, or reenroll, 

as a provider of services or supplier under the Medicare 

program under title XVIII of the Social Security Act. Such 

return information shall be limited to— 

‘‘(i) the taxpayer identity information with respect 

to such taxpayer; 

‘‘(ii) the amount of the delinquent tax debt owed 

by that taxpayer; and 

‘‘(iii) the taxable year to which the delinquent tax 

debt pertains. 

‘‘(B) RESTRICTION ON DISCLOSURE.—Return information 

disclosed under subparagraph (A) may be used by officers 

and employees of the Department of Health and Human 

Services for the purposes of, and to the extent necessary 

in, establishing the taxpayer’s eligibility for enrollment 

or reenrollment in the Medicare program, or in any 

administrative or judicial proceeding relating to, or arising 

from, a denial of such enrollment or reenrollment, or in 

determining the level of enhanced oversight to be applied 

with respect to such taxpayer pursuant to section 1866(j)(3) 

of the Social Security Act. 

‘‘(C) DELINQUENT TAX DEBT.—For purposes of this paragraph, the term ‘delinquent tax debt’ means an outstanding 

debt under this title for which a notice of lien has been 

filed pursuant to section 6323, but the term does not 

include a debt that is being paid in a timely manner 

pursuant to an agreement under section 6159 or 7122, 

or a debt with respect to which a collection due process 

hearing under section 6330 is requested, pending, or completed and no payment is required.’’. 

(2) CONFORMING AMENDMENTS.—Section 6103(p)(4) of such 

Code, as amended by sections 1414 and 3308 of Public Law 

111–148, in the matter preceding subparagraph (A) and in 

subparagraph (F)(ii), is amended by striking ‘‘or (17)’’ and 

inserting ‘‘(17), or (22)’’ each place it appears. 
H. R. 3962—4 

(b) SECRETARY’S AUTHORITY TO USE INFORMATION FROM THE

DEPARTMENT OF TREASURY IN MEDICARE ENROLLMENTS AND RE- ENROLLMENTS.—Section 1866(j)(2) of the Social Security Act (42 

U.S.C. 1395cc(j)), as inserted by section 6401(a) of Public Law 

111–148, is further amended— 

(1) by redesignating subparagraph (E) as subparagraph 

(F); and 

(2) by inserting after subparagraph (D) the following new 

subparagraph: 

‘‘(E) USE OF INFORMATION FROM THE DEPARTMENT OF

TREASURY CONCERNING TAX DEBTS.—In reviewing the 

application of a provider of services or supplier to enroll 

or reenroll under the program under this title, the Secretary shall take into account the information supplied 

by the Secretary of the Treasury pursuant to section 

6103(l)(22) of the Internal Revenue Code of 1986, in determining whether to deny such application or to apply 

enhanced oversight to such provider of services or supplier 

pursuant to paragraph (3) if the Secretary determines such 

provider of services or supplier owes such a debt.’’. 

(c) AUTHORITY TO ADJUST PAYMENTS OF PROVIDERS OF SERVICES AND SUPPLIERS WITH THE SAME TAX IDENTIFICATION NUMBER

FOR MEDICARE OBLIGATIONS.—Section 1866(j)(6) of the Social Security Act (42 U.S.C. 1395cc(j)(6)), as inserted by section 6401(a) 

of Public Law 111–148 and as redesignated by section 1304 of 

Public Law 111–152, is amended— 

(1) in the paragraph heading, by striking ‘‘PAST-DUE’’ and 

inserting ‘‘MEDICARE’’; 

(2) in subparagraph (A), by striking ‘‘past-due obligations 

described in subparagraph (B)(ii) of an’’ and inserting ‘‘amount 

described in subparagraph (B)(ii) due from such’’; and 

(3) in subparagraph (B)(ii), by striking ‘‘a past-due obligation’’ and inserting ‘‘an amount that is more than the amount 

required to be paid’’. 

TITLE II—PENSION FUNDING RELIEF 

Subtitle A—Single Employer Plans 

SEC. 201. EXTENDED PERIOD FOR SINGLE-EMPLOYER DEFINED BENEFIT PLANS TO AMORTIZE CERTAIN SHORTFALL 

AMORTIZATION BASES. 

(a) AMENDMENTS TO ERISA.— 

(1) IN GENERAL.—Paragraph (2) of section 303(c) of the 

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

1083(c)) is amended by adding at the end the following subparagraph: 

‘‘(D) SPECIAL ELECTION FOR ELIGIBLE PLAN YEARS.— 

‘‘(i) IN GENERAL.—If a plan sponsor elects to apply 

this subparagraph with respect to the shortfall 

amortization base of a plan for any eligible plan year 

(in this subparagraph and paragraph (7) referred to 

as an ‘election year’), then, notwithstanding subparagraphs (A) and (B)— 

‘‘(I) the shortfall amortization installments 

with respect to such base shall be determined 
H. R. 3962—5 

under clause (ii) or (iii), whichever is specified 

in the election, and 

‘‘(II) the shortfall amortization installment for 

any plan year in the 9-plan-year period described 

in clause (ii) or the 15-plan-year period described 

in clause (iii), respectively, with respect to such 

shortfall amortization base is the annual installment determined under the applicable clause for 

that year for that base. 

‘‘(ii) 2 PLUS 7 AMORTIZATION SCHEDULE.—The shortfall amortization installments determined under this 

clause are— 

‘‘(I) in the case of the first 2 plan years in 

the 9-plan-year period beginning with the election 

year, interest on the shortfall amortization base 

of the plan for the election year (determined using 

the effective interest rate for the plan for the election year), and 

‘‘(II) in the case of the last 7 plan years in 

such 9-plan-year period, the amounts necessary 

to amortize the remaining balance of the shortfall 

amortization base of the plan for the election year 

in level annual installments over such last 7 plan 

years (using the segment rates under subparagraph (C) for the election year). 

‘‘(iii) 15-YEAR AMORTIZATION.—The shortfall 

amortization installments determined under this 

subparagraph are the amounts necessary to amortize 

the shortfall amortization base of the plan for the 

election year in level annual installments over the 

15-plan-year period beginning with the election year 

(using the segment rates under subparagraph (C) for 

the election year). 

‘‘(iv) ELECTION.— ‘‘(I) IN GENERAL.—The plan sponsor of a plan 

may elect to have this subparagraph apply to not 

more than 2 eligible plan years with respect to 

the plan, except that in the case of a plan described 

in section 106 of the Pension Protection Act of 

2006, the plan sponsor may only elect to have 

this subparagraph apply to a plan year beginning 

in 2011. 

‘‘(II) AMORTIZATION SCHEDULE.—Such election 

shall specify whether the amortization schedule 

under clause (ii) or (iii) shall apply to an election 

year, except that if a plan sponsor elects to have 

this subparagraph apply to 2 eligible plan years, 

the plan sponsor must elect the same schedule 

for both years. 

‘‘(III) OTHER RULES.—Such election shall be 

made at such time, and in such form and manner, 

as shall be prescribed by the Secretary of the 

Treasury, and may be revoked only with the consent of the Secretary of the Treasury. The Secretary of the Treasury shall, before granting a 

revocation request, provide the Pension Benefit 

Guaranty Corporation an opportunity to comment 
H. R. 3962—6 

on the conditions applicable to the treatment of 

any portion of the election year shortfall amortization base that remains unamortized as of the revocation date. 

‘‘(v) ELIGIBLE PLAN YEAR.—For purposes of this 

subparagraph, the term ‘eligible plan year’ means any 

plan year beginning in 2008, 2009, 2010, or 2011, 

except that a plan year shall only be treated as an 

eligible plan year if the due date under subsection 

(j)(1) for the payment of the minimum required contribution for such plan year occurs on or after the 

date of the enactment of this subparagraph. 

‘‘(vi) REPORTING.—A plan sponsor of a plan who 

makes an election under clause (i) shall— 

‘‘(I) give notice of the election to participants 

and beneficiaries of the plan, and 

‘‘(II) inform the Pension Benefit Guaranty Corporation of such election in such form and manner 

as the Director of the Pension Benefit Guaranty 

Corporation may prescribe. 

‘‘(vii) INCREASES IN REQUIRED INSTALLMENTS IN

CERTAIN CASES.—For increases in required contributions in cases of excess compensation or extraordinary 

dividends or stock redemptions, see paragraph (7).’’. 

(2) INCREASES IN REQUIRED INSTALLMENTS IN CERTAIN

CASES.—Section 303(c) of the Employee Retirement Income 

Security Act of 1974 (29 U.S.C. 1083(c)) is amended by adding 

at the end the following paragraph: 

‘‘(7) INCREASES IN ALTERNATE REQUIRED INSTALLMENTS IN

CASES OF EXCESS COMPENSATION OR EXTRAORDINARY DIVIDENDS

OR STOCK REDEMPTIONS.— ‘‘(A) IN GENERAL.—If there is an installment acceleration amount with respect to a plan for any plan year 

in the restriction period with respect to an election year 

under paragraph (2)(D), then the shortfall amortization 

installment otherwise determined and payable under such 

paragraph for such plan year shall, subject to the limitation 

under subparagraph (B), be increased by such amount. 

‘‘(B) TOTAL INSTALLMENTS LIMITED TO SHORTFALL

BASE.—Subject to rules prescribed by the Secretary of the 

Treasury, if a shortfall amortization installment with 

respect to any shortfall amortization base for an election 

year is required to be increased for any plan year under 

subparagraph (A)— 

‘‘(i) such increase shall not result in the amount 

of such installment exceeding the present value of such 

installment and all succeeding installments with 

respect to such base (determined without regard to 

such increase but after application of clause (ii)), and 

‘‘(ii) subsequent shortfall amortization installments 

with respect to such base shall, in reverse order of 

the otherwise required installments, be reduced to the 

extent necessary to limit the present value of such 

subsequent shortfall amortization installments (after 

application of this paragraph) to the present value 

of the remaining unamortized shortfall amortization 

base. 
H. R. 3962—7 

‘‘(C) INSTALLMENT ACCELERATION AMOUNT.—For purposes of this paragraph— 

‘‘(i) IN GENERAL.—The term ‘installment acceleration amount’ means, with respect to any plan year 

in a restriction period with respect to an election year, 

the sum of— 

‘‘(I) the aggregate amount of excess employee 

compensation determined under subparagraph (D) 

with respect to all employees for the plan year, 

plus 

‘‘(II) the aggregate amount of extraordinary 

dividends and redemptions determined under 

subparagraph (E) for the plan year. 

‘‘(ii) ANNUAL LIMITATION.—The installment acceleration amount for any plan year shall not exceed 

the excess (if any) of— 

‘‘(I) the sum of the shortfall amortization 

installments for the plan year and all preceding 

plan years in the amortization period elected under 

paragraph (2)(D) with respect to the shortfall 

amortization base with respect to an election year, 

determined without regard to paragraph (2)(D) and 

this paragraph, over 

‘‘(II) the sum of the shortfall amortization 

installments for such plan year and all such preceding plan years, determined after application of 

paragraph (2)(D) (and in the case of any preceding 

plan year, after application of this paragraph). 

‘‘(iii) CARRYOVER OF EXCESS INSTALLMENT ACCELERATION AMOUNTS.— 

‘‘(I) IN GENERAL.—If the installment acceleration amount for any plan year (determined without 

regard to clause (ii)) exceeds the limitation under 

clause (ii), then, subject to subclause (II), such 

excess shall be treated as an installment acceleration amount with respect to the succeeding plan 

year. 

‘‘(II) CAP TO APPLY.—If any amount treated 

as an installment acceleration amount under subclause (I) or this subclause with respect any succeeding plan year, when added to other installment 

acceleration amounts (determined without regard 

to clause (ii)) with respect to the plan year, exceeds 

the limitation under clause (ii), the portion of such 

amount representing such excess shall be treated 

as an installment acceleration amount with respect 

to the next succeeding plan year. 

‘‘(III) LIMITATION ON YEARS TO WHICH

AMOUNTS CARRIED FOR.—No amount shall be carried under subclause (I) or (II) to a plan year 

which begins after the first plan year following 

the last plan year in the restriction period (or 

after the second plan year following such last plan 

year in the case of an election year with respect 

to which 15-year amortization was elected under 

paragraph (2)(D)). 
H. R. 3962—8 

‘‘(IV) ORDERING RULES.—For purposes of 

applying subclause (II), installment acceleration 

amounts for the plan year (determined without 

regard to any carryover under this clause) shall 

be applied first against the limitation under clause 

(ii) and then carryovers to such plan year shall 

be applied against such limitation on a first-in, 

first-out basis. 

‘‘(D) EXCESS EMPLOYEE COMPENSATION.—For purposes 

of this paragraph— 

‘‘(i) IN GENERAL.—The term ‘excess employee compensation’ means, with respect to any employee for 

any plan year, the excess (if any) of— 

‘‘(I) the aggregate amount includible in income 

under chapter 1 of the Internal Revenue Code 

of 1986 for remuneration during the calendar year 

in which such plan year begins for services performed by the employee for the plan sponsor 

(whether or not performed during such calendar 

year), over ‘‘(II) $1,000,000. 

‘‘(ii) AMOUNTS SET ASIDE FOR NONQUALIFIED

DEFERRED COMPENSATION.—If during any calendar 

year assets are set aside or reserved (directly or 

indirectly) in a trust (or other arrangement as determined by the Secretary of the Treasury), or transferred 

to such a trust or other arrangement, by a plan sponsor 

for purposes of paying deferred compensation of an 

employee under a nonqualified deferred compensation 

plan (as defined in section 409A of such Code) of the 

plan sponsor, then, for purposes of clause (i), the 

amount of such assets shall be treated as remuneration 

of the employee includible in income for the calendar 

year unless such amount is otherwise includible in 

income for such year. An amount to which the preceding sentence applies shall not be taken into account 

under this paragraph for any subsequent calendar 

year. 

‘‘(iii) ONLY REMUNERATION FOR CERTAIN POST-2009

SERVICES COUNTED.—Remuneration shall be taken into 

account under clause (i) only to the extent attributable 

to services performed by the employee for the plan 

sponsor after February 28, 2010. 

‘‘(iv) EXCEPTION FOR CERTAIN EQUITY PAYMENTS.— 

‘‘(I) IN GENERAL.—There shall not be taken 

into account under clause (i)(I) any amount includible in income with respect to the granting after 

February 28, 2010, of service recipient stock 

(within the meaning of section 409A of the Internal 

Revenue Code of 1986) that, upon such grant, is 

subject to a substantial risk of forfeiture (as 

defined under section 83(c)(1) of such Code) for 

at least 5 years from the date of such grant. 

‘‘(II) SECRETARIAL AUTHORITY.—The Secretary 

of the Treasury may by regulation provide for the 

application of this clause in the case of a person 

other than a corporation. 
H. R. 3962—9 

‘‘(v) OTHER EXCEPTIONS.—The following amounts 

includible in income shall not be taken into account 

under clause (i)(I): 

‘‘(I) COMMISSIONS.—Any remuneration payable 

on a commission basis solely on account of income 

directly generated by the individual performance 

of the individual to whom such remuneration is 

payable. 

‘‘(II) CERTAIN PAYMENTS UNDER EXISTING CONTRACTS.—Any remuneration consisting of nonqualified deferred compensation, restricted stock, 

stock options, or stock appreciation rights payable 

or granted under a written binding contract that 

was in effect on March 1, 2010, and which was 

not modified in any material respect before such 

remuneration is paid. 

‘‘(vi) SELF-EMPLOYED INDIVIDUAL TREATED AS

EMPLOYEE.—The term ‘employee’ includes, with respect 

to a calendar year, a self-employed individual who 

is treated as an employee under section 401(c) of such 

Code for the taxable year ending during such calendar 

year, and the term ‘compensation’ shall include earned 

income of such individual with respect to such selfemployment. 

‘‘(vii) INDEXING OF AMOUNT.—In the case of any 

calendar year beginning after 2010, the dollar amount 

under clause (i)(II) shall be increased by an amount 

equal to— 

‘‘(I) such dollar amount, multiplied by 

‘‘(II) the cost-of-living adjustment determined 

under section 1(f)(3) of such Code for the calendar 

year, determined by substituting ‘calendar year 

2009’ for ‘calendar year 1992’ in subparagraph (B) 

thereof. 

If the amount of any increase under clause (i) is not 

a multiple of $1,000, such increase shall be rounded 

to the next lowest multiple of $1,000. 

‘‘(E) EXTRAORDINARY DIVIDENDS AND REDEMPTIONS.— 

‘‘(i) IN GENERAL.—The amount determined under 

this subparagraph for any plan year is the excess (if 

any) of the sum of the dividends declared during the 

plan year by the plan sponsor plus the aggregate 

amount paid for the redemption of stock of the plan 

sponsor redeemed during the plan year over the greater 

of— 

‘‘(I) the adjusted net income (within the 

meaning of section 4043) of the plan sponsor for 

the preceding plan year, determined without 

regard to any reduction by reason of interest, 

taxes, depreciation, or amortization, or 

‘‘(II) in the case of a plan sponsor that determined and declared dividends in the same manner 

for at least 5 consecutive years immediately preceding such plan year, the aggregate amount of 

dividends determined and declared for such plan 

year using such manner. 
H. R. 3962—10 

‘‘(ii) ONLY CERTAIN POST-2009 DIVIDENDS AND

REDEMPTIONS COUNTED.—For purposes of clause (i), 

there shall only be taken into account dividends 

declared, and redemptions occurring, after February 

28, 2010. 

‘‘(iii) EXCEPTION FOR INTRA-GROUP DIVIDENDS.— 

Dividends paid by one member of a controlled group 

(as defined in section 302(d)(3)) to another member 

of such group shall not be taken into account under 

clause (i). 

‘‘(iv) EXCEPTION FOR CERTAIN REDEMPTIONS.— 

Redemptions that are made pursuant to a plan maintained with respect to employees, or that are made 

on account of the death, disability, or termination of 

employment of an employee or shareholder, shall not 

be taken into account under clause (i). 

‘‘(v) EXCEPTION FOR CERTAIN PREFERRED STOCK.— 

‘‘(I) IN GENERAL.—Dividends and redemptions 

with respect to applicable preferred stock shall 

not be taken into account under clause (i) to the 

extent that dividends accrue with respect to such 

stock at a specified rate in all events and without 

regard to the plan sponsor’s income, and interest 

accrues on any unpaid dividends with respect to 

such stock. 

‘‘(II) APPLICABLE PREFERRED STOCK.—For purposes of subclause (I), the term ‘applicable preferred stock’ means preferred stock which was 

issued before March 1, 2010 (or which was issued 

after such date and is held by an employee benefit 

plan subject to the provisions of this title). 

‘‘(F) OTHER DEFINITIONS AND RULES.—For purposes of 

this paragraph— 

‘‘(i) PLAN SPONSOR.—The term ‘ plan sponsor’ 

includes any member of the plan sponsor’s controlled 

group (as defined in section 302(d)(3)). 

‘‘(ii) RESTRICTION PERIOD.—The term ‘restriction 

period’ means, with respect to any election year— 

‘‘(I) except as provided in subclause (II), the 

3-year period beginning with the election year (or, 

if later, the first plan year beginning after 

December 31, 2009), and 

‘‘(II) if the plan sponsor elects 15-year 

amortization for the shortfall amortization base 

for the election year, the 5-year period beginning 

with the election year (or, if later, the first plan 

year beginning after December 31, 2009). 

‘‘(iii) ELECTIONS FOR MULTIPLE PLANS.—If a plan 

sponsor makes elections under paragraph (2)(D) with 

respect to 2 or more plans, the Secretary of the 

Treasury shall provide rules for the application of this 

paragraph to such plans, including rules for the ratable 

allocation of any installment acceleration amount 

among such plans on the basis of each plan’s relative 

reduction in the plan’s shortfall amortization installment for the first plan year in the amortization period 
H. R. 3962—11 

described in subparagraph (A) (determined without 

regard to this paragraph). 

‘‘(iv) MERGERS AND ACQUISITIONS.—The Secretary 

of the Treasury shall prescribe rules for the application 

of paragraph (2)(D) and this paragraph in any case 

where there is a merger or acquisition involving a 

plan sponsor making the election under paragraph 

(2)(D).’’. 

(3) CONFORMING AMENDMENTS.—Section 303 of such Act 

(29 U.S.C. 1083) is amended— 

(A) in subsection (c)(1), by striking ‘‘the shortfall 

amortization bases for such plan year and each of the 

6 preceding plan years’’ and inserting ‘‘any shortfall 

amortization base which has not been fully amortized under 

this subsection’’, and 

(B) in subsection (j)(3), by adding at the end the following: 

‘‘(F) QUARTERLY CONTRIBUTIONS NOT TO INCLUDE CERTAIN INCREASED CONTRIBUTIONS.—Subparagraph (D) shall 

be applied without regard to any increase under subsection 

(c)(7).’’. 

(b) AMENDMENTS TO INTERNAL REVENUE CODE OF 1986.— 

(1) IN GENERAL.—Paragraph (2) of section 430(c) is 

amended by adding at the end the following subparagraph: 

‘‘(D) SPECIAL ELECTION FOR ELIGIBLE PLAN YEARS.— 

‘‘(i) IN GENERAL.—If a plan sponsor elects to apply 

this subparagraph with respect to the shortfall 

amortization base of a plan for any eligible plan year 

(in this subparagraph and paragraph (7) referred to 

as an ‘election year’), then, notwithstanding subparagraphs (A) and (B)— 

‘‘(I) the shortfall amortization installments 

with respect to such base shall be determined 

under clause (ii) or (iii), whichever is specified 

in the election, and 

‘‘(II) the shortfall amortization installment for 

any plan year in the 9-plan-year period described 

in clause (ii) or the 15-plan-year period described 

in clause (iii), respectively, with respect to such 

shortfall amortization base is the annual installment determined under the applicable clause for 

that year for that base. 

‘‘(ii) 2 PLUS 7 AMORTIZATION SCHEDULE.—The shortfall amortization installments determined under this 

clause are— 

‘‘(I) in the case of the first 2 plan years in 

the 9-plan-year period beginning with the election 

year, interest on the shortfall amortization base 

of the plan for the election year (determined using 

the effective interest rate for the plan for the election year), and 

‘‘(II) in the case of the last 7 plan years in 

such 9-plan-year period, the amounts necessary 

to amortize the remaining balance of the shortfall 

amortization base of the plan for the election year 

in level annual installments over such last 7 plan 
H. R. 3962—12 

years (using the segment rates under subparagraph (C) for the election year). 

‘‘(iii) 15-YEAR AMORTIZATION.—The shortfall 

amortization installments determined under this 

subparagraph are the amounts necessary to amortize 

the shortfall amortization base of the plan for the 

election year in level annual installments over the 

15-plan-year period beginning with the election year 

(using the segment rates under subparagraph (C) for 

the election year). 

‘‘(iv) ELECTION.— ‘‘(I) IN GENERAL.—The plan sponsor of a plan 

may elect to have this subparagraph apply to not 

more than 2 eligible plan years with respect to 

the plan, except that in the case of a plan described 

in section 106 of the Pension Protection Act of 

2006, the plan sponsor may only elect to have 

this subparagraph apply to a plan year beginning 

in 2011. 

‘‘(II) AMORTIZATION SCHEDULE.—Such election 

shall specify whether the amortization schedule 

under clause (ii) or (iii) shall apply to an election 

year, except that if a plan sponsor elects to have 

this subparagraph apply to 2 eligible plan years, 

the plan sponsor must elect the same schedule 

for both years. 

‘‘(III) OTHER RULES.—Such election shall be 

made at such time, and in such form and manner, 

as shall be prescribed by the Secretary, and may 

be revoked only with the consent of the Secretary. 

The Secretary shall, before granting a revocation 

request, provide the Pension Benefit Guaranty 

Corporation an opportunity to comment on the 

conditions applicable to the treatment of any portion of the election year shortfall amortization base 

that remains unamortized as of the revocation 

date. 

‘‘(v) ELIGIBLE PLAN YEAR.—For purposes of this 

subparagraph, the term ‘eligible plan year’ means any 

plan year beginning in 2008, 2009, 2010, or 2011, 

except that a plan year shall only be treated as an 

eligible plan year if the due date under subsection 

(j)(1) for the payment of the minimum required contribution for such plan year occurs on or after the 

date of the enactment of this subparagraph. 

‘‘(vi) REPORTING.—A plan sponsor of a plan who 

makes an election under clause (i) shall— 

‘‘(I) give notice of the election to participants 

and beneficiaries of the plan, and 

‘‘(II) inform the Pension Benefit Guaranty Corporation of such election in such form and manner 

as the Director of the Pension Benefit Guaranty 

Corporation may prescribe. 

‘‘(vii) INCREASES IN REQUIRED INSTALLMENTS IN

CERTAIN CASES.—For increases in required contributions in cases of excess compensation or extraordinary 

dividends or stock redemptions, see paragraph (7).’’. 
H. R. 3962—13 

(2) INCREASES IN REQUIRED CONTRIBUTIONS IF EXCESS COMPENSATION PAID.—Section 430(c) is amended by adding at the 

end the following paragraph: 

‘‘(7) INCREASES IN ALTERNATE REQUIRED INSTALLMENTS IN

CASES OF EXCESS COMPENSATION OR EXTRAORDINARY DIVIDENDS

OR STOCK REDEMPTIONS.— 

‘‘(A) IN GENERAL.—If there is an installment acceleration amount with respect to a plan for any plan year 

in the restriction period with respect to an election year 

under paragraph (2)(D), then the shortfall amortization 

installment otherwise determined and payable under such 

paragraph for such plan year shall, subject to the limitation 

under subparagraph (B), be increased by such amount. 

‘‘(B) TOTAL INSTALLMENTS LIMITED TO SHORTFALL

BASE.—Subject to rules prescribed by the Secretary, if a 

shortfall amortization installment with respect to any 

shortfall amortization base for an election year is required 

to be increased for any plan year under subparagraph 

(A)— 

‘‘(i) such increase shall not result in the amount 

of such installment exceeding the present value of such 

installment and all succeeding installments with 

respect to such base (determined without regard to 

such increase but after application of clause (ii)), and 

‘‘(ii) subsequent shortfall amortization installments 

with respect to such base shall, in reverse order of 

the otherwise required installments, be reduced to the 

extent necessary to limit the present value of such 

subsequent shortfall amortization installments (after 

application of this paragraph) to the present value 

of the remaining unamortized shortfall amortization 

base. 

‘‘(C) INSTALLMENT ACCELERATION AMOUNT.—For purposes of this paragraph— 

‘‘(i) IN GENERAL.—The term ‘installment acceleration amount’ means, with respect to any plan year 

in a restriction period with respect to an election year, 

the sum of— 

‘‘(I) the aggregate amount of excess employee 

compensation determined under subparagraph (D) 

with respect to all employees for the plan year, 

plus 

‘‘(II) the aggregate amount of extraordinary 

dividends and redemptions determined under 

subparagraph (E) for the plan year. 

‘‘(ii) ANNUAL LIMITATION.—The installment acceleration amount for any plan year shall not exceed 

the excess (if any) of— 

‘‘(I) the sum of the shortfall amortization 

installments for the plan year and all preceding 

plan years in the amortization period elected under 

paragraph (2)(D) with respect to the shortfall 

amortization base with respect to an election year, 

determined without regard to paragraph (2)(D) and 

this paragraph, over 
H. R. 3962—14 

‘‘(II) the sum of the shortfall amortization 

installments for such plan year and all such preceding plan years, determined after application of 

paragraph (2)(D) (and in the case of any preceding 

plan year, after application of this paragraph). 

‘‘(iii) CARRYOVER OF EXCESS INSTALLMENT ACCELERATION AMOUNTS.— 

‘‘(I) IN GENERAL.—If the installment acceleration amount for any plan year (determined without 

regard to clause (ii)) exceeds the limitation under 

clause (ii), then, subject to subclause (II), such 

excess shall be treated as an installment acceleration amount with respect to the succeeding plan 

year. 

‘‘(II) CAP TO APPLY.—If any amount treated 

as an installment acceleration amount under subclause (I) or this subclause with respect any succeeding plan year, when added to other installment 

acceleration amounts (determined without regard 

to clause (ii)) with respect to the plan year, exceeds 

the limitation under clause (ii), the portion of such 

amount representing such excess shall be treated 

as an installment acceleration amount with respect 

to the next succeeding plan year. 

‘‘(III) LIMITATION ON YEARS TO WHICH

AMOUNTS CARRIED FOR.—No amount shall be carried under subclause (I) or (II) to a plan year 

which begins after the first plan year following 

the last plan year in the restriction period (or 

after the second plan year following such last plan 

year in the case of an election year with respect 

to which 15-year amortization was elected under 

paragraph (2)(D)). 

‘‘(IV) ORDERING RULES.—For purposes of 

applying subclause (II), installment acceleration 

amounts for the plan year (determined without 

regard to any carryover under this clause) shall 

be applied first against the limitation under clause 

(ii) and then carryovers to such plan year shall 

be applied against such limitation on a first-in, 

first-out basis. 

‘‘(D) EXCESS EMPLOYEE COMPENSATION.—For purposes 

of this paragraph— 

‘‘(i) IN GENERAL.—The term ‘excess employee compensation’ means, with respect to any employee for 

any plan year, the excess (if any) of— 

‘‘(I) the aggregate amount includible in income 

under this chapter for remuneration during the 

calendar year in which such plan year begins for 

services performed by the employee for the plan 

sponsor (whether or not performed during such 

calendar year), over 

‘‘(II) $1,000,000. 

‘‘(ii) AMOUNTS SET ASIDE FOR NONQUALIFIED

DEFERRED COMPENSATION.—If during any calendar 

year assets are set aside or reserved (directly or 
H. R. 3962—15 

indirectly) in a trust (or other arrangement as determined by the Secretary), or transferred to such a trust 

or other arrangement, by a plan sponsor for purposes 

of paying deferred compensation of an employee under 

a nonqualified deferred compensation plan (as defined 

in section 409A) of the plan sponsor, then, for purposes 

of clause (i), the amount of such assets shall be treated 

as remuneration of the employee includible in income 

for the calendar year unless such amount is otherwise 

includible in income for such year. An amount to which 

the preceding sentence applies shall not be taken into 

account under this paragraph for any subsequent calendar year. 

‘‘(iii) ONLY REMUNERATION FOR CERTAIN POST-2009

SERVICES COUNTED.—Remuneration shall be taken into 

account under clause (i) only to the extent attributable 

to services performed by the employee for the plan 

sponsor after February 28, 2010. 

‘‘(iv) EXCEPTION FOR CERTAIN EQUITY PAYMENTS.— 

‘‘(I) IN GENERAL.—There shall not be taken 

into account under clause (i)(I) any amount includible in income with respect to the granting after 

February 28, 2010, of service recipient stock 

(within the meaning of section 409A) that, upon 

such grant, is subject to a substantial risk of forfeiture (as defined under section 83(c)(1)) for at 

least 5 years from the date of such grant. 

‘‘(II) SECRETARIAL AUTHORITY.—The Secretary 

may by regulation provide for the application of 

this clause in the case of a person other than 

a corporation. 

‘‘(v) OTHER EXCEPTIONS.—The following amounts 

includible in income shall not be taken into account 

under clause (i)(I): 

‘‘(I) COMMISSIONS.—Any remuneration payable 

on a commission basis solely on account of income 

directly generated by the individual performance 

of the individual to whom such remuneration is 

payable. 

‘‘(II) CERTAIN PAYMENTS UNDER EXISTING CONTRACTS.—Any remuneration consisting of nonqualified deferred compensation, restricted stock, 

stock options, or stock appreciation rights payable 

or granted under a written binding contract that 

was in effect on March 1, 2010, and which was 

not modified in any material respect before such 

remuneration is paid. 

‘‘(vi) SELF-EMPLOYED INDIVIDUAL TREATED AS

EMPLOYEE.—The term ‘employee’ includes, with respect 

to a calendar year, a self-employed individual who 

is treated as an employee under section 401(c) for 

the taxable year ending during such calendar year, 

and the term ‘compensation’ shall include earned 

income of such individual with respect to such selfemployment. 

‘‘(vii) INDEXING OF AMOUNT.—In the case of any 

calendar year beginning after 2010, the dollar amount 
H. R. 3962—16 

under clause (i)(II) shall be increased by an amount 

equal to— 

‘‘(I) such dollar amount, multiplied by 

‘‘(II) the cost-of-living adjustment determined 

under section 1(f)(3) for the calendar year, determined by substituting ‘calendar year 2009’ for ‘calendar year 1992’ in subparagraph (B) thereof. 

If the amount of any increase under clause (i) is not 

a multiple of $1,000, such increase shall be rounded 

to the next lowest multiple of $1,000. 

‘‘(E) EXTRAORDINARY DIVIDENDS AND REDEMPTIONS.— 

‘‘(i) IN GENERAL.—The amount determined under 

this subparagraph for any plan year is the excess (if 

any) of the sum of the dividends declared during the 

plan year by the plan sponsor plus the aggregate 

amount paid for the redemption of stock of the plan 

sponsor redeemed during the plan year over the greater 

of— 

‘‘(I) the adjusted net income (within the 

meaning of section 4043 of the Employee Retirement Income Security Act of 1974) of the plan 

sponsor for the preceding plan year, determined 

without regard to any reduction by reason of 

interest, taxes, depreciation, or amortization, or 

‘‘(II) in the case of a plan sponsor that determined and declared dividends in the same manner 

for at least 5 consecutive years immediately preceding such plan year, the aggregate amount of 

dividends determined and declared for such plan 

year using such manner. 

‘‘(ii) ONLY CERTAIN POST-2009 DIVIDENDS AND

REDEMPTIONS COUNTED.—For purposes of clause (i), 

there shall only be taken into account dividends 

declared, and redemptions occurring, after February 

28, 2010. 

‘‘(iii) EXCEPTION FOR INTRA-GROUP DIVIDENDS.— 

Dividends paid by one member of a controlled group 

(as defined in section 412(d)(3)) to another member 

of such group shall not be taken into account under 

clause (i). 

‘‘(iv) EXCEPTION FOR CERTAIN REDEMPTIONS.— 

Redemptions that are made pursuant to a plan maintained with respect to employees, or that are made 

on account of the death, disability, or termination of 

employment of an employee or shareholder, shall not 

be taken into account under clause (i). 

‘‘(v) EXCEPTION FOR CERTAIN PREFERRED STOCK.— 

‘‘(I) IN GENERAL.—Dividends and redemptions 

with respect to applicable preferred stock shall 

not be taken into account under clause (i) to the 

extent that dividends accrue with respect to such 

stock at a specified rate in all events and without 

regard to the plan sponsor’s income, and interest 

accrues on any unpaid dividends with respect to 

such stock. 
H. R. 3962—17 

‘‘(II) APPLICABLE PREFERRED STOCK.—For purposes of subclause (I), the term ‘applicable preferred stock’ means preferred stock which was 

issued before March 1, 2010 (or which was issued 

after such date and is held by an employee benefit 

plan subject to the provisions of title I of Employee 

Retirement Income Security Act of 1974). 

‘‘(F) OTHER DEFINITIONS AND RULES.—For purposes of 

this paragraph— 

‘‘(i) PLAN SPONSOR.—The term ‘ plan sponsor’ 

includes any member of the plan sponsor’s controlled 

group (as defined in section 412(d)(3)). 

‘‘(ii) RESTRICTION PERIOD.—The term ‘restriction 

period’ means, with respect to any election year— 

‘‘(I) except as provided in subclause (II), the 

3-year period beginning with the election year (or, 

if later, the first plan year beginning after 

December 31, 2009), and 

‘‘(II) if the plan sponsor elects 15-year 

amortization for the shortfall amortization base 

for the election year, the 5-year period beginning 

with the election year (or, if later, the first plan 

year beginning after December 31, 2009). 

‘‘(iii) ELECTIONS FOR MULTIPLE PLANS.—If a plan 

sponsor makes elections under paragraph (2)(D) with 

respect to 2 or more plans, the Secretary shall provide 

rules for the application of this paragraph to such 

plans, including rules for the ratable allocation of any 

installment acceleration amount among such plans on 

the basis of each plan’s relative reduction in the plan’s 

shortfall amortization installment for the first plan 

year in the amortization period described in subparagraph (A) (determined without regard to this paragraph). 

‘‘(iv) MERGERS AND ACQUISITIONS.—The Secretary 

shall prescribe rules for the application of paragraph 

(2)(D) and this paragraph in any case where there 

is a merger or acquisition involving a plan sponsor 

making the election under paragraph (2)(D).’’. 

(3) CONFORMING AMENDMENTS.—Section 430 is amended— 

(A) in subsection (c)(1), by striking ‘‘the shortfall 

amortization bases for such plan year and each of the 

6 preceding plan years’’ and inserting ‘‘any shortfall 

amortization base which has not been fully amortized under 

this subsection’’, and 

(B) in subsection (j)(3), by adding at the end the following: 

‘‘(F) QUARTERLY CONTRIBUTIONS NOT TO INCLUDE CERTAIN INCREASED CONTRIBUTIONS.—Subparagraph (D) shall 

be applied without regard to any increase under subsection 

(c)(7).’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to plan years beginning after December 31, 2007. 
H. R. 3962—18 

SEC. 202. APPLICATION OF EXTENDED AMORTIZATION PERIOD TO 

PLANS SUBJECT TO PRIOR LAW FUNDING RULES. 

(a) IN GENERAL.—Title I of the Pension Protection Act of 2006 

is amended by redesignating section 107 as section 108 and by 

inserting the following after section 106: 

‘‘SEC. 107. APPLICATION OF EXTENDED AMORTIZATION PERIODS TO 

PLANS WITH DELAYED EFFECTIVE DATE. 

‘‘(a) IN GENERAL.—If the plan sponsor of a plan to which section 

104, 105, or 106 of this Act applies elects to have this section 

apply for any eligible plan year (in this section referred to as 

an ‘election year’), section 302 of the Employee Retirement Income 

Security Act of 1974 and section 412 of the Internal Revenue 

Code of 1986 (as in effect before the amendments made by this 

subtitle and subtitle B) shall apply to such year in the manner 

described in subsection (b) or (c), whichever is specified in the 

election. All references in this section to ‘such Act’ or ‘such Code’ 

shall be to such Act or such Code as in effect before the amendments 

made by this subtitle and subtitle B. 

‘‘(b) APPLICATION OF 2 AND 7 RULE.—In the case of an election 

year to which this subsection applies— 

‘‘(1) 2-YEAR LOOKBACK FOR DETERMINING DEFICIT REDUCTION CONTRIBUTIONS FOR CERTAIN PLANS.—For purposes of 

applying section 302(d)(9) of such Act and section 412(l)(9) 

of such Code, the funded current liability percentage (as defined 

in subparagraph (C) thereof) for such plan for such plan year 

shall be such funded current liability percentage of such plan 

for the second plan year preceding the first election year of 

such plan. 

‘‘(2) CALCULATION OF DEFICIT REDUCTION CONTRIBUTION.— 

For purposes of applying section 302(d) of such Act and section 

412(l) of such Code to a plan to which such sections apply 

(after taking into account paragraph (1))— 

‘‘(A) in the case of the increased unfunded new liability 

of the plan, the applicable percentage described in section 

302(d)(4)(C) of such Act and section 412(l)(4)(C) of such 

Code shall be the third segment rate described in sections 

104(b), 105(b), and 106(b) of this Act, and 

‘‘(B) in the case of the excess of the unfunded new 

liability over the increased unfunded new liability, such 

applicable percentage shall be determined without regard 

to this section. 

‘‘(c) APPLICATION OF 15-YEAR AMORTIZATION.—In the case of 

an election year to which this subsection applies, for purposes 

of applying section 302(d) of such Act and section 412(l) of such 

Code— 

‘‘(1) in the case of the increased unfunded new liability 

of the plan, the applicable percentage described in section 

302(d)(4)(C) of such Act and section 412(l)(4)(C) of such Code 

for any pre-effective date plan year beginning with or after 

the first election year shall be the ratio of— 

‘‘(A) the annual installments payable in each year if 

the increased unfunded new liability for such plan year 

were amortized over 15 years, using an interest rate equal 

to the third segment rate described in sections 104(b), 

105(b), and 106(b) of this Act, to 
H. R. 3962—19 

‘‘(B) the increased unfunded new liability for such plan 

year, and 

‘‘(2) in the case of the excess of the unfunded new liability 

over the increased unfunded new liability, such applicable 

percentage shall be determined without regard to this section. 

‘‘(d) ELECTION.— 

‘‘(1) IN GENERAL.—The plan sponsor of a plan may elect 

to have this section apply to not more than 2 eligible plan 

years with respect to the plan, except that in the case of 

a plan to which section 106 of this Act applies, the plan sponsor 

may only elect to have this section apply to 1 eligible plan 

year. 

‘‘(2) AMORTIZATION SCHEDULE.—Such election shall specify 

whether the rules under subsection (b) or (c) shall apply to 

an election year, except that if a plan sponsor elects to have 

this section apply to 2 eligible plan years, the plan sponsor 

must elect the same rule for both years. 

‘‘(3) OTHER RULES.—Such election shall be made at such 

time, and in such form and manner, as shall be prescribed 

by the Secretary of the Treasury, and may be revoked only 

with the consent of the Secretary of the Treasury. 

‘‘(e) DEFINITIONS.—For purposes of this section— 

‘‘(1) ELIGIBLE PLAN YEAR.—For purposes of this subparagraph, the term ‘eligible plan year’ means any plan year beginning in 2008, 2009, 2010, or 2011, except that a plan year 

beginning in 2008 shall only be treated as an eligible plan 

year if the due date for the payment of the minimum required 

contribution for such plan year occurs on or after the date 

of the enactment of this clause. 

‘‘(2) PRE-EFFECTIVE DATE PLAN YEAR.—The term ‘pre-effective date plan year’ means, with respect to a plan, any plan 

year prior to the first year in which the amendments made 

by this subtitle and subtitle B apply to the plan. 

‘‘(3) INCREASED UNFUNDED NEW LIABILITY.—The term 

‘increased unfunded new liability’ means, with respect to a 

year, the excess (if any) of the unfunded new liability over 

the amount of unfunded new liability determined as if the 

value of the plan’s assets determined under subsection 302(c)(2) 

of such Act and section 412(c)(2) of such Code equaled the 

product of the current liability of the plan for the year multiplied by the funded current liability percentage (as defined 

in section 302(d)(8)(B) of such Act and 412(l)(8)(B) of such 

Code) of the plan for the second plan year preceding the first 

election year of such plan. 

‘‘(4) OTHER DEFINITIONS.—The terms ‘unfunded new 

liability’ and ‘current liability’ shall have the meanings set 

forth in section 302(d) of such Act and section 412(l) of such 

Code.’’. 

(b) ELIGIBLE CHARITY PLANS.—Section 104 of the Pension 

Protection Act of 2006 is amended— 

(1) by striking ‘‘eligible cooperative plan’’ wherever it 

appears in subsections (a) and (b) and inserting ‘‘eligible 

cooperative plan or an eligible charity plan’’, and 

(2) by adding at the end the following new subsection: 

‘‘(d) ELIGIBLE CHARITY PLAN DEFINED.—For purposes of this 

section, a plan shall be treated as an eligible charity plan for 

a plan year if the plan is maintained by more than one employer 
H. R. 3962—20 

(determined without regard to section 414(c) of the Internal Revenue 

Code) and 100 percent of the employers are described in section 

501(c)(3) of such Code.’’. 

(c) EFFECTIVE DATE.— 

(1) IN GENERAL.—The amendment made by subsection (a) 

shall take effect as if included in the Pension Protection Act 

of 2006. 

(2) ELIGIBLE CHARITY PLAN.—The amendments made by 

subsection (b) shall apply to plan years beginning after 

December 31, 2007, except that a plan sponsor may elect to 

apply such amendments to plan years beginning after December 

31, 2008. Any such election shall be made at such time, and 

in such form and manner, as shall be prescribed by the Secretary of the Treasury, and may be revoked only with the 

consent of the Secretary of the Treasury. 

SEC. 203. LOOKBACK FOR CERTAIN BENEFIT RESTRICTIONS. 

(a) IN GENERAL.— 

(1) AMENDMENT TO ERISA.—Section 206(g)(9) of the 

Employee Retirement Income Security Act of 1974 is amended 

by adding at the end the following: 

‘‘(D) SPECIAL RULE FOR CERTAIN YEARS.—Solely for purposes of any applicable provision— 

‘‘(i) IN GENERAL.—For plan years beginning on or 

after October 1, 2008, and before October 1, 2010, 

the adjusted funding target attainment percentage of 

a plan shall be the greater of— 

‘‘(I) such percentage, as determined without 

regard to this subparagraph, or 

‘‘(II) the adjusted funding target attainment 

percentage for such plan for the plan year beginning after October 1, 2007, and before October 

1, 2008, as determined under rules prescribed by 

the Secretary of the Treasury. 

‘‘(ii) SPECIAL RULE.—In the case of a plan for which 

the valuation date is not the first day of the plan 

year— 

‘‘(I) clause (i) shall apply to plan years beginning after December 31, 2007, and before January 

1, 2010, and 

‘‘(II) clause (i)(II) shall apply based on the 

last plan year beginning before November 1, 2007, 

as determined under rules prescribed by the Secretary of the Treasury. 

‘‘(iii) APPLICABLE PROVISION.—For purposes of this 

subparagraph, the term ‘applicable provision’ means— 

‘‘(I) paragraph (3), but only for purposes of 

applying such paragraph to a payment which, as 

determined under rules prescribed by the Secretary of the Treasury, is a payment under a social 

security leveling option which accelerates payments under the plan before, and reduces payments after, a participant starts receiving social 

security benefits in order to provide substantially 

similar aggregate payments both before and after 

such benefits are received, and 

‘‘(II) paragraph (4).’’. 
H. R. 3962—21 

(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.— 

Section 436(j) of the Internal Revenue Code of 1986 is amended 

by adding at the end the following: 

‘‘(3) SPECIAL RULE FOR CERTAIN YEARS.—Solely for purposes 

of any applicable provision— 

‘‘(A) IN GENERAL.—For plan years beginning on or after 

October 1, 2008, and before October 1, 2010, the adjusted 

funding target attainment percentage of a plan shall be 

the greater of— 

‘‘(i) such percentage, as determined without regard 

to this paragraph, or 

‘‘(ii) the adjusted funding target attainment 

percentage for such plan for the plan year beginning 

after October 1, 2007, and before October 1, 2008, 

as determined under rules prescribed by the Secretary. 

‘‘(B) SPECIAL RULE.—In the case of a plan for which 

the valuation date is not the first day of the plan year— 

‘‘(i) subparagraph (A) shall apply to plan years 

beginning after December 31, 2007, and before January 

1, 2010, and 

‘‘(ii) subparagraph (A)(ii) shall apply based on the 

last plan year beginning before November 1, 2007, 

as determined under rules prescribed by the Secretary. 

‘‘(C) APPLICABLE PROVISION.—For purposes of this paragraph, the term ‘applicable provision’ means— 

‘‘(i) subsection (d), but only for purposes of applying 

such paragraph to a payment which, as determined 

under rules prescribed by the Secretary, is a payment 

under a social security leveling option which accelerates payments under the plan before, and reduces payments after, a participant starts receiving social security benefits in order to provide substantially similar 

aggregate payments both before and after such benefits 

are received, and 

‘‘(ii) subsection (e).’’. 

(b) INTERACTION WITH WRERA RULE.—Section 203 of the 

Worker, Retiree, and Employer Recovery Act of 2008 shall apply 

to a plan for any plan year in lieu of the amendments made 

by this section applying to sections 206(g)(4) of the Employee Retirement Income Security Act of 1974 and 436(e) of the Internal Revenue Code of 1986 only to the extent that such section produces 

a higher adjusted funding target attainment percentage for such 

plan for such year. 

(c) EFFECTIVE DATE.— 

(1) IN GENERAL.—Except as provided in paragraph (2), the 

amendments made by this section shall apply to plan years 

beginning on or after October 1, 2008. 

(2) SPECIAL RULE.—In the case of a plan for which the 

valuation date is not the first day of the plan year, the amendments made by this section shall apply to plan years beginning 

after December 31, 2007. 

SEC. 204. LOOKBACK FOR CREDIT BALANCE RULE FOR PLANS MAINTAINED BY CHARITIES. 

(a) AMENDMENT TO ERISA.—Paragraph (3) of section 303(f) of 

the Employee Retirement Income Security Act of 1974 is amended 

by adding the following at the end thereof: 
H. R. 3962—22 

‘‘(D) SPECIAL RULE FOR CERTAIN YEARS OF PLANS MAINTAINED BY CHARITIES.— 

‘‘(i) IN GENERAL.—For purposes of applying 

subparagraph (C) for plan years beginning after August 

31, 2009, and before September 1, 2011, the ratio determined under such subparagraph for the preceding plan 

year shall be the greater of— 

‘‘(I) such ratio, as determined without regard 

to this subparagraph, or 

‘‘(II) the ratio for such plan for the plan year 

beginning after August 31, 2007, and before September 1, 2008, as determined under rules prescribed by the Secretary of the Treasury. 

‘‘(ii) SPECIAL RULE.—In the case of a plan for which 

the valuation date is not the first day of the plan 

year— 

‘‘(I) clause (i) shall apply to plan years beginning after December 31, 2008, and before January 

1, 2011, and 

‘‘(II) clause (i)(II) shall apply based on the 

last plan year beginning before September 1, 2007, 

as determined under rules prescribed by the Secretary of the Treasury. 

‘‘(iii) LIMITATION TO CHARITIES.—This subparagraph shall not apply to any plan unless such plan 

is maintained exclusively by one or more organizations 

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

Code of 1986.’’. 

(b) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.—Paragraph (3) of section 430(f) of the Internal Revenue Code of 1986 

is amended by adding the following at the end thereof: 

‘‘(D) SPECIAL RULE FOR CERTAIN YEARS OF PLANS MAINTAINED BY CHARITIES.— 

‘‘(i) IN GENERAL.—For purposes of applying 

subparagraph (C) for plan years beginning after August 

31, 2009, and before September 1, 2011, the ratio determined under such subparagraph for the preceding plan 

year of a plan shall be the greater of— 

‘‘(I) such ratio, as determined without regard 

to this subsection, or 

‘‘(II) the ratio for such plan for the plan year 

beginning after August 31, 2007 and before September 1, 2008, as determined under rules prescribed by the Secretary. 

‘‘(ii) SPECIAL RULE.—In the case of a plan for which 

the valuation date is not the first day of the plan 

year— 

‘‘(I) clause (i) shall apply to plan years beginning after December 31, 2007, and before January 

1, 2010, and 

‘‘(II) clause (i)(II) shall apply based on the 

last plan year beginning before September 1, 2007, 

as determined under rules prescribed by the Secretary. 

‘‘(iii) LIMITATION TO CHARITIES.—This subparagraph shall not apply to any plan unless such plan 
H. R. 3962—23 

is maintained exclusively by one or more organizations 

described in section 501(c)(3).’’. 

(c) EFFECTIVE DATE.— 

(1) IN GENERAL.—Except as provided in paragraph (2), the 

amendments made by this section shall apply to plan years 

beginning after August 31, 2009. 

(2) SPECIAL RULE.—In the case of a plan for which the 

valuation date is not the first day of the plan year, the amendments made by this section shall apply to plan years beginning 

after December 31, 2008. 

Subtitle B—Multiemployer Plans 

SEC. 211. ADJUSTMENTS TO FUNDING STANDARD ACCOUNT RULES. 

(a) ADJUSTMENTS.— (1) AMENDMENT TO ERISA.—Section 304(b) of the Employee 

Retirement Income Security Act of 1974 (29 U.S.C. 1084(b)) 

is amended by adding at the end the following new paragraph: 

‘‘(8) SPECIAL RELIEF RULES.—Notwithstanding any other 

provision of this subsection— 

‘‘(A) AMORTIZATION OF NET INVESTMENT LOSSES.— ‘‘(i) IN GENERAL.—A multiemployer plan with 

respect to which the solvency test under subparagraph 

(C) is met may treat the portion of any experience 

loss or gain attributable to net investment losses 

incurred in either or both of the first two plan years 

ending after August 31, 2008, as an item separate 

from other experience losses, to be amortized in equal 

annual installments (until fully amortized) over the 

period — 

‘‘(I) beginning with the plan year in which 

such portion is first recognized in the actuarial 

value of assets, and 

‘‘(II) ending with the last plan year in the 

30-plan year period beginning with the plan year 

in which such net investment loss was incurred. 

‘‘(ii) COORDINATION WITH EXTENSIONS.—If this 

subparagraph applies for any plan year— 

‘‘(I) no extension of the amortization period 

under clause (i) shall be allowed under subsection 

(d), and 

‘‘(II) if an extension was granted under subsection (d) for any plan year before the election 

to have this subparagraph apply to the plan year, 

such extension shall not result in such amortization period exceeding 30 years. 

‘‘(iii) NET INVESTMENT LOSSES.—For purposes of 

this subparagraph— 

‘‘(I) IN GENERAL.—Net investment losses shall 

be determined in the manner prescribed by the 

Secretary of the Treasury on the basis of the difference between actual and expected returns 

(including any difference attributable to any criminally fraudulent investment arrangement). 

‘‘(II) CRIMINALLY FRAUDULENT INVESTMENT

ARRANGEMENTS.—The determination as to whether 
H. R. 3962—24 

an arrangement is a criminally fraudulent investment arrangement shall be made under rules 

substantially similar to the rules prescribed by 

the Secretary of the Treasury for purposes of section 165 of the Internal Revenue Code of 1986. 

‘‘(B) EXPANDED SMOOTHING PERIOD.— 

‘‘(i) IN GENERAL.—A multiemployer plan with 

respect to which the solvency test under subparagraph 

(C) is met may change its asset valuation method 

in a manner which— 

‘‘(I) spreads the difference between expected 

and actual returns for either or both of the first 

2 plan years ending after August 31, 2008, over 

a period of not more than 10 years, 

‘‘(II) provides that for either or both of the 

first 2 plan years beginning after August 31, 2008, 

the value of plan assets at any time shall not 

be less than 80 percent or greater than 130 percent 

of the fair market value of such assets at such 

time, or 

‘‘(III) makes both changes described in subclauses (I) and (II) to such method. 

‘‘(ii) ASSET VALUATION METHODS.—If this subparagraph applies for any plan year— 

‘‘(I) the Secretary of the Treasury shall not 

treat the asset valuation method of the plan as 

unreasonable solely because of the changes in such 

method described in clause (i), and 

‘‘(II) such changes shall be deemed approved 

by such Secretary under section 302(d)(1) and section 412(d)(1) of such Code. 

‘‘(iii) AMORTIZATION OF REDUCTION IN UNFUNDED

ACCRUED LIABILITY.—If this subparagraph and 

subparagraph (A) both apply for any plan year, the 

plan shall treat any reduction in unfunded accrued 

liability resulting from the application of this subparagraph as a separate experience amortization base, to 

be amortized in equal annual installments (until fully 

amortized) over a period of 30 plan years rather than 

the period such liability would otherwise be amortized 

over. 

‘‘(C) SOLVENCY TEST.—The solvency test under this 

paragraph is met only if the plan actuary certifies that 

the plan is projected to have sufficient assets to timely 

pay expected benefits and anticipated expenditures over 

the amortization period, taking into account the changes 

in the funding standard account under this paragraph. 

‘‘(D) RESTRICTION ON BENEFIT INCREASES.—If subparagraph (A) or (B) apply to a multiemployer plan for any 

plan year, then, in addition to any other applicable restrictions on benefit increases, a plan amendment increasing 

benefits may not go into effect during either of the 2 

plan years immediately following such plan year unless— 

‘‘(i) the plan actuary certifies that— 
H. R. 3962—25 

‘‘(I) any such increase is paid for out of additional contributions not allocated to the plan immediately before the application of this paragraph 

to the plan, and 

‘‘(II) the plan’s funded percentage and projected credit balances for such 2 plan years are 

reasonably expected to be at least as high as such 

percentage and balances would have been if the 

benefit increase had not been adopted, or 

‘‘(ii) the amendment is required as a condition 

of qualification under part I of subchapter D of chapter 

1 of the Internal Revenue Code of 1986 or to comply 

with other applicable law. 

‘‘(E) REPORTING.—A plan sponsor of a plan to which 

this paragraph applies shall— 

‘‘(i) give notice of such application to participants 

and beneficiaries of the plan, and 

‘‘(ii) inform the Pension Benefit Guaranty Corporation of such application in such form and manner as 

the Director of the Pension Benefit Guaranty Corporation may prescribe.’’. 

(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.— 

Section 431(b) is amended by adding at the end the following 

new paragraph: 

‘‘(8) SPECIAL RELIEF RULES.—Notwithstanding any other 

provision of this subsection— 

‘‘(A) AMORTIZATION OF NET INVESTMENT LOSSES.— ‘‘(i) IN GENERAL.—A multiemployer plan with 

respect to which the solvency test under subparagraph 

(C) is met may treat the portion of any experience 

loss or gain attributable to net investment losses 

incurred in either or both of the first two plan years 

ending after August 31, 2008, as an item separate 

from other experience losses, to be amortized in equal 

annual installments (until fully amortized) over the 

period — 

‘‘(I) beginning with the plan year in which 

such portion is first recognized in the actuarial 

value of assets, and 

‘‘(II) ending with the last plan year in the 

30-plan year period beginning with the plan year 

in which such net investment loss was incurred. 

‘‘(ii) COORDINATION WITH EXTENSIONS.—If this 

subparagraph applies for any plan year— 

‘‘(I) no extension of the amortization period 

under clause (i) shall be allowed under subsection 

(d), and 

‘‘(II) if an extension was granted under subsection (d) for any plan year before the election 

to have this subparagraph apply to the plan year, 

such extension shall not result in such amortization period exceeding 30 years. 

‘‘(iii) NET INVESTMENT LOSSES.—For purposes of 

this subparagraph— 

‘‘(I) IN GENERAL.—Net investment losses shall 

be determined in the manner prescribed by the 

Secretary on the basis of the difference between 
H. R. 3962—26 

actual and expected returns (including any difference attributable to any criminally fraudulent 

investment arrangement). 

‘‘(II) CRIMINALLY FRAUDULENT INVESTMENT

ARRANGEMENTS.—The determination as to whether 

an arrangement is a criminally fraudulent investment arrangement shall be made under rules 

substantially similar to the rules prescribed by 

the Secretary for purposes of section 165. 

‘‘(B) EXPANDED SMOOTHING PERIOD.— 

‘‘(i) IN GENERAL.—A multiemployer plan with 

respect to which the solvency test under subparagraph 

(C) is met may change its asset valuation method 

in a manner which— 

‘‘(I) spreads the difference between expected 

and actual returns for either or both of the first 

2 plan years ending after August 31, 2008, over 

a period of not more than 10 years, 

‘‘(II) provides that for either or both of the 

first 2 plan years beginning after August 31, 2008, 

the value of plan assets at any time shall not 

be less than 80 percent or greater than 130 percent 

of the fair market value of such assets at such 

time, or 

‘‘(III) makes both changes described in subclauses (I) and (II) to such method. 

‘‘(ii) ASSET VALUATION METHODS.—If this subparagraph applies for any plan year— 

‘‘(I) the Secretary shall not treat the asset 

valuation method of the plan as unreasonable 

solely because of the changes in such method 

described in clause (i), and 

‘‘(II) such changes shall be deemed approved 

by the Secretary under section 302(d)(1) of the 

Employee Retirement Income Security Act of 1974 

and section 412(d)(1). 

‘‘(iii) AMORTIZATION OF REDUCTION IN UNFUNDED

ACCRUED LIABILITY.—If this subparagraph and 

subparagraph (A) both apply for any plan year, the 

plan shall treat any reduction in unfunded accrued 

liability resulting from the application of this subparagraph as a separate experience amortization base, to 

be amortized in equal annual installments (until fully 

amortized) over a period of 30 plan years rather than 

the period such liability would otherwise be amortized 

over. 

‘‘(C) SOLVENCY TEST.—The solvency test under this 

paragraph is met only if the plan actuary certifies that 

the plan is projected to have sufficient assets to timely 

pay expected benefits and anticipated expenditures over 

the amortization period, taking into account the changes 

in the funding standard account under this paragraph. 

‘‘(D) RESTRICTION ON BENEFIT INCREASES.—If subparagraph (A) or (B) apply to a multiemployer plan for any 

plan year, then, in addition to any other applicable restrictions on benefit increases, a plan amendment increasing 
H. R. 3962—27 

benefits may not go into effect during either of the 2 

plan years immediately following such plan year unless— 

‘‘(i) the plan actuary certifies that— 

‘‘(I) any such increase is paid for out of additional contributions not allocated to the plan immediately before the application of this paragraph 

to the plan, and 

‘‘(II) the plan’s funded percentage and projected credit balances for such 2 plan years are 

reasonably expected to be at least as high as such 

percentage and balances would have been if the 

benefit increase had not been adopted, or 

‘‘(ii) the amendment is required as a condition 

of qualification under part I of subchapter D or to 

comply with other applicable law. 

‘‘(E) REPORTING.—A plan sponsor of a plan to which 

this paragraph applies shall— 

‘‘(i) give notice of such application to participants 

and beneficiaries of the plan, and 

‘‘(ii) inform the Pension Benefit Guaranty Corporation of such application in such form and manner as 

the Director of the Pension Benefit Guaranty Corporation may prescribe.’’. 

(b) EFFECTIVE DATES.— 

(1) IN GENERAL.—The amendments made by this section 

shall take effect as of the first day of the first plan year 

ending after August 31, 2008, except that any election a plan 

makes pursuant to this section that affects the plan’s funding 

standard account for the first plan year beginning after August 

31, 2008, shall be disregarded for purposes of applying the 

provisions of section 305 of the Employee Retirement Income 

Security Act of 1974 and section 432 of the Internal Revenue 

Code of 1986 to such plan year. 

(2) RESTRICTIONS ON BENEFIT INCREASES.—Notwithstanding paragraph (1), the restrictions on plan amendments 

increasing benefits in sections 304(b)(8)(D) of such Act and 

431(b)(8)(D) of such Code, as added by this section, shall take 

effect on the date of enactment of this Act. 

TITLE III—BUDGETARY PROVISIONS 

SEC. 301. BUDGETARY PROVISIONS. 

The budgetary effects of this Act, for the purpose of complying 

with the Statutory Pay-As-You-Go-Act of 2010, shall be determined 

by reference to the latest statement titled ‘‘Budgetary Effects of 

PAYGO Legislation’’ for this Act, submitted for printing in the 
H. R. 3962—28 

Congressional Record by the Chairman of the Senate Budget Committee, provided that such statement has been submitted prior 

to the vote on passage. 

Speaker of the House of Representatives. 

Vice President of the United States and

President of the Senate.