`[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4 Considered and Passed House (CPH)]


109th CONGRESS
  2d Session
                                 H. R. 4

To provide economic security for all Americans, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 28, 2006

 Mr. Boehner (for himself, Mr. Thomas, Mr. McKeon, Mr. Kline, and Mr. 
    Camp) introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committee on 
Education and the Workforce, 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

                             July 28, 2006

    The Committees on Ways and Means and Education and the Workforce 
                   discharged; considered and passed

_______________________________________________________________________

                                 A BILL


 
To provide economic security for all Americans, 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 AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Pension Protection 
Act of 2006''.
    (b) Table of Contents.--The table of contents for this Act (other 
than so much of title XIV as follows section 1401) is as follows:

Sec. 1. Short title and table of contents.
 TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                             PENSION PLANS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

Sec. 101. Minimum funding standards.
Sec. 102. Funding rules for single-employer defined benefit pension 
                            plans.
Sec. 103. Benefit limitations under single-employer plans.
Sec. 104. Special rules for multiple employer plans of certain 
                            cooperatives.
Sec. 105. Temporary relief for certain PBGC settlement plans.
Sec. 106. Special rules for plans of certain government contractors.
Sec. 107. Technical and conforming amendments.
        Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 111. Minimum funding standards.
Sec. 112. Funding rules for single-employer defined benefit pension 
                            plans.
Sec. 113. Benefit limitations under single-employer plans.
Sec. 114. Technical and conforming amendments.
Sec. 115. Modification of transition rule to pension funding 
                            requirements.
Sec. 116. Restrictions on funding of nonqualified deferred compensation 
                            plans by employers maintaining underfunded 
                            or terminated single-employer plans.
  TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS AND 
                           RELATED PROVISIONS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

Sec. 201. Funding rules for multiemployer defined benefit plans.
Sec. 202. Additional funding rules for multiemployer plans in 
                            endangered or critical status.
Sec. 203. Measures to forestall insolvency of multiemployer plans.
Sec. 204. Withdrawal liability reforms.
Sec. 205. Prohibition on retaliation against employers exercising their 
                            rights to petition the Federal government.
Sec. 206. Special rule for certain benefits funded under an agreement 
                            approved by the Pension Benefit Guaranty 
                            Corporation.
        Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 211. Funding rules for multiemployer defined benefit plans.
Sec. 212. Additional funding rules for multiemployer plans in 
                            endangered or critical status.
Sec. 213. Measures to forestall insolvency of multiemployer plans.
Sec. 214. Exemption from excise taxes for certain multiemployer pension 
                            plans.
             Subtitle C--Sunset of Additional Funding Rules

Sec. 221. Sunset of additional funding rules.
                  TITLE III--INTEREST RATE ASSUMPTIONS

Sec. 301. Extension of replacement of 30-year Treasury rates.
Sec. 302. Interest rate assumption for determination of lump sum 
                            distributions.
Sec. 303. Interest rate assumption for applying benefit limitations to 
                            lump sum distributions.
            TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS

Sec. 401. PBGC premiums.
Sec. 402. Special funding rules for certain plans maintained by 
                            commercial airlines.
Sec. 403. Limitation on PBGC guarantee of shutdown and other benefits.
Sec. 404. Rules relating to bankruptcy of employer.
Sec. 405. PBGC premiums for small plans.
Sec. 406. Authorization for PBGC to pay interest on premium overpayment 
                            refunds.
Sec. 407. Rules for substantial owner benefits in terminated plans.
Sec. 408. Acceleration of PBGC computation of benefits attributable to 
                            recoveries from employers.
Sec. 409. Treatment of certain plans where cessation or change in 
                            membership of a controlled group.
Sec. 410. Missing participants.
Sec. 411. Director of the Pension Benefit Guaranty Corporation.
Sec. 412. Inclusion of information in the PBGC annual report.
                          TITLE V--DISCLOSURE

Sec. 501. Defined benefit plan funding notice.
Sec. 502. Access to multiemployer pension plan information.
Sec. 503. Additional annual reporting requirements.
Sec. 504. Electronic display of annual report information.
Sec. 505. Section 4010 filings with the PBGC.
Sec. 506. Disclosure of termination information to plan participants.
Sec. 507. Notice of freedom to divest employer securities.
Sec. 508. Periodic pension benefit statements.
Sec. 509. Notice to participants or beneficiaries of blackout periods.
  TITLE VI--INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND FIDUCIARY 
                                 RULES

                     Subtitle A--Investment Advice

Sec. 601. Prohibited transaction exemption for provision of investment 
                            advice.
                  Subtitle B--Prohibited Transactions

Sec. 611. Prohibited transaction rules relating to financial 
                            investments.
Sec. 612. Correction period for certain transactions involving 
                            securities and commodities.
                 Subtitle C--Fiduciary and Other Rules

Sec. 621. Inapplicability of relief from fiduciary liability during 
                            suspension of ability of participant or 
                            beneficiary to direct investments.
Sec. 622. Increase in maximum bond amount.
Sec. 623. Increase in penalties for coercive interference with exercise 
                            of ERISA rights.
Sec. 624. Treatment of investment of assets by plan where participant 
                            fails to exercise investment election.
Sec. 625. Clarification of fiduciary rules.
                  TITLE VII--BENEFIT ACCRUAL STANDARDS

Sec. 701. Benefit accrual standards.
Sec. 702. Regulations relating to mergers and acquisitions.
             TITLE VIII--PENSION RELATED REVENUE PROVISIONS

                   Subtitle A--Deduction Limitations

Sec. 801. Increase in deduction limit for single-employer plans.
Sec. 802. Deduction limits for multiemployer plans.
Sec. 803. Updating deduction rules for combination of plans.
         Subtitle B--Certain Pension Provisions Made Permanent

Sec. 811. Pensions and individual retirement arrangement provisions of 
                            Economic Growth and Tax Relief 
                            Reconciliation Act of 2001 made permanent.
Sec. 812. Saver's credit.
Subtitle C--Improvements in Portability, Distribution, and Contribution 
                                 Rules

Sec. 821. Clarifications regarding purchase of permissive service 
                            credit.
Sec. 822. Allow rollover of after-tax amounts in annuity contracts.
Sec. 823. Clarification of minimum distribution rules for governmental 
                            plans.
Sec. 824. Allow direct rollovers from retirement plans to Roth IRAs.
Sec. 825. Eligibility for participation in retirement plans.
Sec. 826. Modifications of rules governing hardships and unforseen 
                            financial emergencies.
Sec. 827. Penalty-free withdrawals from retirement plans for 
                            individuals called to active duty for at 
                            least 179 days.
Sec. 828. Waiver of 10 percent early withdrawal penalty tax on certain 
                            distributions of pension plans for public 
                            safety employees.
Sec. 829. Allow rollovers by nonspouse beneficiaries of certain 
                            retirement plan distributions.
Sec. 830. Direct payment of tax refunds to individual retirement plans.
Sec. 831. Allowance of additional IRA payments in certain bankruptcy 
                            cases.
Sec. 832. Determination of average compensation for section 415 limits.
Sec. 833. Inflation indexing of gross income limitations on certain 
                            retirement savings incentives.
                Subtitle D--Health and Medical Benefits

Sec. 841. Use of excess pension assets for future retiree health 
                            benefits and collectively bargained retiree 
                            health benefits.
Sec. 842. Transfer of excess pension assets to multiemployer health 
                            plan.
Sec. 843. Allowance of reserve for medical benefits of plans sponsored 
                            by bona fide associations.
Sec. 844. Treatment of annuity and life insurance contracts with a 
                            long-term care insurance feature.
Sec. 845. Distributions from governmental retirement plans for health 
                            and Long-Term care insurance for public 
                            safety officers.
           Subtitle E--United States Tax Court Modernization

Sec. 851. Cost-of-living adjustments for Tax Court judicial survivor 
                            annuities.
Sec. 852. Cost of life insurance coverage for Tax Court judges age 65 
                            or over.
Sec. 853. Participation of Tax Court judges in the Thrift Savings Plan.
Sec. 854. Annuities to surviving spouses and dependent children of 
                            special trial judges of the Tax Court.
Sec. 855. Jurisdiction of Tax Court over collection due process cases.
Sec. 856. Provisions for recall.
Sec. 857. Authority for special trial judges to hear and decide certain 
                            employment status cases.
Sec. 858. Confirmation of authority of Tax Court to apply doctrine of 
                            equitable recoupment.
Sec. 859. Tax Court filing fee in all cases commenced by filing 
                            petition.
Sec. 860. Expanded use of Tax Court practice fee for pro se taxpayers.
                      Subtitle F--Other Provisions

Sec. 861. Extension to all governmental plans of current moratorium on 
                            application of certain nondiscrimination 
                            rules applicable to State and local plans.
Sec. 862. Elimination of aggregate limit for usage of excess funds from 
                            black lung disability trusts.
Sec. 863. Treatment of death benefits from corporate-owned life 
                            insurance.
Sec. 864. Treatment of test room supervisors and proctors who assist in 
                            the administration of college entrance and 
                            placement exams.
Sec. 865. Grandfather rule for church plans which self-annuitize.
Sec. 866. Exemption for income from leveraged real estate held by 
                            church plans.
Sec. 867. Church plan rule.
Sec. 868. Gratuitous transfer for benefits of employees.
 TITLE IX--INCREASE IN PENSION PLAN DIVERSIFICATION AND PARTICIPATION 
                      AND OTHER PENSION PROVISIONS

Sec. 901. Defined contribution plans required to provide employees with 
                            freedom to invest their plan assets.
Sec. 902. Increasing participation through automatic contribution 
                            arrangements.
Sec. 903. Treatment of eligible combined defined benefit plans and 
                            qualified cash or deferred arrangements.
Sec. 904. Faster vesting of employer nonelective contributions.
Sec. 905. Distributions during working retirement.
Sec. 906. Treatment of certain pension plans of Indian tribal 
                            governments.
       TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION

Sec. 1001. Regulations on time and order of issuance of domestic 
                            relations orders.
Sec. 1002. Entitlement of divorced spouses to railroad retirement 
                            annuities independent of actual entitlement 
                            of employee.
Sec. 1003. Extension of tier II railroad retirement benefits to 
                            surviving former spouses pursuant to 
                            divorce agreements.
Sec. 1004. Requirement for additional survivor annuity option.
                  TITLE XI--ADMINISTRATIVE PROVISIONS

Sec. 1101. Employee plans compliance resolution system.
Sec. 1102. Notice and consent period regarding distributions.
Sec. 1103. Reporting simplification.
Sec. 1104. Voluntary early retirement incentive and employment 
                            retention plans maintained by local 
                            educational agencies and other entities.
Sec. 1105. No reduction in unemployment compensation as a result of 
                            pension rollovers.
Sec. 1106. Revocation of election relating to treatment as 
                            multiemployer plan.
Sec. 1107. Provisions relating to plan amendments.
         TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS

                Subtitle A--Charitable Giving Incentives

Sec. 1201. Tax-free distributions from individual retirement plans for 
                            charitable purposes.
Sec. 1202. Extension of modification of charitable deduction for 
                            contributions of food inventory.
Sec. 1203. Basis adjustment to stock of S corporation contributing 
                            property.
Sec. 1204. Extension of modification of charitable deduction for 
                            contributions of book inventory.
Sec. 1205. Modification of tax treatment of certain payments to 
                            controlling exempt organizations.
Sec. 1206. Encouragement of contributions of capital gain real property 
                            made for conservation purposes.
Sec. 1207. Excise taxes exemption for blood collector organizations.
               Subtitle B--Reforming Exempt Organizations

                        Part 1--General Reforms

Sec. 1211. Reporting on certain acquisitions of interests in insurance 
                            contracts in which certain exempt 
                            organizations hold an interest.
Sec. 1212. Increase in penalty excise taxes relating to public 
                            charities, social welfare organizations, 
                            and private foundations.
Sec. 1213. Reform of charitable contributions of certain easements in 
                            registered historic districts and reduced 
                            deduction for portion of qualified 
                            conservation contribution attributable to 
                            rehabilitation credit.
Sec. 1214. Charitable contributions of taxidermy property.
Sec. 1215. Recapture of tax benefit for charitable contributions of 
                            exempt use property not used for an exempt 
                            use.
Sec. 1216. Limitation of deduction for charitable contributions of 
                            clothing and household items.
Sec. 1217. Modification of recordkeeping requirements for certain 
                            charitable contributions.
Sec. 1218. Contributions of fractional interests in tangible personal 
                            property.
Sec. 1219. Provisions relating to substantial and gross overstatements 
                            of valuations.
Sec. 1220. Additional standards for credit counseling organizations.
Sec. 1221. Expansion of the base of tax on private foundation net 
                            investment income.
Sec. 1222. Definition of convention or association of churches.
Sec. 1223. Notification requirement for entities not currently required 
                            to file.
Sec. 1224. Disclosure to State officials relating to exempt 
                            organizations.
Sec. 1225. Public disclosure of information relating to unrelated 
                            business income tax returns.
Sec. 1226. Study on donor advised funds and supporting organizations.
         Part 2--Improved Accountability of Donor Advised Funds

Sec. 1231. Excise taxes relating to donor advised funds.
Sec. 1232. Excess benefit transactions involving donor advised funds 
                            and sponsoring organizations.
Sec. 1233. Excess business holdings of donor advised funds.
Sec. 1234. Treatment of charitable contribution deductions to donor 
                            advised funds.
Sec. 1235. Returns of, and applications for recognition by, sponsoring 
                            organizations.
      Part 3--Improved Accountability of Supporting Organizations

Sec. 1241. Requirements for supporting organizations.
Sec. 1242. Excess benefit transactions involving supporting 
                            organizations.
Sec. 1243. Excess business holdings of supporting organizations.
Sec. 1244. Treatment of amounts paid to supporting organizations by 
                            private foundations.
Sec. 1245. Returns of supporting organizations.
                      TITLE XIII--OTHER PROVISIONS

Sec. 1301. Technical corrections relating to mine safety.
Sec. 1302. Going-to-the-sun road.
Sec. 1303. Exception to the local furnishing requirement of the tax-
                            exempt bond rules.
Sec. 1304. Qualified tuition programs.
                      TITLE XIV--TARIFF PROVISIONS

Sec. 1401. Short title; table of contents.

 TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                             PENSION PLANS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

SEC. 101. MINIMUM FUNDING STANDARDS.

    (a) Repeal of Existing Funding Rules.--Sections 302 through 308 of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082 
through 1086) are repealed.
    (b) New Minimum Funding Standards.--Part 3 of subtitle B of title I 
of such Act (as amended by subsection (a)) is amended by inserting 
after section 301 the following new section:

``SEC. 302. MINIMUM FUNDING STANDARDS.

    ``(a) Requirement To Meet Minimum Funding Standard.--
            ``(1) In general.--A plan to which this part applies shall 
        satisfy the minimum funding standard applicable to the plan for 
        any plan year.
            ``(2) Minimum funding standard.--For purposes of paragraph 
        (1), a plan shall be treated as satisfying the minimum funding 
        standard for a plan year if--
                    ``(A) in the case of a defined benefit plan which 
                is a single-employer plan, the employer makes 
                contributions to or under the plan for the plan year 
                which, in the aggregate, are not less than the minimum 
                required contribution determined under section 303 for 
                the plan for the plan year,
                    ``(B) in the case of a money purchase plan which is 
                a single-employer plan, the employer makes 
                contributions to or under the plan for the plan year 
                which are required under the terms of the plan, and
                    ``(C) in the case of a multiemployer plan, the 
                employers make contributions to or under the plan for 
                any plan year which, in the aggregate, are sufficient 
                to ensure that the plan does not have an accumulated 
                funding deficiency under section 304 as of the end of 
                the plan year.
    ``(b) Liability for Contributions.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amount of any contribution required by this section (including 
        any required installments under paragraphs (3) and (4) of 
        section 303(j)) shall be paid by the employer responsible for 
        making contributions to or under the plan.
            ``(2) Joint and several liability where employer member of 
        controlled group.--If the employer referred to in paragraph (1) 
        is a member of a controlled group, each member of such group 
        shall be jointly and severally liable for payment of such 
        contributions.
    ``(c) Variance From Minimum Funding Standards.--
            ``(1) Waiver in case of business hardship.--
                    ``(A) In general.--If--
                            ``(i) an employer is (or in the case of a 
                        multiemployer plan, 10 percent or more of the 
                        number of employers contributing to or under 
                        the plan is) unable to satisfy the minimum 
                        funding standard for a plan year without 
                        temporary substantial business hardship 
                        (substantial business hardship in the case of a 
                        multiemployer plan), and
                            ``(ii) application of the standard would be 
                        adverse to the interests of plan participants 
                        in the aggregate,
                the Secretary of the Treasury may, subject to 
                subparagraph (C), waive the requirements of subsection 
                (a) for such year with respect to all or any portion of 
                the minimum funding standard. The Secretary of the 
                Treasury shall not waive the minimum funding standard 
                with respect to a plan for more than 3 of any 15 (5 of 
                any 15 in the case of a multiemployer plan) consecutive 
                plan years.
                    ``(B) Effects of waiver.--If a waiver is granted 
                under subparagraph (A) for any plan year--
                            ``(i) in the case of a single-employer 
                        plan, the minimum required contribution under 
                        section 303 for the plan year shall be reduced 
                        by the amount of the waived funding deficiency 
                        and such amount shall be amortized as required 
                        under section 303(e), and
                            ``(ii) in the case of a multiemployer plan, 
                        the funding standard account shall be credited 
                        under section 304(b)(3)(C) with the amount of 
                        the waived funding deficiency and such amount 
                        shall be amortized as required under section 
                        304(b)(2)(C).
                    ``(C) Waiver of amortized portion not allowed.--The 
                Secretary of the Treasury may not waive under 
                subparagraph (A) any portion of the minimum funding 
                standard under subsection (a) for a plan year which is 
                attributable to any waived funding deficiency for any 
                preceding plan year.
            ``(2) Determination of business hardship.--For purposes of 
        this subsection, the factors taken into account in determining 
        temporary substantial business hardship (substantial business 
        hardship in the case of a multiemployer plan) shall include 
        (but shall not be limited to) whether or not--
                    ``(A) the employer is operating at an economic 
                loss,
                    ``(B) there is substantial unemployment or 
                underemployment in the trade or business and in the 
                industry concerned,
                    ``(C) the sales and profits of the industry 
                concerned are depressed or declining, and
                    ``(D) it is reasonable to expect that the plan will 
                be continued only if the waiver is granted.
            ``(3) Waived funding deficiency.--For purposes of this 
        part, the term `waived funding deficiency' means the portion of 
        the minimum funding standard under subsection (a) (determined 
        without regard to the waiver) for a plan year waived by the 
        Secretary of the Treasury and not satisfied by employer 
        contributions.
            ``(4) Security for waivers for single-employer plans, 
        consultations.--
                    ``(A) Security may be required.--
                            ``(i) In general.--Except as provided in 
                        subparagraph (C), the Secretary of the Treasury 
                        may require an employer maintaining a defined 
                        benefit plan which is a single-employer plan 
                        (within the meaning of section 4001(a)(15)) to 
                        provide security to such plan as a condition 
                        for granting or modifying a waiver under 
                        paragraph (1).
                            ``(ii) Special rules.--Any security 
                        provided under clause (i) may be perfected and 
                        enforced only by the Pension Benefit Guaranty 
                        Corporation, or at the direction of the 
                        Corporation, by a contributing sponsor (within 
                        the meaning of section 4001(a)(13)), or a 
                        member of such sponsor's controlled group 
                        (within the meaning of section 4001(a)(14)).
                    ``(B) Consultation with the pension benefit 
                guaranty corporation.--Except as provided in 
                subparagraph (C), the Secretary of the Treasury shall, 
                before granting or modifying a waiver under this 
                subsection with respect to a plan described in 
                subparagraph (A)(i)--
                            ``(i) provide the Pension Benefit Guaranty 
                        Corporation with--
                                    ``(I) notice of the completed 
                                application for any waiver or 
                                modification, and
                                    ``(II) an opportunity to comment on 
                                such application within 30 days after 
                                receipt of such notice, and
                            ``(ii) consider--
                                    ``(I) any comments of the 
                                Corporation under clause (i)(II), and
                                    ``(II) any views of any employee 
                                organization (within the meaning of 
                                section 3(4)) representing participants 
                                in the plan which are submitted in 
                                writing to the Secretary of the 
                                Treasury in connection with such 
                                application.
                Information provided to the Corporation under this 
                subparagraph shall be considered tax return information 
                and subject to the safeguarding and reporting 
                requirements of section 6103(p) of the Internal Revenue 
                Code of 1986.
                    ``(C) Exception for certain waivers.--
                            ``(i) In general.--The preceding provisions 
                        of this paragraph shall not apply to any plan 
                        with respect to which the sum of--
                                    ``(I) the aggregate unpaid minimum 
                                required contributions for the plan 
                                year and all preceding plan years, and
                                    ``(II) the present value of all 
                                waiver amortization installments 
                                determined for the plan year and 
                                succeeding plan years under section 
                                303(e)(2),
                        is less than $1,000,000.
                            ``(ii) Treatment of waivers for which 
                        applications are pending.--The amount described 
                        in clause (i)(I) shall include any increase in 
                        such amount which would result if all 
                        applications for waivers of the minimum funding 
                        standard under this subsection which are 
                        pending with respect to such plan were denied.
                            ``(iii) Unpaid minimum required 
                        contribution.--For purposes of this 
                        subparagraph--
                                    ``(I) In general.--The term `unpaid 
                                minimum required contribution' means, 
                                with respect to any plan year, any 
                                minimum required contribution under 
                                section 303 for the plan year which is 
                                not paid on or before the due date (as 
                                determined under section 303(j)(1)) for 
                                the plan year.
                                    ``(II) Ordering rule.--For purposes 
                                of subclause (I), any payment to or 
                                under a plan for any plan year shall be 
                                allocated first to unpaid minimum 
                                required contributions for all 
                                preceding plan years on a first-in, 
                                first-out basis and then to the minimum 
                                required contribution under section 303 
                                for the plan year.
            ``(5) Special rules for single-employer plans.--
                    ``(A) Application must be submitted before date 
                2\1/2\ months after close of year.--In the case of a 
                single-employer plan, no waiver may be granted under 
                this subsection with respect to any plan for any plan 
                year unless an application therefor is submitted to the 
                Secretary of the Treasury not later than the 15th day 
                of the 3rd month beginning after the close of such plan 
                year.
                    ``(B) Special rule if employer is member of 
                controlled group.--In the case of a single-employer 
                plan, if an employer is a member of a controlled group, 
                the temporary substantial business hardship 
                requirements of paragraph (1) shall be treated as met 
                only if such requirements are met--
                            ``(i) with respect to such employer, and
                            ``(ii) with respect to the controlled group 
                        of which such employer is a member (determined 
                        by treating all members of such group as a 
                        single employer).
                The Secretary of the Treasury may provide that an 
                analysis of a trade or business or industry of a member 
                need not be conducted if such Secretary determines such 
                analysis is not necessary because the taking into 
                account of such member would not significantly affect 
                the determination under this paragraph.
            ``(6) Advance notice.--
                    ``(A) In general.--The Secretary of the Treasury 
                shall, before granting a waiver under this subsection, 
                require each applicant to provide evidence satisfactory 
                to such Secretary that the applicant has provided 
                notice of the filing of the application for such waiver 
                to each affected party (as defined in section 
                4001(a)(21)). Such notice shall include a description 
                of the extent to which the plan is funded for benefits 
                which are guaranteed under title IV and for benefit 
                liabilities.
                    ``(B) Consideration of relevant information.--The 
                Secretary of the Treasury shall consider any relevant 
                information provided by a person to whom notice was 
                given under subparagraph (A).
            ``(7) Restriction on plan amendments.--
                    ``(A) In general.--No amendment of a plan which 
                increases the liabilities of the plan by reason of any 
                increase in benefits, any change in the accrual of 
                benefits, or any change in the rate at which benefits 
                become nonforfeitable under the plan shall be adopted 
                if a waiver under this subsection or an extension of 
                time under section 304(d) is in effect with respect to 
                the plan, or if a plan amendment described in 
                subsection (d)(2) has been made at any time in the 
                preceding 12 months (24 months in the case of a 
                multiemployer plan). If a plan is amended in violation 
                of the preceding sentence, any such waiver, or 
                extension of time, shall not apply to any plan year 
                ending on or after the date on which such amendment is 
                adopted.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to any plan amendment which--
                            ``(i) the Secretary of the Treasury 
                        determines to be reasonable and which provides 
                        for only de minimis increases in the 
                        liabilities of the plan,
                            ``(ii) only repeals an amendment described 
                        in subsection (d)(2), or
                            ``(iii) is required as a condition of 
                        qualification under part I of subchapter D of 
                        chapter 1 of the Internal Revenue Code of 1986.
            ``(8) Cross reference.--For corresponding duties of the 
        Secretary of the Treasury with regard to implementation of the 
        Internal Revenue Code of 1986, see section 412(c) of such Code.
    ``(d) Miscellaneous Rules.--
            ``(1) Change in method or year.--If the funding method, the 
        valuation date, or a plan year for a plan is changed, the 
        change shall take effect only if approved by the Secretary of 
        the Treasury.
            ``(2) Certain retroactive plan amendments.--For purposes of 
        this section, any amendment applying to a plan year which--
                    ``(A) is adopted after the close of such plan year 
                but no later than 2\1/2\ months after the close of the 
                plan year (or, in the case of a multiemployer plan, no 
                later than 2 years after the close of such plan year),
                    ``(B) does not reduce the accrued benefit of any 
                participant determined as of the beginning of the first 
                plan year to which the amendment applies, and
                    ``(C) does not reduce the accrued benefit of any 
                participant determined as of the time of adoption 
                except to the extent required by the circumstances,
        shall, at the election of the plan administrator, be deemed to 
        have been made on the first day of such plan year. No amendment 
        described in this paragraph which reduces the accrued benefits 
        of any participant shall take effect unless the plan 
        administrator files a notice with the Secretary of the Treasury 
        notifying him of such amendment and such Secretary has approved 
        such amendment, or within 90 days after the date on which such 
        notice was filed, failed to disapprove such amendment. No 
        amendment described in this subsection shall be approved by the 
        Secretary of the Treasury unless such Secretary determines that 
        such amendment is necessary because of a temporary substantial 
        business hardship (as determined under subsection (c)(2)) or a 
        substantial business hardship (as so determined) in the case of 
        a multiemployer plan and that a waiver under subsection (c) 
        (or, in the case of a multiemployer plan, any extension of the 
        amortization period under section 304(d)) is unavailable or 
        inadequate.
            ``(3) Controlled group.--For purposes of this section, the 
        term `controlled group' means any group treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414 
        of the Internal Revenue Code of 1986.''.
    (c) Clerical Amendment.--The table of contents in section 1 of such 
Act is amended by striking the items relating to sections 302 through 
308 and inserting the following new item:

``Sec. 302. Minimum funding standards.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after 2007.

SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION 
              PLANS.

    (a) In General.--Part 3 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (as amended by section 101 of 
this Act) is amended by inserting after section 302 the following new 
section:

``SEC. 303. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED 
              BENEFIT PENSION PLANS.

    ``(a) Minimum Required Contribution.--For purposes of this section 
and section 302(a)(2)(A), except as provided in subsection (f), the 
term `minimum required contribution' means, with respect to any plan 
year of a single-employer plan--
            ``(1) in any case in which the value of plan assets of the 
        plan (as reduced under subsection (f)(4)(B)) is less than the 
        funding target of the plan for the plan year, the sum of--
                    ``(A) the target normal cost of the plan for the 
                plan year,
                    ``(B) the shortfall amortization charge (if any) 
                for the plan for the plan year determined under 
                subsection (c), and
                    ``(C) the waiver amortization charge (if any) for 
                the plan for the plan year as determined under 
                subsection (e); or
            ``(2) in any case in which the value of plan assets of the 
        plan (as reduced under subsection (f)(4)(B)) equals or exceeds 
        the funding target of the plan for the plan year, the target 
        normal cost of the plan for the plan year reduced (but not 
        below zero) by such excess.
    ``(b) Target Normal Cost.--For purposes of this section, except as 
provided in subsection (i)(2) with respect to plans in at-risk status, 
the term `target normal cost' means, for any plan year, the present 
value of all benefits which are expected to accrue or to be earned 
under the plan during the plan year. For purposes of this subsection, 
if any benefit attributable to services performed in a preceding plan 
year is increased by reason of any increase in compensation during the 
current plan year, the increase in such benefit shall be treated as 
having accrued during the current plan year.
    ``(c) Shortfall Amortization Charge.--
            ``(1) In general.--For purposes of this section, the 
        shortfall amortization charge for a plan for any plan year is 
        the aggregate total (not less than zero) of the shortfall 
        amortization installments for such plan year with respect to 
        the shortfall amortization bases for such plan year and each of 
        the 6 preceding plan years.
            ``(2) Shortfall amortization installment.--For purposes of 
        paragraph (1)--
                    ``(A) Determination.--The shortfall amortization 
                installments are the amounts necessary to amortize the 
                shortfall amortization base of the plan for any plan 
                year in level annual installments over the 7-plan-year 
                period beginning with such plan year.
                    ``(B) Shortfall installment.--The shortfall 
                amortization installment for any plan year in the 7-
                plan-year period under subparagraph (A) with respect to 
                any shortfall amortization base is the annual 
                installment determined under subparagraph (A) for that 
                year for that base.
                    ``(C) Segment rates.--In determining any shortfall 
                amortization installment under this paragraph, the plan 
                sponsor shall use the segment rates determined under 
                subparagraph (C) of subsection (h)(2), applied under 
                rules similar to the rules of subparagraph (B) of 
                subsection (h)(2).
            ``(3) Shortfall amortization base.--For purposes of this 
        section, the shortfall amortization base of a plan for a plan 
        year is--
                    ``(A) the funding shortfall of such plan for such 
                plan year, minus
                    ``(B) the present value (determined using the 
                segment rates determined under subparagraph (C) of 
                subsection (h)(2), applied under rules similar to the 
                rules of subparagraph (B) of subsection (h)(2)) of the 
                aggregate total of the shortfall amortization 
                installments and waiver amortization installments which 
                have been determined for such plan year and any 
                succeeding plan year with respect to the shortfall 
                amortization bases and waiver amortization bases of the 
                plan for any plan year preceding such plan year.
            ``(4) Funding shortfall.--For purposes of this section, the 
        funding shortfall of a plan for any plan year is the excess (if 
        any) of--
                    ``(A) the funding target of the plan for the plan 
                year, over
                    ``(B) the value of plan assets of the plan (as 
                reduced under subsection (f)(4)(B)) for the plan year 
                which are held by the plan on the valuation date.
            ``(5) Exemption from new shortfall amortization base.--
                    ``(A) In general.--In any case in which the value 
                of plan assets of the plan (as reduced under subsection 
                (f)(4)(A)) is equal to or greater than the funding 
                target of the plan for the plan year, the shortfall 
                amortization base of the plan for such plan year shall 
                be zero.
                    ``(B) Transition rule.--
                            ``(i) In general.--Except as provided in 
                        clauses (iii) and (iv), in the case of plan 
                        years beginning after 2007 and before 2011, 
                        only the applicable percentage of the funding 
                        target shall be taken into account under 
                        paragraph (3)(A) in determining the funding 
                        shortfall for the plan year for purposes of 
                        subparagraph (A).
                            ``(ii) Applicable percentage.--For purposes 
                        of subparagraph (A), the applicable percentage 
                        shall be determined in accordance with the 
                        following table:

``In the case of a plan year                             The applicable
   beginning in calendar year:                            percentage is
        2008...................................................     92 
        2009...................................................     94 
        2010...................................................     96.
                            ``(iii) Limitation.--Clause (i) shall not 
                        apply with respect to any plan year after 2008 
                        unless the shortfall amortization base for each 
                        of the preceding years beginning after 2007 was 
                        zero (determined after application of this 
                        subparagraph).
                            ``(iv) Transition relief not available for 
                        new or deficit reduction plans.--Clause (i) 
                        shall not apply to a plan--
                                    ``(I) which was not in effect for a 
                                plan year beginning in 2007, or
                                    ``(II) which was in effect for a 
                                plan year beginning in 2007 and which 
                                was subject to section 302(d) (as in 
                                effect for plan years beginning in 
                                2007), determined after the application 
                                of paragraphs (6) and (9) thereof.
            ``(6) Early deemed amortization upon attainment of funding 
        target.--In any case in which the funding shortfall of a plan 
        for a plan year is zero, for purposes of determining the 
        shortfall amortization charge for such plan year and succeeding 
        plan years, the shortfall amortization bases for all preceding 
        plan years (and all shortfall amortization installments 
        determined with respect to such bases) shall be reduced to 
        zero.
    ``(d) Rules Relating to Funding Target.--For purposes of this 
section--
            ``(1) Funding target.--Except as provided in subsection 
        (i)(1) with respect to plans in at-risk status, the funding 
        target of a plan for a plan year is the present value of all 
        benefits accrued or earned under the plan as of the beginning 
        of the plan year.
            ``(2) Funding target attainment percentage.--The `funding 
        target attainment percentage' of a plan for a plan year is the 
        ratio (expressed as a percentage) which--
                    ``(A) the value of plan assets for the plan year 
                (as reduced under subsection (f)(4)(B)), bears to
                    ``(B) the funding target of the plan for the plan 
                year (determined without regard to subsection (i)(1)).
    ``(e) Waiver Amortization Charge.--
            ``(1) Determination of waiver amortization charge.--The 
        waiver amortization charge (if any) for a plan for any plan 
        year is the aggregate total of the waiver amortization 
        installments for such plan year with respect to the waiver 
        amortization bases for each of the 5 preceding plan years.
            ``(2) Waiver amortization installment.--For purposes of 
        paragraph (1)--
                    ``(A) Determination.--The waiver amortization 
                installments are the amounts necessary to amortize the 
                waiver amortization base of the plan for any plan year 
                in level annual installments over a period of 5 plan 
                years beginning with the succeeding plan year.
                    ``(B) Waiver installment.--The waiver amortization 
                installment for any plan year in the 5-year period 
                under subparagraph (A) with respect to any waiver 
                amortization base is the annual installment determined 
                under subparagraph (A) for that year for that base.
            ``(3) Interest rate.--In determining any waiver 
        amortization installment under this subsection, the plan 
        sponsor shall use the segment rates determined under 
        subparagraph (C) of subsection (h)(2), applied under rules 
        similar to the rules of subparagraph (B) of subsection (h)(2).
            ``(4) Waiver amortization base.--The waiver amortization 
        base of a plan for a plan year is the amount of the waived 
        funding deficiency (if any) for such plan year under section 
        302(c).
            ``(5) Early deemed amortization upon attainment of funding 
        target.--In any case in which the funding shortfall of a plan 
        for a plan year is zero, for purposes of determining the waiver 
        amortization charge for such plan year and succeeding plan 
        years, the waiver amortization bases for all preceding plan 
        years (and all waiver amortization installments determined with 
        respect to such bases) shall be reduced to zero.
    ``(f) Reduction of Minimum Required Contribution by Prefunding 
Balance and Funding Standard Carryover Balance.--
            ``(1) Election to maintain balances.--
                    ``(A) Prefunding balance.--The plan sponsor of a 
                single-employer plan may elect to maintain a prefunding 
                balance.
                    ``(B) Funding standard carryover balance.--
                            ``(i) In general.--In the case of a single-
                        employer plan described in clause (ii), the 
                        plan sponsor may elect to maintain a funding 
                        standard carryover balance, until such balance 
                        is reduced to zero.
                            ``(ii) Plans maintaining funding standard 
                        account in 2007.--A plan is described in this 
                        clause if the plan--
                                    ``(I) was in effect for a plan year 
                                beginning in 2007, and
                                    ``(II) had a positive balance in 
                                the funding standard account under 
                                section 302(b) as in effect for such 
                                plan year and determined as of the end 
                                of such plan year.
            ``(2) Application of balances.--A prefunding balance and a 
        funding standard carryover balance maintained pursuant to this 
        paragraph--
                    ``(A) shall be available for crediting against the 
                minimum required contribution, pursuant to an election 
                under paragraph (3),
                    ``(B) shall be applied as a reduction in the amount 
                treated as the value of plan assets for purposes of 
                this section, to the extent provided in paragraph (4), 
                and
                    ``(C) may be reduced at any time, pursuant to an 
                election under paragraph (5).
            ``(3) Election to apply balances against minimum required 
        contribution.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), in the case of any plan year 
                in which the plan sponsor elects to credit against the 
                minimum required contribution for the current plan year 
                all or a portion of the prefunding balance or the 
                funding standard carryover balance for the current plan 
                year (not in excess of such minimum required 
                contribution), the minimum required contribution for 
                the plan year shall be reduced as of the first day of 
                the plan year by the amount so credited by the plan 
                sponsor. For purposes of the preceding sentence, the 
                minimum required contribution shall be determined after 
                taking into account any waiver under section 302(c).
                    ``(B) Coordination with funding standard carryover 
                balance.--To the extent that any plan has a funding 
                standard carryover balance greater than zero, no amount 
                of the prefunding balance of such plan may be credited 
                under this paragraph in reducing the minimum required 
                contribution.
                    ``(C) Limitation for underfunded plans.--The 
                preceding provisions of this paragraph shall not apply 
                for any plan year if the ratio (expressed as a 
                percentage) which--
                            ``(i) the value of plan assets for the 
                        preceding plan year (as reduced under paragraph 
                        (4)(C)), bears to
                            ``(ii) the funding target of the plan for 
                        the preceding plan year (determined without 
                        regard to subsection (i)(1)),
                is less than 80 percent. In the case of plan years 
                beginning in 2008, the ratio under this subparagraph 
                may be determined using such methods of estimation as 
                the Secretary of the Treasury may prescribe.
            ``(4) Effect of balances on amounts treated as value of 
        plan assets.--In the case of any plan maintaining a prefunding 
        balance or a funding standard carryover balance pursuant to 
        this subsection, the amount treated as the value of plan assets 
        shall be deemed to be such amount, reduced as provided in the 
        following subparagraphs:
                    ``(A) Applicability of shortfall amortization 
                base.--For purposes of subsection (c)(5), the value of 
                plan assets is deemed to be such amount, reduced by the 
                amount of the prefunding balance, but only if an 
                election under paragraph (2) applying any portion of 
                the prefunding balance in reducing the minimum required 
                contribution is in effect for the plan year.
                    ``(B) Determination of excess assets, funding 
                shortfall, and funding target attainment percentage.--
                            ``(i) In general.--For purposes of 
                        subsections (a), (c)(4)(B), and (d)(2)(A), the 
                        value of plan assets is deemed to be such 
                        amount, reduced by the amount of the prefunding 
                        balance and the funding standard carryover 
                        balance.
                            ``(ii) Special rule for certain binding 
                        agreements with pbgc.--For purposes of 
                        subsection (c)(4)(B), the value of plan assets 
                        shall not be deemed to be reduced for a plan 
                        year by the amount of the specified balance if, 
                        with respect to such balance, there is in 
                        effect for a plan year a binding written 
                        agreement with the Pension Benefit Guaranty 
                        Corporation which provides that such balance is 
                        not available to reduce the minimum required 
                        contribution for the plan year. For purposes of 
                        the preceding sentence, the term `specified 
                        balance' means the prefunding balance or the 
                        funding standard carryover balance, as the case 
                        may be.
                    ``(C) Availability of balances in plan year for 
                crediting against minimum required contribution.--For 
                purposes of paragraph (3)(C)(i) of this subsection, the 
                value of plan assets is deemed to be such amount, 
                reduced by the amount of the prefunding balance.
            ``(5) Election to reduce balance prior to determinations of 
        value of plan assets and crediting against minimum required 
        contribution.--
                    ``(A) In general.--The plan sponsor may elect to 
                reduce by any amount the balance of the prefunding 
                balance and the funding standard carryover balance for 
                any plan year (but not below zero). Such reduction 
                shall be effective prior to any determination of the 
                value of plan assets for such plan year under this 
                section and application of the balance in reducing the 
                minimum required contribution for such plan for such 
                plan year pursuant to an election under paragraph (2).
                    ``(B) Coordination between prefunding balance and 
                funding standard carryover balance.--To the extent that 
                any plan has a funding standard carryover balance 
                greater than zero, no election may be made under 
                subparagraph (A) with respect to the prefunding 
                balance.
            ``(6) Prefunding balance.--
                    ``(A) In general.--A prefunding balance maintained 
                by a plan shall consist of a beginning balance of zero, 
                increased and decreased to the extent provided in 
                subparagraphs (B) and (C), and adjusted further as 
                provided in paragraph (8).
                    ``(B) Increases.--
                            ``(i) In general.--As of the first day of 
                        each plan year beginning after 2008, the 
                        prefunding balance of a plan shall be increased 
                        by the amount elected by the plan sponsor for 
                        the plan year. Such amount shall not exceed the 
                        excess (if any) of--
                                    ``(I) the aggregate total of 
                                employer contributions to the plan for 
                                the preceding plan year, over--
                                    ``(II) the minimum required 
                                contribution for such preceding plan 
                                year.
                            ``(ii) Adjustments for interest.--Any 
                        excess contributions under clause (i) shall be 
                        properly adjusted for interest accruing for the 
                        periods between the first day of the current 
                        plan year and the dates on which the excess 
                        contributions were made, determined by using 
                        the effective interest rate for the preceding 
                        plan year and by treating contributions as 
                        being first used to satisfy the minimum 
                        required contribution.
                            ``(iii) Certain contributions necessary to 
                        avoid benefit limitations disregarded.--The 
                        excess described in clause (i) with respect to 
                        any preceding plan year shall be reduced (but 
                        not below zero) by the amount of contributions 
                        an employer would be required to make under 
                        paragraph (1), (2), or (4) of section 206(g) to 
                        avoid a benefit limitation which would 
                        otherwise be imposed under such paragraph for 
                        the preceding plan year. Any contribution which 
                        may be taken into account in satisfying the 
                        requirements of more than 1 of such paragraphs 
                        shall be taken into account only once for 
                        purposes of this clause.
                    ``(C) Decrease.--The prefunding balance of a plan 
                shall be decreased (but not below zero) by--
                            ``(i) as of the first day of each plan year 
                        after 2008, the amount of such balance credited 
                        under paragraph (2) (if any) in reducing the 
                        minimum required contribution of the plan for 
                        the preceding plan year, and
                            ``(ii) as of the time specified in 
                        paragraph (5))(A), any reduction in such 
                        balance elected under paragraph (5).
            ``(7) Funding standard carryover balance.--
                    ``(A) In general.--A funding standard carryover 
                balance maintained by a plan shall consist of a 
                beginning balance determined under subparagraph (B), 
                decreased to the extent provided in subparagraph (C), 
                and adjusted further as provided in paragraph (8).
                    ``(B) Beginning balance.--The beginning balance of 
                the funding standard carryover balance shall be the 
                positive balance described in paragraph (1)(B)(ii)(II).
                    ``(C) Decreases.--The funding standard carryover 
                balance of a plan shall be decreased (but not below 
                zero) by--
                            ``(i) as of the first day of each plan year 
                        after 2008, the amount of such balance credited 
                        under paragraph (2) (if any) in reducing the 
                        minimum required contribution of the plan for 
                        the preceding plan year, and
                            ``(ii) as of the time specified in 
                        paragraph (5))(A), any reduction in such 
                        balance elected under paragraph (5).
            ``(8) Adjustments for investment experience.--In 
        determining the prefunding balance or the funding standard 
        carryover balance of a plan as of the first day of the plan 
        year, the plan sponsor shall, in accordance with regulations 
        prescribed by the Secretary of the Treasury, adjust such 
        balance to reflect the rate of return on plan assets for the 
        preceding plan year. Notwithstanding subsection (g)(3), such 
        rate of return shall be determined on the basis of fair market 
        value and shall properly take into account, in accordance with 
        such regulations, all contributions, distributions, and other 
        plan payments made during such period.
            ``(9) Elections.--Elections under this subsection shall be 
        made at such times, and in such form and manner, as shall be 
        prescribed in regulations of the Secretary of the Treasury.
    ``(g) Valuation of Plan Assets and Liabilities.--
            ``(1) Timing of determinations.--Except as otherwise 
        provided under this subsection, all determinations under this 
        section for a plan year shall be made as of the valuation date 
        of the plan for such plan year.
            ``(2) Valuation date.--For purposes of this section--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the valuation date of a plan for any 
                plan year shall be the first day of the plan year.
                    ``(B) Exception for small plans.--If, on each day 
                during the preceding plan year, a plan had 100 or fewer 
                participants, the plan may designate any day during the 
                plan year as its valuation date for such plan year and 
                succeeding plan years. For purposes of this 
                subparagraph, all defined benefit plans which are 
                single-employer plans and are maintained by the same 
                employer (or any member of such employer's controlled 
                group) shall be treated as 1 plan, but only 
                participants with respect to such employer or member 
                shall be taken into account.
                    ``(C) Application of certain rules in determination 
                of plan size.--For purposes of this paragraph--
                            ``(i) Plans not in existence in preceding 
                        year.--In the case of the first plan year of 
                        any plan, subparagraph (B) shall apply to such 
                        plan by taking into account the number of 
                        participants that the plan is reasonably 
                        expected to have on days during such first plan 
                        year.
                            ``(ii) Predecessors.--Any reference in 
                        subparagraph (B) to an employer shall include a 
                        reference to any predecessor of such employer.
            ``(3) Determination of value of plan assets.--For purposes 
        of this section--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the value of plan assets shall be the 
                fair market value of the assets.
                    ``(B) Averaging allowed.--A plan may determine the 
                value of plan assets on the basis of the averaging of 
                fair market values, but only if such method--
                            ``(i) is permitted under regulations 
                        prescribed by the Secretary of the Treasury,
                            ``(ii) does not provide for averaging of 
                        such values over more than the period beginning 
                        on the last day of the 25th month preceding the 
                        month in which the valuation date occurs and 
                        ending on the valuation date (or a similar 
                        period in the case of a valuation date which is 
                        not the 1st day of a month), and
                            ``(iii) does not result in a determination 
                        of the value of plan assets which, at any time, 
                        is lower than 90 percent or greater than 110 
                        percent of the fair market value of such assets 
                        at such time.
                Any such averaging shall be adjusted for contributions 
                and distributions (as provided by the Secretary of the 
                Treasury).
            ``(4) Accounting for contribution receipts.--For purposes 
        of determining the value of assets under paragraph (3)--
                    ``(A) Prior year contributions.--If--
                            ``(i) an employer makes any contribution to 
                        the plan after the valuation date for the plan 
                        year in which the contribution is made, and
                            ``(ii) the contribution is for a preceding 
                        plan year,
                the contribution shall be taken into account as an 
                asset of the plan as of the valuation date, except that 
                in the case of any plan year beginning after 2008, only 
                the present value (determined as of the valuation date) 
                of such contribution may be taken into account. For 
                purposes of the preceding sentence, present value shall 
                be determined using the effective interest rate for the 
                preceding plan year to which the contribution is 
                properly allocable.
                    ``(B) Special rule for current year contributions 
                made before valuation date.--If any contributions for 
                any plan year are made to or under the plan during the 
                plan year but before the valuation date for the plan 
                year, the assets of the plan as of the valuation date 
                shall not include--
                            ``(i) such contributions, and
                            ``(ii) interest on such contributions for 
                        the period between the date of the 
                        contributions and the valuation date, 
                        determined by using the effective interest rate 
                        for the plan year.
    ``(h) Actuarial Assumptions and Methods.--
            ``(1) In general.--Subject to this subsection, the 
        determination of any present value or other computation under 
        this section shall be made on the basis of actuarial 
        assumptions and methods--
                    ``(A) each of which is reasonable (taking into 
                account the experience of the plan and reasonable 
                expectations), and
                    ``(B) which, in combination, offer the actuary's 
                best estimate of anticipated experience under the plan.
            ``(2) Interest rates.--
                    ``(A) Effective interest rate.--For purposes of 
                this section, the term `effective interest rate' means, 
                with respect to any plan for any plan year, the single 
                rate of interest which, if used to determine the 
                present value of the plan's accrued or earned benefits 
                referred to in subsection (d)(1), would result in an 
                amount equal to the funding target of the plan for such 
                plan year.
                    ``(B) Interest rates for determining funding 
                target.--For purposes of determining the funding target 
                and normal cost of a plan for any plan year, the 
                interest rate used in determining the present value of 
                the benefits of the plan shall be--
                            ``(i) in the case of benefits reasonably 
                        determined to be payable during the 5-year 
                        period beginning on the first day of the plan 
                        year, the first segment rate with respect to 
                        the applicable month,
                            ``(ii) in the case of benefits reasonably 
                        determined to be payable during the 15-year 
                        period beginning at the end of the period 
                        described in clause (i), the second segment 
                        rate with respect to the applicable month, and
                            ``(iii) in the case of benefits reasonably 
                        determined to be payable after the period 
                        described in clause (ii), the third segment 
                        rate with respect to the applicable month.
                    ``(C) Segment rates.--For purposes of this 
                paragraph--
                            ``(i) First segment rate.--The term `first 
                        segment rate' means, with respect to any month, 
                        the single rate of interest which shall be 
                        determined by the Secretary of the Treasury for 
                        such month on the basis of the corporate bond 
                        yield curve for such month, taking into account 
                        only that portion of such yield curve which is 
                        based on bonds maturing during the 5-year 
                        period commencing with such month.
                            ``(ii) Second segment rate.--The term 
                        `second segment rate' means, with respect to 
                        any month, the single rate of interest which 
                        shall be determined by the Secretary of the 
                        Treasury for such month on the basis of the 
                        corporate bond yield curve for such month, 
                        taking into account only that portion of such 
                        yield curve which is based on bonds maturing 
                        during the 15-year period beginning at the end 
                        of the period described in clause (i).
                            ``(iii) Third segment rate.--The term 
                        `third segment rate' means, with respect to any 
                        month, the single rate of interest which shall 
                        be determined by the Secretary of the Treasury 
                        for such month on the basis of the corporate 
                        bond yield curve for such month, taking into 
                        account only that portion of such yield curve 
                        which is based on bonds maturing during periods 
                        beginning after the period described in clause 
                        (ii).
                    ``(D) Corporate bond yield curve.--For purposes of 
                this paragraph--
                            ``(i) In general.--The term `corporate bond 
                        yield curve' means, with respect to any month, 
                        a yield curve which is prescribed by the 
                        Secretary of the Treasury for such month and 
                        which reflects the average, for the 24-month 
                        period ending with the month preceding such 
                        month, of monthly yields on investment grade 
                        corporate bonds with varying maturities and 
                        that are in the top 3 quality levels available.
                            ``(ii) Election to use yield curve.--Solely 
                        for purposes of determining the minimum 
                        required contribution under this section, the 
                        plan sponsor may, in lieu of the segment rates 
                        determined under subparagraph (C), elect to use 
                        interest rates under the corporate bond yield 
                        curve. For purposes of the preceding sentence 
                        such curve shall be determined without regard 
                        to the 24-month averaging described in clause 
                        (i) . Such election, once made, may be revoked 
                        only with the consent of the Secretary of the 
                        Treasury.
                    ``(E) Applicable month.--For purposes of this 
                paragraph, the term `applicable month' means, with 
                respect to any plan for any plan year, the month which 
                includes the valuation date of such plan for such plan 
                year or, at the election of the plan sponsor, any of 
                the 4 months which precede such month. Any election 
                made under this subparagraph shall apply to the plan 
                year for which the election is made and all succeeding 
                plan years, unless the election is revoked with the 
                consent of the Secretary of the Treasury.
                    ``(F) Publication requirements.--The Secretary of 
                the Treasury shall publish for each month the corporate 
                bond yield curve (and the corporate bond yield curve 
                reflecting the modification described in section 
                205(g)(3)(B)(iii)(I)) for such month and each of the 
                rates determined under subparagraph (B) for such month. 
                The Secretary of the Treasury shall also publish a 
                description of the methodology used to determine such 
                yield curve and such rates which is sufficiently 
                detailed to enable plans to make reasonable projections 
                regarding the yield curve and such rates for future 
                months based on the plan's projection of future 
                interest rates.
                    ``(G) Transition rule.--
                            ``(i) In general.--Notwithstanding the 
                        preceding provisions of this paragraph, for 
                        plan years beginning in 2008 or 2009, the 
                        first, second, or third segment rate for a plan 
                        with respect to any month shall be equal to the 
                        sum of--
                                    ``(I) the product of such rate for 
                                such month determined without regard to 
                                this subparagraph, multiplied by the 
                                applicable percentage, and
                                    ``(II) the product of the rate 
                                determined under the rules of section 
                                302(b)(5)(B)(ii)(II) (as in effect for 
                                plan years beginning in 2007), 
                                multiplied by a percentage equal to 100 
                                percent minus the applicable 
                                percentage.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage is 
                        33\1/3\ percent for plan years beginning in 
                        2008 and 66\2/3\ percent for plan years 
                        beginning in 2009.
                            ``(iii) New plans ineligible.--Clause (i) 
                        shall not apply to any plan if the first plan 
                        year of the plan begins after December 31, 
                        2007.
                            ``(iv) Election.--The plan sponsor may 
                        elect not to have this subparagraph apply. Such 
                        election, once made, may be revoked only with 
                        the consent of the Secretary of the Treasury.
            ``(3) Mortality tables.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C) or (D), the Secretary of the Treasury 
                shall by regulation prescribe mortality tables to be 
                used in determining any present value or making any 
                computation under this section. Such tables shall be 
                based on the actual experience of pension plans and 
                projected trends in such experience. In prescribing 
                such tables, the Secretary of the Treasury shall take 
                into account results of available independent studies 
                of mortality of individuals covered by pension plans.
                    ``(B) Periodic revision.--The Secretary of the 
                Treasury shall (at least every 10 years) make revisions 
                in any table in effect under subparagraph (A) to 
                reflect the actual experience of pension plans and 
                projected trends in such experience.
                    ``(C) Substitute mortality table.--
                            ``(i) In general.--Upon request by the plan 
                        sponsor and approval by the Secretary of the 
                        Treasury, a mortality table which meets the 
                        requirements of clause (iii) shall be used in 
                        determining any present value or making any 
                        computation under this section during the 
                        period of consecutive plan years (not to exceed 
                        10) specified in the request.
                            ``(ii) Early termination of period.--
                        Notwithstanding clause (i), a mortality table 
                        described in clause (i) shall cease to be in 
                        effect as of the earliest of--
                                    ``(I) the date on which there is a 
                                significant change in the participants 
                                in the plan by reason of a plan spinoff 
                                or merger or otherwise, or
                                    ``(II) the date on which the plan 
                                actuary determines that such table does 
                                not meet the requirements of clause 
                                (iii).
                            ``(iii) Requirements.--A mortality table 
                        meets the requirements of this clause if--
                                    ``(I) there is a sufficient number 
                                of plan participants, and the pension 
                                plans have been maintained for a 
                                sufficient period of time, to have 
                                credible information necessary for 
                                purposes of subclause (II), and
                                    ``(II) such table reflects the 
                                actual experience of the pension plans 
                                maintained by the sponsor and projected 
                                trends in general mortality experience.
                            ``(iv) All plans in controlled group must 
                        use separate table.--Except as provided by the 
                        Secretary of the Treasury, a plan sponsor may 
                        not use a mortality table under this 
                        subparagraph for any plan maintained by the 
                        plan sponsor unless--
                                    ``(I) a separate mortality table is 
                                established and used under this 
                                subparagraph for each other plan 
                                maintained by the plan sponsor and if 
                                the plan sponsor is a member of a 
                                controlled group, each member of the 
                                controlled group, and
                                    ``(II) the requirements of clause 
                                (iii) are met separately with respect 
                                to the table so established for each 
                                such plan, determined by only taking 
                                into account the participants of such 
                                plan, the time such plan has been in 
                                existence, and the actual experience of 
                                such plan.
                            ``(v) Deadline for submission and 
                        disposition of application.--
                                    ``(I) Submission.--The plan sponsor 
                                shall submit a mortality table to the 
                                Secretary of the Treasury for approval 
                                under this subparagraph at least 7 
                                months before the 1st day of the period 
                                described in clause (i).
                                    ``(II) Disposition.--Any mortality 
                                table submitted to the Secretary of the 
                                Treasury for approval under this 
                                subparagraph shall be treated as in 
                                effect as of the 1st day of the period 
                                described in clause (i) unless the 
                                Secretary of the Treasury, during the 
                                180-day period beginning on the date of 
                                such submission, disapproves of such 
                                table and provides the reasons that 
                                such table fails to meet the 
                                requirements of clause (iii). The 180-
                                day period shall be extended upon 
                                mutual agreement of the Secretary of 
                                the Treasury and the plan sponsor.
                    ``(D) Separate mortality tables for the disabled.--
                Notwithstanding subparagraph (A)--
                            ``(i) In general.--The Secretary of the 
                        Treasury shall establish mortality tables which 
                        may be used (in lieu of the tables under 
                        subparagraph (A)) under this subsection for 
                        individuals who are entitled to benefits under 
                        the plan on account of disability. The 
                        Secretary of the Treasury shall establish 
                        separate tables for individuals whose 
                        disabilities occur in plan years beginning 
                        before January 1, 1995, and for individuals 
                        whose disabilities occur in plan years 
                        beginning on or after such date.
                            ``(ii) Special rule for disabilities 
                        occurring after 1994.--In the case of 
                        disabilities occurring in plan years beginning 
                        after December 31, 1994, the tables under 
                        clause (i) shall apply only with respect to 
                        individuals described in such subclause who are 
                        disabled within the meaning of title II of the 
                        Social Security Act and the regulations 
                        thereunder.
                            ``(iii) Periodic revision.--The Secretary 
                        of the Treasury shall (at least every 10 years) 
                        make revisions in any table in effect under 
                        clause (i) to reflect the actual experience of 
                        pension plans and projected trends in such 
                        experience.
            ``(4) Probability of benefit payments in the form of lump 
        sums or other optional forms.--For purposes of determining any 
        present value or making any computation under this section, 
        there shall be taken into account--
                    ``(A) the probability that future benefit payments 
                under the plan will be made in the form of optional 
                forms of benefits provided under the plan (including 
                lump sum distributions, determined on the basis of the 
                plan's experience and other related assumptions), and
                    ``(B) any difference in the present value of such 
                future benefit payments resulting from the use of 
                actuarial assumptions, in determining benefit payments 
                in any such optional form of benefits, which are 
                different from those specified in this subsection.
            ``(5) Approval of large changes in actuarial assumptions.--
                    ``(A) In general.--No actuarial assumption used to 
                determine the funding target for a plan to which this 
                paragraph applies may be changed without the approval 
                of the Secretary of the Treasury.
                    ``(B) Plans to which paragraph applies.--This 
                paragraph shall apply to a plan only if--
                            ``(i) the plan is a single-employer plan to 
                        which title IV applies,
                            ``(ii) the aggregate unfunded vested 
                        benefits as of the close of the preceding plan 
                        year (as determined under section 
                        4006(a)(3)(E)(iii)) of such plan and all other 
                        plans maintained by the contributing sponsors 
                        (as defined in section 4001(a)(13)) and members 
                        of such sponsors' controlled groups (as defined 
                        in section 4001(a)(14)) which are covered by 
                        title IV (disregarding plans with no unfunded 
                        vested benefits) exceed $50,000,000, and
                            ``(iii) the change in assumptions 
                        (determined after taking into account any 
                        changes in interest rate and mortality table) 
                        results in a decrease in the funding shortfall 
                        of the plan for the current plan year that 
                        exceeds $50,000,000, or that exceeds $5,000,000 
                        and that is 5 percent or more of the funding 
                        target of the plan before such change.
    ``(i) Special Rules for At-Risk Plans.--
            ``(1) Funding target for plans in at-risk status.--
                    ``(A) In general.--In the case of a plan which is 
                in at-risk status for a plan year, the funding target 
                of the plan for the plan year shall be equal to the sum 
                of--
                            ``(i) the present value of all benefits 
                        accrued or earned under the plan as of the 
                        beginning of the plan year, as determined by 
                        using the additional actuarial assumptions 
                        described in subparagraph (B), and
                            ``(ii) in the case of a plan which also has 
                        been in at-risk status for at least 2 of the 4 
                        preceding plan years, a loading factor 
                        determined under subparagraph (C).
                    ``(B) Additional actuarial assumptions.--The 
                actuarial assumptions described in this subparagraph 
                are as follows:
                            ``(i) All employees who are not otherwise 
                        assumed to retire as of the valuation date but 
                        who will be eligible to elect benefits during 
                        the plan year and the 10 succeeding plan years 
                        shall be assumed to retire at the earliest 
                        retirement date under the plan but not before 
                        the end of the plan year for which the at-risk 
                        funding target and at-risk target normal cost 
                        are being determined.
                            ``(ii) All employees shall be assumed to 
                        elect the retirement benefit available under 
                        the plan at the assumed retirement age 
                        (determined after application of clause (i)) 
                        which would result in the highest present value 
                        of benefits.
                    ``(C) Loading factor.--The loading factor applied 
                with respect to a plan under this paragraph for any 
                plan year is the sum of--
                            ``(i) $700, times the number of 
                        participants in the plan, plus
                            ``(ii) 4 percent of the funding target 
                        (determined without regard to this paragraph) 
                        of the plan for the plan year.
            ``(2) Target normal cost of at-risk plans.--In the case of 
        a plan which is in at-risk status for a plan year, the target 
        normal cost of the plan for such plan year shall be equal to 
        the sum of--
                    ``(A) the present value of all benefits which are 
                expected to accrue or be earned under the plan during 
                the plan year, determined using the additional 
                actuarial assumptions described in paragraph (1)(B), 
                plus
                    ``(B) in the case of a plan which also has been in 
                at-risk status for at least 2 of the 4 preceding plan 
                years, a loading factor equal to 4 percent of the 
                target normal cost (determined without regard to this 
                paragraph) of the plan for the plan year.
            ``(3) Minimum amount.--In no event shall--
                    ``(A) the at-risk funding target be less than the 
                funding target, as determined without regard to this 
                subsection, or
                    ``(B) the at-risk target normal cost be less than 
                the target normal cost, as determined without regard to 
                this subsection.
            ``(4) Determination of at-risk status.--For purposes of 
        this subsection--
                    ``(A) In general.--A plan is in at-risk status for 
                a plan year if--
                            ``(i) the funding target attainment 
                        percentage for the preceding plan year 
                        (determined under this section without regard 
                        to this subsection) is less than 80 percent, 
                        and
                            ``(ii) the funding target attainment 
                        percentage for the preceding plan year 
                        (determined under this section by using the 
                        additional actuarial assumptions described in 
                        paragraph (1)(B) in computing the funding 
                        target) is less than 70 percent.
                    ``(B) Transition rule.--In the case of plan years 
                beginning in 2008, 2009, and 2010, subparagraph (A)(i) 
                shall be applied by substituting the following 
                percentages for `80 percent':
                            ``(i) 65 percent in the case of 2008.
                            ``(ii) 70 percent in the case of 2009.
                            ``(iii) 75 percent in the case of 2010.
                In the case of plan years beginning in 2008, the 
                funding target attainment percentage for the preceding 
                plan year under subparagraph (A)(ii) may be determined 
                using such methods of estimation as the Secretary of 
                the Treasury may provide.
                    ``(C) Special rule for employees offered early 
                retirement in 2006.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), the additional actuarial 
                        assumptions described in paragraph (1)(B) shall 
                        not be taken into account with respect to any 
                        employee if--
                                    ``(I) such employee is employed by 
                                a specified automobile manufacturer,
                                    ``(II) such employee is offered a 
                                substantial amount of additional cash 
                                compensation, substantially enhanced 
                                retirement benefits under the plan, or 
                                materially reduced employment duties on 
                                the condition that by a specified date 
                                (not later than December 31, 2010) the 
                                employee retires (as defined under the 
                                terms of the plan),
                                    ``(III) such offer is made during 
                                2006 and pursuant to a bona fide 
                                retirement incentive program and 
                                requires, by the terms of the offer, 
                                that such offer can be accepted not 
                                later than a specified date (not later 
                                than December 31, 2006), and
                                    ``(IV) such employee does not elect 
                                to accept such offer before the 
                                specified date on which the offer 
                                expires.
                            ``(ii) Specified automobile manufacturer.--
                        For purposes of clause (i), the term `specified 
                        automobile manufacturer' means--
                                    ``(I) any manufacturer of 
                                automobiles, and
                                    ``(II) any manufacturer of 
                                automobile parts which supplies such 
                                parts directly to a manufacturer of 
                                automobiles and which, after a 
                                transaction or series of transactions 
                                ending in 1999, ceased to be a member 
                                of a controlled group which included 
                                such manufacturer of automobiles.
            ``(5) Transition between applicable funding targets and 
        between applicable target normal costs.--
                    ``(A) In general.--In any case in which a plan 
                which is in at-risk status for a plan year has been in 
                such status for a consecutive period of fewer than 5 
                plan years, the applicable amount of the funding target 
                and of the target normal cost shall be, in lieu of the 
                amount determined without regard to this paragraph, the 
                sum of--
                            ``(i) the amount determined under this 
                        section without regard to this subsection, plus
                            ``(ii) the transition percentage for such 
                        plan year of the excess of the amount 
                        determined under this subsection (without 
                        regard to this paragraph) over the amount 
                        determined under this section without regard to 
                        this subsection.
                    ``(B) Transition percentage.--For purposes of 
                subparagraph (A), the transition percentage shall be 
                determined in accordance with the following table:

``If the consecutive number of
  years (including the plan year)                        The transition
  the plan is in at-risk status                         percentage is--
        is--
        1......................................................     20 
        2......................................................     40 
        3......................................................     60 
        4......................................................     80.
                    ``(C) Years before effective date.--For purposes of 
                this paragraph, plan years beginning before 2008 shall 
                not be taken into account.
            ``(6) Small plan exception.--If, on each day during the 
        preceding plan year, a plan had 500 or fewer participants, the 
        plan shall not be treated as in at-risk status for the plan 
        year. For purposes of this paragraph, all defined benefit plans 
        (other than multiemployer plans) maintained by the same 
        employer (or any member of such employer's controlled group) 
        shall be treated as 1 plan, but only participants with respect 
        to such employer or member shall be taken into account and the 
        rules of subsection (g)(2)(C) shall apply.
    ``(j) Payment of Minimum Required Contributions.--
            ``(1) In general.--For purposes of this section, the due 
        date for any payment of any minimum required contribution for 
        any plan year shall be 8\1/2\ months after the close of the 
        plan year.
            ``(2) Interest.--Any payment required under paragraph (1) 
        for a plan year that is made on a date other than the valuation 
        date for such plan year shall be adjusted for interest accruing 
        for the period between the valuation date and the payment date, 
        at the effective rate of interest for the plan for such plan 
        year.
            ``(3) Accelerated quarterly contribution schedule for 
        underfunded plans.--
                    ``(A) Failure to timely make required 
                installment.--In any case in which the plan has a 
                funding shortfall for the preceding plan year, the 
                employer maintaining the plan shall make the required 
                installments under this paragraph and if the employer 
                fails to pay the full amount of a required installment 
                for the plan year, then the amount of interest charged 
                under paragraph (2) on the underpayment for the period 
                of underpayment shall be determined by using a rate of 
                interest equal to the rate otherwise used under 
                paragraph (2) plus 5 percentage points.
                    ``(B) Amount of underpayment, period of 
                underpayment.--For purposes of subparagraph (A)--
                            ``(i) Amount.--The amount of the 
                        underpayment shall be the excess of--
                                    ``(I) the required installment, 
                                over
                                    ``(II) the amount (if any) of the 
                                installment contributed to or under the 
                                plan on or before the due date for the 
                                installment.
                            ``(ii) Period of underpayment.--The period 
                        for which any interest is charged under this 
                        paragraph with respect to any portion of the 
                        underpayment shall run from the due date for 
                        the installment to the date on which such 
                        portion is contributed to or under the plan.
                            ``(iii) Order of crediting contributions.--
                        For purposes of clause (i)(II), contributions 
                        shall be credited against unpaid required 
                        installments in the order in which such 
                        installments are required to be paid.
                    ``(C) Number of required installments; due dates.--
                For purposes of this paragraph--
                            ``(i) Payable in 4 installments.--There 
                        shall be 4 required installments for each plan 
                        year.
                            ``(ii) Time for payment of installments.--
                        The due dates for required installments are set 
                        forth in the following table:

In the case of the following
 required installment:              The due date is:
  1st.............................  April 15
  2nd.............................  July 15
  3rd.............................  October 15
  4th.............................  January 15 of the following year.

                    ``(D) Amount of required installment.--For purposes 
                of this paragraph--
                            ``(i) In general.--The amount of any 
                        required installment shall be 25 percent of the 
                        required annual payment.
                            ``(ii) Required annual payment.--For 
                        purposes of clause (i), the term `required 
                        annual payment' means the lesser of--
                                    ``(I) 90 percent of the minimum 
                                required contribution (determined 
                                without regard to this subsection) to 
                                the plan for the plan year under this 
                                section, or
                                    ``(II) 100 percent of the minimum 
                                required contribution (determined 
                                without regard to this subsection or to 
                                any waiver under section 302(c)) to the 
                                plan for the preceding plan year.
                        Subclause (II) shall not apply if the preceding 
                        plan year referred to in such clause was not a 
                        year of 12 months.
                    ``(E) Fiscal years and short years.--
                            ``(i) Fiscal years.--In applying this 
                        paragraph to a plan year beginning on any date 
                        other than January 1, there shall be 
                        substituted for the months specified in this 
                        paragraph, the months which correspond thereto.
                            ``(ii) Short plan year.--This subparagraph 
                        shall be applied to plan years of less than 12 
                        months in accordance with regulations 
                        prescribed by the Secretary of the Treasury.
            ``(4) Liquidity requirement in connection with quarterly 
        contributions.--
                    ``(A) In general.--A plan to which this paragraph 
                applies shall be treated as failing to pay the full 
                amount of any required installment under paragraph (3) 
                to the extent that the value of the liquid assets paid 
                in such installment is less than the liquidity 
                shortfall (whether or not such liquidity shortfall 
                exceeds the amount of such installment required to be 
                paid but for this paragraph).
                    ``(B) Plans to which paragraph applies.--This 
                paragraph shall apply to a plan (other than a plan 
                described in subsection (g)(2)(B)) which--
                            ``(i) is required to pay installments under 
                        paragraph (3) for a plan year, and
                            ``(ii) has a liquidity shortfall for any 
                        quarter during such plan year.
                    ``(C) Period of underpayment.--For purposes of 
                paragraph (3)(A), any portion of an installment that is 
                treated as not paid under subparagraph (A) shall 
                continue to be treated as unpaid until the close of the 
                quarter in which the due date for such installment 
                occurs.
                    ``(D) Limitation on increase.--If the amount of any 
                required installment is increased by reason of 
                subparagraph (A), in no event shall such increase 
                exceed the amount which, when added to prior 
                installments for the plan year, is necessary to 
                increase the funding target attainment percentage of 
                the plan for the plan year (taking into account the 
                expected increase in funding target due to benefits 
                accruing or earned during the plan year) to 100 
                percent.
                    ``(E) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Liquidity shortfall.--The term 
                        `liquidity shortfall' means, with respect to 
                        any required installment, an amount equal to 
                        the excess (as of the last day of the quarter 
                        for which such installment is made) of--
                                    ``(I) the base amount with respect 
                                to such quarter, over
                                    ``(II) the value (as of such last 
                                day) of the plan's liquid assets.
                            ``(ii) Base amount.--
                                    ``(I) In general.--The term `base 
                                amount' means, with respect to any 
                                quarter, an amount equal to 3 times the 
                                sum of the adjusted disbursements from 
                                the plan for the 12 months ending on 
                                the last day of such quarter.
                                    ``(II) Special rule.--If the amount 
                                determined under subclause (I) exceeds 
                                an amount equal to 2 times the sum of 
                                the adjusted disbursements from the 
                                plan for the 36 months ending on the 
                                last day of the quarter and an enrolled 
                                actuary certifies to the satisfaction 
                                of the Secretary of the Treasury that 
                                such excess is the result of 
                                nonrecurring circumstances, the base 
                                amount with respect to such quarter 
                                shall be determined without regard to 
                                amounts related to those nonrecurring 
                                circumstances.
                            ``(iii) Disbursements from the plan.--The 
                        term `disbursements from the plan' means all 
                        disbursements from the trust, including 
                        purchases of annuities, payments of single sums 
                        and other benefits, and administrative 
                        expenses.
                            ``(iv) Adjusted disbursements.--The term 
                        `adjusted disbursements' means disbursements 
                        from the plan reduced by the product of--
                                    ``(I) the plan's funding target 
                                attainment percentage for the plan 
                                year, and
                                    ``(II) the sum of the purchases of 
                                annuities, payments of single sums, and 
                                such other disbursements as the 
                                Secretary of the Treasury shall provide 
                                in regulations.
                            ``(v) Liquid assets.--The term `liquid 
                        assets' means cash, marketable securities, and 
                        such other assets as specified by the Secretary 
                        of the Treasury in regulations.
                            ``(vi) Quarter.--The term `quarter' means, 
                        with respect to any required installment, the 
                        3-month period preceding the month in which the 
                        due date for such installment occurs.
                    ``(F) Regulations.--The Secretary of the Treasury 
                may prescribe such regulations as are necessary to 
                carry out this paragraph.
    ``(k) Imposition of Lien Where Failure To Make Required 
Contributions.--
            ``(1) In general.--In the case of a plan to which this 
        subsection applies (as provided under paragraph (2)), if--
                    ``(A) any person fails to make a contribution 
                payment required by section 302 and this section before 
                the due date for such payment, and
                    ``(B) the unpaid balance of such payment (including 
                interest), when added to the aggregate unpaid balance 
                of all preceding such payments for which payment was 
                not made before the due date (including interest), 
                exceeds $1,000,000,
        then there shall be a lien in favor of the plan in the amount 
        determined under paragraph (3) upon all property and rights to 
        property, whether real or personal, belonging to such person 
        and any other person who is a member of the same controlled 
        group of which such person is a member.
            ``(2) Plans to which subsection applies.--This subsection 
        shall apply to a single-employer plan covered under section 
        4021 for any plan year for which the funding target attainment 
        percentage (as defined in subsection (d)(2)) of such plan is 
        less than 100 percent.
            ``(3) Amount of lien.--For purposes of paragraph (1), the 
        amount of the lien shall be equal to the aggregate unpaid 
        balance of contribution payments required under this section 
        and section 302 for which payment has not been made before the 
        due date.
            ``(4) Notice of failure; lien.--
                    ``(A) Notice of failure.--A person committing a 
                failure described in paragraph (1) shall notify the 
                Pension Benefit Guaranty Corporation of such failure 
                within 10 days of the due date for the required 
                contribution payment.
                    ``(B) Period of lien.--The lien imposed by 
                paragraph (1) shall arise on the due date for the 
                required contribution payment and shall continue until 
                the last day of the first plan year in which the plan 
                ceases to be described in paragraph (1)(B). Such lien 
                shall continue to run without regard to whether such 
                plan continues to be described in paragraph (2) during 
                the period referred to in the preceding sentence.
                    ``(C) Certain rules to apply.--Any amount with 
                respect to which a lien is imposed under paragraph (1) 
                shall be treated as taxes due and owing the United 
                States and rules similar to the rules of subsections 
                (c), (d), and (e) of section 4068 shall apply with 
                respect to a lien imposed by subsection (a) and the 
                amount with respect to such lien.
            ``(5) Enforcement.--Any lien created under paragraph (1) 
        may be perfected and enforced only by the Pension Benefit 
        Guaranty Corporation, or at the direction of the Pension 
        Benefit Guaranty Corporation, by the contributing sponsor (or 
        any member of the controlled group of the contributing 
        sponsor).
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Contribution payment.--The term `contribution 
                payment' means, in connection with a plan, a 
                contribution payment required to be made to the plan, 
                including any required installment under paragraphs (3) 
                and (4) of subsection (j).
                    ``(B) Due date; required installment.--The terms 
                `due date' and `required installment' have the meanings 
                given such terms by subsection (j), except that in the 
                case of a payment other than a required installment, 
                the due date shall be the date such payment is required 
                to be made under section 303.
                    ``(C) Controlled group.--The term `controlled 
                group' means any group treated as a single employer 
                under subsections (b), (c), (m), and (o) of section 414 
                of the Internal Revenue Code of 1986.
    ``(l) Qualified Transfers to Health Benefit Accounts.--In the case 
of a qualified transfer (as defined in section 420 of the Internal 
Revenue Code of 1986), any assets so transferred shall not, for 
purposes of this section, be treated as assets in the plan.''.
    (b) Clerical Amendment.--The table of sections in section 1 of such 
Act (as amended by section 101) is amended by inserting after the item 
relating to section 302 the following new item:

``Sec. 303. Minimum funding standards for single-employer defined 
                            benefit pension plans.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after 2007.

SEC. 103. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.

    (a) Funding-Based Limits on Benefits and Benefit Accruals Under 
Single-Employer Plans.--Section 206 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1056) is amended by adding at the end 
the following new subsection:
    ``(g) Funding-Based Limits on Benefits and Benefit Accruals Under 
Single-Employer Plans.--
            ``(1) Funding-based limitation on shutdown benefits and 
        other unpredictable contingent event benefits under single-
        employer plans.--
                    ``(A) In general.--If a participant of a defined 
                benefit plan which is a single-employer plan is 
                entitled to an unpredictable contingent event benefit 
                payable with respect to any event occurring during any 
                plan year, the plan shall provide that such benefit may 
                not be provided if the adjusted funding target 
                attainment percentage for such plan year--
                            ``(i) is less than 60 percent, or
                            ``(ii) would be less than 60 percent taking 
                        into account such occurrence.
                    ``(B) Exemption.--Subparagraph (A) shall cease to 
                apply with respect to any plan year, effective as of 
                the first day of the plan year, upon payment by the 
                plan sponsor of a contribution (in addition to any 
                minimum required contribution under section 303) equal 
                to--
                            ``(i) in the case of subparagraph (A)(i), 
                        the amount of the increase in the funding 
                        target of the plan (under section 303) for the 
                        plan year attributable to the occurrence 
                        referred to in subparagraph (A), and
                            ``(ii) in the case of subparagraph (A)(ii), 
                        the amount sufficient to result in a funding 
                        target attainment percentage of 60 percent.
                    ``(C) Unpredictable contingent event.--For purposes 
                of this paragraph, the term `unpredictable contingent 
                event benefit' means any benefit payable solely by 
                reason of--
                            ``(i) a plant shutdown (or similar event, 
                        as determined by the Secretary of the 
                        Treasury), or
                            ``(ii) an event other than the attainment 
                        of any age, performance of any service, receipt 
                        or derivation of any compensation, or 
                        occurrence of death or disability.
            ``(2) Limitations on plan amendments increasing liability 
        for benefits.--
                    ``(A) In general.--No amendment to a defined 
                benefit plan which is a single-employer plan which has 
                the effect of increasing liabilities of the plan by 
                reason of increases in benefits, establishment of new 
                benefits, changing the rate of benefit accrual, or 
                changing the rate at which benefits become 
                nonforfeitable may take effect during any plan year if 
                the adjusted funding target attainment percentage for 
                such plan year is--
                            ``(i) less than 80 percent, or
                            ``(ii) would be less than 80 percent taking 
                        into account such amendment.
                    ``(B) Exemption.--Subparagraph (A) shall cease to 
                apply with respect to any plan year, effective as of 
                the first day of the plan year (or if later, the 
                effective date of the amendment), upon payment by the 
                plan sponsor of a contribution (in addition to any 
                minimum required contribution under section 303) equal 
                to--
                            ``(i) in the case of subparagraph (A)(i), 
                        the amount of the increase in the funding 
                        target of the plan (under section 303) for the 
                        plan year attributable to the amendment, and
                            ``(ii) in the case of subparagraph (A)(ii), 
                        the amount sufficient to result in an adjusted 
                        funding target attainment percentage of 80 
                        percent.
                    ``(C) Exception for certain benefit increases.--
                Subparagraph (A) shall not apply to any amendment which 
                provides for an increase in benefits under a formula 
                which is not based on a participant's compensation, but 
                only if the rate of such increase is not in excess of 
                the contemporaneous rate of increase in average wages 
                of participants covered by the amendment.
            ``(3) Limitations on accelerated benefit distributions.--
                    ``(A) Funding percentage less than 60 percent.--A 
                defined benefit plan which is a single-employer plan 
                shall provide that, in any case in which the plan's 
                adjusted funding target attainment percentage for a 
                plan year is less than 60 percent, the plan may not pay 
                any prohibited payment after the valuation date for the 
                plan year.
                    ``(B) Bankruptcy.--A defined benefit plan which is 
                a single-employer plan shall provide that, during any 
                period in which the plan sponsor is a debtor in a case 
                under title 11, United States Code, or similar Federal 
                or State law, the plan may not pay any prohibited 
                payment. The preceding sentence shall not apply on or 
                after the date on which the enrolled actuary of the 
                plan certifies that the adjusted funding target 
                attainment percentage of such plan is not less than 100 
                percent.
                    ``(C) Limited payment if percentage at least 60 
                percent but less than 80 percent.--
                            ``(i) In general.--A defined benefit plan 
                        which is a single-employer plan shall provide 
                        that, in any case in which the plan's adjusted 
                        funding target attainment percentage for a plan 
                        year is 60 percent or greater but less than 80 
                        percent, the plan may not pay any prohibited 
                        payment after the valuation date for the plan 
                        year to the extent the amount of the payment 
                        exceeds the lesser of--
                                    ``(I) 50 percent of the amount of 
                                the payment which could be made without 
                                regard to this subsection, or
                                    ``(II) the present value 
                                (determined under guidance prescribed 
                                by the Pension Benefit Guaranty 
                                Corporation, using the interest and 
                                mortality assumptions under section 
                                205(g)) of the maximum guarantee with 
                                respect to the participant under 
                                section 4022.
                            ``(ii) One-time application.--
                                    ``(I) In general.--The plan shall 
                                also provide that only 1 prohibited 
                                payment meeting the requirements of 
                                clause (i) may be made with respect to 
                                any participant during any period of 
                                consecutive plan years to which the 
                                limitations under either subparagraph 
                                (A) or (B) or this subparagraph 
                                applies.
                                    ``(II) Treatment of 
                                beneficiaries.--For purposes of this 
                                clause, a participant and any 
                                beneficiary on his behalf (including an 
                                alternate payee, as defined in section 
                                206(d)(3)(K)) shall be treated as 1 
                                participant. If the accrued benefit of 
                                a participant is allocated to such an 
                                alternate payee and 1 or more other 
                                persons, the amount under clause (i) 
                                shall be allocated among such persons 
                                in the same manner as the accrued 
                                benefit is allocated unless the 
                                qualified domestic relations order (as 
                                defined in section 206(d)(3)(B)(i)) 
                                provides otherwise.
                    ``(D) Exception.--This paragraph shall not apply to 
                any plan for any plan year if the terms of such plan 
                (as in effect for the period beginning on September 1, 
                2005, and ending with such plan year) provide for no 
                benefit accruals with respect to any participant during 
                such period.
                    ``(E) Prohibited payment.--For purpose of this 
                paragraph, the term `prohibited payment' means--
                            ``(i) any payment, in excess of the monthly 
                        amount paid under a single life annuity (plus 
                        any social security supplements described in 
                        the last sentence of section 204(b)(1)(G)), to 
                        a participant or beneficiary whose annuity 
                        starting date (as defined in section 205(h)(2)) 
                        occurs during any period a limitation under 
                        subparagraph (A) or (B) is in effect,
                            ``(ii) any payment for the purchase of an 
                        irrevocable commitment from an insurer to pay 
                        benefits, and
                            ``(iii) any other payment specified by the 
                        Secretary of the Treasury by regulations.
            ``(4) Limitation on benefit accruals for plans with severe 
        funding shortfalls.--
                    ``(A) In general.--A defined benefit plan which is 
                a single-employer plan shall provide that, in any case 
                in which the plan's adjusted funding target attainment 
                percentage for a plan year is less than 60 percent, 
                benefit accruals under the plan shall cease as of the 
                valuation date for the plan year.
                    ``(B) Exemption.--Subparagraph (A) shall cease to 
                apply with respect to any plan year, effective as of 
                the first day of the plan year, upon payment by the 
                plan sponsor of a contribution (in addition to any 
                minimum required contribution under section 303) equal 
                to the amount sufficient to result in an adjusted 
                funding target attainment percentage of 60 percent.
            ``(5) Rules relating to contributions required to avoid 
        benefit limitations.--
                    ``(A) Security may be provided.--
                            ``(i) In general.--For purposes of this 
                        subsection, the adjusted funding target 
                        attainment percentage shall be determined by 
                        treating as an asset of the plan any security 
                        provided by a plan sponsor in a form meeting 
                        the requirements of clause (ii).
                            ``(ii) Form of security.--The security 
                        required under clause (i) shall consist of--
                                    ``(I) a bond issued by a corporate 
                                surety company that is an acceptable 
                                surety for purposes of section 412 of 
                                this Act,
                                    ``(II) cash, or United States 
                                obligations which mature in 3 years or 
                                less, held in escrow by a bank or 
                                similar financial institution, or
                                    ``(III) such other form of security 
                                as is satisfactory to the Secretary of 
                                the Treasury and the parties involved.
                            ``(iii) Enforcement.--Any security provided 
                        under clause (i) may be perfected and enforced 
                        at any time after the earlier of--
                                    ``(I) the date on which the plan 
                                terminates,
                                    ``(II) if there is a failure to 
                                make a payment of the minimum required 
                                contribution for any plan year 
                                beginning after the security is 
                                provided, the due date for the payment 
                                under section 303(j), or
                                    ``(III) if the adjusted funding 
                                target attainment percentage is less 
                                than 60 percent for a consecutive 
                                period of 7 years, the valuation date 
                                for the last year in the period.
                            ``(iv) Release of security.--The security 
                        shall be released (and any amounts thereunder 
                        shall be refunded together with any interest 
                        accrued thereon) at such time as the Secretary 
                        of the Treasury may prescribe in regulations, 
                        including regulations for partial releases of 
                        the security by reason of increases in the 
                        funding target attainment percentage.
                    ``(B) Prefunding balance or funding standard 
                carryover balance may not be used.--No prefunding 
                balance or funding standard carryover balance under 
                section 303(f) may be used under paragraph (1), (2), or 
                (4) to satisfy any payment an employer may make under 
                any such paragraph to avoid or terminate the 
                application of any limitation under such paragraph.
                    ``(C) Deemed reduction of funding balances.--
                            ``(i) In general.--Subject to clause (iii), 
                        in any case in which a benefit limitation under 
                        paragraph (1), (2), (3), or (4) would (but for 
                        this subparagraph and determined without regard 
                        to paragraph (1)(B), (2)(B), or (4)(B)) apply 
                        to such plan for the plan year, the plan 
                        sponsor of such plan shall be treated for 
                        purposes of this Act as having made an election 
                        under section 303(f) to reduce the prefunding 
                        balance or funding standard carryover balance 
                        by such amount as is necessary for such benefit 
                        limitation to not apply to the plan for such 
                        plan year.
                            ``(ii) Exception for insufficient funding 
                        balances.--Clause (i) shall not apply with 
                        respect to a benefit limitation for any plan 
                        year if the application of clause (i) would not 
                        result in the benefit limitation not applying 
                        for such plan year.
                            ``(iii) Restrictions of certain rules to 
                        collectively bargained plans.--With respect to 
                        any benefit limitation under paragraph (1), 
                        (2), or (4), clause (i) shall only apply in the 
                        case of a plan maintained pursuant to 1 or more 
                        collective bargaining agreements between 
                        employee representatives and 1 or more 
                        employers.
            ``(6) New plans.--Paragraphs (1), (2) and (4) shall not 
        apply to a plan for the first 5 plan years of the plan. For 
        purposes of this paragraph, the reference in this paragraph to 
        a plan shall include a reference to any predecessor plan.
            ``(7) Presumed underfunding for purposes of benefit 
        limitations.--
                    ``(A) Presumption of continued underfunding.--In 
                any case in which a benefit limitation under paragraph 
                (1), (2), (3), or (4) has been applied to a plan with 
                respect to the plan year preceding the current plan 
                year, the adjusted funding target attainment percentage 
                of the plan for the current plan year shall be presumed 
                to be equal to the adjusted funding target attainment 
                percentage of the plan for the preceding plan year 
                until the enrolled actuary of the plan certifies the 
                actual adjusted funding target attainment percentage of 
                the plan for the current plan year.
                    ``(B) Presumption of underfunding after 10th 
                month.--In any case in which no certification of the 
                adjusted funding target attainment percentage for the 
                current plan year is made with respect to the plan 
                before the first day of the 10th month of such year, 
                for purposes of paragraphs (1), (2), (3), and (4), such 
                first day shall be deemed, for purposes of such 
                paragraph, to be the valuation date of the plan for the 
                current plan year and the plan's adjusted funding 
                target attainment percentage shall be conclusively 
                presumed to be less than 60 percent as of such first 
                day.
                    ``(C) Presumption of underfunding after 4th month 
                for nearly underfunded plans.--In any case in which--
                            ``(i) a benefit limitation under paragraph 
                        (1), (2), (3), or (4) did not apply to a plan 
                        with respect to the plan year preceding the 
                        current plan year, but the adjusted funding 
                        target attainment percentage of the plan for 
                        such preceding plan year was not more than 10 
                        percentage points greater than the percentage 
                        which would have caused such paragraph to apply 
                        to the plan with respect to such preceding plan 
                        year, and
                            ``(ii) as of the first day of the 4th month 
                        of the current plan year, the enrolled actuary 
                        of the plan has not certified the actual 
                        adjusted funding target attainment percentage 
                        of the plan for the current plan year,
                until the enrolled actuary so certifies, such first day 
                shall be deemed, for purposes of such paragraph, to be 
                the valuation date of the plan for the current plan 
                year and the adjusted funding target attainment 
                percentage of the plan as of such first day shall, for 
                purposes of such paragraph, be presumed to be equal to 
                10 percentage points less than the adjusted funding 
                target attainment percentage of the plan for such 
                preceding plan year.
            ``(8) Treatment of plan as of close of prohibited or 
        cessation period.--For purposes of applying this part--
                    ``(A) Operation of plan after period.--Unless the 
                plan provides otherwise, payments and accruals will 
                resume effective as of the day following the close of 
                the period for which any limitation of payment or 
                accrual of benefits under paragraph (3) or (4) applies.
                    ``(B) Treatment of affected benefits.--Nothing in 
                this paragraph shall be construed as affecting the 
                plan's treatment of benefits which would have been paid 
                or accrued but for this subsection.
            ``(9) Terms relating to funding target attainment 
        percentage.--For purposes of this subsection--
                    ``(A) In general.--The term `funding target 
                attainment percentage' has the same meaning given such 
                term by section 303(d)(2).
                    ``(B) Adjusted funding target attainment 
                percentage.--The term `adjusted funding target 
                attainment percentage' means the funding target 
                attainment percentage which is determined under 
                subparagraph (A) by increasing each of the amounts 
                under subparagraphs (A) and (B) of section 303(d)(2) by 
                the aggregate amount of purchases of annuities for 
                employees other than highly compensated employees (as 
                defined in section 414(q) of the Internal Revenue Code 
                of 1986) which were made by the plan during the 
                preceding 2 plan years.
                    ``(C) Application to plans which are fully funded 
                without regard to reductions for funding balances.--
                            ``(i) In general.--In the case of a plan 
                        for any plan year, if the funding target 
                        attainment percentage is 100 percent or more 
                        (determined without regard to this subparagraph 
                        and without regard to the reduction in the 
                        value of assets under section 303(f)(4)), the 
                        funding target attainment percentage for 
                        purposes of subparagraphs (A) and (B) shall be 
                        determined without regard to such reduction.
                            ``(ii) Transition rule.--Clause (i) shall 
                        be applied to plan years beginning after 2007 
                        and before 2011 by substituting for `100 
                        percent' the applicable percentage determined 
                        in accordance with the following table:

``In the case of a plan year                             The applicable
   beginning in calendar year:                            percentage is
        2008...................................................     92 
        2009...................................................     94 
        2010...................................................     96.
                            ``(iii) Limitation.--Clause (ii) shall not 
                        apply with respect to any plan year after 2008 
                        unless the funding target attainment percentage 
                        (determined without regard to this 
                        subparagraph) of the plan for each preceding 
                        plan year after 2007 was not less than the 
                        applicable percentage with respect to such 
                        preceding plan year determined under clause 
                        (ii).
            ``(10) Special rule for 2008.--For purposes of this 
        subsection, in the case of plan years beginning in 2008, the 
        funding target attainment percentage for the preceding plan 
        year may be determined using such methods of estimation as the 
        Secretary of the Treasury may provide.''.
    (b) Notice Requirement.--
            (1) In general.--Section 101 of such Act (29 U.S.C. 1021) 
        is amended--
                    (A) by redesignating subsection (j) as subsection 
                (k); and
                    (B) by inserting after subsection (i) the following 
                new subsection:
    ``(j) Notice of Funding-Based Limitation on Certain Forms of 
Distribution.--The plan administrator of a single-employer plan shall 
provide a written notice to plan participants and beneficiaries within 
30 days--
            ``(1) after the plan has become subject to a restriction 
        described in paragraph (1) or (3) of section 206(g)),
            ``(2) in the case of a plan to which section 206(g)(4) 
        applies, after the valuation date for the plan year described 
        in section 206(g)(4)(B) for which the plan's adjusted funding 
        target attainment percentage for the plan year is less than 60 
        percent (or, if earlier, the date such percentage is deemed to 
        be less than 60 percent under section 206(g)(7)), and
            ``(3) at such other time as may be determined by the 
        Secretary of the Treasury.
The notice required to be provided under this subsection shall be in 
writing, except that such notice may be in electronic or other form to 
the extent that such form is reasonably accessible to the recipient.''.
            (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
        1132(c)(4)) is amended by striking ``section 302(b)(7)(F)(iv)'' 
        and inserting ``section 101(j) or 302(b)(7)(F)(iv)''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2007.
            (2) Collective bargaining exception.--In the case of a plan 
        maintained pursuant to 1 or more collective bargaining 
        agreements between employee representatives and 1 or more 
        employers ratified before January 1, 2008, the amendments made 
        by this section shall not apply to plan years beginning before 
        the earlier of--
                    (A) the later of--
                            (i) the date on which the last collective 
                        bargaining agreement relating to the plan 
                        terminates (determined without regard to any 
                        extension thereof agreed to after the date of 
                        the enactment of this Act), or
                            (ii) the first day of the first plan year 
                        to which the amendments made by this subsection 
                        would (but for this subparagraph) apply, or
                    (B) January 1, 2010.
        For purposes of subparagraph (A)(i), any plan amendment made 
        pursuant to a collective bargaining agreement relating to the 
        plan which amends the plan solely to conform to any requirement 
        added by this section shall not be treated as a termination of 
        such collective bargaining agreement.

SEC. 104. SPECIAL RULES FOR MULTIPLE EMPLOYER PLANS OF CERTAIN 
              COOPERATIVES.

    (a) General Rule.--Except as provided in this section, if a plan in 
existence on July 26, 2005, was an eligible cooperative plan for its 
plan year which includes such date, the amendments made by this 
subtitle and subtitle B shall not apply to plan years beginning before 
the earlier of--
            (1) the first plan year for which the plan ceases to be an 
        eligible cooperative plan, or
            (2) January 1, 2017.
    (b) Interest Rate.--In applying section 302(b)(5)(B) of the 
Employee Retirement Income Security Act of 1974 and section 
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before 
the amendments made by this subtitle and subtitle B) to an eligible 
cooperative plan for plan years beginning after December 31, 2007, and 
before the first plan year to which such amendments apply, the third 
segment rate determined under section 303(h)(2)(C)(iii) of such Act and 
section 430(h)(2)(C)(iii) of such Code (as added by such amendments) 
shall be used in lieu of the interest rate otherwise used.
    (c) Eligible Cooperative Plan Defined.--For purposes of this 
section, a plan shall be treated as an eligible cooperative plan for a 
plan year if the plan is maintained by more than 1 employer and at 
least 85 percent of the employers are--
            (1) rural cooperatives (as defined in section 401(k)(7)(B) 
        of such Code without regard to clause (iv) thereof), or
            (2) organizations which are--
                    (A) cooperative organizations described in section 
                1381(a) of such Code which are more than 50-percent 
                owned by agricultural producers or by cooperatives 
                owned by agricultural producers, or
                    (B) more than 50-percent owned, or controlled by, 
                one or more cooperative organizations described in 
                subparagraph (A).
A plan shall also be treated as an eligible cooperative plan for any 
plan year for which it is described in section 210(a) of the Employee 
Retirement Income Security Act of 1974 and is maintained by a rural 
telephone cooperative association described in section 3(40)(B)(v) of 
such Act.

SEC. 105. TEMPORARY RELIEF FOR CERTAIN PBGC SETTLEMENT PLANS.

    (a) General Rule.--Except as provided in this section, if a plan in 
existence on July 26, 2005, was a PBGC settlement plan as of such date, 
the amendments made by this subtitle and subtitle B shall not apply to 
plan years beginning before January 1, 2014.
    (b) Interest Rate.--In applying section 302(b)(5)(B) of the 
Employee Retirement Income Security Act of 1974 and section 
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before 
the amendments made by this subtitle and subtitle B), to a PBGC 
settlement plan for plan years beginning after December 31, 2007, and 
before January 1, 2014, the third segment rate determined under section 
303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii) of such 
Code (as added by such amendments) shall be used in lieu of the 
interest rate otherwise used.
    (c) PBGC Settlement Plan.--For purposes of this section, the term 
``PBGC settlement plan'' means a defined benefit plan (other than a 
multiemployer plan) to which section 302 of such Act and section 412 of 
such Code apply and--
            (1) which was sponsored by an employer which was in 
        bankruptcy, giving rise to a claim by the Pension Benefit 
        Guaranty Corporation of not greater than $150,000,000, and the 
        sponsorship of which was assumed by another employer that was 
        not a member of the same controlled group as the bankrupt 
        sponsor and the claim of the Pension Benefit Guaranty 
        Corporation was settled or withdrawn in connection with the 
        assumption of the sponsorship, or
            (2) which, by agreement with the Pension Benefit Guaranty 
        Corporation, was spun off from a plan subsequently terminated 
        by such Corporation under section 4042 of the Employee 
        Retirement Income Security Act of 1974.

SEC. 106. SPECIAL RULES FOR PLANS OF CERTAIN GOVERNMENT CONTRACTORS.

    (a) General Rule.--Except as provided in this section, if a plan is 
an eligible government contractor plan, this subtitle and subtitle B 
shall not apply to plan years beginning before the earliest of--
            (1) the first plan year for which the plan ceases to be an 
        eligible government contractor plan,
            (2) the effective date of the Cost Accounting Standards 
        Pension Harmonization Rule, or
            (3) January 1, 2011.
    (b) Interest Rate.--In applying section 302(b)(5)(B) of the 
Employee Retirement Income Security Act of 1974 and section 
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before 
the amendments made by this subtitle and subtitle B) to an eligible 
government contractor plan for plan years beginning after December 31, 
2007, and before the first plan year to which such amendments apply, 
the third segment rate determined under section 303(h)(2)(C)(iii) of 
such Act and section 430(h)(2)(C)(iii) of such Code (as added by such 
amendments) shall be used in lieu of the interest rate otherwise used.
    (c) Eligible Government Contractor Plan Defined.--For purposes of 
this section, a plan shall be treated as an eligible government 
contractor plan if it is maintained by a corporation or a member of the 
same affiliated group (as defined by section 1504(a) of the Internal 
Revenue Code of 1986), whose primary source of revenue is derived from 
business performed under contracts with the United States that are 
subject to the Federal Acquisition Regulations (Chapter 1 of Title 48, 
C.F.R.) and that are also subject to the Defense Federal Acquisition 
Regulation Supplement (Chapter 2 of Title 48, C.F.R.), and whose 
revenue derived from such business in the previous fiscal year exceeded 
$5,000,000,000, and whose pension plan costs that are assignable under 
those contracts are subject to sections 412 and 413 of the Cost 
Accounting Standards (48 C.F.R. 9904.412 and 9904.413).
    (d) Cost Accounting Standards Pension Harmonization Rule.--The Cost 
Accounting Standards Board shall review and revise sections 412 and 413 
of the Cost Accounting Standards (48 C.F.R. 9904.412 and 9904.413) to 
harmonize the minimum required contribution under the Employee 
Retirement Income Security Act of 1974 of eligible government 
contractor plans and government reimbursable pension plan costs not 
later than January 1, 2010. Any final rule adopted by the Cost 
Accounting Standards Board shall be deemed the Cost Accounting 
Standards Pension Harmonization Rule.

SEC. 107. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Miscellaneous Amendments to Title I.--Subtitle B of title I of 
such Act (29 U.S.C. 1021 et seq.) is amended--
            (1) in section 101(d)(3), by striking ``section 302(e)'' 
        and inserting ``section 303(j)'';
            (2) in section 103(d)(8)(B), by striking ``the requirements 
        of section 302(c)(3)'' and inserting ``the applicable 
        requirements of sections 303(h) and 304(c)(3)'';
            (3) in section 103(d), by striking paragraph (11) and 
        inserting the following:
            ``(11) If the current value of the assets of the plan is 
        less than 70 percent of--
                    ``(A) in the case of a single-employer plan, the 
                funding target (as defined in section 303(d)(1)) of the 
                plan, or
                    ``(B) in the case of a multiemployer plan, the 
                current liability (as defined in section 304(c)(6)(D)) 
                under the plan,
        the percentage which such value is of the amount described in 
        subparagraph (A) or (B).'';
            (4) in section 203(a)(3)(C), by striking ``section 
        302(c)(8)'' and inserting ``section 302(d)(2)'';
            (5) in section 204(g)(1), by striking ``section 302(c)(8)'' 
        and inserting ``section 302(d)(2)'';
            (6) in section 204(i)(2)(B), by striking ``section 
        302(c)(8)'' and inserting ``section 302(d)(2)'';
            (7) in section 204(i)(3), by striking ``funded current 
        liability percentage (within the meaning of section 302(d)(8) 
        of this Act)'' and inserting ``funding target attainment 
        percentage (as defined in section 303(d)(2))'';
            (8) in section 204(i)(4), by striking ``section 
        302(c)(11)(A), without regard to section 302(c)(11)(B)'' and 
        inserting ``section 302(b)(1), without regard to section 
        302(b)(2)'';
            (9) in section 206(e)(1), by striking ``section 302(d)'' 
        and inserting ``section 303(j)(4)'', and by striking ``section 
        302(e)(5)'' and inserting ``section 303(j)(4)(E)(i)'';
            (10) in section 206(e)(3), by striking ``section 302(e) by 
        reason of paragraph (5)(A) thereof'' and inserting ``section 
        303(j)(3) by reason of section 303(j)(4)(A)''; and
            (11) in sections 101(e)(3), 403(c)(1), and 408(b)(13), by 
        striking ``American Jobs Creation Act of 2004'' and inserting 
        ``Pension Protection Act of 2006''.
    (b) Miscellaneous Amendments to Title IV.--Title IV of such Act is 
amended--
            (1) in section 4001(a)(13) (29 U.S.C. 1301(a)(13)), by 
        striking ``302(c)(11)(A)'' and inserting ``302(b)(1)'', by 
        striking ``412(c)(11)(A)'' and inserting ``412(b)(1)'', by 
        striking ``302(c)(11)(B)'' and inserting ``302(b)(2)'', and by 
        striking ``412(c)(11)(B)'' and inserting ``412(b)(2)'';
            (2) in section 4003(e)(1) (29 U.S.C. 1303(e)(1)), by 
        striking ``302(f)(1)(A) and (B)'' and inserting ``303(k)(1)(A) 
        and (B)'', and by striking ``412(n)(1)(A) and (B)'' and 
        inserting ``430(k)(1)(A) and (B)'';
            (3) in section 4010(b)(2) (29 U.S.C. 1310(b)(2)), by 
        striking ``302(f)(1)(A) and (B)'' and inserting ``303(k)(1)(A) 
        and (B)'', and by striking ``412(n)(1)(A) and (B)'' and 
        inserting ``430(k)(1)(A) and (B)'';
            (4) in section 4062(c) (29 U.S.C. 1362(c)), by striking 
        paragraphs (1), (2), and (3) and inserting the following:
            ``(1) the sum of the shortfall amortization charge (within 
        the meaning of section 303(c)(1) of this Act and 430(d)(1) of 
        the Internal Revenue Code of 1986) with respect to the plan (if 
        any) for the plan year in which the termination date occurs, 
        plus the aggregate total of shortfall amortization installments 
        (if any) determined for succeeding plan years under section 
        303(c)(2) of this Act and section 430(d)(2) of such Code 
        (which, for purposes of this subparagraph, shall include any 
        increase in such sum which would result if all applications for 
        waivers of the minimum funding standard under section 302(c) of 
        this Act and section 412(c) of such Code which are pending with 
        respect to such plan were denied and if no additional 
        contributions (other than those already made by the termination 
        date) were made for the plan year in which the termination date 
        occurs or for any previous plan year), and
            ``(2) the sum of the waiver amortization charge (within the 
        meaning of section 303(e)(1) of this Act and 430(e)(1) of the 
        Internal Revenue Code of 1986) with respect to the plan (if 
        any) for the plan year in which the termination date occurs, 
        plus the aggregate total of waiver amortization installments 
        (if any) determined for succeeding plan years under section 
        303(e)(2) of this Act and section 430(e)(2) of such Code,'';
            (5) in section 4071 (29 U.S.C. 1371), by striking 
        ``302(f)(4)'' and inserting ``303(k)(4)'';
            (6) in section 4243(a)(1)(B) (29 U.S.C. 1423(a)(1)(B)), by 
        striking ``302(a)'' and inserting ``304(a)'', and, in clause 
        (i), by striking ``302(a)'' and inserting ``304(a)'';
            (7) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)), by 
        striking ``303(a)'' and inserting ``302(c)'';
            (8) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)), by 
        striking ``303(c)'' and inserting ``302(c)(3)''; and
            (9) in section 4243(g) (29 U.S.C. 1423(g)), by striking 
        ``302(c)(3)'' and inserting ``304(c)(3)''.
    (c) Amendments to Reorganization Plan No. 4 of 1978.--Section 
106(b)(ii) of Reorganization Plan No. 4 of 1978 (ratified and affirmed 
as law by Public Law 98-532 (98 Stat. 2705)) is amended by striking 
``302(c)(8)'' and inserting ``302(d)(2)'', by striking ``304(a) and 
(b)(2)(A)'' and inserting ``304(d)(1), (d)(2), and (e)(2)(A)'', and by 
striking ``412(c)(8), (e), and (f)(2)(A)'' and inserting ``412(c)(2) 
and 431(d)(1), (d)(2), and (e)(2)(A)''.
    (d) Repeal of Expired Authority for Temporary Variances.--Section 
207 of such Act (29 U.S.C. 1057) is repealed.
    (e) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after 2007.

        Subtitle B--Amendments to Internal Revenue Code of 1986

SEC. 111. MINIMUM FUNDING STANDARDS.

    (a) New Minimum Funding Standards.--Section 412 of the Internal 
Revenue Code of 1986 (relating to minimum funding standards) is amended 
to read as follows:

``SEC. 412. MINIMUM FUNDING STANDARDS.

    ``(a) Requirement To Meet Minimum Funding Standard.--
            ``(1) In general.--A plan to which this section applies 
        shall satisfy the minimum funding standard applicable to the 
        plan for any plan year.
            ``(2) Minimum funding standard.--For purposes of paragraph 
        (1), a plan shall be treated as satisfying the minimum funding 
        standard for a plan year if--
                    ``(A) in the case of a defined benefit plan which 
                is not a multiemployer plan, the employer makes 
                contributions to or under the plan for the plan year 
                which, in the aggregate, are not less than the minimum 
                required contribution determined under section 430 for 
                the plan for the plan year,
                    ``(B) in the case of a money purchase plan which is 
                not a multiemployer plan, the employer makes 
                contributions to or under the plan for the plan year 
                which are required under the terms of the plan, and
                    ``(C) in the case of a multiemployer plan, the 
                employers make contributions to or under the plan for 
                any plan year which, in the aggregate, are sufficient 
                to ensure that the plan does not have an accumulated 
                funding deficiency under section 431 as of the end of 
                the plan year.
    ``(b) Liability for Contributions.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amount of any contribution required by this section (including 
        any required installments under paragraphs (3) and (4) of 
        section 430(j)) shall be paid by the employer responsible for 
        making contributions to or under the plan.
            ``(2) Joint and several liability where employer member of 
        controlled group.--If the employer referred to in paragraph (1) 
        is a member of a controlled group, each member of such group 
        shall be jointly and severally liable for payment of such 
        contributions.
    ``(c) Variance From Minimum Funding Standards.--
            ``(1) Waiver in case of business hardship.--
                    ``(A) In general.--If--
                            ``(i) an employer is (or in the case of a 
                        multiemployer plan, 10 percent or more of the 
                        number of employers contributing to or under 
                        the plan is) unable to satisfy the minimum 
                        funding standard for a plan year without 
                        temporary substantial business hardship 
                        (substantial business hardship in the case of a 
                        multiemployer plan), and
                            ``(ii) application of the standard would be 
                        adverse to the interests of plan participants 
                        in the aggregate,
                the Secretary may, subject to subparagraph (C), waive 
                the requirements of subsection (a) for such year with 
                respect to all or any portion of the minimum funding 
                standard. The Secretary shall not waive the minimum 
                funding standard with respect to a plan for more than 3 
                of any 15 (5 of any 15 in the case of a multiemployer 
                plan) consecutive plan years
                    ``(B) Effects of waiver.--If a waiver is granted 
                under subparagraph (A) for any plan year--
                            ``(i) in the case of a defined benefit plan 
                        which is not a multiemployer plan, the minimum 
                        required contribution under section 430 for the 
                        plan year shall be reduced by the amount of the 
                        waived funding deficiency and such amount shall 
                        be amortized as required under section 430(e), 
                        and
                            ``(ii) in the case of a multiemployer plan, 
                        the funding standard account shall be credited 
                        under section 431(b)(3)(C) with the amount of 
                        the waived funding deficiency and such amount 
                        shall be amortized as required under section 
                        431(b)(2)(C).
                    ``(C) Waiver of amortized portion not allowed.--The 
                Secretary may not waive under subparagraph (A) any 
                portion of the minimum funding standard under 
                subsection (a) for a plan year which is attributable to 
                any waived funding deficiency for any preceding plan 
                year.
            ``(2) Determination of business hardship.--For purposes of 
        this subsection, the factors taken into account in determining 
        temporary substantial business hardship (substantial business 
        hardship in the case of a multiemployer plan) shall include 
        (but shall not be limited to) whether or not--
                    ``(A) the employer is operating at an economic 
                loss,
                    ``(B) there is substantial unemployment or 
                underemployment in the trade or business and in the 
                industry concerned,
                    ``(C) the sales and profits of the industry 
                concerned are depressed or declining, and
                    ``(D) it is reasonable to expect that the plan will 
                be continued only if the waiver is granted.
            ``(3) Waived funding deficiency.--For purposes of this 
        section and part III of this subchapter, the term `waived 
        funding deficiency' means the portion of the minimum funding 
        standard under subsection (a) (determined without regard to the 
        waiver) for a plan year waived by the Secretary and not 
        satisfied by employer contributions.
            ``(4) Security for waivers for single-employer plans, 
        consultations.--
                    ``(A) Security may be required.--
                            ``(i) In general.--Except as provided in 
                        subparagraph (C), the Secretary may require an 
                        employer maintaining a defined benefit plan 
                        which is a single-employer plan (within the 
                        meaning of section 4001(a)(15) of the Employee 
                        Retirement Income Security Act of 1974) to 
                        provide security to such plan as a condition 
                        for granting or modifying a waiver under 
                        paragraph (1).
                            ``(ii) Special rules.--Any security 
                        provided under clause (i) may be perfected and 
                        enforced only by the Pension Benefit Guaranty 
                        Corporation, or at the direction of the 
                        Corporation, by a contributing sponsor (within 
                        the meaning of section 4001(a)(13) of the 
                        Employee Retirement Income Security Act of 
                        1974), or a member of such sponsor's controlled 
                        group (within the meaning of section 
                        4001(a)(14) of such Act).
                    ``(B) Consultation with the pension benefit 
                guaranty corporation.--Except as provided in 
                subparagraph (C), the Secretary shall, before granting 
                or modifying a waiver under this subsection with 
                respect to a plan described in subparagraph (A)(i)--
                            ``(i) provide the Pension Benefit Guaranty 
                        Corporation with--
                                    ``(I) notice of the completed 
                                application for any waiver or 
                                modification, and
                                    ``(II) an opportunity to comment on 
                                such application within 30 days after 
                                receipt of such notice, and
                            ``(ii) consider--
                                    ``(I) any comments of the 
                                Corporation under clause (i)(II), and
                                    ``(II) any views of any employee 
                                organization (within the meaning of 
                                section 3(4) of the Employee Retirement 
                                Income Security Act of 1974) 
                                representing participants in the plan 
                                which are submitted in writing to the 
                                Secretary in connection with such 
                                application.
                Information provided to the Corporation under this 
                subparagraph shall be considered tax return information 
                and subject to the safeguarding and reporting 
                requirements of section 6103(p).
                    ``(C) Exception for certain waivers.--
                            ``(i) In general.--The preceding provisions 
                        of this paragraph shall not apply to any plan 
                        with respect to which the sum of--
                                    ``(I) the aggregate unpaid minimum 
                                required contributions (within the 
                                meaning of section 4971(c)(4)) for the 
                                plan year and all preceding plan years, 
                                and
                                    ``(II) the present value of all 
                                waiver amortization installments 
                                determined for the plan year and 
                                succeeding plan years under section 
                                430(e)(2),
                        is less than $1,000,000.
                            ``(ii) Treatment of waivers for which 
                        applications are pending.--The amount described 
                        in clause (i)(I) shall include any increase in 
                        such amount which would result if all 
                        applications for waivers of the minimum funding 
                        standard under this subsection which are 
                        pending with respect to such plan were denied.
            ``(5) Special rules for single-employer plans.--
                    ``(A) Application must be submitted before date 
                2\1/2\ months after close of year.--In the case of a 
                defined benefit plan which is not a multiemployer plan, 
                no waiver may be granted under this subsection with 
                respect to any plan for any plan year unless an 
                application therefor is submitted to the Secretary not 
                later than the 15th day of the 3rd month beginning 
                after the close of such plan year.
                    ``(B) Special rule if employer is member of 
                controlled group.--In the case of a defined benefit 
                plan which is not a multiemployer plan, if an employer 
                is a member of a controlled group, the temporary 
                substantial business hardship requirements of paragraph 
                (1) shall be treated as met only if such requirements 
                are met--
                            ``(i) with respect to such employer, and
                            ``(ii) with respect to the controlled group 
                        of which such employer is a member (determined 
                        by treating all members of such group as a 
                        single employer).
                The Secretary may provide that an analysis of a trade 
                or business or industry of a member need not be 
                conducted if the Secretary determines such analysis is 
                not necessary because the taking into account of such 
                member would not significantly affect the determination 
                under this paragraph.
            ``(6) Advance notice.--
                    ``(A) In general.--The Secretary shall, before 
                granting a waiver under this subsection, require each 
                applicant to provide evidence satisfactory to the 
                Secretary that the applicant has provided notice of the 
                filing of the application for such waiver to each 
                affected party (as defined in section 4001(a)(21) of 
                the Employee Retirement Income Security Act of 1974). 
                Such notice shall include a description of the extent 
                to which the plan is funded for benefits which are 
                guaranteed under title IV of the Employee Retirement 
                Income Security Act of 1974 and for benefit 
                liabilities.
                    ``(B) Consideration of relevant information.--The 
                Secretary shall consider any relevant information 
                provided by a person to whom notice was given under 
                subparagraph (A).
            ``(7) Restriction on plan amendments.--
                    ``(A) In general.--No amendment of a plan which 
                increases the liabilities of the plan by reason of any 
                increase in benefits, any change in the accrual of 
                benefits, or any change in the rate at which benefits 
                become nonforfeitable under the plan shall be adopted 
                if a waiver under this subsection or an extension of 
                time under section 431(d) is in effect with respect to 
                the plan, or if a plan amendment described in 
                subsection (d)(2) has been made at any time in the 
                preceding 12 months (24 months in the case of a 
                multiemployer plan). If a plan is amended in violation 
                of the preceding sentence, any such waiver, or 
                extension of time, shall not apply to any plan year 
                ending on or after the date on which such amendment is 
                adopted.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to any plan amendment which--
                            ``(i) the Secretary determines to be 
                        reasonable and which provides for only de 
                        minimis increases in the liabilities of the 
                        plan,
                            ``(ii) only repeals an amendment described 
                        in subsection (d)(2), or
                            ``(iii) is required as a condition of 
                        qualification under part I of subchapter D, of 
                        chapter 1.
    ``(d) Miscellaneous Rules.--
            ``(1) Change in method or year.--If the funding method, the 
        valuation date, or a plan year for a plan is changed, the 
        change shall take effect only if approved by the Secretary.
            ``(2) Certain retroactive plan amendments.--For purposes of 
        this section, any amendment applying to a plan year which--
                    ``(A) is adopted after the close of such plan year 
                but no later than 2\1/2\ months after the close of the 
                plan year (or, in the case of a multiemployer plan, no 
                later than 2 years after the close of such plan year),
                    ``(B) does not reduce the accrued benefit of any 
                participant determined as of the beginning of the first 
                plan year to which the amendment applies, and
                    ``(C) does not reduce the accrued benefit of any 
                participant determined as of the time of adoption 
                except to the extent required by the circumstances,
        shall, at the election of the plan administrator, be deemed to 
        have been made on the first day of such plan year. No amendment 
        described in this paragraph which reduces the accrued benefits 
        of any participant shall take effect unless the plan 
        administrator files a notice with the Secretary notifying him 
        of such amendment and the Secretary has approved such 
        amendment, or within 90 days after the date on which such 
        notice was filed, failed to disapprove such amendment. No 
        amendment described in this subsection shall be approved by the 
        Secretary unless the Secretary determines that such amendment 
        is necessary because of a temporary substantial business 
        hardship (as determined under subsection (c)(2)) or a 
        substantial business hardship (as so determined) in the case of 
        a multiemployer plan and that a waiver under subsection (c) 
        (or, in the case of a multiemployer plan, any extension of the 
        amortization period under section 431(d)) is unavailable or 
        inadequate.
            ``(3) Controlled group.--For purposes of this section, the 
        term `controlled group' means any group treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414.
    ``(e) Plans to Which Section Applies.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (4), this section applies to a plan if, for any plan year 
        beginning on or after the effective date of this section for 
        such plan under the Employee Retirement Income Security Act of 
        1974--
                    ``(A) such plan included a trust which qualified 
                (or was determined by the Secretary to have qualified) 
                under section 401(a), or
                    ``(B) such plan satisfied (or was determined by the 
                Secretary to have satisfied) the requirements of 
                section 403(a).
            ``(2) Exceptions.--This section shall not apply to--
                    ``(A) any profit-sharing or stock bonus plan,
                    ``(B) any insurance contract plan described in 
                paragraph (3),
                    ``(C) any governmental plan (within the meaning of 
                section 414(d)),
                    ``(D) any church plan (within the meaning of 
                section 414(e)) with respect to which the election 
                provided by section 410(d) has not been made,
                    ``(E) any plan which has not, at any time after 
                September 2, 1974, provided for employer contributions, 
                or
                    ``(F) any plan established and maintained by a 
                society, order, or association described in section 
                501(c)(8) or (9), if no part of the contributions to or 
                under such plan are made by employers of participants 
                in such plan.
        No plan described in subparagraph (C), (D), or (F) shall be 
        treated as a qualified plan for purposes of section 401(a) 
        unless such plan meets the requirements of section 401(a)(7) as 
        in effect on September 1, 1974.
            ``(3) Certain insurance contract plans.--A plan is 
        described in this paragraph if--
                    ``(A) the plan is funded exclusively by the 
                purchase of individual insurance contracts,
                    ``(B) such contracts provide for level annual 
                premium payments to be paid extending not later than 
                the retirement age for each individual participating in 
                the plan, and commencing with the date the individual 
                became a participant in the plan (or, in the case of an 
                increase in benefits, commencing at the time such 
                increase becomes effective),
                    ``(C) benefits provided by the plan are equal to 
                the benefits provided under each contract at normal 
                retirement age under the plan and are guaranteed by an 
                insurance carrier (licensed under the laws of a State 
                to do business with the plan) to the extent premiums 
                have been paid,
                    ``(D) premiums payable for the plan year, and all 
                prior plan years, under such contracts have been paid 
                before lapse or there is reinstatement of the policy,
                    ``(E) no rights under such contracts have been 
                subject to a security interest at any time during the 
                plan year, and
                    ``(F) no policy loans are outstanding at any time 
                during the plan year.
        A plan funded exclusively by the purchase of group insurance 
        contracts which is determined under regulations prescribed by 
        the Secretary to have the same characteristics as contracts 
        described in the preceding sentence shall be treated as a plan 
        described in this paragraph.
            ``(4) Certain terminated multiemployer plans.--This section 
        applies with respect to a terminated multiemployer plan to 
        which section 4021 of the Employee Retirement Income Security 
        Act of 1974 applies until the last day of the plan year in 
        which the plan terminates (within the meaning of section 
        4041A(a)(2) of such Act).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2007.

SEC. 112. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION 
              PLANS.

    (a) In General.--Subchapter D of chapter 1 of the Internal Revenue 
Code of 1986 (relating to deferred compensation, etc.) is amended by 
adding at the end the following new part:

   ``PART III--MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED 
                         BENEFIT PENSION PLANS

``SEC. 430. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED 
              BENEFIT PENSION PLANS.

    ``(a) Minimum Required Contribution.--For purposes of this section 
and section 412(a)(2)(A), except as provided in subsection (f), the 
term `minimum required contribution' means, with respect to any plan 
year of a defined benefit plan which is not a multiemployer plan--
            ``(1) in any case in which the value of plan assets of the 
        plan (as reduced under subsection (f)(4)(B)) is less than the 
        funding target of the plan for the plan year, the sum of--
                    ``(A) the target normal cost of the plan for the 
                plan year,
                    ``(B) the shortfall amortization charge (if any) 
                for the plan for the plan year determined under 
                subsection (c), and
                    ``(C) the waiver amortization charge (if any) for 
                the plan for the plan year as determined under 
                subsection (e);
            ``(2) in any case in which the value of plan assets of the 
        plan (as reduced under subsection (f)(4)(B)) equals or exceeds 
        the funding target of the plan for the plan year, the target 
        normal cost of the plan for the plan year reduced (but not 
        below zero) by such excess.
    ``(b) Target Normal Cost.--For purposes of this section, except as 
provided in subsection (i)(2) with respect to plans in at-risk status, 
the term `target normal cost' means, for any plan year, the present 
value of all benefits which are expected to accrue or to be earned 
under the plan during the plan year. For purposes of this subsection, 
if any benefit attributable to services performed in a preceding plan 
year is increased by reason of any increase in compensation during the 
current plan year, the increase in such benefit shall be treated as 
having accrued during the current plan year.
    ``(c) Shortfall Amortization Charge.--
            ``(1) In general.--For purposes of this section, the 
        shortfall amortization charge for a plan for any plan year is 
        the aggregate total (not less than zero) of the shortfall 
        amortization installments for such plan year with respect to 
        the shortfall amortization bases for such plan year and each of 
        the 6 preceding plan years.
            ``(2) Shortfall amortization installment.--For purposes of 
        paragraph (1)--
                    ``(A) Determination.--The shortfall amortization 
                installments are the amounts necessary to amortize the 
                shortfall amortization base of the plan for any plan 
                year in level annual installments over the 7-plan-year 
                period beginning with such plan year.
                    ``(B) Shortfall installment.--The shortfall 
                amortization installment for any plan year in the 7-
                plan-year period under subparagraph (A) with respect to 
                any shortfall amortization base is the annual 
                installment determined under subparagraph (A) for that 
                year for that base.
                    ``(C) Segment rates.--In determining any shortfall 
                amortization installment under this paragraph, the plan 
                sponsor shall use the segment rates determined under 
                subparagraph (C) of subsection (h)(2), applied under 
                rules similar to the rules of subparagraph (B) of 
                subsection (h)(2).
            ``(3) Shortfall amortization base.--For purposes of this 
        section, the shortfall amortization base of a plan for a plan 
        year is--
                    ``(A) the funding shortfall of such plan for such 
                plan year, minus
                    ``(B) the present value (determined using the 
                segment rates determined under subparagraph (C) of 
                subsection (h)(2), applied under rules similar to the 
                rules of subparagraph (B) of subsection (h)(2)) of the 
                aggregate total of the shortfall amortization 
                installments and waiver amortization installments which 
                have been determined for such plan year and any 
                succeeding plan year with respect to the shortfall 
                amortization bases and waiver amortization bases of the 
                plan for any plan year preceding such plan year.
            ``(4) Funding shortfall.--For purposes of this section, the 
        funding shortfall of a plan for any plan year is the excess (if 
        any) of--
                    ``(A) the funding target of the plan for the plan 
                year, over
                    ``(B) the value of plan assets of the plan (as 
                reduced under subsection (f)(4)(B)) for the plan year 
                which are held by the plan on the valuation date.
            ``(5) Exemption from new shortfall amortization base.--
                    ``(A) In general.--In any case in which the value 
                of plan assets of the plan (as reduced under subsection 
                (f)(4)(A)) is equal to or greater than the funding 
                target of the plan for the plan year, the shortfall 
                amortization base of the plan for such plan year shall 
                be zero.
                    ``(B) Transition rule.--
                            ``(i) In general.--Except as provided in 
                        clauses (iii) and (iv), in the case of plan 
                        years beginning after 2007 and before 2011, 
                        only the applicable percentage of the funding 
                        target shall be taken into account under 
                        paragraph (3)(A) in determining the funding 
                        shortfall for the plan year for purposes of 
                        subparagraph (A).
                            ``(ii) Applicable percentage.--For purposes 
                        of subparagraph (A), the applicable percentage 
                        shall be determined in accordance with the 
                        following table:

``In the case of a plan year                             The applicable
   beginning in calendar year:                            percentage is
        2008...................................................     92 
        2009...................................................     94 
        2010...................................................     96.
                            ``(iii) Limitation.--Clause (i) shall not 
                        apply with respect to any plan year after 2008 
                        unless the shortfall amortization base for each 
                        of the preceding years beginning after 2007 was 
                        zero (determined after application of this 
                        subparagraph).
                            ``(iv) Transition relief not available for 
                        new or deficit reduction plans.--Clause (i) 
                        shall not apply to a plan--
                                    ``(I) which was not in effect for a 
                                plan year beginning in 2007, or
                                    ``(II) which was in effect for a 
                                plan year beginning in 2007 and which 
                                was subject to section 412(l) (as in 
                                effect for plan years beginning in 
                                2007), determined after the application 
                                of paragraphs (6) and (9) thereof.
            ``(6) Early deemed amortization upon attainment of funding 
        target.--In any case in which the funding shortfall of a plan 
        for a plan year is zero, for purposes of determining the 
        shortfall amortization charge for such plan year and succeeding 
        plan years, the shortfall amortization bases for all preceding 
        plan years (and all shortfall amortization installments 
        determined with respect to such bases) shall be reduced to 
        zero.
    ``(d) Rules Relating to Funding Target.--For purposes of this 
section--
            ``(1) Funding target.--Except as provided in subsection 
        (i)(1) with respect to plans in at-risk status, the funding 
        target of a plan for a plan year is the present value of all 
        benefits accrued or earned under the plan as of the beginning 
        of the plan year.
            ``(2) Funding target attainment percentage.--The `funding 
        target attainment percentage' of a plan for a plan year is the 
        ratio (expressed as a percentage) which--
                    ``(A) the value of plan assets for the plan year 
                (as reduced under subsection (f)(4)(B)), bears to
                    ``(B) the funding target of the plan for the plan 
                year (determined without regard to subsection (i)(1)).
    ``(e) Waiver Amortization Charge.--
            ``(1) Determination of waiver amortization charge.--The 
        waiver amortization charge (if any) for a plan for any plan 
        year is the aggregate total of the waiver amortization 
        installments for such plan year with respect to the waiver 
        amortization bases for each of the 5 preceding plan years.
            ``(2) Waiver amortization installment.--For purposes of 
        paragraph (1)--
                    ``(A) Determination.--The waiver amortization 
                installments are the amounts necessary to amortize the 
                waiver amortization base of the plan for any plan year 
                in level annual installments over a period of 5 plan 
                years beginning with the succeeding plan year.
                    ``(B) Waiver installment.--The waiver amortization 
                installment for any plan year in the 5-year period 
                under subparagraph (A) with respect to any waiver 
                amortization base is the annual installment determined 
                under subparagraph (A) for that year for that base.
            ``(3) Interest rate.--In determining any waiver 
        amortization installment under this subsection, the plan 
        sponsor shall use the segment rates determined under 
        subparagraph (C) of subsection (h)(2), applied under rules 
        similar to the rules of subparagraph (B) of subsection (h)(2).
            ``(4) Waiver amortization base.--The waiver amortization 
        base of a plan for a plan year is the amount of the waived 
        funding deficiency (if any) for such plan year under section 
        412(c).
            ``(5) Early deemed amortization upon attainment of funding 
        target.--In any case in which the funding shortfall of a plan 
        for a plan year is zero, for purposes of determining the waiver 
        amortization charge for such plan year and succeeding plan 
        years, the waiver amortization bases for all preceding plan 
        years (and all waiver amortization installments determined with 
        respect to such bases) shall be reduced to zero.
    ``(f) Reduction of Minimum Required Contribution by Prefunding 
Balance and Funding Standard Carryover Balance.--
            ``(1) Election to maintain balances.--
                    ``(A) Prefunding balance.--The plan sponsor of a 
                defined benefit plan which is not a multiemployer plan 
                may elect to maintain a prefunding balance.
                    ``(B) Funding standard carryover balance.--
                            ``(i) In general.--In the case of a defined 
                        benefit plan (other than a multiemployer plan) 
                        described in clause (ii), the plan sponsor may 
                        elect to maintain a funding standard carryover 
                        balance, until such balance is reduced to zero.
                            ``(ii) Plans maintaining funding standard 
                        account in 2007.--A plan is described in this 
                        clause if the plan--
                                    ``(I) was in effect for a plan year 
                                beginning in 2007, and
                                    ``(II) had a positive balance in 
                                the funding standard account under 
                                section 412(b) as in effect for such 
                                plan year and determined as of the end 
                                of such plan year.
            ``(2) Application of balances.--A prefunding balance and a 
        funding standard carryover balance maintained pursuant to this 
        paragraph--
                    ``(A) shall be available for crediting against the 
                minimum required contribution, pursuant to an election 
                under paragraph (3),
                    ``(B) shall be applied as a reduction in the amount 
                treated as the value of plan assets for purposes of 
                this section, to the extent provided in paragraph (4), 
                and
                    ``(C) may be reduced at any time, pursuant to an 
                election under paragraph (5).
            ``(3) Election to apply balances against minimum required 
        contribution.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), in the case of any plan year 
                in which the plan sponsor elects to credit against the 
                minimum required contribution for the current plan year 
                all or a portion of the prefunding balance or the 
                funding standard carryover balance for the current plan 
                year (not in excess of such minimum required 
                contribution), the minimum required contribution for 
                the plan year shall be reduced as of the first day of 
                the plan year by the amount so credited by the plan 
                sponsor as of the first day of the plan year. For 
                purposes of the preceding sentence, the minimum 
                required contribution shall be determined after taking 
                into account any waiver under section 412(c).
                    ``(B) Coordination with funding standard carryover 
                balance.--To the extent that any plan has a funding 
                standard carryover balance greater than zero, no amount 
                of the prefunding balance of such plan may be credited 
                under this paragraph in reducing the minimum required 
                contribution.
                    ``(C) Limitation for underfunded plans.--The 
                preceding provisions of this paragraph shall not apply 
                for any plan year if the ratio (expressed as a 
                percentage) which--
                            ``(i) the value of plan assets for the 
                        preceding plan year (as reduced under paragraph 
                        (4)(C)), bears to
                            ``(ii) the funding target of the plan for 
                        the preceding plan year (determined without 
                        regard to subsection (i)(1)),
                is less than 80 percent. In the case of plan years 
                beginning in 2008, the ratio under this subparagraph 
                may be determined using such methods of estimation as 
                the Secretary may prescribe.
            ``(4) Effect of balances on amounts treated as value of 
        plan assets.--In the case of any plan maintaining a prefunding 
        balance or a funding standard carryover balance pursuant to 
        this subsection, the amount treated as the value of plan assets 
        shall be deemed to be such amount, reduced as provided in the 
        following subparagraphs:
                    ``(A) Applicability of shortfall amortization 
                base.--For purposes of subsection (c)(5), the value of 
                plan assets is deemed to be such amount, reduced by the 
                amount of the prefunding balance, but only if an 
                election under paragraph (2) applying any portion of 
                the prefunding balance in reducing the minimum required 
                contribution is in effect for the plan year.
                    ``(B) Determination of excess assets, funding 
                shortfall, and funding target attainment percentage.--
                            ``(i) In general.--For purposes of 
                        subsections (a), (c)(4)(B), and (d)(2)(A), the 
                        value of plan assets is deemed to be such 
                        amount, reduced by the amount of the prefunding 
                        balance and the funding standard carryover 
                        balance.
                            ``(ii) Special rule for certain binding 
                        agreements with pbgc.--For purposes of 
                        subsection (c)(4)(B), the value of plan assets 
                        shall not be deemed to be reduced for a plan 
                        year by the amount of the specified balance if, 
                        with respect to such balance, there is in 
                        effect for a plan year a binding written 
                        agreement with the Pension Benefit Guaranty 
                        Corporation which provides that such balance is 
                        not available to reduce the minimum required 
                        contribution for the plan year. For purposes of 
                        the preceding sentence, the term `specified 
                        balance' means the prefunding balance or the 
                        funding standard carryover balance, as the case 
                        may be.
                    ``(C) Availability of balances in plan year for 
                crediting against minimum required contribution.--For 
                purposes of paragraph (3)(C)(i) of this subsection, the 
                value of plan assets is deemed to be such amount, 
                reduced by the amount of the prefunding balance.
            ``(5) Election to reduce balance prior to determinations of 
        value of plan assets and crediting against minimum required 
        contribution.--
                    ``(A) In general.--The plan sponsor may elect to 
                reduce by any amount the balance of the prefunding 
                balance and the funding standard carryover balance for 
                any plan year (but not below zero). Such reduction 
                shall be effective prior to any determination of the 
                value of plan assets for such plan year under this 
                section and application of the balance in reducing the 
                minimum required contribution for such plan for such 
                plan year pursuant to an election under paragraph (2).
                    ``(B) Coordination between prefunding balance and 
                funding standard carryover balance.--To the extent that 
                any plan has a funding standard carryover balance 
                greater than zero, no election may be made under 
                subparagraph (A) with respect to the prefunding 
                balance.
            ``(6) Prefunding balance.--
                    ``(A) In general.--A prefunding balance maintained 
                by a plan shall consist of a beginning balance of zero, 
                increased and decreased to the extent provided in 
                subparagraphs (B) and (C), and adjusted further as 
                provided in paragraph (8).
                    ``(B) Increases.--
                            ``(i) In general.--As of the first day of 
                        each plan year beginning after 2008, the 
                        prefunding balance of a plan shall be increased 
                        by the amount elected by the plan sponsor for 
                        the plan year. Such amount shall not exceed the 
                        excess (if any) of--
                                    ``(I) the aggregate total of 
                                employer contributions to the plan for 
                                the preceding plan year, over--
                                    ``(II) the minimum required 
                                contribution for such preceding plan 
                                year.
                            ``(ii) Adjustments for interest.--Any 
                        excess contributions under clause (i) shall be 
                        properly adjusted for interest accruing for the 
                        periods between the first day of the current 
                        plan year and the dates on which the excess 
                        contributions were made, determined by using 
                        the effective interest rate for the preceding 
                        plan year and by treating contributions as 
                        being first used to satisfy the minimum 
                        required contribution.
                            ``(iii) Certain contributions necessary to 
                        avoid benefit limitations disregarded.--The 
                        excess described in clause (i) with respect to 
                        any preceding plan year shall be reduced (but 
                        not below zero) by the amount of contributions 
                        an employer would be required to make under 
                        paragraph (1), (2), or (4) of section 206(g) to 
                        avoid a benefit limitation which would 
                        otherwise be imposed under such paragraph for 
                        the preceding plan year. Any contribution which 
                        may be taken into account in satisfying the 
                        requirements of more than 1 of such paragraphs 
                        shall be taken into account only once for 
                        purposes of this clause.
                    ``(C) Decreases.--The prefunding balance of a plan 
                shall be decreased (but not below zero) by the sum of--
                            ``(i) as of the first day of each plan year 
                        after 2008, the amount of such balance credited 
                        under paragraph (2) (if any) in reducing the 
                        minimum required contribution of the plan for 
                        the preceding plan year, and
                            ``(ii) as of the time specified in 
                        paragraph (5))(A), any reduction in such 
                        balance elected under paragraph (5).
            ``(7) Funding standard carryover balance.--
                    ``(A) In general.--A funding standard carryover 
                balance maintained by a plan shall consist of a 
                beginning balance determined under subparagraph (B), 
                decreased to the extent provided in subparagraph (C), 
                and adjusted further as provided in paragraph (8).
                    ``(B) Beginning balance.--The beginning balance of 
                the funding standard carryover balance shall be the 
                positive balance described in paragraph (1)(B)(ii)(II).
                    ``(C) Decreases.--The funding standard carryover 
                balance of a plan shall be decreased (but not below 
                zero) by--
                            ``(i) as of the first day of each plan year 
                        after 2008, the amount of such balance credited 
                        under paragraph (2) (if any) in reducing the 
                        minimum required contribution of the plan for 
                        the preceding plan year, and
                            ``(ii) as of the time specified in 
                        paragraph (5))(A), any reduction in such 
                        balance elected under paragraph (5).
            ``(8) Adjustments for investment experience.--In 
        determining the prefunding balance or the funding standard 
        carryover balance of a plan as of the first day of the plan 
        year, the plan sponsor shall, in accordance with regulations 
        prescribed by the Secretary of the Treasury, adjust such 
        balance to reflect the rate of return on plan assets for the 
        preceding plan year. Notwithstanding subsection (g)(3), such 
        rate of return shall be determined on the basis of fair market 
        value and shall properly take into account, in accordance with 
        such regulations, all contributions, distributions, and other 
        plan payments made during such period.
            ``(9) Elections.--Elections under this subsection shall be 
        made at such times, and in such form and manner, as shall be 
        prescribed in regulations of the Secretary.
    ``(g) Valuation of Plan Assets and Liabilities.--
            ``(1) Timing of determinations.--Except as otherwise 
        provided under this subsection, all determinations under this 
        section for a plan year shall be made as of the valuation date 
        of the plan for such plan year.
            ``(2) Valuation date.--For purposes of this section--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the valuation date of a plan for any 
                plan year shall be the first day of the plan year.
                    ``(B) Exception for small plans.--If, on each day 
                during the preceding plan year, a plan had 100 or fewer 
                participants, the plan may designate any day during the 
                plan year as its valuation date for such plan year and 
                succeeding plan years. For purposes of this 
                subparagraph, all defined benefit plans (other than 
                multiemployer plans) maintained by the same employer 
                (or any member of such employer's controlled group) 
                shall be treated as 1 plan, but only participants with 
                respect to such employer or member shall be taken into 
                account.
                    ``(C) Application of certain rules in determination 
                of plan size.--For purposes of this paragraph--
                            ``(i) Plans not in existence in preceding 
                        year.--In the case of the first plan year of 
                        any plan, subparagraph (B) shall apply to such 
                        plan by taking into account the number of 
                        participants that the plan is reasonably 
                        expected to have on days during such first plan 
                        year.
                            ``(ii) Predecessors.--Any reference in 
                        subparagraph (B) to an employer shall include a 
                        reference to any predecessor of such employer.
            ``(3) Determination of value of plan assets.--For purposes 
        of this section--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the value of plan assets shall be the 
                fair market value of the assets.
                    ``(B) Averaging allowed.--A plan may determine the 
                value of plan assets on the basis of the averaging of 
                fair market values, but only if such method--
                            ``(i) is permitted under regulations 
                        prescribed by the Secretary,
                            ``(ii) does not provide for averaging of 
                        such values over more than the period beginning 
                        on the last day of the 25th month preceding the 
                        month in which the valuation date occurs and 
                        ending on the valuation date (or a similar 
                        period in the case of a valuation date which is 
                        not the 1st day of a month), and
                            ``(iii) does not result in a determination 
                        of the value of plan assets which, at any time, 
                        is lower than 90 percent or greater than 110 
                        percent of the fair market value of such assets 
                        at such time.
                Any such averaging shall be adjusted for contributions 
                and distributions (as provided by the Secretary).
            ``(4) Accounting for contribution receipts.--For purposes 
        of determining the value of assets under paragraph (3)--
                    ``(A) Prior year contributions.--If--
                            ``(i) an employer makes any contribution to 
                        the plan after the valuation date for the plan 
                        year in which the contribution is made, and
                            ``(ii) the contribution is for a preceding 
                        plan year,
                the contribution shall be taken into account as an 
                asset of the plan as of the valuation date, except that 
                in the case of any plan year beginning after 2008, only 
                the present value (determined as of the valuation date) 
                of such contribution may be taken into account. For 
                purposes of the preceding sentence, present value shall 
                be determined using the effective interest rate for the 
                preceding plan year to which the contribution is 
                properly allocable.
                    ``(B) Special rule for current year contributions 
                made before valuation date.--If any contributions for 
                any plan year are made to or under the plan during the 
                plan year but before the valuation date for the plan 
                year, the assets of the plan as of the valuation date 
                shall not include--
                            ``(i) such contributions, and
                            ``(ii) interest on such contributions for 
                        the period between the date of the 
                        contributions and the valuation date, 
                        determined by using the effective interest rate 
                        for the plan year.
    ``(h) Actuarial Assumptions and Methods.--
            ``(1) In general.--Subject to this subsection, the 
        determination of any present value or other computation under 
        this section shall be made on the basis of actuarial 
        assumptions and methods--
                    ``(A) each of which is reasonable (taking into 
                account the experience of the plan and reasonable 
                expectations), and
                    ``(B) which, in combination, offer the actuary's 
                best estimate of anticipated experience under the plan.
            ``(2) Interest rates.--
                    ``(A) Effective interest rate.--For purposes of 
                this section, the term `effective interest rate' means, 
                with respect to any plan for any plan year, the single 
                rate of interest which, if used to determine the 
                present value of the plan's accrued or earned benefits 
                referred to in subsection (d)(1), would result in an 
                amount equal to the funding target of the plan for such 
                plan year.
                    ``(B) Interest rates for determining funding 
                target.--For purposes of determining the funding target 
                of a plan for any plan year, the interest rate used in 
                determining the present value of the liabilities of the 
                plan shall be--
                            ``(i) in the case of benefits reasonably 
                        determined to be payable during the 5-year 
                        period beginning on the first day of the plan 
                        year, the first segment rate with respect to 
                        the applicable month,
                            ``(ii) in the case of benefits reasonably 
                        determined to be payable during the 15-year 
                        period beginning at the end of the period 
                        described in clause (i), the second segment 
                        rate with respect to the applicable month, and
                            ``(iii) in the case of benefits reasonably 
                        determined to be payable after the period 
                        described in clause (ii), the third segment 
                        rate with respect to the applicable month.
                    ``(C) Segment rates.--For purposes of this 
                paragraph--
                            ``(i) First segment rate.--The term `first 
                        segment rate' means, with respect to any month, 
                        the single rate of interest which shall be 
                        determined by the Secretary for such month on 
                        the basis of the corporate bond yield curve for 
                        such month, taking into account only that 
                        portion of such yield curve which is based on 
                        bonds maturing during the 5-year period 
                        commencing with such month.
                            ``(ii) Second segment rate.--The term 
                        `second segment rate' means, with respect to 
                        any month, the single rate of interest which 
                        shall be determined by the Secretary for such 
                        month on the basis of the corporate bond yield 
                        curve for such month, taking into account only 
                        that portion of such yield curve which is based 
                        on bonds maturing during the 15-year period 
                        beginning at the end of the period described in 
                        clause (i).
                            ``(iii) Third segment rate.--The term 
                        `third segment rate' means, with respect to any 
                        month, the single rate of interest which shall 
                        be determined by the Secretary for such month 
                        on the basis of the corporate bond yield curve 
                        for such month, taking into account only that 
                        portion of such yield curve which is based on 
                        bonds maturing during periods beginning after 
                        the period described in clause (ii).
                    ``(D) Corporate bond yield curve.--For purposes of 
                this paragraph--
                            ``(i) In general.--The term `corporate bond 
                        yield curve' means, with respect to any month, 
                        a yield curve which is prescribed by the 
                        Secretary for such month and which reflects the 
                        average, for the 24-month period ending with 
                        the month preceding such month, of monthly 
                        yields on investment grade corporate bonds with 
                        varying maturities and that are in the top 3 
                        quality levels available.
                            ``(ii) Election to use yield curve.--Solely 
                        for purposes of determining the minimum 
                        required contribution under this section, the 
                        plan sponsor may, in lieu of the segment rates 
                        determined under subparagraph (C), elect to use 
                        interest rates under the corporate bond yield 
                        curve. For purposes of the preceding sentence 
                        such curve shall be determined without regard 
                        to the 24-month averaging described in clause 
                        (i) . Such election, once made, may be revoked 
                        only with the consent of the Secretary.
                    ``(E) Applicable month.--For purposes of this 
                paragraph, the term `applicable month' means, with 
                respect to any plan for any plan year, the month which 
                includes the valuation date of such plan for such plan 
                year or, at the election of the plan sponsor, any of 
                the 4 months which precede such month. Any election 
                made under this subparagraph shall apply to the plan 
                year for which the election is made and all succeeding 
                plan years, unless the election is revoked with the 
                consent of the Secretary.
                    ``(F) Publication requirements.--The Secretary 
                shall publish for each month the corporate bond yield 
                curve (and the corporate bond yield curve reflecting 
                the modification described in section 417(e)(3)(D)(i) 
                for such month and each of the rates determined under 
                subparagraph (B) for such month. The Secretary shall 
                also publish a description of the methodology used to 
                determine such yield curve and such rates which is 
                sufficiently detailed to enable plans to make 
                reasonable projections regarding the yield curve and 
                such rates for future months based on the plan's 
                projection of future interest rates.
                    ``(G) Transition rule.--
                            ``(i) In general.--Notwithstanding the 
                        preceding provisions of this paragraph, for 
                        plan years beginning in 2008 or 2009, the 
                        first, second, or third segment rate for a plan 
                        with respect to any month shall be equal to the 
                        sum of--
                                    ``(I) the product of such rate for 
                                such month determined without regard to 
                                this subparagraph, multiplied by the 
                                applicable percentage, and
                                    ``(II) the product of the rate 
                                determined under the rules of section 
                                412(b)(5)(B)(ii)(II) (as in effect for 
                                plan years beginning in 2007), 
                                multiplied by a percentage equal to 100 
                                percent minus the applicable 
                                percentage.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage is 
                        33\1/3\ percent for plan years beginning in 
                        2008 and 66\2/3\ percent for plan years 
                        beginning in 2009.
                            ``(iii) New plans ineligible.--Clause (i) 
                        shall not apply to any plan if the first plan 
                        year of the plan begins after December 31, 
                        2007.
                            ``(iv) Election.--The plan sponsor may 
                        elect not to have this subparagraph apply. Such 
                        election, once made, may be revoked only with 
                        the consent of the Secretary.
            ``(3) Mortality tables.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C) or (D), the Secretary shall by 
                regulation prescribe mortality tables to be used in 
                determining any present value or making any computation 
                under this section. Such tables shall be based on the 
                actual experience of pension plans and projected trends 
                in such experience. In prescribing such tables, the 
                Secretary shall take into account results of available 
                independent studies of mortality of individuals covered 
                by pension plans.
                    ``(B) Periodic revision.--The Secretary shall (at 
                least every 10 years) make revisions in any table in 
                effect under subparagraph (A) to reflect the actual 
                experience of pension plans and projected trends in 
                such experience.
                    ``(C) Substitute mortality table.--
                            ``(i) In general.--Upon request by the plan 
                        sponsor and approval by the Secretary, a 
                        mortality table which meets the requirements of 
                        clause (iii) shall be used in determining any 
                        present value or making any computation under 
                        this section during the period of consecutive 
                        plan years (not to exceed 10) specified in the 
                        request.
                            ``(ii) Early termination of period.--
                        Notwithstanding clause (i), a mortality table 
                        described in clause (i) shall cease to be in 
                        effect as of the earliest of--
                                    ``(I) the date on which there is a 
                                significant change in the participants 
                                in the plan by reason of a plan spinoff 
                                or merger or otherwise, or
                                    ``(II) the date on which the plan 
                                actuary determines that such table does 
                                not meet the requirements of clause 
                                (iii).
                            ``(iii) Requirements.--A mortality table 
                        meets the requirements of this clause if--
                                    ``(I) there is a sufficient number 
                                of plan participants, and the pension 
                                plans have been maintained for a 
                                sufficient period of time, to have 
                                credible information necessary for 
                                purposes of subclause (II), and
                                    ``(II) such table reflects the 
                                actual experience of the pension plans 
                                maintained by the sponsor and projected 
                                trends in general mortality experience.
                            ``(iv) All plans in controlled group must 
                        use separate table.--Except as provided by the 
                        Secretary, a plan sponsor may not use a 
                        mortality table under this subparagraph for any 
                        plan maintained by the plan sponsor unless--
                                    ``(I) a separate mortality table is 
                                established and used under this 
                                subparagraph for each other plan 
                                maintained by the plan sponsor and if 
                                the plan sponsor is a member of a 
                                controlled group, each member of the 
                                controlled group, and
                                    ``(II) the requirements of clause 
                                (iii) are met separately with respect 
                                to the table so established for each 
                                such plan, determined by only taking 
                                into account the participants of such 
                                plan, the time such plan has been in 
                                existence, and the actual experience of 
                                such plan.
                            ``(v) Deadline for submission and 
                        disposition of application.--
                                    ``(I) Submission.--The plan sponsor 
                                shall submit a mortality table to the 
                                Secretary for approval under this 
                                subparagraph at least 7 months before 
                                the 1st day of the period described in 
                                clause (i).
                                    ``(II) Disposition.--Any mortality 
                                table submitted to the Secretary for 
                                approval under this subparagraph shall 
                                be treated as in effect as of the 1st 
                                day of the period described in clause 
                                (i) unless the Secretary, during the 
                                180-day period beginning on the date of 
                                such submission, disapproves of such 
                                table and provides the reasons that 
                                such table fails to meet the 
                                requirements of clause (iii). The 180-
                                day period shall be extended upon 
                                mutual agreement of the Secretary and 
                                the plan sponsor.
                    ``(D) Separate mortality tables for the disabled.--
                Notwithstanding subparagraph (A)--
                            ``(i) In general.--The Secretary shall 
                        establish mortality tables which may be used 
                        (in lieu of the tables under subparagraph (A)) 
                        under this subsection for individuals who are 
                        entitled to benefits under the plan on account 
                        of disability. The Secretary shall establish 
                        separate tables for individuals whose 
                        disabilities occur in plan years beginning 
                        before January 1, 1995, and for individuals 
                        whose disabilities occur in plan years 
                        beginning on or after such date.
                            ``(ii) Special rule for disabilities 
                        occurring after 1994.--In the case of 
                        disabilities occurring in plan years beginning 
                        after December 31, 1994, the tables under 
                        clause (i) shall apply only with respect to 
                        individuals described in such subclause who are 
                        disabled within the meaning of title II of the 
                        Social Security Act and the regulations 
                        thereunder.
                            ``(iii) Periodic revision.--The Secretary 
                        shall (at least every 10 years) make revisions 
                        in any table in effect under clause (i) to 
                        reflect the actual experience of pension plans 
                        and projected trends in such experience.
            ``(4) Probability of benefit payments in the form of lump 
        sums or other optional forms.--For purposes of determining any 
        present value or making any computation under this section, 
        there shall be taken into account--
                    ``(A) the probability that future benefit payments 
                under the plan will be made in the form of optional 
                forms of benefits provided under the plan (including 
                lump sum distributions, determined on the basis of the 
                plan's experience and other related assumptions), and
                    ``(B) any difference in the present value of such 
                future benefit payments resulting from the use of 
                actuarial assumptions, in determining benefit payments 
                in any such optional form of benefits, which are 
                different from those specified in this subsection.
            ``(5) Approval of large changes in actuarial assumptions.--
                    ``(A) In general.--No actuarial assumption used to 
                determine the funding target for a plan to which this 
                paragraph applies may be changed without the approval 
                of the Secretary.
                    ``(B) Plans to which paragraph applies.--This 
                paragraph shall apply to a plan only if--
                            ``(i) the plan is a defined benefit plan 
                        (other than a multiemployer plan) to which 
                        title IV of the Employee Retirement Income 
                        Security Act of 1974 applies,
                            ``(ii) the aggregate unfunded vested 
                        benefits as of the close of the preceding plan 
                        year (as determined under section 
                        4006(a)(3)(E)(iii) of the Employee Retirement 
                        Income Security Act of 1974) of such plan and 
                        all other plans maintained by the contributing 
                        sponsors (as defined in section 4001(a)(13) of 
                        such Act) and members of such sponsors' 
                        controlled groups (as defined in section 
                        4001(a)(14) of such Act) which are covered by 
                        title IV (disregarding plans with no unfunded 
                        vested benefits) exceed $50,000,000, and
                            ``(iii) the change in assumptions 
                        (determined after taking into account any 
                        changes in interest rate and mortality table) 
                        results in a decrease in the funding shortfall 
                        of the plan for the current plan year that 
                        exceeds $50,000,000, or that exceeds $5,000,000 
                        and that is 5 percent or more of the funding 
                        target of the plan before such change.
    ``(i) Special Rules for At-Risk Plans.--
            ``(1) Funding target for plans in at-risk status.--
                    ``(A) In general.--In the case of a plan which is 
                in at-risk status for a plan year, the funding target 
                of the plan for the plan year shall be equal to the sum 
                of--
                            ``(i) the present value of all benefits 
                        accrued or earned under the plan as of the 
                        beginning of the plan year, as determined by 
                        using the additional actuarial assumptions 
                        described in subparagraph (B), and
                            ``(ii) in the case of a plan which also has 
                        been in at-risk status for at least 2 of the 4 
                        preceding plan years, a loading factor 
                        determined under subparagraph (C).
                    ``(B) Additional actuarial assumptions.--The 
                actuarial assumptions described in this subparagraph 
                are as follows:
                            ``(i) All employees who are not otherwise 
                        assumed to retire as of the valuation date but 
                        who will be eligible to elect benefits during 
                        the plan year and the 10 succeeding plan years 
                        shall be assumed to retire at the earliest 
                        retirement date under the plan but not before 
                        the end of the plan year for which the at-risk 
                        funding target and at-risk target normal cost 
                        are being determined.
                            ``(ii) All employees shall be assumed to 
                        elect the retirement benefit available under 
                        the plan at the assumed retirement age 
                        (determined after application of clause (i)) 
                        which would result in the highest present value 
                        of benefits.
                    ``(C) Loading factor.--The loading factor applied 
                with respect to a plan under this paragraph for any 
                plan year is the sum of--
                            ``(i) $700, times the number of 
                        participants in the plan, plus
                            ``(ii) 4 percent of the funding target 
                        (determined without regard to this paragraph) 
                        of the plan for the plan year.
            ``(2) Target normal cost of at-risk plans.--In the case of 
        a plan which is in at-risk status for a plan year, the target 
        normal cost of the plan for such plan year shall be equal to 
        the sum of--
                    ``(A) the present value of all benefits which are 
                expected to accrue or be earned under the plan during 
                the plan year, determined using the additional 
                actuarial assumptions described in paragraph (1)(B), 
                plus
                    ``(B) in the case of a plan which also has been in 
                at-risk status for at least 2 of the 4 preceding plan 
                years, a loading factor equal to 4 percent of the 
                target normal cost (determined without regard to this 
                paragraph) of the plan for the plan year.
            ``(3) Minimum amount.--In no event shall--
                    ``(A) the at-risk funding target be less than the 
                funding target, as determined without regard to this 
                subsection, or
                    ``(B) the at-risk target normal cost be less than 
                the target normal cost, as determined without regard to 
                this subsection.
            ``(4) Determination of at-risk status.--For purposes of 
        this subsection--
                    ``(A) In general.--A plan is in at-risk status for 
                a plan year if--
                            ``(i) the funding target attainment 
                        percentage for the preceding plan year 
                        (determined under this section without regard 
                        to this subsection) is less than 80 percent, 
                        and
                            ``(ii) the funding target attainment 
                        percentage for the preceding plan year 
                        (determined under this section by using the 
                        additional actuarial assumptions described in 
                        paragraph (1)(B) in computing the funding 
                        target) is less than 70 percent.
                    ``(B) Transition rule.--In the case of plan years 
                beginning in 2008, 2009, and 2010, subparagraph (A)(i) 
                shall be applied by substituting the following 
                percentages for `80 percent':
                            ``(i) 65 percent in the case of 2008.
                            ``(ii) 70 percent in the case of 2009.
                            ``(iii) 75 percent in the case of 2010.
                In the case of plan years beginning in 2008, the 
                funding target attainment percentage for the preceding 
                plan year under subparagraph (A)(ii) may be determined 
                using such methods of estimation as the Secretary may 
                provide.
                    ``(C) Special rule for employees offered early 
                retirement in 2006.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), the additional actuarial 
                        assumptions described in paragraph (1)(B) shall 
                        not be taken into account with respect to any 
                        employee if--
                                    ``(I) such employee is employed by 
                                a specified automobile manufacturer,
                                    ``(II) such employee is offered a 
                                substantial amount of additional cash 
                                compensation, substantially enhanced 
                                retirement benefits under the plan, or 
                                materially reduced employment duties on 
                                the condition that by a specified date 
                                (not later than December 31, 2010) the 
                                employee retires (as defined under the 
                                terms of the plan),
                                    ``(III) such offer is made during 
                                2006 and pursuant to a bona fide 
                                retirement incentive program and 
                                requires, by the terms of the offer, 
                                that such offer can be accepted not 
                                later than a specified date (not later 
                                than December 31, 2006), and
                                    ``(IV) such employee does not elect 
                                to accept such offer before the 
                                specified date on which the offer 
                                expires.
                            ``(ii) Specified automobile manufacturer.--
                        For purposes of clause (i), the term `specified 
                        automobile manufacturer' means--
                                    ``(I) any manufacturer of 
                                automobiles, and
                                    ``(II) any manufacturer of 
                                automobile parts which supplies such 
                                parts directly to a manufacturer of 
                                automobiles and which, after a 
                                transaction or series of transactions 
                                ending in 1999, ceased to be a member 
                                of a controlled group which included 
                                such manufacturer of automobiles.
            ``(5) Transition between applicable funding targets and 
        between applicable target normal costs.--
                    ``(A) In general.--In any case in which a plan 
                which is in at-risk status for a plan year has been in 
                such status for a consecutive period of fewer than 5 
                plan years, the applicable amount of the funding target 
                and of the target normal cost shall be, in lieu of the 
                amount determined without regard to this paragraph, the 
                sum of--
                            ``(i) the amount determined under this 
                        section without regard to this subsection, plus
                            ``(ii) the transition percentage for such 
                        plan year of the excess of the amount 
                        determined under this subsection (without 
                        regard to this paragraph) over the amount 
                        determined under this section without regard to 
                        this subsection.
                    ``(B) Transition percentage.--For purposes of 
                subparagraph (A), the transition percentage shall be 
                determined in accordance with the following table:

``If the consecutive number of
  years (including the plan year)                        The transition
  the plan is in at-risk status                         percentage is--
        is--
        1......................................................     20 
        2......................................................     40 
        3......................................................     60 
        4......................................................     80.
                    ``(C) Years before effective date.--For purposes of 
                this paragraph, plan years beginning before 2008 shall 
                not be taken into account.
            ``(6) Small plan exception.--If, on each day during the 
        preceding plan year, a plan had 500 or fewer participants, the 
        plan shall not be treated as in at-risk status for the plan 
        year. For purposes of this paragraph, all defined benefit plans 
        (other than multiemployer plans) maintained by the same 
        employer (or any member of such employer's controlled group) 
        shall be treated as 1 plan, but only participants with respect 
        to such employer or member shall be taken into account and the 
        rules of subsection (g)(2)(C) shall apply.
    ``(j) Payment of Minimum Required Contributions.--
            ``(1) In general.--For purposes of this section, the due 
        date for any payment of any minimum required contribution for 
        any plan year shall be 8\1/2\ months after the close of the 
        plan year.
            ``(2) Interest.--Any payment required under paragraph (1) 
        for a plan year that is made on a date other than the valuation 
        date for such plan year shall be adjusted for interest accruing 
        for the period between the valuation date and the payment date, 
        at the effective rate of interest for the plan for such plan 
        year.
            ``(3) Accelerated quarterly contribution schedule for 
        underfunded plans.--
                    ``(A) Failure to timely make required 
                installment.--In any case in which the plan has a 
                funding shortfall for the preceding plan year, the 
                employer maintaining the plan shall make the required 
                installments under this paragraph and if the employer 
                fails to pay the full amount of a required installment 
                for the plan year, then the amount of interest charged 
                under paragraph (2) on the underpayment for the period 
                of underpayment shall be determined by using a rate of 
                interest equal to the rate otherwise used under 
                paragraph (2) plus 5 percentage points.
                    ``(B) Amount of underpayment, period of 
                underpayment.--For purposes of subparagraph (A)--
                            ``(i) Amount.--The amount of the 
                        underpayment shall be the excess of--
                                    ``(I) the required installment, 
                                over
                                    ``(II) the amount (if any) of the 
                                installment contributed to or under the 
                                plan on or before the due date for the 
                                installment.
                            ``(ii) Period of underpayment.--The period 
                        for which any interest is charged under this 
                        paragraph with respect to any portion of the 
                        underpayment shall run from the due date for 
                        the installment to the date on which such 
                        portion is contributed to or under the plan.
                            ``(iii) Order of crediting contributions.--
                        For purposes of clause (i)(II), contributions 
                        shall be credited against unpaid required 
                        installments in the order in which such 
                        installments are required to be paid.
                    ``(C) Number of required installments; due dates.--
                For purposes of this paragraph--
                            ``(i) Payable in 4 installments.--There 
                        shall be 4 required installments for each plan 
                        year.
                            ``(ii) Time for payment of installments.--
                        The due dates for required installments are set 
                        forth in the following table:

In the case of the following
 required installment:              The due date is:
  1st.............................  April 15
  2nd.............................  July 15
  3rd.............................  October 15
  4th.............................  January 15 of the following year.

                    ``(D) Amount of required installment.--For purposes 
                of this paragraph--
                            ``(i) In general.--The amount of any 
                        required installment shall be 25 percent of the 
                        required annual payment.
                            ``(ii) Required annual payment.--For 
                        purposes of clause (i), the term `required 
                        annual payment' means the lesser of--
                                    ``(I) 90 percent of the minimum 
                                required contribution (determined 
                                without regard to this subsection) to 
                                the plan for the plan year under this 
                                section, or
                                    ``(II) 100 percent of the minimum 
                                required contribution (determined 
                                without regard to this subsection or to 
                                any waiver under section 302(c)) to the 
                                plan for the preceding plan year.
                        Subclause (II) shall not apply if the preceding 
                        plan year referred to in such clause was not a 
                        year of 12 months.
                    ``(E) Fiscal years and short years.--
                            ``(i) Fiscal years.--In applying this 
                        paragraph to a plan year beginning on any date 
                        other than January 1, there shall be 
                        substituted for the months specified in this 
                        paragraph, the months which correspond thereto.
                            ``(ii) Short plan year.--This subparagraph 
                        shall be applied to plan years of less than 12 
                        months in accordance with regulations 
                        prescribed by the Secretary.
            ``(4) Liquidity requirement in connection with quarterly 
        contributions.--
                    ``(A) In general.--A plan to which this paragraph 
                applies shall be treated as failing to pay the full 
                amount of any required installment under paragraph (3) 
                to the extent that the value of the liquid assets paid 
                in such installment is less than the liquidity 
                shortfall (whether or not such liquidity shortfall 
                exceeds the amount of such installment required to be 
                paid but for this paragraph).
                    ``(B) Plans to which paragraph applies.--This 
                paragraph shall apply to a plan (other than a plan 
                described in subsection (g)(2)(B)) which--
                            ``(i) is required to pay installments under 
                        paragraph (3) for a plan year, and
                            ``(ii) has a liquidity shortfall for any 
                        quarter during such plan year.
                    ``(C) Period of underpayment.--For purposes of 
                paragraph (3)(A), any portion of an installment that is 
                treated as not paid under subparagraph (A) shall 
                continue to be treated as unpaid until the close of the 
                quarter in which the due date for such installment 
                occurs.
                    ``(D) Limitation on increase.--If the amount of any 
                required installment is increased by reason of 
                subparagraph (A), in no event shall such increase 
                exceed the amount which, when added to prior 
                installments for the plan year, is necessary to 
                increase the funding target attainment percentage of 
                the plan for the plan year (taking into account the 
                expected increase in funding target due to benefits 
                accruing or earned during the plan year) to 100 
                percent.
                    ``(E) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Liquidity shortfall.--The term 
                        `liquidity shortfall' means, with respect to 
                        any required installment, an amount equal to 
                        the excess (as of the last day of the quarter 
                        for which such installment is made) of--
                                    ``(I) the base amount with respect 
                                to such quarter, over
                                    ``(II) the value (as of such last 
                                day) of the plan's liquid assets.
                            ``(ii) Base amount.--
                                    ``(I) In general.--The term `base 
                                amount' means, with respect to any 
                                quarter, an amount equal to 3 times the 
                                sum of the adjusted disbursements from 
                                the plan for the 12 months ending on 
                                the last day of such quarter.
                                    ``(II) Special rule.--If the amount 
                                determined under subclause (I) exceeds 
                                an amount equal to 2 times the sum of 
                                the adjusted disbursements from the 
                                plan for the 36 months ending on the 
                                last day of the quarter and an enrolled 
                                actuary certifies to the satisfaction 
                                of the Secretary that such excess is 
                                the result of nonrecurring 
                                circumstances, the base amount with 
                                respect to such quarter shall be 
                                determined without regard to amounts 
                                related to those nonrecurring 
                                circumstances.
                            ``(iii) Disbursements from the plan.--The 
                        term `disbursements from the plan' means all 
                        disbursements from the trust, including 
                        purchases of annuities, payments of single sums 
                        and other benefits, and administrative 
                        expenses.
                            ``(iv) Adjusted disbursements.--The term 
                        `adjusted disbursements' means disbursements 
                        from the plan reduced by the product of--
                                    ``(I) the plan's funding target 
                                attainment percentage for the plan 
                                year, and
                                    ``(II) the sum of the purchases of 
                                annuities, payments of single sums, and 
                                such other disbursements as the 
                                Secretary shall provide in regulations.
                            ``(v) Liquid assets.--The term `liquid 
                        assets' means cash, marketable securities, and 
                        such other assets as specified by the Secretary 
                        in regulations.
                            ``(vi) Quarter.--The term `quarter' means, 
                        with respect to any required installment, the 
                        3-month period preceding the month in which the 
                        due date for such installment occurs.
                    ``(F) Regulations.--The Secretary may prescribe 
                such regulations as are necessary to carry out this 
                paragraph.
    ``(k) Imposition of Lien Where Failure To Make Required 
Contributions.--
            ``(1) In general.--In the case of a plan to which this 
        subsection applies, if--
                    ``(A) any person fails to make a contribution 
                payment required by section 412 and this section before 
                the due date for such payment, and
                    ``(B) the unpaid balance of such payment (including 
                interest), when added to the aggregate unpaid balance 
                of all preceding such payments for which payment was 
                not made before the due date (including interest), 
                exceeds $1,000,000,
        then there shall be a lien in favor of the plan in the amount 
        determined under paragraph (3) upon all property and rights to 
        property, whether real or personal, belonging to such person 
        and any other person who is a member of the same controlled 
        group of which such person is a member.
            ``(2) Plans to which subsection applies.--This subsection 
        shall apply to a defined benefit plan (other than a 
        multiemployer plan) covered under section 4021 of the Employee 
        Retirement Income Security Act of 1974 for any plan year for 
        which the funding target attainment percentage (as defined in 
        subsection (d)(2)) of such plan is less than 100 percent.
            ``(3) Amount of lien.--For purposes of paragraph (1), the 
        amount of the lien shall be equal to the aggregate unpaid 
        balance of contribution payments required under this section 
        and section 412 for which payment has not been made before the 
        due date.
            ``(4) Notice of failure; lien.--
                    ``(A) Notice of failure.--A person committing a 
                failure described in paragraph (1) shall notify the 
                Pension Benefit Guaranty Corporation of such failure 
                within 10 days of the due date for the required 
                contribution payment.
                    ``(B) Period of lien.--The lien imposed by 
                paragraph (1) shall arise on the due date for the 
                required contribution payment and shall continue until 
                the last day of the first plan year in which the plan 
                ceases to be described in paragraph (1)(B). Such lien 
                shall continue to run without regard to whether such 
                plan continues to be described in paragraph (2) during 
                the period referred to in the preceding sentence.
                    ``(C) Certain rules to apply.--Any amount with 
                respect to which a lien is imposed under paragraph (1) 
                shall be treated as taxes due and owing the United 
                States and rules similar to the rules of subsections 
                (c), (d), and (e) of section 4068 of the Employee 
                Retirement Income Security Act of 1974 shall apply with 
                respect to a lien imposed by subsection (a) and the 
                amount with respect to such lien.
            ``(5) Enforcement.--Any lien created under paragraph (1) 
        may be perfected and enforced only by the Pension Benefit 
        Guaranty Corporation, or at the direction of the Pension 
        Benefit Guaranty Corporation, by the contributing sponsor (or 
        any member of the controlled group of the contributing 
        sponsor).
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Contribution payment.--The term `contribution 
                payment' means, in connection with a plan, a 
                contribution payment required to be made to the plan, 
                including any required installment under paragraphs (3) 
                and (4) of subsection (j).
                    ``(B) Due date; required installment.--The terms 
                `due date' and `required installment' have the meanings 
                given such terms by subsection (j), except that in the 
                case of a payment other than a required installment, 
                the due date shall be the date such payment is required 
                to be made under section 430.
                    ``(C) Controlled group.--The term `controlled 
                group' means any group treated as a single employer 
                under subsections (b), (c), (m), and (o) of section 
                414.
    ``(l) Qualified Transfers to Health Benefit Accounts.--In the case 
of a qualified transfer (as defined in section 420), any assets so 
transferred shall not, for purposes of this section, be treated as 
assets in the plan.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after December 31, 2007.

SEC. 113. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.

    (a) Prohibition of Shutdown Benefits and Other Unpredictable 
Contingent Event Benefits Under Single-Employer Plans.--
            (1) In general.--Part III of subchapter D of chapter 1 of 
        the Internal Revenue Code of 1986 (relating to deferred 
        compensation, etc.) is amended--
                    (A) by striking the heading and inserting the 
                following:

  ``PART III--RULES RELATING TO MINIMUM FUNDING STANDARDS AND BENEFIT 
                              LIMITATIONS

       ``subpart a. minimum funding standards for pension plans.
     ``subpart b. benefit limitations under single-employer plans.

        ``Subpart A--Minimum Funding Standards for Pension Plans

``Sec. 430. Minimum funding standards for single-employer defined 
                            benefit pension plans.'', and
                    (B) by adding at the end the following new subpart:

      ``Subpart B--Benefit Limitations Under Single-Employer Plans

``Sec. 436. Funding-based limitation on shutdown benefits and other 
                            unpredictable contingent event benefits 
                            under single-employer plans.

``SEC. 436. FUNDING-BASED LIMITS ON BENEFITS AND BENEFIT ACCRUALS UNDER 
              SINGLE-EMPLOYER PLANS.

    ``(a) General Rule.--For purposes of section 401(a)(29), a defined 
benefit plan which is a single-employer plan shall be treated as 
meeting the requirements of this section if the plan meets the 
requirements of subsections (b), (c), (d), and (e).
    ``(b) Funding-Based Limitation on Shutdown Benefits and Other 
Unpredictable Contingent Event Benefits Under Single-Employer Plans.--
            ``(1) In general.--If a participant of a defined benefit 
        plan which is a single-employer plan is entitled to an 
        unpredictable contingent event benefit payable with respect to 
        any event occurring during any plan year, the plan shall 
        provide that such benefit may not be provided if the adjusted 
        funding target attainment percentage for such plan year--
                    ``(A) is less than 60 percent, or
                    ``(B) would be less than 60 percent taking into 
                account such occurrence.
            ``(2) Exemption.--Paragraph (1) shall cease to apply with 
        respect to any plan year, effective as of the first day of the 
        plan year, upon payment by the plan sponsor of a contribution 
        (in addition to any minimum required contribution under section 
        303) equal to--
                    ``(A) in the case of paragraph (1)(A), the amount 
                of the increase in the funding target of the plan 
                (under section 430) for the plan year attributable to 
                the occurrence referred to in paragraph (1), and
                    ``(B) in the case of paragraph (1)(B), the amount 
                sufficient to result in a funding target attainment 
                percentage of 60 percent.
            ``(3) Unpredictable contingent event.--For purposes of this 
        subsection, the term `unpredictable contingent event benefit' 
        means any benefit payable solely by reason of--
                    ``(A) a plant shutdown (or similar event, as 
                determined by the Secretary), or
                    ``(B) any event other than the attainment of any 
                age, performance of any service, receipt or derivation 
                of any compensation, or occurrence of death or 
                disability.
    ``(c) Limitations on Plan Amendments Increasing Liability for 
Benefits.--
            ``(1) In general.--No amendment to a defined benefit plan 
        which is a single-employer plan which has the effect of 
        increasing liabilities of the plan by reason of increases in 
        benefits, establishment of new benefits, changing the rate of 
        benefit accrual, or changing the rate at which benefits become 
        nonforfeitable may take effect during any plan year if the 
        adjusted funding target attainment percentage for such plan 
        year is--
                    ``(A) less than 80 percent, or
                    ``(B) would be less than 80 percent taking into 
                account such amendment.
            ``(2) Exemption.--Paragraph (1) shall cease to apply with 
        respect to any plan year, effective as of the first day of the 
        plan year (or if later, the effective date of the amendment), 
        upon payment by the plan sponsor of a contribution (in addition 
        to any minimum required contribution under section 430) equal 
        to--
                    ``(A) in the case of paragraph (1)(A), the amount 
                of the increase in the funding target of the plan 
                (under section 430) for the plan year attributable to 
                the amendment, and
                    ``(B) in the case of paragraph (1)(B), the amount 
                sufficient to result in an adjusted funding target 
                attainment percentage of 80 percent.
            ``(3) Exception for certain benefit increases.--Paragraph 
        (1) shall not apply to any amendment which provides for an 
        increase in benefits under a formula which is not based on a 
        participant's compensation, but only if the rate of such 
        increase is not in excess of the contemporaneous rate of 
        increase in average wages of participants covered by the 
        amendment.
    ``(d) Limitations on Accelerated Benefit Distributions.--
            ``(1) Funding percentage less than 60 percent.--A defined 
        benefit plan which is a single-employer plan shall provide 
        that, in any case in which the plan's adjusted funding target 
        attainment percentage for a plan year is less than 60 percent, 
        the plan may not pay any prohibited payment after the valuation 
        date for the plan year.
            ``(2) Bankruptcy.--A defined benefit plan which is a 
        single-employer plan shall provide that, during any period in 
        which the plan sponsor is a debtor in a case under title 11, 
        United States Code, or similar Federal or State law, the plan 
        may not pay any prohibited payment. The preceding sentence 
        shall not apply on or after the date on which the enrolled 
        actuary of the plan certifies that the adjusted funding target 
        attainment percentage of such plan is not less than 100 
        percent.
            ``(3) Limited payment if percentage at least 60 percent but 
        less than 80 percent.--
                    ``(A) In general.--A defined benefit plan which is 
                a single-employer plan shall provide that, in any case 
                in which the plan's adjusted funding target attainment 
                percentage for a plan year is 60 percent or greater but 
                less than 80 percent, the plan may not pay any 
                prohibited payment after the valuation date for the 
                plan year to the extent the amount of the payment 
                exceeds the lesser of--
                            ``(i) 50 percent of the amount of the 
                        payment which could be made without regard to 
                        this section, or
                            ``(ii) the present value (determined under 
                        guidance prescribed by the Pension Benefit 
                        Guaranty Corporation, using the interest and 
                        mortality assumptions under section 417(e)) of 
                        the maximum guarantee with respect to the 
                        participant under section 4022 of the Employee 
                        Retirement Income Security Act of 1974.
                    ``(B) One-time application.--
                            ``(i) In general.--The plan shall also 
                        provide that only 1 prohibited payment meeting 
                        the requirements of subparagraph (A) may be 
                        made with respect to any participant during any 
                        period of consecutive plan years to which the 
                        limitations under either paragraph (1) or (2) 
                        or this paragraph applies.
                            ``(ii) Treatment of beneficiaries.--For 
                        purposes of this subparagraph, a participant 
                        and any beneficiary on his behalf (including an 
                        alternate payee, as defined in section 
                        414(p)(8)) shall be treated as 1 participant. 
                        If the accrued benefit of a participant is 
                        allocated to such an alternate payee and 1 or 
                        more other persons, the amount under 
                        subparagraph (A) shall be allocated among such 
                        persons in the same manner as the accrued 
                        benefit is allocated unless the qualified 
                        domestic relations order (as defined in section 
                        414(p)(1)(A)) provides otherwise.
            ``(4) Exception.--This subsection shall not apply to any 
        plan for any plan year if the terms of such plan (as in effect 
        for the period beginning on September 1, 2005, and ending with 
        such plan year) provide for no benefit accruals with respect to 
        any participant during such period.
            ``(5) Prohibited payment.--For purpose of this subsection, 
        the term `prohibited payment' means--
                    ``(A) any payment, in excess of the monthly amount 
                paid under a single life annuity (plus any social 
                security supplements described in the last sentence of 
                section 411(a)(9)), to a participant or beneficiary 
                whose annuity starting date (as defined in section 
                417(f)(2)) occurs during any period a limitation under 
                paragraph (1) or (2) is in effect,
                    ``(B) any payment for the purchase of an 
                irrevocable commitment from an insurer to pay benefits, 
                and
                    ``(C) any other payment specified by the Secretary 
                by regulations.
    ``(e) Limitation on Benefit Accruals for Plans With Severe Funding 
Shortfalls.--
            ``(1) In general.--A defined benefit plan which is a 
        single-employer plan shall provide that, in any case in which 
        the plan's adjusted funding target attainment percentage for a 
        plan year is less than 60 percent, benefit accruals under the 
        plan shall cease as of the valuation date for the plan year.
            ``(2) Exemption.--Paragraph (1) shall cease to apply with 
        respect to any plan year, effective as of the first day of the 
        plan year, upon payment by the plan sponsor of a contribution 
        (in addition to any minimum required contribution under section 
        430) equal to the amount sufficient to result in an adjusted 
        funding target attainment percentage of 60 percent.
    ``(f) Rules Relating to Contributions Required To Avoid Benefit 
Limitations.--
            ``(1) Security may be provided.--
                    ``(A) In general.--For purposes of this section, 
                the adjusted funding target attainment percentage shall 
                be determined by treating as an asset of the plan any 
                security provided by a plan sponsor in a form meeting 
                the requirements of subparagraph (B).
                    ``(B) Form of security.--The security required 
                under subparagraph (A) shall consist of--
                            ``(i) a bond issued by a corporate surety 
                        company that is an acceptable surety for 
                        purposes of section 412 of the Employee 
                        Retirement Income Security Act of 1974,
                            ``(ii) cash, or United States obligations 
                        which mature in 3 years or less, held in escrow 
                        by a bank or similar financial institution, or
                            ``(iii) such other form of security as is 
                        satisfactory to the Secretary and the parties 
                        involved.
                    ``(C) Enforcement.--Any security provided under 
                subparagraph (A) may be perfected and enforced at any 
                time after the earlier of--
                            ``(i) the date on which the plan 
                        terminates,
                            ``(ii) if there is a failure to make a 
                        payment of the minimum required contribution 
                        for any plan year beginning after the security 
                        is provided, the due date for the payment under 
                        section 430(j), or
                            ``(iii) if the adjusted funding target 
                        attainment percentage is less than 60 percent 
                        for a consecutive period of 7 years, the 
                        valuation date for the last year in the period.
                    ``(D) Release of security.--The security shall be 
                released (and any amounts thereunder shall be refunded 
                together with any interest accrued thereon) at such 
                time as the Secretary may prescribe in regulations, 
                including regulations for partial releases of the 
                security by reason of increases in the funding target 
                attainment percentage.
            ``(2) Prefunding balance or funding standard carryover 
        balance may not be used.--No prefunding balance under section 
        430(f) or funding standard carryover balance may be used under 
        subsection (b), (c), or (e) to satisfy any payment an employer 
        may make under any such subsection to avoid or terminate the 
        application of any limitation under such subsection.
            ``(3) Deemed reduction of funding balances.--
                    ``(A) In general.--Subject to subparagraph (C), in 
                any case in which a benefit limitation under subsection 
                (b), (c), (d), or (e) would (but for this subparagraph 
                and determined without regard to subsection (b)(2), 
                (c)(2), or (e)(2)) apply to such plan for the plan 
                year, the plan sponsor of such plan shall be treated 
                for purposes of this title as having made an election 
                under section 430(f) to reduce the prefunding balance 
                or funding standard carryover balance by such amount as 
                is necessary for such benefit limitation to not apply 
                to the plan for such plan year.
                    ``(B) Exception for insufficient funding 
                balances.--Subparagraph (A) shall not apply with 
                respect to a benefit limitation for any plan year if 
                the application of subparagraph (A) would not result in 
                the benefit limitation not applying for such plan year.
                    ``(C) Restrictions of certain rules to collectively 
                bargained plans.--With respect to any benefit 
                limitation under subsection (b), (c), or (e), 
                subparagraph (A) shall only apply in the case of a plan 
                maintained pursuant to 1 or more collective bargaining 
                agreements between employee representatives and 1 or 
                more employers.
    ``(g) New Plans.--Subsections (b), (c), and (e) shall not apply to 
a plan for the first 5 plan years of the plan. For purposes of this 
subsection, the reference in this subsection to a plan shall include a 
reference to any predecessor plan.
    ``(h) Presumed Underfunding for Purposes of Benefit Limitations.--
            ``(1) Presumption of continued underfunding.--In any case 
        in which a benefit limitation under subsection (b), (c), (d), 
        or (e) has been applied to a plan with respect to the plan year 
        preceding the current plan year, the adjusted funding target 
        attainment percentage of the plan for the current plan year 
        shall be presumed to be equal to the adjusted funding target 
        attainment percentage of the plan for the preceding plan year 
        until the enrolled actuary of the plan certifies the actual 
        adjusted funding target attainment percentage of the plan for 
        the current plan year.
            ``(2) Presumption of underfunding after 10th month.--In any 
        case in which no certification of the adjusted funding target 
        attainment percentage for the current plan year is made with 
        respect to the plan before the first day of the 10th month of 
        such year, for purposes of subsections (b), (c), (d), and (e), 
        such first day shall be deemed, for purposes of such 
        subsection, to be the valuation date of the plan for the 
        current plan year and the plan's adjusted funding target 
        attainment percentage shall be conclusively presumed to be less 
        than 60 percent as of such first day.
            ``(3) Presumption of underfunding after 4th month for 
        nearly underfunded plans.--In any case in which--
                    ``(A) a benefit limitation under subsection (b), 
                (c), (d), or (e) did not apply to a plan with respect 
                to the plan year preceding the current plan year, but 
                the adjusted funding target attainment percentage of 
                the plan for such preceding plan year was not more than 
                10 percentage points greater than the percentage which 
                would have caused such subsection to apply to the plan 
                with respect to such preceding plan year, and
                    ``(B) as of the first day of the 4th month of the 
                current plan year, the enrolled actuary of the plan has 
                not certified the actual adjusted funding target 
                attainment percentage of the plan for the current plan 
                year,
        until the enrolled actuary so certifies, such first day shall 
        be deemed, for purposes of such subsection, to be the valuation 
        date of the plan for the current plan year and the adjusted 
        funding target attainment percentage of the plan as of such 
        first day shall, for purposes of such subsection, be presumed 
        to be equal to 10 percentage points less than the adjusted 
        funding target attainment percentage of the plan for such 
        preceding plan year.
    ``(i) Treatment of Plan as of Close of Prohibited or Cessation 
Period.--For purposes of applying this title--
            ``(1) Operation of plan after period.--Unless the plan 
        provides otherwise, payments and accruals will resume effective 
        as of the day following the close of the period for which any 
        limitation of payment or accrual of benefits under subsection 
        (d) or (e) applies.
            ``(2) Treatment of affected benefits.--Nothing in this 
        subsection shall be construed as affecting the plan's treatment 
        of benefits which would have been paid or accrued but for this 
        section.
    ``(j) Terms Relating to Funding Target Attainment Percentage.--For 
purposes of this section--
            ``(1) In general.--The term `funding target attainment 
        percentage' has the same meaning given such term by section 
        430(d)(2).
            ``(2) Adjusted funding target attainment percentage.--The 
        term `adjusted funding target attainment percentage' means the 
        funding target attainment percentage which is determined under 
        paragraph (1) by increasing each of the amounts under 
        subparagraphs (A) and (B) of section 430(d)(2) by the aggregate 
        amount of purchases of annuities for employees other than 
        highly compensated employees (as defined in section 414(q)) 
        which were made by the plan during the preceding 2 plan years.
            ``(3) Application to plans which are fully funded without 
        regard to reductions for funding balances.--
                    ``(A) In general.--In the case of a plan for any 
                plan year, if the funding target attainment percentage 
                is 100 percent or more (determined without regard to 
                this paragraph and without regard to the reduction in 
                the value of assets under section 430(f)(4)(A)), the 
                funding target attainment percentage for purposes of 
                paragraph (1) shall be determined without regard to 
                such reduction.
                    ``(B) Transition rule.--Subparagraph (A) shall be 
                applied to plan years beginning after 2007 and before 
                2011 by substituting for `100 percent' the applicable 
                percentage determined in accordance with the following 
                table:

``In the case of a plan year                             The applicable
   beginning in calendar year:                            percentage is
        2008...................................................     92 
        2009...................................................     94 
        2010...................................................     96.
                    ``(C) Limitation.--Subparagraph (B) shall not apply 
                with respect to any plan year after 2008 unless the 
                funding target attainment percentage (determined 
                without regard to this paragraph) of the plan for each 
                preceding plan year after 2007 was not less than the 
                applicable percentage with respect to such preceding 
                plan year determined under subparagraph (B).
    ``(k) Special Rule for 2008.--For purposes of this section, in the 
case of plan years beginning in 2008, the funding target attainment 
percentage for the preceding plan year may be determined using such 
methods of estimation as the Secretary may provide.''.
            (2) Clerical amendment.--The table of parts for subchapter 
        D of chapter 1 of the Internal Revenue Code of 1986 is amended 
        by adding at the end the following new item:

  ``Part III--Rules Relating to Minimum Funding Standards and Benefit 
                             Limitations''.

    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2007.
            (2) Collective bargaining exception.--In the case of a plan 
        maintained pursuant to 1 or more collective bargaining 
        agreements between employee representatives and 1 or more 
        employers ratified before January 1, 2008, the amendments made 
        by this section shall not apply to plan years beginning before 
        the earlier of--
                    (A) the later of--
                            (i) the date on which the last collective 
                        bargaining agreement relating to the plan 
                        terminates (determined without regard to any 
                        extension thereof agreed to after the date of 
                        the enactment of this Act), or
                            (ii) the first day of the first plan year 
                        to which the amendments made by this subsection 
                        would (but for this subparagraph) apply, or
                    (B) January 1, 2010.
        For purposes of subparagraph (A)(i), any plan amendment made 
        pursuant to a collective bargaining agreement relating to the 
        plan which amends the plan solely to conform to any requirement 
        added by this section shall not be treated as a termination of 
        such collective bargaining agreement.

SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Amendments Related to Qualification Requirements.--
            (1) Section 401(a)(29) of the Internal Revenue Code of 1986 
        is amended to read as follows:
            ``(29) Benefit limitations on plans in at-risk status.--In 
        the case of a defined benefit plan (other than a multiemployer 
        plan) to which the requirements of section 412 apply, the trust 
        of which the plan is a part shall not constitute a qualified 
        trust under this subsection unless the plan meets the 
        requirements of section 436.''.
            (2) Section 401(a)(32) of such Code is amended--
                    (A) in subparagraph (A), by striking ``412(m)(5)'' 
                each place it appears and inserting ``section 
                430(j)(4)'', and
                    (B) in subparagraph (C), by striking ``section 
                412(m)'' and inserting ``section 430(j)''.
            (3) Section 401(a)(33) of such Code is amended--
                    (A) in subparagraph (B)(i), by striking ``funded 
                current liability percentage (within the meaning of 
                section 412(l)(8))'' and inserting ``funding target 
                attainment percentage (as defined in section 
                430(d)(2))'',
                    (B) in subparagraph (B)(iii), by striking 
                ``subsection 412(c)(8)'' and inserting ``section 
                412(c)(2)'', and
                    (C) in subparagraph (D), by striking ``section 
                412(c)(11) (without regard to subparagraph (B) 
                thereof)'' and inserting ``section 412(b)(2) (without 
                regard to subparagraph (B) thereof)''.
    (b) Vesting Rules.--Section 411 of such Code is amended--
            (1) by striking ``section 412(c)(8)'' in subsection 
        (a)(3)(C) and inserting ``section 412(c)(2)'',
            (2) in subsection (b)(1)(F)--
                    (A) by striking ``paragraphs (2) and (3) of section 
                412(i)'' in clause (ii) and inserting ``subparagraphs 
                (B) and (C) of section 412(e)(3)'', and
                    (B) by striking ``paragraphs (4), (5), and (6) of 
                section 412(i)'' and inserting ``subparagraphs (D), 
                (E), and (F) of section 412(e)(3)'', and
            (3) by striking ``section 412(c)(8)'' in subsection 
        (d)(6)(A) and inserting ``section 412(e)(2)''.
    (c) Mergers and Consolidations of Plans.--Subclause (I) of section 
414(l)(2)(B)(i) of such Code is amended to read as follows:
                                    ``(I) the amount determined under 
                                section 431(c)(6)(A)(i) in the case of 
                                a multiemployer plan (and the sum of 
                                the funding shortfall and target normal 
                                cost determined under section 430 in 
                                the case of any other plan), over''.
    (d) Transfer of Excess Pension Assets to Retiree Health Accounts.--
            (1) Section 420(e)(2) of such Code is amended to read as 
        follows:
            ``(2) Excess pension assets.--The term `excess pension 
        assets' means the excess (if any) of--
                    ``(A) the lesser of--
                            ``(i) the fair market value of the plan's 
                        assets (reduced by the prefunding balance and 
                        funding standard carryover balance determined 
                        under section 430(f)), or
                            ``(ii) the value of plan assets as 
                        determined under section 430(g)(3) after 
                        reduction under section 430(f), over
                    ``(B) 125 percent of the sum of the funding 
                shortfall and the target normal cost determined under 
                section 430 for such plan year.''.
            (2) Section 420(e)(4) of such Code is amended to read as 
        follows:
            ``(4) Coordination with section 430.--In the case of a 
        qualified transfer, any assets so transferred shall not, for 
        purposes of this section and section 430, be treated as assets 
        in the plan.''.
    (e) Excise Taxes.--
            (1) In general.--Subsections (a) and (b) of section 4971 of 
        such Code are amended to read as follows:
    ``(a) Initial Tax.--If at any time during any taxable year an 
employer maintains a plan to which section 412 applies, there is hereby 
imposed for the taxable year a tax equal to--
            ``(1) in the case of a single-employer plan, 10 percent of 
        the aggregate unpaid minimum required contributions for all 
        plan years remaining unpaid as of the end of any plan year 
        ending with or within the taxable year, and
            ``(2) in the case of a multiemployer plan, 5 percent of the 
        accumulated funding deficiency determined under section 431 as 
        of the end of any plan year ending with or within the taxable 
        year.
    ``(b) Additional Tax.--If--
            ``(1) a tax is imposed under subsection (a)(1) on any 
        unpaid required minimum contribution and such amount remains 
        unpaid as of the close of the taxable period, or
            ``(2) a tax is imposed under subsection (a)(2) on any 
        accumulated funding deficiency and the accumulated funding 
        deficiency is not corrected within the taxable period,
there is hereby imposed a tax equal to 100 percent of the unpaid 
minimum required contribution or accumulated funding deficiency, 
whichever is applicable, to the extent not so paid or corrected.''.
            (2) Section 4971(c) of such Code is amended--
                    (A) by striking ``the last two sentences of section 
                412(a)'' in paragraph (1) and inserting ``section 
                431'', and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) Unpaid minimum required contribution.--
                    ``(A) In general.--The term `unpaid minimum 
                required contribution' means, with respect to any plan 
                year, any minimum required contribution under section 
                430 for the plan year which is not paid on or before 
                the due date (as determined under section 430(j)(1)) 
                for the plan year.
                    ``(B) Ordering rule.--Any payment to or under a 
                plan for any plan year shall be allocated first to 
                unpaid minimum required contributions for all preceding 
                plan years on a first-in, first-out basis and then to 
                the minimum required contribution under section 430 for 
                the plan year.''.
            (3) Section 4971(e)(1) of such Code is amended by striking 
        ``section 412(b)(3)(A)'' and inserting ``section 
        412(a)(1)(A)''.
            (4) Section 4971(f)(1) of such Code is amended--
                    (A) by striking ``section 412(m)(5)'' and inserting 
                ``section 430(j)(4)'', and
                    (B) by striking ``section 412(m)'' and inserting 
                ``section 430(j)''.
            (5) Section 4972(c)(7) of such Code is amended by striking 
        ``except to the extent that such contributions exceed the full-
        funding limitation (as defined in section 412(c)(7), determined 
        without regard to subparagraph (A)(i)(I) thereof)'' and 
        inserting ``except, in the case of a multiemployer plan, to the 
        extent that such contributions exceed the full-funding 
        limitation (as defined in section 431(c)(6))''.
    (f) Reporting Requirements.--Section 6059(b) of such Code is 
amended--
            (1) by striking ``the accumulated funding deficiency (as 
        defined in section 412(a))'' in paragraph (2) and inserting 
        ``the minimum required contribution determined under section 
        430, or the accumulated funding deficiency determined under 
        section 431,'', and
            (2) by striking paragraph (3)(B) and inserting:
                    ``(B) the requirements for reasonable actuarial 
                assumptions under section 430(h)(1) or 431(c)(3), 
                whichever are applicable, have been complied with.''.

SEC. 115. MODIFICATION OF TRANSITION RULE TO PENSION FUNDING 
              REQUIREMENTS.

    (a) In General.--In the case of a plan that--
            (1) was not required to pay a variable rate premium for the 
        plan year beginning in 1996,
            (2) has not, in any plan year beginning after 1995, merged 
        with another plan (other than a plan sponsored by an employer 
        that was in 1996 within the controlled group of the plan 
        sponsor); and
            (3) is sponsored by a company that is engaged primarily in 
        the interurban or interstate passenger bus service,
the rules described in subsection (b) shall apply for any plan year 
beginning after December 31, 2007.
    (b) Modified Rules.--The rules described in this subsection are as 
follows:
            (1) For purposes of section 430(j)(3) of the Internal 
        Revenue Code of 1986 and section 303(j)(3) of the Employee 
        Retirement Income Security Act of 1974, the plan shall be 
        treated as not having a funding shortfall for any plan year.
            (2) For purposes of--
                    (A) determining unfunded vested benefits under 
                section 4006(a)(3)(E)(iii) of such Act, and
                    (B) determining any present value or making any 
                computation under section 412 of such Code or section 
                302 of such Act,
        the mortality table shall be the mortality table used by the 
        plan.
            (3) Section 430(c)(5)(B) of such Code and section 
        303(c)(5)(B) of such Act (relating to phase-in of funding 
        target for exemption from new shortfall amortization base) 
        shall each be applied by substituting ``2012'' for ``2011'' 
        therein and by substituting for the table therein the 
        following:


 
                                                                 The
                                                             applicable
  In the case of a plan year beginning in calendar year:     percentage
                                                                 is:
 
2008......................................................    90 percent
2009......................................................    92 percent
2010......................................................    94 percent
2011......................................................   96 percent.

    (c) Definitions.--Any term used in this section which is also used 
in section 430 of such Code or section 303 of such Act shall have the 
meaning provided such term in such section. If the same term has a 
different meaning in such Code and such Act, such term shall, for 
purposes of this section, have the meaning provided by such Code when 
applied with respect to such Code and the meaning provided by such Act 
when applied with respect to such Act.
    (d) Special Rule for 2006 and 2007.--
            (1) In general.--Section 769(c)(3) of the Retirement 
        Protection Act of 1994, as added by section 201 of the Pension 
        Funding Equity Act of 2004, is amended by striking ``and 2005'' 
        and inserting ``, 2005, 2006, and 2007''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to plan years beginning after December 31, 2005.
    (e) Conforming Amendment.--
            (1) Section 769 of the Retirement Protection Act of 1994 is 
        amended by striking subsection (c).
            (2) The amendment made by paragraph (1) shall take effect 
        on December 31, 2007, and shall apply to plan years beginning 
        after such date.

SEC. 116. RESTRICTIONS ON FUNDING OF NONQUALIFIED DEFERRED COMPENSATION 
              PLANS BY EMPLOYERS MAINTAINING UNDERFUNDED OR TERMINATED 
              SINGLE-EMPLOYER PLANS.

    (a) Amendments of Internal Revenue Code.--Subsection (b) of section 
409A of the Internal Revenue Code of 1986 (providing rules relating to 
funding) is amended by redesignating paragraphs (3) and (4) as 
paragraphs (4) and (5), respectively, and by inserting after paragraph 
(2) the following new paragraph:
            ``(3) Treatment of employer's defined benefit plan during 
        restricted period.--
                    ``(A) In general.--If-
                            ``(i) during any restricted period with 
                        respect to a single-employer defined benefit 
                        plan, assets are set aside or reserved 
                        (directly or indirectly) in a trust (or other 
                        arrangement as determined by the Secretary) or 
                        transferred to such a trust or other 
                        arrangement for purposes of paying deferred 
                        compensation of an applicable covered employee 
                        under a nonqualified deferred compensation plan 
                        of the plan sponsor or member of a controlled 
                        group which includes the plan sponsor, or
                            ``(ii) a nonqualified deferred compensation 
                        plan of the plan sponsor or member of a 
                        controlled group which includes the plan 
                        sponsor provides that assets will become 
                        restricted to the provision of benefits under 
                        the plan in connection with such restricted 
                        period (or other similar financial measure 
                        determined by the Secretary) with respect to 
                        the defined benefit plan, or assets are so 
                        restricted,
                such assets shall, for purposes of section 83, be 
                treated as property transferred in connection with the 
                performance of services whether or not such assets are 
                available to satisfy claims of general creditors. 
                Clause (i) shall not apply with respect to any assets 
                which are so set aside before the restricted period 
                with respect to the defined benefit plan.
                    ``(B) Restricted period.--For purposes of this 
                section, the term `restricted period' means, with 
                respect to any plan described in subparagraph (A)--
                            ``(i) any period during which the plan is 
                        in at-risk status (as defined in section 
                        430(i));
                            ``(ii) any period the plan sponsor is a 
                        debtor in a case under title 11, United States 
                        Code, or similar Federal or State law, and
                            ``(iii) the 12-month period beginning on 
                        the date which is 6 months before the 
                        termination date of the plan if, as of the 
                        termination date, the plan is not sufficient 
                        for benefit liabilities (within the meaning of 
                        section 4041 of the Employee Retirement Income 
                        Security Act of 1974).
                    ``(C) Special rule for payment of taxes on deferred 
                compensation included in income.--If an employer 
                provides directly or indirectly for the payment of any 
                Federal, State, or local income taxes with respect to 
                any compensation required to be included in gross 
                income by reason of this paragraph--
                            ``(i) interest shall be imposed under 
                        subsection (a)(1)(B)(i)(I) on the amount of 
                        such payment in the same manner as if such 
                        payment was part of the deferred compensation 
                        to which it relates,
                            ``(ii) such payment shall be taken into 
                        account in determining the amount of the 
                        additional tax under subsection 
                        (a)(1)(B)(i)(II) in the same manner as if such 
                        payment was part of the deferred compensation 
                        to which it relates, and
                            ``(iii) no deduction shall be allowed under 
                        this title with respect to such payment.
                    ``(D) Other definitions.--For purposes of this 
                section--
                            ``(i) Applicable covered employee.--The 
                        term `applicable covered employee' means any--
                                    ``(I) covered employee of a plan 
                                sponsor,
                                    ``(II) covered employee of a member 
                                of a controlled group which includes 
                                the plan sponsor, and
                                    ``(III) former employee who was a 
                                covered employee at the time of 
                                termination of employment with the plan 
                                sponsor or a member of a controlled 
                                group which includes the plan sponsor.
                            ``(ii) Covered employee.--The term `covered 
                        employee' means an individual described in 
                        section 162(m)(3) or an individual subject to 
                        the requirements of section 16(a) of the 
                        Securities Exchange Act of 1934.''.
    (b) Conforming Amendments.--Paragraphs (4) and (5) of section 
409A(b) of such Code, as redesignated by subsection (a) of this 
subsection, are each amended by striking ``paragraph (1) or (2)'' each 
place it appears and inserting ``paragraph (1), (2), or (3)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to transfers or other reservation of assets after the date of the 
enactment of this Act.

  TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS AND 
                           RELATED PROVISIONS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

SEC. 201. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS.

    (a) In General.--Part 3 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (as amended by this Act) is 
amended by inserting after section 303 the following new section:

          ``minimum funding standards for multiemployer plans

    ``Sec. 304.  (a) In General.--For purposes of section 302, the 
accumulated funding deficiency of a multiemployer plan for any plan 
year is--
            ``(1) except as provided in paragraph (2), the amount, 
        determined as of the end of the plan year, equal to the excess 
        (if any) of the total charges to the funding standard account 
        of the plan for all plan years (beginning with the first plan 
        year for which this part applies to the plan) over the total 
        credits to such account for such years, and
            ``(2) if the multiemployer plan is in reorganization for 
        any plan year, the accumulated funding deficiency of the plan 
        determined under section 4243.
    ``(b) Funding Standard Account.--
            ``(1) Account required.--Each multiemployer plan to which 
        this part applies shall establish and maintain a funding 
        standard account. Such account shall be credited and charged 
        solely as provided in this section.
            ``(2) Charges to account.--For a plan year, the funding 
        standard account shall be charged with the sum of--
                    ``(A) the normal cost of the plan for the plan 
                year,
                    ``(B) the amounts necessary to amortize in equal 
                annual installments (until fully amortized)--
                            ``(i) in the case of a plan which comes 
                        into existence on or after January 1, 2008, the 
                        unfunded past service liability under the plan 
                        on the first day of the first plan year to 
                        which this section applies, over a period of 15 
                        plan years,
                            ``(ii) separately, with respect to each 
                        plan year, the net increase (if any) in 
                        unfunded past service liability under the plan 
                        arising from plan amendments adopted in such 
                        year, over a period of 15 plan years,
                            ``(iii) separately, with respect to each 
                        plan year, the net experience loss (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(iv) separately, with respect to each 
                        plan year, the net loss (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 15 plan years,
                    ``(C) the amount necessary to amortize each waived 
                funding deficiency (within the meaning of section 
                302(c)(3)) for each prior plan year in equal annual 
                installments (until fully amortized) over a period of 
                15 plan years,
                    ``(D) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 5 plan years any amount credited to the 
                funding standard account under section 302(b)(3)(D) (as 
                in effect on the day before the date of the enactment 
                of the Pension Protection Act of 2006), and
                    ``(E) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 20 years the contributions which would be 
                required to be made under the plan but for the 
                provisions of section 302(c)(7)(A)(i)(I) (as in effect 
                on the day before the date of the enactment of the 
                Pension Protection Act of 2006).
            ``(3) Credits to account.--For a plan year, the funding 
        standard account shall be credited with the sum of--
                    ``(A) the amount considered contributed by the 
                employer to or under the plan for the plan year,
                    ``(B) the amount necessary to amortize in equal 
                annual installments (until fully amortized)--
                            ``(i) separately, with respect to each plan 
                        year, the net decrease (if any) in unfunded 
                        past service liability under the plan arising 
                        from plan amendments adopted in such year, over 
                        a period of 15 plan years,
                            ``(ii) separately, with respect to each 
                        plan year, the net experience gain (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(iii) separately, with respect to each 
                        plan year, the net gain (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 15 plan years,
                    ``(C) the amount of the waived funding deficiency 
                (within the meaning of section 302(c)(3)) for the plan 
                year, and
                    ``(D) in the case of a plan year for which the 
                accumulated funding deficiency is determined under the 
                funding standard account if such plan year follows a 
                plan year for which such deficiency was determined 
                under the alternative minimum funding standard under 
                section 305 (as in effect on the day before the date of 
                the enactment of the Pension Protection Act of 2006), 
                the excess (if any) of any debit balance in the funding 
                standard account (determined without regard to this 
                subparagraph) over any debit balance in the alternative 
                minimum funding standard account.
            ``(4) Special rule for amounts first amortized in plan 
        years before 2008.--In the case of any amount amortized under 
        section 302(b) (as in effect on the day before the date of the 
        enactment of the Pension Protection Act of 2006) over any 
        period beginning with a plan year beginning before 2008, in 
        lieu of the amortization described in paragraphs (2)(B) and 
        (3)(B), such amount shall continue to be amortized under such 
        section as so in effect.
            ``(5) Combining and offsetting amounts to be amortized.--
        Under regulations prescribed by the Secretary of the Treasury, 
        amounts required to be amortized under paragraph (2) or 
        paragraph (3), as the case may be--
                    ``(A) may be combined into one amount under such 
                paragraph to be amortized over a period determined on 
                the basis of the remaining amortization period for all 
                items entering into such combined amount, and
                    ``(B) may be offset against amounts required to be 
                amortized under the other such paragraph, with the 
                resulting amount to be amortized over a period 
                determined on the basis of the remaining amortization 
                periods for all items entering into whichever of the 
                two amounts being offset is the greater.
            ``(6) Interest.--The funding standard account (and items 
        therein) shall be charged or credited (as determined under 
        regulations prescribed by the Secretary of the Treasury) with 
        interest at the appropriate rate consistent with the rate or 
        rates of interest used under the plan to determine costs.
            ``(7) Special rules relating to charges and credits to 
        funding standard account.--For purposes of this part--
                    ``(A) Withdrawal liability.--Any amount received by 
                a multiemployer plan in payment of all or part of an 
                employer's withdrawal liability under part 1 of 
                subtitle E of title IV shall be considered an amount 
                contributed by the employer to or under the plan. The 
                Secretary of the Treasury may prescribe by regulation 
                additional charges and credits to a multiemployer 
                plan's funding standard account to the extent necessary 
                to prevent withdrawal liability payments from being 
                unduly reflected as advance funding for plan 
                liabilities.
                    ``(B) Adjustments when a multiemployer plan leaves 
                reorganization.--If a multiemployer plan is not in 
                reorganization in the plan year but was in 
                reorganization in the immediately preceding plan year, 
                any balance in the funding standard account at the 
                close of such immediately preceding plan year--
                            ``(i) shall be eliminated by an offsetting 
                        credit or charge (as the case may be), but
                            ``(ii) shall be taken into account in 
                        subsequent plan years by being amortized in 
                        equal annual installments (until fully 
                        amortized) over 30 plan years.
                The preceding sentence shall not apply to the extent of 
                any accumulated funding deficiency under section 
                4243(a) as of the end of the last plan year that the 
                plan was in reorganization.
                    ``(C) Plan payments to supplemental program or 
                withdrawal liability payment fund.--Any amount paid by 
                a plan during a plan year to the Pension Benefit 
                Guaranty Corporation pursuant to section 4222 of this 
                Act or to a fund exempt under section 501(c)(22) of the 
                Internal Revenue Code of 1986 pursuant to section 4223 
                of this Act shall reduce the amount of contributions 
                considered received by the plan for the plan year.
                    ``(D) Interim withdrawal liability payments.--Any 
                amount paid by an employer pending a final 
                determination of the employer's withdrawal liability 
                under part 1 of subtitle E of title IV and subsequently 
                refunded to the employer by the plan shall be charged 
                to the funding standard account in accordance with 
                regulations prescribed by the Secretary of the 
                Treasury.
                    ``(E) Election for deferral of charge for portion 
                of net experience loss.--If an election is in effect 
                under section 302(b)(7)(F) (as in effect on the day 
                before the date of the enactment of the Pension 
                Protection Act of 2006) for any plan year, the funding 
                standard account shall be charged in the plan year to 
                which the portion of the net experience loss deferred 
                by such election was deferred with the amount so 
                deferred (and paragraph (2)(B)(iii) shall not apply to 
                the amount so charged).
                    ``(F) Financial assistance.--Any amount of any 
                financial assistance from the Pension Benefit Guaranty 
                Corporation to any plan, and any repayment of such 
                amount, shall be taken into account under this section 
                and section 302 in such manner as is determined by the 
                Secretary of the Treasury.
                    ``(G) Short-term benefits.--To the extent that any 
                plan amendment increases the unfunded past service 
                liability under the plan by reason of an increase in 
                benefits which are not payable as a life annuity but 
                are payable under the terms of the plan for a period 
                that does not exceed 14 years from the effective date 
                of the amendment, paragraph (2)(B)(ii) shall be applied 
                separately with respect to such increase in unfunded 
                past service liability by substituting the number of 
                years of the period during which such benefits are 
                payable for `15'.
    ``(c) Additional Rules.--
            ``(1) Determinations to be made under funding method.--For 
        purposes of this part, normal costs, accrued liability, past 
        service liabilities, and experience gains and losses shall be 
        determined under the funding method used to determine costs 
        under the plan.
            ``(2) Valuation of assets.--
                    ``(A) In general.--For purposes of this part, the 
                value of the plan's assets shall be determined on the 
                basis of any reasonable actuarial method of valuation 
                which takes into account fair market value and which is 
                permitted under regulations prescribed by the Secretary 
                of the Treasury.
                    ``(B) Election with respect to bonds.--The value of 
                a bond or other evidence of indebtedness which is not 
                in default as to principal or interest may, at the 
                election of the plan administrator, be determined on an 
                amortized basis running from initial cost at purchase 
                to par value at maturity or earliest call date. Any 
                election under this subparagraph shall be made at such 
                time and in such manner as the Secretary of the 
                Treasury shall by regulations provide, shall apply to 
                all such evidences of indebtedness, and may be revoked 
                only with the consent of such Secretary.
            ``(3) Actuarial assumptions must be reasonable.--For 
        purposes of this section, all costs, liabilities, rates of 
        interest, and other factors under the plan shall be determined 
        on the basis of actuarial assumptions and methods--
                    ``(A) each of which is reasonable (taking into 
                account the experience of the plan and reasonable 
                expectations), and
                    ``(B) which, in combination, offer the actuary's 
                best estimate of anticipated experience under the plan.
            ``(4) Treatment of certain changes as experience gain or 
        loss.--For purposes of this section, if--
                    ``(A) a change in benefits under the Social 
                Security Act or in other retirement benefits created 
                under Federal or State law, or
                    ``(B) a change in the definition of the term 
                `wages' under section 3121 of the Internal Revenue Code 
                of 1986, or a change in the amount of such wages taken 
                into account under regulations prescribed for purposes 
                of section 401(a)(5) of such Code,
        results in an increase or decrease in accrued liability under a 
        plan, such increase or decrease shall be treated as an 
        experience loss or gain.
            ``(5) Full funding.--If, as of the close of a plan year, a 
        plan would (without regard to this paragraph) have an 
        accumulated funding deficiency in excess of the full funding 
        limitation--
                    ``(A) the funding standard account shall be 
                credited with the amount of such excess, and
                    ``(B) all amounts described in subparagraphs (B), 
                (C), and (D) of subsection (b) (2) and subparagraph (B) 
                of subsection (b)(3) which are required to be amortized 
                shall be considered fully amortized for purposes of 
                such subparagraphs.
            ``(6) Full-funding limitation.--
                    ``(A) In general.--For purposes of paragraph (5), 
                the term `full-funding limitation' means the excess (if 
                any) of--
                            ``(i) the accrued liability (including 
                        normal cost) under the plan (determined under 
                        the entry age normal funding method if such 
                        accrued liability cannot be directly calculated 
                        under the funding method used for the plan), 
                        over
                            ``(ii) the lesser of--
                                    ``(I) the fair market value of the 
                                plan's assets, or
                                    ``(II) the value of such assets 
                                determined under paragraph (2).
                    ``(B) Minimum amount.--
                            ``(i) In general.--In no event shall the 
                        full-funding limitation determined under 
                        subparagraph (A) be less than the excess (if 
                        any) of--
                                    ``(I) 90 percent of the current 
                                liability of the plan (including the 
                                expected increase in current liability 
                                due to benefits accruing during the 
                                plan year), over
                                    ``(II) the value of the plan's 
                                assets determined under paragraph (2).
                            ``(ii) Assets.--For purposes of clause (i), 
                        assets shall not be reduced by any credit 
                        balance in the funding standard account.
                    ``(C) Full funding limitation.--For purposes of 
                this paragraph, unless otherwise provided by the plan, 
                the accrued liability under a multiemployer plan shall 
                not include benefits which are not nonforfeitable under 
                the plan after the termination of the plan (taking into 
                consideration section 411(d)(3) of the Internal Revenue 
                Code of 1986).
                    ``(D) Current liability.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `current 
                        liability' means all liabilities to employees 
                        and their beneficiaries under the plan.
                            ``(ii) Treatment of unpredictable 
                        contingent event benefits.--For purposes of 
                        clause (i), any benefit contingent on an event 
                        other than--
                                    ``(I) age, service, compensation, 
                                death, or disability, or
                                    ``(II) an event which is reasonably 
                                and reliably predictable (as determined 
                                by the Secretary of the Treasury),
                        shall not be taken into account until the event 
                        on which the benefit is contingent occurs.
                            ``(iii) Interest rate used.--The rate of 
                        interest used to determine current liability 
                        under this paragraph shall be the rate of 
                        interest determined under subparagraph (E).
                            ``(iv) Mortality tables.--
                                    ``(I) Commissioners' standard 
                                table.--In the case of plan years 
                                beginning before the first plan year to 
                                which the first tables prescribed under 
                                subclause (II) apply, the mortality 
                                table used in determining current 
                                liability under this paragraph shall be 
                                the table prescribed by the Secretary 
                                of the Treasury which is based on the 
                                prevailing commissioners' standard 
                                table (described in section 
                                807(d)(5)(A) of the Internal Revenue 
                                Code of 1986) used to determine 
                                reserves for group annuity contracts 
                                issued on January 1, 1993.
                                    ``(II) Secretarial authority.--The 
                                Secretary of the Treasury may by 
                                regulation prescribe for plan years 
                                beginning after December 31, 1999, 
                                mortality tables to be used in 
                                determining current liability under 
                                this subsection. Such tables shall be 
                                based upon the actual experience of 
                                pension plans and projected trends in 
                                such experience. In prescribing such 
                                tables, such Secretary shall take into 
                                account results of available 
                                independent studies of mortality of 
                                individuals covered by pension plans.
                            ``(v) Separate mortality tables for the 
                        disabled.--Notwithstanding clause (iv)--
                                    ``(I) In general.--The Secretary of 
                                the Treasury shall establish mortality 
                                tables which may be used (in lieu of 
                                the tables under clause (iv)) to 
                                determine current liability under this 
                                subsection for individuals who are 
                                entitled to benefits under the plan on 
                                account of disability. Such Secretary 
                                shall establish separate tables for 
                                individuals whose disabilities occur in 
                                plan years beginning before January 1, 
                                1995, and for individuals whose 
                                disabilities occur in plan years 
                                beginning on or after such date.
                                    ``(II) Special rule for 
                                disabilities occurring after 1994.--In 
                                the case of disabilities occurring in 
                                plan years beginning after December 31, 
                                1994, the tables under subclause (I) 
                                shall apply only with respect to 
                                individuals described in such subclause 
                                who are disabled within the meaning of 
                                title II of the Social Security Act and 
                                the regulations thereunder.
                            ``(vi) Periodic review.--The Secretary of 
                        the Treasury shall periodically (at least every 
                        5 years) review any tables in effect under this 
                        subparagraph and shall, to the extent such 
                        Secretary determines necessary, by regulation 
                        update the tables to reflect the actual 
                        experience of pension plans and projected 
                        trends in such experience.
                    ``(E) Required change of interest rate.--For 
                purposes of determining a plan's current liability for 
                purposes of this paragraph--
                            ``(i) In general.--If any rate of interest 
                        used under the plan under subsection (b)(6) to 
                        determine cost is not within the permissible 
                        range, the plan shall establish a new rate of 
                        interest within the permissible range.
                            ``(ii) Permissible range.--For purposes of 
                        this subparagraph--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), the term 
                                `permissible range' means a rate of 
                                interest which is not more than 5 
                                percent above, and not more than 10 
                                percent below, the weighted average of 
                                the rates of interest on 30-year 
                                Treasury securities during the 4-year 
                                period ending on the last day before 
                                the beginning of the plan year.
                                    ``(II) Secretarial authority.--If 
                                the Secretary of the Treasury finds 
                                that the lowest rate of interest 
                                permissible under subclause (I) is 
                                unreasonably high, such Secretary may 
                                prescribe a lower rate of interest, 
                                except that such rate may not be less 
                                than 80 percent of the average rate 
                                determined under such subclause.
                            ``(iii) Assumptions.--Notwithstanding 
                        paragraph (3)(A), the interest rate used under 
                        the plan shall be--
                                    ``(I) determined without taking 
                                into account the experience of the plan 
                                and reasonable expectations, but
                                    ``(II) consistent with the 
                                assumptions which reflect the purchase 
                                rates which would be used by insurance 
                                companies to satisfy the liabilities 
                                under the plan.
            ``(7) Annual valuation.--
                    ``(A) In general.--For purposes of this section, a 
                determination of experience gains and losses and a 
                valuation of the plan's liability shall be made not 
                less frequently than once every year, except that such 
                determination shall be made more frequently to the 
                extent required in particular cases under regulations 
                prescribed by the Secretary of the Treasury.
                    ``(B) Valuation date.--
                            ``(i) Current year.--Except as provided in 
                        clause (ii), the valuation referred to in 
                        subparagraph (A) shall be made as of a date 
                        within the plan year to which the valuation 
                        refers or within one month prior to the 
                        beginning of such year.
                            ``(ii) Use of prior year valuation.--The 
                        valuation referred to in subparagraph (A) may 
                        be made as of a date within the plan year prior 
                        to the year to which the valuation refers if, 
                        as of such date, the value of the assets of the 
                        plan are not less than 100 percent of the 
                        plan's current liability (as defined in 
                        paragraph (6)(D) without regard to clause (iv) 
                        thereof).
                            ``(iii) Adjustments.--Information under 
                        clause (ii) shall, in accordance with 
                        regulations, be actuarially adjusted to reflect 
                        significant differences in participants.
                            ``(iv) Limitation.--A change in funding 
                        method to use a prior year valuation, as 
                        provided in clause (ii), may not be made unless 
                        as of the valuation date within the prior plan 
                        year, the value of the assets of the plan are 
                        not less than 125 percent of the plan's current 
                        liability (as defined in paragraph (6)(D) 
                        without regard to clause (iv) thereof).
            ``(8) Time when certain contributions deemed made.--For 
        purposes of this section, any contributions for a plan year 
        made by an employer after the last day of such plan year, but 
        not later than two and one-half months after such day, shall be 
        deemed to have been made on such last day. For purposes of this 
        subparagraph, such two and one-half month period may be 
        extended for not more than six months under regulations 
        prescribed by the Secretary of the Treasury.
    ``(d) Extension of Amortization Periods for Multiemployer Plans.--
            ``(1) Automatic extension upon application by certain 
        plans.--
                    ``(A) In general.--If the plan sponsor of a 
                multiemployer plan--
                            ``(i) submits to the Secretary of the 
                        Treasury an application for an extension of the 
                        period of years required to amortize any 
                        unfunded liability described in any clause of 
                        subsection (b)(2)(B) or described in subsection 
                        (b)(4), and
                            ``(ii) includes with the application a 
                        certification by the plan's actuary described 
                        in subparagraph (B),
                the Secretary of the Treasury shall extend the 
                amortization period for the period of time (not in 
                excess of 5 years) specified in the application. Such 
                extension shall be in addition to any extension under 
                paragraph (2).
                    ``(B) Criteria.--A certification with respect to a 
                multiemployer plan is described in this subparagraph if 
                the plan's actuary certifies that, based on reasonable 
                assumptions--
                            ``(i) absent the extension under 
                        subparagraph (A), the plan would have an 
                        accumulated funding deficiency in the current 
                        plan year or any of the 9 succeeding plan 
                        years,
                            ``(ii) the plan sponsor has adopted a plan 
                        to improve the plan's funding status,
                            ``(iii) the plan is projected to have 
                        sufficient assets to timely pay expected 
                        benefits and anticipated expenditures over the 
                        amortization period as extended, and
                            ``(iv) the notice required under paragraph 
                        (3)(A) has been provided.
                    ``(C) Termination.--The preceding provisions of 
                this paragraph shall not apply with respect to any 
                application submitted after December 31, 2014.
            ``(2) Alternative extension.--
                    ``(A) In general.--If the plan sponsor of a 
                multiemployer plan submits to the Secretary of the 
                Treasury an application for an extension of the period 
                of years required to amortize any unfunded liability 
                described in any clause of subsection (b)(2)(B) or 
                described in subsection (b)(4), the Secretary of the 
                Treasury may extend the amortization period for a 
                period of time (not in excess of 10 years reduced by 
                the number of years of any extension under paragraph 
                (1) with respect to such unfunded liability) if the 
                Secretary of the Treasury makes the determination 
                described in subparagraph (B). Such extension shall be 
                in addition to any extension under paragraph (1).
                    ``(B) Determination.--The Secretary of the Treasury 
                may grant an extension under subparagraph (A) if such 
                Secretary determines that--
                            ``(i) such extension would carry out the 
                        purposes of this Act and would provide adequate 
                        protection for participants under the plan and 
                        their beneficiaries, and
                            ``(ii) the failure to permit such extension 
                        would--
                                    ``(I) result in a substantial risk 
                                to the voluntary continuation of the 
                                plan, or a substantial curtailment of 
                                pension benefit levels or employee 
                                compensation, and
                                    ``(II) be adverse to the interests 
                                of plan participants in the aggregate.
                    ``(C) Action by secretary of the treasury.--The 
                Secretary of the Treasury shall act upon any 
                application for an extension under this paragraph 
                within 180 days of the submission of such application. 
                If such Secretary rejects the application for an 
                extension under this paragraph, such Secretary shall 
                provide notice to the plan detailing the specific 
                reasons for the rejection, including references to the 
                criteria set forth above.
            ``(3) Advance notice.--
                    ``(A) In general.--The Secretary of the Treasury 
                shall, before granting an extension under this 
                subsection, require each applicant to provide evidence 
                satisfactory to such Secretary that the applicant has 
                provided notice of the filing of the application for 
                such extension to each affected party (as defined in 
                section 4001(a)(21)) with respect to the affected plan. 
                Such notice shall include a description of the extent 
                to which the plan is funded for benefits which are 
                guaranteed under title IV and for benefit liabilities.
                    ``(B) Consideration of relevant information.--The 
                Secretary of the Treasury shall consider any relevant 
                information provided by a person to whom notice was 
                given under paragraph (1).''.
    (b) Shortfall Funding Method.--
            (1) In general.--A multiemployer plan meeting the criteria 
        of paragraph (2) may adopt, use, or cease using, the shortfall 
        funding method and such adoption, use, or cessation of use of 
        such method, shall be deemed approved by the Secretary of the 
        Treasury under section 302(d)(1) of the Employee Retirement 
        Income Security Act of 1974 and section 412(d)(1) of the 
        Internal Revenue Code of 1986.
            (2) Criteria.--A multiemployer pension plan meets the 
        criteria of this clause if--
                    (A) the plan has not used the shortfall funding 
                method during the 5-year period ending on the day 
                before the date the plan is to use the method under 
                paragraph (1); and
                    (B) the plan is not operating under an amortization 
                period extension under section 304(d) of such Act and 
                did not operate under such an extension during such 5-
                year period.
            (3) Shortfall funding method defined.--For purposes of this 
        subsection, the term ``shortfall funding method'' means the 
        shortfall funding method described in Treasury Regulations 
        section 1.412(c)(1)-2 (26 C.F.R. 1.412(c)(1)-2).
            (4) Benefit restrictions to apply.--The benefit 
        restrictions under section 302(c)(7) of such Act and section 
        412(c)(7) of such Code shall apply during any period a 
        multiemployer plan is on the shortfall funding method pursuant 
        to this subsection.
            (5) Use of shortfall method not to preclude other 
        options.--Nothing in this subsection shall be construed to 
        affect a multiemployer plan's ability to adopt the shortfall 
        funding method with the Secretary's permission under otherwise 
        applicable regulations or to affect a multiemployer plan's 
        right to change funding methods, with or without the 
        Secretary's consent, as provided in applicable rules and 
        regulations.
    (c) Conforming Amendments.--
            (1) Section 301 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1081) is amended by striking subsection 
        (d).
            (2) The table of contents in section 1 of such Act (as 
        amended by this Act) is amended by inserting after the item 
        relating to section 303 the following new item:

``Sec. 304. Minimum funding standards for multiemployer plans.''.
    (d) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after 2007.
            (2) Special rule for certain amortization extensions.--If 
        the Secretary of the Treasury grants an extension under section 
        304 of the Employee Retirement Income Security Act of 1974 and 
        section 412(e) of the Internal Revenue Code of 1986 with 
        respect to any application filed with the Secretary of the 
        Treasury on or before June 30, 2005, the extension (and any 
        modification thereof) shall be applied and administered under 
        the rules of such sections as in effect before the enactment of 
        this Act, including the use of the rate of interest determined 
        under section 6621(b) of such Code.

SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
              ENDANGERED OR CRITICAL STATUS.

    (a) In General.--Part 3 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (as amended by the preceding 
provisions of this Act) is amended by inserting after section 304 the 
following new section:

``additional funding rules for multiemployer plans in endangered status 
                           or critical status

    ``Sec. 305.  (a) General Rule.--For purposes of this part, in the 
case of a multiemployer plan in effect on July 16, 2006--
            ``(1) if the plan is in endangered status--
                    ``(A) the plan sponsor shall adopt and implement a 
                funding improvement plan in accordance with the 
                requirements of subsection (c), and
                    ``(B) the requirements of subsection (d) shall 
                apply during the funding plan adoption period and the 
                funding improvement period, and
            ``(2) if the plan is in critical status--
                    ``(A) the plan sponsor shall adopt and implement a 
                rehabilitation plan in accordance with the requirements 
                of subsection (e), and
                    ``(B) the requirements of subsection (f) shall 
                apply during the rehabilitation plan adoption period 
                and the rehabilitation period.
    ``(b) Determination of Endangered and Critical Status.--For 
purposes of this section--
            ``(1) Endangered status.--A multiemployer plan is in 
        endangered status for a plan year if, as determined by the plan 
        actuary under paragraph (3), the plan is not in critical status 
        for the plan year and, as of the beginning of the plan year, 
        either--
                    ``(A) the plan's funded percentage for such plan 
                year is less than 80 percent, or
                    ``(B) the plan has an accumulated funding 
                deficiency for such plan year, or is projected to have 
                such an accumulated funding deficiency for any of the 6 
                succeeding plan years, taking into account any 
                extension of amortization periods under section 304(d).
        For purposes of this section, a plan shall be treated as in 
        seriously endangered status for a plan year if the plan is 
        described in both subparagraphs (A) and (B).
            ``(2) Critical status.--A multiemployer plan is in critical 
        status for a plan year if, as determined by the plan actuary 
        under paragraph (3), the plan is described in 1 or more of the 
        following subparagraphs as of the beginning of the plan year:
                    ``(A) A plan is described in this subparagraph if--
                            ``(i) the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the sum of--
                                    ``(I) the fair market value of plan 
                                assets, plus
                                    ``(II) the present value of the 
                                reasonably anticipated employer 
                                contributions for the current plan year 
                                and each of the 6 succeeding plan 
                                years, assuming that the terms of all 
                                collective bargaining agreements 
                                pursuant to which the plan is 
                                maintained for the current plan year 
                                continue in effect for succeeding plan 
                                years,
                        is less than the present value of all 
                        nonforfeitable benefits projected to be payable 
                        under the plan during the current plan year and 
                        each of the 6 succeeding plan years (plus 
                        administrative expenses for such plan years).
                    ``(B) A plan is described in this subparagraph if--
                            ``(i) the plan has an accumulated funding 
                        deficiency for the current plan year, not 
                        taking into account any extension of 
                        amortization periods under section 304(d), or
                            ``(ii) the plan is projected to have an 
                        accumulated funding deficiency for any of the 3 
                        succeeding plan years (4 succeeding plan years 
                        if the funded percentage of the plan is 65 
                        percent or less), not taking into account any 
                        extension of amortization periods under section 
                        304(d).
                    ``(C) A plan is described in this subparagraph if--
                            ``(i)(I) the plan's normal cost for the 
                        current plan year, plus interest (determined at 
                        the rate used for determining costs under the 
                        plan) for the current plan year on the amount 
                        of unfunded benefit liabilities under the plan 
                        as of the last date of the preceding plan year, 
                        exceeds
                            ``(II) the present value of the reasonably 
                        anticipated employer and employee contributions 
                        for the current plan year,
                            ``(ii) the present value, as of the 
                        beginning of the current plan year, of 
                        nonforfeitable benefits of inactive 
                        participants is greater than the present value 
                        of nonforfeitable benefits of active 
                        participants, and
                            ``(iii) the plan has an accumulated funding 
                        deficiency for the current plan year, or is 
                        projected to have such a deficiency for any of 
                        the 4 succeeding plan years, not taking into 
                        account any extension of amortization periods 
                        under section 304(d).
                    ``(D) A plan is described in this subparagraph if 
                the sum of--
                            ``(i) the fair market value of plan assets, 
                        plus
                            ``(ii) the present value of the reasonably 
                        anticipated employer contributions for the 
                        current plan year and each of the 4 succeeding 
                        plan years, assuming that the terms of all 
                        collective bargaining agreements pursuant to 
                        which the plan is maintained for the current 
                        plan year continue in effect for succeeding 
                        plan years,
                is less than the present value of all benefits 
                projected to be payable under the plan during the 
                current plan year and each of the 4 succeeding plan 
                years (plus administrative expenses for such plan 
                years).
            ``(3) Annual certification by plan actuary.--
                    ``(A) In general.--Not later than the 90th day of 
                each plan year of a multiemployer plan, the plan 
                actuary shall certify to the Secretary of the Treasury 
                and to the plan sponsor--
                            ``(i) whether or not the plan is in 
                        endangered status for such plan year and 
                        whether or not the plan is or will be in 
                        critical status for such plan year, and
                            ``(ii) in the case of a plan which is in a 
                        funding improvement or rehabilitation period, 
                        whether or not the plan is making the scheduled 
                        progress in meeting the requirements of its 
                        funding improvement or rehabilitation plan.
                    ``(B) Actuarial projections of assets and 
                liabilities.--
                            ``(i) In general.--In making the 
                        determinations and projections under this 
                        subsection, the plan actuary shall make 
                        projections required for the current and 
                        succeeding plan years of the current value of 
                        the assets of the plan and the present value of 
                        all liabilities to participants and 
                        beneficiaries under the plan for the current 
                        plan year as of the beginning of such year. The 
                        actuary's projections shall be based on 
                        reasonable actuarial estimates, assumptions, 
                        and methods that, except as provided in clause 
                        (iii), offer the actuary's best estimate of 
                        anticipated experience under the plan. The 
                        projected present value of liabilities as of 
                        the beginning of such year shall be determined 
                        based on the most recent of either--
                                    ``(I) the actuarial statement 
                                required under section 103(d) with 
                                respect to the most recently filed 
                                annual report, or
                                    ``(II) the actuarial valuation for 
                                the preceding plan year.
                            ``(ii) Determinations of future 
                        contributions.--Any actuarial projection of 
                        plan assets shall assume--
                                    ``(I) reasonably anticipated 
                                employer contributions for the current 
                                and succeeding plan years, assuming 
                                that the terms of the one or more 
                                collective bargaining agreements 
                                pursuant to which the plan is 
                                maintained for the current plan year 
                                continue in effect for succeeding plan 
                                years, or
                                    ``(II) that employer contributions 
                                for the most recent plan year will 
                                continue indefinitely, but only if the 
                                plan actuary determines there have been 
                                no significant demographic changes that 
                                would make such assumption 
                                unreasonable.
                            ``(iii) Projected industry activity.--Any 
                        projection of activity in the industry or 
                        industries covered by the plan, including 
                        future covered employment and contribution 
                        levels, shall be based on information provided 
                        by the plan sponsor, which shall act reasonably 
                        and in good faith.
                    ``(C) Penalty for failure to secure timely 
                actuarial certification.--Any failure of the plan's 
                actuary to certify the plan's status under this 
                subsection by the date specified in subparagraph (A) 
                shall be treated for purposes of section 502(c)(2) as a 
                failure or refusal by the plan administrator to file 
                the annual report required to be filed with the 
                Secretary under section 101(b)(4).
                    ``(D) Notice.--
                            ``(i) In general.--In any case in which it 
                        is certified under subparagraph (A) that a 
                        multiemployer plan is or will be in endangered 
                        or critical status for a plan year, the plan 
                        sponsor shall, not later than 30 days after the 
                        date of the certification, provide notification 
                        of the endangered or critical status to the 
                        participants and beneficiaries, the bargaining 
                        parties, the Pension Benefit Guaranty 
                        Corporation, and the Secretary.
                            ``(ii) Plans in critical status.--If it is 
                        certified under subparagraph (A) that a 
                        multiemployer plan is or will be in critical 
                        status, the plan sponsor shall include in the 
                        notice under clause (i) an explanation of the 
                        possibility that--
                                    ``(I) adjustable benefits (as 
                                defined in subsection (e)(8)) may be 
                                reduced, and
                                    ``(II) such reductions may apply to 
                                participants and beneficiaries whose 
                                benefit commencement date is on or 
                                after the date such notice is provided 
                                for the first plan year in which the 
                                plan is in critical status.
                            ``(iii) Model notice.--The Secretary shall 
                        prescribe a model notice that a multiemployer 
                        plan may use to satisfy the requirements under 
                        clause (ii).
    ``(c) Funding Improvement Plan Must Be Adopted for Multiemployer 
Plans in Endangered Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in endangered status for a plan year, the plan sponsor, 
        in accordance with this subsection--
                    ``(A) shall adopt a funding improvement plan not 
                later than 240 days following the required date for the 
                actuarial certification of endangered status under 
                subsection (b)(3)(A), and
                    ``(B) within 30 days after the adoption of the 
                funding improvement plan--
                            ``(i) shall provide to the bargaining 
                        parties 1 or more schedules showing revised 
                        benefit structures, revised contribution 
                        structures, or both, which, if adopted, may 
                        reasonably be expected to enable the 
                        multiemployer plan to meet the applicable 
                        benchmarks in accordance with the funding 
                        improvement plan, including--
                                    ``(I) one proposal for reductions 
                                in the amount of future benefit 
                                accruals necessary to achieve the 
                                applicable benchmarks, assuming no 
                                amendments increasing contributions 
                                under the plan (other than amendments 
                                increasing contributions necessary to 
                                achieve the applicable benchmarks after 
                                amendments have reduced future benefit 
                                accruals to the maximum extent 
                                permitted by law), and
                                    ``(II) one proposal for increases 
                                in contributions under the plan 
                                necessary to achieve the applicable 
                                benchmarks, assuming no amendments 
                                reducing future benefit accruals under 
                                the plan, and
                            ``(ii) may, if the plan sponsor deems 
                        appropriate, prepare and provide the bargaining 
                        parties with additional information relating to 
                        contribution rates or benefit reductions, 
                        alternative schedules, or other information 
                        relevant to achieving the applicable benchmarks 
                        in accordance with the funding improvement 
                        plan.
                For purposes of this section, the term `applicable 
                benchmarks' means the requirements applicable to the 
                multiemployer plan under paragraph (3) (as modified by 
                paragraph (5)).
            ``(2) Exception for years after process begins.--Paragraph 
        (1) shall not apply to a plan year if such year is in a funding 
        plan adoption period or funding improvement period by reason of 
        the plan being in endangered status for a preceding plan year. 
        For purposes of this section, such preceding plan year shall be 
        the initial determination year with respect to the funding 
        improvement plan to which it relates.
            ``(3) Funding improvement plan.--For purposes of this 
        section--
                    ``(A) In general.--A funding improvement plan is a 
                plan which consists of the actions, including options 
                or a range of options to be proposed to the bargaining 
                parties, formulated to provide, based on reasonably 
                anticipated experience and reasonable actuarial 
                assumptions, for the attainment by the plan during the 
                funding improvement period of the following 
                requirements:
                            ``(i) Increase in plan's funding 
                        percentage.--The plan's funded percentage as of 
                        the close of the funding improvement period 
                        equals or exceeds a percentage equal to the sum 
                        of--
                                    ``(I) such percentage as of the 
                                beginning of such period, plus
                                    ``(II) 33 percent of the difference 
                                between 100 percent and the percentage 
                                under subclause (I).
                            ``(ii) Avoidance of accumulated funding 
                        deficiencies.--No accumulated funding 
                        deficiency for any plan year during the funding 
                        improvement period (taking into account any 
                        extension of amortization periods under section 
                        304(d)).
                    ``(B) Seriously endangered plans.--In the case of a 
                plan in seriously endangered status, except as provided 
                in paragraph (5), subparagraph (A)(i)(II) shall be 
                applied by substituting `20 percent' for `33 percent'.
            ``(4) Funding improvement period.--For purposes of this 
        section--
                    ``(A) In general.--The funding improvement period 
                for any funding improvement plan adopted pursuant to 
                this subsection is the 10-year period beginning on the 
                first day of the first plan year of the multiemployer 
                plan beginning after the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the funding improvement plan, 
                        or
                            ``(ii) the expiration of the collective 
                        bargaining agreements in effect on the due date 
                        for the actuarial certification of endangered 
                        status for the initial determination year under 
                        subsection (b)(3)(A) and covering, as of such 
                        due date, at least 75 percent of the active 
                        participants in such multiemployer plan.
                    ``(B) Seriously endangered plans.--In the case of a 
                plan in seriously endangered status, except as provided 
                in paragraph (5), subparagraph (A) shall be applied by 
                substituting `15-year period' for `10-year period'.
                    ``(C) Coordination with changes in status.--
                            ``(i) Plans no longer in endangered 
                        status.--If the plan's actuary certifies under 
                        subsection (b)(3)(A) for a plan year in any 
                        funding plan adoption period or funding 
                        improvement period that the plan is no longer 
                        in endangered status and is not in critical 
                        status, the funding plan adoption period or 
                        funding improvement period, whichever is 
                        applicable, shall end as of the close of the 
                        preceding plan year.
                            ``(ii) Plans in critical status.--If the 
                        plan's actuary certifies under subsection 
                        (b)(3)(A) for a plan year in any funding plan 
                        adoption period or funding improvement period 
                        that the plan is in critical status, the 
                        funding plan adoption period or funding 
                        improvement period, whichever is applicable, 
                        shall end as of the close of the plan year 
                        preceding the first plan year in the 
                        rehabilitation period with respect to such 
                        status.
                    ``(D) Plans in endangered status at end of 
                period.--If the plan's actuary certifies under 
                subsection (b)(3)(A) for the first plan year following 
                the close of the period described in subparagraph (A) 
                that the plan is in endangered status, the provisions 
                of this subsection and subsection (d) shall be applied 
                as if such first plan year were an initial 
                determination year, except that the plan may not be 
                amended in a manner inconsistent with the funding 
                improvement plan in effect for the preceding plan year 
                until a new funding improvement plan is adopted.
            ``(5) Special rules for seriously endangered plans more 
        than 70 percent funded.--
                    ``(A) In general.--If the funded percentage of a 
                plan in seriously endangered status was more than 70 
                percent as of the beginning of the initial 
                determination year--
                            ``(i) paragraphs (3)(B) and (4)(B) shall 
                        apply only if the plan's actuary certifies, 
                        within 30 days after the certification under 
                        subsection (b)(3)(A) for the initial 
                        determination year, that, based on the terms of 
                        the plan and the collective bargaining 
                        agreements in effect at the time of such 
                        certification, the plan is not projected to 
                        meet the requirements of paragraph (3)(A) 
                        (without regard to paragraphs (3)(B) and 
                        (4)(B)), and
                            ``(ii) if there is a certification under 
                        clause (i), the plan may, in formulating its 
                        funding improvement plan, only take into 
                        account the rules of paragraph (3)(B) and 
                        (4)(B) for plan years in the funding 
                        improvement period beginning on or before the 
                        date on which the last of the collective 
                        bargaining agreements described in paragraph 
                        (4)(A)(ii) expires.
                    ``(B) Special rule after expiration of 
                agreements.--Notwithstanding subparagraph (A)(ii), if, 
                for any plan year ending after the date described in 
                subparagraph (A)(ii), the plan actuary certifies (at 
                the time of the annual certification under subsection 
                (b)(3)(A) for such plan year) that, based on the terms 
                of the plan and collective bargaining agreements in 
                effect at the time of that annual certification, the 
                plan is not projected to be able to meet the 
                requirements of paragraph (3)(A) (without regard to 
                paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and 
                (4)(B) shall continue to apply for such year.
            ``(6) Updates to funding improvement plan and schedules.--
                    ``(A) Funding improvement plan.--The plan sponsor 
                shall annually update the funding improvement plan and 
                shall file the update with the plan's annual report 
                under section 104.
                    ``(B) Schedules.--The plan sponsor shall annually 
                update any schedule of contribution rates provided 
                under this subsection to reflect the experience of the 
                plan.
                    ``(C) Duration of schedule.--A schedule of 
                contribution rates provided by the plan sponsor and 
                relied upon by bargaining parties in negotiating a 
                collective bargaining agreement shall remain in effect 
                for the duration of that collective bargaining 
                agreement.
            ``(7) Imposition of default schedule where failure to adopt 
        funding improvement plan.--
                    ``(A) In general.--If--
                            ``(i) a collective bargaining agreement 
                        providing for contributions under a 
                        multiemployer plan that was in effect at the 
                        time the plan entered endangered status 
                        expires, and
                            ``(ii) after receiving one or more 
                        schedules from the plan sponsor under paragraph 
                        (1)(B), the bargaining parties with respect to 
                        such agreement fail to agree on changes to 
                        contribution or benefit schedules necessary to 
                        meet the applicable benchmarks in accordance 
                        with the funding improvement plan,
                the plan sponsor shall implement the schedule described 
                in paragraph (1)(B)(i)(I) beginning on the date 
                specified in subparagraph (B).
                    ``(B) Date of implementation.--The date specified 
                in this subparagraph is the earlier of the date--
                            ``(i) on which the Secretary certifies that 
                        the parties are at an impasse, or
                            ``(ii) which is 180 days after the date on 
                        which the collective bargaining agreement 
                        described in subparagraph (A) expires.
            ``(8) Funding plan adoption period.--For purposes of this 
        section, the term `funding plan adoption period' means the 
        period beginning on the date of the certification under 
        subsection (b)(3)(A) for the initial determination year and 
        ending on the day before the first day of the funding 
        improvement period.
    ``(d) Rules for Operation of Plan During Adoption and Improvement 
Periods.--
            ``(1) Special rules for plan adoption period.--During the 
        funding plan adoption period--
                    ``(A) the plan sponsor may not accept a collective 
                bargaining agreement or participation agreement with 
                respect to the multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation,
                    ``(B) no amendment of the plan which increases the 
                liabilities of the plan by reason of any increase in 
                benefits, any change in the accrual of benefits, or any 
                change in the rate at which benefits become 
                nonforfeitable under the plan may be adopted unless 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, and
                    ``(C) in the case of a plan in seriously endangered 
                status, the plan sponsor shall take all reasonable 
                actions which are consistent with the terms of the plan 
                and applicable law and which are expected, based on 
                reasonable assumptions, to achieve--
                            ``(i) an increase in the plan's funded 
                        percentage, and
                            ``(ii) postponement of an accumulated 
                        funding deficiency for at least 1 additional 
                        plan year.
        Actions under subparagraph (C) include applications for 
        extensions of amortization periods under section 304(d), use of 
        the shortfall funding method in making funding standard account 
        computations, amendments to the plan's benefit structure, 
        reductions in future benefit accruals, and other reasonable 
        actions consistent with the terms of the plan and applicable 
        law.
            ``(2) Compliance with funding improvement plan.--
                    ``(A) In general.--A plan may not be amended after 
                the date of the adoption of a funding improvement plan 
                so as to be inconsistent with the funding improvement 
                plan.
                    ``(B) No reduction in contributions.--A plan 
                sponsor may not during any funding improvement period 
                accept a collective bargaining agreement or 
                participation agreement with respect to the 
                multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation.
                    ``(C) Special rules for benefit increases.--A plan 
                may not be amended after the date of the adoption of a 
                funding improvement plan so as to increase benefits, 
                including future benefit accruals, unless the plan 
                actuary certifies that the benefit increase is 
                consistent with the funding improvement plan and is 
                paid for out of contributions not required by the 
                funding improvement plan to meet the applicable 
                benchmark in accordance with the schedule contemplated 
                in the funding improvement plan.
    ``(e) Rehabilitation Plan Must Be Adopted for Multiemployer Plans 
in Critical Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in critical status for a plan year, the plan sponsor, 
        in accordance with this subsection--
                    ``(A) shall adopt a rehabilitation plan not later 
                than 240 days following the required date for the 
                actuarial certification of critical status under 
                subsection (b)(3)(A), and
                    ``(B) within 30 days after the adoption of the 
                rehabilitation plan--
                            ``(i) shall provide to the bargaining 
                        parties 1 or more schedules showing revised 
                        benefit structures, revised contribution 
                        structures, or both, which, if adopted, may 
                        reasonably be expected to enable the 
                        multiemployer plan to emerge from critical 
                        status in accordance with the rehabilitation 
                        plan, and
                            ``(ii) may, if the plan sponsor deems 
                        appropriate, prepare and provide the bargaining 
                        parties with additional information relating to 
                        contribution rates or benefit reductions, 
                        alternative schedules, or other information 
                        relevant to emerging from critical status in 
                        accordance with the rehabilitation plan.
        The schedule or schedules described in subparagraph (B)(i) 
        shall reflect reductions in future benefit accruals and 
        adjustable benefits, and increases in contributions, that the 
        plan sponsor determines are reasonably necessary to emerge from 
        critical status. One schedule shall be designated as the 
        default schedule and such schedule shall assume that there are 
        no increases in contributions under the plan other than the 
        increases necessary to emerge from critical status after future 
        benefit accruals and other benefits (other than benefits the 
        reduction or elimination of which are not permitted under 
        section 204(g)) have been reduced to the maximum extent 
        permitted by law.
            ``(2) Exception for years after process begins.--Paragraph 
        (1) shall not apply to a plan year if such year is in a 
        rehabilitation plan adoption period or rehabilitation period by 
        reason of the plan being in critical status for a preceding 
        plan year. For purposes of this section, such preceding plan 
        year shall be the initial critical year with respect to the 
        rehabilitation plan to which it relates.
            ``(3) Rehabilitation plan.--For purposes of this section--
                    ``(A) In general.--A rehabilitation plan is a plan 
                which consists of--
                            ``(i) actions, including options or a range 
                        of options to be proposed to the bargaining 
                        parties, formulated, based on reasonably 
                        anticipated experience and reasonable actuarial 
                        assumptions, to enable the plan to cease to be 
                        in critical status by the end of the 
                        rehabilitation period and may include 
                        reductions in plan expenditures (including plan 
                        mergers and consolidations), reductions in 
                        future benefit accruals or increases in 
                        contributions, if agreed to by the bargaining 
                        parties, or any combination of such actions, or
                            ``(ii) if the plan sponsor determines that, 
                        based on reasonable actuarial assumptions and 
                        upon exhaustion of all reasonable measures, the 
                        plan can not reasonably be expected to emerge 
                        from critical status by the end of the 
                        rehabilitation period, reasonable measures to 
                        emerge from critical status at a later time or 
                        to forestall possible insolvency (within the 
                        meaning of section 4245).
                A rehabilitation plan must provide annual standards for 
                meeting the requirements of such rehabilitation plan. 
                Such plan shall also include the schedules required to 
                be provided under paragraph (1)(B)(i) and if clause 
                (ii) applies, shall set forth the alternatives 
                considered, explain why the plan is not reasonably 
                expected to emerge from critical status by the end of 
                the rehabilitation period, and specify when, if ever, 
                the plan is expected to emerge from critical status in 
                accordance with the rehabilitation plan.
                    ``(B) Updates to rehabilitation plan and 
                schedules.--
                            ``(i) Rehabilitation plan.--The plan 
                        sponsor shall annually update the 
                        rehabilitation plan and shall file the update 
                        with the plan's annual report under section 
                        104.
                            ``(ii) Schedules.--The plan sponsor shall 
                        annually update any schedule of contribution 
                        rates provided under this subsection to reflect 
                        the experience of the plan.
                            ``(iii) Duration of schedule.--A schedule 
                        of contribution rates provided by the plan 
                        sponsor and relied upon by bargaining parties 
                        in negotiating a collective bargaining 
                        agreement shall remain in effect for the 
                        duration of that collective bargaining 
                        agreement.
                    ``(C) Imposition of default schedule where failure 
                to adopt rehabilitation plan.--
                            ``(i) In general.--If--
                                    ``(I) a collective bargaining 
                                agreement providing for contributions 
                                under a multiemployer plan that was in 
                                effect at the time the plan entered 
                                critical status expires, and
                                    ``(II) after receiving one or more 
                                schedules from the plan sponsor under 
                                paragraph (1)(B), the bargaining 
                                parties with respect to such agreement 
                                fail to adopt a contribution or benefit 
                                schedules with terms consistent with 
                                the rehabilitation plan and the 
                                schedule from the plan sponsor under 
                                paragraph (1)(B)(i),
                        the plan sponsor shall implement the default 
                        schedule described in the last sentence of 
                        paragraph (1) beginning on the date specified 
                        in clause (ii).
                            ``(ii) Date of implementation.--The date 
                        specified in this clause is the earlier of the 
                        date--
                                    ``(I) on which the Secretary 
                                certifies that the parties are at an 
                                impasse, or
                                    ``(II) which is 180 days after the 
                                date on which the collective bargaining 
                                agreement described in clause (i) 
                                expires.
            ``(4) Rehabilitation period.--For purposes of this 
        section--
                    ``(A) In general.--The rehabilitation period for a 
                plan in critical status is the 10-year period beginning 
                on the first day of the first plan year of the 
                multiemployer plan following the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the rehabilitation plan, or
                            ``(ii) the expiration of the collective 
                        bargaining agreements in effect on the date of 
                        the due date for the actuarial certification of 
                        critical status for the initial critical year 
                        under subsection (a)(1) and covering, as of 
                        such date at least 75 percent of the active 
                        participants in such multiemployer plan.
                If a plan emerges from critical status as provided 
                under subparagraph (B) before the end of such 10-year 
                period, the rehabilitation period shall end with the 
                plan year preceding the plan year for which the 
                determination under subparagraph (B) is made.
                    ``(B) Emergence.--A plan in critical status shall 
                remain in such status until a plan year for which the 
                plan actuary certifies, in accordance with subsection 
                (b)(3)(A), that the plan is not projected to have an 
                accumulated funding deficiency for the plan year or any 
                of the 9 succeeding plan years, without regard to the 
                use of the shortfall method and taking into account any 
                extension of amortization periods under section 304(d).
            ``(5) Rehabilitation plan adoption period.--For purposes of 
        this section, the term `rehabilitation plan adoption period' 
        means the period beginning on the date of the certification 
        under subsection (b)(3)(A) for the initial critical year and 
        ending on the day before the first day of the rehabilitation 
        period.
            ``(6) Limitation on reduction in rates of future 
        accruals.--Any reduction in the rate of future accruals under 
        the default schedule described in paragraph (1)(B)(i) shall not 
        reduce the rate of future accruals below--
                    ``(A) a monthly benefit (payable as a single life 
                annuity commencing at the participant's normal 
                retirement age) equal to 1 percent of the contributions 
                required to be made with respect to a participant, or 
                the equivalent standard accrual rate for a participant 
                or group of participants under the collective 
                bargaining agreements in effect as of the first day of 
                the initial critical year, or
                    ``(B) if lower, the accrual rate under the plan on 
                such first day.
        The equivalent standard accrual rate shall be determined by the 
        plan sponsor based on the standard or average contribution base 
        units which the plan sponsor determines to be representative 
        for active participants and such other factors as the plan 
        sponsor determines to be relevant. Nothing in this paragraph 
        shall be construed as limiting the ability of the plan sponsor 
        to prepare and provide the bargaining parties with alternative 
        schedules to the default schedule that established lower or 
        higher accrual and contribution rates than the rates otherwise 
        described in this paragraph.
            ``(7) Automatic employer surcharge.--
                    ``(A) Imposition of surcharge.--Each employer 
                otherwise obligated to make contributions for the 
                initial critical year shall be obligated to pay to the 
                plan for such year a surcharge equal to 5 percent of 
                the contributions otherwise required under the 
                applicable collective bargaining agreement (or other 
                agreement pursuant to which the employer contributes). 
                For each succeeding plan year in which the plan is in 
                critical status for a consecutive period of years 
                beginning with the initial critical year, the surcharge 
                shall be 10 percent of the contributions otherwise so 
                required.
                    ``(B) Enforcement of surcharge.--The surcharges 
                under subparagraph (A) shall be due and payable on the 
                same schedule as the contributions on which the 
                surcharges are based. Any failure to make a surcharge 
                payment shall be treated as a delinquent contribution 
                under section 515 and shall be enforceable as such.
                    ``(C) Surcharge to terminate upon collective 
                bargaining agreement renegotiation.--The surcharge 
                under this paragraph shall cease to be effective with 
                respect to employees covered by a collective bargaining 
                agreement (or other agreement pursuant to which the 
                employer contributes), beginning on the effective date 
                of a collective bargaining agreement (or other such 
                agreement) that includes terms consistent with a 
                schedule presented by the plan sponsor under paragraph 
                (1)(B)(i), as modified under subparagraph (B) of 
                paragraph (3).
                    ``(D) Surcharge not to apply until employer 
                receives notice.--The surcharge under this paragraph 
                shall not apply to an employer until 30 days after the 
                employer has been notified by the plan sponsor that the 
                plan is in critical status and that the surcharge is in 
                effect.
                    ``(E) Surcharge not to generate increased benefit 
                accruals.--Notwithstanding any provision of a plan to 
                the contrary, the amount of any surcharge under this 
                paragraph shall not be the basis for any benefit 
                accrual under the plan.
            ``(8) Benefit adjustments.--
                    ``(A) Adjustable benefits.--
                            ``(i) In general.--Notwithstanding section 
                        204(g), the plan sponsor shall, subject to the 
                        notice requirements in subparagraph (C), make 
                        any reductions to adjustable benefits which the 
                        plan sponsor deems appropriate, based upon the 
                        outcome of collective bargaining over the 
                        schedule or schedules provided under paragraph 
                        (1)(B)(i).
                            ``(ii) Exception for retirees.--Except in 
                        the case of adjustable benefits described in 
                        clause (iv)(III), the plan sponsor of a plan in 
                        critical status shall not reduce adjustable 
                        benefits of any participant or beneficiary 
                        whose benefit commencement date is before the 
                        date on which the plan provides notice to the 
                        participant or beneficiary under subsection 
                        (b)(3)(D) for the initial critical year.
                            ``(iii) Plan sponsor flexibility.--The plan 
                        sponsor shall include in the schedules provided 
                        to the bargaining parties an allowance for 
                        funding the benefits of participants with 
                        respect to whom contributions are not currently 
                        required to be made, and shall reduce their 
                        benefits to the extent permitted under this 
                        title and considered appropriate by the plan 
                        sponsor based on the plan's then current 
                        overall funding status.
                            ``(iv) Adjustable benefit defined.--For 
                        purposes of this paragraph, the term 
                        `adjustable benefit' means--
                                    ``(I) benefits, rights, and 
                                features under the plan, including 
                                post-retirement death benefits, 60-
                                month guarantees, disability benefits 
                                not yet in pay status, and similar 
                                benefits,
                                    ``(II) any early retirement benefit 
                                or retirement-type subsidy (within the 
                                meaning of section 204(g)(2)(A)) and 
                                any benefit payment option (other than 
                                the qualified joint-and survivor 
                                annuity), and
                                    ``(III) benefit increases that 
                                would not be eligible for a guarantee 
                                under section 4022A on the first day of 
                                initial critical year because the 
                                increases were adopted (or, if later, 
                                took effect) less than 60 months before 
                                such first day.
                    ``(B) Normal retirement benefits protected.--Except 
                as provided in subparagraph (A)(iv)(III), nothing in 
                this paragraph shall be construed to permit a plan to 
                reduce the level of a participant's accrued benefit 
                payable at normal retirement age.
                    ``(C) Notice requirements.--
                            ``(i) In general.--No reduction may be made 
                        to adjustable benefits under subparagraph (A) 
                        unless notice of such reduction has been given 
                        at least 30 days before the general effective 
                        date of such reduction for all participants and 
                        beneficiaries to--
                                    ``(I) plan participants and 
                                beneficiaries,
                                    ``(II) each employer who has an 
                                obligation to contribute (within the 
                                meaning of section 4212(a)) under the 
                                plan, and
                                    ``(III) each employee organization 
                                which, for purposes of collective 
                                bargaining, represents plan 
                                participants employed by such an 
                                employer.
                            ``(ii) Content of notice.--The notice under 
                        clause (i) shall contain--
                                    ``(I) sufficient information to 
                                enable participants and beneficiaries 
                                to understand the effect of any 
                                reduction on their benefits, including 
                                an estimate (on an annual or monthly 
                                basis) of any affected adjustable 
                                benefit that a participant or 
                                beneficiary would otherwise have been 
                                eligible for as of the general 
                                effective date described in clause (i), 
                                and
                                    ``(II) information as to the rights 
                                and remedies of plan participants and 
                                beneficiaries as well as how to contact 
                                the Department of Labor for further 
                                information and assistance where 
                                appropriate.
                            ``(iii) Form and manner.--Any notice under 
                        clause (i)--
                                    ``(I) shall be provided in a form 
                                and manner prescribed in regulations of 
                                the Secretary,
                                    ``(II) shall be written in a manner 
                                so as to be understood by the average 
                                plan participant, and
                                    ``(III) may be provided in written, 
                                electronic, or other appropriate form 
                                to the extent such form is reasonably 
                                accessible to persons to whom the 
                                notice is required to be provided.
                        The Secretary shall in the regulations 
                        prescribed under subclause (I) establish a 
                        model notice that a plan sponsor may use to 
                        meet the requirements of this subparagraph.
            ``(9) Adjustments disregarded in withdrawal liability 
        determination.--
                    ``(A) Benefit reductions.--Any benefit reductions 
                under this subsection shall be disregarded in 
                determining a plan's unfunded vested benefits for 
                purposes of determining an employer's withdrawal 
                liability under section 4201.
                    ``(B) Surcharges.--Any surcharges under paragraph 
                (7) shall be disregarded in determining an employer's 
                withdrawal liability under section 4211, except for 
                purposes of determining the unfunded vested benefits 
                attributable to an employer under section 4211(c)(4) or 
                a comparable method approved under section 4211(c)(5).
                    ``(C) Simplified calculations.--The Pension Benefit 
                Guaranty Corporation shall prescribe simplified methods 
                for the application of this paragraph in determining 
                withdrawal liability.
    ``(f) Rules for Operation of Plan During Adoption and 
Rehabilitation Period.--
            ``(1) Compliance with rehabilitation plan.--
                    ``(A) In general.--A plan may not be amended after 
                the date of the adoption of a rehabilitation plan under 
                subsection (e) so as to be inconsistent with the 
                rehabilitation plan.
                    ``(B) Special rules for benefit increases.--A plan 
                may not be amended after the date of the adoption of a 
                rehabilitation plan under subsection (e) so as to 
                increase benefits, including future benefit accruals, 
                unless the plan actuary certifies that such increase is 
                paid for out of additional contributions not 
                contemplated by the rehabilitation plan, and, after 
                taking into account the benefit increase, the 
                multiemployer plan still is reasonably expected to 
                emerge from critical status by the end of the 
                rehabilitation period on the schedule contemplated in 
                the rehabilitation plan.
            ``(2) Restriction on lump sums and similar benefits.--
                    ``(A) In general.--Effective on the date the notice 
                of certification of the plan's critical status for the 
                initial critical year under subsection (b)(3)(D) is 
                sent, and notwithstanding section 204(g), the plan 
                shall not pay--
                            ``(i) any payment, in excess of the monthly 
                        amount paid under a single life annuity (plus 
                        any social security supplements described in 
                        the last sentence of section 204(b)(1)(G)),
                            ``(ii) any payment for the purchase of an 
                        irrevocable commitment from an insurer to pay 
                        benefits, and
                            ``(iii) any other payment specified by the 
                        Secretary of the Treasury by regulations.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to a benefit which under section 203(e) may be 
                immediately distributed without the consent of the 
                participant or to any makeup payment in the case of a 
                retroactive annuity starting date or any similar 
                payment of benefits owed with respect to a prior 
                period.
            ``(3) Adjustments disregarded in withdrawal liability 
        determination.--Any benefit reductions under this subsection 
        shall be disregarded in determining a plan's unfunded vested 
        benefits for purposes of determining an employer's withdrawal 
        liability under section 4201.
            ``(4) Special rules for plan adoption period.--During the 
        rehabilitation plan adoption period--
                    ``(A) the plan sponsor may not accept a collective 
                bargaining agreement or participation agreement with 
                respect to the multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation, and
                    ``(B) no amendment of the plan which increases the 
                liabilities of the plan by reason of any increase in 
                benefits, any change in the accrual of benefits, or any 
                change in the rate at which benefits become 
                nonforfeitable under the plan may be adopted unless 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.
    ``(g) Expedited Resolution of Plan Sponsor Decisions.--If, within 
60 days of the due date for adoption of a funding improvement plan or a 
rehabilitation plan under subsection (e), the plan sponsor of a plan in 
endangered status or a plan in critical status has not agreed on a 
funding improvement plan or rehabilitation plan, then any member of the 
board or group that constitutes the plan sponsor may require that the 
plan sponsor enter into an expedited dispute resolution procedure for 
the development and adoption of a funding improvement plan or 
rehabilitation plan.
    ``(h) Nonbargained Participation.--
            ``(1) Both bargained and nonbargained employee-
        participants.--In the case of an employer that contributes to a 
        multiemployer plan with respect to both employees who are 
        covered by one or more collective bargaining agreements and 
        employees who are not so covered, if the plan is in endangered 
        status or in critical status, benefits of and contributions for 
        the nonbargained employees, including surcharges on those 
        contributions, shall be determined as if those nonbargained 
        employees were covered under the first to expire of the 
        employer's collective bargaining agreements in effect when the 
        plan entered endangered or critical status.
            ``(2) Nonbargained employees only.--In the case of an 
        employer that contributes to a multiemployer plan only with 
        respect to employees who are not covered by a collective 
        bargaining agreement, this section shall be applied as if the 
        employer were the bargaining party, and its participation 
        agreement with the plan were a collective bargaining agreement 
        with a term ending on the first day of the plan year beginning 
        after the employer is provided the schedule or schedules 
        described in subsections (c) and (e).
    ``(i) Definitions; Actuarial Method.--For purposes of this 
section--
            ``(1) Bargaining party.--The term `bargaining party' 
        means--
                    ``(A)(i) except as provided in clause (ii), an 
                employer who has an obligation to contribute under the 
                plan; or
                    ``(ii) in the case of a plan described under 
                section 404(c) of the Internal Revenue Code of 1986, or 
                a continuation of such a plan, the association of 
                employers that is the employer settlor of the plan; and
                    ``(B) an employee organization which, for purposes 
                of collective bargaining, represents plan participants 
                employed by an employer who has an obligation to 
                contribute under the plan.
            ``(2) Funded percentage.--The term `funded percentage' 
        means the percentage equal to a fraction--
                    ``(A) the numerator of which is the value of the 
                plan's assets, as determined under section 304(c)(2), 
                and
                    ``(B) the denominator of which is the accrued 
                liability of the plan, determined using actuarial 
                assumptions described in section 304(c)(3).
            ``(3) Accumulated funding deficiency.--The term 
        `accumulated funding deficiency' has the meaning given such 
        term in section 304(a).
            ``(4) Active participant.--The term `active participant' 
        means, in connection with a multiemployer plan, a participant 
        who is in covered service under the plan.
            ``(5) Inactive participant.--The term `inactive 
        participant' means, in connection with a multiemployer plan, a 
        participant, or the beneficiary or alternate payee of a 
        participant, who--
                    ``(A) is not in covered service under the plan, and
                    ``(B) is in pay status under the plan or has a 
                nonforfeitable right to benefits under the plan.
            ``(6) Pay status.--A person is in pay status under a 
        multiemployer plan if--
                    ``(A) at any time during the current plan year, 
                such person is a participant or beneficiary under the 
                plan and is paid an early, late, normal, or disability 
                retirement benefit under the plan (or a death benefit 
                under the plan related to a retirement benefit), or
                    ``(B) to the extent provided in regulations of the 
                Secretary of the Treasury, such person is entitled to 
                such a benefit under the plan.
            ``(7) Obligation to contribute.--The term `obligation to 
        contribute' has the meaning given such term under section 
        4212(a).
            ``(8) Actuarial method.--Notwithstanding any other 
        provision of this section, the actuary's determinations with 
        respect to a plan's normal cost, actuarial accrued liability, 
        and improvements in a plan's funded percentage under this 
        section shall be based upon the unit credit funding method 
        (whether or not that method is used for the plan's actuarial 
        valuation).
            ``(9) Plan sponsor.--In the case of a plan described under 
        section 404(c) of the Internal Revenue Code of 1986, or a 
        continuation of such a plan, the term `plan sponsor' means the 
        bargaining parties described under paragraph (1).
            ``(10) Benefit commencement date.--The term `benefit 
        commencement date' means the annuity starting date (or in the 
        case of a retroactive annuity starting date, the date on which 
        benefit payments begin).''.
    (b) Enforcement.--Section 502 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132) is amended--
            (1) in subsection (a)(6) by striking ``(6), or (7)'' and 
        inserting ``(6), (7), or (8)'';
            (2) by redesignating subsection (c)(8) as subsection 
        (c)(9); and
            (3) by inserting after subsection (c)(7) the following new 
        paragraph:
            ``(8) The Secretary may assess against any plan sponsor of 
        a multiemployer plan a civil penalty of not more than $1,100 
        per day--
                    ``(A) for each violation by such sponsor of the 
                requirement under section 305 to adopt by the deadline 
                established in that section a funding improvement plan 
                or rehabilitation plan with respect to a multiemployer 
                which is in endangered or critical status, or
                    ``(B) in the case of a plan in endangered status 
                which is not in seriously endangered status, for 
                failure by the plan to meet the applicable benchmarks 
                under section 305 by the end of the funding improvement 
                period with respect to the plan.''.
    (c) Cause of Action To Compel Adoption or Implementation of Funding 
Improvement or Rehabilitation Plan.--Section 502(a) of the Employee 
Retirement Income Security Act of 1974 is amended by striking ``or'' at 
the end of paragraph (8), by striking the period at the end of 
paragraph (9) and inserting ``; or'' and by adding at the end the 
following:
            ``(10) in the case of a multiemployer plan that has been 
        certified by the actuary to be in endangered or critical status 
        under section 305, if the plan sponsor--
                    ``(A) has not adopted a funding improvement or 
                rehabilitation plan under that section by the deadline 
                established in such section, or
                    ``(B) fails to update or comply with the terms of 
                the funding improvement or rehabilitation plan in 
                accordance with the requirements of such section,
        by an employer that has an obligation to contribute with 
        respect to the multiemployer plan or an employee organization 
        that represents active participants in the multiemployer plan, 
        for an order compelling the plan sponsor to adopt a funding 
        improvement or rehabilitation plan or to update or comply with 
        the terms of the funding improvement or rehabilitation plan in 
        accordance with the requirements of such section and the 
        funding improvement or rehabilitation plan.''.
    (d) No Additional Contributions Required.--Section 302(b) of the 
Employee Retirement Income Security Act of 1974, as amended by this 
Act, is amended by adding at the end the following new paragraph:
            ``(3) Multiemployer plans in critical status.--Paragraph 
        (1) shall not apply in the case of a multiemployer plan for any 
        plan year in which the plan is in critical status pursuant to 
        section 305. This paragraph shall only apply if the plan adopts 
        a rehabilitation plan in accordance with section 305(e) and 
        complies with the terms of such rehabilitation plan (and any 
        updates or modifications of the plan).''.
    (e) Conforming Amendment.--The table of contents in section 1 of 
such Act (as amended by the preceding provisions of this Act) is 
amended by inserting after the item relating to section 304 the 
following new item:

``Sec. 305. Additional funding rules for multiemployer plans in 
                            endangered status or critical status.''.
    (f) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to plan years beginning after 2007.
            (2) Special rule for certain notices.--In any case in which 
        a plan's actuary certifies that it is reasonably expected that 
        a multiemployer plan will be in critical status under section 
        305(b)(3) of the Employee Retirement Income Security Act of 
        1974, as added by this section, with respect to the first plan 
        year beginning after 2007, the notice required under 
        subparagraph (D) of such section may be provided at any time 
        after the date of enactment, so long as it is provided on or 
        before the last date for providing the notice under such 
        subparagraph.
            (3) Special rule for certain restored benefits.--In the 
        case of a multiemployer plan--
                    (A) with respect to which benefits were reduced 
                pursuant to a plan amendment adopted on or after 
                January 1, 2002, and before June 30, 2005, and
                    (B) which, pursuant to the plan document, the trust 
                agreement, or a formal written communication from the 
                plan sponsor to participants provided before June 30, 
                2005, provided for the restoration of such benefits,
        the amendments made by this section shall not apply to such 
        benefit restorations to the extent that any restriction on the 
        providing or accrual of such benefits would otherwise apply by 
        reason of such amendments.

SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER PLANS.

    (a) Advance Determination of Impending Insolvency Over 5 Years.--
Section 4245(d)(1) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1426(d)(1)) is amended--
            (1) by striking ``3 plan years'' the second place it 
        appears and inserting ``5 plan years''; and
            (2) by adding at the end the following new sentence: ``If 
        the plan sponsor makes such a determination that the plan will 
        be insolvent in any of the next 5 plan years, the plan sponsor 
        shall make the comparison under this paragraph at least 
        annually until the plan sponsor makes a determination that the 
        plan will not be insolvent in any of the next 5 plan years.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to determinations made in plan years beginning after 
2007.

SEC. 204. WITHDRAWAL LIABILITY REFORMS.

    (a) Update of Rules Relating to Limitations on Withdrawal 
Liability.--
            (1) Increase in limits.--Section 4225(a)(2) of such Act (29 
        U.S.C. 1405(a)(2)) is amended by striking the table contained 
        therein and inserting the following new table:


----------------------------------------------------------------------------------------------------------------
 ``If the liquidation or distribution value of the employer
              after the sale or exchange is--                                  The portion is--
----------------------------------------------------------------------------------------------------------------
Not more than $5,000,000...................................  30 percent of the amount.
More than $5,000,000, but not more than $10,000,000........  $1,500,000, plus 35 percent of the amount in excess
                                                              of $5,000,000.
More than $10,000,000, but not more than $15,000,000.......  $3,250,000, plus 40 percent of the amount in excess
                                                              of $10,000,000.
More than $15,000,000, but not more than $17,500,000.......  $5,250,000, plus 45 percent of the amount in excess
                                                              of $15,000,000.
More than $17,500,000, but not more than $20,000,000.......  $6,375,000, plus 50 percent of the amount in excess
                                                              of $17,500,000.
More than $20,000,000, but not more than $22,500,000.......  $7,625,000, plus 60 percent of the amount in excess
                                                              of $20,000,000.
More than $22,500,000, but not more than $25,000,000.......  $9,125,000, plus 70 percent of the amount in excess
                                                              of $22,500,000.
More than $25,000,000......................................  $10,875,000, plus 80 percent of the amount in
                                                              excess of $25,000,000.''.
----------------------------------------------------------------------------------------------------------------

        ''.    (2) Plans using attributable method.--Section 
        4225(a)(1)(B) of such Act (29 U.S.C. 1405(a)(1)(B)) is amended 
        to read as follows:
                    ``(B) in the case of a plan using the attributable 
                method of allocating withdrawal liability, the unfunded 
                vested benefits attributable to employees of the 
                employer.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to sales occurring on or after January 1, 2007.
    (b) Withdrawal Liability Continues if Work Contracted Out.--
            (1) In general.--Clause (i) of section 4205(b)(2)(A) of 
        such Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting ``or 
        to an entity or entities owned or controlled by the employer'' 
        after ``to another location''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply with respect to work transferred on or after the 
        date of the enactment of this Act.
    (c) Application of Rules to Plans Primarily Covering Employees in 
the Building and Construction Industry.--
            (1) In general.--Section 4210(b) of such Act (29 U.S.C. 
        1390(b)) is amended--
                    (A) by striking paragraph (1); and
                    (B) by redesignating paragraphs (2) through (4) as 
                paragraphs (1) through (3), respectively.
            (2) Fresh start option.--Section 4211(c)(5) of such Act (29 
        U.S.C. 1391(c)(5)) is amended by adding at the end the 
        following new subparagraph:
                    ``(E) Fresh start option.--Notwithstanding 
                paragraph (1), a plan may be amended to provide that 
                the withdrawal liability method described in subsection 
                (b) shall be applied by substituting the plan year 
                which is specified in the amendment and for which the 
                plan has no unfunded vested benefits for the plan year 
                ending before September 26, 1980.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply with respect to plan withdrawals occurring on or 
        after January 1, 2007.
    (d) Procedures Applicable to Disputes Involving Pension Plan 
Withdrawal Liability.--
            (1) In general.--Section 4221 of Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1401) is amended by adding at 
        the end the following:
    ``(g) Procedures Applicable to Certain Disputes.--
            ``(1) In general.--If--
                    ``(A) a plan sponsor of a plan determines that--
                            ``(i) a complete or partial withdrawal of 
                        an employer has occurred, or
                            ``(ii) an employer is liable for withdrawal 
                        liability payments with respect to such 
                        complete or partial withdrawal, and
                    ``(B) such determination is based in whole or in 
                part on a finding by the plan sponsor under section 
                4212(c) that a principal purpose of any transaction 
                which occurred after December 31, 1998, and at least 5 
                years (2 years in the case of a small employer) before 
                the date of the complete or partial withdrawal was to 
                evade or avoid withdrawal liability under this 
                subtitle,
        then the person against which the withdrawal liability is 
        assessed based solely on the application of section 4212(c) may 
        elect to use the special rule under paragraph (2) in applying 
        subsection (d) of this section and section 4219(c) to such 
        person.
            ``(2) Special rule.--Notwithstanding subsection (d) and 
        section 4219(c), if an electing person contests the plan 
        sponsor's determination with respect to withdrawal liability 
        payments under paragraph (1) through an arbitration proceeding 
        pursuant to subsection (a), through an action brought in a 
        court of competent jurisdiction for review of such an 
        arbitration decision, or as otherwise permitted by law, the 
        electing person shall not be obligated to make the withdrawal 
        liability payments until a final decision in the arbitration 
        proceeding, or in court, upholds the plan sponsor's 
        determination, but only if the electing person--
                    ``(A) provides notice to the plan sponsor of its 
                election to apply the special rule in this paragraph 
                within 90 days after the plan sponsor notifies the 
                electing person of its liability by reason of the 
                application of section 4212(c); and
                    ``(B) if a final decision in the arbitration 
                proceeding, or in court, of the withdrawal liability 
                dispute has not been rendered within 12 months from the 
                date of such notice, the electing person provides to 
                the plan, effective as of the first day following the 
                12-month period, a bond issued by a corporate surety 
                company that is an acceptable surety for purposes of 
                section 412 of this Act, or an amount held in escrow by 
                a bank or similar financial institution satisfactory to 
                the plan, in an amount equal to the sum of the 
                withdrawal liability payments that would otherwise be 
                due under subsection (d) and section 4219(c) for the 
                12-month period beginning with the first anniversary of 
                such notice. Such bond or escrow shall remain in effect 
                until there is a final decision in the arbitration 
                proceeding, or in court, of the withdrawal liability 
                dispute, at which time such bond or escrow shall be 
                paid to the plan if such final decision upholds the 
                plan sponsor's determination.
            ``(3) Definition of small employer.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `small employer' means 
                any employer which, for the calendar year in which the 
                transaction referred to in paragraph (1)(B) occurred 
                and for each of the 3 preceding years, on average--
                            ``(i) employs not more than 500 employees, 
                        and
                            ``(ii) is required to make contributions to 
                        the plan for not more than 250 employees.
                    ``(B) Controlled group.--Any group treated as a 
                single employer under subsection (b)(1) of section 
                4001, without regard to any transaction that was a 
                basis for the plan's finding under section 4212, shall 
                be treated as a single employer for purposes of this 
                subparagraph.
            ``(4) Additional security pending resolution of dispute.--
        If a withdrawal liability dispute to which this subsection 
        applies is not concluded by 12 months after the electing person 
        posts the bond or escrow described in paragraph (2), the 
        electing person shall, at the start of each succeeding 12-month 
        period, provide an additional bond or amount held in escrow 
        equal to the sum of the withdrawal liability payments that 
        would otherwise be payable to the plan during that period.
            ``(5) The liability of the party furnishing a bond or 
        escrow under this subsection shall be reduced, upon the payment 
        of the bond or escrow to the plan, by the amount thereof.''
            (2) Effective date.--The amendments made by this subsection 
        shall apply to any person that receives a notification under 
        section 4219(b)(1) of the Employee Retirement Income Security 
        Act of 1974 on or after the date of enactment of this Act with 
        respect to a transaction that occurred after December 31, 1998.

SEC. 205. PROHIBITION ON RETALIATION AGAINST EMPLOYERS EXERCISING THEIR 
              RIGHTS TO PETITION THE FEDERAL GOVERNMENT.

    Section 510 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1140) is amended by inserting before the last sentence 
thereof the following new sentence:``In the case of a multiemployer 
plan, it shall be unlawful for the plan sponsor or any other person to 
discriminate against any contributing employer for exercising rights 
under this Act or for giving information or testifying in any inquiry 
or proceeding relating to this Act before Congress.''

SEC. 206. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED UNDER AN AGREEMENT 
              APPROVED BY THE PENSION BENEFIT GUARANTY CORPORATION.

    In the case of a multiemployer plan that is a party to an agreement 
that was approved by the Pension Benefit Guaranty Corporation prior to 
June 30, 2005, and that--
            (1) increases benefits, and
            (2) provides for special withdrawal liability rules under 
        section 4203(f) of the Employee Retirement Income Security Act 
        of 1974 (29 U.S.C. 1383),
the amendments made by sections 201, 202, 211, and 212 of this Act 
shall not apply to the benefit increases under any plan amendment 
adopted prior to June 30, 2005, that are funded pursuant to such 
agreement if the plan is funded in compliance with such agreement (and 
any amendments thereto).

        Subtitle B--Amendments to Internal Revenue Code of 1986

SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS.

    (a) In General.--Subpart A of part III of subchapter D of chapter 1 
of the Internal Revenue Code of 1986 (as added by this Act) is amended 
by inserting after section 430 the following new section:

``SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER PLANS.

    ``(a) In General.--For purposes of section 412, the accumulated 
funding deficiency of a multiemployer plan for any plan year is--
            ``(1) except as provided in paragraph (2), the amount, 
        determined as of the end of the plan year, equal to the excess 
        (if any) of the total charges to the funding standard account 
        of the plan for all plan years (beginning with the first plan 
        year for which this part applies to the plan) over the total 
        credits to such account for such years, and
            ``(2) if the multiemployer plan is in reorganization for 
        any plan year, the accumulated funding deficiency of the plan 
        determined under section 4243 of the Employee Retirement Income 
        Security Act of 1974.
    ``(b) Funding Standard Account.--
            ``(1) Account required.--Each multiemployer plan to which 
        this part applies shall establish and maintain a funding 
        standard account. Such account shall be credited and charged 
        solely as provided in this section.
            ``(2) Charges to account.--For a plan year, the funding 
        standard account shall be charged with the sum of--
                    ``(A) the normal cost of the plan for the plan 
                year,
                    ``(B) the amounts necessary to amortize in equal 
                annual installments (until fully amortized)--
                            ``(i) in the case of a plan which comes 
                        into existence on or after January 1, 2008, the 
                        unfunded past service liability under the plan 
                        on the first day of the first plan year to 
                        which this section applies, over a period of 15 
                        plan years,
                            ``(ii) separately, with respect to each 
                        plan year, the net increase (if any) in 
                        unfunded past service liability under the plan 
                        arising from plan amendments adopted in such 
                        year, over a period of 15 plan years,
                            ``(iii) separately, with respect to each 
                        plan year, the net experience loss (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(iv) separately, with respect to each 
                        plan year, the net loss (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 15 plan years,
                    ``(C) the amount necessary to amortize each waived 
                funding deficiency (within the meaning of section 
                412(c)(3)) for each prior plan year in equal annual 
                installments (until fully amortized) over a period of 
                15 plan years,
                    ``(D) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 5 plan years any amount credited to the 
                funding standard account under section 412(b)(3)(D) (as 
                in effect on the day before the date of the enactment 
                of the Pension Protection Act of 2006), and
                    ``(E) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 20 years the contributions which would be 
                required to be made under the plan but for the 
                provisions of section 412(c)(7)(A)(i)(I) (as in effect 
                on the day before the date of the enactment of the 
                Pension Protection Act of 2006).
            ``(3) Credits to account.--For a plan year, the funding 
        standard account shall be credited with the sum of--
                    ``(A) the amount considered contributed by the 
                employer to or under the plan for the plan year,
                    ``(B) the amount necessary to amortize in equal 
                annual installments (until fully amortized)--
                            ``(i) separately, with respect to each plan 
                        year, the net decrease (if any) in unfunded 
                        past service liability under the plan arising 
                        from plan amendments adopted in such year, over 
                        a period of 15 plan years,
                            ``(ii) separately, with respect to each 
                        plan year, the net experience gain (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(iii) separately, with respect to each 
                        plan year, the net gain (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 15 plan years,
                    ``(C) the amount of the waived funding deficiency 
                (within the meaning of section 412(c)(3)) for the plan 
                year, and
                    ``(D) in the case of a plan year for which the 
                accumulated funding deficiency is determined under the 
                funding standard account if such plan year follows a 
                plan year for which such deficiency was determined 
                under the alternative minimum funding standard under 
                section 412(g) (as in effect on the day before the date 
                of the enactment of the Pension Protection Act of 
                2006), the excess (if any) of any debit balance in the 
                funding standard account (determined without regard to 
                this subparagraph) over any debit balance in the 
                alternative minimum funding standard account.
            ``(4) Special rule for amounts first amortized in plan 
        years before 2008.--In the case of any amount amortized under 
        section 412(b) (as in effect on the day before the date of the 
        enactment of the Pension Protection Act of 2006) over any 
        period beginning with a plan year beginning before 2008 in lieu 
        of the amortization described in paragraphs (2)(B) and (3)(B), 
        such amount shall continue to be amortized under such section 
        as so in effect.
            ``(5) Combining and offsetting amounts to be amortized.--
        Under regulations prescribed by the Secretary, amounts required 
        to be amortized under paragraph (2) or paragraph (3), as the 
        case may be--
                    ``(A) may be combined into one amount under such 
                paragraph to be amortized over a period determined on 
                the basis of the remaining amortization period for all 
                items entering into such combined amount, and
                    ``(B) may be offset against amounts required to be 
                amortized under the other such paragraph, with the 
                resulting amount to be amortized over a period 
                determined on the basis of the remaining amortization 
                periods for all items entering into whichever of the 
                two amounts being offset is the greater.
            ``(6) Interest.--The funding standard account (and items 
        therein) shall be charged or credited (as determined under 
        regulations prescribed by the Secretary of the Treasury) with 
        interest at the appropriate rate consistent with the rate or 
        rates of interest used under the plan to determine costs.
            ``(7) Special rules relating to charges and credits to 
        funding standard account.--For purposes of this part--
                    ``(A) Withdrawal liability.--Any amount received by 
                a multiemployer plan in payment of all or part of an 
                employer's withdrawal liability under part 1 of 
                subtitle E of title IV of the Employee Retirement 
                Income Security Act of 1974 shall be considered an 
                amount contributed by the employer to or under the 
                plan. The Secretary may prescribe by regulation 
                additional charges and credits to a multiemployer 
                plan's funding standard account to the extent necessary 
                to prevent withdrawal liability payments from being 
                unduly reflected as advance funding for plan 
                liabilities.
                    ``(B) Adjustments when a multiemployer plan leaves 
                reorganization.--If a multiemployer plan is not in 
                reorganization in the plan year but was in 
                reorganization in the immediately preceding plan year, 
                any balance in the funding standard account at the 
                close of such immediately preceding plan year--
                            ``(i) shall be eliminated by an offsetting 
                        credit or charge (as the case may be), but
                            ``(ii) shall be taken into account in 
                        subsequent plan years by being amortized in 
                        equal annual installments (until fully 
                        amortized) over 30 plan years.
                The preceding sentence shall not apply to the extent of 
                any accumulated funding deficiency under section 
                4243(a) of such Act as of the end of the last plan year 
                that the plan was in reorganization.
                    ``(C) Plan payments to supplemental program or 
                withdrawal liability payment fund.--Any amount paid by 
                a plan during a plan year to the Pension Benefit 
                Guaranty Corporation pursuant to section 4222 of such 
                Act or to a fund exempt under section 501(c)(22) 
                pursuant to section 4223 of such Act shall reduce the 
                amount of contributions considered received by the plan 
                for the plan year.
                    ``(D) Interim withdrawal liability payments.--Any 
                amount paid by an employer pending a final 
                determination of the employer's withdrawal liability 
                under part 1 of subtitle E of title IV of such Act and 
                subsequently refunded to the employer by the plan shall 
                be charged to the funding standard account in 
                accordance with regulations prescribed by the 
                Secretary.
                    ``(E) Election for deferral of charge for portion 
                of net experience loss.--If an election is in effect 
                under section 412(b)(7)(F) (as in effect on the day 
                before the date of the enactment of the Pension 
                Protection Act of 2006) for any plan year, the funding 
                standard account shall be charged in the plan year to 
                which the portion of the net experience loss deferred 
                by such election was deferred with the amount so 
                deferred (and paragraph (2)(B)(iii) shall not apply to 
                the amount so charged).
                    ``(F) Financial assistance.--Any amount of any 
                financial assistance from the Pension Benefit Guaranty 
                Corporation to any plan, and any repayment of such 
                amount, shall be taken into account under this section 
                and section 412 in such manner as is determined by the 
                Secretary.
                    ``(G) Short-term benefits.--To the extent that any 
                plan amendment increases the unfunded past service 
                liability under the plan by reason of an increase in 
                benefits which are not payable as a life annuity but 
                are payable under the terms of the plan for a period 
                that does not exceed 14 years from the effective date 
                of the amendment, paragraph (2)(B)(ii) shall be applied 
                separately with respect to such increase in unfunded 
                past service liability by substituting the number of 
                years of the period during which such benefits are 
                payable for `15'.
    ``(c) Additional Rules.--
            ``(1) Determinations to be made under funding method.--For 
        purposes of this part, normal costs, accrued liability, past 
        service liabilities, and experience gains and losses shall be 
        determined under the funding method used to determine costs 
        under the plan.
            ``(2) Valuation of assets.--
                    ``(A) In general.--For purposes of this part, the 
                value of the plan's assets shall be determined on the 
                basis of any reasonable actuarial method of valuation 
                which takes into account fair market value and which is 
                permitted under regulations prescribed by the 
                Secretary.
                    ``(B) Election with respect to bonds.--The value of 
                a bond or other evidence of indebtedness which is not 
                in default as to principal or interest may, at the 
                election of the plan administrator, be determined on an 
                amortized basis running from initial cost at purchase 
                to par value at maturity or earliest call date. Any 
                election under this subparagraph shall be made at such 
                time and in such manner as the Secretary shall by 
                regulations provide, shall apply to all such evidences 
                of indebtedness, and may be revoked only with the 
                consent of the Secretary.
            ``(3) Actuarial assumptions must be reasonable.--For 
        purposes of this section, all costs, liabilities, rates of 
        interest, and other factors under the plan shall be determined 
        on the basis of actuarial assumptions and methods--
                    ``(A) each of which is reasonable (taking into 
                account the experience of the plan and reasonable 
                expectations), and
                    ``(B) which, in combination, offer the actuary's 
                best estimate of anticipated experience under the plan.
            ``(4) Treatment of certain changes as experience gain or 
        loss.--For purposes of this section, if--
                    ``(A) a change in benefits under the Social 
                Security Act or in other retirement benefits created 
                under Federal or State law, or
                    ``(B) a change in the definition of the term 
                `wages' under section 3121, or a change in the amount 
                of such wages taken into account under regulations 
                prescribed for purposes of section 401(a)(5),
        results in an increase or decrease in accrued liability under a 
        plan, such increase or decrease shall be treated as an 
        experience loss or gain.
            ``(5) Full funding.--If, as of the close of a plan year, a 
        plan would (without regard to this paragraph) have an 
        accumulated funding deficiency in excess of the full funding 
        limitation--
                    ``(A) the funding standard account shall be 
                credited with the amount of such excess, and
                    ``(B) all amounts described in subparagraphs (B), 
                (C), and (D) of subsection (b) (2) and subparagraph (B) 
                of subsection (b)(3) which are required to be amortized 
                shall be considered fully amortized for purposes of 
                such subparagraphs.
            ``(6) Full-funding limitation.--
                    ``(A) In general.--For purposes of paragraph (5), 
                the term `full-funding limitation' means the excess (if 
                any) of--
                            ``(i) the accrued liability (including 
                        normal cost) under the plan (determined under 
                        the entry age normal funding method if such 
                        accrued liability cannot be directly calculated 
                        under the funding method used for the plan), 
                        over
                            ``(ii) the lesser of--
                                    ``(I) the fair market value of the 
                                plan's assets, or
                                    ``(II) the value of such assets 
                                determined under paragraph (2).
                    ``(B) Minimum amount.--
                            ``(i) In general.--In no event shall the 
                        full-funding limitation determined under 
                        subparagraph (A) be less than the excess (if 
                        any) of--
                                    ``(I) 90 percent of the current 
                                liability of the plan (including the 
                                expected increase in current liability 
                                due to benefits accruing during the 
                                plan year), over
                                    ``(II) the value of the plan's 
                                assets determined under paragraph (2).
                            ``(ii) Assets.--For purposes of clause (i), 
                        assets shall not be reduced by any credit 
                        balance in the funding standard account.
                    ``(C) Full funding limitation.--For purposes of 
                this paragraph, unless otherwise provided by the plan, 
                the accrued liability under a multiemployer plan shall 
                not include benefits which are not nonforfeitable under 
                the plan after the termination of the plan (taking into 
                consideration section 411(d)(3)).
                    ``(D) Current liability.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `current 
                        liability' means all liabilities to employees 
                        and their beneficiaries under the plan.
                            ``(ii) Treatment of unpredictable 
                        contingent event benefits.--For purposes of 
                        clause (i), any benefit contingent on an event 
                        other than--
                                    ``(I) age, service, compensation, 
                                death, or disability, or
                                    ``(II) an event which is reasonably 
                                and reliably predictable (as determined 
                                by the Secretary),
                        shall not be taken into account until the event 
                        on which the benefit is contingent occurs.
                            ``(iii) Interest rate used.--The rate of 
                        interest used to determine current liability 
                        under this paragraph shall be the rate of 
                        interest determined under subparagraph (E).
                            ``(iv) Mortality tables.--
                                    ``(I) Commissioners' standard 
                                table.--In the case of plan years 
                                beginning before the first plan year to 
                                which the first tables prescribed under 
                                subclause (II) apply, the mortality 
                                table used in determining current 
                                liability under this paragraph shall be 
                                the table prescribed by the Secretary 
                                which is based on the prevailing 
                                commissioners' standard table 
                                (described in section 807(d)(5)(A)) 
                                used to determine reserves for group 
                                annuity contracts issued on January 1, 
                                1993.
                                    ``(II) Secretarial authority.--The 
                                Secretary may by regulation prescribe 
                                for plan years beginning after December 
                                31, 1999, mortality tables to be used 
                                in determining current liability under 
                                this subsection. Such tables shall be 
                                based upon the actual experience of 
                                pension plans and projected trends in 
                                such experience. In prescribing such 
                                tables, the Secretary shall take into 
                                account results of available 
                                independent studies of mortality of 
                                individuals covered by pension plans.
                            ``(v) Separate mortality tables for the 
                        disabled.--Notwithstanding clause (iv)--
                                    ``(I) In general.--The Secretary 
                                shall establish mortality tables which 
                                may be used (in lieu of the tables 
                                under clause (iv)) to determine current 
                                liability under this subsection for 
                                individuals who are entitled to 
                                benefits under the plan on account of 
                                disability. The Secretary shall 
                                establish separate tables for 
                                individuals whose disabilities occur in 
                                plan years beginning before January 1, 
                                1995, and for individuals whose 
                                disabilities occur in plan years 
                                beginning on or after such date.
                                    ``(II) Special rule for 
                                disabilities occurring after 1994.--In 
                                the case of disabilities occurring in 
                                plan years beginning after December 31, 
                                1994, the tables under subclause (I) 
                                shall apply only with respect to 
                                individuals described in such subclause 
                                who are disabled within the meaning of 
                                title II of the Social Security Act and 
                                the regulations thereunder.
                            ``(vi) Periodic review.--The Secretary 
                        shall periodically (at least every 5 years) 
                        review any tables in effect under this 
                        subparagraph and shall, to the extent such 
                        Secretary determines necessary, by regulation 
                        update the tables to reflect the actual 
                        experience of pension plans and projected 
                        trends in such experience.
                    ``(E) Required change of interest rate.--For 
                purposes of determining a plan's current liability for 
                purposes of this paragraph--
                            ``(i) In general.--If any rate of interest 
                        used under the plan under subsection (b)(6) to 
                        determine cost is not within the permissible 
                        range, the plan shall establish a new rate of 
                        interest within the permissible range.
                            ``(ii) Permissible range.--For purposes of 
                        this subparagraph--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), the term 
                                `permissible range' means a rate of 
                                interest which is not more than 5 
                                percent above, and not more than 10 
                                percent below, the weighted average of 
                                the rates of interest on 30-year 
                                Treasury securities during the 4-year 
                                period ending on the last day before 
                                the beginning of the plan year.
                                    ``(II) Secretarial authority.--If 
                                the Secretary finds that the lowest 
                                rate of interest permissible under 
                                subclause (I) is unreasonably high, the 
                                Secretary may prescribe a lower rate of 
                                interest, except that such rate may not 
                                be less than 80 percent of the average 
                                rate determined under such subclause.
                            ``(iii) Assumptions.--Notwithstanding 
                        paragraph (3)(A), the interest rate used under 
                        the plan shall be--
                                    ``(I) determined without taking 
                                into account the experience of the plan 
                                and reasonable expectations, but
                                    ``(II) consistent with the 
                                assumptions which reflect the purchase 
                                rates which would be used by insurance 
                                companies to satisfy the liabilities 
                                under the plan.
            ``(7) Annual valuation.--
                    ``(A) In general.--For purposes of this section, a 
                determination of experience gains and losses and a 
                valuation of the plan's liability shall be made not 
                less frequently than once every year, except that such 
                determination shall be made more frequently to the 
                extent required in particular cases under regulations 
                prescribed by the Secretary.
                    ``(B) Valuation date.--
                            ``(i) Current year.--Except as provided in 
                        clause (ii), the valuation referred to in 
                        subparagraph (A) shall be made as of a date 
                        within the plan year to which the valuation 
                        refers or within one month prior to the 
                        beginning of such year.
                            ``(ii) Use of prior year valuation.--The 
                        valuation referred to in subparagraph (A) may 
                        be made as of a date within the plan year prior 
                        to the year to which the valuation refers if, 
                        as of such date, the value of the assets of the 
                        plan are not less than 100 percent of the 
                        plan's current liability (as defined in 
                        paragraph (6)(D) without regard to clause (iv) 
                        thereof).
                            ``(iii) Adjustments.--Information under 
                        clause (ii) shall, in accordance with 
                        regulations, be actuarially adjusted to reflect 
                        significant differences in participants.
                            ``(iv) Limitation.--A change in funding 
                        method to use a prior year valuation, as 
                        provided in clause (ii), may not be made unless 
                        as of the valuation date within the prior plan 
                        year, the value of the assets of the plan are 
                        not less than 125 percent of the plan's current 
                        liability (as defined in paragraph (6)(D) 
                        without regard to clause (iv) thereof).
            ``(8) Time when certain contributions deemed made.--For 
        purposes of this section, any contributions for a plan year 
        made by an employer after the last day of such plan year, but 
        not later than two and one-half months after such day, shall be 
        deemed to have been made on such last day. For purposes of this 
        subparagraph, such two and one-half month period may be 
        extended for not more than six months under regulations 
        prescribed by the Secretary.
    ``(d) Extension of Amortization Periods for Multiemployer Plans.--
            ``(1) Automatic extension upon application by certain 
        plans.--
                    ``(A) In general.--If the plan sponsor of a 
                multiemployer plan--
                            ``(i) submits to the Secretary an 
                        application for an extension of the period of 
                        years required to amortize any unfunded 
                        liability described in any clause of subsection 
                        (b)(2)(B) or described in subsection (b)(4), 
                        and
                            ``(ii) includes with the application a 
                        certification by the plan's actuary described 
                        in subparagraph (B),
                the Secretary shall extend the amortization period for 
                the period of time (not in excess of 5 years) specified 
                in the application. Such extension shall be in addition 
                to any extension under paragraph (2).
                    ``(B) Criteria.--A certification with respect to a 
                multiemployer plan is described in this subparagraph if 
                the plan's actuary certifies that, based on reasonable 
                assumptions--
                            ``(i) absent the extension under 
                        subparagraph (A), the plan would have an 
                        accumulated funding deficiency in the current 
                        plan year or any of the 9 succeeding plan 
                        years,
                            ``(ii) the plan sponsor has adopted a plan 
                        to improve the plan's funding status,
                            ``(iii) the plan is projected to have 
                        sufficient assets to timely pay expected 
                        benefits and anticipated expenditures over the 
                        amortization period as extended, and
                            ``(iv) the notice required under paragraph 
                        (3)(A) has been provided.
                    ``(C) Termination.--The preceding provisions of 
                this paragraph shall not apply with respect to any 
                application submitted after December 31, 2014.
            ``(2) Alternative extension.--
                    ``(A) In general.--If the plan sponsor of a 
                multiemployer plan submits to the Secretary an 
                application for an extension of the period of years 
                required to amortize any unfunded liability described 
                in any clause of subsection (b)(2)(B) or described in 
                subsection (b)(4), the Secretary may extend the 
                amortization period for a period of time (not in excess 
                of 10 years reduced by the number of years of any 
                extension under paragraph (1) with respect to such 
                unfunded liability) if the Secretary makes the 
                determination described in subparagraph (B). Such 
                extension shall be in addition to any extension under 
                paragraph (1).
                    ``(B) Determination.--The Secretary may grant an 
                extension under subparagraph (A) if the Secretary 
                determines that--
                            ``(i) such extension would carry out the 
                        purposes of this Act and would provide adequate 
                        protection for participants under the plan and 
                        their beneficiaries, and
                            ``(ii) the failure to permit such extension 
                        would--
                                    ``(I) result in a substantial risk 
                                to the voluntary continuation of the 
                                plan, or a substantial curtailment of 
                                pension benefit levels or employee 
                                compensation, and
                                    ``(II) be adverse to the interests 
                                of plan participants in the aggregate.
                    ``(C) Action by secretary.--The Secretary shall act 
                upon any application for an extension under this 
                paragraph within 180 days of the submission of such 
                application. If the Secretary rejects the application 
                for an extension under this paragraph, the Secretary 
                shall provide notice to the plan detailing the specific 
                reasons for the rejection, including references to the 
                criteria set forth above.
            ``(3) Advance notice.--
                    ``(A) In general.--The Secretary shall, before 
                granting an extension under this subsection, require 
                each applicant to provide evidence satisfactory to such 
                Secretary that the applicant has provided notice of the 
                filing of the application for such extension to each 
                affected party (as defined in section 4001(a)(21) of 
                the Employee Retirement Income Security Act of 1974) 
                with respect to the affected plan. Such notice shall 
                include a description of the extent to which the plan 
                is funded for benefits which are guaranteed under title 
                IV of such Act and for benefit liabilities.
                    ``(B) Consideration of relevant information.--The 
                Secretary shall consider any relevant information 
                provided by a person to whom notice was given under 
                paragraph (1).''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after 2007.
            (2) Special rule for certain amortization extensions.--If 
        the Secretary of the Treasury grants an extension under section 
        304 of the Employee Retirement Income Security Act of 1974 and 
        section 412(e) of the Internal Revenue Code of 1986 with 
        respect to any application filed with the Secretary of the 
        Treasury on or before June 30, 2005, the extension (and any 
        modification thereof) shall be applied and administered under 
        the rules of such sections as in effect before the enactment of 
        this Act, including the use of the rate of interest determined 
        under section 6621(b) of such Code.

SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
              ENDANGERED OR CRITICAL STATUS.

    (a) In General.--Subpart A of part III of subchapter D of chapter 1 
of the Internal Revenue Code of 1986 (as amended by this Act) is 
amended by inserting after section 431 the following new section:

``SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
              ENDANGERED STATUS OR CRITICAL STATUS.

    ``(a) General Rule.--For purposes of this part, in the case of a 
multiemployer plan in effect on July 16, 2006 --
            ``(1) if the plan is in endangered status--
                    ``(A) the plan sponsor shall adopt and implement a 
                funding improvement plan in accordance with the 
                requirements of subsection (c), and
                    ``(B) the requirements of subsection (d) shall 
                apply during the funding plan adoption period and the 
                funding improvement period, and
            ``(2) if the plan is in critical status--
                    ``(A) the plan sponsor shall adopt and implement a 
                rehabilitation plan in accordance with the requirements 
                of subsection (e), and
                    ``(B) the requirements of subsection (f) shall 
                apply during the rehabilitation plan adoption period 
                and the rehabilitation period.
    ``(b) Determination of Endangered and Critical Status.--For 
purposes of this section--
            ``(1) Endangered status.--A multiemployer plan is in 
        endangered status for a plan year if, as determined by the plan 
        actuary under paragraph (3), the plan is not in critical status 
        for the plan year and, as of the beginning of the plan year, 
        either--
                    ``(A) the plan's funded percentage for such plan 
                year is less than 80 percent, or
                    ``(B) the plan has an accumulated funding 
                deficiency for such plan year, or is projected to have 
                such an accumulated funding deficiency for any of the 6 
                succeeding plan years, taking into account any 
                extension of amortization periods under section 431(d).
        For purposes of this section, a plan shall be treated as in 
        seriously endangered status for a plan year if the plan is 
        described in both subparagraphs (A) and (B).
            ``(2) Critical status.--A multiemployer plan is in critical 
        status for a plan year if, as determined by the plan actuary 
        under paragraph (3), the plan is described in 1 or more of the 
        following subparagraphs as of the beginning of the plan year:
                    ``(A) A plan is described in this subparagraph if--
                            ``(i) the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the sum of--
                                    ``(I) the fair market value of plan 
                                assets, plus
                                    ``(II) the present value of the 
                                reasonably anticipated employer 
                                contributions for the current plan year 
                                and each of the 6 succeeding plan 
                                years, assuming that the terms of all 
                                collective bargaining agreements 
                                pursuant to which the plan is 
                                maintained for the current plan year 
                                continue in effect for succeeding plan 
                                years,
                        is less than the present value of all 
                        nonforfeitable benefits projected to be payable 
                        under the plan during the current plan year and 
                        each of the 6 succeeding plan years (plus 
                        administrative expenses for such plan years).
                    ``(B) A plan is described in this subparagraph if--
                            ``(i) the plan has an accumulated funding 
                        deficiency for the current plan year, not 
                        taking into account any extension of 
                        amortization periods under section 431(d), or
                            ``(ii) the plan is projected to have an 
                        accumulated funding deficiency for any of the 3 
                        succeeding plan years (4 succeeding plan years 
                        if the funded percentage of the plan is 65 
                        percent or less), not taking into account any 
                        extension of amortization periods under section 
                        431(d).
                    ``(C) A plan is described in this subparagraph if--
                            ``(i)(I) the plan's normal cost for the 
                        current plan year, plus interest (determined at 
                        the rate used for determining costs under the 
                        plan) for the current plan year on the amount 
                        of unfunded benefit liabilities under the plan 
                        as of the last date of the preceding plan year, 
                        exceeds
                            ``(II) the present value of the reasonably 
                        anticipated employer and employee contributions 
                        for the current plan year,
                            ``(ii) the present value, as of the 
                        beginning of the current plan year, of 
                        nonforfeitable benefits of inactive 
                        participants is greater than the present value 
                        of nonforfeitable benefits of active 
                        participants, and
                            ``(iii) the plan has an accumulated funding 
                        deficiency for the current plan year, or is 
                        projected to have such a deficiency for any of 
                        the 4 succeeding plan years, not taking into 
                        account any extension of amortization periods 
                        under section 431(d).
                    ``(D) A plan is described in this subparagraph if 
                the sum of--
                            ``(i) the fair market value of plan assets, 
                        plus
                            ``(ii) the present value of the reasonably 
                        anticipated employer contributions for the 
                        current plan year and each of the 4 succeeding 
                        plan years, assuming that the terms of all 
                        collective bargaining agreements pursuant to 
                        which the plan is maintained for the current 
                        plan year continue in effect for succeeding 
                        plan years,
                is less than the present value of all benefits 
                projected to be payable under the plan during the 
                current plan year and each of the 4 succeeding plan 
                years (plus administrative expenses for such plan 
                years).
            ``(3) Annual certification by plan actuary.--
                    ``(A) In general.--Not later than the 90th day of 
                each plan year of a multiemployer plan, the plan 
                actuary shall certify to the Secretary and to the plan 
                sponsor--
                            ``(i) whether or not the plan is in 
                        endangered status for such plan year and 
                        whether or not the plan is or will be in 
                        critical status for such plan year, and
                            ``(ii) in the case of a plan which is in a 
                        funding improvement or rehabilitation period, 
                        whether or not the plan is making the scheduled 
                        progress in meeting the requirements of its 
                        funding improvement or rehabilitation plan.
                    ``(B) Actuarial projections of assets and 
                liabilities.--
                            ``(i) In general.--In making the 
                        determinations and projections under this 
                        subsection, the plan actuary shall make 
                        projections required for the current and 
                        succeeding plan years of the current value of 
                        the assets of the plan and the present value of 
                        all liabilities to participants and 
                        beneficiaries under the plan for the current 
                        plan year as of the beginning of such year. The 
                        actuary's projections shall be based on 
                        reasonable actuarial estimates, assumptions, 
                        and methods that, except as provided in clause 
                        (iii), offer the actuary's best estimate of 
                        anticipated experience under the plan. The 
                        projected present value of liabilities as of 
                        the beginning of such year shall be determined 
                        based on the most recent of either--
                                    ``(I) the actuarial statement 
                                required under section 103(d) of the 
                                Employee Retirement Income Security Act 
                                of 1974 with respect to the most 
                                recently filed annual report, or
                                    ``(II) the actuarial valuation for 
                                the preceding plan year.
                            ``(ii) Determinations of future 
                        contributions.--Any actuarial projection of 
                        plan assets shall assume--
                                    ``(I) reasonably anticipated 
                                employer contributions for the current 
                                and succeeding plan years, assuming 
                                that the terms of the one or more 
                                collective bargaining agreements 
                                pursuant to which the plan is 
                                maintained for the current plan year 
                                continue in effect for succeeding plan 
                                years, or
                                    ``(II) that employer contributions 
                                for the most recent plan year will 
                                continue indefinitely, but only if the 
                                plan actuary determines there have been 
                                no significant demographic changes that 
                                would make such assumption 
                                unreasonable.
                            ``(iii) Projected industry activity.--Any 
                        projection of activity in the industry or 
                        industries covered by the plan, including 
                        future covered employment and contribution 
                        levels, shall be based on information provided 
                        by the plan sponsor, which shall act reasonably 
                        and in good faith.
                    ``(C) Penalty for failure to secure timely 
                actuarial certification.--Any failure of the plan's 
                actuary to certify the plan's status under this 
                subsection by the date specified in subparagraph (A) 
                shall be treated for purposes of section 502(c)(2) of 
                the Employee Retirement Income Security Act of 1974 as 
                a failure or refusal by the plan administrator to file 
                the annual report required to be filed with the 
                Secretary under section 101(b)(4) of such Act.
                    ``(D) Notice.--
                            ``(i) In general.--In any case in which it 
                        is certified under subparagraph (A) that a 
                        multiemployer plan is or will be in endangered 
                        or critical status for a plan year, the plan 
                        sponsor shall, not later than 30 days after the 
                        date of the certification, provide notification 
                        of the endangered or critical status to the 
                        participants and beneficiaries, the bargaining 
                        parties, the Pension Benefit Guaranty 
                        Corporation, and the Secretary of Labor.
                            ``(ii) Plans in critical status.--If it is 
                        certified under subparagraph (A) that a 
                        multiemployer plan is or will be in critical 
                        status, the plan sponsor shall include in the 
                        notice under clause (i) an explanation of the 
                        possibility that--
                                    ``(I) adjustable benefits (as 
                                defined in subsection (e)(8)) may be 
                                reduced, and
                                    ``(II) such reductions may apply to 
                                participants and beneficiaries whose 
                                benefit commencement date is on or 
                                after the date such notice is provided 
                                for the first plan year in which the 
                                plan is in critical status.
                            ``(iii) Model notice.--The Secretary of 
                        Labor shall prescribe a model notice that a 
                        multiemployer plan may use to satisfy the 
                        requirements under clause (ii).
    ``(c) Funding Improvement Plan Must Be Adopted for Multiemployer 
Plans in Endangered Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in endangered status for a plan year, the plan sponsor, 
        in accordance with this subsection--
                    ``(A) shall adopt a funding improvement plan not 
                later than 240 days following the required date for the 
                actuarial certification of endangered status under 
                subsection (b)(3)(A), and
                    ``(B) within 30 days after the adoption of the 
                funding improvement plan--
                            ``(i) shall provide to the bargaining 
                        parties 1 or more schedules showing revised 
                        benefit structures, revised contribution 
                        structures, or both, which, if adopted, may 
                        reasonably be expected to enable the 
                        multiemployer plan to meet the applicable 
                        benchmarks in accordance with the funding 
                        improvement plan, including--
                                    ``(I) one proposal for reductions 
                                in the amount of future benefit 
                                accruals necessary to achieve the 
                                applicable benchmarks, assuming no 
                                amendments increasing contributions 
                                under the plan (other than amendments 
                                increasing contributions necessary to 
                                achieve the applicable benchmarks after 
                                amendments have reduced future benefit 
                                accruals to the maximum extent 
                                permitted by law), and
                                    ``(II) one proposal for increases 
                                in contributions under the plan 
                                necessary to achieve the applicable 
                                benchmarks, assuming no amendments 
                                reducing future benefit accruals under 
                                the plan, and
                            ``(ii) may, if the plan sponsor deems 
                        appropriate, prepare and provide the bargaining 
                        parties with additional information relating to 
                        contribution rates or benefit reductions, 
                        alternative schedules, or other information 
                        relevant to achieving the applicable benchmarks 
                        in accordance with the funding improvement 
                        plan.
                For purposes of this section, the term `applicable 
                benchmarks' means the requirements applicable to the 
                multiemployer plan under paragraph (3) (as modified by 
                paragraph (5)).
            ``(2) Exception for years after process begins.--Paragraph 
        (1) shall not apply to a plan year if such year is in a funding 
        plan adoption period or funding improvement period by reason of 
        the plan being in endangered status for a preceding plan year. 
        For purposes of this section, such preceding plan year shall be 
        the initial determination year with respect to the funding 
        improvement plan to which it relates.
            ``(3) Funding improvement plan.--For purposes of this 
        section--
                    ``(A) In general.--A funding improvement plan is a 
                plan which consists of the actions, including options 
                or a range of options to be proposed to the bargaining 
                parties, formulated to provide, based on reasonably 
                anticipated experience and reasonable actuarial 
                assumptions, for the attainment by the plan during the 
                funding improvement period of the following 
                requirements:
                            ``(i) Increase in plan's funding 
                        percentage.--The plan's funded percentage as of 
                        the close of the funding improvement period 
                        equals or exceeds a percentage equal to the sum 
                        of--
                                    ``(I) such percentage as of the 
                                beginning of such period, plus
                                    ``(II) 33 percent of the difference 
                                between 100 percent and the percentage 
                                under subclause (I).
                            ``(ii) Avoidance of accumulated funding 
                        deficiencies.--No accumulated funding 
                        deficiency for any plan year during the funding 
                        improvement period (taking into account any 
                        extension of amortization periods under section 
                        304(d)).
                    ``(B) Seriously endangered plans.--In the case of a 
                plan in seriously endangered status, except as provided 
                in paragraph (5), subparagraph (A)(i)(II) shall be 
                applied by substituting `20 percent' for `33 percent'.
            ``(4) Funding improvement period.--For purposes of this 
        section--
                    ``(A) In general.--The funding improvement period 
                for any funding improvement plan adopted pursuant to 
                this subsection is the 10-year period beginning on the 
                first day of the first plan year of the multiemployer 
                plan beginning after the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the funding improvement plan, 
                        or
                            ``(ii) the expiration of the collective 
                        bargaining agreements in effect on the due date 
                        for the actuarial certification of endangered 
                        status for the initial determination year under 
                        subsection (b)(3)(A) and covering, as of such 
                        due date, at least 75 percent of the active 
                        participants in such multiemployer plan.
                    ``(B) Seriously endangered plans.--In the case of a 
                plan in seriously endangered status, except as provided 
                in paragraph (5), subparagraph (A) shall be applied by 
                substituting `15-year period' for `10-year period'.
                    ``(C) Coordination with changes in status.--
                            ``(i) Plans no longer in endangered 
                        status.--If the plan's actuary certifies under 
                        subsection (b)(3)(A) for a plan year in any 
                        funding plan adoption period or funding 
                        improvement period that the plan is no longer 
                        in endangered status and is not in critical 
                        status, the funding plan adoption period or 
                        funding improvement period, whichever is 
                        applicable, shall end as of the close of the 
                        preceding plan year.
                            ``(ii) Plans in critical status.--If the 
                        plan's actuary certifies under subsection 
                        (b)(3)(A) for a plan year in any funding plan 
                        adoption period or funding improvement period 
                        that the plan is in critical status, the 
                        funding plan adoption period or funding 
                        improvement period, whichever is applicable, 
                        shall end as of the close of the plan year 
                        preceding the first plan year in the 
                        rehabilitation period with respect to such 
                        status.
                    ``(D) Plans in endangered status at end of 
                period.--If the plan's actuary certifies under 
                subsection (b)(3)(A) for the first plan year following 
                the close of the period described in subparagraph (A) 
                that the plan is in endangered status, the provisions 
                of this subsection and subsection (d) shall be applied 
                as if such first plan year were an initial 
                determination year, except that the plan may not be 
                amended in a manner inconsistent with the funding 
                improvement plan in effect for the preceding plan year 
                until a new funding improvement plan is adopted.
            ``(5) Special rules for seriously endangered plans more 
        than 70 percent funded.--
                    ``(A) In general.--If the funded percentage of a 
                plan in seriously endangered status was more than 70 
                percent as of the beginning of the initial 
                determination year--
                            ``(i) paragraphs (3)(B) and (4)(B) shall 
                        apply only if the plan's actuary certifies, 
                        within 30 days after the certification under 
                        subsection (b)(3)(A) for the initial 
                        determination year, that, based on the terms of 
                        the plan and the collective bargaining 
                        agreements in effect at the time of such 
                        certification, the plan is not projected to 
                        meet the requirements of paragraph (3)(A) 
                        (without regard to paragraphs (3)(B) and 
                        (4)(B)), and
                            ``(ii) if there is a certification under 
                        clause (i), the plan may, in formulating its 
                        funding improvement plan, only take into 
                        account the rules of paragraph (3)(B) and 
                        (4)(B) for plan years in the funding 
                        improvement period beginning on or before the 
                        date on which the last of the collective 
                        bargaining agreements described in paragraph 
                        (4)(A)(ii) expires.
                    ``(B) Special rule after expiration of 
                agreements.--Notwithstanding subparagraph (A)(ii), if, 
                for any plan year ending after the date described in 
                subparagraph (A)(ii), the plan actuary certifies (at 
                the time of the annual certification under subsection 
                (b)(3)(A) for such plan year) that, based on the terms 
                of the plan and collective bargaining agreements in 
                effect at the time of that annual certification, the 
                plan is not projected to be able to meet the 
                requirements of paragraph (3)(A) (without regard to 
                paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and 
                (4)(B) shall continue to apply for such year.
            ``(6) Updates to funding improvement plans and schedules.--
                    ``(A) Funding improvement plan.--The plan sponsor 
                shall annually update the funding improvement plan and 
                shall file the update with the plan's annual report 
                under section 104 of the Employee Retirement Income 
                Security Act of 1974.
                    ``(B) Schedules.--The plan sponsor shall annually 
                update any schedule of contribution rates provided 
                under this subsection to reflect the experience of the 
                plan.
                    ``(C) Duration of schedule.--A schedule of 
                contribution rates provided by the plan sponsor and 
                relied upon by bargaining parties in negotiating a 
                collective bargaining agreement shall remain in effect 
                for the duration of that collective bargaining 
                agreement.
            ``(7) Imposition of default schedule where failure to adopt 
        funding improvement plan.--
                    ``(A) In general.--If--
                            ``(i) a collective bargaining agreement 
                        providing for contributions under a 
                        multiemployer plan that was in effect at the 
                        time the plan entered endangered status 
                        expires, and
                            ``(ii) after receiving one or more 
                        schedules from the plan sponsor under paragraph 
                        (1)(B), the bargaining parties with respect to 
                        such agreement fail to agree on changes to 
                        contribution or benefit schedules necessary to 
                        meet the applicable benchmarks in accordance 
                        with the funding improvement plan,
                the plan sponsor shall implement the schedule described 
                in paragraph (1)(B)(i)(I) beginning on the date 
                specified in subparagraph (B).
                    ``(B) Date of implementation.--The date specified 
                in this subparagraph is the earlier of the date--
                            ``(i) on which the Secretary of Labor 
                        certifies that the parties are at an impasse, 
                        or
                            ``(ii) which is 180 days after the date on 
                        which the collective bargaining agreement 
                        described in subparagraph (A) expires.
            ``(8) Funding plan adoption period.--For purposes of this 
        section, the term `funding plan adoption period' means the 
        period beginning on the date of the certification under 
        subsection (b)(3)(A) for the initial determination year and 
        ending on the day before the first day of the funding 
        improvement period.
    ``(d) Rules for Operation of Plan During Adoption and Improvement 
Periods.--
            ``(1) Special rules for plan adoption period.--During the 
        funding plan adoption period--
                    ``(A) the plan sponsor may not accept a collective 
                bargaining agreement or participation agreement with 
                respect to the multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation,
                    ``(B) no amendment of the plan which increases the 
                liabilities of the plan by reason of any increase in 
                benefits, any change in the accrual of benefits, or any 
                change in the rate at which benefits become 
                nonforfeitable under the plan may be adopted unless the 
                amendment is required as a condition of qualification 
                under part I of subchapter D of chapter 1 or to comply 
                with other applicable law, and
                    ``(C) in the case of a plan in seriously endangered 
                status, the plan sponsor shall take all reasonable 
                actions which are consistent with the terms of the plan 
                and applicable law and which are expected, based on 
                reasonable assumptions, to achieve--
                            ``(i) an increase in the plan's funded 
                        percentage, and
                            ``(ii) postponement of an accumulated 
                        funding deficiency for at least 1 additional 
                        plan year.
        Actions under subparagraph (C) include applications for 
        extensions of amortization periods under section 431(d), use of 
        the shortfall funding method in making funding standard account 
        computations, amendments to the plan's benefit structure, 
        reductions in future benefit accruals, and other reasonable 
        actions consistent with the terms of the plan and applicable 
        law.
            ``(2) Compliance with funding improvement plan.--
                    ``(A) In general.--A plan may not be amended after 
                the date of the adoption of a funding improvement plan 
                so as to be inconsistent with the funding improvement 
                plan.
                    ``(B) No reduction in contributions.--A plan 
                sponsor may not during any funding improvement period 
                accept a collective bargaining agreement or 
                participation agreement with respect to the 
                multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation.
                    ``(C) Special rules for benefit increases.--A plan 
                may not be amended after the date of the adoption of a 
                funding improvement plan so as to increase benefits, 
                including future benefit accruals, unless the plan 
                actuary certifies that the benefit increase is 
                consistent with the funding improvement plan and is 
                paid for out of contributions not required by the 
                funding improvement plan to meet the applicable 
                benchmark in accordance with the schedule contemplated 
                in the funding improvement plan.
    ``(e) Rehabilitation Plan Must Be Adopted for Multiemployer Plans 
in Critical Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in critical status for a plan year, the plan sponsor, 
        in accordance with this subsection--
                    ``(A) shall adopt a rehabilitation plan not later 
                than 240 days following the required date for the 
                actuarial certification of critical status under 
                subsection (b)(3)(A), and
                    ``(B) within 30 days after the adoption of the 
                rehabilitation plan--
                            ``(i) shall provide to the bargaining 
                        parties 1 or more schedules showing revised 
                        benefit structures, revised contribution 
                        structures, or both, which, if adopted, may 
                        reasonably be expected to enable the 
                        multiemployer plan to emerge from critical 
                        status in accordance with the rehabilitation 
                        plan, and
                            ``(ii) may, if the plan sponsor deems 
                        appropriate, prepare and provide the bargaining 
                        parties with additional information relating to 
                        contribution rates or benefit reductions, 
                        alternative schedules, or other information 
                        relevant to emerging from critical status in 
                        accordance with the rehabilitation plan.
        The schedule or schedules described in subparagraph (B)(i) 
        shall reflect reductions in future benefit accruals and 
        adjustable benefits, and increases in contributions, that the 
        plan sponsor determines are reasonably necessary to emerge from 
        critical status. One schedule shall be designated as the 
        default schedule and such schedule shall assume that there are 
        no increases in contributions under the plan other than the 
        increases necessary to emerge from critical status after future 
        benefit accruals and other benefits (other than benefits the 
        reduction or elimination of which are not permitted under 
        section 411(d)(6)) have been reduced to the maximum extent 
        permitted by law.
            ``(2) Exception for years after process begins.--Paragraph 
        (1) shall not apply to a plan year if such year is in a 
        rehabilitation plan adoption period or rehabilitation period by 
        reason of the plan being in critical status for a preceding 
        plan year. For purposes of this section, such preceding plan 
        year shall be the initial critical year with respect to the 
        rehabilitation plan to which it relates.
            ``(3) Rehabilitation plan.--For purposes of this section--
                    ``(A) In general.--A rehabilitation plan is a plan 
                which consists of--
                            ``(i) actions, including options or a range 
                        of options to be proposed to the bargaining 
                        parties, formulated, based on reasonably 
                        anticipated experience and reasonable actuarial 
                        assumptions, to enable the plan to cease to be 
                        in critical status by the end of the 
                        rehabilitation period and may include 
                        reductions in plan expenditures (including plan 
                        mergers and consolidations), reductions in 
                        future benefit accruals or increases in 
                        contributions, if agreed to by the bargaining 
                        parties, or any combination of such actions, or
                            ``(ii) if the plan sponsor determines that, 
                        based on reasonable actuarial assumptions and 
                        upon exhaustion of all reasonable measures, the 
                        plan can not reasonably be expected to emerge 
                        from critical status by the end of the 
                        rehabilitation period, reasonable measures to 
                        emerge from critical status at a later time or 
                        to forestall possible insolvency (within the 
                        meaning of section 4245 of the Employee 
                        Retirement Income Security Act of 1974).
                A rehabilitation plan must provide annual standards for 
                meeting the requirements of such rehabilitation plan. 
                Such plan shall also include the schedules required to 
                be provided under paragraph (1)(B)(i) and if clause 
                (ii) applies, shall set forth the alternatives 
                considered, explain why the plan is not reasonably 
                expected to emerge from critical status by the end of 
                the rehabilitation period, and specify when, if ever, 
                the plan is expected to emerge from critical status in 
                accordance with the rehabilitation plan.
                    ``(B) Updates to rehabilitation plan and 
                schedules.--
                            ``(i) Rehabilitation plan.--The plan 
                        sponsor shall annually update the 
                        rehabilitation plan and shall file the update 
                        with the plan's annual report under section 104 
                        of the Employee Retirement Income Security Act 
                        of 1974.
                            ``(ii) Schedules.--The plan sponsor shall 
                        annually update any schedule of contribution 
                        rates provided under this subsection to reflect 
                        the experience of the plan.
                            ``(iii) Duration of schedule.--A schedule 
                        of contribution rates provided by the plan 
                        sponsor and relied upon by bargaining parties 
                        in negotiating a collective bargaining 
                        agreement shall remain in effect for the 
                        duration of that collective bargaining 
                        agreement.
                    ``(C) Imposition of default schedule where failure 
                to adopt rehabilitation plan.--
                            ``(i) In general.--If--
                                    ``(I) a collective bargaining 
                                agreement providing for contributions 
                                under a multiemployer plan that was in 
                                effect at the time the plan entered 
                                critical status expires, and
                                    ``(II) after receiving one or more 
                                schedules from the plan sponsor under 
                                paragraph (1)(B), the bargaining 
                                parties with respect to such agreement 
                                fail to adopt a contribution or benefit 
                                schedules with terms consistent with 
                                the rehabilitation plan and the 
                                schedule from the plan sponsor under 
                                paragraph (1)(B)(i),
                        the plan sponsor shall implement the default 
                        schedule described in the last sentence of 
                        paragraph (1) beginning on the date specified 
                        in clause (ii).
                            ``(ii) Date of implementation.--The date 
                        specified in this clause is the earlier of the 
                        date--
                                    ``(I) on which the Secretary of 
                                Labor certifies that the parties are at 
                                an impasse, or
                                    ``(II) which is 180 days after the 
                                date on which the collective bargaining 
                                agreement described in clause (i) 
                                expires.
            ``(4) Rehabilitation period.--For purposes of this 
        section--
                    ``(A) In general.--The rehabilitation period for a 
                plan in critical status is the 10-year period beginning 
                on the first day of the first plan year of the 
                multiemployer plan following the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the rehabilitation plan, or
                            ``(ii) the expiration of the collective 
                        bargaining agreements in effect on the date of 
                        the due date for the actuarial certification of 
                        critical status for the initial critical year 
                        under subsection (a)(1) and covering, as of 
                        such date at least 75 percent of the active 
                        participants in such multiemployer plan.
                If a plan emerges from critical status as provided 
                under subparagraph (B) before the end of such 10-year 
                period, the rehabilitation period shall end with the 
                plan year preceding the plan year for which the 
                determination under subparagraph (B) is made.
                    ``(B) Emergence.--A plan in critical status shall 
                remain in such status until a plan year for which the 
                plan actuary certifies, in accordance with subsection 
                (b)(3)(A), that the plan is not projected to have an 
                accumulated funding deficiency for the plan year or any 
                of the 9 succeeding plan years, without regard to the 
                use of the shortfall method and taking into account any 
                extension of amortization periods under section 431(d).
            ``(5) Rehabilitation plan adoption period.--For purposes of 
        this section, the term `rehabilitation plan adoption period' 
        means the period beginning on the date of the certification 
        under subsection (b)(3)(A) for the initial critical year and 
        ending on the day before the first day of the rehabilitation 
        period.
            ``(6) Limitation on reduction in rates of future 
        accruals.--Any reduction in the rate of future accruals under 
        the default schedule described in paragraph (1)(B)(i) shall not 
        reduce the rate of future accruals below--
                    ``(A) a monthly benefit (payable as a single life 
                annuity commencing at the participant's normal 
                retirement age) equal to 1 percent of the contributions 
                required to be made with respect to a participant, or 
                the equivalent standard accrual rate for a participant 
                or group of participants under the collective 
                bargaining agreements in effect as of the first day of 
                the initial critical year, or
                    ``(B) if lower, the accrual rate under the plan on 
                such first day.
        The equivalent standard accrual rate shall be determined by the 
        plan sponsor based on the standard or average contribution base 
        units which the plan sponsor determines to be representative 
        for active participants and such other factors as the plan 
        sponsor determines to be relevant. Nothing in this paragraph 
        shall be construed as limiting the ability of the plan sponsor 
        to prepare and provide the bargaining parties with alternative 
        schedules to the default schedule that established lower or 
        higher accrual and contribution rates than the rates otherwise 
        described in this paragraph.
            ``(7) Automatic employer surcharge.--
                    ``(A) Imposition of surcharge.--Each employer 
                otherwise obligated to make a contribution for the 
                initial critical year shall be obligated to pay to the 
                plan for such year a surcharge equal to 5 percent of 
                the contribution otherwise required under the 
                applicable collective bargaining agreement (or other 
                agreement pursuant to which the employer contributes). 
                For each succeeding plan year in which the plan is in 
                critical status for a consecutive period of years 
                beginning with the initial critical year, the surcharge 
                shall be 10 percent of the contribution otherwise so 
                required.
                    ``(B) Enforcement of surcharge.--The surcharges 
                under subparagraph (A) shall be due and payable on the 
                same schedule as the contributions on which the 
                surcharges are based. Any failure to make a surcharge 
                payment shall be treated as a delinquent contribution 
                under section 515 of the Employee Retirement Income 
                Security Act of 1974 and shall be enforceable as such.
                    ``(C) Surcharge to terminate upon collective 
                bargaining agreement renegotiation.--The surcharge 
                under this paragraph shall cease to be effective with 
                respect to employees covered by a collective bargaining 
                agreement (or other agreement pursuant to which the 
                employer contributes), beginning on the effective date 
                of a collective bargaining agreement (or other such 
                agreement) that includes terms consistent with a 
                schedule presented by the plan sponsor under paragraph 
                (1)(B)(i), as modified under subparagraph (B) of 
                paragraph (3).
                    ``(D) Surcharge not to apply until employer 
                receives notice.--The surcharge under this paragraph 
                shall not apply to an employer until 30 days after the 
                employer has been notified by the plan sponsor that the 
                plan is in critical status and that the surcharge is in 
                effect.
                    ``(E) Surcharge not to generate increased benefit 
                accruals.--Notwithstanding any provision of a plan to 
                the contrary, the amount of any surcharge under this 
                paragraph shall not be the basis for any benefit 
                accrual under the plan.
            ``(8) Benefit adjustments.--
                    ``(A) Adjustable benefits.--
                            ``(i) In general.--Notwithstanding section 
                        204(g), the plan sponsor shall, subject to the 
                        notice requirement under subparagraph (C), make 
                        any reductions to adjustable benefits which the 
                        plan sponsor deems appropriate, based upon the 
                        outcome of collective bargaining over the 
                        schedule or schedules provided under paragraph 
                        (1)(B)(i).
                            ``(ii) Exception for retirees.--Except in 
                        the case of adjustable benefits described in 
                        clause (iv)(III), the plan sponsor of a plan in 
                        critical status shall not reduce adjustable 
                        benefits of any participant or beneficiary 
                        whose benefit commencement date is before the 
                        date on which the plan provides notice to the 
                        participant or beneficiary under subsection 
                        (b)(3)(D) for the initial critical year .
                            ``(iii) Plan sponsor flexibility.--The plan 
                        sponsor shall include in the schedules provided 
                        to the bargaining parties an allowance for 
                        funding the benefits of participants with 
                        respect to whom contributions are not currently 
                        required to be made, and shall reduce their 
                        benefits to the extent permitted under this 
                        title and considered appropriate by the plan 
                        sponsor based on the plan's then current 
                        overall funding status.
                            ``(iv) Adjustable benefit defined.--For 
                        purposes of this paragraph, the term 
                        `adjustable benefit' means--
                                    ``(I) benefits, rights, and 
                                features under the plan, including 
                                post-retirement death benefits, 60-
                                month guarantees, disability benefits 
                                not yet in pay status, and similar 
                                benefits,
                                    ``(II) any early retirement benefit 
                                or retirement-type subsidy (within the 
                                meaning of section 411(d)(6)(B)(i)) and 
                                any benefit payment option (other than 
                                the qualified joint-and survivor 
                                annuity), and
                                    ``(III) benefit increases that 
                                would not be eligible for a guarantee 
                                under section 4022A of the Employee 
                                Retirement Income Security Act of 1974 
                                on the first day of initial critical 
                                year because the increases were adopted 
                                (or, if later, took effect) less than 
                                60 months before such first day.
                    ``(B) Normal retirement benefits protected.--Except 
                as provided in subparagraph (A)(iv)(III), nothing in 
                this paragraph shall be construed to permit a plan to 
                reduce the level of a participant's accrued benefit 
                payable at normal retirement age.
                    ``(C) Notice requirements.--
                            ``(i) In general.--No reduction may be made 
                        to adjustable benefits under subparagraph (A) 
                        unless notice of such reduction has been given 
                        at least 30 days before the general effective 
                        date of such reduction for all participants and 
                        beneficiaries to--
                                    ``(I) plan participants and 
                                beneficiaries,
                                    ``(II) each employer who has an 
                                obligation to contribute (within the 
                                meaning of section 4212(a)) under the 
                                plan, and
                                    ``(III) each employee organization 
                                which, for purposes of collective 
                                bargaining, represents plan 
                                participants employed by such an 
                                employer.
                            ``(ii) Content of notice.--The notice under 
                        clause (i) shall contain--
                                    ``(I) sufficient information to 
                                enable participants and beneficiaries 
                                to understand the effect of any 
                                reduction on their benefits, including 
                                an estimate (on an annual or monthly 
                                basis) of any affected adjustable 
                                benefit that a participant or 
                                beneficiary would otherwise have been 
                                eligible for as of the general 
                                effective date described in clause (i), 
                                and
                                    ``(II) information as to the rights 
                                and remedies of plan participants and 
                                beneficiaries as well as how to contact 
                                the Department of Labor for further 
                                information and assistance where 
                                appropriate.
                            ``(iii) Form and manner.--Any notice under 
                        clause (i)--
                                    ``(I) shall be provided in a form 
                                and manner prescribed in regulations of 
                                the Secretary of Labor,
                                    ``(II) shall be written in a manner 
                                so as to be understood by the average 
                                plan participant, and
                                    ``(III) may be provided in written, 
                                electronic, or other appropriate form 
                                to the extent such form is reasonably 
                                accessible to persons to whom the 
                                notice is required to be provided.
                        The Secretary of Labor shall in the regulations 
                        prescribed under subclause (I) establish a 
                        model notice that a plan sponsor may use to 
                        meet the requirements of this subparagraph.
            ``(9) Adjustments disregarded in withdrawal liability 
        determination.--
                    ``(A) Benefit reductions.--Any benefit reductions 
                under this subsection shall be disregarded in 
                determining a plan's unfunded vested benefits for 
                purposes of determining an employer's withdrawal 
                liability under section 4201 of the Employee Retirement 
                Income Security Act of 1974.
                    ``(B) Surcharges.--Any surcharges under paragraph 
                (7) shall be disregarded in determining an employer's 
                withdrawal liability under section 4211 of such Act, 
                except for purposes of determining the unfunded vested 
                benefits attributable to an employer under section 
                4211(c)(4) of such Act or a comparable method approved 
                under section 4211(c)(5) of such Act.
                    ``(C) Simplified calculations.--The Pension Benefit 
                Guaranty Corporation shall prescribe simplified methods 
                for the application of this paragraph in determining 
                withdrawal liability.
    ``(f) Rules for Operation of Plan During Adoption and 
Rehabilitation Period.--
            ``(1) Compliance with rehabilitation plan.--
                    ``(A) In general.--A plan may not be amended after 
                the date of the adoption of a rehabilitation plan under 
                subsection (e) so as to be inconsistent with the 
                rehabilitation plan.
                    ``(B) Special rules for benefit increases.--A plan 
                may not be amended after the date of the adoption of a 
                rehabilitation plan under subsection (e) so as to 
                increase benefits, including future benefit accruals, 
                unless the plan actuary certifies that such increase is 
                paid for out of additional contributions not 
                contemplated by the rehabilitation plan, and, after 
                taking into account the benefit increase, the 
                multiemployer plan still is reasonably expected to 
                emerge from critical status by the end of the 
                rehabilitation period on the schedule contemplated in 
                the rehabilitation plan.
            ``(2) Restriction on lump sums and similar benefits.--
                    ``(A) In general.--Effective on the date the notice 
                of certification of the plan's critical status for the 
                initial critical year under subsection (b)(3)(D) is 
                sent, and notwithstanding section 411(d)(6), the plan 
                shall not pay--
                            ``(i) any payment, in excess of the monthly 
                        amount paid under a single life annuity (plus 
                        any social security supplements described in 
                        the last sentence of section 411(b)(1)(A)),
                            ``(ii) any payment for the purchase of an 
                        irrevocable commitment from an insurer to pay 
                        benefits, and
                            ``(iii) any other payment specified by the 
                        Secretary by regulations.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to a benefit which under section 411(a)(11) may be 
                immediately distributed without the consent of the 
                participant or to any makeup payment in the case of a 
                retroactive annuity starting date or any similar 
                payment of benefits owed with respect to a prior 
                period.
            ``(3) Adjustments disregarded in withdrawal liability 
        determination.--Any benefit reductions under this subsection 
        shall be disregarded in determining a plan's unfunded vested 
        benefits for purposes of determining an employer's withdrawal 
        liability under section 4201 of the Employee Retirement Income 
        Security Act of 1974.
            ``(4) Special rules for plan adoption period.--During the 
        rehabilitation plan adoption period--
                    ``(A) the plan sponsor may not accept a collective 
                bargaining agreement or participation agreement with 
                respect to the multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation, and
                    ``(B) no amendment of the plan which increases the 
                liabilities of the plan by reason of any increase in 
                benefits, any change in the accrual of benefits, or any 
                change in the rate at which benefits become 
                nonforfeitable under the plan may be adopted unless the 
                amendment is required as a condition of qualification 
                under part I of subchapter D of chapter 1 or to comply 
                with other applicable law.
    ``(g) Expedited Resolution of Plan Sponsor Decisions.--If, within 
60 days of the due date for adoption of a funding improvement plan or a 
rehabilitation plan under subsection (e), the plan sponsor of a plan in 
endangered status or a plan in critical status has not agreed on a 
funding improvement plan or rehabilitation plan, then any member of the 
board or group that constitutes the plan sponsor may require that the 
plan sponsor enter into an expedited dispute resolution procedure for 
the development and adoption of a funding improvement plan or 
rehabilitation plan.
    ``(h) Nonbargained Participation.--
            ``(1) Both bargained and nonbargained employee-
        participants.--In the case of an employer that contributes to a 
        multiemployer plan with respect to both employees who are 
        covered by one or more collective bargaining agreements and 
        employees who are not so covered, if the plan is in endangered 
        status or in critical status, benefits of and contributions for 
        the nonbargained employees, including surcharges on those 
        contributions, shall be determined as if those nonbargained 
        employees were covered under the first to expire of the 
        employer's collective bargaining agreements in effect when the 
        plan entered endangered or critical status.
            ``(2) Nonbargained employees only.--In the case of an 
        employer that contributes to a multiemployer plan only with 
        respect to employees who are not covered by a collective 
        bargaining agreement, this section shall be applied as if the 
        employer were the bargaining party, and its participation 
        agreement with the plan were a collective bargaining agreement 
        with a term ending on the first day of the plan year beginning 
        after the employer is provided the schedule or schedules 
        described in subsections (c) and (e).
    ``(i) Definitions; Actuarial Method.--For purposes of this 
section--
            ``(1) Bargaining party.--The term `bargaining party' 
        means--
                    ``(A)(i) except as provided in clause (ii), an 
                employer who has an obligation to contribute under the 
                plan; or
                    ``(ii) in the case of a plan described under 
                section 404(c), or a continuation of such a plan, the 
                association of employers that is the employer settlor 
                of the plan; and
                    ``(B) an employee organization which, for purposes 
                of collective bargaining, represents plan participants 
                employed by an employer who has an obligation to 
                contribute under the plan.
            ``(2) Funded percentage.--The term `funded percentage' 
        means the percentage equal to a fraction--
                    ``(A) the numerator of which is the value of the 
                plan's assets, as determined under section 431(c)(2), 
                and
                    ``(B) the denominator of which is the accrued 
                liability of the plan, determined using actuarial 
                assumptions described in section 431(c)(3).
            ``(3) Accumulated funding deficiency.--The term 
        `accumulated funding deficiency' has the meaning given such 
        term in section 412(a).
            ``(4) Active participant.--The term `active participant' 
        means, in connection with a multiemployer plan, a participant 
        who is in covered service under the plan.
            ``(5) Inactive participant.--The term `inactive 
        participant' means, in connection with a multiemployer plan, a 
        participant, or the beneficiary or alternate payee of a 
        participant, who--
                    ``(A) is not in covered service under the plan, and
                    ``(B) is in pay status under the plan or has a 
                nonforfeitable right to benefits under the plan.
            ``(6) Pay status.--A person is in pay status under a 
        multiemployer plan if--
                    ``(A) at any time during the current plan year, 
                such person is a participant or beneficiary under the 
                plan and is paid an early, late, normal, or disability 
                retirement benefit under the plan (or a death benefit 
                under the plan related to a retirement benefit), or
                    ``(B) to the extent provided in regulations of the 
                Secretary, such person is entitled to such a benefit 
                under the plan.
            ``(7) Obligation to contribute.--The term `obligation to 
        contribute' has the meaning given such term under section 
        4212(a) of the Employee Retirement Income Security Act of 1974.
            ``(8) Actuarial method.--Notwithstanding any other 
        provision of this section, the actuary's determinations with 
        respect to a plan's normal cost, actuarial accrued liability, 
        and improvements in a plan's funded percentage under this 
        section shall be based upon the unit credit funding method 
        (whether or not that method is used for the plan's actuarial 
        valuation).
            ``(9) Plan sponsor.--In the case of a plan described under 
        section 404(c), or a continuation of such a plan, the term 
        `plan sponsor' means the bargaining parties described under 
        paragraph (1).
            ``(10) Benefit commencement date.--The term `benefit 
        commencement date' means the annuity starting date (or in the 
        case of a retroactive annuity starting date, the date on which 
        benefit payments begin).''
    (b) Excise Taxes on Failures Relating to Multiemployer Plans in 
Endangered or Critical Status.--
            (1) In general.--Section 4971 of the Internal Revenue Code 
        of 1986 is amended by redesignating subsection (g) as 
        subsection (h) and by inserting after subsection (f) the 
        following:
    ``(g) Multiemployer Plans in Endangered or Critical Status.--
            ``(1) In general.--Except as provided in this subsection--
                    ``(A) no tax shall be imposed under this section 
                for a taxable year with respect to a multiemployer plan 
                if, for the plan years ending with or within the 
                taxable year, the plan is in critical status pursuant 
                to section 432, and
                    ``(B) any tax imposed under this subsection for a 
                taxable year with respect to a multiemployer plan if, 
                for the plan years ending with or within the taxable 
                year, the plan is in endangered status pursuant to 
                section 432 shall be in addition to any other tax 
                imposed by this section.
            ``(2) Failure to comply with funding improvement or 
        rehabilitation plan.--
                    ``(A) In general.--If any funding improvement plan 
                or rehabilitation plan in effect under section 432 with 
                respect to a multiemployer plan requires an employer to 
                make a contribution to the plan, there is hereby 
                imposed a tax on each failure of the employer to make 
                the required contribution within the time required 
                under such plan.
                    ``(B) Amount of tax.--The amount of the tax imposed 
                by subparagraph (A) shall be equal to the amount of the 
                required contribution the employer failed to make in a 
                timely manner.
                    ``(C) Liability for tax.--The tax imposed by 
                subparagraph (A) shall be paid by the employer 
                responsible for contributing to or under the 
                rehabilitation plan which fails to make the 
                contribution.
            ``(3) Failure to meet requirements for plans in endangered 
        or critical status.--If--
                    ``(A) a plan which is in seriously endangered 
                status fails to meet the applicable benchmarks by the 
                end of the funding improvement period, or
                    ``(B) a plan which is in critical status either--
                            ``(i) fails to meet the requirements of 
                        section 432(e) by the end of the rehabilitation 
                        period, or
                            ``(ii) has received a certification under 
                        section 432(b)(3)(A)(ii) for 3 consecutive plan 
                        years that the plan is not making the scheduled 
                        progress in meeting its requirements under the 
                        rehabilitation plan,
                the plan shall be treated as having an accumulated 
                funding deficiency for purposes of this section for the 
                last plan year in such funding improvement, 
                rehabilitation, or 3-consecutive year period (and each 
                succeeding plan year until such benchmarks or 
                requirements are met) in an amount equal to the greater 
                of the amount of the contributions necessary to meet 
                such benchmarks or requirements or the amount of such 
                accumulated funding deficiency without regard to this 
                paragraph.
            ``(4) Failure to adopt rehabilitation plan.--
                    ``(A) In general.--In the case of a multiemployer 
                plan which is in critical status, there is hereby 
                imposed a tax on the failure of such plan to adopt a 
                rehabilitation plan within the time prescribed under 
                section 432.
                    ``(B) Amount of tax.--The amount of the tax imposed 
                under subparagraph (A) with respect to any plan sponsor 
                for any taxable year shall be the greater of--
                            ``(i) the amount of tax imposed under 
                        subsection (a) for the taxable year (determined 
                        without regard to this subsection), or
                            ``(ii) the amount equal to $1,100 
                        multiplied by the number of days during the 
                        taxable year which are included in the period 
                        beginning on the first day of the 240-day 
                        period described in section 432(e)(1)(A) and 
                        ending on the day on which the rehabilitation 
                        plan is adopted.
                    ``(C) Liability for tax.--
                            ``(i) In general.--The tax imposed by 
                        subparagraph (A) shall be paid by each plan 
                        sponsor.
                            ``(ii) Plan sponsor.--For purposes of 
                        clause (i), the term `plan sponsor' in the case 
                        of a multiemployer plan means the association, 
                        committee, joint board of trustees, or other 
                        similar group of representatives of the parties 
                        who establish or maintain the plan.
            ``(5) Waiver.--In the case of a failure described in 
        paragraph (2) or (3) which is due to reasonable cause and not 
        to willful neglect, the Secretary may waive part or all of the 
        tax imposed by this subsection. For purposes of this paragraph, 
        reasonable cause includes unanticipated and material market 
        fluctuations, the loss of a significant contributing employer, 
        or other factors to the extent that the payment of tax under 
        this subsection with respect to the failure would be excessive 
        or otherwise inequitable relative to the failure involved.
            ``(6) Terms used in section 432.--For purposes of this 
        subsection, any term used in this subsection which is also used 
        in section 432 shall have the meaning given such term by 
        section 432.''.
            (2) Controlled groups.--Section 4971(c)(2) of such Code is 
        amended--
                    (A) by striking ``In the case of a plan other than 
                a multiemployer plan, if the'' and inserting ``If an'', 
                and
                    (B) by striking ``or (f)'' and inserting ``(f), or 
                (g)''.
    (c) No Additional Contribution Required.--Section 412(b) of the 
Internal Revenue Code of 1986, as amended by this Act, is amended by 
adding at the end the following new paragraph:
            ``(3) Multiemployer plans in critical status.--Paragraph 
        (1) shall not apply in the case of a multiemployer plan for any 
        plan year in which the plan is in critical status pursuant to 
        section 432. This paragraph shall only apply if the plan adopts 
        a rehabilitation plan in accordance with section 432(e) and 
        complies with such rehabilitation plan (and any modifications 
        of the plan).''.
    (d) Clerical Amendment.--The table of sections for subpart A of 
part III of subchapter D of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 432. Additional funding rules for multiemployer plans in 
                            endangered status or critical status.''.
    (e) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to plan years beginning after 2007.
            (2) Special rule for certain notices.--In any case in which 
        a plan's actuary certifies that it is reasonably expected that 
        a multiemployer plan will be in critical status under section 
        305(b)(3) of the Employee Retirement Income Security Act of 
        1974, as added by this section, with respect to the first plan 
        year beginning after 2007, the notice required under 
        subparagraph (D) of such section may be provided at any time 
        after the date of enactment, so long as it is provided on or 
        before the last date for providing the notice under such 
        subparagraph.
            (3) Special rule for certain restored benefits.--In the 
        case of a multiemployer plan--
                    (A) with respect to which benefits were reduced 
                pursuant to a plan amendment adopted on or after 
                January 1, 2002, and before June 30, 2005, and
                    (B) which, pursuant to the plan document, the trust 
                agreement, or a formal written communication from the 
                plan sponsor to participants provided before June 30, 
                2005, provided for the restoration of such benefits,
        the amendments made by this section shall not apply to such 
        benefit restorations to the extent that any restriction on the 
        providing or accrual of such benefits would otherwise apply by 
        reason of such amendments.

SEC. 213. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER PLANS.

    (a) Advance Determination of Impending Insolvency Over 5 Years.--
Section 418E(d)(1) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``3 plan years'' the second place it 
        appears and inserting ``5 plan years''; and
            (2) by adding at the end the following new sentence: ``If 
        the plan sponsor makes such a determination that the plan will 
        be insolvent in any of the next 5 plan years, the plan sponsor 
        shall make the comparison under this paragraph at least 
        annually until the plan sponsor makes a determination that the 
        plan will not be insolvent in any of the next 5 plan years.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to the determinations made in plan years beginning 
after 2007.

SEC. 214. EXEMPTION FROM EXCISE TAXES FOR CERTAIN MULTIEMPLOYER PENSION 
              PLANS.

    (a) In General.--Notwithstanding any other provision of law, no tax 
shall be imposed under subsection (a) or (b) of section 4971 of the 
Internal Revenue Code of 1986 with respect to any accumulated funding 
deficiency of a plan described in subsection (b) of this section for 
any taxable year beginning before the earlier of--
            (1) the taxable year in which the plan sponsor adopts a 
        rehabilitation plan under section 305(e) of the Employee 
        Retirement Income Security Act of 1974 and section 432(e) of 
        such Code (as added by this Act); or
            (2) the taxable year that contains January 1, 2009.
    (b) Plan Described.--A plan described under this subsection is a 
multiemployer pension plan--
            (1) with less than 100 participants;
            (2) with respect to which the contributing employers 
        participated in a Federal fishery capacity reduction program;
            (3) with respect to which employers under the plan 
        participated in the Northeast Fisheries Assistance Program; and
            (4) with respect to which the annual normal cost is less 
        than $100,000 and the plan is experiencing a funding deficiency 
        on the date of enactment of this Act.

             Subtitle C--Sunset of Additional Funding Rules

SEC. 221. SUNSET OF ADDITIONAL FUNDING RULES.

    (a) Report.--Not later than December 31, 2011, the Secretary of 
Labor, the Secretary of the Treasury, and the Executive Director of the 
Pension Benefit Guaranty Corporation shall conduct a study of the 
effect of the amendments made by this subtitle on the operation and 
funding status of multiemployer plans and shall report the results of 
such study, including any recommendations for legislation, to the 
Congress.
    (b) Matters Included in Study.--The study required under subsection 
(a) shall include--
            (1) the effect of funding difficulties, funding rules in 
        effect before the date of the enactment of this Act, and the 
        amendments made by this subtitle on small businesses 
        participating in multiemployer plans,
            (2) the effect on the financial status of small employers 
        of--
                    (A) funding targets set in funding improvement and 
                rehabilitation plans and associated contribution 
                increases,
                    (B) funding deficiencies,
                    (C) excise taxes,
                    (D) withdrawal liability,
                    (E) the possibility of alternatives schedules and 
                procedures for financially-troubled employers, and
                    (F) other aspects of the multiemployer system, and
            (3) the role of the multiemployer pension plan system in 
        helping small employers to offer pension benefits.
    (c) Sunset.--
            (1) In general.--Except as provided in this subsection, 
        notwithstanding any other provision of this Act, the provisions 
        of, and the amendments made by, sections 201(b), 202, and 212 
        shall not apply to plan years beginning after December 31, 
        2014.
            (2) Funding improvement and rehabilitation plans.--If a 
        plan is operating under a funding improvement or rehabilitation 
        plan under section 305 of such Act or 432 of such Code for its 
        last year beginning before January 1, 2015, such plan shall 
        continue to operate under such funding improvement or 
        rehabilitation plan during any period after December 31, 2014, 
        such funding improvement or rehabilitation plan is in effect 
        and all provisions of such Act or Code relating to the 
        operation of such funding improvement or rehabilitation plan 
        shall continue in effect during such period.

                  TITLE III--INTEREST RATE ASSUMPTIONS

SEC. 301. EXTENSION OF REPLACEMENT OF 30-YEAR TREASURY RATES.

    (a) Amendments of ERISA.--
            (1) Determination of range.--Subclause (II) of section 
        302(b)(5)(B)(ii) of the Employee Retirement Income Security Act 
        of 1974 is amended--
                    (A) by striking ``2006'' and inserting ``2008'', 
                and
                    (B) by striking ``and 2005'' in the heading and 
                inserting ``, 2005, 2006, and 2007''.
            (2) Determination of current liability.--Subclause (IV) of 
        section 302(d)(7)(C)(i) of such Act is amended--
                    (A) by striking ``or 2005'' and inserting ``, 2005, 
                2006, or 2007'', and
                    (B) by striking ``and 2005'' in the heading and 
                inserting ``, 2005, 2006, and 2007''.
            (3)  PBGC premium rate.--Subclause (V) of section 
        4006(a)(3)(E)(iii) of such Act is amended by striking ``2006'' 
        and inserting ``2008''.
    (b) Amendments of Internal Revenue Code.--
            (1) Determination of range.--Subclause (II) of section 
        412(b)(5)(B)(ii) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) by striking ``2006'' and inserting ``2008'', 
                and
                    (B) by striking ``and 2005'' in the heading and 
                inserting ``, 2005, 2006, and 2007''.
            (2) Determination of current liability.--Subclause (IV) of 
        section 412(l)(7)(C)(i) of such Code is amended--
                    (A) by striking ``or 2005'' and inserting ``, 2005, 
                2006, or 2007'', and
                    (B) by striking ``and 2005'' in the heading and 
                inserting ``, 2005, 2006, and 2007''.
    (c) Plan Amendments.--Clause (ii) of section 101(c)(2)(A) of the 
Pension Funding Equity Act of 2004 is amended by striking ``2006'' and 
inserting ``2008''.

SEC. 302. INTEREST RATE ASSUMPTION FOR DETERMINATION OF LUMP SUM 
              DISTRIBUTIONS.

    (a) Amendment to Employee Retirement Income Security Act of 1974.--
Paragraph (3) of section 205(g) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1055(g)(3)) is amended to read as 
follows:
    ``(3)(A) For purposes of paragraphs (1) and (2), the present value 
shall not be less than the present value calculated by using the 
applicable mortality table and the applicable interest rate.
    ``(B) For purposes of subparagraph (A)--
            ``(i) The term `applicable mortality table' means a 
        mortality table, modified as appropriate by the Secretary of 
        the Treasury, based on the mortality table specified for the 
        plan year under subparagraph (A) of section 303(h)(3) (without 
        regard to subparagraph (C) or (D) of such section).
            ``(ii) The term `applicable interest rate' means the 
        adjusted first, second, and third segment rates applied under 
        rules similar to the rules of section 303(h)(2)(C) for the 
        month before the date of the distribution or such other time as 
        the Secretary of the Treasury may by regulations prescribe.
            ``(iii) For purposes of clause (ii), the adjusted first, 
        second, and third segment rates are the first, second, and 
        third segment rates which would be determined under section 
        303(h)(2)(C) if--
                    ``(I) section 303(h)(2)(D) were applied by 
                substituting the average yields for the month described 
                in clause (ii) for the average yields for the 24-month 
                period described in such section,
                    ``(II) section 303(h)(2)(G)(i)(II) were applied by 
                substituting `section 205(g)(3)(B)(iii)(II)' for 
                `section 302(b)(5)(B)(ii)(II)', and
                    ``(III) the applicable percentage under section 
                303(h)(2)(G) were determined in accordance with the 
                following table:

                                    The applicable percentage is:
In the case of plan years
 beginning in:
  2008............................  20 percent
  2009............................  40 percent
  2010............................  60 percent
  2011............................  80 percent.''.

''.    (b) Amendment to Internal Revenue Code of 1986.--Paragraph (3) 
of section 417(e) of the Internal Revenue Code of 1986 is amended to 
read as follows:
            ``(3) Determination of present value.--
                    ``(A) In general.--For purposes of paragraphs (1) 
                and (2), the present value shall not be less than the 
                present value calculated by using the applicable 
                mortality table and the applicable interest rate.
                    ``(B) Applicable mortality table.--For purposes of 
                subparagraph (A), the term `applicable mortality table' 
                means a mortality table, modified as appropriate by the 
                Secretary, based on the mortality table specified for 
                the plan year under subparagraph (A) of section 
                430(h)(3) (without regard to subparagraph (C) or (D) of 
                such section).
                    ``(C) Applicable interest rate.--For purposes of 
                subparagraph (A), the term `applicable interest rate' 
                means the adjusted first, second, and third segment 
                rates applied under rules similar to the rules of 
                section 430(h)(2)(C) for the month before the date of 
                the distribution or such other time as the Secretary 
                may by regulations prescribe.
                    ``(D) Applicable segment rates.--For purposes of 
                subparagraph (C), the adjusted first, second, and third 
                segment rates are the first, second, and third segment 
                rates which would be determined under section 
                430(h)(2)(C) if--
                            ``(i) section 430(h)(2)(D) were applied by 
                        substituting the average yields for the month 
                        described in clause (ii) for the average yields 
                        for the 24-month period described in such 
                        section,
                            ``(ii) section 430(h)(2)(G)(i)(II) were 
                        applied by substituting `section 
                        417(e)(3)(A)(ii)(II)' for `section 
                        412(b)(5)(B)(ii)(II)', and
                            ``(iii) the applicable percentage under 
                        section 430(h)(2)(G) were determined in 
                        accordance with the following table:

                                    The applicable percentage is:
In the case of plan years
 beginning in:
  2008............................  20 percent
  2009............................  40 percent
  2010............................  60 percent
  2011............................  80 percent.''.

''.    (c) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after December 31, 2007.

SEC. 303. INTEREST RATE ASSUMPTION FOR APPLYING BENEFIT LIMITATIONS TO 
              LUMP SUM DISTRIBUTIONS.

    (a) In General.--Clause (ii) of section 415(b)(2)(E) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                            ``(ii) For purposes of adjusting any 
                        benefit under subparagraph (B) for any form of 
                        benefit subject to section 417(e)(3), the 
                        interest rate assumption shall not be less than 
                        the greatest of--
                                    ``(I) 5.5 percent,
                                    ``(II) the rate that provides a 
                                benefit of not more than 105 percent of 
                                the benefit that would be provided if 
                                the applicable interest rate (as 
                                defined in section 417(e)(3)) were the 
                                interest rate assumption, or
                                    ``(III) the rate specified under 
                                the plan.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to distributions made in years beginning after December 31, 2005.

            TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS

SEC. 401. PBGC PREMIUMS.

    (a) Variable-Rate Premiums.--
            (1) Conforming amendments related to funding rules for 
        single-employer plans.--Section 4006(a)(3)(E) of the Employee 
        Retirement Income and Security Act of 1974 (29 U.S.C. 
        1306(a)(3)(E)) is amended by striking clauses (iii) and (iv) 
        and inserting the following:
    ``(iii) For purposes of clause (ii), the term `unfunded vested 
benefits' means, for a plan year, the excess (if any) of--
            ``(I) the funding target of the plan as determined under 
        section 303(d) for the plan year by only taking into account 
        vested benefits and by using the interest rate described in 
        clause (iv), over
            ``(II) the fair market value of plan assets for the plan 
        year which are held by the plan on the valuation date.
    ``(iv) The interest rate used in valuing benefits for purposes of 
subclause (I) of clause (iii) shall be equal to the first, second, or 
third segment rate for the month preceding the month in which the plan 
year begins, which would be determined under section 303(h)(2)(C) if 
section 303(h)(2)(D) were applied by using the monthly yields for the 
month preceding the month in which the plan year begins on investment 
grade corporate bonds with varying maturities and in the top 3 quality 
levels rather than the average of such yields for a 24-month period.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply with respect to plan years beginning after 2007.
    (b) Termination Premiums.--
            (1) Repeal of sunset provision.--Subparagraph (E) of 
        section 4006(a)(7) of such Act is repealed.
            (2) Technical correction.--
                    (A) In general.--Section 4006(a)(7)(C)(ii) of such 
                Act is amended by striking ``subparagraph (B)(i)(I)'' 
                and inserting ``subparagraph (B)''.
                    (B) Effective date.--The amendment made by this 
                paragraph shall take effect as if included in the 
                provision of the Deficit Reduction Act of 2005 to which 
                it relates.

SEC. 402. SPECIAL FUNDING RULES FOR CERTAIN PLANS MAINTAINED BY 
              COMMERCIAL AIRLINES.

    (a) In General.--The plan sponsor of an eligible plan may elect to 
either--
            (1) have the rules of subsection (b) apply, or
            (2) have section 303 of the Employee Retirement Income 
        Security Act of 1974 and section 430 of the Internal Revenue 
        Code of 1986 applied to its first taxable year beginning in 
        2008 by amortizing the shortfall amortization base for such 
        taxable year over a period of 10 plan years (rather than 7 plan 
        years) beginning with such plan year.
    (b) Alternative Funding Schedule.--
            (1) In general.--If an election is made under subsection 
        (a)(1) to have this subsection apply to an eligible plan and 
        the requirements of paragraphs (2) and (3) are met with respect 
        to the plan--
                    (A) in the case of any applicable plan year 
                beginning before January 1, 2008, the plan shall not 
                have an accumulated funding deficiency for purposes of 
                section 302 of the Employee Retirement Income Security 
                Act of 1974 and sections 412 and 4971 of the Internal 
                Revenue Code of 1986 if contributions to the plan for 
                the plan year are not less than the minimum required 
                contribution determined under subsection (e) for the 
                plan for the plan year, and
                    (B) in the case of any applicable plan year 
                beginning on or after January 1, 2008, the minimum 
                required contribution determined under sections 303 of 
                such Act and 430 of such Code shall, for purposes of 
                sections 302 and 303 of such Act and sections 412, 430, 
                and 4971 of such Code, be equal to the minimum required 
                contribution determined under subsection (e) for the 
                plan for the plan year.
            (2) Accrual restrictions.--
                    (A) In general.--The requirements of this paragraph 
                are met if, effective as of the first day of the first 
                applicable plan year and at all times thereafter while 
                an election under this section is in effect, the plan 
                provides that--
                            (i) the accrued benefit, any death or 
                        disability benefit, and any social security 
                        supplement described in the last sentence of 
                        section 411(a)(9) of such Code and section 
                        204(b)(1)(G) of such Act, of each participant 
                        are frozen at the amount of such benefit or 
                        supplement immediately before such first day, 
                        and
                            (ii) all other benefits under the plan are 
                        eliminated,
                but only to the extent the freezing or elimination of 
                such benefits would have been permitted under section 
                411(d)(6) of such Code and section 204(g) of such Act 
                if they had been implemented by a plan amendment 
                adopted immediately before such first day.
                    (B) Increases in section 415 limits.--If a plan 
                provides that an accrued benefit of a participant which 
                has been subject to any limitation under section 415 of 
                such Code will be increased if such limitation is 
                increased, the plan shall not be treated as meeting the 
                requirements of this section unless, effective as of 
                the first day of the first applicable plan year (or, if 
                later, the date of the enactment of this Act) and at 
                all times thereafter while an election under this 
                section is in effect, the plan provides that any such 
                increase shall not take effect. A plan shall not fail 
                to meet the requirements of section 411(d)(6) of such 
                Code and section 204(g) of such Act solely because the 
                plan is amended to meet the requirements of this 
                subparagraph.
            (3) Restriction on applicable benefit increases.--
                    (A) In general.--The requirements of this paragraph 
                are met if no applicable benefit increase takes effect 
                at any time during the period beginning on July 26, 
                2005, and ending on the day before the first day of the 
                first applicable plan year.
                    (B) Applicable benefit increase.--For purposes of 
                this paragraph, the term ``applicable benefit 
                increase'' means, with respect to any plan year, any 
                increase in liabilities of the plan by plan amendment 
                (or otherwise provided in regulations provided by the 
                Secretary) which, but for this paragraph, would occur 
                during the plan year by reason of--
                            (i) any increase in benefits,
                            (ii) any change in the accrual of benefits, 
                        or
                            (iii) any change in the rate at which 
                        benefits become nonforfeitable under the plan.
            (4) Exception for imputed disability service.--Paragraphs 
        (2) and (3) shall not apply to any accrual or increase with 
        respect to imputed service provided to a participant during any 
        period of the participant's disability occurring on or after 
        the effective date of the plan amendment providing the 
        restrictions under paragraph (2) (or on or after July 26, 2005, 
        in the case of the restrictions under paragraph (3)) if the 
        participant--
                    (A) was receiving disability benefits as of such 
                date, or
                    (B) was receiving sick pay and subsequently 
                determined to be eligible for disability benefits as of 
                such date.
    (c) Definitions.--For purposes of this section--
            (1) Eligible plan.--The term ``eligible plan'' means a 
        defined benefit plan (other than a multiemployer plan) to which 
        sections 302 of such Act and 412 of such Code applies which is 
        sponsored by an employer--
                    (A) which is a commercial airline passenger 
                airline, or
                    (B) the principal business of which is providing 
                catering services to a commercial passenger airline.
            (2) Applicable plan year.--The term ``applicable plan 
        year'' means each plan year to which the election under 
        subsection (a)(1) applies under subsection (d)(1)(A).
    (d) Elections and Related Terms.--
            (1) Years for which election made.--
                    (A) Alternative funding schedule.--If an election 
                under subsection (a)(1) was made with respect to an 
                eligible plan, the plan sponsor may select either a 
                plan year beginning in 2006 or a plan year beginning in 
                2007 as the first plan year to which such election 
                applies. The election shall apply to such plan year and 
                all subsequent years. The election shall be made--
                            (i) not later than December 31, 2006, in 
                        the case of an election for a plan year 
                        beginning in 2006, or
                            (ii) not later than December 31, 2007, in 
                        the case of an election for a plan year 
                        beginning in 2007.
                    (B) 10 year amortization.--An election under 
                subsection (a)(2) shall be made not later than December 
                31, 2007.
                    (C) Election of new plan year for alternative 
                funding schedule.--In the case of an election under 
                subsection (a)(1), the plan sponsor may specify a new 
                plan year in such election and the plan year of the 
                plan may be changed to such new plan year without the 
                approval of the Secretary of the Treasury.
            (2) Manner of election.--A plan sponsor shall make any 
        election under subsection (a) in such manner as the Secretary 
        of the Treasury may prescribe. Such election, once made, may be 
        revoked only with the consent of such Secretary.
    (e) Minimum Required Contribution.--In the case of an eligible plan 
with respect to which an election is made under subsection (a)(1)--
            (1) In general.--In the case of any applicable plan year 
        during the amortization period, the minimum required 
        contribution shall be the amount necessary to amortize the 
        unfunded liability of the plan, determined as of the first day 
        of the plan year, in equal annual installments (until fully 
        amortized) over the remainder of the amortization period. Such 
        amount shall be separately determined for each applicable plan 
        year.
            (2) Years after amortization period.--In the case of any 
        plan year beginning after the end of the amortization period, 
        section 302(a)(2)(A) of such Act and section 412(a)(2)(A) of 
        such Code shall apply to such plan, but the prefunding balance 
        and funding standard carryover balance as of the first day of 
        the first of such years under section 303(f) of such Act and 
        section 430(f) of such Code shall be zero.
            (3) Definitions.--For purposes of this section--
                    (A) Unfunded liability.--The term ``unfunded 
                liability'' means the unfunded accrued liability under 
                the plan, determined under the unit credit funding 
                method.
                    (B) Amortization period.--The term ``amortization 
                period'' means the 17-plan year period beginning with 
                the first applicable plan year.
            (4) Other rules.--In determining the minimum required 
        contribution and amortization amount under this subsection--
                    (A) the provisions of section 302(c)(3) of such Act 
                and section 412(c)(3) of such Code, as in effect before 
                the date of enactment of this section, shall apply,
                    (B) a rate of interest of 8.85 percent shall be 
                used for all calculations requiring an interest rate, 
                and
                    (C) the value of plan assets shall be equal to 
                their fair market value.
            (5) Special rule for certain plan spinoffs.--For purposes 
        of subsection (b), if, with respect to any eligible plan to 
        which this subsection applies--
                    (A) any applicable plan year includes the date of 
                the enactment of this Act,
                    (B) a plan was spun off from the eligible plan 
                during the plan year but before such date of enactment,
        the minimum required contribution under paragraph (1) for the 
        eligible plan for such applicable plan year shall be an 
        aggregate amount determined as if the plans were a single plan 
        for that plan year (based on the full 12-month plan year in 
        effect prior to the spin-off). The employer shall designate the 
        allocation of such aggregate amount between such plans for the 
        applicable plan year.
    (f) Special Rules for Certain Balances and Waivers.--In the case of 
an eligible plan with respect to which an election is made under 
subsection (a)(1)--
            (1) Funding standard account and credit balances.--Any 
        charge or credit in the funding standard account under section 
        302 of such Act or section 412 of such Code, and any prefunding 
        balance or funding standard carryover balance under section 303 
        of such Act or section 430 of such Code, as of the day before 
        the first day of the first applicable plan year, shall be 
        reduced to zero.
            (2) Waived funding deficiencies.--Any waived funding 
        deficiency under sections 302 and 303 of such Act or section 
        412 of such Code, as in effect before the date of enactment of 
        this section, shall be deemed satisfied as of the first day of 
        the first applicable plan year and the amount of such waived 
        funding deficiency shall be taken into account in determining 
        the plan's unfunded liability under subsection (e)(3)(A). In 
        the case of a plan amendment adopted to satisfy the 
        requirements of subsection (b)(2), the plan shall not be deemed 
        to violate section 304(b) of such Act or section 412(f) of such 
        Code, as so in effect, by reason of such amendment or any 
        increase in benefits provided to such plan's participants under 
        a separate plan that is a defined contribution plan or a 
        multiemployer plan.
    (g) Other Rules for Plans Making Election Under This Section.--
            (1) Successor plans to certain plans.--If--
                    (A) an election under paragraph (1) or (2) of 
                subsection (a) is in effect with respect to any 
                eligible plan, and
                    (B) the eligible plan is maintained by an employer 
                that establishes or maintains 1 or more other defined 
                benefit plans (other than any multiemployer plan), and 
                such other plans in combination provide benefit 
                accruals to any substantial number of successor 
                employees,
        the Secretary of the Treasury may, in the Secretary's 
        discretion, determine that any trust of which any other such 
        plan is a part does not constitute a qualified trust under 
        section 401(a) of the Internal Revenue Code of 1986 unless all 
        benefit obligations of the eligible plan have been satisfied. 
        For purposes of this paragraph, the term ``successor employee'' 
        means any employee who is or was covered by the eligible plan 
        and any employees who perform substantially the same type of 
        work with respect to the same business operations as an 
        employee covered by such eligible plan.
            (2) Special rules for terminations.--
                    (A) PBGC liability limited.--Section 4022 of the 
                Employee Retirement Income Security Act of 1974, as 
                amended by this Act, is amended by adding at the end 
                the following new subsection:
    ``(h) Special Rule for Plans Electing Certain Funding 
Requirements.--If any plan makes an election under section 402(a)(1) of 
the Pension Protection Act of 2006 and is terminated effective before 
the end of the 10-year period beginning on the first day of the first 
applicable plan year--
            ``(1) this section shall be applied--
                    ``(A) by treating the first day of the first 
                applicable plan year as the termination date of the 
                plan, and
                    ``(B) by determining the amount of guaranteed 
                benefits on the basis of plan assets and liabilities as 
                of such assumed termination date, and
            ``(2) notwithstanding section 4044(a), plan assets shall 
        first be allocated to pay the amount, if any, by which--
                    ``(A) the amount of guaranteed benefits under this 
                section (determined without regard to paragraph (1) and 
                on the basis of plan assets and liabilities as of the 
                actual date of plan termination), exceeds
                    ``(B) the amount determined under paragraph (1).''.
                    (B) Termination premium.--In applying section 
                4006(a)(7)(A) of the Employee Retirement Income 
                Security Act of 1974 to an eligible plan during any 
                period in which an election under subsection (a)(1) is 
                in effect--
                            (i) ``$2,500'' shall be substituted for 
                        ``$1,250'' in such section if such plan 
                        terminates during the 5-year period beginning 
                        on the first day of the first applicable plan 
                        year with respect to such plan, and
                            (ii) such section shall be applied without 
                        regard to subparagraph (B) of section 
                        8101(d)(2) of the Deficit Reduction Act of 2005 
                        (relating to special rule for plans terminated 
                        in bankruptcy).
                The substitution described in clause (i) shall not 
                apply with respect to any plan if the Secretary of 
                Labor determines that such plan terminated as a result 
                of extraordinary circumstances such as a terrorist 
                attack or other similar event.
            (3) Limitation on deductions under certain plans.--Section 
        404(a)(7)(C)(iv) of the Internal Revenue Code of 1986, as added 
        by this Act, shall not apply with respect to any taxable year 
        of a plan sponsor of an eligible plan if any applicable plan 
        year with respect to such plan ends with or within such taxable 
        year.
            (4) Notice.--In the case of a plan amendment adopted in 
        order to comply with this section, any notice required under 
        section 204(h) of such Act or section 4980F(e) of such Code 
        shall be provided within 15 days of the effective date of such 
        plan amendment. This subsection shall not apply to any plan 
        unless such plan is maintained pursuant to one or more 
        collective bargaining agreements between employee 
        representatives and 1 or more employers.
    (h) Exclusion of Certain Employees From Minimum Coverage 
Requirements.--
            (1) In general.--Section 410(b)(3) of such Code is amended 
        by striking the last sentence and inserting the following: 
        ``For purposes of subparagraph (B), management pilots who are 
        not represented in accordance with title II of the Railway 
        Labor Act shall be treated as covered by a collective 
        bargaining agreement described in such subparagraph if the 
        management pilots manage the flight operations of air pilots 
        who are so represented and the management pilots are, pursuant 
        to the terms of the agreement, included in the group of 
        employees benefitting under the trust described in such 
        subparagraph. Subparagraph (B) shall not apply in the case of a 
        plan which provides contributions or benefits for employees 
        whose principal duties are not customarily performed aboard an 
        aircraft in flight (other than management pilots described in 
        the preceding sentence).''
            (2) Effective date.--The amendment made by this subsection 
        shall apply to years beginning before, on, or after the date of 
        the enactment of this Act.
    (i) Extension of Special Rule for Additional Funding 
Requirements.--In the case of an employer which is a commercial 
passenger airline, section 302(d)(12) of the Employee Retirement Income 
Security Act of 1974 and section 412(l)(12) of the Internal Revenue 
Code of 1986, as in effect before the date of the enactment of this 
Act, shall each be applied--
            (1) by substituting ``December 28, 2007'' for ``December 
        28, 2005'' in subparagraph (D)(i) thereof, and
            (2) without regard to subparagraph (D)(ii).
    (j) Effective Date.--Except as otherwise provided in this section, 
the provisions of and amendments made by this section shall apply to 
plan years ending after the date of the enactment of this Act.

SEC. 403. LIMITATION ON PBGC GUARANTEE OF SHUTDOWN AND OTHER BENEFITS.

    (a) In General.--Section 4022(b) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1322(b)) is amended by adding at the 
end the following:
            ``(8) If an unpredictable contingent event benefit (as 
        defined in section 206(g)(1)) is payable by reason of the 
        occurrence of any event, this section shall be applied as if a 
        plan amendment had been adopted on the date such event 
        occurred.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to benefits that become payable as a result of an event which occurs 
after July 26, 2005.

SEC. 404. RULES RELATING TO BANKRUPTCY OF EMPLOYER.

    (a) Guarantee.--Section 4022 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1322) is amended by adding at the end 
the following:
    ``(g) Bankruptcy Filing Substituted for Termination Date.--If a 
contributing sponsor of a plan has filed or has had filed against such 
person a petition seeking liquidation or reorganization in a case under 
title 11, United States Code, or under any similar Federal law or law 
of a State or political subdivision, and the case has not been 
dismissed as of the termination date of the plan, then this section 
shall be applied by treating the date such petition was filed as the 
termination date of the plan.''.
    (b) Allocation of Assets Among Priority Groups in Bankruptcy 
Proceedings.--Section 4044 of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1344) is amended by adding at the end the 
following:
    ``(e) Bankruptcy Filing Substituted for Termination Date.--If a 
contributing sponsor of a plan has filed or has had filed against such 
person a petition seeking liquidation or reorganization in a case under 
title 11, United States Code, or under any similar Federal law or law 
of a State or political subdivision, and the case has not been 
dismissed as of the termination date of the plan, then subsection 
(a)(3) shall be applied by treating the date such petition was filed as 
the termination date of the plan.''.
    (c) Effective Date.--The amendments made this section shall apply 
with respect to proceedings initiated under title 11, United States 
Code, or under any similar Federal law or law of a State or political 
subdivision, on or after the date that is 30 days after the date of 
enactment of this Act.

SEC. 405. PBGC PREMIUMS FOR SMALL PLANS.

    (a) Small Plans.--Paragraph (3) of section 4006(a) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)) is amended--
            (1) by striking ``The additional'' in subparagraph (E)(i) 
        and inserting ``Except as provided in subparagraph (H), the 
        additional'', and
            (2) by inserting after subparagraph (G) the following new 
        subparagraph:
    ``(H)(i) In the case of an employer who has 25 or fewer employees 
on the first day of the plan year, the additional premium determined 
under subparagraph (E) for each participant shall not exceed $5 
multiplied by the number of participants in the plan as of the close of 
the preceding plan year.
    ``(ii) For purposes of clause (i), whether an employer has 25 or 
fewer employees on the first day of the plan year is determined by 
taking into consideration all of the employees of all members of the 
contributing sponsor's controlled group. In the case of a plan 
maintained by two or more contributing sponsors, the employees of all 
contributing sponsors and their controlled groups shall be aggregated 
for purposes of determining whether the 25-or-fewer-employees 
limitation has been satisfied.''
    (b) Effective Dates.--The amendment made by this section shall 
apply to plan years beginning after December 31, 2006.

SEC. 406. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM OVERPAYMENT 
              REFUNDS.

    (a) In General.--Section 4007(b) of the Employment Retirement 
Income Security Act of 1974 (29 U.S.C. 1307(b)) is amended--
            (1) by striking ``(b)'' and inserting ``(b)(1)'', and
            (2) by inserting at the end the following new paragraph:
    ``(2) The corporation is authorized to pay, subject to regulations 
prescribed by the corporation, interest on the amount of any 
overpayment of premium refunded to a designated payor. Interest under 
this paragraph shall be calculated at the same rate and in the same 
manner as interest is calculated for underpayments under paragraph 
(1).''
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to interest accruing for periods beginning not earlier than the 
date of the enactment of this Act.

SEC. 407. RULES FOR SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

    (a) Modification of Phase-In of Guarantee.--Section 4022(b)(5) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1322(b)(5)) is amended to read as follows:
    ``(5)(A) For purposes of this paragraph, the term `majority owner' 
means an individual who, at any time during the 60-month period ending 
on the date the determination is being made--
            ``(i) owns the entire interest in an unincorporated trade 
        or business,
            ``(ii) in the case of a partnership, is a partner who owns, 
        directly or indirectly, 50 percent or more of either the 
        capital interest or the profits interest in such partnership, 
        or
            ``(iii) in the case of a corporation, owns, directly or 
        indirectly, 50 percent or more in value of either the voting 
        stock of that corporation or all the stock of that corporation.
For purposes of clause (iii), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 (other than 
paragraph (3)(C) thereof) shall apply, including the application of 
such rules under section 414(c) of such Code.
    ``(B) In the case of a participant who is a majority owner, the 
amount of benefits guaranteed under this section shall equal the 
product of--
            ``(i) a fraction (not to exceed 1) the numerator of which 
        is the number of years from the later of the effective date or 
        the adoption date of the plan to the termination date, and the 
        denominator of which is 10, and
            ``(ii) the amount of benefits that would be guaranteed 
        under this section if the participant were not a majority 
        owner.''
    (b) Modification of Allocation of Assets.--
            (1) Section 4044(a)(4)(B) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by 
        striking ``section 4022(b)(5)'' and inserting ``section 
        4022(b)(5)(B)''.
            (2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is 
        amended--
                    (A) by striking ``(5)'' in paragraph (2) and 
                inserting ``(4), (5),'', and
                    (B) by redesignating paragraphs (3) through (6) as 
                paragraphs (4) through (7), respectively, and by 
                inserting after paragraph (2) the following new 
                paragraph:
            ``(3) If assets available for allocation under paragraph 
        (4) of subsection (a) are insufficient to satisfy in full the 
        benefits of all individuals who are described in that 
        paragraph, the assets shall be allocated first to benefits 
        described in subparagraph (A) of that paragraph. Any remaining 
        assets shall then be allocated to benefits described in 
        subparagraph (B) of that paragraph. If assets allocated to such 
        subparagraph (B) are insufficient to satisfy in full the 
        benefits described in that subparagraph, the assets shall be 
        allocated pro rata among individuals on the basis of the 
        present value (as of the termination date) of their respective 
        benefits described in that subparagraph.''
    (c) Conforming Amendments.--
            (1) Section 4021 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1321) is amended--
                    (A) in subsection (b)(9), by striking ``as defined 
                in section 4022(b)(6)'', and
                    (B) by adding at the end the following new 
                subsection:
    ``(d) For purposes of subsection (b)(9), the term `substantial 
owner' means an individual who, at any time during the 60-month period 
ending on the date the determination is being made--
            ``(1) owns the entire interest in an unincorporated trade 
        or business,
            ``(2) in the case of a partnership, is a partner who owns, 
        directly or indirectly, more than 10 percent of either the 
        capital interest or the profits interest in such partnership, 
        or
            ``(3) in the case of a corporation, owns, directly or 
        indirectly, more than 10 percent in value of either the voting 
        stock of that corporation or all the stock of that corporation.
For purposes of paragraph (3), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 (other than 
paragraph (3)(C) thereof) shall apply, including the application of 
such rules under section 414(c) of such Code.''
            (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) 
        is amended by striking ``section 4022(b)(6)'' and inserting 
        ``section 4021(d)''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to plan 
        terminations--
                    (A) under section 4041(c) of the Employee 
                Retirement Income Security Act of 1974 (29 U.S.C. 
                1341(c)) with respect to which notices of intent to 
                terminate are provided under section 4041(a)(2) of such 
                Act (29 U.S.C. 1341(a)(2)) after December 31, 2005, and
                    (B) under section 4042 of such Act (29 U.S.C. 1342) 
                with respect to which notices of determination are 
                provided under such section after such date.
            (2) Conforming amendments.--The amendments made by 
        subsection (c) shall take effect on January 1, 2006.

SEC. 408. ACCELERATION OF PBGC COMPUTATION OF BENEFITS ATTRIBUTABLE TO 
              RECOVERIES FROM EMPLOYERS.

    (a) Modification of Average Recovery Percentage of Outstanding 
Amount of Benefit Liabilities Payable by Corporation to Participants 
and Beneficiaries.--Section 4022(c)(3)(B)(ii) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1322(c)(3)(B)(ii)) is 
amended to read as follows:
                            ``(ii) notices of intent to terminate were 
                        provided (or in the case of a termination by 
                        the corporation, a notice of determination 
                        under section 4042 was issued) during the 5-
                        Federal fiscal year period ending with the 
                        third fiscal year preceding the fiscal year in 
                        which occurs the date of the notice of intent 
                        to terminate (or the notice of determination 
                        under section 4042) with respect to the plan 
                        termination for which the recovery ratio is 
                        being determined.''
    (b) Valuation of Section 4062(c) Liability for Determining Amounts 
Payable by Corporation to Participants and Beneficiaries.--
            (1) Single-employer plan benefits guaranteed.--Section 
        4022(c)(3)(A) of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 13) is amended to read as follows:
                    ``(A) In general.--Except as provided in 
                subparagraph (C), the term `recovery ratio' means the 
                ratio which--
                            ``(i) the sum of the values of all 
                        recoveries under section 4062, 4063, or 4064, 
                        determined by the corporation in connection 
                        with plan terminations described under 
                        subparagraph (B), bears to
                            ``(ii) the sum of all unfunded benefit 
                        liabilities under such plans as of the 
                        termination date in connection with any such 
                        prior termination.''.
            (2) Allocation of assets.--Section 4044 of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1362) is 
        amended by adding at the end the following new subsection:
    ``(e) Valuation of Section 4062(c) Liability for Determining 
Amounts Payable by Corporation to Participants and Beneficiaries.--
            ``(1) In general.--In the case of a terminated plan, the 
        value of the recovery of liability under section 4062(c) 
        allocable as a plan asset under this section for purposes of 
        determining the amount of benefits payable by the corporation 
        shall be determined by multiplying--
                    ``(A) the amount of liability under section 4062(c) 
                as of the termination date of the plan, by
                    ``(B) the applicable section 4062(c) recovery 
                ratio.
            ``(2) Section 4062(c) recovery ratio.--For purposes of this 
        subsection--
                    ``(A) In general.--Except as provided in 
                subparagraph (C), the term `section 4062(c) recovery 
                ratio' means the ratio which--
                            ``(i) the sum of the values of all 
                        recoveries under section 4062(c) determined by 
                        the corporation in connection with plan 
                        terminations described under subparagraph (B), 
                        bears to
                            ``(ii) the sum of all the amounts of 
                        liability under section 4062(c) with respect to 
                        such plans as of the termination date in 
                        connection with any such prior termination.
                    ``(B) Prior terminations.--A plan termination 
                described in this subparagraph is a termination with 
                respect to which--
                            ``(i) the value of recoveries under section 
                        4062(c) have been determined by the 
                        corporation, and
                            ``(ii) notices of intent to terminate were 
                        provided (or in the case of a termination by 
                        the corporation, a notice of determination 
                        under section 4042 was issued) during the 5-
                        Federal fiscal year period ending with the 
                        third fiscal year preceding the fiscal year in 
                        which occurs the date of the notice of intent 
                        to terminate (or the notice of determination 
                        under section 4042) with respect to the plan 
                        termination for which the recovery ratio is 
                        being determined.
                    ``(C) Exception.--In the case of a terminated plan 
                with respect to which the outstanding amount of benefit 
                liabilities exceeds $20,000,000, the term `section 
                4062(c) recovery ratio' means, with respect to the 
                termination of such plan, the ratio of--
                            ``(i) the value of the recoveries on behalf 
                        of the plan under section 4062(c), to
                            ``(ii) the amount of the liability owed 
                        under section 4062(c) as of the date of plan 
                        termination to the trustee appointed under 
                        section 4042 (b) or (c).
            ``(3) Subsection not to apply.--This subsection shall not 
        apply with respect to the determination of--
                    ``(A) whether the amount of outstanding benefit 
                liabilities exceeds $20,000,000, or
                    ``(B) the amount of any liability under section 
                4062 to the corporation or the trustee appointed under 
                section 4042 (b) or (c).
            ``(4) Determinations.--Determinations under this subsection 
        shall be made by the corporation. Such determinations shall be 
        binding unless shown by clear and convincing evidence to be 
        unreasonable.''
    (c) Effective Date.--The amendments made by this section shall 
apply for any termination for which notices of intent to terminate are 
provided (or in the case of a termination by the corporation, a notice 
of determination under section 4042 under the Employee Retirement 
Income Security Act of 1974 is issued) on or after the date which is 30 
days after the date of enactment of this section.

SEC. 409. TREATMENT OF CERTAIN PLANS WHERE CESSATION OR CHANGE IN 
              MEMBERSHIP OF A CONTROLLED GROUP.

    (a) In General.--Section 4041(b) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1341(b)) is amended by adding at the 
end the following new paragraph:
            ``(5) Special rule for certain plans where cessation or 
        change in membership of a controlled group.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), if--
                            ``(i) there is transaction or series of 
                        transactions which result in a person ceasing 
                        to be a member of a controlled group, and
                            ``(ii) such person immediately before the 
                        transaction or series of transactions 
                        maintained a single-employer plan which is a 
                        defined benefit plan which is fully funded,
                then the interest rate used in determining whether the 
                plan is sufficient for benefit liabilities or to 
                otherwise assess plan liabilities for purposes of this 
                subsection or section 4042(a)(4) shall be not less than 
                the interest rate used in determining whether the plan 
                is fully funded.
                    ``(B) Limitations.--Subparagraph (A) shall not 
                apply to any transaction or series of transactions 
                unless--
                            ``(i) any employer maintaining the plan 
                        immediately before or after such transaction or 
                        series of transactions--
                                    ``(I) has an outstanding senior 
                                unsecured debt instrument which is 
                                rated investment grade by each of the 
                                nationally recognized statistical 
                                rating organizations for corporate 
                                bonds that has issued a credit rating 
                                for such instrument, or
                                    ``(II) if no such debt instrument 
                                of such employer has been rated by such 
                                an organization but 1 or more of such 
                                organizations has made an issuer credit 
                                rating for such employer, all such 
                                organizations which have so rated the 
                                employer have rated such employer 
                                investment grade, and
                            ``(ii) the employer maintaining the plan 
                        after the transaction or series of transactions 
                        employs at least 20 percent of the employees 
                        located in the United States who were employed 
                        by such employer immediately before the 
                        transaction or series of transactions.
                    ``(C) Fully funded.--For purposes of subparagraph 
                (A), a plan shall be treated as fully funded with 
                respect to any transaction or series of transactions 
                if--
                            ``(i) in the case of a transaction or 
                        series of transactions which occur in a plan 
                        year beginning before January 1, 2008, the 
                        funded current liability percentage determined 
                        under section 302(d) for the plan year is at 
                        least 100 percent, and
                            ``(ii) in the case of a transaction or 
                        series of transactions which occur in a plan 
                        year beginning on or after such date, the 
                        funding target attainment percentage determined 
                        under section 303 is, as of the valuation date 
                        for such plan year, at least 100 percent.
                    ``(D) 2 year limitation.--Subparagraph (A) shall 
                not apply to any transaction or series of transaction 
                if the plan referred to in subparagraph (A)(ii) is 
                terminated under section 4041(c) or 4042 after the 
                close of the 2-year period beginning on the date on 
                which the first such transaction occurs.''
    (b) Effective Date.--The amendments made by this section shall 
apply to any transaction or series of transactions occurring on and 
after the date of the enactment of this Act.

SEC. 410. MISSING PARTICIPANTS.

    (a) In General.--Section 4050 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1350) is amended by redesignating 
subsection (c) as subsection (e) and by inserting after subsection (b) 
the following new subsections:
    ``(c) Multiemployer Plans.--The corporation shall prescribe rules 
similar to the rules in subsection (a) for multiemployer plans covered 
by this title that terminate under section 4041A.
    ``(d) Plans Not Otherwise Subject to Title.--
            ``(1) Transfer to corporation.--The plan administrator of a 
        plan described in paragraph (4) may elect to transfer a missing 
        participant's benefits to the corporation upon termination of 
        the plan.
            ``(2) Information to the corporation.--To the extent 
        provided in regulations, the plan administrator of a plan 
        described in paragraph (4) shall, upon termination of the plan, 
        provide the corporation information with respect to benefits of 
        a missing participant if the plan transfers such benefits--
                    ``(A) to the corporation, or
                    ``(B) to an entity other than the corporation or a 
                plan described in paragraph (4)(B)(ii).
            ``(3) Payment by the corporation.--If benefits of a missing 
        participant were transferred to the corporation under paragraph 
        (1), the corporation shall, upon location of the participant or 
        beneficiary, pay to the participant or beneficiary the amount 
        transferred (or the appropriate survivor benefit) either--
                    ``(A) in a single sum (plus interest), or
                    ``(B) in such other form as is specified in 
                regulations of the corporation.
            ``(4) Plans described.--A plan is described in this 
        paragraph if--
                    ``(A) the plan is a pension plan (within the 
                meaning of section 3(2))--
                            ``(i) to which the provisions of this 
                        section do not apply (without regard to this 
                        subsection), and
                            ``(ii) which is not a plan described in 
                        paragraphs (2) through (11) of section 4021(b), 
                        and
                    ``(B) at the time the assets are to be distributed 
                upon termination, the plan--
                            ``(i) has missing participants, and
                            ``(ii) has not provided for the transfer of 
                        assets to pay the benefits of all missing 
                        participants to another pension plan (within 
                        the meaning of section 3(2)).
            ``(5) Certain provisions not to apply.--Subsections (a)(1) 
        and (a)(3) shall not apply to a plan described in paragraph 
        (4).''.
    (b) Conforming Amendments.--Section 206(f) of such Act (29 U.S.C. 
1056(f)) is amended--
            (1) by striking ``title IV'' and inserting ``section 
        4050''; and
            (2) by striking ``the plan shall provide that,''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after final regulations implementing 
subsections (c) and (d) of section 4050 of the Employee Retirement 
Income Security Act of 1974 (as added by subsection (a)), respectively, 
are prescribed.

SEC. 411. DIRECTOR OF THE PENSION BENEFIT GUARANTY CORPORATION.

    (a) In General.--Title IV of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1301 et seq.) is amended--
            (1) by striking the second sentence of section 4002(a) and 
        inserting the following: ``In carrying out its functions under 
        this title, the corporation shall be administered by a 
        Director, who shall be appointed by the President, by and with 
        the advice and consent of the Senate, and who shall act in 
        accordance with the policies established by the board.''; and
            (2) in section 4003(b), by--
                    (A) striking ``under this title, any member'' and 
                inserting ``under this title, the Director, any 
                member''; and
                    (B) striking ``designated by the chairman'' and 
                inserting ``designated by the Director or chairman''.
    (b) Compensation of Director.--Section 5314 of title 5, United 
States Code, is amended by adding at the end the following new item:
        ``Director, Pension Benefit Guaranty Corporation.''.
    (c) Jurisdiction of Nomination.--
            (1) In general.--The Committee on Finance of the Senate and 
        the Committee on Health, Education, Labor, and Pensions of the 
        Senate shall have joint jurisdiction over the nomination of a 
        person nominated by the President to fill the position of 
        Director of the Pension Benefit Guaranty Corporation under 
        section 4002 of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1302) (as amended by this Act), and if one 
        committee votes to order reported such a nomination, the other 
        shall report within 30 calendar days, or be automatically 
        discharged.
            (2) Rulemaking of the senate.--This subsection is enacted 
        by Congress--
                    (A) as an exercise of rulemaking power of the 
                Senate, and as such it is deemed a part of the rules of 
                the Senate, but applicable only with respect to the 
                procedure to be followed in the Senate in the case of a 
                nomination described in such sentence, and it 
                supersedes other rules only to the extent that it is 
                inconsistent with such rules; and
                    (B) with full recognition of the constitutional 
                right of the Senate to change the rules (so far as 
                relating to the procedure of the Senate) at any time, 
                in the same manner and to the same extent as in the 
                case of any other rule of the Senate.
    (d) Transition.--The term of the individual serving as Executive 
Director of the Pension Benefit Guaranty Corporation on the date of 
enactment of this Act shall expire on such date of enactment. Such 
individual, or any other individual, may serve as interim Director of 
such Corporation until an individual is appointed as Director of such 
Corporation under section 4002 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1302) (as amended by this Act).

SEC. 412. INCLUSION OF INFORMATION IN THE PBGC ANNUAL REPORT.

    Section 4008 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1308) is amended by--
            (1) striking ``As soon as practicable'' and inserting ``(a) 
        As soon as practicable''; and
            (2) adding at the end the following:
    ``(b) The report under subsection (a) shall include--
            ``(1) a summary of the Pension Insurance Modeling System 
        microsimulation model, including the specific simulation 
        parameters, specific initial values, temporal parameters, and 
        policy parameters used to calculate the financial statements 
        for the corporation;
            ``(2) a comparison of--
                    ``(A) the average return on investments earned with 
                respect to assets invested by the corporation for the 
                year to which the report relates; and
                    ``(B) an amount equal to 60 percent of the average 
                return on investment for such year in the Standard & 
                Poor's 500 Index, plus 40 percent of the average return 
                on investment for such year in the Lehman Aggregate 
                Bond Index (or in a similar fixed income index); and
            ``(3) a statement regarding the deficit or surplus for such 
        year that the corporation would have had if the corporation had 
        earned the return described in paragraph (2)(B) with respect to 
        assets invested by the corporation.''.

                          TITLE V--DISCLOSURE

SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICE.

    (a) In General.--Section 101(f) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1021(f)) is amended to read as follows:
    ``(f) Defined Benefit Plan Funding Notices.--
            ``(1) In general.--The administrator of a defined benefit 
        plan to which title IV applies shall for each plan year provide 
        a plan funding notice to the Pension Benefit Guaranty 
        Corporation, to each plan participant and beneficiary, to each 
        labor organization representing such participants or 
        beneficiaries, and, in the case of a multiemployer plan, to 
        each employer that has an obligation to contribute to the plan.
            ``(2) Information contained in notices.--
                    ``(A) Identifying information.--Each notice 
                required under paragraph (1) shall contain identifying 
                information, including the name of the plan, the 
                address and phone number of the plan administrator and 
                the plan's principal administrative officer, each plan 
                sponsor's employer identification number, and the plan 
                number of the plan.
                    ``(B) Specific information.--A plan funding notice 
                under paragraph (1) shall include--
                            ``(i)(I) in the case of a single-employer 
                        plan, a statement as to whether the plan's 
                        funding target attainment percentage (as 
                        defined in section 303(d)(2)) for the plan year 
                        to which the notice relates, and for the 2 
                        preceding plan years, is at least 100 percent 
                        (and, if not, the actual percentages), or
                            ``(II) in the case of a multiemployer plan, 
                        a statement as to whether the plan's funded 
                        percentage (as defined in section 305(i)) for 
                        the plan year to which the notice relates, and 
                        for the 2 preceding plan years, is at least 100 
                        percent (and, if not, the actual percentages),
                            ``(ii)(I) in the case of a single-employer 
                        plan, a statement of--
                                    ``(aa) the total assets (separately 
                                stating the prefunding balance and the 
                                funding standard carryover balance) and 
                                liabilities of the plan, determined in 
                                the same manner as under section 303, 
                                for the plan year for which the latest 
                                annual report filed under section 
                                104(a) was filed and for the 2 
                                preceding plan years, as reported in 
                                the annual report for each such plan 
                                year, and
                                    ``(bb) the value of the plan's 
                                assets and liabilities for the plan 
                                year to which the notice relates as of 
                                the last day of the plan year to which 
                                the notice relates determined using the 
                                asset valuation under subclause (II) of 
                                section 4006(a)(3)(E)(iii) and the 
                                interest rate under section 
                                4006(a)(3)(E)(iv), and
                            ``(II) in the case of a multiemployer plan, 
                        a statement of the value of the plan's assets 
                        and liabilities for the plan year to which the 
                        notice relates as the last day of such plan 
                        year and the preceding 2 plan years,
                            ``(iii) a statement of the number of 
                        participants who are--
                                    ``(I) retired or separated from 
                                service and are receiving benefits,
                                    ``(II) retired or separated 
                                participants entitled to future 
                                benefits, and
                                    ``(III) active participants under 
                                the plan,
                            ``(iv) a statement setting forth the 
                        funding policy of the plan and the asset 
                        allocation of investments under the plan 
                        (expressed as percentages of total assets) as 
                        of the end of the plan year to which the notice 
                        relates,
                            ``(v) in the case of a multiemployer plan, 
                        whether the plan was in critical or endangered 
                        status under section 305 for such plan year 
                        and, if so--
                                    ``(I) a statement describing how a 
                                person may obtain a copy of the plan's 
                                funding improvement or rehabilitation 
                                plan, as appropriate, adopted under 
                                section 305 and the actuarial and 
                                financial data that demonstrate any 
                                action taken by the plan toward fiscal 
                                improvement, and
                                    ``(II) a summary of any funding 
                                improvement plan, rehabilitation plan, 
                                or modification thereof adopted under 
                                section 305 during the plan year to 
                                which the notice relates,
                            ``(vi) in the case of any plan amendment, 
                        scheduled benefit increase or reduction, or 
                        other known event taking effect in the current 
                        plan year and having a material effect on plan 
                        liabilities or assets for the year (as defined 
                        in regulations by the Secretary), an 
                        explanation of the amendment, schedule increase 
                        or reduction, or event, and a projection to the 
                        end of such plan year of the effect of the 
                        amendment, scheduled increase or reduction, or 
                        event on plan liabilities,
                            ``(vii)(I) in the case of a single-employer 
                        plan, a summary of the rules governing 
                        termination of single-employer plans under 
                        subtitle C of title IV, or
                            ``(II) in the case of a multiemployer plan, 
                        a summary of the rules governing reorganization 
                        or insolvency, including the limitations on 
                        benefit payments,
                            ``(viii) a general description of the 
                        benefits under the plan which are eligible to 
                        be guaranteed by the Pension Benefit Guaranty 
                        Corporation, along with an explanation of the 
                        limitations on the guarantee and the 
                        circumstances under which such limitations 
                        apply,
                            ``(ix) a statement that a person may obtain 
                        a copy of the annual report of the plan filed 
                        under section 104(a) upon request, through the 
                        Internet website of the Department of Labor, or 
                        through an Intranet website maintained by the 
                        applicable plan sponsor (or plan administrator 
                        on behalf of the plan sponsor), and
                            ``(x) if applicable, a statement that each 
                        contributing sponsor, and each member of the 
                        contributing sponsor's controlled group, of the 
                        single-employer plan was required to provide 
                        the information under section 4010 for the plan 
                        year to which the notice relates.
                    ``(C) Other information.--Each notice under 
                paragraph (1) shall include--
                            ``(i) in the case of a multiemployer plan, 
                        a statement that the plan administrator shall 
                        provide, upon written request, to any labor 
                        organization representing plan participants and 
                        beneficiaries and any employer that has an 
                        obligation to contribute to the plan, a copy of 
                        the annual report filed with the Secretary 
                        under section 104(a), and
                            ``(ii) any additional information which the 
                        plan administrator elects to include to the 
                        extent not inconsistent with regulations 
                        prescribed by the Secretary.
            ``(3) Time for providing notice.--
                    ``(A) In general.--Any notice under paragraph (1) 
                shall be provided not later than 120 days after the end 
                of the plan year to which the notice relates.
                    ``(B) Exception for small plans.--In the case of a 
                small plan (as such term is used under section 
                303(g)(2)(B)) any notice under paragraph (1) shall be 
                provided upon filing of the annual report under section 
                104(a).
            ``(4) Form and manner.--Any notice under paragraph (1)--
                    ``(A) shall be provided in a form and manner 
                prescribed in regulations of the Secretary,
                    ``(B) shall be written in a manner so as to be 
                understood by the average plan participant, and
                    ``(C) may be provided in written, electronic, or 
                other appropriate form to the extent such form is 
                reasonably accessible to persons to whom the notice is 
                required to be provided.''.
    (b) Repeal of Notice to Participants of Funding Status.--
            (1) In general.--Title IV of such Act (29 U.S.C. 1301 et 
        seq.) is amended by striking section 4011.
            (2) Clerical amendment.--Section 1 of such Act is amended 
        in the table of contents by striking the item relating to 
        section 4011.
    (c) Model Notice.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of Labor shall publish a model 
version of the notice required by section 101(f) of the Employee 
Retirement Income Security Act of 1974. The Secretary of Labor may 
promulgate any interim final rules as the Secretary determines 
appropriate to carry out the provisions of this subsection.
    (d) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2007, except 
        that the amendment made by subsection (b) shall apply to plan 
        years beginning after December 31, 2006.
            (2) Transition rule.--Any requirement under section 101(f) 
        of the Employee Retirement Income Security Act of 1974 (as 
        amended by this section) to report the funding target 
        attainment percentage or funded percentage of a plan with 
        respect to any plan year beginning before January 1, 2008, 
        shall be treated as met if the plan reports--
                    (A) in the case of a plan year beginning in 2006, 
                the funded current liability percentage (as defined in 
                section 302(d)(8) of such Act) of the plan for such 
                plan year, and
                    (B) in the case of a plan year beginning in 2007, 
                the funding target attainment percentage or funded 
                percentage as determined using such methods of 
                estimation as the Secretary of the Treasury may 
                provide.

SEC. 502. ACCESS TO MULTIEMPLOYER PENSION PLAN INFORMATION.

    (a) Financial Information With Respect to Multiemployer Plans.--
            (1) In general.--Section 101 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1021), as amended by 
        section 103, is amended--
                    (A) by redesignating subsection (k) as subsection 
                (l); and
                    (B) by inserting after subsection (j) the following 
                new subsection:
    ``(k) Multiemployer Plan Information Made Available on Request.--
            ``(1) In general.--Each administrator of a multiemployer 
        plan shall, upon written request, furnish to any plan 
        participant or beneficiary, employee representative, or any 
        employer that has an obligation to contribute to the plan--
                    ``(A) a copy of any periodic actuarial report 
                (including any sensitivity testing) received by the 
                plan for any plan year which has been in the plan's 
                possession for at least 30 days,
                    ``(B) a copy of any quarterly, semi-annual, or 
                annual financial report prepared for the plan by any 
                plan investment manager or advisor or other fiduciary 
                which has been in the plan's possession for at least 30 
                days, and
                    ``(C) a copy of any application filed with the 
                Secretary of the Treasury requesting an extension under 
                section 304 of this Act or section 431(d) of the 
                Internal Revenue Code of 1986 and the determination of 
                such Secretary pursuant to such application.
            ``(2) Compliance.--Information required to be provided 
        under paragraph (1) --
                    ``(A) shall be provided to the requesting 
                participant, beneficiary, or employer within 30 days 
                after the request in a form and manner prescribed in 
                regulations of the Secretary,
                    ``(B) may be provided in written, electronic, or 
                other appropriate form to the extent such form is 
                reasonably accessible to persons to whom the 
                information is required to be provided, and
                    ``(C) shall not--
                            ``(i) include any individually identifiable 
                        information regarding any plan participant, 
                        beneficiary, employee, fiduciary, or 
                        contributing employer, or
                            ``(ii) reveal any proprietary information 
                        regarding the plan, any contributing employer, 
                        or entity providing services to the plan.
            ``(3) Limitations.--In no case shall a participant, 
        beneficiary, or employer be entitled under this subsection to 
        receive more than one copy of any report or application 
        described in paragraph (1) during any one 12-month period. The 
        administrator may make a reasonable charge to cover copying, 
        mailing, and other costs of furnishing copies of information 
        pursuant to paragraph (1). The Secretary may by regulations 
        prescribe the maximum amount which will constitute a reasonable 
        charge under the preceding sentence.''.
            (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
        1132(c)(4)) is amended by striking ``section 101(j)'' and 
        inserting ``subsection (j) or (k) of section 101''.
            (3) Regulations.--The Secretary shall prescribe regulations 
        under section 101(k)(2) of the Employee Retirement Income 
        Security Act of 1974 (as added by paragraph (1)) not later than 
        1 year after the date of the enactment of this Act.
    (b) Notice of Potential Withdrawal Liability to Multiemployer 
Plans.--
            (1) In general.--Section 101 of such Act (as amended by 
        subsection (a)) is amended--
                    (A) by redesignating subsection (l) as subsection 
                (m); and
                    (B) by inserting after subsection (k) the following 
                new subsection:
    ``(l) Notice of Potential Withdrawal Liability.--
            ``(1) In general.--The plan sponsor or administrator of a 
        multiemployer plan shall, upon written request, furnish to any 
        employer who has an obligation to contribute to the plan a 
        notice of--
                    ``(A) the estimated amount which would be the 
                amount of such employer's withdrawal liability under 
                part 1 of subtitle E of title IV if such employer 
                withdrew on the last day of the plan year preceding the 
                date of the request, and
                    ``(B) an explanation of how such estimated 
                liability amount was determined, including the 
                actuarial assumptions and methods used to determine the 
                value of the plan liabilities and assets, the data 
                regarding employer contributions, unfunded vested 
                benefits, annual changes in the plan's unfunded vested 
                benefits, and the application of any relevant 
                limitations on the estimated withdrawal liability.
        For purposes of subparagraph (B), the term `employer 
        contribution' means, in connection with a participant, a 
        contribution made by an employer as an employer of such 
        participant.
            ``(2) Compliance.--Any notice required to be provided under 
        paragraph (1)--
                    ``(A) shall be provided in a form and manner 
                prescribed in regulations of the Secretary to the 
                requesting employer within--
                            ``(i) 180 days after the request, or
                            ``(ii) subject to regulations of the 
                        Secretary, such longer time as may be necessary 
                        in the case of a plan that determines 
                        withdrawal liability based on any method 
                        described under paragraph (4) or (5) of section 
                        4211(c); and
                    ``(B) may be provided in written, electronic, or 
                other appropriate form to the extent such form is 
                reasonably accessible to employers to whom the 
                information is required to be provided.
            ``(3) Limitations.--In no case shall an employer be 
        entitled under this subsection to receive more than one notice 
        described in paragraph (1) during any one 12-month period. The 
        person required to provide such notice may make a reasonable 
        charge to cover copying, mailing, and other costs of furnishing 
        such notice pursuant to paragraph (1). The Secretary may by 
        regulations prescribe the maximum amount which will constitute 
        a reasonable charge under the preceding sentence.''.
            (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
        1132(c)(4)) is amended by striking ``section 101(j) or (k)'' 
        and inserting ``subsection (j), (k), or (l) of section 101''.
    (c) Notice of Amendment Reducing Future Accruals.--
            (1) Amendment of erisa.--Section 204(h)(1) of such Act (29 
        U.S.C. 1054(h)(1)) is amended by inserting at the end before 
        the period the following: ``and to each employer who has an 
        obligation to contribute to the plan.''.
            (2) Amendment of internal revenue code.--Section 
        4980F(e)(1) of such Code is amended by adding at the end before 
        the period the following: ``and to each employer who has an 
        obligation to contribute to the plan.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2007.

SEC. 503. ADDITIONAL ANNUAL REPORTING REQUIREMENTS.

    (a) Additional Annual Reporting Requirements With Respect to 
Defined Benefit Plans.--
            (1) In general.--Section 103 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1023) is amended--
                    (A) in subsection (a)(1)(B), by striking 
                ``subsections (d) and (e)'' and inserting ``subsections 
                (d), (e), and (f)''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(f) Additional Information With Respect to Defined Benefit 
Plans.--
            ``(1) Liabilities under 2 or more plans.--
                    ``(A) In general.--In any case in which any 
                liabilities to participants or their beneficiaries 
                under a defined benefit plan as of the end of a plan 
                year consist (in whole or in part) of liabilities to 
                such participants and beneficiaries under 2 or more 
                pension plans as of immediately before such plan year, 
                an annual report under this section for such plan year 
                shall include the funded percentage of each of such 2 
                or more pension plans as of the last day of such plan 
                year and the funded percentage of the plan with respect 
                to which the annual report is filed as of the last day 
                of such plan year.
                    ``(B) Funded percentage.--For purposes of this 
                paragraph, the term `funded percentage'--
                            ``(i) in the case of a single-employer 
                        plan, means the funding target attainment 
                        percentage, as defined in section 303(d)(2), 
                        and
                            ``(ii) in the case of a multiemployer plan, 
                        has the meaning given such term in section 
                        305(i)(2).
            ``(2) Additional information for multiemployer plans.--With 
        respect to any defined benefit plan which is a multiemployer 
        plan, an annual report under this section for a plan year shall 
        include, in addition to the information required under 
        paragraph (1), the following, as of the end of the plan year to 
        which the report relates:
                    ``(A) The number of employers obligated to 
                contribute to the plan.
                    ``(B) A list of the employers that contributed more 
                than 5 percent of the total contributions to the plan 
                during such plan year.
                    ``(C) The number of participants under the plan on 
                whose behalf no contributions were made by an employer 
                as an employer of the participant for such plan year 
                and for each of the 2 preceding plan years.
                    ``(D) The ratios of--
                            ``(i) the number of participants under the 
                        plan on whose behalf no employer had an 
                        obligation to make an employer contribution 
                        during the plan year, to
                            ``(ii) the number of participants under the 
                        plan on whose behalf no employer had an 
                        obligation to make an employer contribution 
                        during each of the 2 preceding plan years.
                    ``(E) Whether the plan received an amortization 
                extension under section 304(d) of this Act or section 
                431(d) of the Internal Revenue Code of 1986 for such 
                plan year and, if so, the amount of the difference 
                between the minimum required contribution for the year 
                and the minimum required contribution which would have 
                been required without regard to the extension, and the 
                period of such extension.
                    ``(F) Whether the plan used the shortfall funding 
                method (as such term is used in section 305) for such 
                plan year and, if so, the amount of the difference 
                between the minimum required contribution for the year 
                and the minimum required contribution which would have 
                been required without regard to the use of such method, 
                and the period of use of such method.
                    ``(G) Whether the plan was in critical or 
                endangered status under section 305 for such plan year, 
                and if so, a summary of any funding improvement or 
                rehabilitation plan (or modification thereto) adopted 
                during the plan year, and the funded percentage of the 
                plan.
                    ``(H) The number of employers that withdrew from 
                the plan during the preceding plan year and the 
                aggregate amount of withdrawal liability assessed, or 
                estimated to be assessed, against such withdrawn 
                employers.
                    ``(I) In the case of a multiemployer plan that has 
                merged with another plan or to which assets and 
                liabilities have been transferred, the actuarial 
                valuation of the assets and liabilities of each 
                affected plan during the year preceding the effective 
                date of the merger or transfer, based upon the most 
                recent data available as of the day before the first 
                day of the plan year, or other valuation method 
                performed under standards and procedures as the 
                Secretary may prescribe by regulation.''.
            (2) Guidance by secretary of labor.--Not later than 1 year 
        after the date of enactment of this Act, the Secretary of Labor 
        shall publish guidance to assist multiemployer defined benefit 
        plans to--
                    (A) identify and enumerate plan participants for 
                whom there is no employer with an obligation to make an 
                employer contribution under the plan; and
                    (B) report such information under section 
                103(f)(2)(D) of the Employee Retirement Income Security 
                Act of 1974 (as added by this section).
    (b) Additional Information in Annual Actuarial Statement Regarding 
Plan Retirement Projections.--Section 103(d) of such Act (29 U.S.C. 
1023(d)) is amended--
            (1) by redesignating paragraphs (12) and (13) as paragraphs 
        (13) and (14), respectively; and
            (2) by inserting after paragraph (11) the following new 
        paragraph:
            ``(12) A statement explaining the actuarial assumptions and 
        methods used in projecting future retirements and forms of 
        benefit distributions under the plan.''.
    (c) Repeal of Summary Annual Report Requirement for Defined Benefit 
Plans.--
            (1) In general.--Section 104(b)(3) of such Act (29 U.S.C. 
        1024(b)(3)) is amended by inserting ``(other than an 
        administrator of a defined benefit plan to which the 
        requirements of section 103(f) applies)'' after ``the 
        administrators''.
            (2) Conforming amendments.--Section 101(a)(2) of such Act 
        (29 U.S.C. 1021(a)(2)) is amended by inserting ``subsection (f) 
        and'' before ``sections 104(b)(3) and 105(a) and (c)''.
    (d) Furnishing Summary Plan Information to Employers and Employee 
Representatives of Multiemployer Plans.--Section 104 of such Act (29 
U.S.C. 1024) is amended--
            (1) in the header, by striking ``participants'' and 
        inserting ``participants and certain employers'';
            (2) redesignating subsection (d) as subsection (e); and
            (3) inserting after subsection (c) the following:
    ``(d) Furnishing Summary Plan Information to Employers and Employee 
Representatives of Multiemployer Plans.--
            ``(1) In general.--With respect to a multiemployer plan 
        subject to this section, within 30 days after the due date 
        under subsection (a)(1) for the filing of the annual report for 
        the fiscal year of the plan, the administrators shall furnish 
        to each employee organization and to each employer with an 
        obligation to contribute to the plan a report that contains--
                    ``(A) a description of the contribution schedules 
                and benefit formulas under the plan, and any 
                modification to such schedules and formulas, during 
                such plan year;
                    ``(B) the number of employers obligated to 
                contribute to the plan;
                    ``(C) a list of the employers that contributed more 
                than 5 percent of the total contributions to the plan 
                during such plan year;
                    ``(D) the number of participants under the plan on 
                whose behalf no contributions were made by an employer 
                as an employer of the participant for such plan year 
                and for each of the 2 preceding plan years;
                    ``(E) whether the plan was in critical or 
                endangered status under section 305 for such plan year 
                and, if so, include--
                            ``(i) a list of the actions taken by the 
                        plan to improve its funding status; and
                            ``(ii) a statement describing how a person 
                        may obtain a copy of the plan's improvement or 
                        rehabilitation plan, as applicable, adopted 
                        under section 305 and the actuarial and 
                        financial data that demonstrate any action 
                        taken by the plan toward fiscal improvement;
                    ``(F) the number of employers that withdrew from 
                the plan during the preceding plan year and the 
                aggregate amount of withdrawal liability assessed, or 
                estimated to be assessed, against such withdrawn 
                employers, as reported on the annual report for the 
                plan year to which the report under this subsection 
                relates;
                    ``(G) in the case of a multiemployer plan that has 
                merged with another plan or to which assets and 
                liabilities have been transferred, the actuarial 
                valuation of the assets and liabilities of each 
                affected plan during the year preceding the effective 
                date of the merger or transfer, based upon the most 
                recent data available as of the day before the first 
                day of the plan year, or other valuation method 
                performed under standards and procedures as the 
                Secretary may prescribe by regulation;
                    ``(H) a description as to whether the plan--
                            ``(i) sought or received an amortization 
                        extension under section 304(d) of this Act or 
                        section 431(d) of the Internal Revenue Code of 
                        1986 for such plan year; or
                            ``(ii) used the shortfall funding method 
                        (as such term is used in section 305) for such 
                        plan year; and
                    ``(I) notification of the right under this section 
                of the recipient to a copy of the annual report filed 
                with the Secretary under subsection (a), summary plan 
                description, summary of any material modification of 
                the plan, upon written request, but that--
                            ``(i) in no case shall a recipient be 
                        entitled to receive more than one copy of any 
                        such document described during any one 12-month 
                        period; and
                            ``(ii) the administrator may make a 
                        reasonable charge to cover copying, mailing, 
                        and other costs of furnishing copies of 
                        information pursuant to this subparagraph.
            ``(2) Effect of subsection.--Nothing in this subsection 
        waives any other provision under this title requiring plan 
        administrators to provide, upon request, information to 
        employers that have an obligation to contribute under the 
        plan.''.
    (e) Model Form.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of Labor shall publish a model 
form for providing the statements, schedules, and other material 
required to be provided under section 101(f) of the Employee Retirement 
Income Security Act of 1974, as amended by this section. The Secretary 
of Labor may promulgate any interim final rules as the Secretary 
determines appropriate to carry out the provisions of this subsection.
    (f) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2007.

SEC. 504. ELECTRONIC DISPLAY OF ANNUAL REPORT INFORMATION.

    (a) Electronic Display of Information.--Section 104(b) of such Act 
(29 U.S.C. 1024(b)) is amended by adding at the end the following:
    ``(5) Identification and basic plan information and actuarial 
information included in the annual report for any plan year shall be 
filed with the Secretary in an electronic format which accommodates 
display on the Internet, in accordance with regulations which shall be 
prescribed by the Secretary. The Secretary shall provide for display of 
such information included in the annual report, within 90 days after 
the date of the filing of the annual report, on an Internet website 
maintained by the Secretary and other appropriate media. Such 
information shall also be displayed on any Intranet website maintained 
by the plan sponsor (or by the plan administrator on behalf of the plan 
sponsor) for the purpose of communicating with employees and not the 
public, in accordance with regulations which shall be prescribed by the 
Secretary.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2007.

SEC. 505. SECTION 4010 FILINGS WITH THE PBGC.

    (a) Change in Criteria for Persons Required To Provide Information 
To PBGC.--Section 4010(b) of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1310(b)) is amended by striking paragraph (1) 
and inserting the following:
            ``(1) the funding target attainment percentage (as defined 
        in subsection (d)) at the end of the preceding plan year of a 
        plan maintained by the contributing sponsor or any member of 
        its controlled group is less than 80 percent;''.
    (b) Additional Information Required.--Section 4010 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1310) is amended by 
adding at the end the following new subsection:
    ``(d) Additional Information Required.--
            ``(1) In general.--The information submitted to the 
        corporation under subsection (a) shall include--
                    ``(A) the amount of benefit liabilities under the 
                plan determined using the assumptions used by the 
                corporation in determining liabilities;
                    ``(B) the funding target of the plan determined as 
                if the plan has been in at-risk status for at least 5 
                plan years; and
                    ``(C) the funding target attainment percentage of 
                the plan.
            ``(2) Definitions.--For purposes of this subsection:
                    ``(A) Funding target.--The term `funding target' 
                has the meaning provided under section 303(d)(1).
                    ``(B) Funding target attainment percentage.--The 
                term `funding target attainment percentage' has the 
                meaning provided under section 302(d)(2).
                    ``(C) At-risk status.--The term `at-risk status' 
                has the meaning provided in section 303(i)(4).
    ``(e) Notice to Congress.--The corporation shall, on an annual 
basis, submit to the Committee on Health, Education, Labor, and 
Pensions and the Committee on Finance of the Senate and the Committee 
on Education and the Workforce and the Committee on Ways and Means of 
the House of Representatives, a summary report in the aggregate of the 
information submitted to the corporation under this section.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to years beginning after 2007.

SEC. 506. DISCLOSURE OF TERMINATION INFORMATION TO PLAN PARTICIPANTS.

    (a) Distress Terminations.--
            (1) In general.--Section 4041(c)(2) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1341(c)(2)) 
        is amended by adding at the end the following:
                    ``(D) Disclosure of termination information.--
                            ``(i) In general.--A plan administrator 
                        that has filed a notice of intent to terminate 
                        under subsection (a)(2) shall provide to an 
                        affected party any information provided to the 
                        corporation under subsection (a)(2) not later 
                        than 15 days after--
                                    ``(I) receipt of a request from the 
                                affected party for the information; or
                                    ``(II) the provision of new 
                                information to the corporation relating 
                                to a previous request.
                            ``(ii) Confidentiality.--
                                    ``(I) In general.--The plan 
                                administrator shall not provide 
                                information under clause (i) in a form 
                                that includes any information that may 
                                directly or indirectly be associated 
                                with, or otherwise identify, an 
                                individual participant or beneficiary.
                                    ``(II) Limitation.--A court may 
                                limit disclosure under this 
                                subparagraph of confidential 
                                information described in section 552(b) 
                                of title 5, United States Code, to any 
                                authorized representative of the 
                                participants or beneficiaries that 
                                agrees to ensure the confidentiality of 
                                such information.
                            ``(iii) Form and manner of information; 
                        charges.--
                                    ``(I) Form and manner.--The 
                                corporation may prescribe the form and 
                                manner of the provision of information 
                                under this subparagraph, which shall 
                                include delivery in written, 
                                electronic, or other appropriate form 
                                to the extent that such form is 
                                reasonably accessible to individuals to 
                                whom the information is required to be 
                                provided.
                                    ``(II) Reasonable charges.--A plan 
                                administrator may charge a reasonable 
                                fee for any information provided under 
                                this subparagraph in other than 
                                electronic form.
                            ``(iv) Authorized representative.--For 
                        purposes of this subparagraph, the term 
                        `authorized representative' means any employee 
                        organization representing participants in the 
                        pension plan.''.
            (2) Conforming amendment.--Section 4041(c)(1) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1341(c)(1)) is amended in subparagraph (C) by striking 
        ``subparagraph (B)'' and inserting ``subparagraphs (B) and 
        (D)''.
    (b) Involuntary Terminations.--
            (1) In general.--Section 4042(c) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1342(c)) is amended by--
                    (A) striking ``(c) If the'' and inserting ``(c)(1) 
                If the'';
                    (B) redesignating paragraph (3) as paragraph (2); 
                and
                    (C) adding at the end the following:
            ``(3) Disclosure of termination information.--
                    ``(A) In general.--
                            ``(i) Information from plan sponsor or 
                        administrator.--A plan sponsor or plan 
                        administrator of a single-employer plan that 
                        has received a notice from the corporation of a 
                        determination that the plan should be 
                        terminated under this section shall provide to 
                        an affected party any information provided to 
                        the corporation in connection with the plan 
                        termination.
                            ``(ii) Information from corporation.--The 
                        corporation shall provide a copy of the 
                        administrative record, including the 
                        trusteeship decision record of a termination of 
                        a plan described under clause (i).
                    ``(B) Timing of disclosure.--The plan sponsor, plan 
                administrator, or the corporation, as applicable, shall 
                provide the information described in subparagraph (A) 
                not later than 15 days after--
                            ``(i) receipt of a request from an affected 
                        party for such information; or
                            ``(ii) in the case of information described 
                        under subparagraph (A)(i), the provision of any 
                        new information to the corporation relating to 
                        a previous request by an affected party.
                    ``(C) Confidentiality.--
                            ``(i) In general.--The plan administrator 
                        and plan sponsor shall not provide information 
                        under subparagraph (A)(i) in a form which 
                        includes any information that may directly or 
                        indirectly be associated with, or otherwise 
                        identify, an individual participant or 
                        beneficiary.
                            ``(ii) Limitation.--A court may limit 
                        disclosure under this paragraph of confidential 
                        information described in section 552(b) of 
                        title 5, United States Code, to authorized 
                        representatives (within the meaning of section 
                        4041(c)(2)(D)(iv)) of the participants or 
                        beneficiaries that agree to ensure the 
                        confidentiality of such information.
                    ``(D) Form and manner of information; charges.--
                            ``(i) Form and manner.--The corporation may 
                        prescribe the form and manner of the provision 
                        of information under this paragraph, which 
                        shall include delivery in written, electronic, 
                        or other appropriate form to the extent that 
                        such form is reasonably accessible to 
                        individuals to whom the information is required 
                        to be provided.
                            ``(ii) Reasonable charges.--A plan sponsor 
                        may charge a reasonable fee for any information 
                        provided under this paragraph in other than 
                        electronic form.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to any plan termination under title IV of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1301 et seq.) 
        with respect to which the notice of intent to terminate (or in 
        the case of a termination by the Pension Benefit Guaranty 
        Corporation, a notice of determination under section 4042 of 
        such Act (29 U.S.C. 1342)) occurs after the date of enactment 
        of this Act.
            (2) Transition rule.--If notice under section 4041(c)(2)(D) 
        or 4042(c)(3) of the Employee Retirement Income Security Act of 
        1974 (as added by this section) would otherwise be required to 
        be provided before the 90th day after the date of the enactment 
        of this Act, such notice shall not be required to be provided 
        until such 90th day.

SEC. 507. NOTICE OF FREEDOM TO DIVEST EMPLOYER SECURITIES.

    (a) In General.--Section 101 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1021), as amended by this Act, is 
amended by redesignating subsection (m) as subsection (n) and by 
inserting after subsection (l) the following:
    ``(m) Notice of Right To Divest.--Not later than 30 days before the 
first date on which an applicable individual of an applicable 
individual account plan is eligible to exercise the right under section 
204(j) to direct the proceeds from the divestment of employer 
securities with respect to any type of contribution, the administrator 
shall provide to such individual a notice--
            ``(1) setting forth such right under such section, and
            ``(2) describing the importance of diversifying the 
        investment of retirement account assets.
The notice required by this subsection shall be written in a manner 
calculated to be understood by the average plan participant and may be 
delivered in written, electronic, or other appropriate form to the 
extent that such form is reasonably accessible to the recipient.''
    (b) Penalties.--Section 502(c)(7) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132(c)(7)) is amended by striking 
``section 101(i)'' and inserting ``subsection (i) or (m) of section 
101''.
    (c) Model Notice.--The Secretary of the Treasury shall, within 180 
days after the date of the enactment of this subsection, prescribe a 
model notice for purposes of satisfying the requirements of the 
amendments made by this section.
    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2006.
            (2) Transition rule.--If notice under section 101(m) of the 
        Employee Retirement Income Security Act of 1974 (as added by 
        this section) would otherwise be required to be provided before 
        the 90th day after the date of the enactment of this Act, such 
        notice shall not be required to be provided until such 90th 
        day.

SEC. 508. PERIODIC PENSION BENEFIT STATEMENTS.

    (a) Amendments of ERISA.--
            (1) In general.--Section 105(a) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1025(a)) is amended to 
        read as follows:
    ``(a) Requirements To Provide Pension Benefit Statements.--
            ``(1) Requirements.--
                    ``(A) Individual account plan.--The administrator 
                of an individual account plan (other than a one-
                participant retirement plan described in section 
                101(i)(8)(B)) shall furnish a pension benefit 
                statement--
                            ``(i) at least once each calendar quarter 
                        to a participant or beneficiary who has the 
                        right to direct the investment of assets in his 
                        or her account under the plan,
                            ``(ii) at least once each calendar year to 
                        a participant or beneficiary who has his or her 
                        own account under the plan but does not have 
                        the right to direct the investment of assets in 
                        that account, and
                            ``(iii) upon written request to a plan 
                        beneficiary not described in clause (i) or 
                        (ii).
                    ``(B) Defined benefit plan.--The administrator of a 
                defined benefit plan (other than a one-participant 
                retirement plan described in section 101(i)(8)(B)) 
                shall furnish a pension benefit statement--
                            ``(i) at least once every 3 years to each 
                        participant with a nonforfeitable accrued 
                        benefit and who is employed by the employer 
                        maintaining the plan at the time the statement 
                        is to be furnished, and
                            ``(ii) to a participant or beneficiary of 
                        the plan upon written request.
                Information furnished under clause (i) to a participant 
                may be based on reasonable estimates determined under 
                regulations prescribed by the Secretary, in 
                consultation with the Pension Benefit Guaranty 
                Corporation.
            ``(2) Statements.--
                    ``(A) In general.--A pension benefit statement 
                under paragraph (1)--
                            ``(i) shall indicate, on the basis of the 
                        latest available information--
                                    ``(I) the total benefits accrued, 
                                and
                                    ``(II) the nonforfeitable pension 
                                benefits, if any, which have accrued, 
                                or the earliest date on which benefits 
                                will become nonforfeitable,
                            ``(ii) shall include an explanation of any 
                        permitted disparity under section 401(l) of the 
                        Internal Revenue Code of 1986 or any floor-
                        offset arrangement that may be applied in 
                        determining any accrued benefits described in 
                        clause (i),
                            ``(iii) shall be written in a manner 
                        calculated to be understood by the average plan 
                        participant, and
                            ``(iv) may be delivered in written, 
                        electronic, or other appropriate form to the 
                        extent such form is reasonably accessible to 
                        the participant or beneficiary.
                    ``(B) Additional information.--In the case of an 
                individual account plan, any pension benefit statement 
                under clause (i) or (ii) of paragraph (1)(A) shall 
                include--
                            ``(i) the value of each investment to which 
                        assets in the individual account have been 
                        allocated, determined as of the most recent 
                        valuation date under the plan, including the 
                        value of any assets held in the form of 
                        employer securities, without regard to whether 
                        such securities were contributed by the plan 
                        sponsor or acquired at the direction of the 
                        plan or of the participant or beneficiary, and
                            ``(ii) in the case of a pension benefit 
                        statement under paragraph (1)(A)(i)--
                                    ``(I) an explanation of any 
                                limitations or restrictions on any 
                                right of the participant or beneficiary 
                                under the plan to direct an investment,
                                    ``(II) an explanation, written in a 
                                manner calculated to be understood by 
                                the average plan participant, of the 
                                importance, for the long-term 
                                retirement security of participants and 
                                beneficiaries, of a well-balanced and 
                                diversified investment portfolio, 
                                including a statement of the risk that 
                                holding more than 20 percent of a 
                                portfolio in the security of one entity 
                                (such as employer securities) may not 
                                be adequately diversified, and
                                    ``(III) a notice directing the 
                                participant or beneficiary to the 
                                Internet website of the Department of 
                                Labor for sources of information on 
                                individual investing and 
                                diversification.
                    ``(C) Alternative notice.--The requirements of 
                subparagraph (A)(i)(II) are met if, at least annually 
                and in accordance with requirements of the Secretary, 
                the plan--
                            ``(i) updates the information described in 
                        such paragraph which is provided in the pension 
                        benefit statement, or
                            ``(ii) provides in a separate statement 
                        such information as is necessary to enable a 
                        participant or beneficiary to determine their 
                        nonforfeitable vested benefits.
            ``(3) Defined benefit plans.--
                    ``(A) Alternative notice.--In the case of a defined 
                benefit plan, the requirements of paragraph (1)(B)(i) 
                shall be treated as met with respect to a participant 
                if at least once each year the administrator provides 
                to the participant notice of the availability of the 
                pension benefit statement and the ways in which the 
                participant may obtain such statement. Such notice may 
                be delivered in written, electronic, or other 
                appropriate form to the extent such form is reasonably 
                accessible to the participant.
                    ``(B) Years in which no benefits accrue.--The 
                Secretary may provide that years in which no employee 
                or former employee benefits (within the meaning of 
                section 410(b) of the Internal Revenue Code of 1986) 
                under the plan need not be taken into account in 
                determining the 3-year period under paragraph 
                (1)(B)(i).''
            (2) Conforming amendments.--
                    (A) Section 105 of the Employee Retirement Income 
                Security Act of 1974 (29 U.S.C. 1025) is amended by 
                striking subsection (d).
                    (B) Section 105(b) of such Act (29 U.S.C. 1025(b)) 
                is amended to read as follows:
    ``(b) Limitation on Number of Statements.--In no case shall a 
participant or beneficiary of a plan be entitled to more than 1 
statement described in subparagraph (A)(iii) or (B)(ii) of subsection 
(a)(1), whichever is applicable, in any 12-month period.''
                    (C) Section 502(c)(1) of such Act (29 U.S.C. 
                1132(c)(1)) is amended by striking ``or section 
                101(f)'' and inserting ``section 101(f), or section 
                105(a)''.
    (b) Model Statements.--
            (1) In general.--The Secretary of Labor shall, within 1 
        year after the date of the enactment of this section, develop 1 
        or more model benefit statements that are written in a manner 
        calculated to be understood by the average plan participant and 
        that may be used by plan administrators in complying with the 
        requirements of section 105 of the Employee Retirement Income 
        Security Act of 1974.
            (2) Interim final rules.--The Secretary of Labor may 
        promulgate any interim final rules as the Secretary determines 
        appropriate to carry out the provisions of this subsection.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2006.
            (2) Special rule for collectively bargained agreements.--In 
        the case of a plan maintained pursuant to 1 or more collective 
        bargaining agreements between employee representatives and 1 or 
        more employers ratified on or before the date of the enactment 
        of this Act, paragraph (1) shall be applied to benefits 
        pursuant to, and individuals covered by, any such agreement by 
        substituting for ``December 31, 2006'' the earlier of--
                    (A) the later of--
                            (i) December 31, 2007, or
                            (ii) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof after such date of enactment), or
                    (B) December 31, 2008.

SEC. 509. NOTICE TO PARTICIPANTS OR BENEFICIARIES OF BLACKOUT PERIODS.

    (a) In General.--Section 101(i)(8)(B) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1021(i)(8)(B)) is amended by 
striking clauses (i) through (iv), by redesignating clause (v) as 
clause (ii), and by inserting before clause (ii), as so redesignated, 
the following new clause:
                            ``(i) on the first day of the plan year--
                                    ``(I) covered only one individual 
                                (or the individual and the individual's 
                                spouse) and the individual (or the 
                                individual and the individual's spouse) 
                                owned 100 percent of the plan sponsor 
                                (whether or not incorporated), or
                                    ``(II) covered only one or more 
                                partners (or partners and their 
                                spouses) in the plan sponsor, and''.
    (b) Effective Date.--The amendments made by this subsection shall 
take effect as if included in the provisions of section 306 of Public 
Law 107-204 (116 Stat. 745 et seq.).

  TITLE VI--INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND FIDUCIARY 
                                 RULES

                     Subtitle A--Investment Advice

SEC. 601. PROHIBITED TRANSACTION EXEMPTION FOR PROVISION OF INVESTMENT 
              ADVICE.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) Exemption from prohibited transactions.--Section 408(b) 
        of the Employee Retirement Income Security Act of 1974 (29 
        U.S.C. 1108(b)) is amended by adding at the end the following 
        new paragraph:
            ``(14) Any transaction in connection with the provision of 
        investment advice described in section 3(21)(A)(ii) to a 
        participant or beneficiary of an individual account plan that 
        permits such participant or beneficiary to direct the 
        investment of assets in their individual account, if--
                    ``(A) the transaction is--
                            ``(i) the provision of the investment 
                        advice to the participant or beneficiary of the 
                        plan with respect to a security or other 
                        property available as an investment under the 
                        plan,
                            ``(ii) the acquisition, holding, or sale of 
                        a security or other property available as an 
                        investment under the plan pursuant to the 
                        investment advice, or
                            ``(iii) the direct or indirect receipt of 
                        fees or other compensation by the fiduciary 
                        adviser or an affiliate thereof (or any 
                        employee, agent, or registered representative 
                        of the fiduciary adviser or affiliate) in 
                        connection with the provision of the advice or 
                        in connection with an acquisition, holding, or 
                        sale of a security or other property available 
                        as an investment under the plan pursuant to the 
                        investment advice; and
                    ``(B) the requirements of subsection (g) are 
                met.''.
            (2) Requirements.--Section 408 of such Act is amended 
        further by adding at the end the following new subsection:
    ``(g) Provision of Investment Advice to Participant and 
Beneficiaries.--
            ``(1) In general.--The prohibitions provided in section 406 
        shall not apply to transactions described in subsection (b)(14) 
        if the investment advice provided by a fiduciary adviser is 
        provided under an eligible investment advice arrangement.
            ``(2) Eligible investment advice arrangement.--For purposes 
        of this subsection, the term `eligible investment advice 
        arrangement' means an arrangement--
                    ``(A) which either--
                            ``(i) provides that any fees (including any 
                        commission or other compensation) received by 
                        the fiduciary adviser for investment advice or 
                        with respect to the sale, holding, or 
                        acquisition of any security or other property 
                        for purposes of investment of plan assets do 
                        not vary depending on the basis of any 
                        investment option selected, or
                            ``(ii) uses a computer model under an 
                        investment advice program meeting the 
                        requirements of paragraph (3) in connection 
                        with the provision of investment advice by a 
                        fiduciary adviser to a participant or 
                        beneficiary, and
                    ``(B) with respect to which the requirements of 
                paragraph (4), (5), (6), (7), (8), and (9) are met.
            ``(3) Investment advice program using computer model.--
                    ``(A) In general.--An investment advice program 
                meets the requirements of this paragraph if the 
                requirements of subparagraphs (B), (C), and (D) are 
                met.
                    ``(B) Computer model.--The requirements of this 
                subparagraph are met if the investment advice provided 
                under the investment advice program is provided 
                pursuant to a computer model that--
                            ``(i) applies generally accepted investment 
                        theories that take into account the historic 
                        returns of different asset classes over defined 
                        periods of time,
                            ``(ii) utilizes relevant information about 
                        the participant, which may include age, life 
                        expectancy, retirement age, risk tolerance, 
                        other assets or sources of income, and 
                        preferences as to certain types of investments,
                            ``(iii) utilizes prescribed objective 
                        criteria to provide asset allocation portfolios 
                        comprised of investment options available under 
                        the plan,
                            ``(iv) operates in a manner that is not 
                        biased in favor of investments offered by the 
                        fiduciary adviser or a person with a material 
                        affiliation or contractual relationship with 
                        the fiduciary adviser, and
                            ``(v) takes into account all investment 
                        options under the plan in specifying how a 
                        participant's account balance should be 
                        invested and is not inappropriately weighted 
                        with respect to any investment option.
                    ``(C) Certification.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met with respect to any 
                        investment advice program if an eligible 
                        investment expert certifies, prior to the 
                        utilization of the computer model and in 
                        accordance with rules prescribed by the 
                        Secretary, that the computer model meets the 
                        requirements of subparagraph (B).
                            ``(ii) Renewal of certifications.--If, as 
                        determined under regulations prescribed by the 
                        Secretary, there are material modifications to 
                        a computer model, the requirements of this 
                        subparagraph are met only if a certification 
                        described in clause (i) is obtained with 
                        respect to the computer model as so modified.
                            ``(iii) Eligible investment expert.--The 
                        term `eligible investment expert' means any 
                        person--
                                    ``(I) which meets such requirements 
                                as the Secretary may provide, and
                                    ``(II) does not bear any material 
                                affiliation or contractual relationship 
                                with any investment adviser or a 
                                related person thereof (or any 
                                employee, agent, or registered 
                                representative of the investment 
                                adviser or related person).
                    ``(D) Exclusivity of recommendation.--The 
                requirements of this subparagraph are met with respect 
                to any investment advice program if--
                            ``(i) the only investment advice provided 
                        under the program is the advice generated by 
                        the computer model described in subparagraph 
                        (B), and
                            ``(ii) any transaction described in 
                        subsection (b)(14)(B)(ii) occurs solely at the 
                        direction of the participant or beneficiary.
                Nothing in the preceding sentence shall preclude the 
                participant or beneficiary from requesting investment 
                advice other than that described in subparagraph (A), 
                but only if such request has not been solicited by any 
                person connected with carrying out the arrangement.
            ``(4) Express authorization by separate fiduciary.--The 
        requirements of this paragraph are met with respect to an 
        arrangement if the arrangement is expressly authorized by a 
        plan fiduciary other than the person offering the investment 
        advice program, any person providing investment options under 
        the plan, or any affiliate of either.
            ``(5) Annual audit.--The requirements of this paragraph are 
        met if an independent auditor, who has appropriate technical 
        training or experience and proficiency and so represents in 
        writing--
                    ``(A) conducts an annual audit of the arrangement 
                for compliance with the requirements of this 
                subsection, and
                    ``(B) following completion of the annual audit, 
                issues a written report to the fiduciary who authorized 
                use of the arrangement which presents its specific 
                findings regarding compliance of the arrangement with 
                the requirements of this subsection.
        For purposes of this paragraph, an auditor is considered 
        independent if it is not related to the person offering the 
        arrangement to the plan and is not related to any person 
        providing investment options under the plan.
            ``(6) Disclosure.--The requirements of this paragraph are 
        met if--
                    ``(A) the fiduciary adviser provides to a 
                participant or a beneficiary before the initial 
                provision of the investment advice with regard to any 
                security or other property offered as an investment 
                option, a written notification (which may consist of 
                notification by means of electronic communication)--
                            ``(i) of the role of any party that has a 
                        material affiliation or contractual 
                        relationship with the financial adviser in the 
                        development of the investment advice program 
                        and in the selection of investment options 
                        available under the plan,
                            ``(ii) of the past performance and 
                        historical rates of return of the investment 
                        options available under the plan,
                            ``(iii) of all fees or other compensation 
                        relating to the advice that the fiduciary 
                        adviser or any affiliate thereof is to receive 
                        (including compensation provided by any third 
                        party) in connection with the provision of the 
                        advice or in connection with the sale, 
                        acquisition, or holding of the security or 
                        other property,
                            ``(iv) of any material affiliation or 
                        contractual relationship of the fiduciary 
                        adviser or affiliates thereof in the security 
                        or other property,
                            ``(v) the manner, and under what 
                        circumstances, any participant or beneficiary 
                        information provided under the arrangement will 
                        be used or disclosed,
                            ``(vi) of the types of services provided by 
                        the fiduciary adviser in connection with the 
                        provision of investment advice by the fiduciary 
                        adviser,
                            ``(vii) that the adviser is acting as a 
                        fiduciary of the plan in connection with the 
                        provision of the advice, and
                            ``(viii) that a recipient of the advice may 
                        separately arrange for the provision of advice 
                        by another adviser, that could have no material 
                        affiliation with and receive no fees or other 
                        compensation in connection with the security or 
                        other property, and
                    ``(B) at all times during the provision of advisory 
                services to the participant or beneficiary, the 
                fiduciary adviser--
                            ``(i) maintains the information described 
                        in subparagraph (A) in accurate form and in the 
                        manner described in paragraph (8),
                            ``(ii) provides, without charge, accurate 
                        information to the recipient of the advice no 
                        less frequently than annually,
                            ``(iii) provides, without charge, accurate 
                        information to the recipient of the advice upon 
                        request of the recipient, and
                            ``(iv) provides, without charge, accurate 
                        information to the recipient of the advice 
                        concerning any material change to the 
                        information required to be provided to the 
                        recipient of the advice at a time reasonably 
                        contemporaneous to the change in information.
            ``(7) Other conditions.--The requirements of this paragraph 
        are met if--
                    ``(A) the fiduciary adviser provides appropriate 
                disclosure, in connection with the sale, acquisition, 
                or holding of the security or other property, in 
                accordance with all applicable securities laws,
                    ``(B) the sale, acquisition, or holding occurs 
                solely at the direction of the recipient of the advice,
                    ``(C) the compensation received by the fiduciary 
                adviser and affiliates thereof in connection with the 
                sale, acquisition, or holding of the security or other 
                property is reasonable, and
                    ``(D) the terms of the sale, acquisition, or 
                holding of the security or other property are at least 
                as favorable to the plan as an arm's length transaction 
                would be.
            ``(8) Standards for presentation of information.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if the notification required to be 
                provided to participants and beneficiaries under 
                paragraph (6)(A) is written in a clear and conspicuous 
                manner and in a manner calculated to be understood by 
                the average plan participant and is sufficiently 
                accurate and comprehensive to reasonably apprise such 
                participants and beneficiaries of the information 
                required to be provided in the notification.
                    ``(B) Model form for disclosure of fees and other 
                compensation.--The Secretary shall issue a model form 
                for the disclosure of fees and other compensation 
                required in paragraph (6)(A)(iii) which meets the 
                requirements of subparagraph (A).
            ``(9) Maintenance for 6 years of evidence of compliance.--
        The requirements of this paragraph are met if a fiduciary 
        adviser who has provided advice referred to in paragraph (1) 
        maintains, for a period of not less than 6 years after the 
        provision of the advice, any records necessary for determining 
        whether the requirements of the preceding provisions of this 
        subsection and of subsection (b)(14) have been met. A 
        transaction prohibited under section 406 shall not be 
        considered to have occurred solely because the records are lost 
        or destroyed prior to the end of the 6-year period due to 
        circumstances beyond the control of the fiduciary adviser.
            ``(10) Exemption for plan sponsor and certain other 
        fiduciaries.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                plan sponsor or other person who is a fiduciary (other 
                than a fiduciary adviser) shall not be treated as 
                failing to meet the requirements of this part solely by 
                reason of the provision of investment advice referred 
                to in section 3(21)(A)(ii) (or solely by reason of 
                contracting for or otherwise arranging for the 
                provision of the advice), if--
                            ``(i) the advice is provided by a fiduciary 
                        adviser pursuant to an eligible investment 
                        advice arrangement between the plan sponsor or 
                        other fiduciary and the fiduciary adviser for 
                        the provision by the fiduciary adviser of 
                        investment advice referred to in such section,
                            ``(ii) the terms of the eligible investment 
                        advice arrangement require compliance by the 
                        fiduciary adviser with the requirements of this 
                        subsection, and
                            ``(iii) the terms of the eligible 
                        investment advice arrangement include a written 
                        acknowledgment by the fiduciary adviser that 
                        the fiduciary adviser is a fiduciary of the 
                        plan with respect to the provision of the 
                        advice.
                    ``(B) Continued duty of prudent selection of 
                adviser and periodic review.--Nothing in subparagraph 
                (A) shall be construed to exempt a plan sponsor or 
                other person who is a fiduciary from any requirement of 
                this part for the prudent selection and periodic review 
                of a fiduciary adviser with whom the plan sponsor or 
                other person enters into an eligible investment advice 
                arrangement for the provision of investment advice 
                referred to in section 3(21)(A)(ii). The plan sponsor 
                or other person who is a fiduciary has no duty under 
                this part to monitor the specific investment advice 
                given by the fiduciary adviser to any particular 
                recipient of the advice.
                    ``(C) Availability of plan assets for payment for 
                advice.--Nothing in this part shall be construed to 
                preclude the use of plan assets to pay for reasonable 
                expenses in providing investment advice referred to in 
                section 3(21)(A)(ii).
            ``(11) Definitions.--For purposes of this subsection and 
        subsection (b)(14)--
                    ``(A) Fiduciary adviser.--The term `fiduciary 
                adviser' means, with respect to a plan, a person who is 
                a fiduciary of the plan by reason of the provision of 
                investment advice referred to in section 3(21)(A)(ii) 
                by the person to the participant or beneficiary of the 
                plan and who is--
                            ``(i) registered as an investment adviser 
                        under the Investment Advisers Act of 1940 (15 
                        U.S.C. 80b-1 et seq.) or under the laws of the 
                        State in which the fiduciary maintains its 
                        principal office and place of business,
                            ``(ii) a bank or similar financial 
                        institution referred to in section 408(b)(4) or 
                        a savings association (as defined in section 
                        3(b)(1) of the Federal Deposit Insurance Act 
                        (12 U.S.C. 1813(b)(1)), but only if the advice 
                        is provided through a trust department of the 
                        bank or similar financial institution or 
                        savings association which is subject to 
                        periodic examination and review by Federal or 
                        State banking authorities,
                            ``(iii) an insurance company qualified to 
                        do business under the laws of a State,
                            ``(iv) a person registered as a broker or 
                        dealer under the Securities Exchange Act of 
                        1934 (15 U.S.C. 78a et seq.),
                            ``(v) an affiliate of a person described in 
                        any of clauses (i) through (iv), or
                            ``(vi) an employee, agent, or registered 
                        representative of a person described in clauses 
                        (i) through (v) who satisfies the requirements 
                        of applicable insurance, banking, and 
                        securities laws relating to the provision of 
                        the advice.
                For purposes of this part, a person who develops the 
                computer model described in paragraph (3)(B) or markets 
                the investment advice program or computer model shall 
                be treated as a person who is a fiduciary of the plan 
                by reason of the provision of investment advice 
                referred to in section 3(21)(A)(ii) to the participant 
                or beneficiary and shall be treated as a fiduciary 
                adviser for purposes of this subsection and subsection 
                (b)(14), except that the Secretary may prescribe rules 
                under which only 1 fiduciary adviser may elect to be 
                treated as a fiduciary with respect to the plan.
                    ``(B) Affiliate.--The term `affiliate' of another 
                entity means an affiliated person of the entity (as 
                defined in section 2(a)(3) of the Investment Company 
                Act of 1940 (15 U.S.C. 80a-2(a)(3))).
                    ``(C) Registered representative.--The term 
                `registered representative' of another entity means a 
                person described in section 3(a)(18) of the Securities 
                Exchange Act of 1934 (15 U.S.C. 78c(a)(18)) 
                (substituting the entity for the broker or dealer 
                referred to in such section) or a person described in 
                section 202(a)(17) of the Investment Advisers Act of 
                1940 (15 U.S.C. 80b-2(a)(17)) (substituting the entity 
                for the investment adviser referred to in such 
                section).''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply with respect to advice referred to in section 
        3(21)(A)(ii) of the Employee Retirement Income Security Act of 
        1974 provided after December 31, 2006.
    (b) Amendments to Internal Revenue Code of 1986.--
            (1) Exemption from prohibited transactions.--Subsection (d) 
        of section 4975 of the Internal Revenue Code of 1986 (relating 
        to exemption from tax on prohibited transactions) is amended--
                    (A) in paragraph (15), by striking ``or'' at the 
                end;
                    (B) in paragraph (16), by striking the period at 
                the end and inserting ``;or''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(17) Any transaction in connection with the provision of 
        investment advice described in subsection (e)(3)(B) to a 
        participant or beneficiary in a plan and that permits such 
        participant or beneficiary to direct the investment of plan 
        assets in an individual account, if--
                    ``(A) the transaction is--
                            ``(i) the provision of the investment 
                        advice to the participant or beneficiary of the 
                        plan with respect to a security or other 
                        property available as an investment under the 
                        plan,
                            ``(ii) the acquisition, holding, or sale of 
                        a security or other property available as an 
                        investment under the plan pursuant to the 
                        investment advice, or
                            ``(iii) the direct or indirect receipt of 
                        fees or other compensation by the fiduciary 
                        adviser or an affiliate thereof (or any 
                        employee, agent, or registered representative 
                        of the fiduciary adviser or affiliate) in 
                        connection with the provision of the advice or 
                        in connection with an acquisition, holding, or 
                        sale of a security or other property available 
                        as an investment under the plan pursuant to the 
                        investment advice; and
                    ``(B) the requirements of subsection (f)(8) are 
                met.''.
            (2) Requirements.--Subsection (f) of such section 4975 
        (relating to other definitions and special rules) is amended by 
        adding at the end the following new paragraph:
            ``(8) Provision of investment advice to participant and 
        beneficiaries.--
                    ``(A) In general.--The prohibitions provided in 
                subsection (c) shall not apply to transactions 
                described in subsection (b)(14) if the investment 
                advice provided by a fiduciary adviser is provided 
                under an eligible investment advice arrangement.
                    ``(B) Eligible investment advice arrangement.--For 
                purposes of this paragraph, the term `eligible 
                investment advice arrangement' means an arrangement--
                            ``(i) which either--
                                    ``(I) provides that any fees 
                                (including any commission or other 
                                compensation) received by the fiduciary 
                                adviser for investment advice or with 
                                respect to the sale, holding, or 
                                acquisition of any security or other 
                                property for purposes of investment of 
                                plan assets do not vary depending on 
                                the basis of any investment option 
                                selected, or
                                    ``(II) uses a computer model under 
                                an investment advice program meeting 
                                the requirements of subparagraph (C) in 
                                connection with the provision of 
                                investment advice by a fiduciary 
                                adviser to a participant or 
                                beneficiary, and
                            ``(ii) with respect to which the 
                        requirements of subparagraphs (D), (E), (F), 
                        (G), (H), and (I) are met.
                    ``(C) Investment advice program using computer 
                model.--
                            ``(i) In general.--An investment advice 
                        program meets the requirements of this 
                        subparagraph if the requirements of clauses 
                        (ii), (iii), and (iv) are met.
                            ``(ii) Computer model.--The requirements of 
                        this clause are met if the investment advice 
                        provided under the investment advice program is 
                        provided pursuant to a computer model that--
                                    ``(I) applies generally accepted 
                                investment theories that take into 
                                account the historic returns of 
                                different asset classes over defined 
                                periods of time,
                                    ``(II) utilizes relevant 
                                information about the participant, 
                                which may include age, life expectancy, 
                                retirement age, risk tolerance, other 
                                assets or sources of income, and 
                                preferences as to certain types of 
                                investments,
                                    ``(III) utilizes prescribed 
                                objective criteria to provide asset 
                                allocation portfolios comprised of 
                                investment options available under the 
                                plan,
                                    ``(IV) operates in a manner that is 
                                not biased in favor of investments 
                                offered by the fiduciary adviser or a 
                                person with a material affiliation or 
                                contractual relationship with the 
                                fiduciary adviser, and
                                    ``(V) takes into account all 
                                investment options under the plan in 
                                specifying how a participant's account 
                                balance should be invested and is not 
                                inappropriately weighted with respect 
                                to any investment option.
                            ``(iii) Certification.--
                                    ``(I) In general.--The requirements 
                                of this clause are met with respect to 
                                any investment advice program if an 
                                eligible investment expert certifies, 
                                prior to the utilization of the 
                                computer model and in accordance with 
                                rules prescribed by the Secretary of 
                                Labor, that the computer model meets 
                                the requirements of clause (ii).
                                    ``(II) Renewal of certifications.--
                                If, as determined under regulations 
                                prescribed by the Secretary of Labor, 
                                there are material modifications to a 
                                computer model, the requirements of 
                                this clause are met only if a 
                                certification described in subclause 
                                (I) is obtained with respect to the 
                                computer model as so modified.
                                    ``(III) Eligible investment 
                                expert.--The term `eligible investment 
                                expert' means any person which meets 
                                such requirements as the Secretary of 
                                Labor may provide and which does not 
                                bear any material affiliation or 
                                contractual relationship with any 
                                investment adviser or a related person 
                                thereof (or any employee, agent, or 
                                registered representative of the 
                                investment adviser or related person).
                            ``(iv) Exclusivity of recommendation.--The 
                        requirements of this clause are met with 
                        respect to any investment advice program if--
                                    ``(I) the only investment advice 
                                provided under the program is the 
                                advice generated by the computer model 
                                described in clause (ii), and
                                    ``(II) any transaction described in 
                                subsection (b)(14)(B)(ii) occurs solely 
                                at the direction of the participant or 
                                beneficiary.
                        Nothing in the preceding sentence shall 
                        preclude the participant or beneficiary from 
                        requesting investment advice other than that 
                        described in clause (i), but only if such 
                        request has not been solicited by any person 
                        connected with carrying out the arrangement.
                    ``(D) Express authorization by separate 
                fiduciary.--The requirements of this subparagraph are 
                met with respect to an arrangement if the arrangement 
                is expressly authorized by a plan fiduciary other than 
                the person offering the investment advice program, any 
                person providing investment options under the plan, or 
                any affiliate of either.
                    ``(E) Audits.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if an independent auditor, 
                        who has appropriate technical training or 
                        experience and proficiency and so represents in 
                        writing--
                                    ``(I) conducts an annual audit of 
                                the arrangement for compliance with the 
                                requirements of this paragraph, and
                                    ``(II) following completion of the 
                                annual audit, issues a written report 
                                to the fiduciary who authorized use of 
                                the arrangement which presents its 
                                specific findings regarding compliance 
                                of the arrangement with the 
                                requirements of this paragraph.
                            ``(ii) Special rule for individual 
                        retirement and similar plans.--In the case of a 
                        plan described in subparagraphs (B) through (F) 
                        (and so much of subparagraph (G) as relates to 
                        such subparagraphs) of subsection (e)(1), in 
                        lieu of the requirements of clause (i), audits 
                        of the arrangement shall be conducted at such 
                        times and in such manner as the Secretary of 
                        Labor may prescribe.
                            ``(iii) Independent auditor.--For purposes 
                        of this subparagraph, an auditor is considered 
                        independent if it is not related to the person 
                        offering the arrangement to the plan and is not 
                        related to any person providing investment 
                        options under the plan.
                    ``(F) Disclosure.--The requirements of this 
                subparagraph are met if--
                            ``(i) the fiduciary adviser provides to a 
                        participant or a beneficiary before the initial 
                        provision of the investment advice with regard 
                        to any security or other property offered as an 
                        investment option, a written notification 
                        (which may consist of notification by means of 
                        electronic communication)--
                                    ``(I) of the role of any party that 
                                has a material affiliation or 
                                contractual relationship with the 
                                financial adviser in the development of 
                                the investment advice program and in 
                                the selection of investment options 
                                available under the plan,
                                    ``(II) of the past performance and 
                                historical rates of return of the 
                                investment options available under the 
                                plan,
                                    ``(III) of all fees or other 
                                compensation relating to the advice 
                                that the fiduciary adviser or any 
                                affiliate thereof is to receive 
                                (including compensation provided by any 
                                third party) in connection with the 
                                provision of the advice or in 
                                connection with the sale, acquisition, 
                                or holding of the security or other 
                                property,
                                    ``(IV) of any material affiliation 
                                or contractual relationship of the 
                                fiduciary adviser or affiliates thereof 
                                in the security or other property,
                                    ``(V) the manner, and under what 
                                circumstances, any participant or 
                                beneficiary information provided under 
                                the arrangement will be used or 
                                disclosed,
                                    ``(VI) of the types of services 
                                provided by the fiduciary adviser in 
                                connection with the provision of 
                                investment advice by the fiduciary 
                                adviser,
                                    ``(VII) that the adviser is acting 
                                as a fiduciary of the plan in 
                                connection with the provision of the 
                                advice, and
                                    ``(VIII) that a recipient of the 
                                advice may separately arrange for the 
                                provision of advice by another adviser, 
                                that could have no material affiliation 
                                with and receive no fees or other 
                                compensation in connection with the 
                                security or other property, and
                            ``(ii) at all times during the provision of 
                        advisory services to the participant or 
                        beneficiary, the fiduciary adviser--
                                    ``(I) maintains the information 
                                described in clause (i) in accurate 
                                form and in the manner described in 
                                subparagraph (H),
                                    ``(II) provides, without charge, 
                                accurate information to the recipient 
                                of the advice no less frequently than 
                                annually,
                                    ``(III) provides, without charge, 
                                accurate information to the recipient 
                                of the advice upon request of the 
                                recipient, and
                                    ``(IV) provides, without charge, 
                                accurate information to the recipient 
                                of the advice concerning any material 
                                change to the information required to 
                                be provided to the recipient of the 
                                advice at a time reasonably 
                                contemporaneous to the change in 
                                information.
                    ``(G) Other conditions.--The requirements of this 
                subparagraph are met if--
                            ``(i) the fiduciary adviser provides 
                        appropriate disclosure, in connection with the 
                        sale, acquisition, or holding of the security 
                        or other property, in accordance with all 
                        applicable securities laws,
                            ``(ii) the sale, acquisition, or holding 
                        occurs solely at the direction of the recipient 
                        of the advice,
                            ``(iii) the compensation received by the 
                        fiduciary adviser and affiliates thereof in 
                        connection with the sale, acquisition, or 
                        holding of the security or other property is 
                        reasonable, and
                            ``(iv) the terms of the sale, acquisition, 
                        or holding of the security or other property 
                        are at least as favorable to the plan as an 
                        arm's length transaction would be.
                    ``(H) Standards for presentation of information.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if the notification 
                        required to be provided to participants and 
                        beneficiaries under subparagraph (F)(i) is 
                        written in a clear and conspicuous manner and 
                        in a manner calculated to be understood by the 
                        average plan participant and is sufficiently 
                        accurate and comprehensive to reasonably 
                        apprise such participants and beneficiaries of 
                        the information required to be provided in the 
                        notification.
                            ``(ii) Model form for disclosure of fees 
                        and other compensation.--The Secretary of Labor 
                        shall issue a model form for the disclosure of 
                        fees and other compensation required in 
                        subparagraph (F)(i)(III) which meets the 
                        requirements of clause (i).
                    ``(I) Maintenance for 6 years of evidence of 
                compliance.--The requirements of this subparagraph are 
                met if a fiduciary adviser who has provided advice 
                referred to in subparagraph (A) maintains, for a period 
                of not less than 6 years after the provision of the 
                advice, any records necessary for determining whether 
                the requirements of the preceding provisions of this 
                paragraph and of subsection (d)(17) have been met. A 
                transaction prohibited under section 406 shall not be 
                considered to have occurred solely because the records 
                are lost or destroyed prior to the end of the 6-year 
                period due to circumstances beyond the control of the 
                fiduciary adviser.
                    ``(J) Definitions.--For purposes of this paragraph 
                and subsection (d)(17)--
                            ``(i) Fiduciary adviser.--The term 
                        `fiduciary adviser' means, with respect to a 
                        plan, a person who is a fiduciary of the plan 
                        by reason of the provision of investment advice 
                        by the person to the participant or beneficiary 
                        of the plan and who is--
                                    ``(I) registered as an investment 
                                adviser under the Investment Advisers 
                                Act of 1940 (15 U.S.C. 80b-1 et seq.) 
                                or under the laws of the State in which 
                                the fiduciary maintains its principal 
                                office and place of business,
                                    ``(II) a bank or similar financial 
                                institution referred to in section 
                                408(b)(4) or a savings association (as 
                                defined in section 3(b)(1) of the 
                                Federal Deposit Insurance Act (12 
                                U.S.C. 1813(b)(1)), but only if the 
                                advice is provided through a trust 
                                department of the bank or similar 
                                financial institution or savings 
                                association which is subject to 
                                periodic examination and review by 
                                Federal or State banking authorities,
                                    ``(III) an insurance company 
                                qualified to do business under the laws 
                                of a State,
                                    ``(IV) a person registered as a 
                                broker or dealer under the Securities 
                                Exchange Act of 1934 (15 U.S.C. 78a et 
                                seq.),
                                    ``(V) an affiliate of a person 
                                described in any of subclauses (I) 
                                through (IV), or
                                    ``(VI) an employee, agent, or 
                                registered representative of a person 
                                described in subclauses (I) through (V) 
                                who satisfies the requirements of 
                                applicable insurance, banking, and 
                                securities laws relating to the 
                                provision of the advice.
                        For purposes of this title, a person who 
                        develops the computer model described in 
                        subparagraph (C)(ii) or markets the investment 
                        advice program or computer model shall be 
                        treated as a person who is a fiduciary of the 
                        plan by reason of the provision of investment 
                        advice referred to in subsection (e)(3)(B) to 
                        the participant or beneficiary and shall be 
                        treated as a fiduciary adviser for purposes of 
                        this paragraph and subsection (d)(17), except 
                        that the Secretary of Labor may prescribe rules 
                        under which only 1 fiduciary adviser may elect 
                        to be treated as a fiduciary with respect to 
                        the plan.
                            ``(ii) Affiliate.--The term `affiliate' of 
                        another entity means an affiliated person of 
                        the entity (as defined in section 2(a)(3) of 
                        the Investment Company Act of 1940 (15 U.S.C. 
                        80a-2(a)(3))).
                            ``(iii) Registered representative.--The 
                        term `registered representative' of another 
                        entity means a person described in section 
                        3(a)(18) of the Securities Exchange Act of 1934 
                        (15 U.S.C. 78c(a)(18)) (substituting the entity 
                        for the broker or dealer referred to in such 
                        section) or a person described in section 
                        202(a)(17) of the Investment Advisers Act of 
                        1940 (15 U.S.C. 80b-2(a)(17)) (substituting the 
                        entity for the investment adviser referred to 
                        in such section).''.
            (3) Determination of feasibility of application of computer 
        model investment advice programs for individual retirement and 
        similar plans.--
                    (A) Solicitation of information.--As soon as 
                practicable after the date of the enactment of this 
                Act, the Secretary of Labor, in consultation with the 
                Secretary of the Treasury, shall--
                            (i) solicit information as to the 
                        feasibility of the application of computer 
                        model investment advice programs for plans 
                        described in subparagraphs (B) through (F) (and 
                        so much of subparagraph (G) as relates to such 
                        subparagraphs) of section 4975(e)(1) of the 
                        Internal Revenue Code of 1986, including 
                        soliciting information from--
                                    (I) at least the top 50 trustees of 
                                such plans, determined on the basis of 
                                assets held by such trustees, and
                                    (II) other persons offering 
                                computer model investment advice 
                                programs based on nonproprietary 
                                products, and
                            (ii) shall on the basis of such information 
                        make the determination under subparagraph (B).
                The information solicited by the Secretary of Labor 
                under clause (i) from persons described in subclauses 
                (I) and (II) of clause (i) shall include information on 
                computer modeling capabilities of such persons with 
                respect to the current year and preceding year, 
                including such capabilities for investment accounts 
                maintained by such persons.
                    (B) Determination of feasibility.--The Secretary of 
                Labor, in consultation with the Secretary of the 
                Treasury, shall, on the basis of information received 
                under subparagraph (A), determine whether there is any 
                computer model investment advice program which may be 
                utilized by a plan described in subparagraph (A)(i) to 
                provide investment advice to the account beneficiary of 
                the plan which--
                            (i) utilizes relevant information about the 
                        account beneficiary, which may include age, 
                        life expectancy, retirement age, risk 
                        tolerance, other assets or sources of income, 
                        and preferences as to certain types of 
                        investments,
                            (ii) takes into account the full range of 
                        investments, including equities and bonds, in 
                        determining the options for the investment 
                        portfolio of the account beneficiary, and
                            (iii) allows the account beneficiary, in 
                        directing the investment of assets, sufficient 
                        flexibility in obtaining advice to evaluate and 
                        select investment options.
                The Secretary of Labor shall report the results of such 
                determination to the committees of Congress referred to 
                in subparagraph (D)(ii) not later than December 31, 
                2007.
                    (C) Application of computer model investment advice 
                program.--
                            (i) Certification required for use of 
                        computer model.--
                                    (I) Restriction on use.--Subclause 
                                (II) of section 4975(f)(8)(B)(i) of the 
                                Internal Revenue Code of 1986 shall not 
                                apply to a plan described in 
                                subparagraph (A)(i).
                                    (II) Restriction lifted if model 
                                certified.--If the Secretary of Labor 
                                determines under subparagraph (B) or 
                                (D) that there is a computer model 
                                investment advice program described in 
                                subparagraph (B), subclause (I) shall 
                                cease to apply as of the date of such 
                                determination.
                            (ii) Class exemption if no initial 
                        certification by secretary.--If the Secretary 
                        of Labor determines under subparagraph (B) that 
                        there is no computer model investment advice 
                        program described in subparagraph (B), the 
                        Secretary of Labor shall grant a class 
                        exemption from treatment as a prohibited 
                        transaction under section 4975(c) of the 
                        Internal Revenue Code of 1986 to any 
                        transaction described in section 4975(d)(17)(A) 
                        of such Code with respect to plans described in 
                        subparagraph (A)(i), subject to such conditions 
                        as set forth in such exemption as are in the 
                        interests of the plan and its account 
                        beneficiary and protective of the rights of the 
                        account beneficiary and as are necessary to--
                                    (I) ensure the requirements of 
                                sections 4975(d)(17) and 4975(f)(8) 
                                (other than subparagraph (C) thereof) 
                                of the Internal Revenue Code of 1986 
                                are met, and
                                    (II) ensure the investment advice 
                                provided under the investment advice 
                                program utilizes prescribed objective 
                                criteria to provide asset allocation 
                                portfolios comprised of securities or 
                                other property available as investments 
                                under the plan.
                        If the Secretary of Labor solicits any 
                        information under subparagraph (A) from a 
                        person and such person does not provide such 
                        information within 60 days after the 
                        solicitation, then, unless such failure was due 
                        to reasonable cause and not wilful neglect, 
                        such person shall not be entitled to utilize 
                        the class exemption under this clause.
                    (D) Subsequent determination.--
                            (i) In general.--If the Secretary of Labor 
                        initially makes a determination described in 
                        subparagraph (C)(ii), the Secretary may 
                        subsequently determine that there is a computer 
                        model investment advice program described in 
                        subparagraph (B). If the Secretary makes such 
                        subsequent determination, then the class 
                        exemption described in subparagraph (C)(ii) 
                        shall cease to apply after the later of--
                                    (I) the date which is 2 years after 
                                such subsequent determination, or
                                    (II) the date which is 3 years 
                                after the first date on which such 
                                exemption took effect.
                            (ii) Requests for determination.--Any 
                        person may request the Secretary of Labor to 
                        make a determination under this subparagraph 
                        with respect to any computer model investment 
                        advice program, and the Secretary of Labor 
                        shall make a determination with respect to such 
                        request within 90 days. If the Secretary of 
                        Labor makes a determination that such program 
                        is not described in subparagraph (B), the 
                        Secretary shall, within 10 days of such 
                        determination, notify the Committee on Ways and 
                        Means and the Committee on Education and the 
                        Workforce of the House of Representatives and 
                        the Committee on Finance and the Committee on 
                        Health, Education, Labor, and Pensions of the 
                        Senate of such determination and the reasons 
                        for such determination.
                    (E) Effective date.--The provisions of this 
                paragraph shall take effect on the date of the 
                enactment of this Act.
            (4) Effective date.--Except as provided in this subsection, 
        the amendments made by this subsection shall apply with respect 
        to advice referred to in section 4975(c)(3)(B) of the Internal 
        Revenue Code of 1986 provided after December 31, 2006.
    (c) Coordination With Existing Exemptions.--Any exemption under 
section 408(b) of the Employee Retirement Income Security Act of 1974 
and section 4975(d) of the Internal Revenue Code of 1986 provided by 
the amendments made by this section shall not in any manner alter 
existing individual or class exemptions, provided by statute or 
administrative action.

                  Subtitle B--Prohibited Transactions

SEC. 611. PROHIBITED TRANSACTION RULES RELATING TO FINANCIAL 
              INVESTMENTS.

    (a) Exemption for Block Trading.--
            (1) Amendments to employee retirement income security act 
        of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as 
        amended by section 601, is amended by adding at the end the 
        following new paragraph:
            ``(15)(A) Any transaction involving the purchase or sale of 
        securities, or other property (as determined by the Secretary), 
        between a plan and a party in interest (other than a fiduciary 
        described in section 3(21)(A)) with respect to a plan if--
                    ``(i) the transaction involves a block trade,
                    ``(ii) at the time of the transaction, the interest 
                of the plan (together with the interests of any other 
                plans maintained by the same plan sponsor), does not 
                exceed 10 percent of the aggregate size of the block 
                trade,
                    ``(iii) the terms of the transaction, including the 
                price, are at least as favorable to the plan as an 
                arm's length transaction, and
                    ``(iv) the compensation associated with the 
                purchase and sale is not greater than the compensation 
                associated with an arm's length transaction with an 
                unrelated party.
            ``(B) For purposes of this paragraph, the term `block 
        trade' means any trade of at least 10,000 shares or with a 
        market value of at least $200,000 which will be allocated 
        across two or more unrelated client accounts of a fiduciary.''.
            (2) Amendments to internal revenue code of 1986.--
                    (A) In general.--Subsection (d) of section 4975 of 
                the Internal Revenue Code of 1986 (relating to 
                exemptions), as amended by section 601, is amended by 
                striking ``or'' at the end of paragraph (16), by 
                striking the period at the end of paragraph (17) and 
                inserting ``, or'', and by adding at the end the 
                following new paragraph:
            ``(18) any transaction involving the purchase or sale of 
        securities, or other property (as determined by the Secretary 
        of Labor), between a plan and a party in interest (other than a 
        fiduciary described in subsection (e)(3)(B)) with respect to a 
        plan if--
                    ``(A) the transaction involves a block trade,
                    ``(B) at the time of the transaction, the interest 
                of the plan (together with the interests of any other 
                plans maintained by the same plan sponsor), does not 
                exceed 10 percent of the aggregate size of the block 
                trade,
                    ``(C) the terms of the transaction, including the 
                price, are at least as favorable to the plan as an 
                arm's length transaction, and
                    ``(D) the compensation associated with the purchase 
                and sale is not greater than the compensation 
                associated with an arm's length transaction with an 
                unrelated party.''.
                    (B) Special rule relating to block trade.--
                Subsection (f) of section 4975 of such Code (relating 
                to other definitions and special rules), as amended by 
                section 601, is amended by adding at the end the 
                following new paragraph:
            ``(9) Block trade.--The term `block trade' means any trade 
        of at least 10,000 shares or with a market value of at least 
        $200,000 which will be allocated across two or more unrelated 
        client accounts of a fiduciary.''.
    (b) Bonding Relief.--Section 412(a) of such Act (29 U.S.C. 1112(a)) 
is amended--
            (1) by redesignating paragraph (2) as paragraph (3),
            (2) by striking ``and'' at the end of paragraph (1), and
            (3) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) no bond shall be required of any entity which is 
        registered as a broker or a dealer under section 15(b) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) if the 
        broker or dealer is subject to the fidelity bond requirements 
        of a self-regulatory organization (within the meaning of 
        section 3(a)(26) of such Act (15 U.S.C. 78c(a)(26)).''.
    (c) Exemption for Electronic Communication Network.--
            (1) Amendments to employee retirement income security act 
        of 1974.--Section 408(b) of such Act, as amended by subsection 
        (a), is amended by adding at the end the following:
            ``(16) Any transaction involving the purchase or sale of 
        securities, or other property (as determined by the Secretary), 
        between a plan and a party in interest if--
                    ``(A) the transaction is executed through an 
                electronic communication network, alternative trading 
                system, or similar execution system or trading venue 
                subject to regulation and oversight by--
                            ``(i) the applicable Federal regulating 
                        entity, or
                            ``(ii) such foreign regulatory entity as 
                        the Secretary may determine by regulation,
                    ``(B) either--
                            ``(i) the transaction is effected pursuant 
                        to rules designed to match purchases and sales 
                        at the best price available through the 
                        execution system in accordance with applicable 
                        rules of the Securities and Exchange Commission 
                        or other relevant governmental authority, or
                            ``(ii) neither the execution system nor the 
                        parties to the transaction take into account 
                        the identity of the parties in the execution of 
                        trades,
                    ``(C) the price and compensation associated with 
                the purchase and sale are not greater than the price 
                and compensation associated with an arm's length 
                transaction with an unrelated party,
                    ``(D) if the party in interest has an ownership 
                interest in the system or venue described in 
                subparagraph (A), the system or venue has been 
                authorized by the plan sponsor or other independent 
                fiduciary for transactions described in this paragraph, 
                and
                    ``(E) not less than 30 days prior to the initial 
                transaction described in this paragraph executed 
                through any system or venue described in subparagraph 
                (A), a plan fiduciary is provided written or electronic 
                notice of the execution of such transaction through 
                such system or venue.''.
            (2) Amendments to internal revenue code of 1986.--
        Subsection (d) of section 4975 of the Internal Revenue Code of 
        1986 (relating to exemptions), as amended by subsection (a), is 
        amended by striking ``or'' at the end of paragraph (17), by 
        striking the period at the end of paragraph (18) and inserting 
        ``, or'', and by adding at the end the following new paragraph:
            ``(19) any transaction involving the purchase or sale of 
        securities, or other property (as determined by the Secretary 
        of Labor), between a plan and a party in interest if--
                    ``(A) the transaction is executed through an 
                electronic communication network, alternative trading 
                system, or similar execution system or trading venue 
                subject to regulation and oversight by--
                            ``(i) the applicable Federal regulating 
                        entity, or
                            ``(ii) such foreign regulatory entity as 
                        the Secretary of Labor may determine by 
                        regulation,
                    ``(B) either--
                            ``(i) the transaction is effected pursuant 
                        to rules designed to match purchases and sales 
                        at the best price available through the 
                        execution system in accordance with applicable 
                        rules of the Securities and Exchange Commission 
                        or other relevant governmental authority, or
                            ``(ii) neither the execution system nor the 
                        parties to the transaction take into account 
                        the identity of the parties in the execution of 
                        trades,
                    ``(C) the price and compensation associated with 
                the purchase and sale are not greater than the price 
                and compensation associated with an arm's length 
                transaction with an unrelated party,
                    ``(D) if the party in interest has an ownership 
                interest in the system or venue described in 
                subparagraph (A), the system or venue has been 
                authorized by the plan sponsor or other independent 
                fiduciary for transactions described in this paragraph, 
                and
                    ``(E) not less than 30 days prior to the initial 
                transaction described in this paragraph executed 
                through any system or venue described in subparagraph 
                (A), a plan fiduciary is provided written or electronic 
                notice of the execution of such transaction through 
                such system or venue.''.
    (d) Exemption for Service Providers.--
            (1) Amendments to employee retirement income security act 
        of 1974.--Section 408(b) of such Act (29 U.S.C. 1106), as 
        amended by subsection (c), is amended by adding at the end the 
        following new paragraph:
            ``(17)(A) Transactions described in subparagraphs (A), (B), 
        and (D) of section 406(a)(1) between a plan and a person that 
        is a party in interest other than a fiduciary (or an affiliate) 
        who has or exercises any discretionary authority or control 
        with respect to the investment of the plan assets involved in 
        the transaction or renders investment advice (within the 
        meaning of section 3(21)(A)(ii)) with respect to those assets, 
        solely by reason of providing services to the plan or solely by 
        reason of a relationship to such a service provider described 
        in subparagraph (F), (G), (H), or (I) of section 3(14), or 
        both, but only if in connection with such transaction the plan 
        receives no less, nor pays no more, than adequate 
        consideration.
            ``(B) For purposes of this paragraph, the term `adequate 
        consideration' means--
                            ``(i) in the case of a security for which 
                        there is a generally recognized market--
                                    ``(I) the price of the security 
                                prevailing on a national securities 
                                exchange which is registered under 
                                section 6 of the Securities Exchange 
                                Act of 1934, taking into account 
                                factors such as the size of the 
                                transaction and marketability of the 
                                security, or
                                    ``(II) if the security is not 
                                traded on such a national securities 
                                exchange, a price not less favorable to 
                                the plan than the offering price for 
                                the security as established by the 
                                current bid and asked prices quoted by 
                                persons independent of the issuer and 
                                of the party in interest, taking into 
                                account factors such as the size of the 
                                transaction and marketability of the 
                                security, and
                            ``(ii) in the case of an asset other than a 
                        security for which there is a generally 
                        recognized market, the fair market value of the 
                        asset as determined in good faith by a 
                        fiduciary or fiduciaries in accordance with 
                        regulations prescribed by the Secretary.''.
            (2) Amendment to internal revenue code of 1986.--
                    (A) In general.--Subsection (d) of section 4975 of 
                the Internal Revenue Code of 1986 (relating to 
                exemptions), as amended by subsection (c), is amended 
                by striking ``or'' at the end of paragraph (18), by 
                striking the period at the end of paragraph (19) and 
                inserting ``, or'', and by adding at the end the 
                following new paragraph:
            ``(20) transactions described in subparagraphs (A), (B), 
        and (D) of subsection (c)(1) between a plan and a person that 
        is a party in interest other than a fiduciary (or an affiliate) 
        who has or exercises any discretionary authority or control 
        with respect to the investment of the plan assets involved in 
        the transaction or renders investment advice (within the 
        meaning of subsection (e)(3)(B)) with respect to those assets, 
        solely by reason of providing services to the plan or solely by 
        reason of a relationship to such a service provider described 
        in subparagraph (F), (G), (H), or (I) of subsection (e)(2), or 
        both, but only if in connection with such transaction the plan 
        receives no less, nor pays no more, than adequate 
        consideration.''.
                    (B) Special rule relating to service providers.--
                Subsection (f) of section 4975 of such Code (relating 
                to other definitions and special rules), as amended by 
                subsection (a), is amended by adding at the end the 
                following new paragraph:
            ``(10) Adequate consideration.--The term `adequate 
        consideration' means--
                    ``(A) in the case of a security for which there is 
                a generally recognized market--
                            ``(i) the price of the security prevailing 
                        on a national securities exchange which is 
                        registered under section 6 of the Securities 
                        Exchange Act of 1934, taking into account 
                        factors such as the size of the transaction and 
                        marketability of the security, or
                            ``(ii) if the security is not traded on 
                        such a national securities exchange, a price 
                        not less favorable to the plan than the 
                        offering price for the security as established 
                        by the current bid and asked prices quoted by 
                        persons independent of the issuer and of the 
                        party in interest, taking into account factors 
                        such as the size of the transaction and 
                        marketability of the security, and
                    ``(B) in the case of an asset other than a security 
                for which there is a generally recognized market, the 
                fair market value of the asset as determined in good 
                faith by a fiduciary or fiduciaries in accordance with 
                regulations prescribed by the Secretary of Labor.''.
    (e) Relief for Foreign Exchange Transactions.--
            (1) Amendments to employee retirement income security act 
        of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as 
        amended by subsection (d), is amended by adding at the end the 
        following new paragraph:
            ``(18) Foreign exchange transactions.--Any foreign exchange 
        transactions, between a bank or broker-dealer (or any affiliate 
        of either), and a plan (as defined in section 3(3)) with 
        respect to which such bank or broker-dealer (or affiliate) is a 
        trustee, custodian, fiduciary, or other party in interest, if--
                    ``(A) the transaction is in connection with the 
                purchase, holding, or sale of securities or other 
                investment assets (other than a foreign exchange 
                transaction unrelated to any other investment in 
                securities or other investment assets),
                    ``(B) at the time the foreign exchange transaction 
                is entered into, the terms of the transaction are not 
                less favorable to the plan than the terms generally 
                available in comparable arm's length foreign exchange 
                transactions between unrelated parties, or the terms 
                afforded by the bank or broker-dealer (or any affiliate 
                of either) in comparable arm's-length foreign exchange 
                transactions involving unrelated parties,
                    ``(C) the exchange rate used by such bank or 
                broker-dealer (or affiliate) for a particular foreign 
                exchange transaction does not deviate by more or less 
                than 3 percent from the interbank bid and asked rates 
                for transactions of comparable size and maturity at the 
                time of the transaction as displayed on an independent 
                service that reports rates of exchange in the foreign 
                currency market for such currency, and
                    ``(D) the bank or broker-dealer (or any affiliate 
                of either) does not have investment discretion, or 
                provide investment advice, with respect to the 
                transaction.''.
            (2) Amendment to internal revenue code of 1986.--Subsection 
        (d) of section 4975 of the Internal Revenue Code of 1986 
        (relating to exemptions), as amended by subsection (d), is 
        amended by striking ``or'' at the end of paragraph (19), by 
        striking the period at the end of paragraph (20) and inserting 
        ``, or'', and by adding at the end the following new paragraph:
            ``(21) any foreign exchange transactions, between a bank or 
        broker-dealer (or any affiliate of either) and a plan (as 
        defined in this section) with respect to which such bank or 
        broker-dealer (or affiliate) is a trustee, custodian, 
        fiduciary, or other party in interest person, if--
                    ``(A) the transaction is in connection with the 
                purchase, holding, or sale of securities or other 
                investment assets (other than a foreign exchange 
                transaction unrelated to any other investment in 
                securities or other investment assets),
                    ``(B) at the time the foreign exchange transaction 
                is entered into, the terms of the transaction are not 
                less favorable to the plan than the terms generally 
                available in comparable arm's length foreign exchange 
                transactions between unrelated parties, or the terms 
                afforded by the bank or broker-dealer (or any affiliate 
                of either) in comparable arm's-length foreign exchange 
                transactions involving unrelated parties,
                    ``(C) the exchange rate used by such bank or 
                broker-dealer (or affiliate) for a particular foreign 
                exchange transaction does not deviate by more or less 
                than 3 percent from the interbank bid and asked rates 
                for transactions of comparable size and maturity at the 
                time of the transaction as displayed on an independent 
                service that reports rates of exchange in the foreign 
                currency market for such currency, and
                    ``(D) the bank or broker-dealer (or any affiliate 
                of either) does not have investment discretion, or 
                provide investment advice, with respect to the 
                transaction.''.
    (f) Definition of Plan Asset Vehicle.--Section 3 of such Act (29 
U.S.C. 1002) is amended by adding at the end the following new 
paragraph:
    ``(42) the term `plan assets' means plan assets as defined by such 
regulations as the Secretary may prescribe, except that under such 
regulations the assets of any entity shall not be treated as plan 
assets if, immediately after the most recent acquisition of any equity 
interest in the entity, less than 25 percent of the total value of each 
class of equity interest in the entity is held by benefit plan 
investors. For purposes of determinations pursuant to this paragraph, 
the value of any equity interest held by a person (other than such a 
benefit plan investor) who has discretionary authority or control with 
respect to the assets of the entity or any person who provides 
investment advice for a fee (direct or indirect) with respect to such 
assets, or any affiliate of such a person, shall be disregarded for 
purposes of calculating the 25 percent threshold. An entity shall be 
considered to hold plan assets only to the extent of the percentage of 
the equity interest held by benefit plan investors. For purposes of 
this paragraph, the term `benefit plan investor' means an employee 
benefit plan subject to part 4, any plan to which section 4975 of the 
Internal Revenue Code of 1986 applies, and any entity whose underlying 
assets include plan assets by reason of a plan's investment in such 
entity.''.
    (g) Exemption for Cross Trading.--
            (1) Amendments to employee retirement income security act 
        of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as 
        amended by subsection (e), is amended by adding at the end the 
        following new paragraph:
            ``(19) Cross trading.--Any transaction described in 
        sections 406(a)(1)(A) and 406(b)(2) involving the purchase and 
        sale of a security between a plan and any other account managed 
        by the same investment manager, if--
                    ``(A) the transaction is a purchase or sale, for no 
                consideration other than cash payment against prompt 
                delivery of a security for which market quotations are 
                readily available,
                    ``(B) the transaction is effected at the 
                independent current market price of the security 
                (within the meaning of section 270.17a-7(b) of title 
                17, Code of Federal Regulations),
                    ``(C) no brokerage commission, fee (except for 
                customary transfer fees, the fact of which is disclosed 
                pursuant to subparagraph (D)), or other remuneration is 
                paid in connection with the transaction,
                    ``(D) a fiduciary (other than the investment 
                manager engaging in the cross-trades or any affiliate) 
                for each plan participating in the transaction 
                authorizes in advance of any cross-trades (in a 
                document that is separate from any other written 
                agreement of the parties) the investment manager to 
                engage in cross trades at the investment manager's 
                discretion, after such fiduciary has received 
                disclosure regarding the conditions under which cross 
                trades may take place (but only if such disclosure is 
                separate from any other agreement or disclosure 
                involving the asset management relationship), including 
                the written policies and procedures of the investment 
                manager described in subparagraph (H),
                    ``(E) each plan participating in the transaction 
                has assets of at least $100,000,000, except that if the 
                assets of a plan are invested in a master trust 
                containing the assets of plans maintained by employers 
                in the same controlled group (as defined in section 
                407(d)(7)), the master trust has assets of at least 
                $100,000,000,
                    ``(F) the investment manager provides to the plan 
                fiduciary who authorized cross trading under 
                subparagraph (D) a quarterly report detailing all cross 
                trades executed by the investment manager in which the 
                plan participated during such quarter, including the 
                following information, as applicable: (i) the identity 
                of each security bought or sold; (ii) the number of 
                shares or units traded, (iii) the parties involved in 
                the cross-trade; and (iv) trade price and the method 
                used to establish the trade price,
                    ``(G) the investment manager does not base its fee 
                schedule on the plan`s consent to cross trading, and no 
                other service (other than the investment opportunities 
                and cost savings available through a cross trade) is 
                conditioned on the plan's consent to cross trading,
                    ``(H) the investment manager has adopted, and 
                cross-trades are effected in accordance with, written 
                cross-trading policies and procedures that are fair and 
                equitable to all accounts participating in the cross-
                trading program, and that include a description of the 
                manager's pricing policies and procedures, and the 
                manager's policies and procedures for allocating cross 
                trades in an objective manner among accounts 
                participating in the cross-trading program, and
                    ``(I) the investment manager has designated an 
                individual responsible for periodically reviewing such 
                purchases and sales to ensure compliance with the 
                written policies and procedures described in 
                subparagraph (H), and following such review, the 
                individual shall issue an annual written report no 
                later than 90 days following the period to which it 
                relates signed under penalty of perjury to the plan 
                fiduciary who authorized cross trading under 
                subparagraph (D) describing the steps performed during 
                the course of the review, the level of compliance, and 
                any specific instances of non-compliance.
        The written report under subparagraph (I) shall also notify the 
        plan fiduciary of the plan's right to terminate participation 
        in the investment manager's cross-trading program at any 
        time.''.
            (2) Amendments of internal revenue code of 1986.--
        Subsection (d) of section 4975 of the Internal Revenue Code of 
        1986 (relating to exemptions), as amended by subsection (e), is 
        amended by striking ``or'' at the end of paragraph (20), by 
        striking the period at the end of paragraph (21) and inserting 
        ``, or'', and by adding at the end the following new paragraph:
            ``(22) any transaction described in subsection (c)(1)(A) 
        involving the purchase and sale of a security between a plan 
        and any other account managed by the same investment manager, 
        if--
                    ``(A) the transaction is a purchase or sale, for no 
                consideration other than cash payment against prompt 
                delivery of a security for which market quotations are 
                readily available,
                    ``(B) the transaction is effected at the 
                independent current market price of the security 
                (within the meaning of section 270.17a-7(b) of title 
                17, Code of Federal Regulations),
                    ``(C) no brokerage commission, fee (except for 
                customary transfer fees, the fact of which is disclosed 
                pursuant to subparagraph (D)), or other remuneration is 
                paid in connection with the transaction,
                    ``(D) a fiduciary (other than the investment 
                manager engaging in the cross-trades or any affiliate) 
                for each plan participating in the transaction 
                authorizes in advance of any cross-trades (in a 
                document that is separate from any other written 
                agreement of the parties) the investment manager to 
                engage in cross trades at the investment manager's 
                discretion, after such fiduciary has received 
                disclosure regarding the conditions under which cross 
                trades may take place (but only if such disclosure is 
                separate from any other agreement or disclosure 
                involving the asset management relationship), including 
                the written policies and procedures of the investment 
                manager described in subparagraph (H),
                    ``(E) each plan participating in the transaction 
                has assets of at least $100,000,000, except that if the 
                assets of a plan are invested in a master trust 
                containing the assets of plans maintained by employers 
                in the same controlled group (as defined in section 
                407(d)(7) of the Employee Retirement Income Security 
                Act of 1974), the master trust has assets of at least 
                $100,000,000,
                    ``(F) the investment manager provides to the plan 
                fiduciary who authorized cross trading under 
                subparagraph (D) a quarterly report detailing all cross 
                trades executed by the investment manager in which the 
                plan participated during such quarter, including the 
                following information, as applicable: (i) the identity 
                of each security bought or sold; (ii) the number of 
                shares or units traded, (iii) the parties involved in 
                the cross-trade; and (iv) trade price and the method 
                used to establish the trade price,
                    ``(G) the investment manager does not base its fee 
                schedule on the plan`s consent to cross trading, and no 
                other service (other than the investment opportunities 
                and cost savings available through a cross trade) is 
                conditioned on the plan's consent to cross trading,
                    ``(H) the investment manager has adopted, and 
                cross-trades are effected in accordance with, written 
                cross-trading policies and procedures that are fair and 
                equitable to all accounts participating in the cross-
                trading program, and that include a description of the 
                manager's pricing policies and procedures, and the 
                manager's policies and procedures for allocating cross 
                trades in an objective manner among accounts 
                participating in the cross-trading program, and
                    ``(I) the investment manager has designated an 
                individual responsible for periodically reviewing such 
                purchases and sales to ensure compliance with the 
                written policies and procedures described in 
                subparagraph (H), and following such review, the 
                individual shall issue an annual written report no 
                later than 90 days following the period to which it 
                relates signed under penalty of perjury to the plan 
                fiduciary who authorized cross trading under 
                subparagraph (D) describing the steps performed during 
                the course of the review, the level of compliance, and 
                any specific instances of non-compliance.
        The written report shall also notify the plan fiduciary of the 
        plan's right to terminate participation in the investment 
        manager's cross-trading program at any time.''.
            (3) Regulations.--No later than 180 days after the date of 
        the enactment of this Act, the Secretary of Labor, after 
        consultation with the Securities and Exchange Commission, shall 
        issue regulations regarding the content of policies and 
        procedures required to be adopted by an investment manager 
        under section 408(b)(19) of the Employee Retirement Income 
        Security Act of 1974.
    (h) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to transactions 
        occurring after the date of the enactment of this Act.
            (2) Bonding rule.--The amendments made by subsection (b) 
        shall apply to plan years beginning after such date.

SEC. 612. CORRECTION PERIOD FOR CERTAIN TRANSACTIONS INVOLVING 
              SECURITIES AND COMMODITIES.

    (a) Amendment of Employee Retirement Income Security Act of 1974.--
Section 408(b) of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1108(b)), as amended by sections 601 and 611, is further 
amended by adding at the end the following new paragraph:
            ``(20)(A) Except as provided in subparagraphs (B) and (C), 
        a transaction described in section 406(a) in connection with 
        the acquisition, holding, or disposition of any security or 
        commodity, if the transaction is corrected before the end of 
        the correction period.
            ``(B) Subparagraph (A) does not apply to any transaction 
        between a plan and a plan sponsor or its affiliates that 
        involves the acquisition or sale of an employer security (as 
        defined in section 407(d)(1)) or the acquisition, sale, or 
        lease of employer real property (as defined in section 
        407(d)(2)).
            ``(C) In the case of any fiduciary or other party in 
        interest (or any other person knowingly participating in such 
        transaction), subparagraph (A) does not apply to any 
        transaction if, at the time the transaction occurs, such 
        fiduciary or party in interest (or other person) knew (or 
        reasonably should have known) that the transaction would 
        (without regard to this paragraph) constitute a violation of 
        section 406(a).
            ``(D) For purposes of this paragraph, the term `correction 
        period' means, in connection with a fiduciary or party in 
        interest (or other person knowingly participating in the 
        transaction), the 14-day period beginning on the date on which 
        such fiduciary or party in interest (or other person) 
        discovers, or reasonably should have discovered, that the 
        transaction would (without regard to this paragraph) constitute 
        a violation of section 406(a).
            ``(E) For purposes of this paragraph--
                    ``(i) The term `security' has the meaning given 
                such term by section 475(c)(2) of the Internal Revenue 
                Code of 1986 (without regard to subparagraph (F)(iii) 
                and the last sentence thereof).
                    ``(ii) The term `commodity' has the meaning given 
                such term by section 475(e)(2) of such Code (without 
                regard to subparagraph (D)(iii) thereof).
                    ``(iii) The term `correct' means, with respect to a 
                transaction--
                            ``(I) to undo the transaction to the extent 
                        possible and in any case to make good to the 
                        plan or affected account any losses resulting 
                        from the transaction, and
                            ``(II) to restore to the plan or affected 
                        account any profits made through the use of 
                        assets of the plan.''.
    (b) Amendment of Internal Revenue Code of 1986.--
            (1) In general.--Subsection (d) of section 4975 of the 
        Internal Revenue Code of 1986 (relating to exemptions), as 
        amended by sections 601 and 611, is amended by striking ``or'' 
        at the end of paragraph (21), by striking the period at the end 
        of paragraph (22) and inserting ``, or'', and by adding at the 
        end the following new paragraph:
            ``(23) except as provided in subsection (f)(11), a 
        transaction described in subparagraph (A), (B), (C), or (D) of 
        subsection (c)(1) in connection with the acquisition, holding, 
        or disposition of any security or commodity, if the transaction 
        is corrected before the end of the correction period.''.
            (2) Special rules relating to correction period.--
        Subsection (f) of section 4975 of such Code (relating to other 
        definitions and special rules), as amended by sections 601 and 
        611, is amended by adding at the end the following new 
        paragraph:
            ``(11) Correction period.--
                    ``(A) In general.--For purposes of subsection 
                (d)(23), the term `correction period' means the 14-day 
                period beginning on the date on which the disqualified 
                person discovers, or reasonably should have discovered, 
                that the transaction would (without regard to this 
                paragraph and subsection (d)(23)) constitute a 
                prohibited transaction.
                    ``(B) Exceptions.--
                            ``(i) Employer securities.--Subsection 
                        (d)(23) does not apply to any transaction 
                        between a plan and a plan sponsor or its 
                        affiliates that involves the acquisition or 
                        sale of an employer security (as defined in 
                        section 407(d)(1)) or the acquisition, sale, or 
                        lease of employer real property (as defined in 
                        section 407(d)(2)).
                            ``(ii) Knowing prohibited transaction.--In 
                        the case of any disqualified person, subsection 
                        (d)(23) does not apply to a transaction if, at 
                        the time the transaction is entered into, the 
                        disqualified person knew (or reasonably should 
                        have known) that the transaction would (without 
                        regard to this paragraph) constitute a 
                        prohibited transaction.
                    ``(C) Abatement of tax where there is a 
                correction.--If a transaction is not treated as a 
                prohibited transaction by reason of subsection (d)(23), 
                then no tax under subsection (a) and (b) shall be 
                assessed with respect to such transaction, and if 
                assessed the assessment shall be abated, and if 
                collected shall be credited or refunded as an 
                overpayment.
                    ``(D) Definitions.--For purposes of this paragraph 
                and subsection (d)(23)--
                            ``(i) Security.--The term `security' has 
                        the meaning given such term by section 
                        475(c)(2) (without regard to subparagraph 
                        (F)(iii) and the last sentence thereof).
                            ``(ii) Commodity.--The term `commodity' has 
                        the meaning given such term by section 
                        475(e)(2) (without regard to subparagraph 
                        (D)(iii) thereof).
                            ``(iii) Correct.--The term `correct' means, 
                        with respect to a transaction--
                                    ``(I) to undo the transaction to 
                                the extent possible and in any case to 
                                make good to the plan or affected 
                                account any losses resulting from the 
                                transaction, and
                                    ``(II) to restore to the plan or 
                                affected account any profits made 
                                through the use of assets of the 
                                plan.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to any transaction which the fiduciary or disqualified person 
discovers, or reasonably should have discovered, after the date of the 
enactment of this Act constitutes a prohibited transaction.

                 Subtitle C--Fiduciary and Other Rules

SEC. 621. INAPPLICABILITY OF RELIEF FROM FIDUCIARY LIABILITY DURING 
              SUSPENSION OF ABILITY OF PARTICIPANT OR BENEFICIARY TO 
              DIRECT INVESTMENTS.

    (a) In General.--Section 404(c) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1104(c)) is amended--
            (1) in paragraph (1)--
                    (A) by redesignating subparagraphs (A) and (B) as 
                clauses (i) and (ii), respectively, and by inserting 
                ``(A)'' after ``(c)(1)'',
                    (B) in subparagraph (A)(ii) (as redesignated by 
                paragraph (1)), by inserting before the period the 
                following: ``, except that this clause shall not apply 
                in connection with such participant or beneficiary for 
                any blackout period during which the ability of such 
                participant or beneficiary to direct the investment of 
                the assets in his or her account is suspended by a plan 
                sponsor or fiduciary'', and
                    (C) by adding at the end the following new 
                subparagraphs:
    ``(B) If a person referred to in subparagraph (A)(ii) meets the 
requirements of this title in connection with authorizing and 
implementing the blackout period, any person who is otherwise a 
fiduciary shall not be liable under this title for any loss occurring 
during such period.
    ``(C) For purposes of this paragraph, the term `blackout period' 
has the meaning given such term by section 101(i)(7).''; and
            (2) by adding at the end the following:
            ``(4)(A) In any case in which a qualified change in 
        investment options occurs in connection with an individual 
        account plan, a participant or beneficiary shall not be treated 
        for purposes of paragraph (1) as not exercising control over 
        the assets in his account in connection with such change if the 
        requirements of subparagraph (C) are met in connection with 
        such change.
            ``(B) For purposes of subparagraph (A), the term `qualified 
        change in investment options' means, in connection with an 
        individual account plan, a change in the investment options 
        offered to the participant or beneficiary under the terms of 
        the plan, under which--
                    ``(i) the account of the participant or beneficiary 
                is reallocated among one or more remaining or new 
                investment options which are offered in lieu of one or 
                more investment options offered immediately prior to 
                the effective date of the change, and
                    ``(ii) the stated characteristics of the remaining 
                or new investment options provided under clause (i), 
                including characteristics relating to risk and rate of 
                return, are, as of immediately after the change, 
                reasonably similar to those of the existing investment 
                options as of immediately before the change.
            ``(C) The requirements of this subparagraph are met in 
        connection with a qualified change in investment options if--
                    ``(i) at least 30 days and no more than 60 days 
                prior to the effective date of the change, the plan 
                administrator furnishes written notice of the change to 
                the participants and beneficiaries, including 
                information comparing the existing and new investment 
                options and an explanation that, in the absence of 
                affirmative investment instructions from the 
                participant or beneficiary to the contrary, the account 
                of the participant or beneficiary will be invested in 
                the manner described in subparagraph (B),
                    ``(ii) the participant or beneficiary has not 
                provided to the plan administrator, in advance of the 
                effective date of the change, affirmative investment 
                instructions contrary to the change, and
                    ``(iii) the investments under the plan of the 
                participant or beneficiary as in effect immediately 
                prior to the effective date of the change were the 
                product of the exercise by such participant or 
                beneficiary of control over the assets of the account 
                within the meaning of paragraph (1).''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2007.
            (2) Special rule for collectively bargained agreements.--In 
        the case of a plan maintained pursuant to 1 or more collective 
        bargaining agreements between employee representatives and 1 or 
        more employers ratified on or before the date of the enactment 
        of this Act, paragraph (1) shall be applied to benefits 
        pursuant to, and individuals covered by, any such agreement by 
        substituting for ``December 31, 2007'' the earlier of--
                    (A) the later of--
                            (i) December 31, 2008, or
                            (ii) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof after such date of enactment), or
                    (B) December 31, 2009.

SEC. 622. INCREASE IN MAXIMUM BOND AMOUNT.

    (a) In General.--Section 412(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1112), as amended by section 611(b), is 
amended by adding at the end the following: ``In the case of a plan 
that holds employer securities (within the meaning of section 
407(d)(1)), this subsection shall be applied by substituting 
`$1,000,000' for `$500,000' each place it appears.''
    (b) Effective Date.--The amendment made by this section shall apply 
to plan years beginning after December 31, 2007.

SEC. 623. INCREASE IN PENALTIES FOR COERCIVE INTERFERENCE WITH EXERCISE 
              OF ERISA RIGHTS.

    (a) In General.--Section 511 of the Employment Retirement Income 
Security Act of 1974 (29 U.S.C. 1141) is amended--
            (1) by striking ``$10,000'' and inserting ``$100,000'', and
            (2) by striking ``one year'' and inserting ``10 years''.
    (b) Effective Date.--The amendments made by this section shall 
apply to violations occurring on and after the date of the enactment of 
this Act.

SEC. 624. TREATMENT OF INVESTMENT OF ASSETS BY PLAN WHERE PARTICIPANT 
              FAILS TO EXERCISE INVESTMENT ELECTION.

    (a) In General.--Section 404(c) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1104(c)), as amended by section 622, is 
amended by adding at the end the following new paragraph:
            ``(5) Default investment arrangements.--
                    ``(A) In general.--For purposes of paragraph (1), a 
                participant in an individual account plan meeting the 
                notice requirements of subparagraph (B) shall be 
                treated as exercising control over the assets in the 
                account with respect to the amount of contributions and 
                earnings which, in the absence of an investment 
                election by the participant, are invested by the plan 
                in accordance with regulations prescribed by the 
                Secretary. The regulations under this subparagraph 
                shall provide guidance on the appropriateness of 
                designating default investments that include a mix of 
                asset classes consistent with capital preservation or 
                long-term capital appreciation, or a blend of both.
                    ``(B) Notice requirements.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if each participant--
                                    ``(I) receives, within a reasonable 
                                period of time before each plan year, a 
                                notice explaining the employee's right 
                                under the plan to designate how 
                                contributions and earnings will be 
                                invested and explaining how, in the 
                                absence of any investment election by 
                                the participant, such contributions and 
                                earnings will be invested, and
                                    ``(II) has a reasonable period of 
                                time after receipt of such notice and 
                                before the beginning of the plan year 
                                to make such designation.
                            ``(ii) Form of notice.--The requirements of 
                        clauses (i) and (ii) of section 401(k)(12)(D) 
                        of the Internal Revenue Code of 1986 shall 
                        apply with respect to the notices described in 
                        this subparagraph.''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2006.
            (2) Regulations.--Final regulations under section 
        404(c)(5)(A) of the Employee Retirement Income Security Act of 
        1974 (as added by this section) shall be issued no later than 6 
        months after the date of the enactment of this Act.

SEC. 625. CLARIFICATION OF FIDUCIARY RULES.

    (a) In General.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of Labor shall issue final 
regulations clarifying that the selection of an annuity contract as an 
optional form of distribution from an individual account plan to a 
participant or beneficiary--
            (1) is not subject to the safest available annuity standard 
        under Interpretive Bulletin 95-1 (29 C.F.R. 2509.95-1), and
            (2) is subject to all otherwise applicable fiduciary 
        standards.
    (b) Effective Date.--This section shall take effect on the date of 
enactment of this Act.

                  TITLE VII--BENEFIT ACCRUAL STANDARDS

SEC. 701. BENEFIT ACCRUAL STANDARDS.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) Rules relating to reduction in rate of benefit 
        accrual.--Section 204(b) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1054(b)) is amended by adding 
        at the end the following new paragraph:
            ``(5) Special rules relating to age.--
                    ``(A) Comparison to similarly situated younger 
                individual.--
                            ``(i) In general.--A plan shall not be 
                        treated as failing to meet the requirements of 
                        paragraph (1)(H)(i) if a participant's accrued 
                        benefit, as determined as of any date under the 
                        terms of the plan, would be equal to or greater 
                        than that of any similarly situated, younger 
                        individual who is or could be a participant.
                            ``(ii) Similarly situated.--For purposes of 
                        this subparagraph, a participant is similarly 
                        situated to any other individual if such 
                        participant is identical to such other 
                        individual in every respect (including period 
                        of service, compensation, position, date of 
                        hire, work history, and any other respect) 
                        except for age.
                            ``(iii) Disregard of subsidized early 
                        retirement benefits.--In determining the 
                        accrued benefit as of any date for purposes of 
                        this clause, the subsidized portion of any 
                        early retirement benefit or retirement-type 
                        subsidy shall be disregarded.
                            ``(iv) Accrued benefit.--For purposes of 
                        this subparagraph, the accrued benefit may, 
                        under the terms of the plan, be expressed as an 
                        annuity payable at normal retirement age, the 
                        balance of a hypothetical account, or the 
                        current value of the accumulated percentage of 
                        the employee's final average compensation.
                    ``(B) Applicable defined benefit plans.--
                            ``(i) Interest credits.--
                                    ``(I) In general.--An applicable 
                                defined benefit plan shall be treated 
                                as failing to meet the requirements of 
                                paragraph (1)(H) unless the terms of 
                                the plan provide that any interest 
                                credit (or an equivalent amount) for 
                                any plan year shall be at a rate which 
                                is not greater than a market rate of 
                                return. A plan shall not be treated as 
                                failing to meet the requirements of 
                                this subclause merely because the plan 
                                provides for a reasonable minimum 
                                guaranteed rate of return or for a rate 
                                of return that is equal to the greater 
                                of a fixed or variable rate of return.
                                    ``(II) Preservation of capital.--An 
                                interest credit (or an equivalent 
                                amount) of less than zero shall in no 
                                event result in the account balance or 
                                similar amount being less than the 
                                aggregate amount of contributions 
                                credited to the account.
                                    ``(III) Market rate of return.--The 
                                Secretary of the Treasury may provide 
                                by regulation for rules governing the 
                                calculation of a market rate of return 
                                for purposes of subclause (I) and for 
                                permissible methods of crediting 
                                interest to the account (including 
                                fixed or variable interest rates) 
                                resulting in effective rates of return 
                                meeting the requirements of subclause 
                                (I).
                            ``(ii) Special rule for plan conversions.--
                        If, after June 29, 2005, an applicable plan 
                        amendment is adopted, the plan shall be treated 
                        as failing to meet the requirements of 
                        paragraph (1)(H) unless the requirements of 
                        clause (iii) are met with respect to each 
                        individual who was a participant in the plan 
                        immediately before the adoption of the 
                        amendment.
                            ``(iii) Rate of benefit accrual.--Subject 
                        to clause (iv), the requirements of this clause 
                        are met with respect to any participant if the 
                        accrued benefit of the participant under the 
                        terms of the plan as in effect after the 
                        amendment is not less than the sum of--
                                    ``(I) the participant's accrued 
                                benefit for years of service before the 
                                effective date of the amendment, 
                                determined under the terms of the plan 
                                as in effect before the amendment, plus
                                    ``(II) the participant's accrued 
                                benefit for years of service after the 
                                effective date of the amendment, 
                                determined under the terms of the plan 
                                as in effect after the amendment.
                            ``(iv) Special rules for early retirement 
                        subsidies.--For purposes of clause (iii)(I), 
                        the plan shall credit the accumulation account 
                        or similar amount with the amount of any early 
                        retirement benefit or retirement-type subsidy 
                        for the plan year in which the participant 
                        retires if, as of such time, the participant 
                        has met the age, years of service, and other 
                        requirements under the plan for entitlement to 
                        such benefit or subsidy.
                            ``(v) Applicable plan amendment.--For 
                        purposes of this subparagraph--
                                    ``(I) In general.--The term 
                                `applicable plan amendment' means an 
                                amendment to a defined benefit plan 
                                which has the effect of converting the 
                                plan to an applicable defined benefit 
                                plan.
                                    ``(II) Special rule for coordinated 
                                benefits.--If the benefits of 2 or more 
                                defined benefit plans established or 
                                maintained by an employer are 
                                coordinated in such a manner as to have 
                                the effect of the adoption of an 
                                amendment described in subclause (I), 
                                the sponsor of the defined benefit plan 
                                or plans providing for such 
                                coordination shall be treated as having 
                                adopted such a plan amendment as of the 
                                date such coordination begins.
                                    ``(III) Multiple amendments.--The 
                                Secretary of the Treasury shall issue 
                                regulations to prevent the avoidance of 
                                the purposes of this subparagraph 
                                through the use of 2 or more plan 
                                amendments rather than a single 
                                amendment.
                                    ``(IV) Applicable defined benefit 
                                plan.--For purposes of this 
                                subparagraph, the term `applicable 
                                defined benefit plan' has the meaning 
                                given such term by section 203(f)(3).
                            ``(vi) Termination requirements.--An 
                        applicable defined benefit plan shall not be 
                        treated as meeting the requirements of clause 
                        (i) unless the plan provides that, upon the 
                        termination of the plan--
                                    ``(I) if the interest credit rate 
                                (or an equivalent amount) under the 
                                plan is a variable rate, the rate of 
                                interest used to determine accrued 
                                benefits under the plan shall be equal 
                                to the average of the rates of interest 
                                used under the plan during the 5-year 
                                period ending on the termination date, 
                                and
                                    ``(II) the interest rate and 
                                mortality table used to determine the 
                                amount of any benefit under the plan 
                                payable in the form of an annuity 
                                payable at normal retirement age shall 
                                be the rate and table specified under 
                                the plan for such purpose as of the 
                                termination date, except that if such 
                                interest rate is a variable rate, the 
                                interest rate shall be determined under 
                                the rules of subclause (I).
                    ``(C) Certain offsets permitted.--A plan shall not 
                be treated as failing to meet the requirements of 
                paragraph (1)(H)(i) solely because the plan provides 
                offsets against benefits under the plan to the extent 
                such offsets are allowable in applying the requirements 
                of section 401(a) of the Internal Revenue Code of 1986.
                    ``(D) Permitted disparities in plan contributions 
                or benefits.--A plan shall not be treated as failing to 
                meet the requirements of paragraph (1)(H) solely 
                because the plan provides a disparity in contributions 
                or benefits with respect to which the requirements of 
                section 401(l) of the Internal Revenue Code of 1986 are 
                met.
                    ``(E) Indexing permitted.--
                            ``(i) In general.--A plan shall not be 
                        treated as failing to meet the requirements of 
                        paragraph (1)(H) solely because the plan 
                        provides for indexing of accrued benefits under 
                        the plan.
                            ``(ii) Protection against loss.--Except in 
                        the case of any benefit provided in the form of 
                        a variable annuity, clause (i) shall not apply 
                        with respect to any indexing which results in 
                        an accrued benefit less than the accrued 
                        benefit determined without regard to such 
                        indexing.
                            ``(iii) Indexing.--For purposes of this 
                        subparagraph, the term `indexing' means, in 
                        connection with an accrued benefit, the 
                        periodic adjustment of the accrued benefit by 
                        means of the application of a recognized 
                        investment index or methodology.
                    ``(F) Early retirement benefit or retirement-type 
                subsidy.--For purposes of this paragraph, the terms 
                `early retirement benefit' and `retirement-type 
                subsidy' have the meaning given such terms in 
                subsection (g)(2)(A).
                    ``(G) Benefit accrued to date.--For purposes of 
                this paragraph, any reference to the accrued benefit 
                shall be a reference to such benefit accrued to 
                date.''.
            (2) Determinations of accrued benefit as balance of benefit 
        account or equivalent amounts.--Section 203 of such Act (29 
        U.S.C. 1053) is amended by adding at the end the following new 
        subsection:
    ``(f) Special Rules for Plans Computing Accrued Benefits by 
Reference to Hypothetical Account Balance or Equivalent Amounts.--
            ``(1) In general.--An applicable defined benefit plan shall 
        not be treated as failing to meet--
                    ``(A) subject to paragraph (2), the requirements of 
                subsection (a)(2), or
                    ``(B) the requirements of section 204(c) or section 
                205(g) with respect to contributions other than 
                employee contributions,
        solely because the present value of the accrued benefit (or any 
        portion thereof) of any participant is, under the terms of the 
        plan, equal to the amount expressed as the balance in the 
        hypothetical account described in paragraph (3) or as an 
        accumulated percentage of the participant's final average 
        compensation.
            ``(2) 3-year vesting.--In the case of an applicable defined 
        benefit plan, such plan shall be treated as meeting the 
        requirements of subsection (a)(2) only if an employee who has 
        completed at least 3 years of service has a nonforfeitable 
        right to 100 percent of the employee's accrued benefit derived 
        from employer contributions.
            ``(3) Applicable defined benefit plan and related rules.--
        For purposes of this subsection--
                    ``(A) In general.--The term `applicable defined 
                benefit plan' means a defined benefit plan under which 
                the accrued benefit (or any portion thereof) is 
                calculated as the balance of a hypothetical account 
                maintained for the participant or as an accumulated 
                percentage of the participant's final average 
                compensation.
                    ``(B) Regulations to include similar plans.--The 
                Secretary of the Treasury shall issue regulations which 
                include in the definition of an applicable defined 
                benefit plan any defined benefit plan (or any portion 
                of such a plan) which has an effect similar to an 
                applicable defined benefit plan.''.
    (b) Amendments to the Internal Revenue Code of 1986.--
            (1) Rules relating to reduction in rate of benefit 
        accrual.--Subsection (b) of section 411 of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(5) Special rules relating to age.--
                    ``(A) Comparison to similarly situated younger 
                individual.--
                            ``(i) In general.--A plan shall not be 
                        treated as failing to meet the requirements of 
                        paragraph (1)(H)(i) if a participant's accrued 
                        benefit, as determined as of any date under the 
                        terms of the plan, would be equal to or greater 
                        than that of any similarly situated, younger 
                        individual who is or could be a participant.
                            ``(ii) Similarly situated.--For purposes of 
                        this subparagraph, a participant is similarly 
                        situated to any other individual if such 
                        participant is identical to such other 
                        individual in every respect (including period 
                        of service, compensation, position, date of 
                        hire, work history, and any other respect) 
                        except for age.
                            ``(iii) Disregard of subsidized early 
                        retirement benefits.--In determining the 
                        accrued benefit as of any date for purposes of 
                        this clause, the subsidized portion of any 
                        early retirement benefit or retirement-type 
                        subsidy shall be disregarded.
                            ``(iv) Accrued benefit.--For purposes of 
                        this subparagraph, the accrued benefit may, 
                        under the terms of the plan, be expressed as an 
                        annuity payable at normal retirement age, the 
                        balance of a hypothetical account, or the 
                        current value of the accumulated percentage of 
                        the employee's final average compensation.
                    ``(B) Applicable defined benefit plans.--
                            ``(i) Interest credits.--
                                    ``(I) In general.--An applicable 
                                defined benefit plan shall be treated 
                                as failing to meet the requirements of 
                                paragraph (1)(H) unless the terms of 
                                the plan provide that any interest 
                                credit (or an equivalent amount) for 
                                any plan year shall be at a rate which 
                                is not greater than a market rate of 
                                return. A plan shall not be treated as 
                                failing to meet the requirements of 
                                this subclause merely because the plan 
                                provides for a reasonable minimum 
                                guaranteed rate of return or for a rate 
                                of return that is equal to the greater 
                                of a fixed or variable rate of return.
                                    ``(II) Preservation of capital.--An 
                                interest credit (or an equivalent 
                                amount) of less than zero shall in no 
                                event result in the account balance or 
                                similar amount being less than the 
                                aggregate amount of contributions 
                                credited to the account.
                                    ``(III) Market rate of return.--The 
                                Secretary may provide by regulation for 
                                rules governing the calculation of a 
                                market rate of return for purposes of 
                                subclause (I) and for permissible 
                                methods of crediting interest to the 
                                account (including fixed or variable 
                                interest rates) resulting in effective 
                                rates of return meeting the 
                                requirements of subclause (I).
                            ``(ii) Special rule for plan conversions.--
                        If, after June 29, 2005, an applicable plan 
                        amendment is adopted, the plan shall be treated 
                        as failing to meet the requirements of 
                        paragraph (1)(H) unless the requirements of 
                        clause (iii) are met with respect to each 
                        individual who was a participant in the plan 
                        immediately before the adoption of the 
                        amendment.
                            ``(iii) Rate of benefit accrual.--Subject 
                        to clause (iv), the requirements of this clause 
                        are met with respect to any participant if the 
                        accrued benefit of the participant under the 
                        terms of the plan as in effect after the 
                        amendment is not less than the sum of--
                                    ``(I) the participant's accrued 
                                benefit for years of service before the 
                                effective date of the amendment, 
                                determined under the terms of the plan 
                                as in effect before the amendment, plus
                                    ``(II) the participant's accrued 
                                benefit for years of service after the 
                                effective date of the amendment, 
                                determined under the terms of the plan 
                                as in effect after the amendment.
                            ``(iv) Special rules for early retirement 
                        subsidies.--For purposes of clause (iii)(I), 
                        the plan shall credit the accumulation account 
                        or similar amount with the amount of any early 
                        retirement benefit or retirement-type subsidy 
                        for the plan year in which the participant 
                        retires if, as of such time, the participant 
                        has met the age, years of service, and other 
                        requirements under the plan for entitlement to 
                        such benefit or subsidy.
                            ``(v) Applicable plan amendment.--For 
                        purposes of this subparagraph--
                                    ``(I) In general.--The term 
                                `applicable plan amendment' means an 
                                amendment to a defined benefit plan 
                                which has the effect of converting the 
                                plan to an applicable defined benefit 
                                plan.
                                    ``(II) Special rule for coordinated 
                                benefits.--If the benefits of 2 or more 
                                defined benefit plans established or 
                                maintained by an employer are 
                                coordinated in such a manner as to have 
                                the effect of the adoption of an 
                                amendment described in subclause (I), 
                                the sponsor of the defined benefit plan 
                                or plans providing for such 
                                coordination shall be treated as having 
                                adopted such a plan amendment as of the 
                                date such coordination begins.
                                    ``(III) Multiple amendments.--The 
                                Secretary shall issue regulations to 
                                prevent the avoidance of the purposes 
                                of this subparagraph through the use of 
                                2 or more plan amendments rather than a 
                                single amendment.
                                    ``(IV) Applicable defined benefit 
                                plan.--For purposes of this 
                                subparagraph, the term `applicable 
                                defined benefit plan' has the meaning 
                                given such term by section 411(a)(13).
                            ``(vi) Termination requirements.--An 
                        applicable defined benefit plan shall not be 
                        treated as meeting the requirements of clause 
                        (i) unless the plan provides that, upon the 
                        termination of the plan--
                                    ``(I) if the interest credit rate 
                                (or an equivalent amount) under the 
                                plan is a variable rate, the rate of 
                                interest used to determine accrued 
                                benefits under the plan shall be equal 
                                to the average of the rates of interest 
                                used under the plan during the 5-year 
                                period ending on the termination date, 
                                and
                                    ``(II) the interest rate and 
                                mortality table used to determine the 
                                amount of any benefit under the plan 
                                payable in the form of an annuity 
                                payable at normal retirement age shall 
                                be the rate and table specified under 
                                the plan for such purpose as of the 
                                termination date, except that if such 
                                interest rate is a variable rate, the 
                                interest rate shall be determined under 
                                the rules of subclause (I).
                    ``(C) Certain offsets permitted.--A plan shall not 
                be treated as failing to meet the requirements of 
                paragraph (1)(H)(i) solely because the plan provides 
                offsets against benefits under the plan to the extent 
                such offsets are allowable in applying the requirements 
                of section 401(a).
                    ``(D) Permitted disparities in plan contributions 
                or benefits.--A plan shall not be treated as failing to 
                meet the requirements of paragraph (1)(H) solely 
                because the plan provides a disparity in contributions 
                or benefits with respect to which the requirements of 
                section 401(l) are met.
                    ``(E) Indexing permitted.--
                            ``(i) In general.--A plan shall not be 
                        treated as failing to meet the requirements of 
                        paragraph (1)(H) solely because the plan 
                        provides for indexing of accrued benefits under 
                        the plan.
                            ``(ii) Protection against loss.--Except in 
                        the case of any benefit provided in the form of 
                        a variable annuity, clause (i) shall not apply 
                        with respect to any indexing which results in 
                        an accrued benefit less than the accrued 
                        benefit determined without regard to such 
                        indexing.
                            ``(iii) Indexing.--For purposes of this 
                        subparagraph, the term `indexing' means, in 
                        connection with an accrued benefit, the 
                        periodic adjustment of the accrued benefit by 
                        means of the application of a recognized 
                        investment index or methodology.
                    ``(F) Early retirement benefit or retirement-type 
                subsidy.--For purposes of this paragraph, the terms 
                `early retirement benefit' and `retirement-type 
                subsidy' have the meaning given such terms in 
                subsection (d)(6)(B)(i).
                    ``(G) Benefit accrued to date.--For purposes of 
                this paragraph, any reference to the accrued benefit 
                shall be a reference to such benefit accrued to 
                date.''.
            (2) Determinations of accrued benefit as balance of benefit 
        account or equivalent amounts.--Subsection (a) of section 411 
        of such Code is amended by adding at the end the following new 
        paragraph:
            ``(13) Special rules for plans computing accrued benefits 
        by reference to hypothetical account balance or equivalent 
        amounts.--
                    ``(A) In general.--An applicable defined benefit 
                plan shall not be treated as failing to meet--
                            ``(i) subject to paragraph (2), the 
                        requirements of subsection (a)(2), or
                            ``(ii) the requirements of subsection (c) 
                        or section 417(e) with respect to contributions 
                        other than employee contributions,
                solely because the present value of the accrued benefit 
                (or any portion thereof) of any participant is, under 
                the terms of the plan, equal to the amount expressed as 
                the balance in the hypothetical account described in 
                paragraph (3) or as an accumulated percentage of the 
                participant's final average compensation.
                    ``(B) 3-year vesting.--In the case of an applicable 
                defined benefit plan, such plan shall be treated as 
                meeting the requirements of subsection (a)(2) only if 
                an employee who has completed at least 3 years of 
                service has a nonforfeitable right to 100 percent of 
                the employee's accrued benefit derived from employer 
                contributions.
                    ``(C) Applicable defined benefit plan and related 
                rules.--For purposes of this subsection--
                            ``(i) In general.--The term `applicable 
                        defined benefit plan' means a defined benefit 
                        plan under which the accrued benefit (or any 
                        portion thereof) is calculated as the balance 
                        of a hypothetical account maintained for the 
                        participant or as an accumulated percentage of 
                        the participant's final average compensation.
                            ``(ii) Regulations to include similar 
                        plans.--The Secretary shall issue regulations 
                        which include in the definition of an 
                        applicable defined benefit plan any defined 
                        benefit plan (or any portion of such a plan) 
                        which has an effect similar to an applicable 
                        defined benefit plan.''.
    (c) Amendments to Age Discrimination in Employment Act.--Section 
4(i) of the Age Discrimination in Employment Act of 1967 (29 U.S.C. 
623(i)) is amended by adding at the end the following new paragraph:
            ``(10) Special rules relating to age.--
                    ``(A) Comparison to similarly situated younger 
                individual.--
                            ``(i) In general.--A plan shall not be 
                        treated as failing to meet the requirements of 
                        paragraph (1) if a participant's accrued 
                        benefit, as determined as of any date under the 
                        terms of the plan, would be equal to or greater 
                        than that of any similarly situated, younger 
                        individual who is or could be a participant.
                            ``(ii) Similarly situated.--For purposes of 
                        this subparagraph, a participant is similarly 
                        situated to any other individual if such 
                        participant is identical to such other 
                        individual in every respect (including period 
                        of service, compensation, position, date of 
                        hire, work history, and any other respect) 
                        except for age.
                            ``(iii) Disregard of subsidized early 
                        retirement benefits.--In determining the 
                        accrued benefit as of any date for purposes of 
                        this clause, the subsidized portion of any 
                        early retirement benefit or retirement-type 
                        subsidy shall be disregarded.
                            ``(iv) Accrued benefit.--For purposes of 
                        this subparagraph, the accrued benefit may, 
                        under the terms of the plan, be expressed as an 
                        annuity payable at normal retirement age, the 
                        balance of a hypothetical account, or the 
                        current value of the accumulated percentage of 
                        the employee's final average compensation.
                    ``(B) Applicable defined benefit plans.--
                            ``(i) Interest credits.--
                                    ``(I) In general.--An applicable 
                                defined benefit plan shall be treated 
                                as failing to meet the requirements of 
                                paragraph (1) unless the terms of the 
                                plan provide that any interest credit 
                                (or an equivalent amount) for any plan 
                                year shall be at a rate which is not 
                                greater than a market rate of return. A 
                                plan shall not be treated as failing to 
                                meet the requirements of this subclause 
                                merely because the plan provides for a 
                                reasonable minimum guaranteed rate of 
                                return or for a rate of return that is 
                                equal to the greater of a fixed or 
                                variable rate of return.
                                    ``(II) Preservation of capital.--An 
                                interest credit (or an equivalent 
                                amount) of less than zero shall in no 
                                event result in the account balance or 
                                similar amount being less than the 
                                aggregate amount of contributions 
                                credited to the account.
                                    ``(III) Market rate of return.--The 
                                Secretary of the Treasury may provide 
                                by regulation for rules governing the 
                                calculation of a market rate of return 
                                for purposes of subclause (I) and for 
                                permissible methods of crediting 
                                interest to the account (including 
                                fixed or variable interest rates) 
                                resulting in effective rates of return 
                                meeting the requirements of subclause 
                                (I).
                            ``(ii) Special rule for plan conversions.--
                        If, after June 29, 2005, an applicable plan 
                        amendment is adopted, the plan shall be treated 
                        as failing to meet the requirements of 
                        paragraph (1)(H) unless the requirements of 
                        clause (iii) are met with respect to each 
                        individual who was a participant in the plan 
                        immediately before the adoption of the 
                        amendment.
                            ``(iii) Rate of benefit accrual.--Subject 
                        to clause (iv), the requirements of this clause 
                        are met with respect to any participant if the 
                        accrued benefit of the participant under the 
                        terms of the plan as in effect after the 
                        amendment is not less than the sum of--
                                    ``(I) the participant's accrued 
                                benefit for years of service before the 
                                effective date of the amendment, 
                                determined under the terms of the plan 
                                as in effect before the amendment, plus
                                    ``(II) the participant's accrued 
                                benefit for years of service after the 
                                effective date of the amendment, 
                                determined under the terms of the plan 
                                as in effect after the amendment.
                            ``(iv) Special rules for early retirement 
                        subsidies.--For purposes of clause (iii)(I), 
                        the plan shall credit the accumulation account 
                        or similar amount with the amount of any early 
                        retirement benefit or retirement-type subsidy 
                        for the plan year in which the participant 
                        retires if, as of such time, the participant 
                        has met the age, years of service, and other 
                        requirements under the plan for entitlement to 
                        such benefit or subsidy.
                            ``(v) Applicable plan amendment.--For 
                        purposes of this subparagraph--
                                    ``(I) In general.--The term 
                                `applicable plan amendment' means an 
                                amendment to a defined benefit plan 
                                which has the effect of converting the 
                                plan to an applicable defined benefit 
                                plan.
                                    ``(II) Special rule for coordinated 
                                benefits.--If the benefits of 2 or more 
                                defined benefit plans established or 
                                maintained by an employer are 
                                coordinated in such a manner as to have 
                                the effect of the adoption of an 
                                amendment described in subclause (I), 
                                the sponsor of the defined benefit plan 
                                or plans providing for such 
                                coordination shall be treated as having 
                                adopted such a plan amendment as of the 
                                date such coordination begins.
                                    ``(III) Multiple amendments.--The 
                                Secretary of the Treasury shall issue 
                                regulations to prevent the avoidance of 
                                the purposes of this subparagraph 
                                through the use of 2 or more plan 
                                amendments rather than a single 
                                amendment.
                                    ``(IV) Applicable defined benefit 
                                plan.--For purposes of this 
                                subparagraph, the term `applicable 
                                defined benefit plan' has the meaning 
                                given such term by section 203(f)(3) of 
                                the Employee Retirement Income Security 
                                Act of 1974.
                            ``(vi) Termination requirements.--An 
                        applicable defined benefit plan shall not be 
                        treated as meeting the requirements of clause 
                        (i) unless the plan provides that, upon the 
                        termination of the plan--
                                    ``(I) if the interest credit rate 
                                (or an equivalent amount) under the 
                                plan is a variable rate, the rate of 
                                interest used to determine accrued 
                                benefits under the plan shall be equal 
                                to the average of the rates of interest 
                                used under the plan during the 5-year 
                                period ending on the termination date, 
                                and
                                    ``(II) the interest rate and 
                                mortality table used to determine the 
                                amount of any benefit under the plan 
                                payable in the form of an annuity 
                                payable at normal retirement age shall 
                                be the rate and table specified under 
                                the plan for such purpose as of the 
                                termination date, except that if such 
                                interest rate is a variable rate, the 
                                interest rate shall be determined under 
                                the rules of subclause (I).
                    ``(C) Certain offsets permitted.--A plan shall not 
                be treated as failing to meet the requirements of 
                paragraph (1) solely because the plan provides offsets 
                against benefits under the plan to the extent such 
                offsets are allowable in applying the requirements of 
                section 401(a) of the Internal Revenue Code of 1986.
                    ``(D) Permitted disparities in plan contributions 
                or benefits.--A plan shall not be treated as failing to 
                meet the requirements of paragraph (1) solely because 
                the plan provides a disparity in contributions or 
                benefits with respect to which the requirements of 
                section 401(l) of the Internal Revenue Code of 1986 are 
                met.
                    ``(E) Indexing permitted.--
                            ``(i) In general.--A plan shall not be 
                        treated as failing to meet the requirements of 
                        paragraph (1) solely because the plan provides 
                        for indexing of accrued benefits under the 
                        plan.
                            ``(ii) Protection against loss.--Except in 
                        the case of any benefit provided in the form of 
                        a variable annuity, clause (i) shall not apply 
                        with respect to any indexing which results in 
                        an accrued benefit less than the accrued 
                        benefit determined without regard to such 
                        indexing.
                            ``(iii) Indexing.--For purposes of this 
                        subparagraph, the term `indexing' means, in 
                        connection with an accrued benefit, the 
                        periodic adjustment of the accrued benefit by 
                        means of the application of a recognized 
                        investment index or methodology.
                    ``(F) Early retirement benefit or retirement-type 
                subsidy.--For purposes of this paragraph, the terms 
                `early retirement benefit' and `retirement-type 
                subsidy' have the meaning given such terms in section 
                203(g)(2)(A) of the Employee Retirement Income Security 
                Act of 1974.
                    ``(G) Benefit accrued to date.--For purposes of 
                this paragraph, any reference to the accrued benefit 
                shall be a reference to such benefit accrued to 
                date.''.
    (d) No Inference.--Nothing in the amendments made by this section 
shall be construed to create an inference with respect to--
            (1) the treatment of applicable defined benefit plans or 
        conversions to applicable defined benefit plans under sections 
        204(b)(1)(H) of the Employee Retirement Income Security Act of 
        1974, 4(i)(1) of the Age Discrimination in Employment Act of 
        1967, and 411(b)(1)(H) of the Internal Revenue Code of 1986, as 
        in effect before such amendments, or
            (2) the determination of whether an applicable defined 
        benefit plan fails to meet the requirements of sections 
        203(a)(2), 204(c), or 204(g) of the Employee Retirement Income 
        Security Act of 1974 or sections 411(a)(2), 411(c), or 417(e) 
        of such Code, as in effect before such amendments, solely 
        because the present value of the accrued benefit (or any 
        portion thereof) of any participant is, under the terms of the 
        plan, equal to the amount expressed as the balance in a 
        hypothetical account or as an accumulated percentage of the 
        participant's final average compensation.
For purposes of this subsection, the term ``applicable defined benefit 
plan'' has the meaning given such term by section 203(f)(3) of the 
Employee Retirement Income Security Act of 1974 and section 
411(a)(13)(C) of such Code, as in effect after such amendments.
    (e) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to periods beginning on or after June 29, 2005.
            (2) Present value of accrued benefit.--The amendments made 
        by subsections (a)(2) and (b)(2) shall apply to distributions 
        made after the date of the enactment of this Act.
            (3) Vesting and interest credit requirements.--In the case 
        of a plan in existence on June 29, 2005, the requirements of 
        clause (i) of section 411(b)(5)(B) of the Internal Revenue Code 
        of 1986, clause (i) of section 204(b)(5)(B) of the Employee 
        Retirement Income Security Act of 1974, and clause (i) of 
        section 4(i)(10)(B) of the Age Discrimination in Employment Act 
        of 1967 (as added by this Act) and the requirements of 
        203(f)(2) of the Employee Retirement Income Security Act of 
        1974 and section 411(a)(13)(B) of the Internal Revenue Code of 
        1986 (as so added) shall, for purposes of applying the 
        amendments made by subsections (a) and (b), apply to years 
        beginning after December 31, 2007, unless the plan sponsor 
        elects the application of such requirements for any period 
        after June 29, 2005, and before the first year beginning after 
        December 31, 2007.
            (4) Special rule for collectively bargained plans.--In the 
        case of a plan maintained pursuant to 1 or more collective 
        bargaining agreements between employee representatives and 1 or 
        more employers ratified on or before the date of the enactment 
        of this Act, the requirements described in paragraph (3) shall, 
        for purposes of applying the amendments made by subsections (a) 
        and (b), not apply to plan years beginning before--
                    (A) the earlier of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of enactment), or
                            (ii) January 1, 2008, or
                    (B) January 1, 2010.
            (5) Conversions.--The requirements of clause (ii) of 
        section 411(b)(5)(B) of the Internal Revenue Code of 1986, 
        clause (ii) of section 204(b)(5)(B) of the Employee Retirement 
        Income Security Act of 1974, and clause (ii) of section 
        4(i)(10)(B) of the Age Discrimination in Employment Act of 1967 
        (as added by this Act), shall apply to plan amendments adopted 
        after, and taking effect after, June 29, 2005, except that the 
        plan sponsor may elect to have such amendments apply to plan 
        amendments adopted before, and taking effect after, such date.

SEC. 702. REGULATIONS RELATING TO MERGERS AND ACQUISITIONS.

    The Secretary of the Treasury or his delegate shall, not later than 
12 months after the date of the enactment of this Act, prescribe 
regulations for the application of the amendments made by, and the 
provisions of, this title in cases where the conversion of a plan to an 
applicable defined benefit plan is made with respect to a group of 
employees who become employees by reason of a merger, acquisition, or 
similar transaction.

             TITLE VIII--PENSION RELATED REVENUE PROVISIONS

                   Subtitle A--Deduction Limitations

SEC. 801. INCREASE IN DEDUCTION LIMIT FOR SINGLE-EMPLOYER PLANS.

    (a) In General.--Section 404 of the Internal Revenue Code of 1986 
(relating to deduction for contributions of an employer to an 
employees' trust or annuity plan and compensation under a deferred 
payment plan) is amended--
            (1) in subsection (a)(1)(A), by inserting ``in the case of 
        a defined benefit plan other than a multiemployer plan, in an 
        amount determined under subsection (o), and in the case of any 
        other plan'' after ``section 501(a),'', and
            (2) by inserting at the end the following new subsection:
    ``(o) Deduction Limit for Single-Employer Plans.--For purposes of 
subsection (a)(1)(A)--
            ``(1) In general.--In the case of a defined benefit plan to 
        which subsection (a)(1)(A) applies (other than a multiemployer 
        plan), the amount determined under this subsection for any 
        taxable year shall be equal to the greater of--
                    ``(A) the sum of the amounts determined under 
                paragraph (2) with respect to each plan year ending 
                with or within the taxable year, or
                    ``(B) the sum of the minimum required contributions 
                under section 430 for such plan years.
            ``(2) Determination of amount.--
                    ``(A) In general.--The amount determined under this 
                paragraph for any plan year shall be equal to the 
                excess (if any) of--
                            ``(i) the sum of--
                                    ``(I) the funding target for the 
                                plan year,
                                    ``(II) the target normal cost for 
                                the plan year, and
                                    ``(III) the cushion amount for the 
                                plan year, over
                            ``(ii) the value (determined under section 
                        430(g)(2)) of the assets of the plan which are 
                        held by the plan as of the valuation date for 
                        the plan year.
                    ``(B) Special rule for certain employers.--If 
                section 430(i) does not apply to a plan for a plan 
                year, the amount determined under subparagraph (A)(i) 
                for the plan year shall in no event be less than the 
                sum of--
                            ``(i) the funding target for the plan year 
                        (determined as if section 430(i) applied to the 
                        plan), plus
                            ``(ii) the target normal cost for the plan 
                        year (as so determined).
            ``(3) Cushion amount.--For purposes of paragraph 
        (2)(A)(i)(III)--
                    ``(A) In general.--The cushion amount for any plan 
                year is the sum of--
                            ``(i) 50 percent of the funding target for 
                        the plan year, and
                            ``(ii) the amount by which the funding 
                        target for the plan year would increase if the 
                        plan were to take into account--
                                    ``(I) increases in compensation 
                                which are expected to occur in 
                                succeeding plan years, or
                                    ``(II) if the plan does not base 
                                benefits for service to date on 
                                compensation, increases in benefits 
                                which are expected to occur in 
                                succeeding plan years (determined on 
                                the basis of the average annual 
                                increase in benefits over the 6 
                                immediately preceding plan years).
                    ``(B) Limitations.--
                            ``(i) In general.--In making the 
                        computation under subparagraph (A)(ii), the 
                        plan's actuary shall assume that the 
                        limitations under subsection (l) and section 
                        415(b) shall apply.
                            ``(ii) Expected increases.--In the case of 
                        a plan year during which a plan is covered 
                        under section 4021 of the Employee Retirement 
                        Income Security Act of 1974, the plan's actuary 
                        may, notwithstanding subsection (l), take into 
                        account increases in the limitations which are 
                        expected to occur in succeeding plan years.
            ``(4) Special rules for plans with 100 or fewer 
        participants.--
                    ``(A) In general.--For purposes of determining the 
                amount under paragraph (3) for any plan year, in the 
                case of a plan which has 100 or fewer participants for 
                the plan year, the liability of the plan attributable 
                to benefit increases for highly compensated employees 
                (as defined in section 414(q)) resulting from a plan 
                amendment which is made or becomes effective, whichever 
                is later, within the last 2 years shall not be taken 
                into account in determining the target liability.
                    ``(B) Rule for determining number of 
                participants.--For purposes of determining the number 
                of plan participants, all defined benefit plans 
                maintained by the same employer (or any member of such 
                employer's controlled group (within the meaning of 
                section 412(f)(4))) shall be treated as one plan, but 
                only participants of such member or employer shall be 
                taken into account.
            ``(5) Special rule for terminating plans.--In the case of a 
        plan which, subject to section 4041 of the Employee Retirement 
        Income Security Act of 1974, terminates during the plan year, 
        the amount determined under paragraph (2) shall in no event be 
        less than the amount required to make the plan sufficient for 
        benefit liabilities (within the meaning of section 4041(d) of 
        such Act).
            ``(6) Actuarial assumptions.--Any computation under this 
        subsection for any plan year shall use the same actuarial 
        assumptions which are used for the plan year under section 430.
            ``(7) Definitions.--Any term used in this subsection which 
        is also used in section 430 shall have the same meaning given 
        such term by section 430.''.
    (b) Exception From Limitation on Deduction Where Combination of 
Defined Contribution and Defined Benefit Plans.--Section 404(a)(7)(C) 
of such Code, as amended by this Act, is amended by adding at the end 
the following new clause:
                            ``(iv) Guaranteed plans.--In applying this 
                        paragraph, any single-employer plan covered 
                        under section 4021 of the Employee Retirement 
                        Income Security Act of 1974 shall not be taken 
                        into account.''.
    (c) Technical and Conforming Amendments.--
            (1) The last sentence of section 404(a)(1)(A) of such Code 
        is amended by striking ``section 412'' each place it appears 
        and inserting ``section 431''.
            (2) Section 404(a)(1)(B) of such Code is amended--
                    (A) by striking ``In the case of a plan'' and 
                inserting ``In the case of a multiemployer plan'',
                    (B) by striking ``section 412(c)(7)'' each place it 
                appears and inserting ``section 431(c)(6)'',
                    (C) by striking ``section 412(c)(7)(B)'' and 
                inserting ``section 431(c)(6)(A)(ii)'',
                    (D) by striking ``section 412(c)(7)(A)'' and 
                inserting ``section 431(c)(6)(A)(i)'', and
                    (E) by striking ``section 412'' and inserting 
                ``section 431''.
            (3) Section 404(a)(7) of such Code, as amended by this Act, 
        is amended--
                    (A) by adding at the end of subparagraph (A) the 
                following new sentence: ``In the case of a defined 
                benefit plan which is a single employer plan, the 
                amount necessary to satisfy the minimum funding 
                standard provided by section 412 shall not be less than 
                the plan's funding shortfall determined under section 
                430.'', and
                    (B) by striking subparagraph (D) and inserting:
                    ``(D) Insurance contract plans.--For purposes of 
                this paragraph, a plan described in section 412(e)(3) 
                shall be treated as a defined benefit plan.''.
            (4) Section 404A(g)(3)(A) of such Code is amended by 
        striking ``paragraphs (3) and (7) of section 412(c)'' and 
        inserting ``paragraphs (3) and (6) of section 431(c)''.
    (d) Special Rule for 2006 and 2007.--
            (1) In general.--Clause (i) of section 404(a)(1)(D) of the 
        Internal Revenue Code of 1986 (relating to special rule in case 
        of certain plans) is amended by striking ``section 412(l)'' and 
        inserting ``section 412(l)(8)(A), except that section 
        412(l)(8)(A) shall be applied for purposes of this clause by 
        substituting `150 percent (140 percent in the case of a 
        multiemployer plan) of current liability' for `the current 
        liability' in clause (i).''
            (2) Conforming amendment.--Section 404(a)(1) of the 
        Internal Revenue Code of 1986 is amended by striking 
        subparagraph (F).
    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to years beginning 
        after December 31, 2007.
            (2) Special rules.--The amendments made by subsection (d) 
        shall apply to years beginning after December 31, 2005.

SEC. 802. DEDUCTION LIMITS FOR MULTIEMPLOYER PLANS.

    (a) Increase in Deduction.--Section 404(a)(1)(D) of the Internal 
Revenue Code of 1986, as amended by this Act, is amended to read as 
follows:
                    ``(D) Amount determined on basis of unfunded 
                current liability.--In the case of a defined benefit 
                plan which is a multiemployer plan, except as provided 
                in regulations, the maximum amount deductible under the 
                limitations of this paragraph shall not be less than 
                the excess (if any) of--
                            ``(i) 140 percent of the current liability 
                        of the plan determined under section 
                        431(c)(6)(C), over
                            ``(ii) the value of the plan's assets 
                        determined under section 431(c)(2).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to years beginning after December 31, 2007.

SEC. 803. UPDATING DEDUCTION RULES FOR COMBINATION OF PLANS.

    (a) In General.--Subparagraph (C) of section 404(a)(7) of the 
Internal Revenue Code of 1986 (relating to limitation on deductions 
where combination of defined contribution plan and defined benefit 
plan) is amended by adding after clause (ii) the following new clause:
                            ``(iii) Limitation.--In the case of 
                        employer contributions to 1 or more defined 
                        contribution plans, this paragraph shall only 
                        apply to the extent that such contributions 
                        exceed 6 percent of the compensation otherwise 
                        paid or accrued during the taxable year to the 
                        beneficiaries under such plans. For purposes of 
                        this clause, amounts carried over from 
                        preceding taxable years under subparagraph (B) 
                        shall be treated as employer contributions to 1 
                        or more defined contributions to the extent 
                        attributable to employer contributions to such 
                        plans in such preceding taxable years.''.
    (b) Exception From Limitation on Deduction Where Combination of 
Defined Contribution and Defined Benefit Plans.--Section 404(a)(7)(C) 
of such Code, as amended by this Act, is amended by adding at the end 
the following new clause:
                            ``(v) Multiemployer plans.--In applying 
                        this paragraph, any multiemployer plan shall 
                        not be taken into account.''.
    (c) Conforming Amendment.--Subparagraph (A) of section 4972(c)(6) 
of such Code (relating to nondeductible contributions) is amended to 
read as follows:
                    ``(A) so much of the contributions to 1 or more 
                defined contribution plans which are not deductible 
                when contributed solely because of section 404(a)(7) as 
                does not exceed the amount of contributions described 
                in section 401(m)(4)(A), or''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions for taxable years beginning after December 31, 
2005.

         Subtitle B--Certain Pension Provisions Made Permanent

SEC. 811. PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS OF 
              ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 
              MADE PERMANENT.

    Title IX of the Economic Growth and Tax Relief Reconciliation Act 
of 2001 shall not apply to the provisions of, and amendments made by, 
subtitles A through F of title VI of such Act (relating to pension and 
individual retirement arrangement provisions).

SEC. 812. SAVER'S CREDIT.

    Section 25B of the Internal Revenue Code of 1986 (relating to 
elective deferrals and IRA contributions by certain individuals) is 
amended by striking subsection (h).

Subtitle C--Improvements in Portability, Distribution, and Contribution 
                                 Rules

SEC. 821. CLARIFICATIONS REGARDING PURCHASE OF PERMISSIVE SERVICE 
              CREDIT.

    (a) In General.--Section 415(n) of the Internal Revenue Code of 
1986 (relating to special rules for the purchase of permissive service 
credit) is amended--
            (1) by striking ``an employee'' in paragraph (1) and 
        inserting ``a participant'', and
            (2) by adding at the end of paragraph (3)(A) the following 
        new flush sentence:
                ``Such term may include service credit for periods for 
                which there is no performance of service, and, 
                notwithstanding clause (ii), may include service 
                credited in order to provide an increased benefit for 
                service credit which a participant is receiving under 
                the plan.''.
    (b) Special Rules for Trustee-to-Trustee Transfers.--Section 
415(n)(3) of such Code is amended by adding at the end the following 
new subparagraph:
                    ``(D) Special rules for trustee-to-trustee 
                transfers.--In the case of a trustee-to-trustee 
                transfer to which section 403(b)(13)(A) or 
                457(e)(17)(A) applies (without regard to whether the 
                transfer is made between plans maintained by the same 
                employer)--
                            ``(i) the limitations of subparagraph (B) 
                        shall not apply in determining whether the 
                        transfer is for the purchase of permissive 
                        service credit, and
                            ``(ii) the distribution rules applicable 
                        under this title to the defined benefit 
                        governmental plan to which any amounts are so 
                        transferred shall apply to such amounts and any 
                        benefits attributable to such amounts.''.
    (c) Nonqualified Service.--Section 415(n)(3) of such Code is 
amended--
            (1) by striking ``permissive service credit attributable to 
        nonqualified service'' each place it appears in subparagraph 
        (B) and inserting ``nonqualified service credit'',
            (2) by striking so much of subparagraph (C) as precedes 
        clause (i) and inserting:
                    ``(C) Nonqualified service credit.--For purposes of 
                subparagraph (B), the term `nonqualified service 
                credit' means permissive service credit other than that 
                allowed with respect to--'', and
            (3) by striking ``elementary or secondary education 
        (through grade 12), as determined under State law'' in 
        subparagraph (C)(ii) and inserting ``elementary or secondary 
        education (through grade 12), or a comparable level of 
        education, as determined under the applicable law of the 
        jurisdiction in which the service was performed''.
    (d) Effective Dates.--
            (1) In general.--The amendments made by subsections (a) and 
        (c) shall take effect as if included in the amendments made by 
        section 1526 of the Taxpayer Relief Act of 1997.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall take effect as if included in the amendments made by 
        section 647 of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001.

SEC. 822. ALLOW ROLLOVER OF AFTER-TAX AMOUNTS IN ANNUITY CONTRACTS.

    (a) In General.--Subparagraph (A) of section 402(c)(2) (relating to 
the maximum amount which may be rolled over) is amended--
            (1) by striking ``which is part of a plan which is a 
        defined contribution plan and which agrees to separately 
        account'' and inserting ``or to an annuity contract described 
        in section 403(b) and such trust or contract provides for 
        separate accounting''; and
            (2) by inserting ``(and earnings thereon)'' after ``so 
        transferred''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2006.

SEC. 823. CLARIFICATION OF MINIMUM DISTRIBUTION RULES FOR GOVERNMENTAL 
              PLANS.

    The Secretary of the Treasury shall issue regulations under which a 
governmental plan (as defined in section 414(d) of the Internal Revenue 
Code of 1986) shall, for all years to which section 401(a)(9) of such 
Code applies to such plan, be treated as having complied with such 
section 401(a)(9) if such plan complies with a reasonable good faith 
interpretation of such section 401(a)(9).

SEC. 824. ALLOW DIRECT ROLLOVERS FROM RETIREMENT PLANS TO ROTH IRAS.

    (a) In General.--Subsection (e) of section 408A of the Internal 
Revenue Code of 1986 (defining qualified rollover contribution) is 
amended to read as follows:
    ``(e) Qualified Rollover Contribution.--For purposes of this 
section, the term `qualified rollover contribution' means a rollover 
contribution--
            ``(1) to a Roth IRA from another such account,
            ``(2) from an eligible retirement plan, but only if--
                    ``(A) in the case of an individual retirement plan, 
                such rollover contribution meets the requirements of 
                section 408(d)(3), and
                    ``(B) in the case of any eligible retirement plan 
                (as defined in section 402(c)(8)(B) other than clauses 
                (i) and (ii) thereof), such rollover contribution meets 
                the requirements of section 402(c), 403(b)(8), or 
                457(e)(16), as applicable.
For purposes of section 408(d)(3)(B), there shall be disregarded any 
qualified rollover contribution from an individual retirement plan 
(other than a Roth IRA) to a Roth IRA.''.
    (b) Conforming Amendments.--
            (1) Section 408A(c)(3)(B) of such Code, as in effect before 
        the Tax Increase Prevention and Reconciliation Act of 2005, is 
        amended--
                    (A) in the text by striking ``individual retirement 
                plan'' and inserting ``an eligible retirement plan (as 
                defined by section 402(c)(8)(B))'', and
                    (B) in the heading by striking ``IRA'' the first 
                place it appears and inserting ``eligible retirement 
                plan''.
            (2) Section 408A(d)(3) of such Code is amended--
                    (A) in subparagraph (A), by striking ``section 
                408(d)(3)'' inserting ``sections 402(c), 403(b)(8), 
                408(d)(3), and 457(e)(16)'',
                    (B) in subparagraph (B), by striking ``individual 
                retirement plan'' and inserting ``eligible retirement 
                plan (as defined by section 402(c)(8)(B))'',
                    (C) in subparagraph (D), by inserting ``or 6047'' 
                after ``408(i)'',
                    (D) in subparagraph (D), by striking ``or both'' 
                and inserting ``persons subject to section 6047(d)(1), 
                or all of the foregoing persons'', and
                    (E) in the heading, by striking ``IRA'' the first 
                place it appears and inserting ``eligible retirement 
                plan''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2007.

SEC. 825. ELIGIBILITY FOR PARTICIPATION IN RETIREMENT PLANS.

    An individual shall not be precluded from participating in an 
eligible deferred compensation plan by reason of having received a 
distribution under section 457(e)(9) of the Internal Revenue Code of 
1986, as in effect prior to the enactment of the Small Business Job 
Protection Act of 1996.

SEC. 826. MODIFICATIONS OF RULES GOVERNING HARDSHIPS AND UNFORSEEN 
              FINANCIAL EMERGENCIES.

    Within 180 days after the date of the enactment of this Act, the 
Secretary of the Treasury shall modify the rules for determining 
whether a participant has had a hardship for purposes of section 
401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986 to provide 
that if an event (including the occurrence of a medical expense) would 
constitute a hardship under the plan if it occurred with respect to the 
participant's spouse or dependent (as defined in section 152 of such 
Code), such event shall, to the extent permitted under a plan, 
constitute a hardship if it occurs with respect to a person who is a 
beneficiary under the plan with respect to the participant. The 
Secretary of the Treasury shall issue similar rules for purposes of 
determining whether a participant has had--
            (1) a hardship for purposes of section 403(b)(11)(B) of 
        such Code; or
            (2) an unforeseen financial emergency for purposes of 
        sections 409A(a)(2)(A)(vi), 409A(a)(2)(B)(ii), and 
        457(d)(1)(A)(iii) of such Code.

SEC. 827. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR 
              INDIVIDUALS CALLED TO ACTIVE DUTY FOR AT LEAST 179 DAYS.

    (a) In General.--Paragraph (2) of section 72(t) of the Internal 
Revenue Code of 1986 (relating to 10-percent additional tax on early 
distributions from qualified retirement plans) is amended by adding at 
the end the following new subparagraph:
                    ``(G) Distributions from retirement plans to 
                individuals called to active duty.--
                            ``(i) In general.--Any qualified reservist 
                        distribution.
                            ``(ii) Amount distributed may be repaid.--
                        Any individual who receives a qualified 
                        reservist distribution may, at any time during 
                        the 2-year period beginning on the day after 
                        the end of the active duty period, make one or 
                        more contributions to an individual retirement 
                        plan of such individual in an aggregate amount 
                        not to exceed the amount of such distribution. 
                        The dollar limitations otherwise applicable to 
                        contributions to individual retirement plans 
                        shall not apply to any contribution made 
                        pursuant to the preceding sentence. No 
                        deduction shall be allowed for any contribution 
                        pursuant to this clause.
                            ``(iii) Qualified reservist distribution.--
                        For purposes of this subparagraph, the term 
                        `qualified reservist distribution' means any 
                        distribution to an individual if--
                                    ``(I) such distribution is from an 
                                individual retirement plan, or from 
                                amounts attributable to employer 
                                contributions made pursuant to elective 
                                deferrals described in subparagraph (A) 
                                or (C) of section 402(g)(3) or section 
                                501(c)(18)(D)(iii),
                                    ``(II) such individual was (by 
                                reason of being a member of a reserve 
                                component (as defined in section 101 of 
                                title 37, United States Code)) ordered 
                                or called to active duty for a period 
                                in excess of 179 days or for an 
                                indefinite period, and
                                    ``(III) such distribution is made 
                                during the period beginning on the date 
                                of such order or call and ending at the 
                                close of the active duty period.
                            ``(iv) Application of subparagraph.--This 
                        subparagraph applies to individuals ordered or 
                        called to active duty after September 11, 2001, 
                        and before December 31, 2007. In no event shall 
                        the 2-year period referred to in clause (ii) 
                        end before the date which is 2 years after the 
                        date of the enactment of this subparagraph.''.
    (b) Conforming Amendments.--
            (1) Section 401(k)(2)(B)(i) of such Code is amended by 
        striking ``or'' at the end of subclause (III), by striking 
        ``and'' at the end of subclause (IV) and inserting ``or'', and 
        by inserting after subclause (IV) the following new subclause:
                                    ``(V) in the case of a qualified 
                                reservist distribution (as defined in 
                                section 72(t)(2)(G)(iii)), the date on 
                                which a period referred to in subclause 
                                (III) of such section begins, and''.
            (2) Section 403(b)(7)(A)(ii) of such Code is amended by 
        inserting ``(unless such amount is a distribution to which 
        section 72(t)(2)(G) applies)'' after ``distributee''.
            (3) Section 403(b)(11) of such Code is amended by striking 
        ``or'' at the end of subparagraph (A), by striking the period 
        at the end of subparagraph (B) and inserting ``, or'', and by 
        inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) for distributions to which section 
                72(t)(2)(G) applies.''.
    (c) Effective Date; Waiver of Limitations.--
            (1) Effective date.--The amendment made by this section 
        shall apply to distributions after September 11, 2001.
            (2) Waiver of limitations.--If refund or credit of any 
        overpayment of tax resulting from the amendments made by this 
        section is prevented at any time before the close of the 1-year 
        period beginning on the date of the enactment of this Act by 
        the operation of any law or rule of law (including res 
        judicata), such refund or credit may nevertheless be made or 
        allowed if claim therefor is filed before the close of such 
        period.

SEC. 828. WAIVER OF 10 PERCENT EARLY WITHDRAWAL PENALTY TAX ON CERTAIN 
              DISTRIBUTIONS OF PENSION PLANS FOR PUBLIC SAFETY 
              EMPLOYEES.

    (a) In General.--Section 72(t) of the Internal Revenue Code of 1986 
(relating to subsection not to apply to certain distributions) is 
amended by adding at the end the following new paragraph:
            ``(10) Distributions to qualified public safety employees 
        in governmental plans.--
                    ``(A) In general.--In the case of a distribution to 
                a qualified public safety employee from a governmental 
                plan (within the meaning of section 414(d)) which is a 
                defined benefit plan, paragraph (2)(A)(v) shall be 
                applied by substituting `age 50' for `age 55'.
                    ``(B) Qualified public safety employee.--For 
                purposes of this paragraph, the term `qualified public 
                safety employee' means any employee of a State or 
                political subdivision of a State who provides police 
                protection, firefighting services, or emergency medical 
                services for any area within the jurisdiction of such 
                State or political subdivision.''
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions after the date of the enactment of this Act.

SEC. 829. ALLOW ROLLOVERS BY NONSPOUSE BENEFICIARIES OF CERTAIN 
              RETIREMENT PLAN DISTRIBUTIONS.

    (a) In General.--
            (1) Qualified plans.--Section 402(c) of the Internal 
        Revenue Code of 1986 (relating to rollovers from exempt trusts) 
        is amended by adding at the end the following new paragraph:
            ``(11) Distributions to inherited individual retirement 
        plan of nonspouse beneficiary.--
                    ``(A) In general.--If, with respect to any portion 
                of a distribution from an eligible retirement plan of a 
                deceased employee, a direct trustee-to-trustee transfer 
                is made to an individual retirement plan described in 
                clause (i) or (ii) of paragraph (8)(B) established for 
                the purposes of receiving the distribution on behalf of 
                an individual who is a designated beneficiary (as 
                defined by section 401(a)(9)(E)) of the employee and 
                who is not the surviving spouse of the employee--
                            ``(i) the transfer shall be treated as an 
                        eligible rollover distribution for purposes of 
                        this subsection,
                            ``(ii) the individual retirement plan shall 
                        be treated as an inherited individual 
                        retirement account or individual retirement 
                        annuity (within the meaning of section 
                        408(d)(3)(C)) for purposes of this title, and
                            ``(iii) section 401(a)(9)(B) (other than 
                        clause (iv) thereof) shall apply to such plan.
                    ``(B) Certain trusts treated as beneficiaries.--For 
                purposes of this paragraph, to the extent provided in 
                rules prescribed by the Secretary, a trust maintained 
                for the benefit of one or more designated beneficiaries 
                shall be treated in the same manner as a trust 
                designated beneficiary.''.
            (2) Section 403(a) plans.--Subparagraph (B) of section 
        403(a)(4) of such Code (relating to rollover amounts) is 
        amended by inserting ``and (11)'' after ``(7)''.
            (3) Section 403(b) plans.--Subparagraph (B) of section 
        403(b)(8) of such Code (relating to rollover amounts) is 
        amended by striking ``and (9)'' and inserting ``, (9), and 
        (11)''.
            (4) Section 457 plans.--Subparagraph (B) of section 
        457(e)(16) of such Code (relating to rollover amounts) is 
        amended by striking ``and (9)'' and inserting ``, (9), and 
        (11)''.
    (b) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2006.

SEC. 830. DIRECT PAYMENT OF TAX REFUNDS TO INDIVIDUAL RETIREMENT PLANS.

    (a) In General.--The Secretary of the Treasury (or the Secretary's 
delegate) shall make available a form (or modify existing forms) for 
use by individuals to direct that a portion of any refund of 
overpayment of tax imposed by chapter 1 of the Internal Revenue Code of 
1986 be paid directly to an individual retirement plan (as defined in 
section 7701(a)(37) of such Code) of such individual.
    (b) Effective Date.--The form required by subsection (a) shall be 
made available for taxable years beginning after December 31, 2006.

SEC. 831. ALLOWANCE OF ADDITIONAL IRA PAYMENTS IN CERTAIN BANKRUPTCY 
              CASES.

    (a) Allowance of Contributions.--Section 219(b)(5) of the Internal 
Revenue Code of 1986 (relating to deductible amount) is amended by 
redesignating subparagraph (C) as subparagraph (D) and by inserting 
after subparagraph (B) the following new subparagraph:
                    ``(C) Catchup contributions for certain 
                individuals.--
                            ``(i) In general.--In the case of an 
                        applicable individual who elects to make a 
                        qualified retirement contribution in addition 
                        to the deductible amount determined under 
                        subparagraph (A)--
                                    ``(I) the deductible amount for any 
                                taxable year shall be increased by an 
                                amount equal to 3 times the applicable 
                                amount determined under subparagraph 
                                (B) for such taxable year, and
                                    ``(II) subparagraph (B) shall not 
                                apply.
                            ``(ii) Applicable individual.--For purposes 
                        of this subparagraph, the term `applicable 
                        individual' means, with respect to any taxable 
                        year, any individual who was a qualified 
                        participant in a qualified cash or deferred 
                        arrangement (as defined in section 401(k)) of 
                        an employer described in clause (iii) under 
                        which the employer matched at least 50 percent 
                        of the employee's contributions to such 
                        arrangement with stock of such employer.
                            ``(iii) Employer described.--An employer is 
                        described in this clause if, in any taxable 
                        year preceding the taxable year described in 
                        clause (ii)--
                                    ``(I) such employer (or any 
                                controlling corporation of such 
                                employer) was a debtor in a case under 
                                title 11 of the United States Code, or 
                                similar Federal or State law, and
                                    ``(II) such employer (or any other 
                                person) was subject to an indictment or 
                                conviction resulting from business 
                                transactions related to such case.
                            ``(iv) Qualified participant.--For purposes 
                        of clause (ii), the term `qualified 
                        participant' means any applicable individual 
                        who was a participant in the cash or deferred 
                        arrangement described in such clause on the 
                        date that is 6 months before the filing of the 
                        case described in clause (iii).
                            ``(v) Termination.--This subparagraph shall 
                        not apply to taxable years beginning after 
                        December 31, 2009.''
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.

SEC. 832. DETERMINATION OF AVERAGE COMPENSATION FOR SECTION 415 LIMITS.

    (a) In General.--Section 415(b)(3) of the Internal Revenue Code of 
1986 is amended by striking ``both was an active participant in the 
plan and''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2005.

SEC. 833. INFLATION INDEXING OF GROSS INCOME LIMITATIONS ON CERTAIN 
              RETIREMENT SAVINGS INCENTIVES.

    (a) Saver's Credit.--Subsection (b) of section 25B of the Internal 
Revenue Code of 1986 is amended to read as follows:
    ``(b) Applicable Percentage.--For purposes of this section--
            ``(1) Joint returns.--In the case of a joint return, the 
        applicable percentage is--
                    ``(A) if the adjusted gross income of the taxpayer 
                is not over $30,000, 50 percent,
                    ``(B) if the adjusted gross income of the taxpayer 
                is over $30,000 but not over $32,500, 20 percent,
                    ``(C) if the adjusted gross income of the taxpayer 
                is over $32,500 but not over $50,000, 10 percent, and
                    ``(D) if the adjusted gross income of the taxpayer 
                is over $50,000, zero percent.
            ``(2) Other returns.--In the case of--
                    ``(A) a head of household, the applicable 
                percentage shall be determined under paragraph (1) 
                except that such paragraph shall be applied by 
                substituting for each dollar amount therein (as 
                adjusted under paragraph (3)) a dollar amount equal to 
                75 percent of such dollar amount, and
                    ``(B) any taxpayer not described in paragraph (1) 
                or subparagraph (A), the applicable percentage shall be 
                determined under paragraph (1) except that such 
                paragraph shall be applied by substituting for each 
                dollar amount therein (as adjusted under paragraph (3)) 
                a dollar amount equal to 50 percent of such dollar 
                amount.
            ``(3) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2006, each of the 
        dollar amount in paragraph (1) shall be increased by an amount 
        equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2005' for `calendar year 1992' in 
                subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $500.''.
    (b) Deduction of Retirement Contributions for Active 
Participants.--Section 219(g) of such Code is amended by adding at the 
end the following new paragraph:
            ``(8) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2006, the dollar amount 
        in the last row of the table contained in paragraph (3)(B)(i), 
        the dollar amount in the last row of the table contained in 
        paragraph (3)(B)(ii), and the dollar amount contained in 
        paragraph (7)(A), shall each be increased by an amount equal 
        to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2005' for `calendar year 1992' in 
                subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $1,000.''.
    (c) Contribution Limitation for Roth IRAs.--Section 408A(c)(3) of 
such Code is amended by adding at the end the following new 
subparagraph:
                    ``(C) Inflation adjustment.--In the case of any 
                taxable year beginning in a calendar year after 2006, 
                the dollar amounts in subclauses (I) and (II) of 
                subparagraph (C)(ii) shall each 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 in which the taxable year begins, 
                        determined by substituting `calendar year 2005' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                Any increase determined under the preceding sentence 
                shall be rounded to the nearest multiple of $1,000.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after 2006.

                Subtitle D--Health and Medical Benefits

SEC. 841. USE OF EXCESS PENSION ASSETS FOR FUTURE RETIREE HEALTH 
              BENEFITS AND COLLECTIVELY BARGAINED RETIREE HEALTH 
              BENEFITS.

    (a) In General.--Section 420 of the Internal Revenue Code of 1986 
(relating to transfers of excess pension assets to retiree health 
accounts) is amended by adding at the end the following new subsection:
    ``(f) Qualified Transfers To Cover Future Retiree Health Costs and 
Collectively Bargained Retiree Health Benefits.--
            ``(1) In general.--An employer maintaining a defined 
        benefit plan (other than a multiemployer plan) may, in lieu of 
        a qualified transfer, elect for any taxable year to have the 
        plan make--
                    ``(A) a qualified future transfer, or
                    ``(B) a collectively bargained transfer.
        Except as provided in this subsection, a qualified future 
        transfer and a collectively bargained transfer shall be treated 
        for purposes of this title and the Employee Retirement Income 
        Security Act of 1974 as if it were a qualified transfer.
            ``(2) Qualified future and collectively bargained 
        transfers.--For purposes of this subsection--
                    ``(A) In general.--The terms `qualified future 
                transfer' and `collectively bargained transfer' mean a 
                transfer which meets all of the requirements for a 
                qualified transfer, except that--
                            ``(i) the determination of excess pension 
                        assets shall be made under subparagraph (B),
                            ``(ii) the limitation on the amount 
                        transferred shall be determined under 
                        subparagraph (C),
                            ``(iii) the minimum cost requirements of 
                        subsection (c)(3) shall be modified as provided 
                        under subparagraph (D), and
                            ``(iv) in the case of a collectively 
                        bargained transfer, the requirements of 
                        subparagraph (E) shall be met with respect to 
                        the transfer.
                    ``(B) Excess pension assets.--
                            ``(i) In general.--In determining excess 
                        pension assets for purposes of this subsection, 
                        subsection (e)(2) shall be applied by 
                        substituting `120 percent' for `125 percent'.
                            ``(ii) Requirement to maintain funded 
                        status.--If, as of any valuation date of any 
                        plan year in the transfer period, the amount 
                        determined under subsection (e)(2)(B) (after 
                        application of clause (i)) exceeds the amount 
                        determined under subsection (e)(2)(A), either--
                                    ``(I) the employer maintaining the 
                                plan shall make contributions to the 
                                plan in an amount not less than the 
                                amount required to reduce such excess 
                                to zero as of such date, or
                                    ``(II) there is transferred from 
                                the health benefits account to the plan 
                                an amount not less than the amount 
                                required to reduce such excess to zero 
                                as of such date.
                    ``(C) Limitation on amount transferred.--
                Notwithstanding subsection (b)(3), the amount of the 
                excess pension assets which may be transferred--
                            ``(i) in the case of a qualified future 
                        transfer shall be equal to the sum of--
                                    ``(I) if the transfer period 
                                includes the taxable year of the 
                                transfer, the amount determined under 
                                subsection (b)(3) for such taxable 
                                year, plus
                                    ``(II) in the case of all other 
                                taxable years in the transfer period, 
                                the sum of the qualified current 
                                retiree health liabilities which the 
                                plan reasonably estimates, in 
                                accordance with guidance issued by the 
                                Secretary, will be incurred for each of 
                                such years, and
                            ``(ii) in the case of a collectively 
                        bargained transfer, shall not exceed the amount 
                        which is reasonably estimated, in accordance 
                        with the provisions of the collective 
                        bargaining agreement and generally accepted 
                        accounting principles, to be the amount the 
                        employer maintaining the plan will pay (whether 
                        directly or through reimbursement) out of such 
                        account during the collectively bargained cost 
                        maintenance period for collectively bargained 
                        retiree health liabilities.
                    ``(D) Minimum cost requirements.--
                            ``(i) In general.--The requirements of 
                        subsection (c)(3) shall be treated as met if--
                                    ``(I) in the case of a qualified 
                                future transfer, each group health plan 
                                or arrangement under which applicable 
                                health benefits are provided provides 
                                applicable health benefits during the 
                                period beginning with the first year of 
                                the transfer period and ending with the 
                                last day of the 4th year following the 
                                transfer period such that the annual 
                                average amount of such the applicable 
                                employer cost during such period is not 
                                less than the applicable employer cost 
                                determined under subsection (c)(3)(A) 
                                with respect to the transfer, and
                                    ``(II) in the case of a 
                                collectively bargained transfer, each 
                                collectively bargained group health 
                                plan under which collectively bargained 
                                health benefits are provided provides 
                                that the collectively bargained 
                                employer cost for each taxable year 
                                during the collectively bargained cost 
                                maintenance period shall not be less 
                                than the amount specified by the 
                                collective bargaining agreement.
                            ``(ii) Election to maintain benefits for 
                        future transfers.--An employer may elect, in 
                        lieu of the requirements of clause (i)(I), to 
                        meet the requirements of subsection (c)(3) by 
                        meeting the requirements of such subsection (as 
                        in effect before the amendments made by section 
                        535 of the Tax Relief Extension Act of 1999) 
                        for each of the years described in the period 
                        under clause (i)(I).
                            ``(iii) Collectively bargained employer 
                        cost.--For purposes of this subparagraph, the 
                        term `collectively bargained employer cost' 
                        means the average cost per covered individual 
                        of providing collectively bargained retiree 
                        health benefits as determined in accordance 
                        with the applicable collective bargaining 
                        agreement. Such agreement may provide for an 
                        appropriate reduction in the collectively 
                        bargained employer cost to take into account 
                        any portion of the collectively bargained 
                        retiree health benefits that is provided or 
                        financed by a government program or other 
                        source.
                    ``(E) Special rules for collectively bargained 
                transfers.--
                            ``(i) In general.--A collectively bargained 
                        transfer shall only include a transfer which--
                                    ``(I) is made in accordance with a 
                                collective bargaining agreement,
                                    ``(II) before the transfer, the 
                                employer designates, in a written 
                                notice delivered to each employee 
                                organization that is a party to the 
                                collective bargaining agreement, as a 
                                collectively bargained transfer in 
                                accordance with this section, and
                                    ``(III) involves a plan maintained 
                                by an employer which, in its taxable 
                                year ending in 2005, provided health 
                                benefits or coverage to retirees and 
                                their spouses and dependents under all 
                                of the benefit plans maintained by the 
                                employer, but only if the aggregate 
                                cost (including administrative 
                                expenses) of such benefits or coverage 
                                which would have been allowable as a 
                                deduction to the employer (if such 
                                benefits or coverage had been provided 
                                directly by the employer and the 
                                employer used the cash receipts and 
                                disbursements method of accounting) is 
                                at least 5 percent of the gross 
                                receipts of the employer (determined in 
                                accordance with the last sentence of 
                                subsection (c)(2)(E)(ii)(II)) for such 
                                taxable year, or a plan maintained by a 
                                successor to such employer.
                            ``(ii) Use of assets.--Any assets 
                        transferred to a health benefits account in a 
                        collectively bargained transfer (and any income 
                        allocable thereto) shall be used only to pay 
                        collectively bargained retiree health 
                        liabilities (other than liabilities of key 
                        employees not taken into account under 
                        paragraph (6)(B)(iii)) for the taxable year of 
                        the transfer or for any subsequent taxable year 
                        during the collectively bargained cost 
                        maintenance period (whether directly or through 
                        reimbursement).
            ``(3) Coordination with other transfers.--In applying 
        subsection (b)(3) to any subsequent transfer during a taxable 
        year in a transfer period or collectively bargained cost 
        maintenance period, qualified current retiree health 
        liabilities shall be reduced by any such liabilities taken into 
        account with respect to the qualified future transfer or 
        collectively bargained transfer to which such period relates.
            ``(4) Special deduction rules for collectively bargained 
        transfers.--In the case of a collectively bargained transfer--
                    ``(A) the limitation under subsection (d)(1)(C) 
                shall not apply, and
                    ``(B) notwithstanding subsection (d)(2), an 
                employer may contribute an amount to a health benefits 
                account or welfare benefit fund (as defined in section 
                419(e)(1)) with respect to collectively bargained 
                retiree health liabilities for which transferred assets 
                are required to be used under subsection (c)(1)(B), and 
                the deductibility of any such contribution shall be 
                governed by the limits applicable to the deductibility 
                of contributions to a welfare benefit fund under a 
                collective bargaining agreement (as determined under 
                section 419A(f)(5)(A)) without regard to whether such 
                contributions are made to a health benefits account or 
                welfare benefit fund and without regard to the 
                provisions of section 404 or the other provisions of 
                this section.
        The Secretary shall provide rules to ensure that the 
        application of this paragraph does not result in a deduction 
        being allowed more than once for the same contribution or for 2 
        or more contributions or expenditures relating to the same 
        collectively bargained retiree health liabilities.
            ``(5) Transfer period.--For purposes of this subsection, 
        the term `transfer period' means, with respect to any transfer, 
        a period of consecutive taxable years (not less than 2) 
        specified in the election under paragraph (1) which begins and 
        ends during the 10-taxable-year period beginning with the 
        taxable year of the transfer.
            ``(6) Terms relating to collectively bargained transfers.--
        For purposes of this subsection--
                    ``(A) Collectively bargained cost maintenance 
                period.--The term `collectively bargained cost 
                maintenance period' means, with respect to each covered 
                retiree and his covered spouse and dependents, the 
                shorter of--
                            ``(i) the remaining lifetime of such 
                        covered retiree and his covered spouse and 
                        dependents, or
                            ``(ii) the period of coverage provided by 
                        the collectively bargained health plan 
                        (determined as of the date of the collectively 
                        bargained transfer) with respect to such 
                        covered retiree and his covered spouse and 
                        dependents.
                    ``(B) Collectively bargained retiree health 
                liabilities.--
                            ``(i) In general.--The term `collectively 
                        bargained retiree health liabilities' means the 
                        present value, as of the beginning of a taxable 
                        year and determined in accordance with the 
                        applicable collective bargaining agreement, of 
                        all collectively bargained health benefits 
                        (including administrative expenses) for such 
                        taxable year and all subsequent taxable years 
                        during the collectively bargained cost 
                        maintenance period.
                            ``(ii) Reduction for amounts previously set 
                        aside.--The amount determined under clause (i) 
                        shall be reduced by the value (as of the close 
                        of the plan year preceding the year of the 
                        collectively bargained transfer) of the assets 
                        in all health benefits accounts or welfare 
                        benefit funds (as defined in section 419(e)(1)) 
                        set aside to pay for the collectively bargained 
                        retiree health liabilities.
                            ``(iii) Key employees excluded.--If an 
                        employee is a key employee (within the meaning 
                        of section 416(I)(1)) with respect to any plan 
                        year ending in a taxable year, such employee 
                        shall not be taken into account in computing 
                        collectively bargained retiree health 
                        liabilities for such taxable year or in 
                        calculating collectively bargained employer 
                        cost under subsection (c)(3)(C).
                    ``(C) Collectively bargained health benefits.--The 
                term `collectively bargained health benefits' means 
                health benefits or coverage which are provided to--
                            ``(i) retired employees who, immediately 
                        before the collectively bargained transfer, are 
                        entitled to receive such benefits upon 
                        retirement and who are entitled to pension 
                        benefits under the plan, and their spouses and 
                        dependents, and
                            ``(ii) if specified by the provisions of 
                        the collective bargaining agreement governing 
                        the collectively bargained transfer, active 
                        employees who, following their retirement, are 
                        entitled to receive such benefits and who are 
                        entitled to pension benefits under the plan, 
                        and their spouses and dependents.
                    ``(D) Collectively bargained health plan.--The term 
                `collectively bargained health plan' means a group 
                health plan or arrangement for retired employees and 
                their spouses and dependents that is maintained 
                pursuant to 1 or more collective bargaining 
                agreements.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to transfers after the date of the enactment of this Act.

SEC. 842. TRANSFER OF EXCESS PENSION ASSETS TO MULTIEMPLOYER HEALTH 
              PLAN.

    (a) In General.--Section 420 of the Internal Revenue Code of 1986 
is amended--
            (1) by striking ``(other than a multiemployer plan)'' in 
        subsection (a), and
            (2) by adding at the end of subsection (e) the following 
        new paragraph:
            ``(5) Application to multiemployer plans.--In the case of a 
        multiemployer plan, this section shall be applied to any such 
        plan--
                    ``(A) by treating any reference in this section to 
                an employer as a reference to all employers maintaining 
                the plan (or, if appropriate, the plan sponsor), and
                    ``(B) in accordance with such modifications of this 
                section (and the provisions of this title relating to 
                this section) as the Secretary determines appropriate 
                to reflect the fact the plan is not maintained by a 
                single employer.''
    (b) Effective Date.--The amendment made by this section shall apply 
to transfers made in taxable years beginning after December 31, 2006.

SEC. 843. ALLOWANCE OF RESERVE FOR MEDICAL BENEFITS OF PLANS SPONSORED 
              BY BONA FIDE ASSOCIATIONS.

    (a) In General.--Section 419A(c) of the Internal Revenue Code of 
1986 (relating to account limit) is amended by adding at the end the 
following new paragraph:
            ``(6) Additional reserve for medical benefits of bona fide 
        association plans.--
                    ``(A) In general.--An applicable account limit for 
                any taxable year may include a reserve in an amount not 
                to exceed 35 percent of the sum of--
                            ``(i) the qualified direct costs, and
                            ``(ii) the change in claims incurred but 
                        unpaid,
                for such taxable year with respect to medical benefits 
                (other than post-retirement medical benefits).
                    ``(B) Applicable account limit.--For purposes of 
                this subsection, the term `applicable account limit' 
                means an account limit for a qualified asset account 
                with respect to medical benefits provided through a 
                plan maintained by a bona fide association (as defined 
                in section 2791(d)(3) of the Public Health Service Act 
                (42 U.S.C. 300gg-91(d)(3))''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2006.

SEC. 844. TREATMENT OF ANNUITY AND LIFE INSURANCE CONTRACTS WITH A 
              LONG-TERM CARE INSURANCE FEATURE.

    (a) Exclusion From Gross Income.--Subsection (e) of section 72 of 
the Internal Revenue Code of 1986 (relating to amounts not received as 
annuities) is amended by redesignating paragraph (11) as paragraph (12) 
and by inserting after paragraph (10) the following new paragraph:
            ``(11) Special rules for certain combination contracts 
        providing long-term care insurance.--Notwithstanding paragraphs 
        (2), (5)(C), and (10), in the case of any charge against the 
        cash value of an annuity contract or the cash surrender value 
        of a life insurance contract made as payment for coverage under 
        a qualified long-term care insurance contract which is part of 
        or a rider on such annuity or life insurance contract--
                    ``(A) the investment in the contract shall be 
                reduced (but not below zero) by such charge, and
                    ``(B) such charge shall not be includible in gross 
                income.''.
    (b) Tax-Free Exchanges Among Certain Insurance Policies.--
            (1) Annuity contracts can include qualified long-term care 
        insurance riders.--Paragraph (2) of section 1035(b) of such 
        Code is amended by adding at the end the following new 
        sentence: ``For purposes of the preceding sentence, a contract 
        shall not fail to be treated as an annuity contract solely 
        because a qualified long-term care insurance contract is a part 
        of or a rider on such contract.''.
            (2) Life insurance contracts can include qualified long-
        term care insurance riders.--Paragraph (3) of section 1035(b) 
        of such Code is amended by adding at the end the following new 
        sentence: ``For purposes of the preceding sentence, a contract 
        shall not fail to be treated as a life insurance contract 
        solely because a qualified long-term care insurance contract is 
        a part of or a rider on such contract.''.
            (3) Expansion of tax-free exchanges of life insurance, 
        endowment, and annuity contracts for long-term care 
        contracts.--Subsection (a) of section 1035 of such Code 
        (relating to certain exchanges of insurance policies) is 
        amended--
                    (A) in paragraph (1) by inserting ``or for a 
                qualified long-term care insurance contract'' before 
                the semicolon at the end,
                    (B) in paragraph (2) by inserting ``, or (C) for a 
                qualified long-term care insurance contract'' before 
                the semicolon at the end, and
                    (C) in paragraph (3) by inserting ``or for a 
                qualified long-term care insurance contract'' before 
                the period at the end.
            (4) Tax-free exchanges of qualified long-term care 
        insurance contract.--Subsection (a) of section 1035 of such 
        Code (relating to certain exchanges of insurance policies) is 
        amended by striking ``or'' at the end of paragraph (2), by 
        striking the period at the end of paragraph (3) and inserting 
        ``; or'', and by inserting after paragraph (3) the following 
        new paragraph:
            ``(4) a qualified long-term care insurance contract for a 
        qualified long-term care insurance contract.''.
    (c) Treatment of Coverage Provided as Part of a Life Insurance or 
Annuity Contract.--Subsection (e) of section 7702B of such Code 
(relating to treatment of qualified long-term care insurance) is 
amended to read as follows:
    ``(e) Treatment of Coverage Provided as Part of a Life Insurance or 
Annuity Contract.--Except as otherwise provided in regulations 
prescribed by the Secretary, in the case of any long-term care 
insurance coverage (whether or not qualified) provided by a rider on or 
as part of a life insurance contract or an annuity contract--
            ``(1) In general.--This title shall apply as if the portion 
        of the contract providing such coverage is a separate contract.
            ``(2) Denial of deduction under section 213.--No deduction 
        shall be allowed under section 213(a) for any payment made for 
        coverage under a qualified long-term care insurance contract if 
        such payment is made as a charge against the cash surrender 
        value of a life insurance contract or the cash value of an 
        annuity contract.
            ``(3) Portion defined.--For purposes of this subsection, 
        the term `portion' means only the terms and benefits under a 
        life insurance contract or annuity contract that are in 
        addition to the terms and benefits under the contract without 
        regard to long-term care insurance coverage.
            ``(4) Annuity contracts to which paragraph (1) does not 
        apply.--For purposes of this subsection, none of the following 
        shall be treated as an annuity contract:
                    ``(A) A trust described in section 401(a) which is 
                exempt from tax under section 501(a).
                    ``(B) A contract--
                            ``(i) purchased by a trust described in 
                        subparagraph (A),
                            ``(ii) purchased as part of a plan 
                        described in section 403(a),
                            ``(iii) described in section 403(b),
                            ``(iv) provided for employees of a life 
                        insurance company under a plan described in 
                        section 818(a)(3), or
                            ``(v) from an individual retirement account 
                        or an individual retirement annuity.
                    ``(C) A contract purchased by an employer for the 
                benefit of the employee (or the employee's spouse).
        Any dividend described in section 404(k) which is received by a 
        participant or beneficiary shall, for purposes of this 
        paragraph, be treated as paid under a separate contract to 
        which subparagraph (B)(i) applies.''.
    (d) Information Reporting.--
            (1) Subpart B of part III of subchapter A of chapter 61 of 
        such Code (relating to information concerning transactions with 
        other persons) is amended by adding at the end the following 
        new section:

``SEC. 6050U. CHARGES OR PAYMENTS FOR QUALIFIED LONG-TERM CARE 
              INSURANCE CONTRACTS UNDER COMBINED ARRANGEMENTS.

    ``(a) Requirement of Reporting.--Any person who makes a charge 
against the cash value of an annuity contract, or the cash surrender 
value of a life insurance contract, which is excludible from gross 
income under section 72(e)(11) shall make a return, according to the 
forms or regulations prescribed by the Secretary, setting forth--
            ``(1) the amount of the aggregate of such charges against 
        each such contract for the calendar year,
            ``(2) the amount of the reduction in the investment in each 
        such contract by reason of such charges, and
            ``(3) the name, address, and TIN of the individual who is 
        the holder of each such contract.
    ``(b) Statements To Be Furnished to Persons With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each individual whose name is required 
to be set forth in such return a written statement showing--
            ``(1) the name, address, and phone number of the 
        information contact of the person making the payments, and
            ``(2) the information required to be shown on the return 
        with respect to such individual.
The written statement required under the preceding sentence shall be 
furnished to the individual on or before January 31 of the year 
following the calendar year for which the return under subsection (a) 
was required to be made.''.
            (2) Penalty for failure to file.--
                    (A) Return.--Subparagraph (B) of section 6724(d)(1) 
                of such Code is amended by striking ``or'' at the end 
                of clause (xvii), by striking ``and'' at the end of 
                clause (xviii) and inserting ``or'', and by adding at 
                the end the following new clause:
                            ``(xix) section 6050U (relating to charges 
                        or payments for qualified long-term care 
                        insurance contracts under combined 
                        arrangements), and''.
                    (B) Statement.--Paragraph (2) of section 6724(d) of 
                such Code is amended by striking ``or'' at the end of 
                subparagraph (AA), by striking the period at the end of 
                subparagraph (BB), and by inserting after subparagraph 
                (BB) the following new subparagraph:
                    ``(CC) section 6050U (relating to charges or 
                payments for qualified long-term care insurance 
                contracts under combined arrangements).''.
            (3) Clerical amendment.--The table of sections for subpart 
        B of part III of subchapter A of such chapter 61 of such Code 
        is amended by adding at the end the following new item:

``Sec. 6050U. Charges or payments for qualified long-term care 
                            insurance contracts under combined 
                            arrangements.''.
    (e) Treatment of Policy Acquisition Expenses.--Subsection (e) of 
section 848 of such Code (relating to classification of contracts) is 
amended by adding at the end the following new paragraph:
            ``(6) Treatment of certain qualified long-term care 
        insurance contract arrangements.--An annuity or life insurance 
        contract which includes a qualified long-term care insurance 
        contract as a part of or a rider on such annuity or life 
        insurance contract shall be treated as a specified insurance 
        contract not described in subparagraph (A) or (B) of subsection 
        (c)(1).''.
    (f) Technical Amendment.--Paragraph (1) of section 7702B(e) of such 
Code (as in effect before amendment by subsection (c)) is amended by 
striking ``section'' and inserting ``title''.
    (g) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        contracts issued after December 31, 1996, but only with respect 
        to taxable years beginning after December 31, 2009.
            (2) Tax-free exchanges.--The amendments made by subsection 
        (b) shall apply with respect to exchanges occurring after 
        December 31, 2009.
            (3) Information reporting.--The amendments made by 
        subsection (d) shall apply to charges made after December 31, 
        2009.
            (4) Policy acquisition expenses.--The amendment made by 
        subsection (e) shall apply to specified policy acquisition 
        expenses determined for taxable years beginning after December 
        31, 2009.
            (5) Technical amendment.--The amendment made by subsection 
        (f) shall take effect as if included in section 321(a) of the 
        Health Insurance Portability and Accountability Act of 1996.

SEC. 845. DISTRIBUTIONS FROM GOVERNMENTAL RETIREMENT PLANS FOR HEALTH 
              AND LONG-TERM CARE INSURANCE FOR PUBLIC SAFETY OFFICERS.

    (a) In General.--Section 402 of the Internal Revenue Code of 1986 
(relating to taxability of beneficiary of employees' trust) is amended 
by adding at the end the following new subsection:
    ``(l) Distributions From Governmental Plans for Health and Long-
Term Care Insurance.--
            ``(1) In general.--In the case of an employee who is an 
        eligible retired public safety officer who makes the election 
        described in paragraph (6) with respect to any taxable year of 
        such employee, gross income of such employee for such taxable 
        year does not include any distribution from an eligible 
        retirement plan to the extent that the aggregate amount of such 
        distributions does not exceed the amount paid by such employee 
        for qualified health insurance premiums of the employee, his 
        spouse, or dependents (as defined in section 152) for such 
        taxable year.
            ``(2) Limitation.--The amount which may be excluded from 
        gross income for the taxable year by reason of paragraph (1) 
        shall not exceed $3,000.
            ``(3) Distributions must otherwise be includible.--
                    ``(A) In general.--An amount shall be treated as a 
                distribution for purposes of paragraph (1) only to the 
                extent that such amount would be includible in gross 
                income without regard to paragraph (1).
                    ``(B) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which an 
                amount is treated as a distribution for purposes of 
                subparagraph (A), the aggregate amounts distributed 
                from an eligible retirement plan in a taxable year (up 
                to the amount excluded under paragraph (1)) shall be 
                treated as includible in gross income (without regard 
                to subparagraph (A)) to the extent that such amount 
                does not exceed the aggregate amount which would have 
                been so includible if all amounts distributed from all 
                eligible retirement plans were treated as 1 contract 
                for purposes of determining the inclusion of such 
                distribution under section 72. Proper adjustments shall 
                be made in applying section 72 to other distributions 
                in such taxable year and subsequent taxable years.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Eligible retirement plan.--For purposes of 
                paragraph (1), the term `eligible retirement plan' 
                means a governmental plan (within the meaning of 
                section 414(d)) which is described in clause (iii), 
                (iv), (v), or (vi) of subsection (c)(8)(B).
                    ``(B) Eligible retired public safety officer.--The 
                term `eligible retired public safety officer' means an 
                individual who, by reason of disability or attainment 
                of normal retirement age, is separated from service as 
                a public safety officer with the employer who maintains 
                the eligible retirement plan from which distributions 
                subject to paragraph (1) are made.
                    ``(C) Public safety officer.--The term `public 
                safety officer' shall have the same meaning given such 
                term by section 1204(9)(A) of the Omnibus Crime Control 
                and Safe Streets Act of 1968 (42 U.S.C. 3796b(9)(A)).
                    ``(D) Qualified health insurance premiums.--The 
                term `qualified health insurance premiums' means 
                premiums for coverage for the eligible retired public 
                safety officer, his spouse, and dependents, by an 
                accident or health insurance plan or qualified long-
                term care insurance contract (as defined in section 
                7702B(b)).
            ``(5) Special rules.--For purposes of this subsection--
                    ``(A) Direct payment to insurer required.--
                Paragraph (1) shall only apply to a distribution if 
                payment of the premiums is made directly to the 
                provider of the accident or health insurance plan or 
                qualified long-term care insurance contract by 
                deduction from a distribution from the eligible 
                retirement plan.
                    ``(B) Related plans treated as 1.--All eligible 
                retirement plans of an employer shall be treated as a 
                single plan.
            ``(6) Election described.--
                    ``(A) In general.--For purposes of paragraph (1), 
                an election is described in this paragraph if the 
                election is made by an employee after separation from 
                service with respect to amounts not distributed from an 
                eligible retirement plan to have amounts from such plan 
                distributed in order to pay for qualified health 
                insurance premiums.
                    ``(B) Special rule.--A plan shall not be treated as 
                violating the requirements of section 401, or as 
                engaging in a prohibited transaction for purposes of 
                section 503(b), merely because it provides for an 
                election with respect to amounts that are otherwise 
                distributable under the plan or merely because of a 
                distribution made pursuant to an election described in 
                subparagraph (A).
            ``(7) Coordination with medical expense deduction.--The 
        amounts excluded from gross income under paragraph (1) shall 
        not be taken into account under section 213.
            ``(8) Coordination with deduction for health insurance 
        costs of self-employed individuals.--The amounts excluded from 
        gross income under paragraph (1) shall not be taken into 
        account under section 162(l).''.
    (b) Conforming Amendments.--
            (1) Section 403(a) of such Code (relating to taxability of 
        beneficiary under a qualified annuity plan) is amended by 
        inserting after paragraph (1) the following new paragraph:
            ``(2) Special rule for health and long-term care 
        insurance.--To the extent provided in section 402(l), paragraph 
        (1) shall not apply to the amount distributed under the 
        contract which is otherwise includible in gross income under 
        this subsection.''.
            (2) Section 403(b) of such Code (relating to taxability of 
        beneficiary under annuity purchased by section 501(c)(3) 
        organization or public school) is amended by inserting after 
        paragraph (1) the following new paragraph:
            ``(2) Special rule for health and long-term care 
        insurance.--To the extent provided in section 402(l), paragraph 
        (1) shall not apply to the amount distributed under the 
        contract which is otherwise includible in gross income under 
        this subsection.''.
            (3) Section 457(a) of such Code (relating to year of 
        inclusion in gross income) is amended by adding at the end the 
        following new paragraph:
            ``(3) Special rule for health and long-term care 
        insurance.--In the case of a plan of an eligible employer 
        described in subsection (e)(1)(A), to the extent provided in 
        section 402(l), paragraph (1) shall not apply to amounts 
        otherwise includible in gross income under this subsection.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions in taxable years beginning after December 31, 
2006.

           Subtitle E--United States Tax Court Modernization

SEC. 851. COST-OF-LIVING ADJUSTMENTS FOR TAX COURT JUDICIAL SURVIVOR 
              ANNUITIES.

    (a) In General.--Subsection (s) of section 7448 of the Internal 
Revenue Code of 1986 (relating to annuities to surviving spouses and 
dependent children of judges) is amended to read as follows:
    ``(s) Increases in Survivor Annuities.--Each time that an increase 
is made under section 8340(b) of title 5, United States Code, in 
annuities payable under subchapter III of chapter 83 of that title, 
each annuity payable from the survivors annuity fund under this section 
shall be increased at the same time by the same percentage by which 
annuities are increased under such section 8340(b).''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to increases made under section 8340(b) of title 5, United 
States Code, in annuities payable under subchapter III of chapter 83 of 
that title, taking effect after the date of the enactment of this Act.

SEC. 852. COST OF LIFE INSURANCE COVERAGE FOR TAX COURT JUDGES AGE 65 
              OR OVER.

    Section 7472 of the Internal Revenue Code of 1986 (relating to 
expenditures) is amended by inserting after the first sentence the 
following new sentence: ``Notwithstanding any other provision of law, 
the Tax Court is authorized to pay on behalf of its judges, age 65 or 
over, any increase in the cost of Federal Employees' Group Life 
Insurance imposed after the date of the enactment of the Pension 
Protection Act of 2006, including any expenses generated by such 
payments, as authorized by the chief judge in a manner consistent with 
such payments authorized by the Judicial Conference of the United 
States pursuant to section 604(a)(5) of title 28, United States Code.''

SEC. 853. PARTICIPATION OF TAX COURT JUDGES IN THE THRIFT SAVINGS PLAN.

    (a) In General.--Section 7447 of the Internal Revenue Code of 1986 
(relating to retirement of judges) is amended by adding at the end the 
following new subsection:
    ``(j) Thrift Savings Plan.--
            ``(1) Election to contribute.--
                    ``(A) In general.--A judge of the Tax Court may 
                elect to contribute to the Thrift Savings Fund 
                established by section 8437 of title 5, United States 
                Code.
                    ``(B) Period of election.--An election may be made 
                under this paragraph only during a period provided 
                under section 8432(b) of title 5, United States Code, 
                for individuals subject to chapter 84 of such title.
            ``(2) Applicability of title 5 provisions.--Except as 
        otherwise provided in this subsection, the provisions of 
        subchapters III and VII of chapter 84 of title 5, United States 
        Code, shall apply with respect to a judge who makes an election 
        under paragraph (1).
            ``(3) Special rules.--
                    ``(A) Amount contributed.--The amount contributed 
                by a judge to the Thrift Savings Fund in any pay period 
                shall not exceed the maximum percentage of such judge's 
                basic pay for such period as allowable under section 
                8440f of title 5, United States Code. Basic pay does 
                not include any retired pay paid pursuant to this 
                section.
                    ``(B) Contributions for benefit of judge.--No 
                contributions may be made for the benefit of a judge 
                under section 8432(c) of title 5, United States Code.
                    ``(C) Applicability of section 8433(b) of title 5 
                whether or not judge retires.--Section 8433(b) of title 
                5, United States Code, applies with respect to a judge 
                who makes an election under paragraph (1) and who 
                either--
                            ``(i) retires under subsection (b), or
                            ``(ii) ceases to serve as a judge of the 
                        Tax Court but does not retire under subsection 
                        (b).
                Retirement under subsection (b) is a separation from 
                service for purposes of subchapters III and VII of 
                chapter 84 of that title.
                    ``(D) Applicability of section 8351(b)(5) of title 
                5.--The provisions of section 8351(b)(5) of title 5, 
                United States Code, shall apply with respect to a judge 
                who makes an election under paragraph (1).
                    ``(E) Exception.--Notwithstanding subparagraph (C), 
                if any judge retires under this section, or resigns 
                without having met the age and service requirements set 
                forth under subsection (b)(2), and such judge's 
                nonforfeitable account balance is less than an amount 
                that the Executive Director of the Federal Retirement 
                Thrift Investment Board prescribes by regulation, the 
                Executive Director shall pay the nonforfeitable account 
                balance to the participant in a single payment.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act, except that United 
States Tax Court judges may only begin to participate in the Thrift 
Savings Plan at the next open season beginning after such date.

SEC. 854. ANNUITIES TO SURVIVING SPOUSES AND DEPENDENT CHILDREN OF 
              SPECIAL TRIAL JUDGES OF THE TAX COURT.

    (a) Definitions.--Section 7448(a) of the Internal Revenue Code of 
1986 (relating to definitions), as amended by this Act, is amended by 
redesignating paragraphs (5), (6), (7), and (8) as paragraphs (7), (8), 
(9), and (10), respectively, and by inserting after paragraph (4) the 
following new paragraphs:
            ``(5) The term `special trial judge' means a judicial 
        officer appointed pursuant to section 7443A, including any 
        individual receiving an annuity under chapters 83 or 84 of 
        title 5, United States Code, whether or not performing judicial 
        duties under section 7443B.
            ``(6) The term `special trial judge's salary' means the 
        salary of a special trial judge received under section 
        7443A(d), any amount received as an annuity under chapters 83 
        or 84 of title 5, United States Code, and compensation received 
        under section 7443B.''.
    (b) Election.--Subsection (b) of section 7448 of such Code 
(relating to annuities to surviving spouses and dependent children of 
judges) is amended--
            (1) by striking the subsection heading and inserting the 
        following:
    ``(b) Election.--
            ``(1) Judges.--'',
            (2) by moving the text 2 ems to the right, and
            (3) by adding at the end the following new paragraph:
            ``(2) Special trial judges.--Any special trial judge may by 
        written election filed with the chief judge bring himself or 
        herself within the purview of this section. Such election shall 
        be filed not later than the later of 6 months after--
                    ``(A) 6 months after the date of the enactment of 
                this paragraph,
                    ``(B) the date the judge takes office, or
                    ``(C) the date the judge marries.''.
    (c) Conforming Amendments.--
            (1) The heading of section 7448 of such Code is amended by 
        inserting ``and special trial judges'' after ``judges''.
            (2) The item relating to section 7448 in the table of 
        sections for part I of subchapter C of chapter 76 of such Code 
        is amended by inserting ``and special trial judges'' after 
        ``judges''.
            (3) Subsections (c)(1), (d), (f), (g), (h), (j), (m), (n), 
        and (u) of section 7448 of such Code, as amended by this Act, 
        are each amended--
                    (A) by inserting ``or special trial judge'' after 
                ``judge'' each place it appears other than in the 
                phrase ``chief judge'', and
                    (B) by inserting ``or special trial judge's'' after 
                ``judge's'' each place it appears.
            (4) Section 7448(c) of such Code is amended--
                    (A) in paragraph (1), by striking ``Tax Court 
                judges'' and inserting ``Tax Court judicial officers'',
                    (B) in paragraph (2)--
                            (i) in subparagraph (A), by inserting ``and 
                        section 7443A(d)'' after ``(a)(4)'', and
                            (ii) in subparagraph (B), by striking 
                        ``subsection (a)(4)'' and inserting 
                        ``subsections (a)(4) and (a)(6)''.
            (5) Section 7448(j)(1) of such Code is amended--
                    (A) in subparagraph (A), by striking ``service or 
                retired'' and inserting ``service, retired'', and by 
                inserting ``, or receiving any annuity under chapters 
                83 or 84 of title 5, United States Code,'' after 
                ``section 7447'', and
                    (B) in the last sentence, by striking ``subsections 
                (a) (6) and (7)'' and inserting ``paragraphs (8) and 
                (9) of subsection (a)''.
            (6) Section 7448(m)(1) of such Code, as amended by this 
        Act, is amended by inserting ``or any annuity under chapters 83 
        or 84 of title 5, United States Code'' after ``7447(d)''.
            (7) Section 7448(n) of such Code is amended by inserting 
        ``his years of service pursuant to any appointment under 
        section 7443A,'' after ``of the Tax Court,''.
            (8) Section 3121(b)(5)(E) of such Code is amended by 
        inserting ``or special trial judge'' before ``of the United 
        States Tax Court''.
            (9) Section 210(a)(5)(E) of the Social Security Act is 
        amended by inserting ``or special trial judge'' before ``of the 
        United States Tax Court''.

SEC. 855. JURISDICTION OF TAX COURT OVER COLLECTION DUE PROCESS CASES.

    (a) In General.--Paragraph (1) of section 6330(d) of the Internal 
Revenue Code of 1986 (relating to proceeding after hearing) is amended 
to read as follows:
            ``(1) Judicial review of determination.--The person may, 
        within 30 days of a determination under this section, appeal 
        such determination to the Tax Court (and the Tax Court shall 
        have jurisdiction with respect to such matter).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to determinations made after the date which is 60 days after the date 
of the enactment of this Act.

SEC. 856. PROVISIONS FOR RECALL.

    (a) In General.--Part I of subchapter C of chapter 76 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
7443A the following new section:

``SEC. 7443B. RECALL OF SPECIAL TRIAL JUDGES OF THE TAX COURT.

    ``(a) Recalling of Retired Special Trial Judges.--Any individual 
who has retired pursuant to the applicable provisions of title 5, 
United States Code, upon reaching the age and service requirements 
established therein, may at or after retirement be called upon by the 
chief judge of the Tax Court to perform such judicial duties with the 
Tax Court as may be requested of such individual for any period or 
periods specified by the chief judge; except that in the case of any 
such individual--
            ``(1) the aggregate of such periods in any 1 calendar year 
        shall not (without such individual's consent) exceed 90 
        calendar days, and
            ``(2) such individual shall be relieved of performing such 
        duties during any period in which illness or disability 
        precludes the performance of such duties.
Any act, or failure to act, by an individual performing judicial duties 
pursuant to this subsection shall have the same force and effect as if 
it were the act (or failure to act) of a special trial judge of the Tax 
Court.
    ``(b) Compensation.--For the year in which a period of recall 
occurs, the special trial judge shall receive, in addition to the 
annuity provided under the applicable provisions of title 5, United 
States Code, an amount equal to the difference between that annuity and 
the current salary of the office to which the special trial judge is 
recalled.
    ``(c) Rulemaking Authority.--The provisions of this section may be 
implemented under such rules as may be promulgated by the Tax Court.''
    (b) Conforming Amendment.--The table of sections for part I of 
subchapter C of chapter 76 of such Code is amended by inserting after 
the item relating to section 7443A the following new item:

``Sec. 7443B. Recall of special trial judges of the Tax Court.''.

SEC. 857. AUTHORITY FOR SPECIAL TRIAL JUDGES TO HEAR AND DECIDE CERTAIN 
              EMPLOYMENT STATUS CASES.

    (a) In General.--Section 7443A(b) of the Internal Revenue Code of 
1986 (relating to proceedings which may be assigned to special trial 
judges) is amended by striking ``and'' at the end of paragraph (4), by 
redesignating paragraph (5) as paragraph (6), and by inserting after 
paragraph (4) the following new paragraph:
            ``(5) any proceeding under section 7436(c), and''.
    (b) Conforming Amendment.--Section 7443A(c) of such Code is amended 
by striking ``or (4)'' and inserting ``(4), or (5)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to any proceeding under section 7436(c) of the Internal Revenue 
Code of 1986 with respect to which a decision has not become final (as 
determined under section 7481 of such Code) before the date of the 
enactment of this Act.

SEC. 858. CONFIRMATION OF AUTHORITY OF TAX COURT TO APPLY DOCTRINE OF 
              EQUITABLE RECOUPMENT.

    (a) Confirmation of Authority of Tax Court To Apply Doctrine of 
Equitable Recoupment.--Section 6214(b) of the Internal Revenue Code of 
1986 (relating to jurisdiction over other years and quarters) is 
amended by adding at the end the following new sentence: 
``Notwithstanding the preceding sentence, the Tax Court may apply the 
doctrine of equitable recoupment to the same extent that it is 
available in civil tax cases before the district courts of the United 
States and the United States Court of Federal Claims.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to any action or proceeding in the United States Tax Court with respect 
to which a decision has not become final (as determined under section 
7481 of the Internal Revenue Code of 1986) as of the date of the 
enactment of this Act.

SEC. 859. TAX COURT FILING FEE IN ALL CASES COMMENCED BY FILING 
              PETITION.

    (a) In General.--Section 7451 of the Internal Revenue Code of 1986 
(relating to fee for filing a Tax Court petition) is amended by 
striking all that follows ``petition'' and inserting a period.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 860. EXPANDED USE OF TAX COURT PRACTICE FEE FOR PRO SE TAXPAYERS.

    (a) In General.--Section 7475(b) of the Internal Revenue Code of 
1986 (relating to use of fees) is amended by inserting before the 
period at the end ``and to provide services to pro se taxpayers''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

                      Subtitle F--Other Provisions

SEC. 861. EXTENSION TO ALL GOVERNMENTAL PLANS OF CURRENT MORATORIUM ON 
              APPLICATION OF CERTAIN NONDISCRIMINATION RULES APPLICABLE 
              TO STATE AND LOCAL PLANS.

    (a) In General.--
            (1) Subparagraph (G) of section 401(a)(5) and subparagraph 
        (G) of section 401(a)(26) of the Internal Revenue Code of 1986 
        are each amended by striking ``section 414(d))'' and all that 
        follows and inserting ``section 414(d)).''.
            (2) Subparagraph (G) of section 401(k)(3) of such Code and 
        paragraph (2) of section 1505(d) of the Taxpayer Relief Act of 
        1997 (Public Law 105-34; 111 Stat. 1063) are each amended by 
        striking ``maintained by a State or local government or 
        political subdivision thereof (or agency or instrumentality 
        thereof)''.
    (b) Conforming Amendments.--
            (1) The heading of subparagraph (G) of section 401(a)(5) of 
        the Internal Revenue Code of 1986 is amended by striking 
        ``State and local governmental'' and inserting 
        ``Governmental''.
            (2) The heading of subparagraph (G) of section 401(a)(26) 
        of such Code is amended by striking ``Exception for state and 
        local'' and inserting ``Exception for''.
            (3) Section 401(k)(3)(G) of such Code is amended by 
        inserting ``Governmental plan.--'' after ``(G)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to any year beginning after the date of the enactment of this 
Act.

SEC. 862. ELIMINATION OF AGGREGATE LIMIT FOR USAGE OF EXCESS FUNDS FROM 
              BLACK LUNG DISABILITY TRUSTS.

    (a) In General.--So much of section 501(c)(21)(C) of the Internal 
Revenue Code of 1986 (relating to black lung disability trusts) as 
precedes the last sentence is amended to read as follows:
                    ``(C) Payments described in subparagraph (A)(i)(IV) 
                may be made from such trust during a taxable year only 
                to the extent that the aggregate amount of such 
                payments during such taxable year does not exceed the 
                excess (if any), as of the close of the preceding 
                taxable year, of--
                            ``(i) the fair market value of the assets 
                        of the trust, over
                            ``(ii) 110 percent of the present value of 
                        the liability described in subparagraph 
                        (A)(i)(I) of such person.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.

SEC. 863. TREATMENT OF DEATH BENEFITS FROM CORPORATE-OWNED LIFE 
              INSURANCE.

    (a) In General.--Section 101 of the Internal Revenue Code of 1986 
(relating to certain death benefits) is amended by adding at the end 
the following new subsection:
    ``(j) Treatment of Certain Employer-Owned Life Insurance 
Contracts.--
            ``(1) General rule.--In the case of an employer-owned life 
        insurance contract, the amount excluded from gross income of an 
        applicable policyholder by reason of paragraph (1) of 
        subsection (a) shall not exceed an amount equal to the sum of 
        the premiums and other amounts paid by the policyholder for the 
        contract.
            ``(2) Exceptions.--In the case of an employer-owned life 
        insurance contract with respect to which the notice and consent 
        requirements of paragraph (4) are met, paragraph (1) shall not 
        apply to any of the following:
                    ``(A) Exceptions based on insured's status.--Any 
                amount received by reason of the death of an insured 
                who, with respect to an applicable policyholder--
                            ``(i) was an employee at any time during 
                        the 12-month period before the insured's death, 
                        or
                            ``(ii) is, at the time the contract is 
                        issued--
                                    ``(I) a director,
                                    ``(II) a highly compensated 
                                employee within the meaning of section 
                                414(q) (without regard to paragraph 
                                (1)(B)(ii) thereof), or
                                    ``(III) a highly compensated 
                                individual within the meaning of 
                                section 105(h)(5), except that `35 
                                percent' shall be substituted for `25 
                                percent' in subparagraph (C) thereof.
                    ``(B) Exception for amounts paid to insured's 
                heirs.--Any amount received by reason of the death of 
                an insured to the extent--
                            ``(i) the amount is paid to a member of the 
                        family (within the meaning of section 
                        267(c)(4)) of the insured, any individual who 
                        is the designated beneficiary of the insured 
                        under the contract (other than the applicable 
                        policyholder), a trust established for the 
                        benefit of any such member of the family or 
                        designated beneficiary, or the estate of the 
                        insured, or
                            ``(ii) the amount is used to purchase an 
                        equity (or capital or profits) interest in the 
                        applicable policyholder from any person 
                        described in clause (i).
            ``(3) Employer-owned life insurance contract.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `employer-owned life insurance contract' means 
                a life insurance contract which--
                            ``(i) is owned by a person engaged in a 
                        trade or business and under which such person 
                        (or a related person described in subparagraph 
                        (B)(ii)) is directly or indirectly a 
                        beneficiary under the contract, and
                            ``(ii) covers the life of an insured who is 
                        an employee with respect to the trade or 
                        business of the applicable policyholder on the 
                        date the contract is issued.
                For purposes of the preceding sentence, if coverage for 
                each insured under a master contract is treated as a 
                separate contract for purposes of sections 817(h), 
                7702, and 7702A, coverage for each such insured shall 
                be treated as a separate contract.
                    ``(B) Applicable policyholder.--For purposes of 
                this subsection--
                            ``(i) In general.--The term `applicable 
                        policyholder' means, with respect to any 
                        employer-owned life insurance contract, the 
                        person described in subparagraph (A)(i) which 
                        owns the contract.
                            ``(ii) Related persons.--The term 
                        `applicable policyholder' includes any person 
                        which--
                                    ``(I) bears a relationship to the 
                                person described in clause (i) which is 
                                specified in section 267(b) or 
                                707(b)(1), or
                                    ``(II) is engaged in trades or 
                                businesses with such person which are 
                                under common control (within the 
                                meaning of subsection (a) or (b) of 
                                section 52).
            ``(4) Notice and consent requirements.--The notice and 
        consent requirements of this paragraph are met if, before the 
        issuance of the contract, the employee--
                    ``(A) is notified in writing that the applicable 
                policyholder intends to insure the employee's life and 
                the maximum face amount for which the employee could be 
                insured at the time the contract was issued,
                    ``(B) provides written consent to being insured 
                under the contract and that such coverage may continue 
                after the insured terminates employment, and
                    ``(C) is informed in writing that an applicable 
                policyholder will be a beneficiary of any proceeds 
                payable upon the death of the employee.
            ``(5) Definitions.--For purposes of this subsection--
                    ``(A) Employee.--The term `employee' includes an 
                officer, director, and highly compensated employee 
                (within the meaning of section 414(q)).
                    ``(B) Insured.--The term `insured' means, with 
                respect to an employer-owned life insurance contract, 
                an individual covered by the contract who is a United 
                States citizen or resident. In the case of a contract 
                covering the joint lives of 2 individuals, references 
                to an insured include both of the individuals.''.
    (b) Reporting Requirements.--Subpart A of part III of subchapter A 
of chapter 61 of the Internal Revenue Code of 1986 (relating to 
information concerning persons subject to special provisions) is 
amended by inserting after section 6039H the following new section:

``SEC. 6039I. RETURNS AND RECORDS WITH RESPECT TO EMPLOYER-OWNED LIFE 
              INSURANCE CONTRACTS.

    ``(a) In General.--Every applicable policyholder owning 1 or more 
employer-owned life insurance contracts issued after the date of the 
enactment of this section shall file a return (at such time and in such 
manner as the Secretary shall by regulations prescribe) showing for 
each year such contracts are owned--
            ``(1) the number of employees of the applicable 
        policyholder at the end of the year,
            ``(2) the number of such employees insured under such 
        contracts at the end of the year,
            ``(3) the total amount of insurance in force at the end of 
        the year under such contracts,
            ``(4) the name, address, and taxpayer identification number 
        of the applicable policyholder and the type of business in 
        which the policyholder is engaged, and
            ``(5) that the applicable policyholder has a valid consent 
        for each insured employee (or, if all such consents are not 
        obtained, the number of insured employees for whom such consent 
        was not obtained).
    ``(b) Recordkeeping Requirement.--Each applicable policyholder 
owning 1 or more employer-owned life insurance contracts during any 
year shall keep such records as may be necessary for purposes of 
determining whether the requirements of this section and section 101(j) 
are met.
    ``(c) Definitions.--Any term used in this section which is used in 
section 101(j) shall have the same meaning given such term by section 
101(j).''.
    (c) Conforming Amendments.--
            (1) Paragraph (1) of section 101(a) of the Internal Revenue 
        Code of 1986 is amended by striking ``and subsection (f)'' and 
        inserting ``subsection (f), and subsection (j)''.
            (2) The table of sections for subpart A of part III of 
        subchapter A of chapter 61 of such Code is amended by inserting 
        after the item relating to section 6039H the following new 
        item:

``Sec. 6039I. Returns and records with respect to employer-owned life 
                            insurance contracts.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to life insurance contracts issued after the date of the 
enactment of this Act, except for a contract issued after such date 
pursuant to an exchange described in section 1035 of the Internal 
Revenue Code of 1986 for a contract issued on or prior to that date. 
For purposes of the preceding sentence, any material increase in the 
death benefit or other material change shall cause the contract to be 
treated as a new contract except that, in the case of a master contract 
(within the meaning of section 264(f)(4)(E) of such Code), the addition 
of covered lives shall be treated as a new contract only with respect 
to such additional covered lives.

SEC. 864. TREATMENT OF TEST ROOM SUPERVISORS AND PROCTORS WHO ASSIST IN 
              THE ADMINISTRATION OF COLLEGE ENTRANCE AND PLACEMENT 
              EXAMS.

    (a) In General.--Section 530 of the Revenue Reconciliation Act of 
1978 is amended by adding at the end the following new subsection:
    ``(f) Treatment of Test Room Supervisors and Proctors Who Assist in 
the Administration of College Entrance and Placement Exams.--
            ``(1) In general.--In the case of an individual described 
        in paragraph (2) who is providing services as a test proctor or 
        room supervisor by assisting in the administration of college 
        entrance or placement examinations, this section shall be 
        applied to such services performed after December 31, 2006 (and 
        remuneration paid for such services) without regard to 
        subsection (a)(3) thereof.
            ``(2) Applicability.--An individual is described in this 
        paragraph if the individual--
                    ``(A) is providing the services described in 
                subsection (a) to an organization described in section 
                501(c), and exempt from tax under section 501(a), of 
                the Internal Revenue Code of 1986, and
                    ``(B) is not otherwise treated as an employee of 
                such organization for purposes of subtitle C of such 
                Code (relating to employment taxes).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to remuneration for services performed after December 31, 2006.

SEC. 865. GRANDFATHER RULE FOR CHURCH PLANS WHICH SELF-ANNUITIZE.

    (a) In General.--In the case of any plan year ending after the date 
of the enactment of this Act, annuity payments provided with respect to 
any account maintained for a participant or beneficiary under a 
qualified church plan shall not fail to satisfy the requirements of 
section 401(a)(9) of the Internal Revenue Code of 1986 merely because 
the payments are not made under an annuity contract purchased from an 
insurance company if such payments would not fail such requirements if 
provided with respect to a retirement income account described in 
section 403(b)(9) of such Code.
    (b) Qualified Church Plan.--For purposes of this section, the term 
``qualified church plan'' means any money purchase pension plan 
described in section 401(a) of such Code which--
            (1) is a church plan (as defined in section 414(e) of such 
        Code) with respect to which the election provided by section 
        410(d) of such Code has not been made, and
            (2) was in existence on April 17, 2002.

SEC. 866. EXEMPTION FOR INCOME FROM LEVERAGED REAL ESTATE HELD BY 
              CHURCH PLANS.

    (a) In General.--Section 514(c)(9)(C) of the Internal Revenue Code 
of 1986 is amended by striking ``or'' after clause (ii), by striking 
the period at the end of clause (iii) and inserting ``; or'', and by 
inserting after clause (iii) the following:
                            ``(iv) a retirement income account 
                        described in section 403(b)(9).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning on or after the date of enactment of 
this Act.

SEC. 867. CHURCH PLAN RULE.

    (a) In General.--Paragraph (11) of section 415(b) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following: 
``Subparagraph (B) of paragraph (1) shall not apply to a plan 
maintained by an organization described in section 3121(w)(3)(A) except 
with respect to highly compensated benefits. For purposes of this 
paragraph, the term `highly compensated benefits' means any benefits 
accrued for an employee in any year on or after the first year in which 
such employee is a highly compensated employee (as defined in section 
414(q)) of the organization described in section 3121(w)(3)(A). For 
purposes of applying paragraph (1)(B) to highly compensated benefits, 
all benefits of the employee otherwise taken into account (without 
regard to this paragraph) shall be taken into account.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2006.

SEC. 868. GRATUITOUS TRANSFER FOR BENEFITS OF EMPLOYEES.

    (a) In General.--Subparagraph (E) of section 664(g)(3) of the 
Internal Revenue Code of 1986 is amended by inserting ``(determined on 
the basis of fair market value of securities when allocated to 
participants)'' after ``paragraph (7)''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

 TITLE IX--INCREASE IN PENSION PLAN DIVERSIFICATION AND PARTICIPATION 
                      AND OTHER PENSION PROVISIONS

SEC. 901. DEFINED CONTRIBUTION PLANS REQUIRED TO PROVIDE EMPLOYEES WITH 
              FREEDOM TO INVEST THEIR PLAN ASSETS.

    (a) Amendments of Internal Revenue Code.--
            (1) Qualification requirement.--Section 401(a) of the 
        Internal Revenue Code of 1986 (relating to qualified pension, 
        profit-sharing, and stock bonus plans) is amended by inserting 
        after paragraph (34) the following new paragraph:
            ``(35) Diversification requirements for certain defined 
        contribution plans.--
                    ``(A) In general.--A trust which is part of an 
                applicable defined contribution plan shall not be 
                treated as a qualified trust unless the plan meets the 
                diversification requirements of subparagraphs (B), (C), 
                and (D).
                    ``(B) Employee contributions and elective deferrals 
                invested in employer securities.--In the case of the 
                portion of an applicable individual's account 
                attributable to employee contributions and elective 
                deferrals which is invested in employer securities, a 
                plan meets the requirements of this subparagraph if the 
                applicable individual may elect to direct the plan to 
                divest any such securities and to reinvest an 
                equivalent amount in other investment options meeting 
                the requirements of subparagraph (D).
                    ``(C) Employer contributions invested in employer 
                securities.--In the case of the portion of the account 
                attributable to employer contributions other than 
                elective deferrals which is invested in employer 
                securities, a plan meets the requirements of this 
                subparagraph if each applicable individual who--
                            ``(i) is a participant who has completed at 
                        least 3 years of service, or
                            ``(ii) is a beneficiary of a participant 
                        described in clause (i) or of a deceased 
                        participant,
                may elect to direct the plan to divest any such 
                securities and to reinvest an equivalent amount in 
                other investment options meeting the requirements of 
                subparagraph (D).
                    ``(D) Investment options.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if the plan offers not 
                        less than 3 investment options, other than 
                        employer securities, to which an applicable 
                        individual may direct the proceeds from the 
                        divestment of employer securities pursuant to 
                        this paragraph, each of which is diversified 
                        and has materially different risk and return 
                        characteristics.
                            ``(ii) Treatment of certain restrictions 
                        and conditions.--
                                    ``(I) Time for making investment 
                                choices.--A plan shall not be treated 
                                as failing to meet the requirements of 
                                this subparagraph merely because the 
                                plan limits the time for divestment and 
                                reinvestment to periodic, reasonable 
                                opportunities occurring no less 
                                frequently than quarterly.
                                    ``(II) Certain restrictions and 
                                conditions not allowed.--Except as 
                                provided in regulations, a plan shall 
                                not meet the requirements of this 
                                subparagraph if the plan imposes 
                                restrictions or conditions with respect 
                                to the investment of employer 
                                securities which are not imposed on the 
                                investment of other assets of the plan. 
                                This subclause shall not apply to any 
                                restrictions or conditions imposed by 
                                reason of the application of securities 
                                laws.
                    ``(E) Applicable defined contribution plan.--For 
                purposes of this paragraph--
                            ``(i) In general.--The term `applicable 
                        defined contribution plan' means any defined 
                        contribution plan which holds any publicly 
                        traded employer securities.
                            ``(ii) Exception for certain esops.--Such 
                        term does not include an employee stock 
                        ownership plan if--
                                    ``(I) there are no contributions to 
                                such plan (or earnings thereunder) 
                                which are held within such plan and are 
                                subject to subsection (k) or (m), and
                                    ``(II) such plan is a separate plan 
                                for purposes of section 414(l) with 
                                respect to any other defined benefit 
                                plan or defined contribution plan 
                                maintained by the same employer or 
                                employers.
                            ``(iii) Exception for one participant 
                        plans.--Such term does not include a one-
                        participant retirement plan.
                            ``(iv) One-participant retirement plan.--
                        For purposes of clause (iii), the term `one-
                        participant retirement plan' means a retirement 
                        plan that--
                                    ``(I) on the first day of the plan 
                                year covered only one individual (or 
                                the individual and the individual's 
                                spouse) and the individual owned 100 
                                percent of the plan sponsor (whether or 
                                not incorporated), or covered only one 
                                or more partners (or partners and their 
                                spouses) in the plan sponsor,
                                    ``(II) meets the minimum coverage 
                                requirements of section 410(b) without 
                                being combined with any other plan of 
                                the business that covers the employees 
                                of the business,
                                    ``(III) does not provide benefits 
                                to anyone except the individual (and 
                                the individual's spouse) or the 
                                partners (and their spouses),
                                    ``(IV) does not cover a business 
                                that is a member of an affiliated 
                                service group, a controlled group of 
                                corporations, or a group of businesses 
                                under common control, and
                                    ``(V) does not cover a business 
                                that uses the services of leased 
                                employees (within the meaning of 
                                section 414(n)).
                        For purposes of this clause, the term `partner' 
                        includes a 2-percent shareholder (as defined in 
                        section 1372(b)) of an S corporation.
                    ``(F) Certain plans treated as holding publicly 
                traded employer securities.--
                            ``(i) In general.--Except as provided in 
                        regulations or in clause (ii), a plan holding 
                        employer securities which are not publicly 
                        traded employer securities shall be treated as 
                        holding publicly traded employer securities if 
                        any employer corporation, or any member of a 
                        controlled group of corporations which includes 
                        such employer corporation, has issued a class 
                        of stock which is a publicly traded employer 
                        security.
                            ``(ii) Exception for certain controlled 
                        groups with publicly traded securities.--Clause 
                        (i) shall not apply to a plan if--
                                    ``(I) no employer corporation, or 
                                parent corporation of an employer 
                                corporation, has issued any publicly 
                                traded employer security, and
                                    ``(II) no employer corporation, or 
                                parent corporation of an employer 
                                corporation, has issued any special 
                                class of stock which grants particular 
                                rights to, or bears particular risks 
                                for, the holder or issuer with respect 
                                to any corporation described in clause 
                                (i) which has issued any publicly 
                                traded employer security.
                            ``(iii) Definitions.--For purposes of this 
                        subparagraph, the term--
                                    ``(I) `controlled group of 
                                corporations' has the meaning given 
                                such term by section 1563(a), except 
                                that `50 percent' shall be substituted 
                                for `80 percent' each place it appears,
                                    ``(II) `employer corporation' means 
                                a corporation which is an employer 
                                maintaining the plan, and
                                    ``(III) `parent corporation' has 
                                the meaning given such term by section 
                                424(e).
                    ``(G) Other definitions.--For purposes of this 
                paragraph--
                            ``(i) Applicable individual.--The term 
                        `applicable individual' means--
                                    ``(I) any participant in the plan, 
                                and
                                    ``(II) any beneficiary who has an 
                                account under the plan with respect to 
                                which the beneficiary is entitled to 
                                exercise the rights of a participant.
                            ``(ii) Elective deferral.--The term 
                        `elective deferral' means an employer 
                        contribution described in section 402(g)(3)(A).
                            ``(iii) Employer security.--The term 
                        `employer security' has the meaning given such 
                        term by section 407(d)(1) of the Employee 
                        Retirement Income Security Act of 1974.
                            ``(iv) Employee stock ownership plan.--The 
                        term `employee stock ownership plan' has the 
                        meaning given such term by section 4975(e)(7).
                            ``(v) Publicly traded employer 
                        securities.--The term `publicly traded employer 
                        securities' means employer securities which are 
                        readily tradable on an established securities 
                        market.
                            ``(vi) Year of service.--The term `year of 
                        service' has the meaning given such term by 
                        section 411(a)(5).
                    ``(H) Transition rule for securities attributable 
                to employer contributions.--
                            ``(i) Rules phased in over 3 years.--
                                    ``(I) In general.--In the case of 
                                the portion of an account to which 
                                subparagraph (C) applies and which 
                                consists of employer securities 
                                acquired in a plan year beginning 
                                before January 1, 2007, subparagraph 
                                (C) shall only apply to the applicable 
                                percentage of such securities. This 
                                subparagraph shall be applied 
                                separately with respect to each class 
                                of securities.
                                    ``(II) Exception for certain 
                                participants aged 55 or over.--
                                Subclause (I) shall not apply to an 
                                applicable individual who is a 
                                participant who has attained age 55 and 
                                completed at least 3 years of service 
                                before the first plan year beginning 
                                after December 31, 2005.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage shall 
                        be determined as follows:

``Plan year to which                                     The applicable
   subparagraph (C) applies:                             percentage is:
        1st....................................................     33 
        2d.....................................................     66 
        3d and following....................................... 100.''.
            (2) Conforming amendments.--
                    (A) Section 401(a)(28)(B) of such Code (relating to 
                additional requirements relating to employee stock 
                ownership plans) is amended by adding at the end the 
                following new clause:
                            ``(v) Exception.--This subparagraph shall 
                        not apply to an applicable defined contribution 
                        plan (as defined in paragraph (35)(E)).''
                    (B) Section 409(h)(7) of such Code is amended by 
                inserting ``or subparagraph (B) or (C) of section 
                401(a)(35)'' before the period at the end.
                    (C) Section 4980(c)(3)(A) of such Code is amended 
                by striking ``if--'' and all that follows and inserting 
                ``if the requirements of subparagraphs (B), (C), and 
                (D) are met.''
    (b) Amendments of ERISA.--
            (1) In general.--Section 204 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1054) is amended by 
        redesignating subsection (j) as subsection (k) and by inserting 
        after subsection (i) the following new subsection:
    ``(j) Diversification Requirements for Certain Individual Account 
Plans.--
            ``(1) In general.--An applicable individual account plan 
        shall meet the diversification requirements of paragraphs (2), 
        (3), and (4).
            ``(2) Employee contributions and elective deferrals 
        invested in employer securities.--In the case of the portion of 
        an applicable individual's account attributable to employee 
        contributions and elective deferrals which is invested in 
        employer securities, a plan meets the requirements of this 
        paragraph if the applicable individual may elect to direct the 
        plan to divest any such securities and to reinvest an 
        equivalent amount in other investment options meeting the 
        requirements of paragraph (4).
            ``(3) Employer contributions invested in employer 
        securities.--In the case of the portion of the account 
        attributable to employer contributions other than elective 
        deferrals which is invested in employer securities, a plan 
        meets the requirements of this paragraph if each applicable 
        individual who--
                    ``(A) is a participant who has completed at least 3 
                years of service, or
                    ``(B) is a beneficiary of a participant described 
                in subparagraph (A) or of a deceased participant,
        may elect to direct the plan to divest any such securities and 
        to reinvest an equivalent amount in other investment options 
        meeting the requirements of paragraph (4).
            ``(4) Investment options.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if the plan offers not less than 3 
                investment options, other than employer securities, to 
                which an applicable individual may direct the proceeds 
                from the divestment of employer securities pursuant to 
                this subsection, each of which is diversified and has 
                materially different risk and return characteristics.
                    ``(B) Treatment of certain restrictions and 
                conditions.--
                            ``(i) Time for making investment choices.--
                        A plan shall not be treated as failing to meet 
                        the requirements of this paragraph merely 
                        because the plan limits the time for divestment 
                        and reinvestment to periodic, reasonable 
                        opportunities occurring no less frequently than 
                        quarterly.
                            ``(ii) Certain restrictions and conditions 
                        not allowed.--Except as provided in 
                        regulations, a plan shall not meet the 
                        requirements of this paragraph if the plan 
                        imposes restrictions or conditions with respect 
                        to the investment of employer securities which 
                        are not imposed on the investment of other 
                        assets of the plan. This subparagraph shall not 
                        apply to any restrictions or conditions imposed 
                        by reason of the application of securities 
                        laws.
            ``(5) Applicable individual account plan.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `applicable individual 
                account plan' means any individual account plan (as 
                defined in section 3(34)) which holds any publicly 
                traded employer securities.
                    ``(B) Exception for certain esops.--Such term does 
                not include an employee stock ownership plan if--
                            ``(i) there are no contributions to such 
                        plan (or earnings thereunder) which are held 
                        within such plan and are subject to subsection 
                        (k) or (m) of section 401 of the Internal 
                        Revenue Code of 1986, and
                            ``(ii) such plan is a separate plan (for 
                        purposes of section 414(l) of such Code) with 
                        respect to any other defined benefit plan or 
                        individual account plan maintained by the same 
                        employer or employers.
                    ``(C) Exception for one participant plans.--Such 
                term shall not include a one-participant retirement 
                plan (as defined in section 101(i)(8)(B)).
                    ``(D) Certain plans treated as holding publicly 
                traded employer securities.--
                            ``(i) In general.--Except as provided in 
                        regulations or in clause (ii), a plan holding 
                        employer securities which are not publicly 
                        traded employer securities shall be treated as 
                        holding publicly traded employer securities if 
                        any employer corporation, or any member of a 
                        controlled group of corporations which includes 
                        such employer corporation, has issued a class 
                        of stock which is a publicly traded employer 
                        security.
                            ``(ii) Exception for certain controlled 
                        groups with publicly traded securities.--Clause 
                        (i) shall not apply to a plan if--
                                    ``(I) no employer corporation, or 
                                parent corporation of an employer 
                                corporation, has issued any publicly 
                                traded employer security, and
                                    ``(II) no employer corporation, or 
                                parent corporation of an employer 
                                corporation, has issued any special 
                                class of stock which grants particular 
                                rights to, or bears particular risks 
                                for, the holder or issuer with respect 
                                to any corporation described in clause 
                                (i) which has issued any publicly 
                                traded employer security.
                            ``(iii) Definitions.--For purposes of this 
                        subparagraph, the term--
                                    ``(I) `controlled group of 
                                corporations' has the meaning given 
                                such term by section 1563(a) of the 
                                Internal Revenue Code of 1986, except 
                                that `50 percent' shall be substituted 
                                for `80 percent' each place it appears,
                                    ``(II) `employer corporation' means 
                                a corporation which is an employer 
                                maintaining the plan, and
                                    ``(III) `parent corporation' has 
                                the meaning given such term by section 
                                424(e) of such Code.
            ``(6) Other definitions.--For purposes of this paragraph--
                    ``(A) Applicable individual.--The term `applicable 
                individual' means--
                            ``(i) any participant in the plan, and
                            ``(ii) any beneficiary who has an account 
                        under the plan with respect to which the 
                        beneficiary is entitled to exercise the rights 
                        of a participant.
                    ``(B) Elective deferral.--The term `elective 
                deferral' means an employer contribution described in 
                section 402(g)(3)(A) of the Internal Revenue Code of 
                1986.
                    ``(C) Employer security.--The term `employer 
                security' has the meaning given such term by section 
                407(d)(1).
                    ``(D) Employee stock ownership plan.--The term 
                `employee stock ownership plan' has the meaning given 
                such term by section 4975(e)(7) of such Code.
                    ``(E) Publicly traded employer securities.--The 
                term `publicly traded employer securities' means 
                employer securities which are readily tradable on an 
                established securities market.
                    ``(F) Year of service.--The term `year of service' 
                has the meaning given such term by section 203(b)(2).
            ``(7) Transition rule for securities attributable to 
        employer contributions.--
                    ``(A) Rules phased in over 3 years.--
                            ``(i) In general.--In the case of the 
                        portion of an account to which paragraph (3) 
                        applies and which consists of employer 
                        securities acquired in a plan year beginning 
                        before January 1, 2007, paragraph (3) shall 
                        only apply to the applicable percentage of such 
                        securities. This subparagraph shall be applied 
                        separately with respect to each class of 
                        securities.
                            ``(ii) Exception for certain participants 
                        aged 55 or over.--Clause (i) shall not apply to 
                        an applicable individual who is a participant 
                        who has attained age 55 and completed at least 
                        3 years of service before the first plan year 
                        beginning after December 31, 2005.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage shall be 
                determined as follows:

``Plan year to which                                     The applicable
  paragraph (3) applies:                                 percentage is:
        1st....................................................     33 
        2d.....................................................     66 
        3d..................................................... 100.''.
            (2) Conforming amendment.--Section 407(b)(3) of such Act 
        (29 U.S.C. 1107(b)(3)) is amended by adding at the end the 
        following:
            ``(D) For diversification requirements for qualifying 
        employer securities held in certain individual account plans, 
        see section 204(j).''.
    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3), the amendments made by this section shall apply to plan 
        years beginning after December 31, 2006.
            (2) Special rule for collectively bargained agreements.--In 
        the case of a plan maintained pursuant to 1 or more collective 
        bargaining agreements between employee representatives and 1 or 
        more employers ratified on or before the date of the enactment 
        of this Act, paragraph (1) shall be applied to benefits 
        pursuant to, and individuals covered by, any such agreement by 
        substituting for ``December 31, 2006'' the earlier of--
                    (A) the later of--
                            (i) December 31, 2007, or
                            (ii) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof after such date of enactment), or
                    (B) December 31, 2008.
            (3) Special rule for certain employer securities held in an 
        esop.--
                    (A) In general.--In the case of employer securities 
                to which this paragraph applies, the amendments made by 
                this section shall apply to plan years beginning after 
                the earlier of--
                            (i) December 31, 2007, or
                            (ii) the first date on which the fair 
                        market value of such securities exceeds the 
                        guaranteed minimum value described in 
                        subparagraph (B)(ii).
                    (B) Applicable securities.--This paragraph shall 
                apply to employer securities which are attributable to 
                employer contributions other than elective deferrals, 
                and which, on September 17, 2003--
                            (i) consist of preferred stock, and
                            (ii) are within an employee stock ownership 
                        plan (as defined in section 4975(e)(7) of the 
                        Internal Revenue Code of 1986), the terms of 
                        which provide that the value of the securities 
                        cannot be less than the guaranteed minimum 
                        value specified by the plan on such date.
                    (C) Coordination with transition rule.--In applying 
                section 401(a)(35)(H) of the Internal Revenue Code of 
                1986 and section 204(j)(7) of the Employee Retirement 
                Income Security Act of 1974 (as added by this section) 
                to employer securities to which this paragraph applies, 
                the applicable percentage shall be determined without 
                regard to this paragraph.

SEC. 902. INCREASING PARTICIPATION THROUGH AUTOMATIC CONTRIBUTION 
              ARRANGEMENTS.

    (a) In General.--Section 401(k) of the Internal Revenue Code of 
1986 (relating to cash or deferred arrangement) is amended by adding at 
the end the following new paragraph:
            ``(13) Alternative method for automatic contribution 
        arrangements to meet nondiscrimination requirements.--
                    ``(A) In general.--A qualified automatic 
                contribution arrangement shall be treated as meeting 
                the requirements of paragraph (3)(A)(ii).
                    ``(B) Qualified automatic contribution 
                arrangement.--For purposes of this paragraph, the term 
                `qualified automatic contribution arrangement' means 
                any cash or deferred arrangement which meets the 
                requirements of subparagraphs (C) through (E).
                    ``(C) Automatic deferral.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if, under the arrangement, 
                        each employee eligible to participate in the 
                        arrangement is treated as having elected to 
                        have the employer make elective contributions 
                        in an amount equal to a qualified percentage of 
                        compensation.
                            ``(ii) Election out.--The election treated 
                        as having been made under clause (i) shall 
                        cease to apply with respect to any employee if 
                        such employee makes an affirmative election--
                                    ``(I) to not have such 
                                contributions made, or
                                    ``(II) to make elective 
                                contributions at a level specified in 
                                such affirmative election.
                            ``(iii) Qualified percentage.--For purposes 
                        of this subparagraph, the term `qualified 
                        percentage' means, with respect to any 
                        employee, any percentage determined under the 
                        arrangement if such percentage is applied 
                        uniformly, does not exceed 10 percent, and is 
                        at least--
                                    ``(I) 3 percent during the period 
                                ending on the last day of the first 
                                plan year which begins after the date 
                                on which the first elective 
                                contribution described in clause (i) is 
                                made with respect to such employee,
                                    ``(II) 4 percent during the first 
                                plan year following the plan year 
                                described in subclause (I),
                                    ``(III) 5 percent during the second 
                                plan year following the plan year 
                                described in subclause (I), and
                                    ``(IV) 6 percent during any 
                                subsequent plan year.
                            ``(iv) Automatic deferral for current 
                        employees not required.--Clause (i) may be 
                        applied without taking into account any 
                        employee who--
                                    ``(I) was eligible to participate 
                                in the arrangement (or a predecessor 
                                arrangement) immediately before the 
                                date on which such arrangement becomes 
                                a qualified automatic contribution 
                                arrangement (determined after 
                                application of this clause), and
                                    ``(II) had an election in effect on 
                                such date either to participate in the 
                                arrangement or to not participate in 
                                the arrangement.
                    ``(D) Matching or nonelective contributions.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if, under the arrangement, 
                        the employer--
                                    ``(I) makes matching contributions 
                                on behalf of each employee who is not a 
                                highly compensated employee in an 
                                amount equal to the sum of 100 percent 
                                of the elective contributions of the 
                                employee to the extent that such 
                                contributions do not exceed 1 percent 
                                of compensation plus 50 percent of so 
                                much of such compensation as exceeds 1 
                                percent but does not exceed 6 percent 
                                of compensation, or
                                    ``(II) is required, without regard 
                                to whether the employee makes an 
                                elective contribution or employee 
                                contribution, to make a contribution to 
                                a defined contribution plan on behalf 
                                of each employee who is not a highly 
                                compensated employee and who is 
                                eligible to participate in the 
                                arrangement in an amount equal to at 
                                least 3 percent of the employee's 
                                compensation.
                            ``(ii) Application of rules for matching 
                        contributions.--The rules of clauses (ii) and 
                        (iii) of paragraph (12)(B) shall apply for 
                        purposes of clause (i)(I).
                            ``(iii) Withdrawal and vesting 
                        restrictions.--An arrangement shall not be 
                        treated as meeting the requirements of clause 
                        (i) unless, with respect to employer 
                        contributions (including matching 
                        contributions) taken into account in 
                        determining whether the requirements of clause 
                        (i) are met--
                                    ``(I) any employee who has 
                                completed at least 2 years of service 
                                (within the meaning of section 411(a)) 
                                has a nonforfeitable right to 100 
                                percent of the employee's accrued 
                                benefit derived from such employer 
                                contributions, and
                                    ``(II) the requirements of 
                                subparagraph (B) of paragraph (2) are 
                                met with respect to all such employer 
                                contributions.
                            ``(iv) Application of certain other 
                        rules.--The rules of subparagraphs (E)(ii) and 
                        (F) of paragraph (12) shall apply for purposes 
                        of subclauses (I) and (II) of clause (i).
                    ``(E) Notice requirements.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if, within a reasonable 
                        period before each plan year, each employee 
                        eligible to participate in the arrangement for 
                        such year receives written notice of the 
                        employee's rights and obligations under the 
                        arrangement which--
                                    ``(I) is sufficiently accurate and 
                                comprehensive to apprise the employee 
                                of such rights and obligations, and
                                    ``(II) is written in a manner 
                                calculated to be understood by the 
                                average employee to whom the 
                                arrangement applies.
                            ``(ii) Timing and content requirements.--A 
                        notice shall not be treated as meeting the 
                        requirements of clause (i) with respect to an 
                        employee unless--
                                    ``(I) the notice explains the 
                                employee's right under the arrangement 
                                to elect not to have elective 
                                contributions made on the employee's 
                                behalf (or to elect to have such 
                                contributions made at a different 
                                percentage),
                                    ``(II) in the case of an 
                                arrangement under which the employee 
                                may elect among 2 or more investment 
                                options, the notice explains how 
                                contributions made under the 
                                arrangement will be invested in the 
                                absence of any investment election by 
                                the employee, and
                                    ``(III) the employee has a 
                                reasonable period of time after receipt 
                                of the notice described in subclauses 
                                (I) and (II) and before the first 
                                elective contribution is made to make 
                                either such election.''.
    (b) Matching Contributions.--Section 401(m) of such Code (relating 
to nondiscrimination test for matching contributions and employee 
contributions) is amended by redesignating paragraph (12) as paragraph 
(13) and by inserting after paragraph (11) the following new paragraph:
            ``(12) Alternative method for automatic contribution 
        arrangements.--A defined contribution plan shall be treated as 
        meeting the requirements of paragraph (2) with respect to 
        matching contributions if the plan--
                    ``(A) is a qualified automatic contribution 
                arrangement (as defined in subsection (k)(13)), and
                    ``(B) meets the requirements of paragraph 
                (11)(B).''.
    (c) Exclusion From Definition of Top-Heavy Plans.--
            (1) Elective contribution rule.--Clause (i) of section 
        416(g)(4)(H) of such Code is amended by inserting ``or 
        401(k)(13)'' after ``section 401(k)(12)''.
            (2) Matching contribution rule.--Clause (ii) of section 
        416(g)(4)(H) of such Code is amended by inserting ``or 
        401(m)(12)'' after ``section 401(m)(11)''.
    (d) Treatment of Withdrawals of Contributions During First 90 
Days.--
            (1) In general.--Section 414 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following new 
        subsection:
    ``(w) Special Rules for Certain Withdrawals From Eligible Automatic 
Contribution Arrangements.--
            ``(1) In general.--If an eligible automatic contribution 
        arrangement allows an employee to elect to make permissible 
        withdrawals--
                    ``(A) the amount of any such withdrawal shall be 
                includible in the gross income of the employee for the 
                taxable year of the employee in which the distribution 
                is made,
                    ``(B) no tax shall be imposed under section 72(t) 
                with respect to the distribution, and
                    ``(C) the arrangement shall not be treated as 
                violating any restriction on distributions under this 
                title solely by reason of allowing the withdrawal.
        In the case of any distribution to an employee by reason of an 
        election under this paragraph, employer matching contributions 
        shall be forfeited or subject to such other treatment as the 
        Secretary may prescribe.
            ``(2) Permissible withdrawal.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `permissible 
                withdrawal' means any withdrawal from an eligible 
                automatic contribution arrangement meeting the 
                requirements of this paragraph which--
                            ``(i) is made pursuant to an election by an 
                        employee, and
                            ``(ii) consists of elective contributions 
                        described in paragraph (3)(B) (and earnings 
                        attributable thereto).
                    ``(B) Time for making election.--Subparagraph (A) 
                shall not apply to an election by an employee unless 
                the election is made no later than the date which is 90 
                days after the date of the first elective contribution 
                with respect to the employee under the arrangement.
                    ``(C) Amount of distribution.--Subparagraph (A) 
                shall not apply to any election by an employee unless 
                the amount of any distribution by reason of the 
                election is equal to the amount of elective 
                contributions made with respect to the first payroll 
                period to which the eligible automatic contribution 
                arrangement applies to the employee and any succeeding 
                payroll period beginning before the effective date of 
                the election (and earnings attributable thereto).
            ``(3) Eligible automatic contribution arrangement.--For 
        purposes of this subsection, the term `eligible automatic 
        contribution arrangement' means an arrangement under an 
        applicable employer plan--
                    ``(A) under which a participant may elect to have 
                the employer make payments as contributions under the 
                plan on behalf of the participant, or to the 
                participant directly in cash,
                    ``(B) under which the participant is treated as 
                having elected to have the employer make such 
                contributions in an amount equal to a uniform 
                percentage of compensation provided under the plan 
                until the participant specifically elects not to have 
                such contributions made (or specifically elects to have 
                such contributions made at a different percentage),
                    ``(C) under which, in the absence of an investment 
                election by the participant, contributions described in 
                subparagraph (B) are invested in accordance with 
                regulations prescribed by the Secretary of Labor under 
                section 404(c)(5) of the Employee Retirement Income 
                Security Act of 1974, and
                    ``(D) which meets the requirements of paragraph 
                (4).
            ``(4) Notice requirements.--
                    ``(A) In general.--The administrator of a plan 
                containing an arrangement described in paragraph (3) 
                shall, within a reasonable period before each plan 
                year, give to each employee to whom an arrangement 
                described in paragraph (3) applies for such plan year 
                notice of the employee's rights and obligations under 
                the arrangement which--
                            ``(i) is sufficiently accurate and 
                        comprehensive to apprise the employee of such 
                        rights and obligations, and
                            ``(ii) is written in a manner calculated to 
                        be understood by the average employee to whom 
                        the arrangement applies.
                    ``(B) Time and form of notice.--A notice shall not 
                be treated as meeting the requirements of subparagraph 
                (A) with respect to an employee unless--
                            ``(i) the notice includes an explanation of 
                        the employee's right under the arrangement to 
                        elect not to have elective contributions made 
                        on the employee's behalf (or to elect to have 
                        such contributions made at a different 
                        percentage),
                            ``(ii) the employee has a reasonable period 
                        of time after receipt of the notice described 
                        in clause (i) and before the first elective 
                        contribution is made to make such election, and
                            ``(iii) the notice explains how 
                        contributions made under the arrangement will 
                        be invested in the absence of any investment 
                        election by the employee.
            ``(5) Applicable employer plan.--For purposes of this 
        subsection, the term `applicable employer plan' means--
                    ``(A) an employees' trust described in section 
                401(a) which is exempt from tax under section 501(a),
                    ``(B) a plan under which amounts are contributed by 
                an individual's employer for an annuity contract 
                described in section 403(b), and
                    ``(C) an eligible deferred compensation plan 
                described in section 457(b) which is maintained by an 
                eligible employer described in section 457(e)(1)(A).
            ``(6) Special rule.--A withdrawal described in paragraph 
        (1) (subject to the limitation of paragraph (2)(C)) shall not 
        be taken into account for purposes of section 401(k)(3).''.
            (2) Vesting conforming amendments.--
                    (A) Section 411(a)(3)(G) of such Code is amended by 
                inserting ``an erroneous automatic contribution under 
                section 414(w),'' after ``402(g)(2)(A),''.
                    (B) The heading of section 411(a)(3)(G) of such 
                Code is amended by inserting ``or erroneous automatic 
                contribution'' before the period.
                    (C) Section 401(k)(8)(E) of such Code is amended by 
                inserting ``an erroneous automatic contribution under 
                section 414(w),'' after ``402(g)(2)(A),''.
                    (D) The heading of section 401(k)(8)(E) of such 
                Code is amended by inserting ``or erroneous automatic 
                contribution'' before the period.
                    (E) Section 203(a)(3)(F) of the Employee Retirement 
                Income Security Act of 1974 (29 U.S.C. 1053(a)(3)(F)) 
                is amended by inserting ``an erroneous automatic 
                contribution under section 414(w) of such Code,'' after 
                ``402(g)(2)(A) of such Code,''.
    (e) Excess Contributions.--
            (1) Expansion of corrective distribution period for 
        automatic contribution arrangements.--Subsection (f) of section 
        4979 of the Internal Revenue Code of 1986 is amended--
                    (A) by inserting ``(6 months in the case of an 
                excess contribution or excess aggregate contribution to 
                an eligible automatic contribution arrangement (as 
                defined in section 414(w)(3)))'' after ``2\1/2\ 
                months'' in paragraph (1), and
                    (B) by striking ``2\1/2\ Months of'' in the heading 
                and inserting ``Specified Period After''.
            (2) Year of inclusion.--Paragraph (2) of section 4979(f) of 
        such Code is amended to read as follows:
            ``(2) Year of inclusion.--Any amount distributed as 
        provided in paragraph (1) shall be treated as earned and 
        received by the recipient in the recipient's taxable year in 
        which such distributions were made.''.
            (3) Simplification of allocable earnings.--
                    (A) Section 4979.--Paragraph (1) of section 4979(f) 
                of such Code is amended by adding ``through the end of 
                the plan year for which the contribution was made'' 
                after ``thereto''.
                    (B) Section 401(k) and 401(m).--
                            (i) Clause (i) of section 401(k)(8)(A) of 
                        such Code is amended by adding ``through the 
                        end of such year'' after ``such 
                        contributions''.
                            (ii) Subparagraph (A) of section 401(m)(6) 
                        of such Code is amended by adding ``through the 
                        end of such year'' after ``to such 
                        contributions''.
    (f) Preemption of Conflicting State Regulation.--
            (1) In general.--Section 514 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1144) is amended by 
        adding at the end the following new subsection:
    ``(e)(1) Notwithstanding any other provision of this section, this 
title shall supersede any law of a State which would directly or 
indirectly prohibit or restrict the inclusion in any plan of an 
automatic contribution arrangement. The Secretary may prescribe 
regulations which would establish minimum standards that such an 
arrangement would be required to satisfy in order for this subsection 
to apply in the case of such arrangement.
    ``(2) For purposes of this subsection, the term `automatic 
contribution arrangement' means an arrangement----
            ``(A) under which a participant may elect to have the plan 
        sponsor make payments as contributions under the plan on behalf 
        of the participant, or to the participant directly in cash,
            ``(B) under which a participant is treated as having 
        elected to have the plan sponsor make such contributions in an 
        amount equal to a uniform percentage of compensation provided 
        under the plan until the participant specifically elects not to 
        have such contributions made (or specifically elects to have 
        such contributions made at a different percentage), and
            ``(C) under which such contributions are invested in 
        accordance with regulations prescribed by the Secretary under 
        section 404(c)(5).
    ``(3)(A) The plan administrator of an automatic contribution 
arrangement shall, within a reasonable period before such plan year, 
provide to each participant to whom the arrangement applies for such 
plan year notice of the participant's rights and obligations under the 
arrangement which--
            ``(i) is sufficiently accurate and comprehensive to apprise 
        the participant of such rights and obligations, and
            ``(ii) is written in a manner calculated to be understood 
        by the average participant to whom the arrangement applies.
    ``(B) A notice shall not be treated as meeting the requirements of 
subparagraph (A) with respect to a participant unless--
            ``(i) the notice includes an explanation of the 
        participant's right under the arrangement not to have elective 
        contributions made on the participant's behalf (or to elect to 
        have such contributions made at a different percentage),
            ``(ii) the participant has a reasonable period of time, 
        after receipt of the notice described in clause (i) and before 
        the first elective contribution is made, to make such election, 
        and
            ``(iii) the notice explains how contributions made under 
        the arrangement will be invested in the absence of any 
        investment election by the participant.''.
            (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
        1132(c)(4)) is amended by striking ``or section 
        302(b)(7)(F)(vi)'' inserting ``, section 302(b)(7)(F)(vi), or 
        section 514(e)(3)''.
    (g) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2007, except that the 
amendments made by subsection (f) shall take effect on the date of the 
enactment of this Act.

SEC. 903. TREATMENT OF ELIGIBLE COMBINED DEFINED BENEFIT PLANS AND 
              QUALIFIED CASH OR DEFERRED ARRANGEMENTS.

    (a) Amendments of Internal Revenue Code.--Section 414 of the 
Internal Revenue Code of 1986, as amended by this Act, is amended by 
adding at the end the following new subsection:
    ``(x) Special Rules for Eligible Combined Defined Benefit Plans and 
Qualified Cash or Deferred Arrangements.--
            ``(1) General rule.--Except as provided in this subsection, 
        the requirements of this title shall be applied to any defined 
        benefit plan or applicable defined contribution plan which are 
        part of an eligible combined plan in the same manner as if each 
        such plan were not a part of the eligible combined plan.
            ``(2) Eligible combined plan.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `eligible combined 
                plan' means a plan--
                            ``(i) which is maintained by an employer 
                        which, at the time the plan is established, is 
                        a small employer,
                            ``(ii) which consists of a defined benefit 
                        plan and an applicable defined contribution 
                        plan,
                            ``(iii) the assets of which are held in a 
                        single trust forming part of the plan and are 
                        clearly identified and allocated to the defined 
                        benefit plan and the applicable defined 
                        contribution plan to the extent necessary for 
                        the separate application of this title under 
                        paragraph (1), and
                            ``(iv) with respect to which the benefit, 
                        contribution, vesting, and nondiscrimination 
                        requirements of subparagraphs (B), (C), (D), 
                        (E), and (F) are met.
                For purposes of this subparagraph, the term `small 
                employer' has the meaning given such term by section 
                4980D(d)(2), except that such section shall be applied 
                by substituting `500' for `50' each place it appears.
                    ``(B) Benefit requirements.--
                            ``(i) In general.--The benefit requirements 
                        of this subparagraph are met with respect to 
                        the defined benefit plan forming part of the 
                        eligible combined plan if the accrued benefit 
                        of each participant derived from employer 
                        contributions, when expressed as an annual 
                        retirement benefit, is not less than the 
                        applicable percentage of the participant's 
                        final average pay. For purposes of this clause, 
                        final average pay shall be determined using the 
                        period of consecutive years (not exceeding 5) 
                        during which the participant had the greatest 
                        aggregate compensation from the employer.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage is the 
                        lesser of--
                                    ``(I) 1 percent multiplied by the 
                                number of years of service with the 
                                employer, or
                                    ``(II) 20 percent.
                            ``(iii) Special rule for applicable defined 
                        benefit plans.--If the defined benefit plan 
                        under clause (i) is an applicable defined 
                        benefit plan as defined in section 
                        411(a)(13)(B) which meets the interest credit 
                        requirements of section 411(b)(5)(B)(i), the 
                        plan shall be treated as meeting the 
                        requirements of clause (i) with respect to any 
                        plan year if each participant receives a pay 
                        credit for the year which is not less than the 
                        percentage of compensation determined in 
                        accordance with the following table:

``If the participant's age as of 
        the
   beginning of the year is--                       The percentage is--
        30 or less.............................................      2 
        Over 30 but less than 40...............................      4 
        40 or over but less than 50............................      6 
        50 or over.............................................      8.
                            ``(iv) Years of service.--For purposes of 
                        this subparagraph, years of service shall be 
                        determined under the rules of paragraphs (4), 
                        (5), and (6) of section 411(a), except that the 
                        plan may not disregard any year of service 
                        because of a participant making, or failing to 
                        make, any elective deferral with respect to the 
                        qualified cash or deferred arrangement to which 
                        subparagraph (C) applies.
                    ``(C) Contribution requirements.--
                            ``(i) In general.--The contribution 
                        requirements of this subparagraph with respect 
                        to any applicable defined contribution plan 
                        forming part of an eligible combined plan are 
                        met if--
                                    ``(I) the qualified cash or 
                                deferred arrangement included in such 
                                plan constitutes an automatic 
                                contribution arrangement, and
                                    ``(II) the employer is required to 
                                make matching contributions on behalf 
                                of each employee eligible to 
                                participate in the arrangement in an 
                                amount equal to 50 percent of the 
                                elective contributions of the employee 
                                to the extent such elective 
                                contributions do not exceed 4 percent 
                                of compensation.
                        Rules similar to the rules of clauses (ii) and 
                        (iii) of section 401(k)(12)(B) shall apply for 
                        purposes of this clause.
                            ``(ii) Nonelective contributions.--An 
                        applicable defined contribution plan shall not 
                        be treated as failing to meet the requirements 
                        of clause (i) because the employer makes 
                        nonelective contributions under the plan but 
                        such contributions shall not be taken into 
                        account in determining whether the requirements 
                        of clause (i)(II) are met.
                    ``(D) Vesting requirements.--The vesting 
                requirements of this subparagraph are met if--
                            ``(i) in the case of a defined benefit plan 
                        forming part of an eligible combined plan an 
                        employee who has completed at least 3 years of 
                        service has a nonforfeitable right to 100 
                        percent of the employee's accrued benefit under 
                        the plan derived from employer contributions, 
                        and
                            ``(ii) in the case of an applicable defined 
                        contribution plan forming part of eligible 
                        combined plan--
                                    ``(I) an employee has a 
                                nonforfeitable right to any matching 
                                contribution made under the qualified 
                                cash or deferred arrangement included 
                                in such plan by an employer with 
                                respect to any elective contribution, 
                                including matching contributions in 
                                excess of the contributions required 
                                under subparagraph (C)(i)(II), and
                                    ``(II) an employee who has 
                                completed at least 3 years of service 
                                has a nonforfeitable right to 100 
                                percent of the employee's accrued 
                                benefit derived under the arrangement 
                                from nonelective contributions of the 
                                employer.
                        For purposes of this subparagraph, the rules of 
                        section 411 shall apply to the extent not 
                        inconsistent with this subparagraph.
                    ``(E) Uniform provision of contributions and 
                benefits.--In the case of a defined benefit plan or 
                applicable defined contribution plan forming part of an 
                eligible combined plan, the requirements of this 
                subparagraph are met if all contributions and benefits 
                under each such plan, and all rights and features under 
                each such plan, must be provided uniformly to all 
                participants.
                    ``(F) Requirements must be met without taking into 
                account social security and similar contributions and 
                benefits or other plans.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if the requirements of 
                        clauses (ii) and (iii) are met.
                            ``(ii) Social security and similar 
                        contributions.--The requirements of this clause 
                        are met if--
                                    ``(I) the requirements of 
                                subparagraphs (B) and (C) are met 
                                without regard to section 401(l), and
                                    ``(II) the requirements of sections 
                                401(a)(4) and 410(b) are met with 
                                respect to both the applicable defined 
                                contribution plan and defined benefit 
                                plan forming part of an eligible 
                                combined plan without regard to section 
                                401(l).
                            ``(iii) Other plans and arrangements.--The 
                        requirements of this clause are met if the 
                        applicable defined contribution plan and 
                        defined benefit plan forming part of an 
                        eligible combined plan meet the requirements of 
                        sections 401(a)(4) and 410(b) without being 
                        combined with any other plan.
            ``(3) Nondiscrimination requirements for qualified cash or 
        deferred arrangement.--
                    ``(A) In general.--A qualified cash or deferred 
                arrangement which is included in an applicable defined 
                contribution plan forming part of an eligible combined 
                plan shall be treated as meeting the requirements of 
                section 401(k)(3)(A)(ii) if the requirements of 
                paragraph (2)(C) are met with respect to such 
                arrangement.
                    ``(B) Matching contributions.--In applying section 
                401(m)(11) to any matching contribution with respect to 
                a contribution to which paragraph (2)(C) applies, the 
                contribution requirement of paragraph (2)(C) and the 
                notice requirements of paragraph (5)(B) shall be 
                substituted for the requirements otherwise applicable 
                under clauses (i) and (ii) of section 401(m)(11)(A).
            ``(4) Satisfaction of top-heavy rules.--A defined benefit 
        plan and applicable defined contribution plan forming part of 
        an eligible combined plan for any plan year shall be treated as 
        meeting the requirements of section 416 for the plan year.
            ``(5) Automatic contribution arrangement.--For purposes of 
        this subsection--
                    ``(A) In general.--A qualified cash or deferred 
                arrangement shall be treated as an automatic 
                contribution arrangement if the arrangement--
                            ``(i) provides that each employee eligible 
                        to participate in the arrangement is treated as 
                        having elected to have the employer make 
                        elective contributions in an amount equal to 4 
                        percent of the employee's compensation unless 
                        the employee specifically elects not to have 
                        such contributions made or to have such 
                        contributions made at a different rate, and
                            ``(ii) meets the notice requirements under 
                        subparagraph (B).
                    ``(B) Notice requirements.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if the requirements of 
                        clauses (ii) and (iii) are met.
                            ``(ii) Reasonable period to make 
                        election.--The requirements of this clause are 
                        met if each employee to whom subparagraph 
                        (A)(i) applies--
                                    ``(I) receives a notice explaining 
                                the employee's right under the 
                                arrangement to elect not to have 
                                elective contributions made on the 
                                employee's behalf or to have the 
                                contributions made at a different rate, 
                                and
                                    ``(II) has a reasonable period of 
                                time after receipt of such notice and 
                                before the first elective contribution 
                                is made to make such election.
                            ``(iii) Annual notice of rights and 
                        obligations.--The requirements of this clause 
                        are met if each employee eligible to 
                        participate in the arrangement is, within a 
                        reasonable period before any year, given notice 
                        of the employee's rights and obligations under 
                        the arrangement.
                The requirements of clauses (i) and (ii) of section 
                401(k)(12)(D) shall be met with respect to the notices 
                described in clauses (ii) and (iii) of this 
                subparagraph.
            ``(6) Coordination with other requirements.--
                    ``(A) Treatment of separate plans.--Section 414(k) 
                shall not apply to an eligible combined plan.
                    ``(B) Reporting.--An eligible combined plan shall 
                be treated as a single plan for purposes of sections 
                6058 and 6059.
            ``(7) Applicable defined contribution plan.--For purposes 
        of this subsection--
                    ``(A) In general.--The term `applicable defined 
                contribution plan' means a defined contribution plan 
                which includes a qualified cash or deferred 
                arrangement.
                    ``(B) Qualified cash or deferred arrangement.--The 
                term `qualified cash or deferred arrangement' has the 
                meaning given such term by section 401(k)(2).''.
    (b) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) In general.--Section 210 of the Employee Retirement 
        Income Security Act of 1974 is amended by adding at the end the 
        following new subsection:
    ``(e) Special Rules for Eligible Combined Defined Benefit Plans and 
Qualified Cash or Deferred Arrangements.--
            ``(1) General rule.--Except as provided in this subsection, 
        this Act shall be applied to any defined benefit plan or 
        applicable individual account plan which are part of an 
        eligible combined plan in the same manner as if each such plan 
        were not a part of the eligible combined plan.
            ``(2) Eligible combined plan.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `eligible combined 
                plan' means a plan--
                            ``(i) which is maintained by an employer 
                        which, at the time the plan is established, is 
                        a small employer,
                            ``(ii) which consists of a defined benefit 
                        plan and an applicable individual account plan 
                        each of which qualifies under section 401(a) of 
                        the Internal Revenue Code of 1986,
                            ``(iii) the assets of which are held in a 
                        single trust forming part of the plan and are 
                        clearly identified and allocated to the defined 
                        benefit plan and the applicable individual 
                        account plan to the extent necessary for the 
                        separate application of this Act under 
                        paragraph (1), and
                            ``(iv) with respect to which the benefit, 
                        contribution, vesting, and nondiscrimination 
                        requirements of subparagraphs (B), (C), (D), 
                        (E), and (F) are met.
                For purposes of this subparagraph, the term `small 
                employer' has the meaning given such term by section 
                4980D(d)(2) of the Internal Revenue Code of 1986, 
                except that such section shall be applied by 
                substituting `500' for `50' each place it appears.
                    ``(B) Benefit requirements.--
                            ``(i) In general.--The benefit requirements 
                        of this subparagraph are met with respect to 
                        the defined benefit plan forming part of the 
                        eligible combined plan if the accrued benefit 
                        of each participant derived from employer 
                        contributions, when expressed as an annual 
                        retirement benefit, is not less than the 
                        applicable percentage of the participant's 
                        final average pay. For purposes of this clause, 
                        final average pay shall be determined using the 
                        period of consecutive years (not exceeding 5) 
                        during which the participant had the greatest 
                        aggregate compensation from the employer.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage is the 
                        lesser of--
                                    ``(I) 1 percent multiplied by the 
                                number of years of service with the 
                                employer, or
                                    ``(II) 20 percent.
                            ``(iii) Special rule for applicable defined 
                        benefit plans.--If the defined benefit plan 
                        under clause (i) is an applicable defined 
                        benefit plan as defined in section 203(f)(3)(B) 
                        which meets the interest credit requirements of 
                        section 204(b)(5)(B)(i), the plan shall be 
                        treated as meeting the requirements of clause 
                        (i) with respect to any plan year if each 
                        participant receives pay credit for the year 
                        which is not less than the percentage of 
                        compensation determined in accordance with the 
                        following table:

``If the participant's age as of 
        the
   beginning of the year is--                       The percentage is--
        30 or less.............................................      2 
        Over 30 but less than 40...............................      4 
        40 or over but less than 50............................      6 
        50 or over.............................................      8.
                            ``(iv) Years of service.--For purposes of 
                        this subparagraph, years of service shall be 
                        determined under the rules of paragraphs (1), 
                        (2), and (3) of section 203(b), except that the 
                        plan may not disregard any year of service 
                        because of a participant making, or failing to 
                        make, any elective deferral with respect to the 
                        qualified cash or deferred arrangement to which 
                        subparagraph (C) applies.
                    ``(C) Contribution requirements.--
                            ``(i) In general.--The contribution 
                        requirements of this subparagraph with respect 
                        to any applicable individual account plan 
                        forming part of an eligible combined plan are 
                        met if--
                                    ``(I) the qualified cash or 
                                deferred arrangement included in such 
                                plan constitutes an automatic 
                                contribution arrangement, and
                                    ``(II) the employer is required to 
                                make matching contributions on behalf 
                                of each employee eligible to 
                                participate in the arrangement in an 
                                amount equal to 50 percent of the 
                                elective contributions of the employee 
                                to the extent such elective 
                                contributions do not exceed 4 percent 
                                of compensation.
                        Rules similar to the rules of clauses (ii) and 
                        (iii) of section 401(k)(12)(B) of the Internal 
                        Revenue Code of 1986 shall apply for purposes 
                        of this clause.
                            ``(ii) Nonelective contributions.--An 
                        applicable individual account plan shall not be 
                        treated as failing to meet the requirements of 
                        clause (i) because the employer makes 
                        nonelective contributions under the plan but 
                        such contributions shall not be taken into 
                        account in determining whether the requirements 
                        of clause (i)(II) are met.
                    ``(D) Vesting requirements.--The vesting 
                requirements of this subparagraph are met if--
                            ``(i) in the case of a defined benefit plan 
                        forming part of an eligible combined plan an 
                        employee who has completed at least 3 years of 
                        service has a nonforfeitable right to 100 
                        percent of the employee's accrued benefit under 
                        the plan derived from employer contributions, 
                        and
                            ``(ii) in the case of an applicable 
                        individual account plan forming part of 
                        eligible combined plan--
                                    ``(I) an employee has a 
                                nonforfeitable right to any matching 
                                contribution made under the qualified 
                                cash or deferred arrangement included 
                                in such plan by an employer with 
                                respect to any elective contribution, 
                                including matching contributions in 
                                excess of the contributions required 
                                under subparagraph (C)(i)(II), and
                                    ``(II) an employee who has 
                                completed at least 3 years of service 
                                has a nonforfeitable right to 100 
                                percent of the employee's accrued 
                                benefit derived under the arrangement 
                                from nonelective contributions of the 
                                employer.
                        For purposes of this subparagraph, the rules of 
                        section 203 shall apply to the extent not 
                        inconsistent with this subparagraph.
                    ``(E) Uniform provision of contributions and 
                benefits.--In the case of a defined benefit plan or 
                applicable individual account plan forming part of an 
                eligible combined plan, the requirements of this 
                subparagraph are met if all contributions and benefits 
                under each such plan, and all rights and features under 
                each such plan, must be provided uniformly to all 
                participants.
                    ``(F) Requirements must be met without taking into 
                account social security and similar contributions and 
                benefits or other plans.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if the requirements of 
                        clauses (ii) and (iii) are met.
                            ``(ii) Social security and similar 
                        contributions.--The requirements of this clause 
                        are met if--
                                    ``(I) the requirements of 
                                subparagraphs (B) and (C) are met 
                                without regard to section 401(l) of the 
                                Internal Revenue Code of 1986, and
                                    ``(II) the requirements of sections 
                                401(a)(4) and 410(b) of the Internal 
                                Revenue Code of 1986 are met with 
                                respect to both the applicable defined 
                                contribution plan and defined benefit 
                                plan forming part of an eligible 
                                combined plan without regard to section 
                                401(l) of the Internal Revenue Code of 
                                1986.
                            ``(iii) Other plans and arrangements.--The 
                        requirements of this clause are met if the 
                        applicable defined contribution plan and 
                        defined benefit plan forming part of an 
                        eligible combined plan meet the requirements of 
                        sections 401(a)(4) and 410(b) of the Internal 
                        Revenue Code of 1986 without being combined 
                        with any other plan.
            ``(3) Nondiscrimination requirements for qualified cash or 
        deferred arrangement.--
                    ``(A) In general.--A qualified cash or deferred 
                arrangement which is included in an applicable 
                individual account plan forming part of an eligible 
                combined plan shall be treated as meeting the 
                requirements of section 401(k)(3)(A)(ii) of the 
                Internal Revenue Code of 1986 if the requirements of 
                paragraph (2) are met with respect to such arrangement.
                    ``(B) Matching contributions.--In applying section 
                401(m)(11) of such Code to any matching contribution 
                with respect to a contribution to which paragraph 
                (2)(C) applies, the contribution requirement of 
                paragraph (2)(C) and the notice requirements of 
                paragraph (5)(B) shall be substituted for the 
                requirements otherwise applicable under clauses (i) and 
                (ii) of section 401(m)(11)(A) of such Code.
            ``(4) Automatic contribution arrangement.--For purposes of 
        this subsection--
                    ``(A) In general.--A qualified cash or deferred 
                arrangement shall be treated as an automatic 
                contribution arrangement if the arrangement--
                            ``(i) provides that each employee eligible 
                        to participate in the arrangement is treated as 
                        having elected to have the employer make 
                        elective contributions in an amount equal to 4 
                        percent of the employee's compensation unless 
                        the employee specifically elects not to have 
                        such contributions made or to have such 
                        contributions made at a different rate, and
                            ``(ii) meets the notice requirements under 
                        subparagraph (B).
                    ``(B) Notice requirements.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if the requirements of 
                        clauses (ii) and (iii) are met.
                            ``(ii) Reasonable period to make 
                        election.--The requirements of this clause are 
                        met if each employee to whom subparagraph 
                        (A)(i) applies--
                                    ``(I) receives a notice explaining 
                                the employee's right under the 
                                arrangement to elect not to have 
                                elective contributions made on the 
                                employee's behalf or to have the 
                                contributions made at a different rate, 
                                and
                                    ``(II) has a reasonable period of 
                                time after receipt of such notice and 
                                before the first elective contribution 
                                is made to make such election.
                            ``(iii) Annual notice of rights and 
                        obligations.--The requirements of this clause 
                        are met if each employee eligible to 
                        participate in the arrangement is, within a 
                        reasonable period before any year, given notice 
                        of the employee's rights and obligations under 
                        the arrangement.
                The requirements of this subparagraph shall not be 
                treated as met unless the requirements of clauses (i) 
                and (ii) of section 401(k)(12)(D) of the Internal 
                Revenue Code of 1986 are met with respect to the 
                notices described in clauses (ii) and (iii) of this 
                subparagraph.
            ``(5) Coordination with other requirements.--
                    ``(A) Treatment of separate plans.--The except 
                clause in section 3(35) shall not apply to an eligible 
                combined plan.
                    ``(B) Reporting.--An eligible combined plan shall 
                be treated as a single plan for purposes of section 
                103.
            ``(6) Applicable individual account plan.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `applicable individual 
                account plan' means an individual account plan which 
                includes a qualified cash or deferred arrangement.
                    ``(B) Qualified cash or deferred arrangement.--The 
                term `qualified cash or deferred arrangement' has the 
                meaning given such term by section 401(k)(2) of the 
                Internal Revenue Code of 1986.''.
            (2) Conforming changes.--
                    (A) The heading for section 210 of such Act is 
                amended to read as follows:

``SEC. 210. MULTIPLE EMPLOYER PLANS AND OTHER SPECIAL RULES.''.

                    (B) The table of contents in section 1 of such Act 
                is amended by striking the item relating to section 210 
                and inserting the following new item:

``Sec. 210. Multiple employer plans and other special rules.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2009.

SEC. 904. FASTER VESTING OF EMPLOYER NONELECTIVE CONTRIBUTIONS.

    (a) Amendments to the Internal Revenue Code of 1986.--
            (1) In general.--Paragraph (2) of section 411(a) of the 
        Internal Revenue Code of 1986 (relating to employer 
        contributions) is amended to read as follows:
            ``(2) Employer contributions.--
                    ``(A) Defined benefit plans.--
                            ``(i) In general.--In the case of a defined 
                        benefit plan, a plan satisfies the requirements 
                        of this paragraph if it satisfies the 
                        requirements of clause (ii) or (iii).
                            ``(ii) 5-year vesting.--A plan satisfies 
                        the requirements of this clause if an employee 
                        who has completed at least 5 years of service 
                        has a nonforfeitable right to 100 percent of 
                        the employee's accrued benefit derived from 
                        employer contributions.
                            ``(iii) 3 to 7 year vesting.--A plan 
                        satisfies the requirements of this clause if an 
                        employee has a nonforfeitable right to a 
                        percentage of the employee's accrued benefit 
                        derived from employer contributions determined 
                        under the following table:

                                                     The nonforfeitable
``Years of service:                                      percentage is:
        3......................................................     20 
        4......................................................     40 
        5......................................................     60 
        6......................................................     80 
        7 or more..............................................    100.
                    ``(B) Defined contribution plans.--
                            ``(i) In general.--In the case of a defined 
                        contribution plan, a plan satisfies the 
                        requirements of this paragraph if it satisfies 
                        the requirements of clause (ii) or (iii).
                            ``(ii) 3-year vesting.--A plan satisfies 
                        the requirements of this clause if an employee 
                        who has completed at least 3 years of service 
                        has a nonforfeitable right to 100 percent of 
                        the employee's accrued benefit derived from 
                        employer contributions.
                            ``(iii) 2 to 6 year vesting.--A plan 
                        satisfies the requirements of this clause if an 
                        employee has a nonforfeitable right to a 
                        percentage of the employee's accrued benefit 
                        derived from employer contributions determined 
                        under the following table:

                                                     The nonforfeitable
``Years of service:                                      percentage is:
        2......................................................     20 
        3......................................................     40 
        4......................................................     60 
        5......................................................     80 
        6 or more.............................................. 100.''.
            (2) Conforming amendment.--Section 411(a) of such Code 
        (relating to general rule for minimum vesting standards) is 
        amended by striking paragraph (12).
    (b) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) In general.--Paragraph (2) of section 203(a) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1053(a)(2)) is amended to read as follows:
            ``(2)(A)(i) In the case of a defined benefit plan, a plan 
        satisfies the requirements of this paragraph if it satisfies 
        the requirements of clause (ii) or (iii).
            ``(ii) A plan satisfies the requirements of this clause if 
        an employee who has completed at least 5 years of service has a 
        nonforfeitable right to 100 percent of the employee's accrued 
        benefit derived from employer contributions.
            ``(iii) A plan satisfies the requirements of this clause if 
        an employee has a nonforfeitable right to a percentage of the 
        employee's accrued benefit derived from employer contributions 
        determined under the following table:

                                                     The nonforfeitable
``Years of service:                                      percentage is:
        3......................................................     20 
        4......................................................     40 
        5......................................................     60 
        6......................................................     80 
        7 or more..............................................    100.
            ``(B)(i) In the case of an individual account plan, a plan 
        satisfies the requirements of this paragraph if it satisfies 
        the requirements of clause (ii) or (iii).
            ``(ii) A plan satisfies the requirements of this clause if 
        an employee who has completed at least 3 years of service has a 
        nonforfeitable right to 100 percent of the employee's accrued 
        benefit derived from employer contributions.
            ``(iii) A plan satisfies the requirements of this clause if 
        an employee has a nonforfeitable right to a percentage of the 
        employee's accrued benefit derived from employer contributions 
        determined under the following table:

                                                     The nonforfeitable
``Years of service:                                      percentage is:
        2......................................................     20 
        3......................................................     40 
        4......................................................     60 
        5......................................................     80 
        6 or more.............................................. 100.''.
            (2) Conforming amendment.--Section 203(a) of such Act is 
        amended by striking paragraph (4).
    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (4), the amendments made by this section shall apply to 
        contributions for plan years beginning after December 31, 2006.
            (2) Collective bargaining agreements.--In the case of a 
        plan maintained pursuant to one or more collective bargaining 
        agreements between employee representatives and one or more 
        employers ratified before the date of the enactment of this 
        Act, the amendments made by this section shall not apply to 
        contributions on behalf of employees covered by any such 
        agreement for plan years beginning before the earlier of--
                    (A) the later of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of the 
                        enactment); or
                            (ii) January 1, 2007; or
                    (B) January 1, 2009.
            (3) Service required.--With respect to any plan, the 
        amendments made by this section shall not apply to any employee 
        before the date that such employee has 1 hour of service under 
        such plan in any plan year to which the amendments made by this 
        section apply.
            (4) Special rule for stock ownership plans.--
        Notwithstanding paragraph (1) or (2), in the case of an 
        employee stock ownership plan (as defined in section 4975(e)(7) 
        of the Internal Revenue Code of 1986) which had outstanding on 
        September 26, 2005, a loan incurred for the purpose of 
        acquiring qualifying employer securities (as defined in section 
        4975(e)(8) of such Code), the amendments made by this section 
        shall not apply to any plan year beginning before the earlier 
        of--
                    (A) the date on which the loan is fully repaid, or
                    (B) the date on which the loan was, as of September 
                26, 2005, scheduled to be fully repaid.

SEC. 905. DISTRIBUTIONS DURING WORKING RETIREMENT.

    (a) Amendment to the Employee Retirement Income Security Act of 
1974.--Subparagraph (A) of section 3(2) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1002(2)) is amended by adding at 
the end the following new sentence: ``A distribution from a plan, fund, 
or program shall not be treated as made in a form other than retirement 
income or as a distribution prior to termination of covered employment 
solely because such distribution is made to an employee who has 
attained age 62 and who is not separated from employment at the time of 
such distribution.''.
    (b) Amendment to the Internal Revenue Code of 1986.--Subsection (a) 
of section 401 of the Internal Revenue Code of 1986 (as amended by this 
Act) is amended by inserting after paragraph (35) the following new 
paragraph:
            ``(36) Distributions during working retirement.--A trust 
        forming part of a pension plan shall not be treated as failing 
        to constitute a qualified trust under this section solely 
        because the plan provides that a distribution may be made from 
        such trust to an employee who has attained age 62 and who is 
        not separated from employment at the time of such 
        distribution.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions in plan years beginning after December 31, 2006.

SEC. 906. TREATMENT OF CERTAIN PENSION PLANS OF INDIAN TRIBAL 
              GOVERNMENTS.

    (a) Definition of Government Plan To Include Certain Pension Plans 
of Indian Tribal Governments.--
            (1) Amendment to internal revenue code of 1986.--Section 
        414(d) of the Internal Revenue Code of 1986 (defining 
        governmental plan) is amended by adding at the end the 
        following: ``The term `governmental plan' includes a plan which 
        is established and maintained by an Indian tribal government 
        (as defined in section 7701(a)(40)), a subdivision of an Indian 
        tribal government (determined in accordance with section 
        7871(d)), or an agency or instrumentality of either, and all of 
        the participants of which are employees of such entity 
        substantially all of whose services as such an employee are in 
        the performance of essential governmental functions but not in 
        the performance of commercial activities (whether or not an 
        essential government function).''.
            (2) Amendment to employee retirement income security act of 
        1974.--
                    (A) Section 3(32) of the Employee Retirement Income 
                Security Act of 1974 (29 U.S.C. 1002(32)) is amended by 
                adding at the end the following: ``The term 
                `governmental plan' includes a plan which is 
                established and maintained by an Indian tribal 
                government (as defined in section 7701(a)(40) of the 
                Internal Revenue Code of 1986), a subdivision of an 
                Indian tribal government (determined in accordance with 
                section 7871(d) of such Code), or an agency or 
                instrumentality of either, and all of the participants 
                of which are employees of such entity substantially all 
                of whose services as such an employee are in the 
                performance of essential governmental functions but not 
                in the performance of commercial activities (whether or 
                not an essential government function)''.
                    (B) Section 4021(b)(2) of such Act is amended by 
                adding at the end the following: ``or which is 
                described in the last sentence of section 3(32)''.
    (b) Clarification That Tribal Governments Are Subject to the Same 
Pension Plan Rules and Regulations Applied to State and Other Local 
Governments and Their Police and Firefighters.--
            (1) Amendments to internal revenue code of 1986.--
                    (A) Police and firefighters.--Subparagraph (H) 
                section 415(b)(2) of the Internal Revenue Code of 1986 
                (defining participant) is amended--
                            (i) in clause (i), by striking ``State or 
                        political subdivision'' and inserting ``State, 
                        Indian tribal government (as defined in section 
                        7701(a)(40)), or any political subdivision''; 
                        and
                            (ii) in clause (ii)(I), by striking ``State 
                        or political subdivision'' each place it 
                        appears and inserting ``State, Indian tribal 
                        government (as so defined), or any political 
                        subdivision''.
                    (B) State and local government plans.--
                            (i) In general.--Subparagraph (A) of 
                        section 415(b)(10) of such Code (relating to 
                        limitation to equal accrued benefit) is amended 
                        by inserting ``or a governmental plan described 
                        in the last sentence of section 414(d) 
                        (relating to plans of Indian tribal 
                        governments),'' after ``foregoing,''.
                            (ii) Conforming amendment.--The heading of 
                        paragraph (1) of section 415(b) of such Code is 
                        amended by striking ``Special rule for state 
                        and'' and inserting ``Special rule for state, 
                        indian tribal, and''.
                    (C) Government pick up contributions.--Paragraph 
                (2) of section 414(h) of such Code (relating to 
                designation by units of government) is amended by 
                inserting ``or a governmental plan described in the 
                last sentence of section 414(d) (relating to plans of 
                Indian tribal governments),'' after ``foregoing,''.
            (2) Amendments to employee retirement income security act 
        of 1974.--Section 4021(b) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1321(b)) is amended--
                    (A) in paragraph (12), by striking ``or'' at the 
                end;
                    (B) in paragraph (13), by striking ``plan.'' and 
                inserting ``plan; or''; and
                    (C) by adding at the end the following:
            ``(14) established and maintained by an Indian tribal 
        government (as defined in section 7701(a)(40) of the Internal 
        Revenue Code of 1986), a subdivision of an Indian tribal 
        government (determined in accordance with section 7871(d) of 
        such Code), or an agency or instrumentality of either, and all 
        of the participants of which are employees of such entity 
        substantially all of whose services as such an employee are in 
        the performance of essential governmental functions but not in 
        the performance of commercial activities (whether or not an 
        essential government function).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to any year beginning on or after the date of the enactment of 
this Act.

       TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION

SEC. 1001. REGULATIONS ON TIME AND ORDER OF ISSUANCE OF DOMESTIC 
              RELATIONS ORDERS.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary of Labor shall issue regulations under section 206(d)(3) 
of the Employee Retirement Security Act of 1974 and section 414(p) of 
the Internal Revenue Code of 1986 which clarify that--
            (1) a domestic relations order otherwise meeting the 
        requirements to be a qualified domestic relations order, 
        including the requirements of section 206(d)(3)(D) of such Act 
        and section 414(p)(3) of such Code, shall not fail to be 
        treated as a qualified domestic relations order solely 
        because--
                    (A) the order is issued after, or revises, another 
                domestic relations order or qualified domestic 
                relations order; or
                    (B) of the time at which it is issued; and
            (2) any order described in paragraph (1) shall be subject 
        to the same requirements and protections which apply to 
        qualified domestic relations orders, including the provisions 
        of section 206(d)(3)(H) of such Act and section 414(p)(7) of 
        such Code.

SEC. 1002. ENTITLEMENT OF DIVORCED SPOUSES TO RAILROAD RETIREMENT 
              ANNUITIES INDEPENDENT OF ACTUAL ENTITLEMENT OF EMPLOYEE.

    (a) In General.--Section 2 of the Railroad Retirement Act of 1974 
(45 U.S.C. 231a) is amended--
            (1) in subsection (c)(4)(i), by striking ``(A) is entitled 
        to an annuity under subsection (a)(1) and (B)''; and
            (2) in subsection (e)(5), by striking ``or divorced wife'' 
        the second place it appears.
    (b) Effective Date.--The amendments made by this section shall take 
effect 1 year after the date of the enactment of this Act.

SEC. 1003. EXTENSION OF TIER II RAILROAD RETIREMENT BENEFITS TO 
              SURVIVING FORMER SPOUSES PURSUANT TO DIVORCE AGREEMENTS.

    (a) In General.--Section 5 of the Railroad Retirement Act of 1974 
(45 U.S.C. 231d) is amended by adding at the end the following:
    ``(d) Notwithstanding any other provision of law, the payment of 
any portion of an annuity computed under section 3(b) to a surviving 
former spouse in accordance with a court decree of divorce, annulment, 
or legal separation or the terms of any court-approved property 
settlement incident to any such court decree shall not be terminated 
upon the death of the individual who performed the service with respect 
to which such annuity is so computed unless such termination is 
otherwise required by the terms of such court decree.''
    (b) Effective Date.--The amendment made by this section shall take 
effect 1 year after the date of the enactment of this Act.

SEC. 1004. REQUIREMENT FOR ADDITIONAL SURVIVOR ANNUITY OPTION.

    (a) Amendments to Internal Revenue Code.--
            (1) Election of survivor annuity.--Section 417(a)(1)(A) of 
        the Internal Revenue Code of 1986 is amended--
                    (A) in clause (i), by striking ``, and'' and 
                inserting a comma;
                    (B) by redesignating clause (ii) as clause (iii); 
                and
                    (C) by inserting after clause (i) the following:
                    ``(ii) if the participant elects a waiver under 
                clause (i), may elect the qualified optional survivor 
                annuity at any time during the applicable election 
                period, and''.
            (2) Definition.--Section 417 of such Code is amended by 
        adding at the end the following:
    ``(g) Definition of Qualified Optional Survivor Annuity.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified optional survivor annuity' means an annuity--
                    ``(A) for the life of the participant with a 
                survivor annuity for the life of the spouse which is 
                equal to the applicable percentage of the amount of the 
                annuity which is payable during the joint lives of the 
                participant and the spouse, and
                    ``(B) which is the actuarial equivalent of a single 
                annuity for the life of the participant.
        Such term also includes any annuity in a form having the effect 
        of an annuity described in the preceding sentence.
            ``(2) Applicable percentage.--
                    ``(A) In general.--For purposes of paragraph (1), 
                if the survivor annuity percentage--
                            ``(i) is less than 75 percent, the 
                        applicable percentage is 75 percent, and
                            ``(ii) is greater than or equal to 75 
                        percent, the applicable percentage is 50 
                        percent.
                    ``(B) Survivor annuity percentage.--For purposes of 
                subparagraph (A), the term `survivor annuity 
                percentage' means the percentage which the survivor 
                annuity under the plan's qualified joint and survivor 
                annuity bears to the annuity payable during the joint 
                lives of the participant and the spouse.''.
            (3) Notice.--Section 417(a)(3)(A)(i) of such Code is 
        amended by inserting ``and of the qualified optional survivor 
        annuity'' after ``annuity''.
    (b) Amendments to ERISA.--
            (1) Election of survivor annuity.--Section 205(c)(1)(A) of 
        the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1055(c)(1)(A)) is amended--
                    (A) in clause (i), by striking ``, and'' and 
                inserting a comma;
                    (B) by redesignating clause (ii) as clause (iii); 
                and
                    (C) by inserting after clause (i) the following:
                    ``(ii) if the participant elects a waiver under 
                clause (i), may elect the qualified optional survivor 
                annuity at any time during the applicable election 
                period, and''.
            (2) Definition.--Section 205(d) of such Act (29 U.S.C. 
        1055(d)) is amended--
                    (A) by inserting ``(1)'' after ``(d)'';
                    (B) by redesignating paragraphs (1) and (2) as 
                subparagraphs (A) and (B), respectively; and
                    (C) by adding at the end the following:
    ``(2)(A) For purposes of this section, the term `qualified optional 
survivor annuity' means an annuity--
            ``(i) for the life of the participant with a survivor 
        annuity for the life of the spouse which is equal to the 
        applicable percentage of the amount of the annuity which is 
        payable during the joint lives of the participant and the 
        spouse, and
            ``(ii) which is the actuarial equivalent of a single 
        annuity for the life of the participant.
Such term also includes any annuity in a form having the effect of an 
annuity described in the preceding sentence.
    ``(B)(i) For purposes of subparagraph (A), if the survivor annuity 
percentage--
            ``(I) is less than 75 percent, the applicable percentage is 
        75 percent, and
            ``(II) is greater than or equal to 75 percent, the 
        applicable percentage is 50 percent.
    ``(ii) For purposes of clause (i), the term `survivor annuity 
percentage' means the percentage which the survivor annuity under the 
plan's qualified joint and survivor annuity bears to the annuity 
payable during the joint lives of the participant and the spouse.''.
            (3) Notice.--Section 205(c)(3)(A)(i) of such Act (29 U.S.C. 
        1055(c)(3)(A)(i)) is amended by inserting ``and of the 
        qualified optional survivor annuity'' after ``annuity''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2007.
            (2) Special rule for collectively bargained plans.--In the 
        case of a plan maintained pursuant to 1 or more collective 
        bargaining agreements between employee representatives and 1 or 
        more employers ratified on or before the date of the enactment 
        of this Act, the amendments made by this section shall not 
        apply to plan years beginning before the earlier of--
                    (A) the later of--
                            (i) January 1, 2008, or
                            (ii) the date on which the last collective 
                        bargaining agreement related to the plan 
                        terminates (determined without regard to any 
                        extension thereof after the date of enactment 
                        of this Act), or
                    (B) January 1, 2009.

                  TITLE XI--ADMINISTRATIVE PROVISIONS

SEC. 1101. EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.

    (a) In General.--The Secretary of the Treasury shall have full 
authority to establish and implement the Employee Plans Compliance 
Resolution System (or any successor program) and any other employee 
plans correction policies, including the authority to waive income, 
excise, or other taxes to ensure that any tax, penalty, or sanction is 
not excessive and bears a reasonable relationship to the nature, 
extent, and severity of the failure.
    (b) Improvements.--The Secretary of the Treasury shall continue to 
update and improve the Employee Plans Compliance Resolution System (or 
any successor program), giving special attention to--
            (1) increasing the awareness and knowledge of small 
        employers concerning the availability and use of the program;
            (2) taking into account special concerns and circumstances 
        that small employers face with respect to compliance and 
        correction of compliance failures;
            (3) extending the duration of the self-correction period 
        under the Self-Correction Program for significant compliance 
        failures;
            (4) expanding the availability to correct insignificant 
        compliance failures under the Self-Correction Program during 
        audit; and
            (5) assuring that any tax, penalty, or sanction that is 
        imposed by reason of a compliance failure is not excessive and 
        bears a reasonable relationship to the nature, extent, and 
        severity of the failure.

SEC. 1102. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

    (a) Expansion of Period.--
            (1) Amendment of internal revenue code.--
                    (A) In general.--Section 417(a)(6)(A) of the 
                Internal Revenue Code of 1986 is amended by striking 
                ``90-day'' and inserting ``180-day''.
                    (B) Modification of regulations.--The Secretary of 
                the Treasury shall modify the regulations under 
                sections 402(f), 411(a)(11), and 417 of the Internal 
                Revenue Code of 1986 by substituting ``180 days'' for 
                ``90 days'' each place it appears in Treasury 
                Regulations sections 1.402(f)-1, 1.411(a)-11(c), and 
                1.417(e)-1(b).
            (2) Amendment of erisa.--
                    (A) In general.--Section 205(c)(7)(A) of the 
                Employee Retirement Income Security Act of 1974 (29 
                U.S.C. 1055(c)(7)(A)) is amended by striking ``90-day'' 
                and inserting ``180-day''.
                    (B) Modification of regulations.--The Secretary of 
                the Treasury shall modify the regulations under part 2 
                of subtitle B of title I of the Employee Retirement 
                Income Security Act of 1974 relating to sections 203(e) 
                and 205 of such Act by substituting ``180 days'' for 
                ``90 days'' each place it appears.
            (3) Effective date.--The amendments and modifications made 
        or required by this subsection shall apply to years beginning 
        after December 31, 2006.
    (b) Notification of Right To Defer.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the regulations under section 411(a)(11) of the Internal 
        Revenue Code of 1986 and under section 205 of the Employee 
        Retirement Income Security Act of 1974 to provide that the 
        description of a participant's right, if any, to defer receipt 
        of a distribution shall also describe the consequences of 
        failing to defer such receipt.
            (2) Effective date.--
                    (A) In general.--The modifications required by 
                paragraph (1) shall apply to years beginning after 
                December 31, 2006.
                    (B) Reasonable notice.--A plan shall not be treated 
                as failing to meet the requirements of section 
                411(a)(11) of such Code or section 205 of such Act with 
                respect to any description of consequences described in 
                paragraph (1) made within 90 days after the Secretary 
                of the Treasury issues the modifications required by 
                paragraph (1) if the plan administrator makes a 
                reasonable attempt to comply with such requirements.

SEC. 1103. REPORTING SIMPLIFICATION.

    (a) Simplified Annual Filing Requirement for Owners and Their 
Spouses.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the requirements for filing annual returns with respect to one-
        participant retirement plans to ensure that such plans with 
        assets of $250,000 or less as of the close of the plan year 
        need not file a return for that year.
            (2) One-participant retirement plan defined.--For purposes 
        of this subsection, the term ``one-participant retirement 
        plan'' means a retirement plan with respect to which the 
        following requirements are met:
                    (A) on the first day of the plan year--
                            (i) the plan covered only one individual 
                        (or the individual and the individual's spouse) 
                        and the individual owned 100 percent of the 
                        plan sponsor (whether or not incorporated), or
                            (ii) the plan covered only one or more 
                        partners (or partners and their spouses) in the 
                        plan sponsor;
                    (B) the plan meets the minimum coverage 
                requirements of section 410(b) of the Internal Revenue 
                Code of 1986 without being combined with any other plan 
                of the business that covers the employees of the 
                business;
                    (C) the plan does not provide benefits to anyone 
                except the individual (and the individual's spouse) or 
                the partners (and their spouses);
                    (D) the plan does not cover a business that is a 
                member of an affiliated service group, a controlled 
                group of corporations, or a group of businesses under 
                common control; and
                    (E) the plan does not cover a business that uses 
                the services of leased employees (within the meaning of 
                section 414(n) of such Code).
        For purposes of this paragraph, the term ``partner'' includes a 
        2-percent shareholder (as defined in section 1372(b) of such 
        Code) of an S corporation.
            (3) Other definitions.--Terms used in paragraph (2) which 
        are also used in section 414 of the Internal Revenue Code of 
        1986 shall have the respective meanings given such terms by 
        such section.
            (4) Effective date.--The provisions of this subsection 
        shall apply to plan years beginning on or after January 1, 
        2007.
    (b) Simplified Annual Filing Requirement for Plans With Fewer Than 
25 Participants.--In the case of plan years beginning after December 
31, 2006, the Secretary of the Treasury and the Secretary of Labor 
shall provide for the filing of a simplified annual return for any 
retirement plan which covers less than 25 participants on the first day 
of a plan year and which meets the requirements described in 
subparagraphs (B), (D), and (E) of subsection (a)(2).

SEC. 1104. VOLUNTARY EARLY RETIREMENT INCENTIVE AND EMPLOYMENT 
              RETENTION PLANS MAINTAINED BY LOCAL EDUCATIONAL AGENCIES 
              AND OTHER ENTITIES.

    (a) Voluntary Early Retirement Incentive Plans.--
            (1) Treatment as plan providing severance pay.--Section 
        457(e)(11) of the Internal Revenue Code of 1986 (relating to 
        certain plans excluded) is amended by adding at the end the 
        following new subparagraph:
                    ``(D) Certain voluntary early retirement incentive 
                plans.--
                            ``(i) In general.--If an applicable 
                        voluntary early retirement incentive plan--
                                    ``(I) makes payments or supplements 
                                as an early retirement benefit, a 
                                retirement-type subsidy, or a benefit 
                                described in the last sentence of 
                                section 411(a)(9), and
                                    ``(II) such payments or supplements 
                                are made in coordination with a defined 
                                benefit plan which is described in 
                                section 401(a) and includes a trust 
                                exempt from tax under section 501(a) 
                                and which is maintained by an eligible 
                                employer described in paragraph (1)(A) 
                                or by an education association 
                                described in clause (ii)(II),
                        such applicable plan shall be treated for 
                        purposes of subparagraph (A)(i) as a bona fide 
                        severance pay plan with respect to such 
                        payments or supplements to the extent such 
                        payments or supplements could otherwise have 
                        been provided under such defined benefit plan 
                        (determined as if section 411 applied to such 
                        defined benefit plan).
                            ``(ii) Applicable voluntary early 
                        retirement incentive plan.--For purposes of 
                        this subparagraph, the term `applicable 
                        voluntary early retirement incentive plan' 
                        means a voluntary early retirement incentive 
                        plan maintained by--
                                    ``(I) a local educational agency 
                                (as defined in section 9101 of the 
                                Elementary and Secondary Education Act 
                                of 1965 (20 U.S.C. 7801)), or
                                    ``(II) an education association 
                                which principally represents employees 
                                of 1 or more agencies described in 
                                subclause (I) and which is described in 
                                section 501(c) (5) or (6) and exempt 
                                from tax under section 501(a).''
            (2) Age discrimination in employment act.--Section 4(l)(1) 
        of the Age Discrimination in Employment Act of 1967 (29 U.S.C. 
        623(l)(1)) is amended--
                    (A) by inserting ``(A)'' after ``(1)'',
                    (B) by redesignating subparagraphs (A) and (B) as 
                clauses (i) and (ii), respectively,
                    (C) by redesignating clauses (i) and (ii) of 
                subparagraph (B) (as in effect before the amendments 
                made by subparagraph (B)) as subclauses (I) and (II), 
                respectively, and
                    (D) by adding at the end the following:
            ``(B) A voluntary early retirement incentive plan that--
                    ``(i) is maintained by--
                            ``(I) a local educational agency (as 
                        defined in section 9101 of the Elementary and 
                        Secondary Education Act of 1965 (20 U.S.C. 
                        7801), or
                            ``(II) an education association which 
                        principally represents employees of 1 or more 
                        agencies described in subclause (I) and which 
                        is described in section 501(c) (5) or (6) of 
                        the Internal Revenue Code of 1986 and exempt 
                        from taxation under section 501(a) of such 
                        Code, and
                    ``(ii) makes payments or supplements described in 
                subclauses (I) and (II) of subparagraph (A)(ii) in 
                coordination with a defined benefit plan (as so 
                defined) maintained by an eligible employer described 
                in section 457(e)(1)(A) of such Code or by an education 
                association described in clause (i)(II),
        shall be treated solely for purposes of subparagraph (A)(ii) as 
        if it were a part of the defined benefit plan with respect to 
        such payments or supplements. Payments or supplements under 
        such a voluntary early retirement incentive plan shall not 
        constitute severance pay for purposes of paragraph (2).''.
    (b) Employment Retention Plans.--
            (1) In general.--Section 457(f)(2) of the Internal Revenue 
        Code of 1986 (relating to exceptions) is amended by striking 
        ``and'' at the end of subparagraph (D), by striking the period 
        at the end of subparagraph (E) and inserting ``, and'', and by 
        adding at the end the following:
                    ``(F) that portion of any applicable employment 
                retention plan described in paragraph (4) with respect 
                to any participant.''
            (2) Definitions and rules relating to employment retention 
        plans.--Section 457(f) of such Code is amended by adding at the 
        end the following new paragraph:
            ``(4) Employment retention plans.--For purposes of 
        paragraph (2)(F)--
                    ``(A) In general.--The portion of an applicable 
                employment retention plan described in this paragraph 
                with respect to any participant is that portion of the 
                plan which provides benefits payable to the participant 
                not in excess of twice the applicable dollar limit 
                determined under subsection (e)(15).
                    ``(B) Other rules.--
                            ``(i) Limitation.--Paragraph (2)(F) shall 
                        only apply to the portion of the plan described 
                        in subparagraph (A) for years preceding the 
                        year in which such portion is paid or otherwise 
                        made available to the participant.
                            ``(ii) Treatment.--A plan shall not be 
                        treated for purposes of this title as providing 
                        for the deferral of compensation for any year 
                        with respect to the portion of the plan 
                        described in subparagraph (A).
                    ``(C) Applicable employment retention plan.--The 
                term `applicable employment retention plan' means an 
                employment retention plan maintained by--
                            ``(i) a local educational agency (as 
                        defined in section 9101 of the Elementary and 
                        Secondary Education Act of 1965 (20 U.S.C. 
                        7801), or
                            ``(ii) an education association which 
                        principally represents employees of 1 or more 
                        agencies described in clause (i) and which is 
                        described in section 501(c) (5) or (6) and 
                        exempt from taxation under section 501(a).
                    ``(D) Employment retention plan.--The term 
                `employment retention plan' means a plan to pay, upon 
                termination of employment, compensation to an employee 
                of a local educational agency or education association 
                described in subparagraph (C) for purposes of--
                            ``(i) retaining the services of the 
                        employee, or
                            ``(ii) rewarding such employee for the 
                        employee's service with 1 or more such agencies 
                        or associations.''.
    (c) Coordination With ERISA.--Section 3(2)(B) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1002(2)(B)) is 
amended by adding at the end the following: ``An applicable voluntary 
early retirement incentive plan (as defined in section 
457(e)(11)(D)(ii) of the Internal Revenue Code of 1986) making payments 
or supplements described in section 457(e)(11)(D)(i) of such Code, and 
an applicable employment retention plan (as defined in section 
457(f)(4)(C) of such Code) making payments of benefits described in 
section 457(f)(4)(A) of such Code, shall, for purposes of this title, 
be treated as a welfare plan (and not a pension plan) with respect to 
such payments and supplements.''
    (d) Effective Dates.--
            (1) In general.--The amendments made by this Act shall take 
        effect on the date of the enactment of this Act.
            (2) Tax amendments.--The amendments made by subsections 
        (a)(1) and (b) shall apply to taxable years ending after the 
        date of the enactment of this Act.
            (3) ERISA amendments.--The amendment made by subsection (c) 
        shall apply to plan years ending after the date of the 
        enactment of this Act.
            (4) Construction.--Nothing in the amendments made by this 
        section shall alter or affect the construction of the Internal 
        Revenue Code of 1986, the Employee Retirement Income Security 
        Act of 1974, or the Age Discrimination in Employment Act of 
        1967 as applied to any plan, arrangement, or conduct to which 
        such amendments do not apply.

SEC. 1105. NO REDUCTION IN UNEMPLOYMENT COMPENSATION AS A RESULT OF 
              PENSION ROLLOVERS.

    (a) In General.--Section 3304(a) of the Internal Revenue Code of 
1986 (relating to requirements for State unemployment laws) is amended 
by adding at the end the following new flush sentence:
``Compensation shall not be reduced under paragraph (15) for any 
pension, retirement or retired pay, annuity, or similar payment which 
is not includible in gross income of the individual for the taxable 
year in which paid because it was part of a rollover distribution.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to weeks beginning on or after the date of the enactment of this Act.

SEC. 1106. REVOCATION OF ELECTION RELATING TO TREATMENT AS 
              MULTIEMPLOYER PLAN.

    (a) Amendment to ERISA.--Section 3(37) of the Employee Retirement 
Income Security Act of 1974 is amended by adding at the end the 
following new subparagraph (G):
            ``(G)(i) Within 1 year after the enactment of the Pension 
        Protection Act of 2006--
                    ``(I) an election under subparagraph (E) may be 
                revoked, pursuant to procedures prescribed by the 
                Pension Benefit Guaranty Corporation, if, for each of 
                the 3 plan years prior to the date of the enactment of 
                that Act, the plan would have been a multiemployer plan 
                but for the election under subparagraph (E), and
                    ``(II) a plan that meets the criteria in clauses 
                (i) and (ii) of subparagraph (A) of this paragraph or 
                that is described in clause (vi) may, pursuant to 
                procedures prescribed by the Pension Benefit Guaranty 
                Corporation, elect to be a multiemployer plan, if--
                            ``(aa) for each of the 3 plan years 
                        immediately before the date of the enactment of 
                        the Pension Protection Act of 2006, the plan 
                        has met those criteria or is so described,
                            ``(bb) substantially all of the plan's 
                        employer contributions for each of those plan 
                        years were made or required to be made by 
                        organizations that were exempt from tax under 
                        section 501 of the Internal Revenue Code of 
                        1986, and
                            ``(cc) the plan was established prior to 
                        September 2, 1974.
            ``(ii) An election under this paragraph shall be effective 
        for all purposes under this Act and under the Internal Revenue 
        Code of 1986, starting with the first plan year ending after 
        the date of the enactment of the Pension Protection Act of 
        2006.
            ``(iii) Once made, an election under this paragraph shall 
        be irrevocable, except that a plan described in subclause 
        (i)(II) shall cease to be a multiemployer plan as of the plan 
        year beginning immediately after the first plan year for which 
        the majority of its employer contributions were made or 
        required to be made by organizations that were not exempt from 
        tax under section 501 of the Internal Revenue Code of 1986.
            ``(iv) The fact that a plan makes an election under clause 
        (i)(II) does not imply that the plan was not a multiemployer 
        plan prior to the date of the election or would not be a 
        multiemployer plan without regard to the election.
            ``(v)(I) No later than 30 days before an election is made 
        under this paragraph, the plan administrator shall provide 
        notice of the pending election to each plan participant and 
        beneficiary, each labor organization representing such 
        participants or beneficiaries, and each employer that has an 
        obligation to contribute to the plan, describing the principal 
        differences between the guarantee programs under title IV and 
        the benefit restrictions under this title for single employer 
        and multiemployer plans, along with such other information as 
        the plan administrator chooses to include.
            ``(II) Within 180 days after the date of enactment of the 
        Pension Protection Act of 2006, the Secretary shall prescribe a 
        model notice under this subparagraph.
            ``(III) A plan administrator's failure to provide the 
        notice required under this subparagraph shall be treated for 
        purposes of section 502(c)(2) as a failure or refusal by the 
        plan administrator to file the annual report required to be 
        filed with the Secretary under section 101(b)(4).
            ``(vi) A plan is described in this clause if it is a plan--
                    ``(I) that was established in Chicago, Illinois, on 
                August 12, 1881; and
                    ``(II) sponsored by an organization described in 
                section 501(c)(5) of the Internal Revenue Code of 1986 
                and exempt from tax under section 501(a) of such 
                Code.''.
    (b) Amendment to Internal Revenue Code.--Subsection (f) of section 
414 of the Internal Revenue Code of 1986 is amended by adding at the 
end the following new paragraph (6):
            ``(6) Election with regard to multiemployer status.--
                    ``(A) Within 1 year after the enactment of the 
                Pension Protection Act of 2006--
                            ``(i) An election under paragraph (5) may 
                        be revoked, pursuant to procedures prescribed 
                        by the Pension Benefit Guaranty Corporation, 
                        if, for each of the 3 plan years prior to the 
                        date of the enactment of that Act, the plan 
                        would have been a multiemployer plan but for 
                        the election under paragraph (5), and
                            ``(ii) a plan that meets the criteria in 
                        subparagraph (A) and (B) of paragraph (1) of 
                        this subsection or that is described in 
                        subparagraph (E) may, pursuant to procedures 
                        prescribed by the Pension Benefit Guaranty 
                        Corporation, elect to be a multiemployer plan, 
                        if--
                                    ``(I) for each of the 3 plan years 
                                immediately before the date of 
                                enactment of the Pension Protection Act 
                                of 2006, the plan has met those 
                                criteria or is so described,
                                    ``(II) substantially all of the 
                                plan's employer contributions for each 
                                of those plan years were made or 
                                required to be made by organizations 
                                that were exempt from tax under section 
                                501, and
                                    ``(III) the plan was established 
                                prior to September 2, 1974.
                    ``(B) An election under this paragraph shall be 
                effective for all purposes under this Act and under the 
                Employee Retirement Income Security Act of 1974, 
                starting with the first plan year ending after the date 
                of the enactment of the Pension Protection Act of 2006.
                    ``(C) Once made, an election under this paragraph 
                shall be irrevocable, except that a plan described in 
                subparagraph (A)(ii) shall cease to be a multiemployer 
                plan as of the plan year beginning immediately after 
                the first plan year for which the majority of its 
                employer contributions were made or required to be made 
                by organizations that were not exempt from tax under 
                section 501.
                    ``(D) The fact that a plan makes an election under 
                subparagraph (A)(ii) does not imply that the plan was 
                not a multiemployer plan prior to the date of the 
                election or would not be a multiemployer plan without 
                regard to the election.
                    ``(E) A plan is described in this subparagraph if 
                it is a plan--
                            ``(i) that was established in Chicago, 
                        Illinois, on August 12, 1881; and
                            ``(ii) sponsored by an organization 
                        described in section 501(c)(5) and exempt from 
                        tax under section 501(a).''.

SEC. 1107. PROVISIONS RELATING TO PLAN AMENDMENTS.

    (a) In General.--If this section applies to any pension plan or 
contract amendment--
            (1) such pension plan or contract shall be treated as being 
        operated in accordance with the terms of the plan during the 
        period described in subsection (b)(2)(A), and
            (2) except as provided by the Secretary of the Treasury, 
        such pension plan shall not fail to meet the requirements of 
        section 411(d)(6) of the Internal Revenue Code of 1986 and 
        section 204(g) of the Employee Retirement Income Security Act 
        of 1974 by reason of such amendment.
    (b) Amendments to Which Section Applies.--
            (1) In general.--This section shall apply to any amendment 
        to any pension plan or annuity contract which is made--
                    (A) pursuant to any amendment made by this Act or 
                pursuant to any regulation issued by the Secretary of 
                the Treasury or the Secretary of Labor under this Act, 
                and
                    (B) on or before the last day of the first plan 
                year beginning on or after January 1, 2009.
        In the case of a governmental plan (as defined in section 
        414(d) of the Internal Revenue Code of 1986), this paragraph 
        shall be applied by substituting ``2011'' for ``2009''.
            (2) Conditions.--This section shall not apply to any 
        amendment unless--
                    (A) during the period--
                            (i) beginning on the date the legislative 
                        or regulatory amendment described in paragraph 
                        (1)(A) takes effect (or in the case of a plan 
                        or contract amendment not required by such 
                        legislative or regulatory amendment, the 
                        effective date specified by the plan), and
                            (ii) ending on the date described in 
                        paragraph (1)(B) (or, if earlier, the date the 
                        plan or contract amendment is adopted), the 
                        plan or contract is operated as if such plan or 
                        contract amendment were in effect; and
                    (B) such plan or contract amendment applies 
                retroactively for such period.

         TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS

                Subtitle A--Charitable Giving Incentives

SEC. 1201. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR 
              CHARITABLE PURPOSES.

    (a) In General.--Subsection (d) of section 408 (relating to 
individual retirement accounts) is amended by adding at the end the 
following new paragraph:
            ``(8) Distributions for charitable purposes.--
                    ``(A) In general.--So much of the aggregate amount 
                of qualified charitable distributions with respect to a 
                taxpayer made during any taxable year which does not 
                exceed $100,000 shall not be includible in gross income 
                of such taxpayer for such taxable year.
                    ``(B) Qualified charitable distribution.--For 
                purposes of this paragraph, the term `qualified 
                charitable distribution' means any distribution from an 
                individual retirement plan (other than a plan described 
                in subsection (k) or (p))--
                            ``(i) which is made directly by the trustee 
                        to an organization described in section 
                        170(b)(1)(A) (other than any organization 
                        described in section 509(a)(3) or any fund or 
                        account described in section 4966(d)(2)), and
                            ``(ii) which is made on or after the date 
                        that the individual for whose benefit the plan 
                        is maintained has attained age 70\1/2\.
                A distribution shall be treated as a qualified 
                charitable distribution only to the extent that the 
                distribution would be includible in gross income 
                without regard to subparagraph (A).
                    ``(C) Contributions must be otherwise deductible.--
                For purposes of this paragraph, a distribution to an 
                organization described in subparagraph (B)(i) shall be 
                treated as a qualified charitable distribution only if 
                a deduction for the entire distribution would be 
                allowable under section 170 (determined without regard 
                to subsection (b) thereof and this paragraph).
                    ``(D) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which a 
                distribution is a qualified charitable distribution, 
                the entire amount of the distribution shall be treated 
                as includible in gross income without regard to 
                subparagraph (A) to the extent that such amount does 
                not exceed the aggregate amount which would have been 
                so includible if all amounts distributed from all 
                individual retirement plans were treated as 1 contract 
                under paragraph (2)(A) for purposes of determining the 
                inclusion of such distribution under section 72. Proper 
                adjustments shall be made in applying section 72 to 
                other distributions in such taxable year and subsequent 
                taxable years.
                    ``(E) Denial of deduction.--Qualified charitable 
                distributions which are not includible in gross income 
                pursuant to subparagraph (A) shall not be taken into 
                account in determining the deduction under section 170.
                    ``(F) Termination.--This paragraph shall not apply 
                to distributions made in taxable years beginning after 
                December 31, 2007.''.
    (b) Modifications Relating to Information Returns by Certain 
Trusts.--
            (1) Returns.--Section 6034 (relating to returns by trusts 
        described in section 4947(a)(2) or claiming charitable 
        deductions under section 642(c)) is amended to read as follows:

``SEC. 6034. RETURNS BY CERTAIN TRUSTS.

    ``(a) Split-Interest Trusts.--Every trust described in section 
4947(a)(2) shall furnish such information with respect to the taxable 
year as the Secretary may by forms or regulations require.
    ``(b) Trusts Claiming Certain Charitable Deductions.--
            ``(1) In general.--Every trust not required to file a 
        return under subsection (a) but claiming a deduction under 
        section 642(c) for the taxable year shall furnish such 
        information with respect to such taxable year as the Secretary 
        may by forms or regulations prescribe, including--
                    ``(A) the amount of the deduction taken under 
                section 642(c) within such year,
                    ``(B) the amount paid out within such year which 
                represents amounts for which deductions under section 
                642(c) have been taken in prior years,
                    ``(C) the amount for which such deductions have 
                been taken in prior years but which has not been paid 
                out at the beginning of such year,
                    ``(D) the amount paid out of principal in the 
                current and prior years for the purposes described in 
                section 642(c),
                    ``(E) the total income of the trust within such 
                year and the expenses attributable thereto, and
                    ``(F) a balance sheet showing the assets, 
                liabilities, and net worth of the trust as of the 
                beginning of such year.
            ``(2) Exceptions.--Paragraph (1) shall not apply to a trust 
        for any taxable year if--
                    ``(A) all the net income for such year, determined 
                under the applicable principles of the law of trusts, 
                is required to be distributed currently to the 
                beneficiaries, or
                    ``(B) the trust is described in section 
                4947(a)(1).''.
            (2) Increase in penalty relating to filing of information 
        return by split-interest trusts.--Paragraph (2) of section 
        6652(c) (relating to returns by exempt organizations and by 
        certain trusts) is amended by adding at the end the following 
        new subparagraph:
                    ``(C) Split-interest trusts.--In the case of a 
                trust which is required to file a return under section 
                6034(a), subparagraphs (A) and (B) of this paragraph 
                shall not apply and paragraph (1) shall apply in the 
                same manner as if such return were required under 
                section 6033, except that--
                            ``(i) the 5 percent limitation in the 
                        second sentence of paragraph (1)(A) shall not 
                        apply,
                            ``(ii) in the case of any trust with gross 
                        income in excess of $250,000, the first 
                        sentence of paragraph (1)(A) shall be applied 
                        by substituting `$100' for `$20', and the 
                        second sentence thereof shall be applied by 
                        substituting `$50,000' for `$10,000', and
                            ``(iii) the third sentence of paragraph 
                        (1)(A) shall be disregarded.
                In addition to any penalty imposed on the trust 
                pursuant to this subparagraph, if the person required 
                to file such return knowingly fails to file the return, 
                such penalty shall also be imposed on such person who 
                shall be personally liable for such penalty.''.
            (3) Confidentiality of noncharitable beneficiaries.--
        Subsection (b) of section 6104 (relating to inspection of 
        annual information returns) is amended by adding at the end the 
        following new sentence: ``In the case of a trust which is 
        required to file a return under section 6034(a), this 
        subsection shall not apply to information regarding 
        beneficiaries which are not organizations described in section 
        170(c).''.
            (4) Clerical amendment.--The item in the table of sections 
        for subpart A of part III of subchapter A of chapter 61 
        relating to section 6034 is amended to read as follows:

``Sec. 6034. Returns by certain trusts.''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to distributions made in taxable years beginning 
        after December 31, 2005.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to returns for taxable years beginning after 
        December 31, 2006.

SEC. 1202. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION FOR 
              CONTRIBUTIONS OF FOOD INVENTORY.

    (a) In General.--Section 170(e)(3)(C)(iv) (relating to termination) 
is amended by striking ``2005'' and inserting ``2007''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after December 31, 2005.

SEC. 1203. BASIS ADJUSTMENT TO STOCK OF S CORPORATION CONTRIBUTING 
              PROPERTY.

    (a) In General.--Paragraph (2) of section 1367(a) (relating to 
adjustments to basis of stock of shareholders, etc.) is amended by 
adding at the end the following new flush sentence:
        ``The decrease under subparagraph (B) by reason of a charitable 
        contribution (as defined in section 170(c)) of property shall 
        be the amount equal to the shareholder's pro rata share of the 
        adjusted basis of such property. The preceding sentence shall 
        not apply to contributions made in taxable years beginning 
        after December 31, 2007.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after December 31, 
2005.

SEC. 1204. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION FOR 
              CONTRIBUTIONS OF BOOK INVENTORY.

    (a) In General.--Section 170(e)(3)(D)(iv) (relating to termination) 
is amended by striking ``2005'' and inserting ``2007''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after December 31, 2005.

SEC. 1205. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS TO 
              CONTROLLING EXEMPT ORGANIZATIONS.

    (a) In General.--Paragraph (13) of section 512(b) (relating to 
special rules for certain amounts received from controlled entities) is 
amended by redesignating subparagraph (E) as subparagraph (F) and by 
inserting after subparagraph (D) the following new subparagraph:
                    ``(E) Paragraph to apply only to certain excess 
                payments.--
                            ``(i) In general.--Subparagraph (A) shall 
                        apply only to the portion of a qualifying 
                        specified payment received or accrued by the 
                        controlling organization that exceeds the 
                        amount which would have been paid or accrued if 
                        such payment met the requirements prescribed 
                        under section 482.
                            ``(ii) Addition to tax for valuation 
                        misstatements.--The tax imposed by this chapter 
                        on the controlling organization shall be 
                        increased by an amount equal to 20 percent of 
                        the larger of--
                                    ``(I) such excess determined 
                                without regard to any amendment or 
                                supplement to a return of tax, or
                                    ``(II) such excess determined with 
                                regard to all such amendments and 
                                supplements.
                            ``(iii) Qualifying specified payment.--The 
                        term `qualifying specified payment' means a 
                        specified payment which is made pursuant to--
                                    ``(I) a binding written contract in 
                                effect on the date of the enactment of 
                                this subparagraph, or
                                    ``(II) a contract which is a 
                                renewal, under substantially similar 
                                terms, of a contract described in 
                                subclause (I).
                            ``(iv) Termination.--This subparagraph 
                        shall not apply to payments received or accrued 
                        after December 31, 2007.''.
    (b) Reporting.--
            (1) In general.--Section 6033 (relating to returns by 
        exempt organizations) is amended by redesignating subsection 
        (h) as subsection (i) and by inserting after subsection (g) the 
        following new subsection:
    ``(h) Controlling Organizations.--Each controlling organization 
(within the meaning of section 512(b)(13)) which is subject to the 
requirements of subsection (a) shall include on the return required 
under subsection (a)--
            ``(1) any interest, annuities, royalties, or rents received 
        from each controlled entity (within the meaning of section 
        512(b)(13)),
            ``(2) any loans made to each such controlled entity, and
            ``(3) any transfers of funds between such controlling 
        organization and each such controlled entity.''.
            (2) Report to congress.--Not later than January 1, 2009, 
        the Secretary of the Treasury shall submit to the Committee on 
        Finance of the Senate and the Committee on Ways and Means of 
        the House of Representatives a report on the effectiveness of 
        the Internal Revenue Service in administering the amendments 
        made by subsection (a) and on the extent to which payments by 
        controlled entities (within the meaning of section 512(b)(13) 
        of the Internal Revenue Code of 1986) to controlling 
        organizations (within the meaning of section 512(b)(13) of such 
        Code) meet the requirements under section 482 of such Code. 
        Such report shall include the results of any audit of any 
        controlling organization or controlled entity and 
        recommendations relating to the tax treatment of payments from 
        controlled entities to controlling organizations.
    (c) Effective Date.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to payments received or accrued after December 31, 
        2005.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to returns the due date (determined without regard 
        to extensions) of which is after the date of the enactment of 
        this Act.

SEC. 1206. ENCOURAGEMENT OF CONTRIBUTIONS OF CAPITAL GAIN REAL PROPERTY 
              MADE FOR CONSERVATION PURPOSES.

    (a) In General.--
            (1) Individuals.--Paragraph (1) of section 170(b) (relating 
        to percentage limitations) is amended by redesignating 
        subparagraphs (E) and (F) as subparagraphs (F) and (G), 
        respectively, and by inserting after subparagraph (D) the 
        following new subparagraph:
                    ``(E) Contributions of qualified conservation 
                contributions.--
                            ``(i) In general.--Any qualified 
                        conservation contribution (as defined in 
                        subsection (h)(1)) shall be allowed to the 
                        extent the aggregate of such contributions does 
                        not exceed the excess of 50 percent of the 
                        taxpayer's contribution base over the amount of 
                        all other charitable contributions allowable 
                        under this paragraph.
                            ``(ii) Carryover.--If the aggregate amount 
                        of contributions described in clause (i) 
                        exceeds the limitation of clause (i), such 
                        excess shall be treated (in a manner consistent 
                        with the rules of subsection (d)(1)) as a 
                        charitable contribution to which clause (i) 
                        applies in each of the 15 succeeding years in 
                        order of time.
                            ``(iii) Coordination with other 
                        subparagraphs.--For purposes of applying this 
                        subsection and subsection (d)(1), contributions 
                        described in clause (i) shall not be treated as 
                        described in subparagraph (A), (B), (C), or (D) 
                        and such subparagraphs shall apply without 
                        regard to such contributions.
                            ``(iv) Special rule for contribution of 
                        property used in agriculture or livestock 
                        production.--
                                    ``(I) In general.--If the 
                                individual is a qualified farmer or 
                                rancher for the taxable year for which 
                                the contribution is made, clause (i) 
                                shall be applied by substituting `100 
                                percent' for `50 percent'.
                                    ``(II) Exception.--Subclause (I) 
                                shall not apply to any contribution of 
                                property made after the date of the 
                                enactment of this subparagraph which is 
                                used in agriculture or livestock 
                                production (or available for such 
                                production) unless such contribution is 
                                subject to a restriction that such 
                                property remain available for such 
                                production. This subparagraph shall be 
                                applied separately with respect to 
                                property to which subclause (I) does 
                                not apply by reason of the preceding 
                                sentence prior to its application to 
                                property to which subclause (I) does 
                                apply.
                            ``(v) Definition.--For purposes of clause 
                        (iv), the term `qualified farmer or rancher' 
                        means a taxpayer whose gross income from the 
                        trade or business of farming (within the 
                        meaning of section 2032A(e)(5)) is greater than 
                        50 percent of the taxpayer's gross income for 
                        the taxable year.
                            ``(vi) Termination.--This subparagraph 
                        shall not apply to any contribution made in 
                        taxable years beginning after December 31, 
                        2007.''.
            (2) Corporations.--Paragraph (2) of section 170(b) is 
        amended to read as follows:
            ``(2) Corporations.--In the case of a corporation--
                    ``(A) In general.--The total deductions under 
                subsection (a) for any taxable year (other than for 
                contributions to which subparagraph (B) applies) shall 
                not exceed 10 percent of the taxpayer's taxable income.
                    ``(B) Qualified conservation contributions by 
                certain corporate farmers and ranchers.--
                            ``(i) In general.--Any qualified 
                        conservation contribution (as defined in 
                        subsection (h)(1))--
                                    ``(I) which is made by a 
                                corporation which, for the taxable year 
                                during which the contribution is made, 
                                is a qualified farmer or rancher (as 
                                defined in paragraph (1)(E)(v)) and the 
                                stock of which is not readily tradable 
                                on an established securities market at 
                                any time during such year, and
                                    ``(II) which, in the case of 
                                contributions made after the date of 
                                the enactment of this subparagraph, is 
                                a contribution of property which is 
                                used in agriculture or livestock 
                                production (or available for such 
                                production) and which is subject to a 
                                restriction that such property remain 
                                available for such production,
                        shall be allowed to the extent the aggregate of 
                        such contributions does not exceed the excess 
                        of the taxpayer's taxable income over the 
                        amount of charitable contributions allowable 
                        under subparagraph (A).
                            ``(ii) Carryover.--If the aggregate amount 
                        of contributions described in clause (i) 
                        exceeds the limitation of clause (i), such 
                        excess shall be treated (in a manner consistent 
                        with the rules of subsection (d)(2)) as a 
                        charitable contribution to which clause (i) 
                        applies in each of the 15 succeeding years in 
                        order of time.
                            ``(iii) Termination.--This subparagraph 
                        shall not apply to any contribution made in 
                        taxable years beginning after December 31, 
                        2007.
                    ``(C) Taxable income.--For purposes of this 
                paragraph, taxable income shall be computed without 
                regard to--
                            ``(i) this section,
                            ``(ii) part VIII (except section 248),
                            ``(iii) any net operating loss carryback to 
                        the taxable year under section 172,
                            ``(iv) section 199, and
                            ``(v) any capital loss carryback to the 
                        taxable year under section 1212(a)(1).''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 170(d) is amended by striking 
        ``subsection (b)(2)'' each place it appears and inserting 
        ``subsection (b)(2)(A)''.
            (2) Section 545(b)(2) is amended by striking ``and (D)'' 
        and inserting ``(D), and (E)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions made in taxable years beginning after December 
31, 2005.

SEC. 1207. EXCISE TAXES EXEMPTION FOR BLOOD COLLECTOR ORGANIZATIONS.

    (a) Exemption From Imposition of Special Fuels Tax.--Section 
4041(g) (relating to other exemptions) is amended by striking ``and'' 
at the end of paragraph (3), by striking the period in paragraph (4) 
and inserting ``; and'', and by inserting after paragraph (4) the 
following new paragraph:
            ``(5) with respect to the sale of any liquid to a qualified 
        blood collector organization (as defined in section 
        7701(a)(49)) for such organization's exclusive use in the 
        collection, storage, or transportation of blood.''.
    (b) Exemption From Manufacturers Excise Tax.--
            (1) In general.--Section 4221(a) (relating to certain tax-
        free sales) is amended by striking ``or'' at the end of 
        paragraph (4), by adding ``or'' at the end of paragraph (5), 
        and by inserting after paragraph (5) the following new 
        paragraph:
            ``(6) to a qualified blood collector organization (as 
        defined in section 7701(a)(49)) for such organization's 
        exclusive use in the collection, storage, or transportation of 
        blood,''.
            (2) No exemption with respect to vaccines and recreational 
        equipment.--Section 4221(a) is amended by adding at the end the 
        following new sentence: ``In the case of taxes imposed by 
        subchapter C or D, paragraph (6) shall not apply.''.
            (3) Conforming amendments.--
                    (A) The second sentence of section 4221(a) is 
                amended by striking ``Paragraphs (4) and (5)'' and 
                inserting ``Paragraphs (4), (5), and (6)''.
                    (B) Section 6421(c) is amended by striking ``or 
                (5)'' and inserting ``(5), or (6)''.
    (c) Exemption From Communication Excise Tax.--
            (1) In general.--Section 4253 (relating to exemptions) is 
        amended by redesignating subsection (k) as subsection (l) and 
        inserting after subsection (j) the following new subsection:
    ``(k) Exemption for Qualified Blood Collector Organizations.--Under 
regulations provided by the Secretary, no tax shall be imposed under 
section 4251 on any amount paid by a qualified blood collector 
organization (as defined in section 7701(a)(49)) for services or 
facilities furnished to such organization.''.
            (2) Conforming amendment.--Section 4253(l), as redesignated 
        by paragraph (1), is amended by striking ``or (j)'' and 
        inserting ``(j), or (k)''.
    (d) Exemption From Tax on Heavy Vehicles.--Section 4483 is amended 
by redesignating subsection (h) as subsection (i) and by inserting 
after subsection (g) the following new subsection:
    ``(h) Exemption for Vehicles Used in Blood Collection.--
            ``(1) In general.--No tax shall be imposed by section 4481 
        on the use of any qualified blood collector vehicle by a 
        qualified blood collector organization.
            ``(2) Qualified blood collector vehicle.--For purposes of 
        this subsection, the term `qualified blood collector vehicle' 
        means a vehicle at least 80 percent of the use of which during 
        the prior taxable period was by a qualified blood collector 
        organization in the collection, storage, or transportation of 
        blood.
            ``(3) Special rule for vehicles first placed in service in 
        a taxable period.--In the case of a vehicle first placed in 
        service in a taxable period, a vehicle shall be treated as a 
        qualified blood collector vehicle for such taxable period if 
        such qualified blood collector organization certifies to the 
        Secretary that the organization reasonably expects at least 80 
        percent of the use of such vehicle by the organization during 
        such taxable period will be in the collection, storage, or 
        transportation of blood.
            ``(4) Qualified blood collector organization.--The term 
        `qualified blood collector organization' has the meaning given 
        such term by section 7701(a)(49).''.
    (e) Credit or Refund for Certain Taxes on Sales and Services.--
            (1) Deemed overpayment.--
                    (A) In general.--Section 6416(b)(2) is amended by 
                redesignating subparagraphs (E) and (F) as 
                subparagraphs (F) and (G), respectively, and by 
                inserting after subparagraph (D) the following new 
                subparagraph:
                    ``(E) sold to a qualified blood collector 
                organization (as defined in section 7701(a)(49)) for 
                such organization's exclusive use in the collection, 
                storage, or transportation of blood;''.
                    (B) No credit or refund for vaccines or 
                recreational equipment.--Section 6416(b)(2) is amended 
                by adding at the end the following new sentence: ``In 
                the case of taxes imposed by subchapter C or D of 
                chapter 32, subparagraph (E) shall not apply.''.
                    (C) Conforming amendments.--Section 6416(b)(2) is 
                amended--
                            (i) by striking ``Subparagraphs (C) and 
                        (D)'' in the second sentence and inserting 
                        ``Subparagraphs (C), (D), and (E)''.
                            (ii) by striking ``(B), (C), and (D)'' and 
                        inserting ``(B), (C), (D), and (E)''.
            (2) Sales of tires.--Section 6416(b)(4)(B) is amended by 
        striking ``or'' at the end of clause (i), by striking the 
        period at the end of clause (ii) and inserting ``, or'', and by 
        adding after clause (ii) the following:
                            ``(iii) sold to a qualified blood collector 
                        organization for its exclusive use in 
                        connection with a vehicle the organization 
                        certifies will be primarily used in the 
                        collection, storage, or transportation of 
                        blood.''.
    (f) Definition of Qualified Blood Collector Organization.--Section 
7701(a) is amended by inserting at the end the following new paragraph:
            ``(49) Qualified blood collector organization.--The term 
        `qualified blood collector organization' means an organization 
        which is--
                    ``(A) described in section 501(c)(3) and exempt 
                from tax under section 501(a),
                    ``(B) primarily engaged in the activity of the 
                collection of human blood,
                    ``(C) registered with the Secretary for purposes of 
                excise tax exemptions, and
                    ``(D) registered by the Food and Drug 
                Administration to collect blood.''.
    (g) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        take effect on January 1, 2007.
            (2) Subsection (d).--The amendment made by subsection (d) 
        shall apply to taxable periods beginning on or after July 1, 
        2007.

               Subtitle B--Reforming Exempt Organizations

                        PART 1--GENERAL REFORMS

SEC. 1211. REPORTING ON CERTAIN ACQUISITIONS OF INTERESTS IN INSURANCE 
              CONTRACTS IN WHICH CERTAIN EXEMPT ORGANIZATIONS HOLD AN 
              INTEREST.

    (a) Reporting Requirements.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 (relating to information concerning transactions 
        with other persons), as amended by this Act, is amended by 
        adding at the end the following new section:

``SEC. 6050V. RETURNS RELATING TO APPLICABLE INSURANCE CONTRACTS IN 
              WHICH CERTAIN EXEMPT ORGANIZATIONS HOLD INTERESTS.

    ``(a) In General.--Each applicable exempt organization which makes 
a reportable acquisition shall make the return described in subsection 
(c).
    ``(b) Time for Making Return.--Any applicable exempt organization 
required to make a return under subsection (a) shall file such return 
at such time as may be established by the Secretary.
    ``(c) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary prescribes,
            ``(2) contains the name, address, and taxpayer 
        identification number of the applicable exempt organization and 
        the issuer of the applicable insurance contract, and
            ``(3) contains such other information as the Secretary may 
        prescribe.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Reportable acquisition.--The term `reportable 
        acquisition' means the acquisition by an applicable exempt 
        organization of a direct or indirect interest in any applicable 
        insurance contract in any case in which such acquisition is a 
        part of a structured transaction involving a pool of such 
        contracts.
            ``(2) Applicable insurance contract.--
                    ``(A) In general.--The term `applicable insurance 
                contract' means any life insurance, annuity, or 
                endowment contract with respect to which both an 
                applicable exempt organization and a person other than 
                an applicable exempt organization have directly or 
                indirectly held an interest in the contract (whether or 
                not at the same time).
                    ``(B) Exceptions.--Such term shall not include a 
                life insurance, annuity, or endowment contract if--
                            ``(i) all persons directly or indirectly 
                        holding any interest in the contract (other 
                        than applicable exempt organizations) have an 
                        insurable interest in the insured under the 
                        contract independent of any interest of an 
                        applicable exempt organization in the contract,
                            ``(ii) the sole interest in the contract of 
                        an applicable exempt organization or each 
                        person other than an applicable exempt 
                        organization is as a named beneficiary, or
                            ``(iii) the sole interest in the contract 
                        of each person other than an applicable exempt 
                        organization is--
                                    ``(I) as a beneficiary of a trust 
                                holding an interest in the contract, 
                                but only if the person's designation as 
                                such beneficiary was made without 
                                consideration and solely on a purely 
                                gratuitous basis, or
                                    ``(II) as a trustee who holds an 
                                interest in the contract in a fiduciary 
                                capacity solely for the benefit of 
                                applicable exempt organizations or 
                                persons otherwise described in 
                                subclause (I) or clause (i) or (ii).
            ``(3) Applicable exempt organization.--The term `applicable 
        exempt organization' means--
                    ``(A) an organization described in section 170(c),
                    ``(B) an organization described in section 
                168(h)(2)(A)(iv), or
                    ``(C) an organization not described in paragraph 
                (1) or (2) which is described in section 2055(a) or 
                section 2522(a).
    ``(e) Termination.--This section shall not apply to reportable 
acquisitions occurring after the date which is 2 years after the date 
of the enactment of this section.''.
            (2) Conforming amendment.--The table of sections for 
        subpart B of part III of subchapter A of chapter 61 is amended 
        by adding at the end the following new item:

``Sec. 6050V. Returns relating to applicable insurance contracts in 
                            which certain exempt organizations hold 
                            interests.''.
    (b) Penalties.--
            (1) In general.--Subparagraph (B) of section 6724(d)(1), as 
        amended by this Act, is amended by redesignating clauses (xiv) 
        through (xix) as clauses (xv) through (xx) and by inserting 
        after clause (xiii) the following new clause:
                            ``(xiv) section 6050V (relating to returns 
                        relating to applicable insurance contracts in 
                        which certain exempt organizations hold 
                        interests),''.
            (2) Intentional disregard.--Section 6721(e)(2) is amended 
        by striking ``or'' at the end of subparagraph (B), by striking 
        ``and'' at the end of subparagraph (C) and inserting ``or'', 
        and by adding at the end the following new subparagraph:
                    ``(D) in the case of a return required to be filed 
                under section 6050V, 10 percent of the value of the 
                benefit of any contract with respect to which 
                information is required to be included on the return, 
                and''.
    (c) Study.--
            (1) In general.--The Secretary of the Treasury shall 
        undertake a study on--
                    (A) the use by tax exempt organizations of 
                applicable insurance contracts (as defined under 
                section 6050V(d)(2) of the Internal Revenue Code of 
                1986, as added by subsection (a)) for the purpose of 
                sharing the benefits of the organization's insurable 
                interest in individuals insured under such contracts 
                with investors, and
                    (B) whether such activities are consistent with the 
                tax exempt status of such organizations.
            (2) Report.--Not later than 30 months after the date of the 
        enactment of this Act, the Secretary of the Treasury shall 
        report on the study conducted under paragraph (1) to the 
        Committee on Finance of the Senate and the Committee on Ways 
        and Means of the House of Representatives.
    (d) Effective Date.--The amendments made by this section shall 
apply to acquisitions of contracts after the date of enactment of this 
Act.

SEC. 1212. INCREASE IN PENALTY EXCISE TAXES RELATING TO PUBLIC 
              CHARITIES, SOCIAL WELFARE ORGANIZATIONS, AND PRIVATE 
              FOUNDATIONS.

    (a) Taxes on Self-Dealing and Excess Benefit Transactions.--
            (1) In general.--Section 4941(a) (relating to initial 
        taxes) is amended--
                    (A) in paragraph (1), by striking ``5 percent'' and 
                inserting ``10 percent'', and
                    (B) in paragraph (2), by striking ``2\1/2\ 
                percent'' and inserting ``5 percent''.
            (2) Increased limitation for managers on self-dealing.--
        Section 4941(c)(2) is amended by striking ``$10,000'' each 
        place it appears in the text and heading thereof and inserting 
        ``$20,000''.
            (3) Increased limitation for managers on excess benefit 
        transactions.--Section 4958(d)(2) is amended by striking 
        ``$10,000'' and inserting ``$20,000''.
    (b) Taxes on Failure To Distribute Income.--Section 4942(a) 
(relating to initial tax) is amended by striking ``15 percent'' and 
inserting ``30 percent''.
    (c) Taxes on Excess Business Holdings.--Section 4943(a)(1) 
(relating to imposition) is amended by striking ``5 percent'' and 
inserting ``10 percent''.
    (d) Taxes on Investments Which Jeopardize Charitable Purpose.--
            (1) In general.--Section 4944(a) (relating to initial 
        taxes) is amended by striking ``5 percent'' both places it 
        appears and inserting ``10 percent''.
            (2) Increased limitation for managers.--Section 4944(d)(2) 
        is amended--
                    (A) by striking ``$5,000,'' and inserting 
                ``$10,000,'', and
                    (B) by striking ``$10,000.'' and inserting 
                ``$20,000.''.
    (e) Taxes on Taxable Expenditures.--
            (1) In general.--Section 4945(a) (relating to initial 
        taxes) is amended--
                    (A) in paragraph (1), by striking ``10 percent'' 
                and inserting ``20 percent'', and
                    (B) in paragraph (2), by striking ``2\1/2\ 
                percent'' and inserting ``5 percent''.
            (2) Increased limitation for managers.--Section 4945(c)(2) 
        is amended--
                    (A) by striking ``$5,000,'' and inserting 
                ``$10,000,'', and
                    (B) by striking ``$10,000.'' and inserting 
                ``$20,000.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 1213. REFORM OF CHARITABLE CONTRIBUTIONS OF CERTAIN EASEMENTS IN 
              REGISTERED HISTORIC DISTRICTS AND REDUCED DEDUCTION FOR 
              PORTION OF QUALIFIED CONSERVATION CONTRIBUTION 
              ATTRIBUTABLE TO REHABILITATION CREDIT.

    (a) Special Rules With Respect to Buildings in Registered Historic 
Districts.--
            (1) In general.--Paragraph (4) of section 170(h) (relating 
        to definition of conservation purpose) is amended by 
        redesignating subparagraph (B) as subparagraph (C) and by 
        inserting after subparagraph (A) the following new 
        subparagraph:
                    ``(B) Special rules with respect to buildings in 
                registered historic districts.--In the case of any 
                contribution of a qualified real property interest 
                which is a restriction with respect to the exterior of 
                a building described in subparagraph (C)(ii), such 
                contribution shall not be considered to be exclusively 
                for conservation purposes unless--
                            ``(i) such interest--
                                    ``(I) includes a restriction which 
                                preserves the entire exterior of the 
                                building (including the front, sides, 
                                rear, and height of the building), and
                                    ``(II) prohibits any change in the 
                                exterior of the building which is 
                                inconsistent with the historical 
                                character of such exterior,
                            ``(ii) the donor and donee enter into a 
                        written agreement certifying, under penalty of 
                        perjury, that the donee--
                                    ``(I) is a qualified organization 
                                (as defined in paragraph (3)) with a 
                                purpose of environmental protection, 
                                land conservation, open space 
                                preservation, or historic preservation, 
                                and
                                    ``(II) has the resources to manage 
                                and enforce the restriction and a 
                                commitment to do so, and
                            ``(iii) in the case of any contribution 
                        made in a taxable year beginning after the date 
                        of the enactment of this subparagraph, the 
                        taxpayer includes with the taxpayer's return 
                        for the taxable year of the contribution--
                                    ``(I) a qualified appraisal (within 
                                the meaning of subsection (f)(11)(E)) 
                                of the qualified property interest,
                                    ``(II) photographs of the entire 
                                exterior of the building, and
                                    ``(III) a description of all 
                                restrictions on the development of the 
                                building.''.
    (b) Disallowance of Deduction for Structures and Land in Registered 
Historic Districts.--Subparagraph (C) of section 170(h)(4), as 
redesignated by subsection (a), is amended--
            (1) by striking ``any building, structure, or land area 
        which'',
            (2) by inserting ``any building, structure, or land area 
        which'' before ``is listed'' in clause (i), and
            (3) by inserting ``any building which'' before ``is 
        located'' in clause (ii).
    (c) Filing Fee for Certain Contributions.--Subsection (f) of 
section 170 (relating to disallowance of deduction in certain cases and 
special rules) is amended by adding at the end the following new 
paragraph:
            ``(13) Contributions of certain interests in buildings 
        located in registered historic districts.--
                    ``(A) In general.--No deduction shall be allowed 
                with respect to any contribution described in 
                subparagraph (B) unless the taxpayer includes with the 
                return for the taxable year of the contribution a $500 
                filing fee.
                    ``(B) Contribution described.--A contribution is 
                described in this subparagraph if such contribution is 
                a qualified conservation contribution (as defined in 
                subsection (h)) which is a restriction with respect to 
                the exterior of a building described in subsection 
                (h)(4)(C)(ii) and for which a deduction is claimed in 
                excess of $10,000.
                    ``(C) Dedication of fee.--Any fee collected under 
                this paragraph shall be used for the enforcement of the 
                provisions of subsection (h).''.
    (d) Reduced Deduction for Portion of Qualified Conservation 
Contribution Attributable to the Rehabilitation Credit.--Subsection (f) 
of section 170, as amended by subsection (c), is amended by adding at 
the end the following new paragraph:
            ``(14) Reduction for amounts attributable to rehabilitation 
        credit.--In the case of any qualified conservation contribution 
        (as defined in subsection (h)), the amount of the deduction 
        allowed under this section shall be reduced by an amount which 
        bears the same ratio to the fair market value of the 
        contribution as--
                    ``(A) the sum of the credits allowed to the 
                taxpayer under section 47 for the 5 preceding taxable 
                years with respect to any building which is a part of 
                such contribution, bears to
                    ``(B) the fair market value of the building on the 
                date of the contribution.''.
    (e) Effective Dates.--
            (1) Special rules for buildings in registered historic 
        districts.--The amendments made by subsection (a) shall apply 
        to contributions made after July 25, 2006.
            (2) Disallowance of deduction for structures and land; 
        reduction for rehabilitation credit.--The amendments made by 
        subsections (b) and (d) shall apply to contributions made after 
        the date of the enactment of this Act.
            (3) Filing fee.--The amendment made by subsection (c) shall 
        apply to contributions made 180 days after the date of the 
        enactment of this Act.

SEC. 1214. CHARITABLE CONTRIBUTIONS OF TAXIDERMY PROPERTY.

    (a) Denial of Long-Term Capital Gain.--Subparagraph (B) of section 
170(e)(1) is amended by striking ``or'' at the end of clause (ii), by 
inserting ``or'' at the end of clause (iii), and by inserting after 
clause (iii) the following new clause:
                            ``(iv) of any taxidermy property which is 
                        contributed by the person who prepared, 
                        stuffed, or mounted the property or by any 
                        person who paid or incurred the cost of such 
                        preparation, stuffing, or mounting,''.
    (b) Treatment of Basis.--Subsection (f) of section 170, as amended 
by this Act, is amended by adding at the end the following new 
paragraph:
            ``(15) Special rule for taxidermy property.--
                    ``(A) Basis.--For purposes of this section and 
                notwithstanding section 1012, in the case of a 
                charitable contribution of taxidermy property which is 
                made by the person who prepared, stuffed, or mounted 
                the property or by any person who paid or incurred the 
                cost of such preparation, stuffing, or mounting, only 
                the cost of the preparing, stuffing, or mounting shall 
                be included in the basis of such property.
                    ``(B) Taxidermy property.--For purposes of this 
                section, the term `taxidermy property' means any work 
                of art which--
                            ``(i) is the reproduction or preservation 
                        of an animal, in whole or in part,
                            ``(ii) is prepared, stuffed, or mounted for 
                        purposes of recreating one or more 
                        characteristics of such animal, and
                            ``(iii) contains a part of the body of the 
                        dead animal.''.
    (c) Effective Date.--The amendment made by this section shall apply 
to contributions made after July 25, 2006.

SEC. 1215. RECAPTURE OF TAX BENEFIT FOR CHARITABLE CONTRIBUTIONS OF 
              EXEMPT USE PROPERTY NOT USED FOR AN EXEMPT USE.

    (a) Recapture of Deduction on Certain Sales of Exempt Use 
Property.--
            (1) In general.--Clause (i) of section 170(e)(1)(B) 
        (related to certain contributions of ordinary income and 
        capital gain property) is amended to read as follows:
                            ``(i) of tangible personal property--
                                    ``(I) if the use by the donee is 
                                unrelated to the purpose or function 
                                constituting the basis for its 
                                exemption under section 501 (or, in the 
                                case of a governmental unit, to any 
                                purpose or function described in 
                                subsection (c)), or
                                    ``(II) which is applicable property 
                                (as defined in paragraph (7)(C)) which 
                                is sold, exchanged, or otherwise 
                                disposed of by the donee before the 
                                last day of the taxable year in which 
                                the contribution was made and with 
                                respect to which the donee has not made 
                                a certification in accordance with 
                                paragraph (7)(D),''.
            (2) Dispositions after close of taxable year.--Section 
        170(e) is amended by adding at the end the following new 
        paragraph:
            ``(7) Recapture of deduction on certain dispositions of 
        exempt use property.--
                    ``(A) In general.--In the case of an applicable 
                disposition of applicable property, there shall be 
                included in the income of the donor of such property 
                for the taxable year of such donor in which the 
                applicable disposition occurs an amount equal to the 
                excess (if any) of--
                            ``(i) the amount of the deduction allowed 
                        to the donor under this section with respect to 
                        such property, over
                            ``(ii) the donor's basis in such property 
                        at the time such property was contributed.
                    ``(B) Applicable disposition.--For purposes of this 
                paragraph, the term `applicable disposition' means any 
                sale, exchange, or other disposition by the donee of 
                applicable property--
                            ``(i) after the last day of the taxable 
                        year of the donor in which such property was 
                        contributed, and
                            ``(ii) before the last day of the 3-year 
                        period beginning on the date of the 
                        contribution of such property,
                unless the donee makes a certification in accordance 
                with subparagraph (D).
                    ``(C) Applicable property.--For purposes of this 
                paragraph, the term `applicable property' means 
                charitable deduction property (as defined in section 
                6050L(a)(2)(A))--
                            ``(i) which is tangible personal property 
                        the use of which is identified by the donee as 
                        related to the purpose or function constituting 
                        the basis of the donee's exemption under 
                        section 501, and
                            ``(ii) for which a deduction in excess of 
                        the donor's basis is allowed.
                    ``(D) Certification.--A certification meets the 
                requirements of this subparagraph if it is a written 
                statement which is signed under penalty of perjury by 
                an officer of the donee organization and--
                            ``(i) which--
                                    ``(I) certifies that the use of the 
                                property by the donee was related to 
                                the purpose or function constituting 
                                the basis for the donee's exemption 
                                under section 501, and
                                    ``(II) describes how the property 
                                was used and how such use furthered 
                                such purpose or function, or
                            ``(ii) which--
                                    ``(I) states the intended use of 
                                the property by the donee at the time 
                                of the contribution, and
                                    ``(II) certifies that such intended 
                                use has become impossible or infeasible 
                                to implement.''.
    (b) Reporting Requirements.--Paragraph (1) of section 6050L(a) 
(relating to returns relating to certain dispositions of donated 
property) is amended--
            (1) by striking ``2 years'' and inserting ``3 years'', and
            (2) by striking ``and'' at the end of subparagraph (D), by 
        striking the period at the end of subparagraph (E) and 
        inserting a comma, and by inserting at the end the following:
                    ``(F) a description of the donee's use of the 
                property, and
                    ``(G) a statement indicating whether the use of the 
                property was related to the purpose or function 
                constituting the basis for the donee's exemption under 
                section 501.
        In any case in which the donee indicates that the use of 
        applicable property (as defined in section 170(e)(7)(C)) was 
        related to the purpose or function constituting the basis for 
        the exemption of the donee under section 501 under subparagraph 
        (G), the donee shall include with the return the certification 
        described in section 170(e)(7)(D) if such certification is made 
        under section 170(e)(7).''.
    (c) Penalty.--
            (1) In general.--Part I of subchapter B of chapter 68 
        (relating to assessable penalties) is amended by inserting 
        after section 6720A the following new section:

``SEC. 6720B. FRAUDULENT IDENTIFICATION OF EXEMPT USE PROPERTY.

    ``In addition to any criminal penalty provided by law, any person 
who identifies applicable property (as defined in section 170(e)(7)(C)) 
as having a use which is related to a purpose or function constituting 
the basis for the donee's exemption under section 501 and who knows 
that such property is not intended for such a use shall pay a penalty 
of $10,000.''.
            (2) Clerical amendment.--The table of sections for part I 
        of subchapter B of chapter 68 is amended by adding after the 
        item relating to section 6720A the following new item:

``Sec. 6720B. Fraudulent identification of exempt use property.''.
    (d) Effective Date.--
            (1) Recapture.--The amendments made by subsection (a) shall 
        apply to contributions after September 1, 2006.
            (2) Reporting.--The amendments made by subsection (b) shall 
        apply to returns filed after September 1, 2006.
            (3) Penalty.--The amendments made by subsection (c) shall 
        apply to identifications made after the date of the enactment 
        of this Act.

SEC. 1216. LIMITATION OF DEDUCTION FOR CHARITABLE CONTRIBUTIONS OF 
              CLOTHING AND HOUSEHOLD ITEMS.

    (a) In General.--Subsection (f) of section 170, as amended by this 
Act, is amended by adding at the end the following new paragraph:
            ``(16) Contributions of clothing and household items.--
                    ``(A) In general.--In the case of an individual, 
                partnership, or corporation, no deduction shall be 
                allowed under subsection (a) for any contribution of 
                clothing or a household item unless such clothing or 
                household item is in good used condition or better.
                    ``(B) Items of minimal value.--Notwithstanding 
                subparagraph (A), the Secretary may by regulation deny 
                a deduction under subsection (a) for any contribution 
                of clothing or a household item which has minimal 
                monetary value.
                    ``(C) Exception for certain property.--
                Subparagraphs (A) and (B) shall not apply to any 
                contribution of a single item of clothing or a 
                household item for which a deduction of more than $500 
                is claimed if the taxpayer includes with the taxpayer's 
                return a qualified appraisal with respect to the 
                property.
                    ``(D) Household items.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `household 
                        items' includes furniture, furnishings, 
                        electronics, appliances, linens, and other 
                        similar items.
                            ``(ii) Excluded items.--Such term does not 
                        include--
                                    ``(I) food,
                                    ``(II) paintings, antiques, and 
                                other objects of art,
                                    ``(III) jewelry and gems, and
                                    ``(IV) collections.
                    ``(E) Special rule for pass-thru entities.--In the 
                case of a partnership or S corporation, this paragraph 
                shall be applied at the entity level, except that the 
                deduction shall be denied at the partner or shareholder 
                level.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after the date of enactment of this Act.

SEC. 1217. MODIFICATION OF RECORDKEEPING REQUIREMENTS FOR CERTAIN 
              CHARITABLE CONTRIBUTIONS.

    (a) Recordkeeping Requirement.--Subsection (f) of section 170, as 
amended by this Act, is amended by adding at the end the following new 
paragraph:
            ``(17) Recordkeeping.--No deduction shall be allowed under 
        subsection (a) for any contribution of a cash, check, or other 
        monetary gift unless the donor maintains as a record of such 
        contribution a bank record or a written communication from the 
        donee showing the name of the donee organization, the date of 
        the contribution, and the amount of the contribution.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after the date of the 
enactment of this Act.

SEC. 1218. CONTRIBUTIONS OF FRACTIONAL INTERESTS IN TANGIBLE PERSONAL 
              PROPERTY.

    (a) Income Tax.--Section 170 (relating to charitable, etc., 
contributions and gifts) is amended by redesignating subsection (o) as 
subsection (p) and by inserting after subsection (n) the following new 
subsection:
    ``(o) Special Rules for Fractional Gifts.--
            ``(1) Denial of deduction in certain cases.--
                    ``(A) In general.--No deduction shall be allowed 
                for a contribution of an undivided portion of a 
                taxpayer's entire interest in tangible personal 
                property unless all interest in the property is held 
                immediately before such contribution by--
                            ``(i) the taxpayer, or
                            ``(ii) the taxpayer and the donee.
                    ``(B) Exceptions.--The Secretary may, by 
                regulation, provide for exceptions to subparagraph (A) 
                in cases where all persons who hold an interest in the 
                property make proportional contributions of an 
                undivided portion of the entire interest held by such 
                persons.
            ``(2) Valuation of subsequent gifts.--In the case of any 
        additional contribution, the fair market value of such 
        contribution shall be determined by using the lesser of--
                    ``(A) the fair market value of the property at the 
                time of the initial fractional contribution, or
                    ``(B) the fair market value of the property at the 
                time of the additional contribution.
            ``(3) Recapture of deduction in certain cases; addition to 
        tax.--
                    ``(A) Recapture.--The Secretary shall provide for 
                the recapture of the amount of any deduction allowed 
                under this section (plus interest) with respect to any 
                contribution of an undivided portion of a taxpayer's 
                entire interest in tangible personal property--
                            ``(i) in any case in which the donor does 
                        not contribute all of the remaining interest in 
                        such property to the donee (or, if such donee 
                        is no longer in existence, to any person 
                        described in section 170(c)) before the earlier 
                        of--
                                    ``(I) the date that is 10 years 
                                after the date of the initial 
                                fractional contribution, or
                                    ``(II) the date of the death of the 
                                donor, and
                            ``(ii) in any case in which the donee has 
                        not, during the period beginning on the date of 
                        the initial fractional contribution and ending 
                        on the date described in clause (i)--
                                    ``(I) had substantial physical 
                                possession of the property, and
                                    ``(II) used the property in a use 
                                which is related to a purpose or 
                                function constituting the basis for the 
                                organizations' exemption under section 
                                501.
                    ``(B) Addition to tax.--The tax imposed under this 
                chapter for any taxable year for which there is a 
                recapture under subparagraph (A) shall be increased by 
                10 percent of the amount so recaptured.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Additional contribution.--The term 
                `additional contribution' means any charitable 
                contribution by the taxpayer of any interest in 
                property with respect to which the taxpayer has 
                previously made an initial fractional contribution.
                    ``(B) Initial fractional contribution.--The term 
                `initial fractional contribution' means, with respect 
                to any taxpayer, the first charitable contribution of 
                an undivided portion of the taxpayer's entire interest 
                in any tangible personal property.''.
    (b) Estate Tax.--Section 2055 (relating to transfers for public, 
charitable, and religious uses) is amended by redesignating subsection 
(g) as subsection (h) and by inserting after subsection (f) the 
following new subsection:
    ``(g) Valuation of Subsequent Gifts.--
            ``(1) In general.--In the case of any additional 
        contribution, the fair market value of such contribution shall 
        be determined by using the lesser of--
                    ``(A) the fair market value of the property at the 
                time of the initial fractional contribution, or
                    ``(B) the fair market value of the property at the 
                time of the additional contribution.
            ``(2) Definitions.--For purposes of this paragraph--
                    ``(A) Additional contribution.--The term 
                `additional contribution' means a bequest, legacy, 
                devise, or transfer described in subsection (a) of any 
                interest in a property with respect to which the 
                decedent had previously made an initial fractional 
                contribution.
                    ``(B) Initial fractional contribution.--The term 
                `initial fractional contribution' means, with respect 
                to any decedent, any charitable contribution of an 
                undivided portion of the decedent's entire interest in 
                any tangible personal property for which a deduction 
                was allowed under section 170.''.
    (c) Gift Tax.--Section 2522 (relating to charitable and similar 
gifts) is amended by redesignating subsection (e) as subsection (f) and 
by inserting after subsection (d) the following new subsection:
    ``(e) Special Rules for Fractional Gifts.--
            ``(1) Denial of deduction in certain cases.--
                    ``(A) In general.--No deduction shall be allowed 
                for a contribution of an undivided portion of a 
                taxpayer's entire interest in tangible personal 
                property unless all interest in the property is held 
                immediately before such contribution by--
                            ``(i) the taxpayer, or
                            ``(ii) the taxpayer and the donee.
                    ``(B) Exceptions.--The Secretary may, by 
                regulation, provide for exceptions to subparagraph (A) 
                in cases where all persons who hold an interest in the 
                property make proportional contributions of an 
                undivided portion of the entire interest held by such 
                persons.
            ``(2) Valuation of subsequent gifts.--In the case of any 
        additional contribution, the fair market value of such 
        contribution shall be determined by using the lesser of--
                    ``(A) the fair market value of the property at the 
                time of the initial fractional contribution, or
                    ``(B) the fair market value of the property at the 
                time of the additional contribution.
            ``(3) Recapture of deduction in certain cases; addition to 
        tax.--
                    ``(A) In general.--The Secretary shall provide for 
                the recapture of an amount equal to any deduction 
                allowed under this section (plus interest) with respect 
                to any contribution of an undivided portion of a 
                taxpayer's entire interest in tangible personal 
                property--
                            ``(i) in any case in which the donor does 
                        not contribute all of the remaining interest in 
                        such property to the donee (or, if such donee 
                        is no longer in existence, to any person 
                        described in section 170(c)) before the earlier 
                        of--
                                    ``(I) the date that is 10 years 
                                after the date of the initial 
                                fractional contribution, or
                                    ``(II) the date of the death of the 
                                donor, and
                            ``(ii) in any case in which the donee has 
                        not, during the period beginning on the date of 
                        the initial fractional contribution and ending 
                        on the date described in clause (i)--
                                    ``(I) had substantial physical 
                                possession of the property, and
                                    ``(II) used the property in a use 
                                which is related to a purpose or 
                                function constituting the basis for the 
                                organizations' exemption under section 
                                501.
                    ``(B) Addition to tax.--The tax imposed under this 
                chapter for any taxable year for which there is a 
                recapture under subparagraph (A) shall be increased by 
                10 percent of the amount so recaptured.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Additional contribution.--The term 
                `additional contribution' means any gift for which a 
                deduction is allowed under subsection (a) or (b) of any 
                interest in a property with respect to which the donor 
                has previously made an initial fractional contribution.
                    ``(B) Initial fractional contribution.--The term 
                `initial fractional contribution' means, with respect 
                to any donor, the first gift of an undivided portion of 
                the donor's entire interest in any tangible personal 
                property for which a deduction is allowed under 
                subsection (a) or (b).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions, bequests, and gifts made after the date of the 
enactment of this Act.

SEC. 1219. PROVISIONS RELATING TO SUBSTANTIAL AND GROSS OVERSTATEMENTS 
              OF VALUATIONS.

    (a) Modification of Thresholds for Substantial and Gross Valuation 
Misstatements.--
            (1) Substantial valuation misstatement.--
                    (A) Income taxes.--Subparagraph (A) of section 
                6662(e)(1) (relating to substantial valuation 
                misstatement under chapter 1) is amended by striking 
                ``200 percent'' and inserting ``150 percent''.
                    (B) Estate and gift taxes.--Paragraph (1) of 
                section 6662(g) is amended by striking ``50 percent'' 
                and inserting ``65 percent''.
            (2) Gross valuation misstatement.--
                    (A) Income taxes.--Clauses (i) and (ii) of section 
                6662(h)(2)(A) (relating to increase in penalty in case 
                of gross valuation misstatements) are amended to read 
                as follows:
                            ``(i) in paragraph (1)(A), `200 percent' 
                        for `150 percent',
                            ``(ii) in paragraph (1)(B)(i)--
                                    ``(I) `400 percent' for `200 
                                percent', and
                                    ``(II) `25 percent' for `50 
                                percent', and''.
                    (B) Estate and gift taxes.--Subparagraph (C) of 
                section 6662(h)(2) is amended by striking ```25 
                percent' for `50 percent''' and inserting ```40 
                percent' for `65 percent'''.
            (3) Elimination of reasonable cause exception for gross 
        misstatements.--Section 6664(c)(2) (relating to reasonable 
        cause exception for underpayments) is amended by striking 
        ``paragraph (1) shall not apply unless'' and inserting 
        ``paragraph (1) shall not apply. The preceding sentence shall 
        not apply to a substantial valuation overstatement under 
        chapter 1 if''.
    (b) Penalty on Appraisers Whose Appraisals Result in Substantial or 
Gross Valuation Misstatements.--
            (1) In general.--Part I of subchapter B of chapter 68 
        (relating to assessable penalties) is amended by inserting 
        after section 6695 the following new section:

``SEC. 6695A. SUBSTANTIAL AND GROSS VALUATION MISSTATEMENTS 
              ATTRIBUTABLE TO INCORRECT APPRAISALS.

    ``(a) Imposition of Penalty.--If--
            ``(1) a person prepares an appraisal of the value of 
        property and such person knows, or reasonably should have 
        known, that the appraisal would be used in connection with a 
        return or a claim for refund, and
            ``(2) the claimed value of the property on a return or 
        claim for refund which is based on such appraisal results in a 
        substantial valuation misstatement under chapter 1 (within the 
        meaning of section 6662(e)), or a gross valuation misstatement 
        (within the meaning of section 6662(h)), with respect to such 
        property, then such person shall pay a penalty in the amount 
        determined under subsection (b).
    ``(b) Amount of Penalty.--The amount of the penalty imposed under 
subsection (a) on any person with respect to an appraisal shall be 
equal to the lesser of--
            ``(1) the greater of--
                    ``(A) 10 percent of the amount of the underpayment 
                (as defined in section 6664(a)) attributable to the 
                misstatement described in subsection (a)(2), or
                    ``(B) $1,000, or
            ``(2) 125 percent of the gross income received by the 
        person described in subsection (a)(1) from the preparation of 
        the appraisal.
    ``(c) Exception.--No penalty shall be imposed under subsection (a) 
if the person establishes to the satisfaction of the Secretary that the 
value established in the appraisal was more likely than not the proper 
value.''.
            (2) Rules applicable to penalty.--Section 6696 (relating to 
        rules applicable with respect to sections 6694 and 6695) is 
        amended--
                    (A) by striking ``6694 and 6695'' each place it 
                appears in the text and heading thereof and inserting 
                ``6694, 6695, and 6695A'', and
                    (B) by striking ``6694 or 6695'' each place it 
                appears in the text and inserting ``6694, 6695, or 
                6695A''.
            (3) Conforming amendment.--The table of sections for part I 
        of subchapter B of chapter 68 is amended by striking the item 
        relating to section 6696 and inserting the following new items:

``Sec. 6695A. Substantial and gross valuation misstatements 
                            attributable to incorrect appraisals.
``Sec. 6696. Rules applicable with respect to sections 6694, 6695, and 
                            6695A.''.
    (c) Qualified Appraisers and Appraisals.--
            (1) In general.--Subparagraph (E) of section 170(f)(11) is 
        amended to read as follows:
                    ``(E) Qualified appraisal and appraiser.--For 
                purposes of this paragraph--
                            ``(i) Qualified appraisal.--The term 
                        `qualified appraisal' means, with respect to 
                        any property, an appraisal of such property 
                        which--
                                    ``(I) is treated for purposes of 
                                this paragraph as a qualified appraisal 
                                under regulations or other guidance 
                                prescribed by the Secretary, and
                                    ``(II) is conducted by a qualified 
                                appraiser in accordance with generally 
                                accepted appraisal standards and any 
                                regulations or other guidance 
                                prescribed under subclause (I).
                            ``(ii) Qualified appraiser.--Except as 
                        provided in clause (iii), the term `qualified 
                        appraiser' means an individual who--
                                    ``(I) has earned an appraisal 
                                designation from a recognized 
                                professional appraiser organization or 
                                has otherwise met minimum education and 
                                experience requirements set forth in 
                                regulations prescribed by the 
                                Secretary,
                                    ``(II) regularly performs 
                                appraisals for which the individual 
                                receives compensation, and
                                    ``(III) meets such other 
                                requirements as may be prescribed by 
                                the Secretary in regulations or other 
                                guidance.
                            ``(iii) Specific appraisals.--An individual 
                        shall not be treated as a qualified appraiser 
                        with respect to any specific appraisal unless--
                                    ``(I) the individual demonstrates 
                                verifiable education and experience in 
                                valuing the type of property subject to 
                                the appraisal, and
                                    ``(II) the individual has not been 
                                prohibited from practicing before the 
                                Internal Revenue Service by the 
                                Secretary under section 330(c) of title 
                                31, United States Code, at any time 
                                during the 3-year period ending on the 
                                date of the appraisal.''.
            (2) Reasonable cause exception.--Subparagraphs (B) and (C) 
        of section 6664(c)(3) are amended to read as follows:
                    ``(B) Qualified appraisal.--The term `qualified 
                appraisal' has the meaning given such term by section 
                170(f)(11)(E)(i).
                    ``(C) Qualified appraiser.--The term `qualified 
                appraiser' has the meaning given such term by section 
                170(f)(11)(E)(ii).''.
    (d) Disciplinary Actions Against Appraisers.--Section 330(c) of 
title 31, United States Code, is amended by striking ``with respect to 
whom a penalty has been assessed under section 6701(a) of the Internal 
Revenue Code of 1986''.
    (e) Effective Dates.--
            (1) Misstatement penalties.--Except as provided in 
        paragraph (3), the amendments made by subsection (a) shall 
        apply to returns filed after the date of the enactment of this 
        Act.
            (2) Appraiser provisions.--Except as provided in paragraph 
        (3), the amendments made by subsections (b), (c), and (d) shall 
        apply to appraisals prepared with respect to returns or 
        submissions filed after the date of the enactment of this Act.
            (3) Special rule for certain easements.--In the case of a 
        contribution of a qualified real property interest which is a 
        restriction with respect to the exterior of a building 
        described in section 170(h)(4)(C)(ii) of the Internal Revenue 
        Code of 1986, and an appraisal with respect to the 
        contribution, the amendments made by subsections (a) and (b) 
        shall apply to returns filed after July 25, 2006.

SEC. 1220. ADDITIONAL STANDARDS FOR CREDIT COUNSELING ORGANIZATIONS.

    (a) In General.--Section 501 (relating to exemption from tax on 
corporations, certain trusts, etc.) is amended by redesignating 
subsection (q) as subsection (r) and by inserting after subsection (p) 
the following new subsection:
    ``(q) Special Rules for Credit Counseling Organizations.--
            ``(1) In general.--An organization with respect to which 
        the provision of credit counseling services is a substantial 
        purpose shall not be exempt from tax under subsection (a) 
        unless such organization is described in paragraph (3) or (4) 
        of subsection (c) and such organization is organized and 
        operated in accordance with the following requirements:
                    ``(A) The organization--
                            ``(i) provides credit counseling services 
                        tailored to the specific needs and 
                        circumstances of consumers,
                            ``(ii) makes no loans to debtors (other 
                        than loans with no fees or interest) and does 
                        not negotiate the making of loans on behalf of 
                        debtors,
                            ``(iii) provides services for the purpose 
                        of improving a consumer's credit record, credit 
                        history, or credit rating only to the extent 
                        that such services are incidental to providing 
                        credit counseling services, and
                            ``(iv) does not charge any separately 
                        stated fee for services for the purpose of 
                        improving any consumer's credit record, credit 
                        history, or credit rating.
                    ``(B) The organization does not refuse to provide 
                credit counseling services to a consumer due to the 
                inability of the consumer to pay, the ineligibility of 
                the consumer for debt management plan enrollment, or 
                the unwillingness of the consumer to enroll in a debt 
                management plan.
                    ``(C) The organization establishes and implements a 
                fee policy which--
                            ``(i) requires that any fees charged to a 
                        consumer for services are reasonable,
                            ``(ii) allows for the waiver of fees if the 
                        consumer is unable to pay, and
                            ``(iii) except to the extent allowed by 
                        State law, prohibits charging any fee based in 
                        whole or in part on a percentage of the 
                        consumer's debt, the consumer's payments to be 
                        made pursuant to a debt management plan, or the 
                        projected or actual savings to the consumer 
                        resulting from enrolling in a debt management 
                        plan.
                    ``(D) At all times the organization has a board of 
                directors or other governing body--
                            ``(i) which is controlled by persons who 
                        represent the broad interests of the public, 
                        such as public officials acting in their 
                        capacities as such, persons having special 
                        knowledge or expertise in credit or financial 
                        education, and community leaders,
                            ``(ii) not more than 20 percent of the 
                        voting power of which is vested in persons who 
                        are employed by the organization or who will 
                        benefit financially, directly or indirectly, 
                        from the organization's activities (other than 
                        through the receipt of reasonable directors' 
                        fees or the repayment of consumer debt to 
                        creditors other than the credit counseling 
                        organization or its affiliates), and
                            ``(iii) not more than 49 percent of the 
                        voting power of which is vested in persons who 
                        are employed by the organization or who will 
                        benefit financially, directly or indirectly, 
                        from the organization's activities (other than 
                        through the receipt of reasonable directors' 
                        fees).
                    ``(E) The organization does not own more than 35 
                percent of--
                            ``(i) the total combined voting power of 
                        any corporation (other than a corporation which 
                        is an organization described in subsection 
                        (c)(3) and exempt from tax under subsection 
                        (a)) which is in the trade or business of 
                        lending money, repairing credit, or providing 
                        debt management plan services, payment 
                        processing, or similar services,
                            ``(ii) the profits interest of any 
                        partnership (other than a partnership which is 
                        an organization described in subsection (c)(3) 
                        and exempt from tax under subsection (a)) which 
                        is in the trade or business of lending money, 
                        repairing credit, or providing debt management 
                        plan services, payment processing, or similar 
                        services, and
                            ``(iii) the beneficial interest of any 
                        trust or estate (other than a trust which is an 
                        organization described in subsection (c)(3) and 
                        exempt from tax under subsection (a)) which is 
                        in the trade or business of lending money, 
                        repairing credit, or providing debt management 
                        plan services, payment processing, or similar 
                        services.
                    ``(F) The organization receives no amount for 
                providing referrals to others for debt management plan 
                services, and pays no amount to others for obtaining 
                referrals of consumers.
            ``(2) Additional requirements for organizations described 
        in subsection (c)(3).--
                    ``(A) In general.--In addition to the requirements 
                under paragraph (1), an organization with respect to 
                which the provision of credit counseling services is a 
                substantial purpose and which is described in paragraph 
                (3) of subsection (c) shall not be exempt from tax 
                under subsection (a) unless such organization is 
                organized and operated in accordance with the following 
                requirements:
                            ``(i) The organization does not solicit 
                        contributions from consumers during the initial 
                        counseling process or while the consumer is 
                        receiving services from the organization.
                            ``(ii) The aggregate revenues of the 
                        organization which are from payments of 
                        creditors of consumers of the organization and 
                        which are attributable to debt management plan 
                        services do not exceed the applicable 
                        percentage of the total revenues of the 
                        organization.
                    ``(B) Applicable percentage.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), the applicable percentage 
                        is 50 percent.
                            ``(ii) Transition rule.--Notwithstanding 
                        clause (i), in the case of an organization with 
                        respect to which the provision of credit 
                        counseling services is a substantial purpose 
                        and which is described in paragraph (3) of 
                        subsection (c) and exempt from tax under 
                        subsection (a) on the date of the enactment of 
                        this subsection, the applicable percentage is--
                                    ``(I) 80 percent for the first 
                                taxable year of such organization 
                                beginning after the date which is 1 
                                year after the date of the enactment of 
                                this subsection, and
                                    ``(II) 70 percent for the second 
                                such taxable year beginning after such 
                                date, and
                                    ``(III) 60 percent for the third 
                                such taxable year beginning after such 
                                date.
            ``(3) Additional requirement for organizations described in 
        subsection (c)(4).--In addition to the requirements under 
        paragraph (1), an organization with respect to which the 
        provision of credit counseling services is a substantial 
        purpose and which is described in paragraph (4) of subsection 
        (c) shall not be exempt from tax under subsection (a) unless 
        such organization notifies the Secretary, in such manner as the 
        Secretary may by regulations prescribe, that it is applying for 
        recognition as a credit counseling organization.
            ``(4) Credit counseling services; debt management plan 
        services.--For purposes of this subsection--
                    ``(A) Credit counseling services.--The term `credit 
                counseling services' means--
                            ``(i) the providing of educational 
                        information to the general public on budgeting, 
                        personal finance, financial literacy, saving 
                        and spending practices, and the sound use of 
                        consumer credit,
                            ``(ii) the assisting of individuals and 
                        families with financial problems by providing 
                        them with counseling, or
                            ``(iii) a combination of the activities 
                        described in clauses (i) and (ii).
                    ``(B) Debt management plan services.--The term 
                `debt management plan services' means services related 
                to the repayment, consolidation, or restructuring of a 
                consumer's debt, and includes the negotiation with 
                creditors of lower interest rates, the waiver or 
                reduction of fees, and the marketing and processing of 
                debt management plans.''.
    (b) Debt Management Plan Services Treated as an Unrelated 
Business.--Section 513 (relating to unrelated trade or business) is 
amended by adding at the end the following:
    ``(j) Debt Management Plan Services.--The term `unrelated trade or 
business' includes the provision of debt management plan services (as 
defined in section 501(q)(4)(B)) by any organization other than an 
organization which meets the requirements of section 501(q).''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after the date of the enactment of this Act.
            (2) Transition rule for existing organizations.--In the 
        case of any organization described in paragraph (3) or (4) 
        section 501(c) of the Internal Revenue Code of 1986 and with 
        respect to which the provision of credit counseling services is 
        a substantial purpose on the date of the enactment of this Act, 
        the amendments made by this section shall apply to taxable 
        years beginning after the date which is 1 year after the date 
        of the enactment of this Act.

SEC. 1221. EXPANSION OF THE BASE OF TAX ON PRIVATE FOUNDATION NET 
              INVESTMENT INCOME.

    (a) Gross Investment Income.--
            (1) In general.--Paragraph (2) of section 4940(c) (relating 
        to gross investment income) is amended by adding at the end the 
        following new sentence: ``Such term shall also include income 
        from sources similar to those in the preceding sentence.''.
            (2) Conforming amendment.--Subsection (e) of section 509 
        (relating to gross investment income) is amended by adding at 
        the end the following new sentence: ``Such term shall also 
        include income from sources similar to those in the preceding 
        sentence.''.
    (b) Capital Gain Net Income.--Paragraph (4) of section 4940(c) 
(relating to capital gains and losses) is amended--
            (1) in subparagraph (A), by striking ``used for the 
        production of interest, dividends, rents, and royalties'' and 
        inserting ``used for the production of gross investment income 
        (as defined in paragraph (2))'',
            (2) in subparagraph (C), by inserting ``or carrybacks'' 
        after ``carryovers'', and
            (3) by adding at the end the following new subparagraph:
                    ``(D) Except to the extent provided by regulation, 
                under rules similar to the rules of section 1031 
                (including the exception under subsection (a)(2) 
                thereof), no gain or loss shall be taken into account 
                with respect to any portion of property used for a 
                period of not less than 1 year for a purpose or 
                function constituting the basis of the private 
                foundation's exemption if the entire property is 
                exchanged immediately following such period solely for 
                property of like kind which is to be used primarily for 
                a purpose or function constituting the basis for such 
                foundation's exemption.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 1222. DEFINITION OF CONVENTION OR ASSOCIATION OF CHURCHES.

    Section 7701 (relating to definitions) is amended by redesignating 
subsection (o) as subsection (p) and by inserting after subsection (n) 
the following new subsection:
    ``(o) Convention or Association of Churches.--For purposes of this 
title, any organization which is otherwise a convention or association 
of churches shall not fail to so qualify merely because the membership 
of such organization includes individuals as well as churches or 
because individuals have voting rights in such organization.''.

SEC. 1223. NOTIFICATION REQUIREMENT FOR ENTITIES NOT CURRENTLY REQUIRED 
              TO FILE.

    (a) In General.--Section 6033 (relating to returns by exempt 
organizations), as amended by this Act, is amended by redesignating 
subsection (i) as subsection (j) and by inserting after subsection (h) 
the following new subsection:
    ``(i) Additional Notification Requirements.--Any organization the 
gross receipts of which in any taxable year result in such organization 
being referred to in subsection (a)(3)(A)(ii) or (a)(3)(B)--
            ``(1) shall furnish annually, in electronic form, and at 
        such time and in such manner as the Secretary may by 
        regulations prescribe, information setting forth--
                    ``(A) the legal name of the organization,
                    ``(B) any name under which such organization 
                operates or does business,
                    ``(C) the organization's mailing address and 
                Internet web site address (if any),
                    ``(D) the organization's taxpayer identification 
                number,
                    ``(E) the name and address of a principal officer, 
                and
                    ``(F) evidence of the continuing basis for the 
                organization's exemption from the filing requirements 
                under subsection (a)(1), and
            ``(2) upon the termination of the existence of the 
        organization, shall furnish notice of such termination.''.
    (b) Loss of Exempt Status for Failure To File Return or Notice.--
Section 6033 (relating to returns by exempt organizations), as amended 
by subsection (a), is amended by redesignating subsection (j) as 
subsection (k) and by inserting after subsection (i) the following new 
subsection:
    ``(j) Loss of Exempt Status for Failure To File Return or Notice.--
            ``(1) In general.--If an organization described in 
        subsection (a)(1) or (i) fails to file an annual return or 
        notice required under either subsection for 3 consecutive 
        years, such organization's status as an organization exempt 
        from tax under section 501(a) shall be considered revoked on 
        and after the date set by the Secretary for the filing of the 
        third annual return or notice. The Secretary shall publish and 
        maintain a list of any organization the status of which is so 
        revoked.
            ``(2) Application necessary for reinstatement.--Any 
        organization the tax-exempt status of which is revoked under 
        paragraph (1) must apply in order to obtain reinstatement of 
        such status regardless of whether such organization was 
        originally required to make such an application.
            ``(3) Retroactive reinstatement if reasonable cause shown 
        for failure.--If, upon application for reinstatement of status 
        as an organization exempt from tax under section 501(a), an 
        organization described in paragraph (1) can show to the 
        satisfaction of the Secretary evidence of reasonable cause for 
        the failure described in such paragraph, the organization's 
        exempt status may, in the discretion of the Secretary, be 
        reinstated effective from the date of the revocation under such 
        paragraph.''.
    (c) No Declaratory Judgment Relief.--Section 7428(b) (relating to 
limitations) is amended by adding at the end the following new 
paragraph:
            ``(4) Nonapplication for certain revocations.--No action 
        may be brought under this section with respect to any 
        revocation of status described in section 6033(j)(1).''.
    (d) No Monetary Penalty for Failure To Notify.--Section 6652(c)(1) 
(relating to annual returns under section 6033 or 6012(a)(6)) is 
amended by adding at the end the following new subparagraph:
                    ``(E) No penalty for certain annual notices.--This 
                paragraph shall not apply with respect to any notice 
                required under section 6033(i).''.
    (e) Secretarial Outreach Requirements.--
            (1) Notice requirement.--The Secretary of the Treasury 
        shall notify in a timely manner every organization described in 
        section 6033(i) of the Internal Revenue Code of 1986 (as added 
        by this section) of the requirement under such section 6033(i) 
        and of the penalty established under section 6033(j) of such 
        Code--
                    (A) by mail, in the case of any organization the 
                identity and address of which is included in the list 
                of exempt organizations maintained by the Secretary, 
                and
                    (B) by Internet or other means of outreach, in the 
                case of any other organization.
            (2) Loss of status penalty for failure to file return.--The 
        Secretary of the Treasury shall publicize, in a timely manner 
        in appropriate forms and instructions and through other 
        appropriate means, the penalty established under section 
        6033(j) of such Code for the failure to file a return under 
        subsection (a)(1) or (i) of section 6033 of such Code.
    (f) Effective Date.--The amendments made by this section shall 
apply to notices and returns with respect to annual periods beginning 
after 2006.

SEC. 1224. DISCLOSURE TO STATE OFFICIALS RELATING TO EXEMPT 
              ORGANIZATIONS.

    (a) In General.--Subsection (c) of section 6104 is amended by 
striking paragraph (2) and inserting the following new paragraphs:
            ``(2) Disclosure of proposed actions related to charitable 
        organizations.--
                    ``(A) Specific notifications.--In the case of an 
                organization to which paragraph (1) applies, the 
                Secretary may disclose to the appropriate State 
                officer--
                            ``(i) a notice of proposed refusal to 
                        recognize such organization as an organization 
                        described in section 501(c)(3) or a notice of 
                        proposed revocation of such organization's 
                        recognition as an organization exempt from 
                        taxation,
                            ``(ii) the issuance of a letter of proposed 
                        deficiency of tax imposed under section 507 or 
                        chapter 41 or 42, and
                            ``(iii) the names, addresses, and taxpayer 
                        identification numbers of organizations which 
                        have applied for recognition as organizations 
                        described in section 501(c)(3).
                    ``(B) Additional disclosures.--Returns and return 
                information of organizations with respect to which 
                information is disclosed under subparagraph (A) may be 
                made available for inspection by or disclosed to an 
                appropriate State officer.
                    ``(C) Procedures for disclosure.--Information may 
                be inspected or disclosed under subparagraph (A) or (B) 
                only--
                            ``(i) upon written request by an 
                        appropriate State officer, and
                            ``(ii) for the purpose of, and only to the 
                        extent necessary in, the administration of 
                        State laws regulating such organizations.
                Such information may only be inspected by or disclosed 
                to a person other than the appropriate State officer if 
                such person is an officer or employee of the State and 
                is designated by the appropriate State officer to 
                receive the returns or return information under this 
                paragraph on behalf of the appropriate State officer.
                    ``(D) Disclosures other than by request.--The 
                Secretary may make available for inspection or disclose 
                returns and return information of an organization to 
                which paragraph (1) applies to an appropriate State 
                officer of any State if the Secretary determines that 
                such returns or return information may constitute 
                evidence of noncompliance under the laws within the 
                jurisdiction of the appropriate State officer.
            ``(3) Disclosure with respect to certain other exempt 
        organizations.--Upon written request by an appropriate State 
        officer, the Secretary may make available for inspection or 
        disclosure returns and return information of any organization 
        described in section 501(c) (other than organizations described 
        in paragraph (1) or (3) thereof) for the purpose of, and only 
        to the extent necessary in, the administration of State laws 
        regulating the solicitation or administration of the charitable 
        funds or charitable assets of such organizations. Such 
        information may only be inspected by or disclosed to a person 
        other than the appropriate State officer if such person is an 
        officer or employee of the State and is designated by the 
        appropriate State officer to receive the returns or return 
        information under this paragraph on behalf of the appropriate 
        State officer.
            ``(4) Use in civil judicial and administrative 
        proceedings.--Returns and return information disclosed pursuant 
        to this subsection may be disclosed in civil administrative and 
        civil judicial proceedings pertaining to the enforcement of 
        State laws regulating such organizations in a manner prescribed 
        by the Secretary similar to that for tax administration 
        proceedings under section 6103(h)(4).
            ``(5) No disclosure if impairment.--Returns and return 
        information shall not be disclosed under this subsection, or in 
        any proceeding described in paragraph (4), to the extent that 
        the Secretary determines that such disclosure would seriously 
        impair Federal tax administration.
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Return and return information.--The terms 
                `return' and `return information' have the respective 
                meanings given to such terms by section 6103(b).
                    ``(B) Appropriate state officer.--The term 
                `appropriate State officer' means--
                            ``(i) the State attorney general,
                            ``(ii) the State tax officer,
                            ``(iii) in the case of an organization to 
                        which paragraph (1) applies, any other State 
                        official charged with overseeing organizations 
                        of the type described in section 501(c)(3), and
                            ``(iv) in the case of an organization to 
                        which paragraph (3) applies, the head of an 
                        agency designated by the State attorney general 
                        as having primary responsibility for overseeing 
                        the solicitation of funds for charitable 
                        purposes.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 6103(a) is amended by 
        inserting ``or section 6104(c)'' after ``this section''.
            (2) Subparagraph (A) of section 6103(p)(3) is amended by 
        inserting ``and section 6104(c)'' after ``section'' in the 
        first sentence.
            (3) Paragraph (4) of section 6103(p) is amended--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``, any appropriate State officer (as defined 
                in section 6104(c)),'' before ``or any other person'',
                    (B) in subparagraph (F)(i), by inserting ``any 
                appropriate State officer (as defined in section 
                6104(c)),'' before ``or any other person'', and
                    (C) in the matter following subparagraph (F), by 
                inserting ``, an appropriate State officer (as defined 
                in section 6104(c)),'' after ``including an agency'' 
                each place it appears.
            (4) The heading for paragraph (1) of section 6104(c) is 
        amended by inserting ``for charitable organizations'' after 
        ``rule''.
            (5) Paragraph (2) of section 7213(a) is amended by 
        inserting ``or under section 6104(c)'' after ``6103''.
            (6) Paragraph (2) of section 7213A(a) is amended by 
        inserting ``or under section 6104(c)'' after ``7213(a)(2)''.
            (7) Paragraph (2) of section 7431(a) is amended by 
        inserting `` or in violation of section 6104(c)'' after 
        ``6103''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act but shall not apply to 
requests made before such date.

SEC. 1225. PUBLIC DISCLOSURE OF INFORMATION RELATING TO UNRELATED 
              BUSINESS INCOME TAX RETURNS.

    (a) In General.--Subparagraph (A) of section 6104(d)(1) is amended 
by redesignating clauses (ii) and (iii) as clauses (iii) and (iv), 
respectively, and by inserting after clause (i) the following new 
clause:
                            ``(ii) any annual return filed under 
                        section 6011 which relates to any tax imposed 
                        by section 511 (relating to imposition of tax 
                        on unrelated business income of charitable, 
                        etc., organizations) by such organization, but 
                        only if such organization is described in 
                        section 501(c)(3),''.
    (b) Effective Date.--The amendments made by this section shall 
apply to returns filed after the date of the enactment of this Act.

SEC. 1226. STUDY ON DONOR ADVISED FUNDS AND SUPPORTING ORGANIZATIONS.

    (a) Study.--The Secretary of the Treasury shall undertake a study 
on the organization and operation of donor advised funds (as defined in 
section 4966(d)(2) of the Internal Revenue Code of 1986, as added by 
this Act) and of organizations described in section 509(a)(3) of such 
Code. The study shall specifically consider--
            (1) whether the deductions allowed for the income, gift, or 
        estate taxes for charitable contributions to sponsoring 
        organizations (as defined in section 4966(d)(1) of such Code, 
        as added by this Act) of donor advised funds or to 
        organizations described in section 509(a)(3) of such Code are 
        appropriate in consideration of--
                    (A) the use of contributed assets (including the 
                type, extent, and timing of such use), or
                    (B) the use of the assets of such organizations for 
                the benefit of the person making the charitable 
                contribution (or a person related to such person),
            (2) whether donor advised funds should be required to 
        distribute for charitable purposes a specified amount (whether 
        based on the income or assets of the fund) in order to ensure 
        that the sponsoring organization with respect to such donor 
        advised fund is operating consistent with the purposes or 
        functions constituting the basis for its exemption under 
        section 501, or its status as an organization described in 
        section 509(a), of such Code,
            (3) whether the retention by donors to organizations 
        described in paragraph (1) of rights or privileges with respect 
        to amounts transferred to such organizations (including 
        advisory rights or privileges with respect to the making of 
        grants or the investment of assets) is consistent with the 
        treatment of such transfers as completed gifts that qualify for 
        a deduction for income, gift, or estate taxes, and
            (4) whether the issues raised by paragraphs (1), (2), and 
        (3) are also issues with respect to other forms of charities or 
        charitable donations.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Secretary of the Treasury shall submit to the 
Committee on Finance of the Senate and the Committee on Ways and Means 
of the House of Representatives a report on the study conducted under 
subsection (a) and make such recommendations as the Secretary of the 
Treasury considers appropriate.

         PART 2--IMPROVED ACCOUNTABILITY OF DONOR ADVISED FUNDS

SEC. 1231. EXCISE TAXES RELATING TO DONOR ADVISED FUNDS.

    (a) In General.--Chapter 42 (relating to private foundations and 
certain other tax-exempt organizations), as amended by the Tax Increase 
Prevention and Reconciliation Act of 2005, is amended by adding at the 
end the following new subchapter:

                  ``Subchapter G--Donor Advised Funds

``Sec. 4966. Taxes on taxable distributions.
``Sec. 4967. Taxes on prohibited benefits.

``SEC. 4966. TAXES ON TAXABLE DISTRIBUTIONS.

    ``(a) Imposition of Taxes.--
            ``(1) On the sponsoring organization.--There is hereby 
        imposed on each taxable distribution a tax equal to 20 percent 
        of the amount thereof. The tax imposed by this paragraph shall 
        be paid by the sponsoring organization with respect to the 
        donor advised fund.
            ``(2) On the fund management.--There is hereby imposed on 
        the agreement of any fund manager to the making of a 
        distribution, knowing that it is a taxable distribution, a tax 
        equal to 5 percent of the amount thereof. The tax imposed by 
        this paragraph shall be paid by any fund manager who agreed to 
        the making of the distribution.
    ``(b) Special Rules.--For purposes of subsection (a)--
            ``(1) Joint and several liability.--If more than one person 
        is liable under subsection (a)(2) with respect to the making of 
        a taxable distribution, all such persons shall be jointly and 
        severally liable under such paragraph with respect to such 
        distribution.
            ``(2) Limit for management.--With respect to any one 
        taxable distribution, the maximum amount of the tax imposed by 
        subsection (a)(2) shall not exceed $10,000.
    ``(c) Taxable Distribution.--For purposes of this section--
            ``(1) In general.--The term `taxable distribution' means 
        any distribution from a donor advised fund--
                    ``(A) to any natural person, or
                    ``(B) to any other person if--
                            ``(i) such distribution is for any purpose 
                        other than one specified in section 
                        170(c)(2)(B), or
                            ``(ii) the sponsoring organization does not 
                        exercise expenditure responsibility with 
                        respect to such distribution in accordance with 
                        section 4945(h).
            ``(2) Exceptions.--Such term shall not include any 
        distribution from a donor advised fund--
                    ``(A) to any organization described in section 
                170(b)(1)(A) (other than a disqualified supporting 
                organization),
                    ``(B) to the sponsoring organization of such donor 
                advised fund, or
                    ``(C) to any other donor advised fund.
    ``(d) Definitions.--For purposes of this subchapter--
            ``(1) Sponsoring organization.--The term `sponsoring 
        organization' means any organization which--
                    ``(A) is described in section 170(c) (other than in 
                paragraph (1) thereof, and without regard to paragraph 
                (2)(A) thereof),
                    ``(B) is not a private foundation (as defined in 
                section 509(a)), and
                    ``(C) maintains 1 or more donor advised funds.
            ``(2) Donor advised fund.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B) or (C), the term `donor advised fund' 
                means a fund or account--
                            ``(i) which is separately identified by 
                        reference to contributions of a donor or 
                        donors,
                            ``(ii) which is owned and controlled by a 
                        sponsoring organization, and
                            ``(iii) with respect to which a donor (or 
                        any person appointed or designated by such 
                        donor) has, or reasonably expects to have, 
                        advisory privileges with respect to the 
                        distribution or investment of amounts held in 
                        such fund or account by reason of the donor's 
                        status as a donor.
                    ``(B) Exceptions.--The term `donor advised fund' 
                shall not include any fund or account--
                            ``(i) which makes distributions only to a 
                        single identified organization or governmental 
                        entity, or
                            ``(ii) with respect to which a person 
                        described in subparagraph (A)(iii) advises as 
                        to which individuals receive grants for travel, 
                        study, or other similar purposes, if--
                                    ``(I) such person's advisory 
                                privileges are performed exclusively by 
                                such person in the person's capacity as 
                                a member of a committee all of the 
                                members of which are appointed by the 
                                sponsoring organization,
                                    ``(II) no combination of persons 
                                described in subparagraph (A)(iii) (or 
                                persons related to such persons) 
                                control, directly or indirectly, such 
                                committee, and
                                    ``(III) all grants from such fund 
                                or account are awarded on an objective 
                                and nondiscriminatory basis pursuant to 
                                a procedure approved in advance by the 
                                board of directors of the sponsoring 
                                organization, and such procedure is 
                                designed to ensure that all such grants 
                                meet the requirements of paragraphs 
                                (1), (2), or (3) of section 4945(g).
                    ``(C) Secretarial authority.--The Secretary may 
                exempt a fund or account not described in subparagraph 
                (B) from treatment as a donor advised fund--
                            ``(i) if such fund or account is advised by 
                        a committee not directly or indirectly 
                        controlled by the donor or any person appointed 
                        or designated by the donor for the purpose of 
                        advising with respect to distributions from 
                        such fund (and any related parties), or
                            ``(ii) if such fund benefits a single 
                        identified charitable purpose.
            ``(3) Fund manager.--The term `fund manager' means, with 
        respect to any sponsoring organization--
                    ``(A) an officer, director, or trustee of such 
                sponsoring organization (or an individual having powers 
                or responsibilities similar to those of officers, 
                directors, or trustees of the sponsoring organization), 
                and
                    ``(B) with respect to any act (or failure to act), 
                the employees of the sponsoring organization having 
                authority or responsibility with respect to such act 
                (or failure to act).
            ``(4) Disqualified supporting organization.--
                    ``(A) In general.--The term `disqualified 
                supporting organization' means, with respect to any 
                distribution--
                            ``(i) any type III supporting organization 
                        (as defined in section 4943(f)(5)(A)) which is 
                        not a functionally integrated type III 
                        supporting organization (as defined in section 
                        4943(f)(5)(B)), and
                            ``(ii) any organization which is described 
                        in subparagraph (B) or (C) if--
                                    ``(I) the donor or any person 
                                designated by the donor for the purpose 
                                of advising with respect to 
                                distributions from a donor advised fund 
                                (and any related parties) directly or 
                                indirectly controls a supported 
                                organization (as defined in section 
                                509(f)(3)) of such organization, or
                                    ``(II) the Secretary determines by 
                                regulations that a distribution to such 
                                organization otherwise is 
                                inappropriate.
                    ``(B) Type i and type ii supporting 
                organizations.--An organization is described in this 
                subparagraph if the organization meets the requirements 
                of subparagraphs (A) and (C) of section 509(a)(3) and 
                is--
                            ``(i) operated, supervised, or controlled 
                        by one or more organizations described in 
                        paragraph (1) or (2) of section 509(a), or
                            ``(ii) supervised or controlled in 
                        connection with one or more such organizations.
                    ``(C) Functionally integrated type iii supporting 
                organizations.--An organization is described in this 
                subparagraph if the organization is a functionally 
                integrated type III supporting organization (as defined 
                under section 4943(f)(5)(B)).

``SEC. 4967. TAXES ON PROHIBITED BENEFITS.

    ``(a) Imposition of Taxes.--
            ``(1) On the donor, donor advisor, or related person.--
        There is hereby imposed on the advice of any person described 
        in subsection (d) to have a sponsoring organization make a 
        distribution from a donor advised fund which results in such 
        person or any other person described in subsection (d) 
        receiving, directly or indirectly, a more than incidental 
        benefit as a result of such distribution, a tax equal to 125 
        percent of such benefit. The tax imposed by this paragraph 
        shall be paid by any person described in subsection (d) who 
        advises as to the distribution or who receives such a benefit 
        as a result of the distribution.
            ``(2) On the fund management.--There is hereby imposed on 
        the agreement of any fund manager to the making of a 
        distribution, knowing that such distribution would confer a 
        benefit described in paragraph (1), a tax equal to 10 percent 
        of the amount of such benefit. The tax imposed by this 
        paragraph shall be paid by any fund manager who agreed to the 
        making of the distribution.
    ``(b) Exception.--No tax shall be imposed under this section with 
respect to any distribution if a tax has been imposed with respect to 
such distribution under section 4958.
    ``(c) Special Rules.--For purposes of subsection (a)--
            ``(1) Joint and several liability.--If more than one person 
        is liable under paragraph (1) or (2) of subsection (a) with 
        respect to a distribution described in subsection (a), all such 
        persons shall be jointly and severally liable under such 
        paragraph with respect to such distribution.
            ``(2) Limit for management.--With respect to any one 
        distribution described in subsection (a), the maximum amount of 
        the tax imposed by subsection (a)(2) shall not exceed $10,000.
    ``(d) Person Described.--A person is described in this subsection 
if such person is described in section 4958(f)(7) with respect to a 
donor advised fund.''.
    (b) Conforming Amendments.--
            (1) Section 4963 is amended by inserting ``4966, 4967,'' 
        after ``4958,'' each place it appears in subsections (a) and 
        (c).
            (2) The table of subchapters for chapter 42 is amended by 
        adding at the end the following new item:
                 ``subchapter g. donor advised funds''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 1232. EXCESS BENEFIT TRANSACTIONS INVOLVING DONOR ADVISED FUNDS 
              AND SPONSORING ORGANIZATIONS.

    (a) Disqualified Persons.--
            (1) In general.--Paragraph (1) of section 4958(f) is 
        amended by striking ``and'' at the end of subparagraph (B), by 
        striking the period at the end of subparagraph (C) and 
        inserting a comma, and by adding after subparagraph (C) the 
        following new subparagraphs:
                    ``(D) which involves a donor advised fund (as 
                defined in section 4966(d)(2)), any person who is 
                described in paragraph (7) with respect to such donor 
                advised fund (as so defined), and
                    ``(E) which involves a sponsoring organization (as 
                defined in section 4966(d)(1)), any person who is 
                described in paragraph (8) with respect to such 
                sponsoring organization (as so defined).''.
            (2) Donors, donor advisors, and investment advisors treated 
        as disqualified persons.--Section 4958(f) is amended by adding 
        at the end the following new paragraphs:
            ``(7) Donors and donor advisors.--For purposes of paragraph 
        (1)(E), a person is described in this paragraph if such 
        person--
                    ``(A) is described in section 4966(d)(2)(A)(iii),
                    ``(B) is a member of the family of an individual 
                described in subparagraph (A), or
                    ``(C) is a 35-percent controlled entity (as defined 
                in paragraph (3) by substituting `persons described in 
                subparagraph (A) or (B) of paragraph (7)' for `persons 
                described in subparagraph (A) or (B) of paragraph (1)' 
                in subparagraph (A)(i) thereof).
            ``(8) Investment advisors.--For purposes of paragraph 
        (1)(F)--
                    ``(A) In general.--A person is described in this 
                paragraph if such person--
                            ``(i) is an investment advisor,
                            ``(ii) is a member of the family of an 
                        individual described in clause (i), or
                            ``(iii) is a 35-percent controlled entity 
                        (as defined in paragraph (3) by substituting 
                        `persons described in clause (i) or (ii) of 
                        paragraph (8)(A)' for `persons described in 
                        subparagraph (A) or (B) of paragraph (1)' in 
                        subparagraph (A)(i) thereof).
                    ``(B) Investment advisor defined.--For purposes of 
                subparagraph (A), the term `investment advisor' means, 
                with respect to any sponsoring organization (as defined 
                in section 4966(d)(1)), any person (other than an 
                employee of such organization) compensated by such 
                organization for managing the investment of, or 
                providing investment advice with respect to, assets 
                maintained in donor advised funds (as defined in 
                section 4966(d)(2)) owned by such organization.''.
    (b) Certain Transactions Treated as Excess Benefit Transactions.--
            (1) In general.--Section 4958(c) is amended by 
        redesignating paragraph (2) as paragraph (3) and by inserting 
        after paragraph (1) the following new paragraph:
            ``(2) Special rules for donor advised funds.--In the case 
        of any donor advised fund (as defined in section 4966(d)(2))--
                    ``(A) the term `excess benefit transaction' 
                includes any grant, loan, compensation, or other 
                similar payment from such fund to a person described in 
                subsection (f)(7) with respect to such fund, and
                    ``(B) the term `excess benefit' includes, with 
                respect to any transaction described in subparagraph 
                (A), the amount of any such grant, loan, compensation, 
                or other similar payment.''.
            (2) Special rule for correction of transaction.--Section 
        4958(f)(6) is amended by inserting ``, except that in the case 
        of any correction of an excess benefit transaction described in 
        subsection (c)(2), no amount repaid in a manner prescribed by 
        the Secretary may be held in any donor advised fund'' after 
        ``standards''.
    (c) Effective Date.--The amendments made by this section shall 
apply to transactions occurring after the date of the enactment of this 
Act.

SEC. 1233. EXCESS BUSINESS HOLDINGS OF DONOR ADVISED FUNDS.

    (a) In General.--Section 4943 is amended by adding at the end the 
following new subsection:
    ``(e) Application of Tax to Donor Advised Funds.--
            ``(1) In general.--For purposes of this section, a donor 
        advised fund (as defined in section 4966(d)(2)) shall be 
        treated as a private foundation.
            ``(2) Disqualified person.--In applying this section to any 
        donor advised fund (as so defined), the term `disqualified 
        person' means, with respect to the donor advised fund, any 
        person who is--
                    ``(A) described in section 4966(d)(2)(A)(iii),
                    ``(B) a member of the family of an individual 
                described in subparagraph (A), or
                    ``(C) a 35-percent controlled entity (as defined in 
                section 4958(f)(3) by substituting `persons described 
                in subparagraph (A) or (B) of section 4943(e)(2)' for 
                `persons described in subparagraph (A) or (B) of 
                paragraph (1)' in subparagraph (A)(i) thereof).
            ``(3) Present holdings.--For purposes of this subsection, 
        rules similar to the rules of paragraphs (4), (5), and (6) of 
        subsection (c) shall apply to donor advised funds (as so 
        defined), except that--
                    ``(A) `the date of the enactment of this 
                subsection' shall be substituted for `May 26, 1969' 
                each place it appears in paragraphs (4), (5), and (6), 
                and
                    ``(B) `January 1, 2007' shall be substituted for 
                `January 1, 1970' in paragraph (4)(E).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 1234. TREATMENT OF CHARITABLE CONTRIBUTION DEDUCTIONS TO DONOR 
              ADVISED FUNDS.

    (a) Income.--Section 170(f) (relating to disallowance of deduction 
in certain cases and special rules), as amended by this Act, is amended 
by adding at the end the following new paragraph:
            ``(18) Contributions to donor advised funds.--A deduction 
        otherwise allowed under subsection (a) for any contribution to 
        a donor advised fund (as defined in section 4966(d)(2)) shall 
        only be allowed if--
                    ``(A) the sponsoring organization (as defined in 
                section 4966(d)(1)) with respect to such donor advised 
                fund is not--
                            ``(i) described in paragraph (3), (4), or 
                        (5) of subsection (c), or
                            ``(ii) a type III supporting organization 
                        (as defined in section 4943(f)(5)(A)) which is 
                        not a functionally integrated type III 
                        supporting organization (as defined in section 
                        4943(f)(5)(B)), and
                    ``(B) the taxpayer obtains a contemporaneous 
                written acknowledgment (determined under rules similar 
                to the rules of paragraph (8)(C)) from the sponsoring 
                organization (as so defined) of such donor advised fund 
                that such organization has exclusive legal control over 
                the assets contributed.''.
    (b) Estate.--Section 2055(e) is amended by adding at the end the 
following new paragraph:
            ``(5) Contributions to donor advised funds.--A deduction 
        otherwise allowed under subsection (a) for any contribution to 
        a donor advised fund (as defined in section 4966(d)(2)) shall 
        only be allowed if--
                    ``(A) the sponsoring organization (as defined in 
                section 4966(d)(1)) with respect to such donor advised 
                fund is not--
                            ``(i) described in paragraph (3) or (4) of 
                        subsection (a), or
                            ``(ii) a type III supporting organization 
                        (as defined in section 4943(f)(5)(A)) which is 
                        not a functionally integrated type III 
                        supporting organization (as defined in section 
                        4943(f)(5)(B)), and
                    ``(B) the taxpayer obtains a contemporaneous 
                written acknowledgment (determined under rules similar 
                to the rules of section 170(f)(8)(C)) from the 
                sponsoring organization (as so defined) of such donor 
                advised fund that such organization has exclusive legal 
                control over the assets contributed.''.
    (c) Gift.--Section 2522(c) is amended by adding at the end the 
following new paragraph:
            ``(5) Contributions to donor advised funds.--A deduction 
        otherwise allowed under subsection (a) for any contribution to 
        a donor advised fund (as defined in section 4966(d)(2)) shall 
        only be allowed if--
                    ``(A) the sponsoring organization (as defined in 
                section 4966(d)(1)) with respect to such donor advised 
                fund is not--
                            ``(i) described in paragraph (3) or (4) of 
                        subsection (a), or
                            ``(ii) a type III supporting organization 
                        (as defined in section 4943(f)(5)(A)) which is 
                        not a functionally integrated type III 
                        supporting organization (as defined in section 
                        4943(f)(5)(B)), and
                    ``(B) the taxpayer obtains a contemporaneous 
                written acknowledgment (determined under rules similar 
                to the rules of section 170(f)(8)(C)) from the 
                sponsoring organization (as so defined) of such donor 
                advised fund that such organization has exclusive legal 
                control over the assets contributed.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions made after the date which is 180 days after the 
date of the enactment of this Act.

SEC. 1235. RETURNS OF, AND APPLICATIONS FOR RECOGNITION BY, SPONSORING 
              ORGANIZATIONS.

    (a) Matters Included on Returns.--
            (1) In general.--Section 6033, as amended by this Act, is 
        amended by redesignating subsection (k) as subsection (l) and 
        by inserting after subsection (j) the following new subsection:
    ``(k) Additional Provisions Relating to Sponsoring Organizations.--
Every organization described in section 4966(d)(1) shall, on the return 
required under subsection (a) for the taxable year--
            ``(1) list the total number of donor advised funds (as 
        defined in section 4966(d)(2)) it owns at the end of such 
        taxable year,
            ``(2) indicate the aggregate value of assets held in such 
        funds at the end of such taxable year, and
            ``(3) indicate the aggregate contributions to and grants 
        made from such funds during such taxable year.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to returns filed for taxable years ending after the 
        date of the enactment of this Act.
    (b) Matters Included on Exempt Status Application.--
            (1) In general.--Section 508 is amended by adding at the 
        end the following new subsection:
    ``(f) Additional Provisions Relating to Sponsoring Organizations.--
A sponsoring organization (as defined in section 4966(d)(1)) shall give 
notice to the Secretary (in such manner as the Secretary may provide) 
whether such organization maintains or intends to maintain donor 
advised funds (as defined in section 4966(d)(2)) and the manner in 
which such organization plans to operate such funds.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to organizations applying for tax-exempt status 
        after the date of the enactment of this Act.

      PART 3--IMPROVED ACCOUNTABILITY OF SUPPORTING ORGANIZATIONS

SEC. 1241. REQUIREMENTS FOR SUPPORTING ORGANIZATIONS.

    (a) Types of Supporting Organizations.--Subparagraph (B) of section 
509(a)(3) is amended to read as follows:
                    ``(B) is--
                            ``(i) operated, supervised, or controlled 
                        by one or more organizations described in 
                        paragraph (1) or (2),
                            ``(ii) supervised or controlled in 
                        connection with one or more such organizations, 
                        or
                            ``(iii) operated in connection with one or 
                        more such organizations, and''.
    (b) Requirements for Supporting Organizations.--Section 509 
(relating to private foundation defined) is amended by adding at the 
end the following new subsection:
    ``(f) Requirements for Supporting Organizations.--
            ``(1) Type iii supporting organizations.--For purposes of 
        subsection (a)(3)(B)(iii), an organization shall not be 
        considered to be operated in connection with any organization 
        described in paragraph (1) or (2) of subsection (a) unless such 
        organization meets the following requirements:
                    ``(A) Responsiveness.--For each taxable year 
                beginning after the date of the enactment of this 
                subsection, the organization provides to each supported 
                organization such information as the Secretary may 
                require to ensure that such organization is responsive 
                to the needs or demands of the supported organization.
                    ``(B) Foreign supported organizations.--
                            ``(i) In general.--The organization is not 
                        operated in connection with any supported 
                        organization that is not organized in the 
                        United States.
                            ``(ii) Transition rule for existing 
                        organizations.--If the organization is operated 
                        in connection with an organization that is not 
                        organized in the United States on the date of 
                        the enactment of this subsection, clause (i) 
                        shall not apply until the first day of the 
                        third taxable year of the organization 
                        beginning after the date of the enactment of 
                        this subsection.
            ``(2) Organizations controlled by donors.--
                    ``(A) In general.--For purposes of subsection 
                (a)(3)(B), an organization shall not be considered to 
                be--
                            ``(i) operated, supervised, or controlled 
                        by any organization described in paragraph (1) 
                        or (2) of subsection (a), or
                            ``(ii) operated in connection with any 
                        organization described in paragraph (1) or (2) 
                        of subsection (a),
                if such organization accepts any gift or contribution 
                from any person described in subparagraph (B).
                    ``(B) Person described.--A person is described in 
                this subparagraph if, with respect to a supported 
                organization of an organization described in 
                subparagraph (A), such person is--
                            ``(i) a person (other than an organization 
                        described in paragraph (1), (2), or (4) of 
                        section 509(a)) who directly or indirectly 
                        controls, either alone or together with persons 
                        described in clauses (ii) and (iii), the 
                        governing body of such supported organization,
                            ``(ii) a member of the family (determined 
                        under section 4958(f)(4)) of an individual 
                        described in clause (i), or
                            ``(iii) a 35-percent controlled entity (as 
                        defined in section 4958(f)(3) by substituting 
                        `persons described in clause (i) or (ii) of 
                        section 509(f)(2)(B)' for `persons described in 
                        subparagraph (A) or (B) of paragraph (1)' in 
                        subparagraph (A)(i) thereof).
            ``(3) Supported organization.--For purposes of this 
        subsection, the term `supported organization' means, with 
        respect to an organization described in subsection (a)(3), an 
        organization described in paragraph (1) or (2) of subsection 
        (a)--
                    ``(A) for whose benefit the organization described 
                in subsection (a)(3) is organized and operated, or
                    ``(B) with respect to which the organization 
                performs the functions of, or carries out the purposes 
                of.''.
    (c) Charitable Trusts Which Are Type III Supporting 
Organizations.--For purposes of section 509(a)(3)(B)(iii) of the 
Internal Revenue Code of 1986, an organization which is a trust shall 
not be considered to be operated in connection with any organization 
described in paragraph (1) or (2) of section 509(a) of such Code solely 
because--
            (1) it is a charitable trust under State law,
            (2) the supported organization (as defined in section 
        509(f)(3) of such Code) is a beneficiary of such trust, and
            (3) the supported organization (as so defined) has the 
        power to enforce the trust and compel an accounting.
    (d) Payout Requirements for Type III Supporting Organizations.--
            (1) In general.--The Secretary of the Treasury shall 
        promulgate new regulations under section 509 of the Internal 
        Revenue Code of 1986 on payments required by type III 
        supporting organizations which are not functionally integrated 
        type III supporting organizations. Such regulations shall 
        require such organizations to make distributions of a 
        percentage of either income or assets to supported 
        organizations (as defined in section 509(f)(3) of such Code) in 
        order to ensure that a significant amount is paid to such 
        organizations.
            (2) Type iii supporting organization; functionally 
        integrated type iii supporting organization.--For purposes of 
        paragraph (1), the terms ``type III supporting organization'' 
        and ``functionally integrated type III supporting 
        organization'' have the meanings given such terms under 
        subparagraphs (A) and (B) section 4943(f)(5) of the Internal 
        Revenue Code of 1986 (as added by this Act), respectively.
    (e) Effective Dates.--
            (1) In general.--The amendments made by subsections (a) and 
        (b) shall take effect on the date of the enactment of this Act.
            (2) Charitable trusts which are type iii supporting 
        organizations.--Subsection (c) shall take effect--
                    (A) in the case of trusts operated in connection 
                with an organization described in paragraph (1) or (2) 
                of section 509(a) of the Internal Revenue Code of 1986 
                on the date of the enactment of this Act, on the date 
                that is one year after the date of the enactment of 
                this Act, and
                    (B) in the case of any other trust, on the date of 
                the enactment of this Act.

SEC. 1242. EXCESS BENEFIT TRANSACTIONS INVOLVING SUPPORTING 
              ORGANIZATIONS.

    (a) Disqualified Persons.--Paragraph (1) of section 4958(f), as 
amended by this Act, is amended by redesignating subparagraphs (D) and 
(E) as subparagraphs (E) and (F), respectively, and by adding after 
subparagraph (C) the following new subparagraph:
                    ``(D) any person who is described in subparagraph 
                (A), (B), or (C) with respect to an organization 
                described in section 509(a)(3) and organized and 
                operated exclusively for the benefit of, to perform the 
                functions of, or to carry out the purposes of the 
                applicable tax-exempt organization.''.
    (b) Certain Transactions Treated as Excess Benefit Transactions.--
Section 4958(c), as amended by this Act, is amended by redesignating 
paragraph (3) as paragraph (4) and by inserting after paragraph (2) the 
following new paragraph:
            ``(3) Special rules for supporting organizations.--
                    ``(A) In general.--In the case of any organization 
                described in section 509(a)(3)--
                            ``(i) the term `excess benefit transaction' 
                        includes--
                                    ``(I) any grant, loan, 
                                compensation, or other similar payment 
                                provided by such organization to a 
                                person described in subparagraph (B), 
                                and
                                    ``(II) any loan provided by such 
                                organization to a disqualified person 
                                (other than an organization described 
                                in paragraph (1), (2), or (4) of 
                                section 509(a)), and
                            ``(ii) the term `excess benefit' includes, 
                        with respect to any transaction described in 
                        clause (i), the amount of any such grant, loan, 
                        compensation, or other similar payment.
                    ``(B) Person described.--A person is described in 
                this subparagraph if such person is--
                            ``(i) a substantial contributor to such 
                        organization,
                            ``(ii) a member of the family (determined 
                        under section 4958(f)(4)) of an individual 
                        described in clause (i), or
                            ``(iii) a 35-percent controlled entity (as 
                        defined in section 4958(f)(3) by substituting 
                        `persons described in clause (i) or (ii) of 
                        section 4958(c)(3)(B)' for `persons described 
                        in subparagraph (A) or (B) of paragraph (1)' in 
                        subparagraph (A)(i) thereof).
                    ``(C) Substantial contributor.--For purposes of 
                this paragraph--
                            ``(i) In general.--The term `substantial 
                        contributor' means any person who contributed 
                        or bequeathed an aggregate amount of more than 
                        $5,000 to the organization, if such amount is 
                        more than 2 percent of the total contributions 
                        and bequests received by the organization 
                        before the close of the taxable year of the 
                        organization in which the contribution or 
                        bequest is received by the organization from 
                        such person. In the case of a trust, such term 
                        also means the creator of the trust. Rules 
                        similar to the rules of subparagraphs (B) and 
                        (C) of section 507(d)(2) shall apply for 
                        purposes of this subparagraph.
                            ``(ii) Exception.--Such term shall not 
                        include any organization described in paragraph 
                        (1), (2), or (4) of section 509(a).''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to transactions occurring after the date of the 
        enactment of this Act.
            (2) Subsection (b).--The amendments made by subsection (a) 
        shall apply to transactions occurring after July 25, 2006.

SEC. 1243. EXCESS BUSINESS HOLDINGS OF SUPPORTING ORGANIZATIONS.

    (a) In General.--Section 4943, as amended by this Act, is amended 
by adding at the end the following new subsection:
    ``(f) Application of Tax to Supporting Organizations.--
            ``(1) In general.--For purposes of this section, an 
        organization which is described in paragraph (3) shall be 
        treated as a private foundation.
            ``(2) Exception.--The Secretary may exempt the excess 
        business holdings of any organization from the application of 
        this subsection if the Secretary determines that such holdings 
        are consistent with the purpose or function constituting the 
        basis for its exemption under section 501.
            ``(3) Organizations described.--An organization is 
        described in this paragraph if such organization is--
                    ``(A) a type III supporting organization (other 
                than a functionally integrated type III supporting 
                organization), or
                    ``(B) an organization which meets the requirements 
                of subparagraphs (A) and (C) of section 509(a)(3) and 
                which is supervised or controlled in connection with or 
                one or more organizations described in paragraph (1) or 
                (2) of section 509(a), but only if such organization 
                accepts any gift or contribution from any person 
                described in section 509(f)(2)(B).
            ``(4) Disqualified person.--
                    ``(A) In general.--In applying this section to any 
                organization described in paragraph (3), the term 
                `disqualified person' means, with respect to the 
                organization--
                            ``(i) any person who was, at any time 
                        during the 5-year period ending on the date 
                        described in subsection (a)(2)(A), in a 
                        position to exercise substantial influence over 
                        the affairs of the organization,
                            ``(ii) any member of the family (determined 
                        under section 4958(f)(4)) of an individual 
                        described in clause (i),
                            ``(iii) any 35-percent controlled entity 
                        (as defined in section 4958(f)(3) by 
                        substituting `persons described in clause (i) 
                        or (ii) of section 4943(f)(4)(A)' for `persons 
                        described in subparagraph (A) or (B) of 
                        paragraph (1)' in subparagraph (A)(i) thereof),
                            ``(iv) any person described in section 
                        4958(c)(3)(B), and
                            ``(v) any organization--
                                    ``(I) which is effectively 
                                controlled (directly or indirectly) by 
                                the same person or persons who control 
                                the organization in question, or
                                    ``(II) substantially all of the 
                                contributions to which were made 
                                (directly or indirectly) by the same 
                                person or persons described in 
                                subparagraph (B) or a member of the 
                                family (within the meaning of section 
                                4946(d)) of such a person.
                    ``(B) Persons described.--A person is described in 
                this subparagraph if such person is--
                            ``(i) a substantial contributor to the 
                        organization (as defined in section 
                        4958(c)(3)(C)),
                            ``(ii) an officer, director, or trustee of 
                        the organization (or an individual having 
                        powers or responsibilities similar to those of 
                        the officers, directors, or trustees of the 
                        organization), or
                            ``(iii) an owner of more than 20 percent 
                        of--
                                    ``(I) the total combined voting 
                                power of a corporation,
                                    ``(II) the profits interest of a 
                                partnership, or
                                    ``(III) the beneficial interest of 
                                a trust or unincorporated enterprise,
                        which is a substantial contributor (as so 
                        defined) to the organization.
            ``(5) Type iii supporting organization; functionally 
        integrated type iii supporting organization.--For purposes of 
        this subsection--
                    ``(A) Type iii supporting organization.--The term 
                `type III supporting organization' means an 
                organization which meets the requirements of 
                subparagraphs (A) and (C) of section 509(a)(3) and 
                which is operated in connection with one or more 
                organizations described in paragraph (1) or (2) of 
                section 509(a).
                    ``(B) Functionally integrated type iii supporting 
                organization.--The term `functionally integrated type 
                III supporting organization' means a type III 
                supporting organization which is not required under 
                regulations established by the Secretary to make 
                payments to supported organizations (as defined under 
                section 509(f)(3)) due to the activities of the 
                organization related to performing the functions of, or 
                carrying out the purposes of, such supported 
                organizations.
            ``(6) Special rule for certain holdings of type iii 
        supporting organizations.--For purposes of this subsection, the 
        term `excess business holdings' shall not include any holdings 
        of a type III supporting organization in any business 
        enterprise if, as of November 18, 2005, the holdings were held 
        (and at all times thereafter, are held) for the benefit of the 
        community pursuant to the direction of a State attorney general 
        or a State official with jurisdiction over such organization.
            ``(7) Present holdings.--For purposes of this subsection, 
        rules similar to the rules of paragraphs (4), (5), and (6) of 
        subsection (c) shall apply to organizations described in 
        section 509(a)(3), except that--
                    ``(A) `the date of the enactment of this 
                subsection' shall be substituted for `May 26, 1969' 
                each place it appears in paragraphs (4), (5), and (6), 
                and
                    ``(B) `January 1, 2007' shall be substituted for 
                `January 1, 1970' in paragraph (4)(E).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 1244. TREATMENT OF AMOUNTS PAID TO SUPPORTING ORGANIZATIONS BY 
              PRIVATE FOUNDATIONS.

    (a) Qualifying Distributions.--Paragraph (4) of section 4942(g) is 
amended to read as follows:
            ``(4) Limitation on distributions by nonoperating private 
        foundations to supporting organizations.--
                    ``(A) In general.--For purposes of this section, 
                the term `qualifying distribution' shall not include 
                any amount paid by a private foundation which is not an 
                operating foundation to--
                            ``(i) any type III supporting organization 
                        (as defined in section 4943(f)(5)(A)) which is 
                        not a functionally integrated type III 
                        supporting organization (as defined in section 
                        4943(f)(5)(B)), and
                            ``(ii) any organization which is described 
                        in subparagraph (B) or (C) if--
                                    ``(I) a disqualified person of the 
                                private foundation directly or 
                                indirectly controls such organization 
                                or a supported organization (as defined 
                                in section 509(f)(3)) of such 
                                organization, or
                                    ``(II) the Secretary determines by 
                                regulations that a distribution to such 
                                organization otherwise is 
                                inappropriate.
                    ``(B) Type i and type ii supporting 
                organizations.--An organization is described in this 
                subparagraph if the organization meets the requirements 
                of subparagraphs (A) and (C) of section 509(a)(3) and 
                is--
                            ``(i) operated, supervised, or controlled 
                        by one or more organizations described in 
                        paragraph (1) or (2) of section 509(a), or
                            ``(ii) supervised or controlled in 
                        connection with one or more such organizations.
                    ``(C) Functionally integrated type iii supporting 
                organizations.--An organization is described in this 
                subparagraph if the organization is a functionally 
                integrated type III supporting organization (as defined 
                under section 4943(f)(5)(B)).''.
    (b) Taxable Expenditures.--Subparagraph (A) of section 4945(d)(4) 
is amended to read as follows:
                    ``(A) such organization--
                            ``(i) is described in paragraph (1) or (2) 
                        of section 509(a),
                            ``(ii) is an organization described in 
                        section 509(a)(3) (other than an organization 
                        described in clause (i) or (ii) of section 
                        4942(g)(4)(A)), or
                            ``(iii) is an exempt operating foundation 
                        (as defined in section 4940(d)(2)), or''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions and expenditures after the date of the enactment 
of this Act.

SEC. 1245. RETURNS OF SUPPORTING ORGANIZATIONS.

    (a) Requirement to File Return.--Subparagraph (B) of section 
6033(a)(3) is amended by inserting ``(other than an organization 
described in section 509(a)(3))'' after ``paragraph (1)''.
    (b) Matters Included on Returns.--Section 6033, as amended by this 
Act, is amended by redesignating subsection (l) as subsection (m) and 
by inserting after subsection (k) the following new subsection:
    ``(l) Additional Provisions Relating to Supporting Organizations.--
Every organization described in section 509(a)(3) shall, on the return 
required under subsection (a)--
            ``(1) list the supported organizations (as defined in 
        section 509(f)(3)) with respect to which such organization 
        provides support,
            ``(2) indicate whether the organization meets the 
        requirements of clause (i), (ii), or (iii) of section 
        509(a)(3)(B), and
            ``(3) certify that the organization meets the requirements 
        of section 509(a)(3)(C).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to returns filed for taxable years ending after the date of the 
enactment of this Act.

                      TITLE XIII--OTHER PROVISIONS

SEC. 1301. TECHNICAL CORRECTIONS RELATING TO MINE SAFETY.

    Section 110 of the Federal Mine Safety and Health Act of 1977 (30 
U.S.C. 820), as amended by the Mine Improvement and New Emergency 
Response Act of 2006 (Public Law 109-236), is amended--
            (1) by striking subsection (d); and
            (2) in subsection (a)--
                    (A) by striking ``(1)(1) The operator'' and 
                inserting ``(1) The operator'';
                    (B) in the paragraph (2) added by section 
                8(a)(1)(B) of the Mine Improvement and New Emergency 
                Response Act of 2006 (Public Law 109-236)--
                            (i) by striking ``paragraph (1)'' and 
                        inserting ``subsection (a)(1)''; and
                            (ii) by redesignating such paragraph as 
                        subsection (d) and transferring such subsection 
                        so as to appear after subsection (c); and
            (3) in subsection (b)--
                    (A) by striking ``Any operator'' and inserting 
                ``(1) Any operator''; and
                    (B) in the second sentence, as added by section 
                8(a)(2) of the Mine Improvement and New Emergency 
                Response Act of 2006 (Public Law 109-236), by striking 
                ``Violations'' and inserting the following:
    ``(2) Violations''.

SEC. 1302. GOING-TO-THE-SUN ROAD.

    (a) In General.--Section 1940 of the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users (119 Stat. 
1511) is amended--
            (1) in subsection (a)--
                    (A) by striking paragraphs (1) and (2);
                    (B) by redesignating paragraphs (3) through (5) as 
                paragraphs (1) through (3), respectively; and
                    (C) by striking ``$10,000,000'' each place that it 
                appears and inserting ``$16,666,666''; and
            (2) by adding at the end the following:
    ``(c) Contract Authority.--Except as otherwise provided in this 
section, funds authorized to be appropriated under this section shall 
be available for obligation in the same manner as if the funds were 
apportioned under chapter 1 of title 23, United States Code.''.
    (b) Rescission.--Section 10212 of the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users (119 Stat. 
1937) is amended by striking ``$8,543,000,000'' each place it appears 
and inserting ``$8,593,000,000''.

SEC. 1303. EXCEPTION TO THE LOCAL FURNISHING REQUIREMENT OF THE TAX-
              EXEMPT BOND RULES.

    (a) Snettisham Hydroelectric Facility.--For purposes of determining 
whether any private activity bond issued before May 31, 2006, and used 
to finance the acquisition of the Snettisham hydroelectric facility is 
a qualified bond for purposes of section 142(a)(8) of the Internal 
Revenue Code of 1986, the electricity furnished by such facility to the 
City of Hoonah, Alaska, shall not be taken into account for purposes of 
section 142(f)(1) of such Code.
    (b) Lake Dorothy Hydroelectric Facility.--For purposes of 
determining whether any private activity bond issued before May 31, 
2006, and used to finance the Lake Dorothy hydroelectric facility is a 
qualified bond for purposes of section 142(a)(8) of the Internal 
Revenue Code of 1986, the electricity furnished by such facility to the 
City of Hoonah, Alaska, shall not be taken into account for purposes of 
paragraphs (1) and (3) of section 142(f) of such Code.
    (c) Definitions.--For purposes of this section--
            (1) Lake dorothy hydroelectric facility.--The term ``Lake 
        Dorothy hydroelectric facility'' means the hydroelectric 
        facility located approximately 10 miles south of Juneau, 
        Alaska, and commonly referred to as the ``Lake Dorothy 
        project''.
            (2) Snettisham hydroelectric facility.--The term 
        ``Snettisham hydroelectric facility'' means the hydroelectric 
        project described in section 1804 of the Small Business Job 
        Protection Act of 1996.

SEC. 1304. QUALIFIED TUITION PROGRAMS.

    (a) Permanent Extension of Modifications.--Section 901 of the 
Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to 
sunset provisions) shall not apply to section 402 of such Act (relating 
to modifications to qualified tuition programs).
    (b) Regulatory Authority to Prevent Abuse.--Section 529 (relating 
to qualified tuition programs) is amended by adding at the end the 
following new subsection:
    ``(f) Regulations.--Notwithstanding any other provision of this 
section, the Secretary shall prescribe such regulations as may be 
necessary or appropriate to carry out the purposes of this section and 
to prevent abuse of such purposes, including regulations under chapters 
11, 12, and 13 of this title.''.

                      TITLE XIV--TARIFF PROVISIONS

SEC. 1401. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This title may be cited as the ``Miscellaneous 
Trade and Technical Corrections Act of 2006''.
    (b) Table of contents.--The table of contents of this title is as 
follows:

                      TITLE XIV--TARIFF PROVISIONS

Sec. 1401. Short title; table of contents.
Sec. 1402. Reference.
         Subtitle A--Temporary Duty Suspensions and Reductions

             Chapter 1--New Duty Suspensions and Reductions

Sec. 1411. Certain non-knit gloves designed for use by auto mechanics.
Sec. 1412. Certain microphones for use in automotive interiors.
Sec. 1413. Acrylic or modacrylic synthetic filament tow.
Sec. 1414. Acrylic or modacrylic synthetic staple fibers, carded, 
                            combed, or otherwise processed for 
                            spinning.
Sec. 1415. Nitrocellulose.
Sec. 1416. Potassium sorbate.
Sec. 1417. Sorbic acid.
Sec. 1418. Certain capers.
Sec. 1419. Certain pepperoncini prepared or preserved otherwise than by 
                            vinegar or acetic acid.
Sec. 1420. Certain capers.
Sec. 1421. Certain pepperoncini prepared or preserved by vinegar or 
                            acetic acid in concentrations at 0.5 
                            percent or greater.
Sec. 1422. Certain pepperoncini prepared or preserved otherwise than by 
                            vinegar or acetic acid in concentrations 
                            less than 0.5 percent.
Sec. 1423. Chloral.
Sec. 1424. Imidacloprid technical (imidacloprid).
Sec. 1425. Triadimefon.
Sec. 1426. Polyethylene HE1878.
Sec. 1427. Thiacloprid.
Sec. 1428. Pyrimethanil.
Sec. 1429. Foramsulfuron.
Sec. 1430. Fenamidone.
Sec. 1431. Cyclanilide technical.
Sec. 1432. Para-benzoquinone.
Sec. 1433. O-Anisidine.
Sec. 1434. 2,4-Xylidine.
Sec. 1435. Crotonaldehyde.
Sec. 1436. Butanedioic acid, dimethyl ester, polymer with 4-hydroxy-
                            2,2,6,6,-tetramethyl-1-piperidineethanol.
Sec. 1437. Mixtures of CAS Nos. 106990-43-6 and 65447-77-0.
Sec. 1438. MCPA.
Sec. 1439. Bronate advanced.
Sec. 1440. Bromoxynil octanoate tech.
Sec. 1441. Bromoxynil meo.
Sec. 1442. Hydraulic control units.
Sec. 1443. Shield asy-steering gear.
Sec. 1444. 2,4-Dichloroaniline.
Sec. 1445. 2-Acetylbutyrolactone.
Sec. 1446. Alkylketone.
Sec. 1447. Cyfluthrin (baythroid).
Sec. 1448. Beta-cyfluthrin.
Sec. 1449. Cyclopropane-1,1-dicarboxylic acid, dimethyl ester.
Sec. 1450. Spiroxamine.
Sec. 1451. Spiromesifen.
Sec. 1452. 4-Chlorobenzaldehyde.
Sec. 1453. Oxadiazon.
Sec. 1454. NAHP.
Sec. 1455. Phosphorus thiochloride.
Sec. 1456. Trifloxystrobin.
Sec. 1457. Phosphoric acid, lanthanum salt, cerium terbium-doped.
Sec. 1458. Lutetium oxide.
Sec. 1459. ACM.
Sec. 1460. Permethrin.
Sec. 1461. Thidiazuron.
Sec. 1462. Flutolanil.
Sec. 1463. Resmethrin.
Sec. 1464. Clothianidin.
Sec. 1465. Certain master cylinder assembles.
Sec. 1466. Certain transaxles.
Sec. 1467. Converter asy.
Sec. 1468. Module and bracket asy-power steering.
Sec. 1469. Unit asy-battery hi volt.
Sec. 1470. Certain articles of natural cork.
Sec. 1471. Glyoxylic acid.
Sec. 1472. Cyclopentanone.
Sec. 1473. Mesotrione technical.
Sec. 1474. Malonic acid-dinitrile 50% NMP.
Sec. 1475. Formulations of NOA 446510.
Sec. 1476. DEMBB distilled-ISO tank.
Sec. 1477. Methylionone.
Sec. 1478. Certain acrylic fiber tow.
Sec. 1479. Certain acrylic fiber tow.
Sec. 1480. MKH 6561 isocyanate.
Sec. 1481. Endosulfan.
Sec. 1482. Tetraconazole.
Sec. 1483. M-alcohol.
Sec. 1484. Certain machines for use in the assembly of motorcycle 
                            wheels.
Sec. 1485. Deltamethrin.
Sec. 1486. Palm fatty acid distillate.
Sec. 1487. 4-Methoxy-2-methyldiphenylamine.
Sec. 1488. 2-Methylhydroquinone.
Sec. 1489. 1-Fluoro-2-nitrobenzene.
Sec. 1490. Cosmetic bags with a flexible outer surface of reinforced or 
                            laminated polyvinyl chloride (PVC).
Sec. 1491. Mixtures of methyl 4-iodo-2-[3-(4-methoxy-6-methyl-1,3,5-
                            triazin-2-yl)ureidosulfonyl]benzoate, 
                            sodium salt (iodosulfuron methyl, sodium 
                            salt).
Sec. 1492. Ethyl 4,5-dihydro-5,5-diphenyl-1,2-oxazole-3-carboxylate 
                            (isoxadifen-ethyl).
Sec. 1493. (5-cyclopropyl-4-isoxazolyl)[2-(methylsulfonyl)-4-
                            (trifluoromethyl)phenyl]methanone 
                            (isoxaflutole).
Sec. 1494. Methyl 2-[(4,6-dimethoxypyrimidin-2-ylcarbamoyl)sulfamoyl]-
                            a-(methanesulfonamido)-p-toluate 
                            (mesosulfuron-methyl) whether or not mixed 
                            with application adjuvants.
Sec. 1495. Mixtures of foramsulfuron and iodosulfuron-methyl-sodium.
Sec. 1496. Vulcuren UPKA 1988.
Sec. 1497. Vullcanox 41010 NA/LG.
Sec. 1498. Vulkazon AFS/LG.
Sec. 1499. P-Anisaldehyde.
Sec. 1500. 1,2-Pentanediol.
Sec. 1501. Agrumex.
Sec. 1502. Cohedur RL.
Sec. 1503. Formulations of prosulfuron.
Sec. 1504. Lewatit.
Sec. 1505. Para-Chlorophenol.
Sec. 1506. Cypermethrin.
Sec. 1507. Ion-exchange resin powder.
Sec. 1508. Ion-exchange resin powder.
Sec. 1509. Desmodur E 14.
Sec. 1510. Desmodur VP LS 2253.
Sec. 1511. Desmodur R-E.
Sec. 1512. Walocel MW 3000 PFV.
Sec. 1513. TSME.
Sec. 1514. Walocel VP-M 20660.
Sec. 1515. Xama 2.
Sec. 1516. Xama 7.
Sec. 1517. Certain cases for toys.
Sec. 1518. Certain cases for toys.
Sec. 1519. Aniline 2.5-disulfonic acid.
Sec. 1520. 1,4-benzenedicarboxylic acid, polymer with n,n,-bis(2-
                            aminoethyl)-1,2-ethanediamine, cyclized, 
                            methosulfate.
Sec. 1521. Sulfur blue 7.
Sec. 1522. Formaldehyde, reaction products with 1,4-benzenediol and m-
                            phenylenediamine, sulfurized.
Sec. 1523. Isocyanatosulfonyl.
Sec. 1524. Isocyanatosulfonyl.
Sec. 1525. Gemifloxacin, gemifloxacin mesylate, and gemifloxacin 
                            mesylate sesquihydrate.
Sec. 1526. Butralin.
Sec. 1527. Spirodiclofen.
Sec. 1528. Propamocarb HCL (PREVICUR).
Sec. 1529. Desmodur IL.
Sec. 1530. Chloroacetone.
Sec. 1531. IPN (isophthalonitrile).
Sec. 1532. NOA 446510 technical.
Sec. 1533. Hexythiazox technical.
Sec. 1534. Crelan (self-blocked cycloaliphatic polyuretdione).
Sec. 1535. Aspirin.
Sec. 1536. Desmodur BL XP 2468.
Sec. 1537. Desmodur RF-E.
Sec. 1538. Desmodur HL.
Sec. 1539. D-Mannose.
Sec. 1540. Certain camel hair.
Sec. 1541. Waste of camel hair.
Sec. 1542. Certain camel hair.
Sec. 1543. Woven fabric of vicuna hair.
Sec. 1544. Certain camel hair.
Sec. 1545. Noils of camel hair.
Sec. 1546. Chloroacetic acid, ethyl ester.
Sec. 1547. Chloroacetic acid, sodium salt.
Sec. 1548. Low expansion laboratory glass.
Sec. 1549. Stoppers, lids, and other closures.
Sec. 1550. Pigment yellow 213.
Sec. 1551. Indoxacarb.
Sec. 1552. Dimethyl carbonate.
Sec. 1553. 5-Chloro-1-indanone (EK179).
Sec. 1554. Mixtures of famoxadone and cymoxanil.
Sec. 1555. Decanedioic acid, bis(2,2,6,6-tetramethyl-4-piperidinyl) 
                            ester.
Sec. 1556. Acid blue 80.
Sec. 1557. Pigment brown 25.
Sec. 1558. Formulations of azoxystrobin.
Sec. 1559. Formulations of pinoxaden/cloquintocet.
Sec. 1560. Mixtures of difenoconazole/mefenoxam.
Sec. 1561. Fludioxinil technical.
Sec. 1562. Mixtures of clodinafop-propargyl.
Sec. 1563. Avermectin b, 1,4"-deoxy-4"-methylamino-, (4"r)-, benzoate.
Sec. 1564. Cloquintocet-mexyl.
Sec. 1565. Metalaxyl-M technical.
Sec. 1566. Cyproconazole technical.
Sec. 1567. Pinoxaden technical.
Sec. 1568. Mixtures of tralkoxydim.
Sec. 1569. Certain chemicals.
Sec. 1570. Mixtures of (<plus-minus>)-(cis and trans)-1-[[2-(2,4-
                            dichlorophenyl)-4-propyl-1,3-dioxolan-2-
                            yl]-methyl]-1h-1,2,4-triazole.
sec. 1571. Paraquat dichloride.
Sec. 1572. Certain basketballs.
Sec. 1573. Certain leather basketballs.
Sec. 1574. Certain rubber basketballs.
Sec. 1575. Certain volleyballs.
Sec. 1576. 4-Chloro-3-[[3-(4-methoxyphenyl)-1,3-dioxopropyl]-amino]-
                            dodecyl ester.
Sec. 1577. Linuron.
Sec. 1578. N,N-Dimethylpiperidinium chloride (mepiquat chloride).
Sec. 1579. Diuron.
Sec. 1580. Formulated product Krovar I DF.
Sec. 1581. Triasulfuron technical.
Sec. 1582. Brodifacoum technical.
Sec. 1583. Pymetrozine technical.
Sec. 1584. Formulations of thiamethoxam, difenoconazole, fludioxinil, 
                            and mefenoxam.
Sec. 1585. Trifloxysulfuron-sodium technical.
Sec. 1586. 2 Benzylthio-3-ethyl sulfonyl pyridine.
Sec. 1587. 2-Amino-4-methoxy-6-methyl-1,3,5-triazine.
Sec. 1588. Formulated products containing mixtures of the active 
                            ingredient 2-chloro-n-[[(4-methoxy-6-
                            methyl-1,3,5-triazin-2yl) amino]carbonyl] 
                            benzenesulfonamide and application 
                            adjuvants.
Sec. 1589. 2-methyl-4-methoxy-6-methylamino-1,3,5-triazine.
Sec. 1590. Mixtures of sodium-2-chloro-6-[(4,6 dimethoxypyrimidin-2-
                            yl)thio]benzoate and application adjuvants 
                            (pyrithiobac-sodium).
Sec. 1591. Certain decorative plates, decorative sculptures, decorative 
                            plaques, and architectural miniatures.
Sec. 1592. Certain music boxes.
Sec. 1593. 2-Methyl-4-chlorophenoxyacetic acid.
Sec. 1594. Phenmedipham.
Sec. 1595. Desmedipham.
Sec. 1596. Certain footwear with open toes or heels.
Sec. 1597. Certain work footwear.
Sec. 1598. Certain refracting and reflecting telescopes.
Sec. 1600. Certain work footwear.
Sec. 1601. Certain footwear for men.
Sec. 1602. Certain rubber or plastic footwear.
Sec. 1604. Zinc dimethyldithiocarbamate.
Sec. 1605. Certain liquid crystal device (LCD) panel assemblies.
Sec. 1606. Certain watertube boilers and reactor vessel heads.
          Chapter 2--Existing Duty Suspensions and Reductions

Sec. 1611. Extension of certain existing duty suspensions and 
                            reductions.
                  Subtitle B--Other Tariff Provisions

       Chapter 1--Liquidation Or Reliquidation of Certain Entries

Sec. 1621. Certain tramway cars and associated spare parts.
Sec. 1622. Reliquidation of certain entries of candles.
Sec. 1623. Certain entries of roller chain.
Sec. 1624. Certain entries of soundspa clock radios.
                  Chapter 2--Miscellaneous Provisions

Sec. 1631. Vessel repair duties.
Sec. 1632. Suspension of new shipper review provision.
Sec. 1633. Extension and modification of duty suspension on wool 
                            products; wool research fund; wool duty 
                            refunds.
Sec. 1634. Authorities relating to DR-CAFTA Agreement.
Sec. 1635. Technical amendments to Customs modernization.
                       Subtitle C--Effective Date

Sec. 1641. Effective date.

SEC. 1402. REFERENCE.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a chapter, subchapter, note, additional U.S. note, heading, 
subheading, or other provision, the reference shall be considered to be 
made to a chapter, subchapter, note, additional U.S. note, heading, 
subheading, or other provision of the Harmonized Tariff Schedule of the 
United States (19 U.S.C. 3007).

         Subtitle A--Temporary Duty Suspensions and Reductions

             CHAPTER 1--NEW DUTY SUSPENSIONS AND REDUCTIONS

SEC. 1411. CERTAIN NON-KNIT GLOVES DESIGNED FOR USE BY AUTO MECHANICS.

    (a) In General.--Subchapter II of chapter 99 is amended by 
inserting in numerical sequence the following new headings:


``      9902.14.01      Mechanics' work     2.8%         No change        No change        On or before 12/
                         gloves, valued                                                     31/2009
                         not over $3.50
                         per pair
                         (provided for in
                         subheading
                         6216.00.58)......
        9902.14.02      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                         gloves, valued                                                     31/2009
                         over $3.50 but
                         not over $3.70
                         per pair
                         (provided for in
                         subheading
                         6216.00.58)......
        9902.14.03      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                         gloves, valued                                                     31/2009
                         over $3.70 but
                         not over $4.99
                         per pair
                         (provided for in
                         subheading
                         6216.00.58)......
        9902.14.04      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                         gloves, valued                                                     31/2009
                         over $4.99 but
                         not over $7.72
                         per pair
                         (provided for in
                         subheading
                         6216.00.58)......
        9902.14.05      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                         gloves, valued                                                     31/2009
                         over $7.72 per
                         pair (provided
                         for in subheading
                         6216.00.58)......

    (b) Amendment to U.S. Notes.--Subchapter II of chapter 99 is 
amended by adding at the end of the U.S. Notes to such subchapter the 
following new U.S. Note:
    ``18. For purposes of headings 9902.14.01, 9902.14.02, 9902.14.03, 
9902.14.04, and 9902.14.05, the term `mechanics' work gloves' means 
gloves, of man-made fibers, having synthetic leather palms and fingers; 
fourchettes of synthetic leather or of fabric of nylon or elastomeric 
yarn; backs comprising either one layer of knitted fabric of 
elastomeric yarn or three layers, with the outer layer of knitted 
fabric of elastomeric yarn, the center layer of foam and the inner 
layer of tricot fabric; the foregoing, whether or not including an 
thermoplastic rubber logo or pad on the back; and elastic wrist straps 
with molded thermoplastic rubber hook-and-loop enclosures.''.

SEC. 1412. CERTAIN MICROPHONES FOR USE IN AUTOMOTIVE INTERIORS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.17      Unidirectional      Free         No change        No change        On or before 12/  ''.
                         (cardioid)                                                         31/2009
                         electret
                         condenser
                         microphone
                         modules for use
                         in motor vehicles
                         provided for in
                         headings 8701
                         through 8705
                         (other than such
                         modules designed
                         for handheld,
                         microphone stand,
                         or lapel use),
                         the foregoing
                         each including
                         wire leads for
                         external
                         connection,
                         whether or not
                         including a multi-
                         pin board level
                         type connector
                         but not including
                         a battery
                         compartment;
                         having a typical
                         frequency
                         response of 250
                         Hertz through
                         7,000 Hertz with
                         no more than a 20
                         decibel deviation
                         in that frequency
                         range and an
                         electrostatic
                         discharge
                         immunity of 4,000
                         V (contact) and
                         8,000 V (air);
                         and capable of
                         operation and
                         storage in the
                         temperature range
                         of -40C through
                         85C and a
                         humidity of not
                         over 95 percent
                         (provided for in
                         subheading
                         8518.10.80)......

SEC. 1413. ACRYLIC OR MODACRYLIC SYNTHETIC FILAMENT TOW.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.21       Synthetic          6.8%         No change        No change        On or before 12/  ''.
                         filament tow:                                                      31/2009
                         acrylic or
                         modacrylic
                         (provided for in
                         subheading
                         5501.30.00)......

SEC. 1414. ACRYLIC OR MODACRYLIC SYNTHETIC STAPLE FIBERS, CARDED, 
              COMBED, OR OTHERWISE PROCESSED FOR SPINNING.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.22       Synthetic staple   Free         No change        No change        On or before 12/  ''.
                         fibers, carded,                                                    31/2009
                         combed, or
                         otherwise
                         processed for
                         spinning: acrylic
                         or modacrylic
                         (provided for in
                         subheading
                         5506.30.00)......

SEC. 1415. NITROCELLULOSE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:

``      9902.10.23      Cellulose nitrates  4.4%         No change        No change        On or before 12/  ''.
                         (nitrocellulose,                                                   31/2009
                         including
                         collodions) (CAS
                         9004-70-0)
                         (provided for in
                         subheading
                         3912.20.00)......

SEC. 1416. POTASSIUM SORBATE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.24      Potassium sorbate   1.4%         No change        No change        On or before 12/  ''.
                         (CAS No. 24634-61-                                                 31/2009
                         5) (provided for
                         in subheading
                         2916.19.10)......

SEC. 1417. SORBIC ACID.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.25      Sorbic acid (CAS    1.9%         No change        No change        On or before 12/  ''.
                         No. 110-44-1)                                                      31/2009
                         (provided for in
                         subheading
                         2916.19.20)......

SEC. 1418. CERTAIN CAPERS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.26       Capers, prepared   Free         No change        No change        On or before 12/  ''.
                         or preserved by                                                    31/2009
                         vinegar other
                         than such goods
                         in immediate
                         containers each
                         holding 3.4 kg or
                         less (provided
                         for in subheading
                         2001.90.20)......

SEC. 1419. CERTAIN PEPPERONCINI PREPARED OR PRESERVED OTHERWISE THAN BY 
              VINEGAR OR ACETIC ACID.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.27       Pepperoncini,      Free         No change        No change        On or before 12/  ''.
                         prepared or                                                        31/2009
                         preserved
                         otherwise than by
                         vinegar, not
                         frozen (provided
                         for in subheading
                         2005.90.55)......

SEC. 1420. CERTAIN CAPERS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.28       Capers, prepared   Free         No change        No change        On or before 12/  ''.
                         or preserved by                                                    31/2009
                         vinegar in
                         immediate
                         containers each
                         holding more than
                         3.4 kg (provided
                         for in subheading
                         2001.90.10)......

SEC. 1421. CERTAIN PEPPERONCINI PREPARED OR PRESERVED BY VINEGAR OR 
              ACETIC ACID IN CONCENTRATIONS AT 0.5 PERCENT OR GREATER.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.29       Pepperoncini,      2.2%         No change        No change        On or before 12/  ''.
                         prepared or                                                        31/2009
                         preserved by
                         vinegar (provided
                         for in subheading
                         2001.90.38)......

SEC. 1422. CERTAIN PEPPERONCINI PREPARED OR PRESERVED OTHERWISE THAN BY 
              VINEGAR OR ACETIC ACID IN CONCENTRATIONS LESS THAN 0.5 
              PERCENT.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.30      Giardiniera,        Free         No change        No change        On or before 12/  ''.
                         prepared or                                                        31/2009
                         preserved
                         otherwise than by
                         vinegar, not
                         frozen (provided
                         for in subheading
                         2005.90.55)......

SEC. 1423. CHLORAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.31      Trichloroacetaldeh  Free         No change        No change        On or before 12/  ''.
                         yde (CAS No. 75-                                                   31/2009
                         87-6) (provided
                         for in subheading
                         2913.00.50)......

SEC. 1424. IMIDACLOPRID TECHNICAL (IMIDACLOPRID).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.32      1-[(6-Chloro-3-     Free         No change        No change        On or before 12/  ''.
                         pyrdinyl)methyl]-                                                  31/2009
                         N-nitro-2-
                         imidazolidinimine
                         (Imidacloprid)
                         (CAS No. 138261-
                         41-3) (provided
                         for in subheading
                         2933.39.27)......

SEC. 1425. TRIADIMEFON.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.33      1-(4-               Free         No change        No change        On or before 12/  ''.
                         Chlorophenoxy)-3,                                                  31/2009
                         3-dimethyl-1-(1H-
                         1,2,4-triazol-1-
                         y1)-2-butanone
                         (CAS No. 43121-43-
                         3) (Triadimefon)
                         (provided for in
                         subheading
                         2933.99.22)......

SEC. 1426. POLYETHYLENE HE1878.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.34      Polyethylene        3.6%         No change        No change        On or before 12/  ''.
                         HE1878 (CAS No.                                                    31/2009
                         25087-34-7), with
                         l-butene as
                         comonomer
                         (provided for in
                         subheading
                         3901.20.50)......

SEC. 1427. THIACLOPRID.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.35      (Z)-[3-[(6-chloro-  Free         No change        No change        On or before 12/  ''.
                         3-                                                                 31/2009
                         pyridinyl)methyl]-
                         2-
                         thiazolidinyliden
                         e]cyanamide
                         (thiacloprid)
                         (CAS No. 111988-
                         49-9) (provided
                         for in subheading
                         2934.10.10)......

SEC. 1428. PYRIMETHANIL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.36      4,6-Dimethyl-N-     Free         No change        No change        On or before 12/  ''.
                         phenyl-2-                                                          31/2009
                         pyrimidinamine
                         (pyrimethanil)
                         (CAS No. 53112-28-
                         0) (provided for
                         in subheading
                         2933.59.15)......

SEC. 1429. FORAMSULFURON.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.37      Foramsulfuron       2.6%         No change        No change        On or before 12/  ''.
                         (Benzamide, 2-                                                     31/2009
                         (((((4,6-
                         dimethoxy-2-
                         pyrimidinyl)amino
                         )
                         carbonyl)amino)su
                         lfonyl)-4-
                         (formylamino)-
                         N,N-dimethyl-,)
                         (CAS No. 173159-
                         57-4), in bulk or
                         put up in forms
                         or packaging for
                         retail sale
                         (provided for in
                         subheading
                         2935.00.75 or
                         3808.30.15)......

SEC. 1430. FENAMIDONE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.38      (5S)-3,5-Dihydro-5- Free         No change        No change        On or before 12/  ''.
                          methyl-2-                                                         31/2009
                         (methylthio)- 5-
                         phenyl-3-
                         (phenylamino)- 4H-
                         imidazol-4-one
                         (Fenamidone) (CAS
                         No. 161326-34-7)
                         (provided for in
                         subheading
                         2933.29.35)......

SEC. 1431. CYCLANILIDE TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.39      1-(2,4-             Free         No change        No change        On or before 12/  ''.
                         Dichlorophenylami                                                  31/2009
                         nocarbonyl)cyclop
                         ropanecarboxylic
                         acid
                         (Cyclanilide)
                         (CAS No. 113136-
                         77-9) (provided
                         for in subheading
                         2924.29.47)......

SEC. 1432. PARA-BENZOQUINONE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.40      1,4-Benzoquinone    Free         No change        No change        On or before 12/  ''.
                         (CAS No. 106-51-                                                   31/2009
                         4) (provided for
                         in subheading
                         2914.69.90)......

SEC. 1433. O-ANISIDINE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.41       o-Anisidine (CAS   Free         No change        No change        On or before 12/  ''.
                         No. 90-04-4)                                                       31/2009
                         (provided for in
                         subheading
                         2922.22.10)......

SEC. 1434. 2,4-XYLIDINE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.43       2,4-Xylidine (CAS  Free         No change        No change        On or before 12/  ''.
                         No. 95-68-1)                                                       31/2009
                         (provided for in
                         subheading
                         2921.49.10)......

SEC. 1435. CROTONALDEHYDE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.44       Crotonaldehyde (2- Free         No change        No change        On or before 12/  ''.
                         butenaldehyde)                                                     31/2009
                         (CAS No. 4170-30-
                         3) (provided for
                         in subheading
                         2912.19.50)......

SEC. 1436. BUTANEDIOIC ACID, DIMETHYL ESTER, POLYMER WITH 4-HYDROXY-
              2,2,6,6,-TETRAMETHYL-1-PIPERIDINEETHANOL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.47      Butanedioic acid,   Free         No change        No change        On or before 12/  ''.
                         dimethyl ester,                                                    31/2009
                         polymer with 4-
                         hydroxy-2,2,6,6,-
                         tetramethyl-1-
                         piperidineethanol
                         (CAS No. 65447-77-
                         0) (provided for
                         in subheading
                         3907.99.00)......

SEC. 1437. MIXTURES OF CAS NOS. 106990-43-6 AND 65447-77-0.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.48       1,3,5-Triazine-    Free         No change        No change        On or before 12/  ''.
                         2,4,6-triamine,                                                    31/2009
                         N,N-[1,2-
                         ethanediylbis[[[4
                         ,6-bis[butyl
                         (1,2,2,6,6-
                         pentamethyl-4-
                         piperidinyl)amino
                         ]-1,3,5-triazine-
                         2-yl]imino]-3,1-
                         propanediyl]]bis[
                         N,N-dibutyl-N,N-
                         bis(1,2,2,6,6-
                         pentamethyl-4-
                         piperidinyl)-
                         (CAS No. 106990-
                         43-6) and
                         Butanedioic acid,
                         dimethylester
                         polymer with 4-
                         hyroxy-2,2,6,6-
                         tetramethyl-1-
                         piperdine ethanol
                         (CAS No. 65447-77-
                         0) (Provided for
                         in subheading
                         3812.30.90)......

SEC. 1438. MCPA.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.54      2-Ethylhexyl (4-    Free         No change        No change        On or before 12/  ''.
                         chloro-2-                                                          31/2009
                         methylphenoxy)ace
                         tate (CAS No.
                         29450-45-1)
                         (provided for in
                         subheading
                         2918.90.20)......

SEC. 1439. BRONATE ADVANCED.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.55      Formulations of     2.8%         No change        No change        On or before 12/  ''.
                         2,6-dibromo-4-                                                     31/2009
                         cyanophenyl
                         octanoate (CAS
                         No. 1689-99-2),
                         2, 6-dibromo-4-
                         cyanophenyl
                         heptanoate (CAS
                         No. 56634-95-8),
                         and 2-ethylhexyl
                         (4-chloro-2-
                         methylphenoxy)ace
                         tate (CAS No.
                         29450-45-1)
                         (provided for in
                         subheading
                         3808.30.15)......

SEC. 1440. BROMOXYNIL OCTANOATE TECH.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.56      2,6-dibromo-4-      Free         No change        No change        On or before 12/  ''.
                         cyanophenyl                                                        31/2009
                         octanoate (CAS
                         No. 1689-99-2)
                         (provided for in
                         subheading
                         2926.90.25)......

SEC. 1441. BROMOXYNIL MEO.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.57      2,6-Dibromo-4-      Free         No change        No change        On or before 12/  ''.
                         cyanophenyl                                                        31/2009
                         octanoate/
                         heptanoate (CAS
                         Nos.1689-99-2 and
                         56634-95-8)
                         (provided for in
                         subheading
                         3808.30.15)......

SEC. 1442. HYDRAULIC CONTROL UNITS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.62      Hydraulic control   Free         No change        No change        On or before 12/  ''.
                         units designed                                                     31/2009
                         for use in
                         braking systems
                         of hybrid motor
                         vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         9032.89.60)......

SEC. 1443. SHIELD ASY-STEERING GEAR.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.63      Steering gear       Free         No change        No change        On or before 12/  ''.
                         assemblies for                                                     31/2009
                         single-pinion
                         constant-ratio
                         electronic power
                         assisted steering
                         systems rated at
                         80 amperes at
                         12V, the
                         foregoing
                         designed for use
                         in hybrid motor
                         vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8708.99.73)......

SEC. 1444. 2,4-DICHLOROANILINE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.64      2,4-                Free         No change        No change        On or before 12/  ''.
                         Dichloroaniline                                                    31/2009
                         (CAS No. 554-00-
                         7) (provided for
                         in subheading
                         2921.42.18)......

SEC. 1445. 2-ACETYLBUTYROLACTONE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.65      2-                  Free         No change        No change        On or before 12/  ''.
                         Acetylbutyrolacto                                                  31/2009
                         ne (CAS No. 517-
                         23-7) (provided
                         for in subheading
                         2932.29.50)......

SEC. 1446. ALKYLKETONE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.66      1-(4-Chlorophenyl)- Free         No change        No change        On or before 12/  ''.
                         4, 4-dimethyl-3-                                                   31/2009
                         pentanone (CAS
                         No. 66346-01-8)
                         (provided for in
                         subheading
                         2914.70.40)......

SEC. 1447. CYFLUTHRIN (BAYTHROID).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.67      Cyano(4-fluoro-3-   3.5%         No change        No change        On or before 12/  ''.
                         phenoxyphenyl)met                                                  31/2009
                         hyl 3-(2,2-
                         dichloroethenyl)-
                         2,2-
                         dimethylcycloprop
                         anecarboxylate
                         (Cyfluthrin,
                         excluding b-
                         Cyfluthrin) (CAS
                         No. 68359-37-5)
                         (provided for in
                         subheading
                         2926.90.30)......

SEC. 1448. BETA-CYFLUTHRIN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.68      Reaction mixture    Free         No change        No change        On or before 12/  ''.
                         comprising the                                                     31/2009
                         enantiomeric pair
                         (R)-a-cyano-4-
                         fluoro-3-
                         phenoxybenzyl
                         (1S,3S)-3-(2,2-
                         dichlorovinyl)-2,
                         2-
                         dimethylcycloprop
                         anecarboxylate
                         and (S)-a-cyano-4-
                         fluoro-3-
                         phenoxybenzyl
                         (1R,3R)-3-(2,2-
                         dichlorovinyl)-2,
                         2-
                         dimethylcycloprop
                         anecarboxylate in
                         ratio 1:2 with
                         the enantiomeric
                         pair (R)-a-cyano-
                         4-fluoro-3-
                         phenoxybenzyl
                         (1S,3R)-3-(2,2-
                         dichlorovinyl)-2,
                         2-
                         dimethylcycloprop
                         anecarboxylate
                         and (S)-a-cyano-4-
                         fluoro-3-
                         phenoxybenzyl
                         (1R,3S)-3-(2,2-
                         dichlorovinyl)-2,
                         2-
                         dimethylcycloprop
                         anecarboxylate (b-
                         Cyfluthrin) (CAS
                         No. 68359-37-5)
                         (provided for in
                         subheading
                         2926.90.30)......

SEC. 1449. CYCLOPROPANE-1,1-DICARBOXYLIC ACID, DIMETHYL ESTER.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.69      Cyclopropane-1,1-   1.8%         No change        No change        On or before 12/  ''.
                         dicarboxylic                                                       31/2009
                         acid, dimethyl
                         ester (CAS No.
                         6914-71-2)
                         (provided for in
                         subheading
                         2917.20.00)......

SEC. 1450. SPIROXAMINE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.70      8-(1,1-             Free         No change        No change        On or before 12/  ''.
                         Dimethylethyl)-N-                                                  31/2009
                         ethyl-N-propyl-
                         1,4-
                         dioxaspiro[4,5]de
                         cane-2-
                         methanamine (CAS
                         118134-30-8)
                         (provided for in
                         subheading
                         2932.99.90)......

SEC. 1451. SPIROMESIFEN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.71      3,3-                Free         No change        No change        On or before 12/  ''.
                         Dimethylbutanoic                                                   31/2009
                         acid, 2-oxo-3-
                         (2,4,6-
                         trimethylphenyl)-
                         1-
                         oxaspiro[4.4]non-
                         3-en-yl ester
                         (CAS 283594-90-1)
                         (provided for in
                         subheading
                         2932.29.10)......

SEC. 1452. 4-CHLOROBENZALDEHYDE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.72      4-                  Free         No change        No change        On or before 12/  ''.
                         Chlorobenzaldehyd                                                  31/2009
                         e (CAS No. 104-88-
                         1) (provided for
                         in subheading
                         2913.00.40)......

SEC. 1453. OXADIAZON.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.73      5-tert-butyl-3-     Free         No change        No change        On or before 12/  ''.
                         (2,4-dichloro-5-                                                   31/2009
                         isopropoxyphenyl)
                         -1,3,4-oxadiazol-
                         2(3H)-one
                         (Oxadiazon) (CAS
                         No. 19666-30-9)
                         (provided for in
                         subheading
                         2934.99.11)......

SEC. 1454. NAHP.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.74      2-(1,1-             Free         No change        No change        On or before 12/  ''.
                         Dimethylethyl)-5-                                                  31/2009
                         hydroxypyrimidine
                         , sodium salt
                         (CAS No. 146237-
                         62-9) (provided
                         for in subheading
                         2933.59.70)......

SEC. 1455. PHOSPHORUS THIOCHLORIDE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.75      Phosphorus          Free         No change        No change        On or before 12/  ''.
                         Thiochloride (CAS                                                  31/2009
                         No. 3982-91-0)
                         (provided for in
                         subheading
                         2851.00.00)......

SEC. 1456. TRIFLOXYSTROBIN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.76.     Methyl (E)-         2.4%         No change        No change        On or before 12/  ''.
                         methoxyimino-{(E)-                                                 31/2009
                         a-[1-(a,a,a-
                         trifluoro-m-
                         tolyl)ethylidenea
                         minooxy]-o-
                         tolyl}acetate
                         (Trifloxystrobin)
                         (CAS No. 141517-
                         21-7) (provided
                         for in subheading
                         2929.90.20)......

SEC. 1457. PHOSPHORIC ACID, LANTHANUM SALT, CERIUM TERBIUM-DOPED.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.77       Phosphoric acid,   Free         No change        No change        On or before 12/  ''.
                         lanthanum salt,                                                    31/2009
                         cerium terbium-
                         doped (CAS No.
                         95823-34-0)
                         (provided for in
                         subheading
                         2846.90.80)......

SEC. 1458. LUTETIUM OXIDE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.78       Lutetium oxide     Free         No change        No change        On or before 12/  ''.
                         (CAS No. 12032-20-                                                 31/2009
                         1) (provided for
                         in subheading
                         2846.90.80)......

SEC. 1459. ACM.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.79       (3-Acetoxy-3-      0.7%         No change        No change        On or before 12/  ''.
                         cyanopropyl)                                                       31/2009
                         methylphosphinic
                         acid, butyl ester
                         (CAS No. 167004-
                         78-6) (provided
                         for in subheading
                         2931.00.90)......

SEC. 1460. PERMETHRIN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.80       (3-                Free         No change        No change        On or before 12/  ''.
                         Phenoxyphenyl)met                                                  31/2009
                         hyl 3-(2,2-
                         dichloroethenyl)-
                         2,2-
                         dimethylcycloprop
                         anecarboxylate
                         (Permethrin) (CAS
                         No. 52645-53-1)
                         (provided for in
                         subheading
                         2916.20.50)......

SEC. 1461. THIDIAZURON.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.81       N-Phenyl-N -       Free         No change        No change        On or before 12/  ''.
                         (1,2,3-thiadiazol-                                                 31/2009
                         5-yl)urea
                         (Thidiazuron) CAS
                         No. 51707-55-2),
                         whether or not
                         mixed with
                         application
                         adjuvants
                         (provided for in
                         subheading
                         2934.99.15 or
                         3808.30.15)......

SEC. 1462. FLUTOLANIL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.82       N-[3-(1-           Free         No change        No change        On or before 12/  ''.
                         Methylethoxy)phen                                                  31/2009
                         yl]-2-
                         (trifluoromethyl)
                         benzamide
                         (Flutolanil) (CAS
                         No. 66332-96-5)
                         (provided for in
                         subheading
                         2924.29.47)......

SEC. 1463. RESMETHRIN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.83       [5-(Phenylmethyl)- Free         No change        No change        On or before 12/  ''.
                         3-furanyl]methyl                                                   31/2009
                         2,2-dimethyl-3-(2-
                         methyl-1-
                         propenyl)
                         cyclopropanecarbo
                         xylate
                         (Resmethrin) (CAS
                         No. 10453-86-8)
                         (provided for in
                         subheading
                         2932.19.10)......

SEC. 1464. CLOTHIANIDIN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.84       (E)-1-(2-Chloro-   5.4%         No change        No change        On or before 12/  ''.
                         1,3-thiazol-5-                                                     31/2009
                         ylmethyl)-3-
                         methyl-2-
                         nitroguanidine
                         (Clothianidin)
                         (CAS No. 210880-
                         92-5) (provided
                         for in subheading
                         2934.10.90)......

SEC. 1465. CERTAIN MASTER CYLINDER ASSEMBLES.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.92      Master cylinder     Free         No change        No change        On or before 12/  ''.
                         assemblies for                                                     31/2009
                         braking systems,
                         not incorporating
                         a vacuum booster,
                         the foregoing
                         designed for use
                         in hybrid motor
                         vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8708.39.50)......

SEC. 1466. CERTAIN TRANSAXLES.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.93      Transaxles, each    1.5%         No change        No change        On or before 12/  ''.
                         incorporating an                                                   31/2009
                         integral
                         electronic
                         controller, the
                         foregoing
                         designed for use
                         in hybrid motor
                         vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8708.40.20)......

SEC. 1467. CONVERTER ASY.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.94       Static converters  Free         No change        No change        On or before 12/  ''.
                         capable of                                                         31/2009
                         converting 300 V
                         direct current to
                         12 V direct
                         current, designed
                         for use in hybrid
                         motor vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8504.40.95)......

SEC. 1468. MODULE AND BRACKET ASY-POWER STEERING.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.95      Controllers for     Free         No change        No change        On or before 12/  ''.
                         electronic power                                                   31/2009
                         assisted steering
                         systems, rated at
                         80 amperes at 12
                         V, designed for
                         use in hybrid
                         motor vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8537.10.90)......

SEC. 1469. UNIT ASY-BATTERY HI VOLT.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.96      Nickel metal-       2.8%         No change        No change        On or before 12/  ''.
                         hydride storage                                                    31/2009
                         batteries,
                         exceeding 300 V,
                         the foregoing
                         designed for use
                         in hybrid motor
                         vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8507.80.80)......

SEC. 1470. CERTAIN ARTICLES OF NATURAL CORK.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.10.99      Articles of         6%           No change        No change        On or before 12/  ''.
                         natural cork, not                                                  31/2009
                         elsewhere
                         specified or
                         included
                         (provided for in
                         subheading
                         4503.90.60)......

SEC. 1471. GLYOXYLIC ACID.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.01       Glyoxylic acid     1.6%         No change        No change        On or before 12/  ''.
                         (CAS No. 298-12-                                                   31/2009
                         4) (provided for
                         in subheading
                         2918.30.90)......

SEC. 1472. CYCLOPENTANONE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.02       Cyclopentanone     Free         No change        No change        On or before 12/  ''.
                         (CAS No. 120-92-                                                   31/2009
                         3) (provided for
                         in subheading
                         2914.29.50)......

SEC. 1473. MESOTRIONE TECHNICAL.

    (a) Calendar Year 2006.--Subchapter II of chapter 99 is amended by 
inserting in numerical sequence the following new heading:


``      9902.11.03       2-[4-              6.04%        No change        No change        On or before 12/  ''.
                         (Methylsulfonyl)-                                                  31/2006
                         2-nitrobenzoyl]-
                         1,3-
                         cyclohexanedione
                         (Mesotrione) (CAS
                         No. 104206-82-8)
                         (provided for in
                         subheading
                         2930.90.10)......

    (b) Calendar Year 2007.--
            (1) In general.--Heading 9902.11.03, as added by subsection 
        (a), is amended--
                    (A) by striking ``6.04%'' and inserting ``6.08%''; 
                and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2007''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on January 1, 2007.
    (c) Calendar Years 2008 and 2009.--
            (1) In general.--Heading 9902.11.03, as added by subsection 
        (a) and amended by subsection (b), is further amended--
                    (A) by striking ``6.08%'' and inserting ``6.11%''; 
                and
                    (B) by striking ``12/31/2007'' and inserting ``12/
                31/2009''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on January 1, 2008.

SEC. 1474. MALONIC ACID-DINITRILE 50% NMP.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.04       50% solution of    Free         No change        No change        On or before 12/  ''.
                         malononitrile in                                                   31/2009
                         methyl-2-
                         pyrrolidone
                         solvent (CAS Nos.
                         109-77-3 and 872-
                         50-4) (provided
                         for in subheading
                         3824.90.9190)....

SEC. 1475. FORMULATIONS OF NOA 446510.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.05       Formulations of    Free         No change        No change        On or before 12/  ''.
                         NOA 446510 which                                                   31/2009
                         include NOA
                         446510 Technical,
                         2-(4-chloro-
                         phenyl)-N-[2-(3-
                         methoxy-4-prop-2-
                         ynyloxy-
                         phenyl)ethyl]-2-
                         prop-2-
                         ynyloxyacetamide
                         (CAS No. 374726-
                         62-2) (provided
                         for in subheading
                         3808.20.15)......

SEC. 1476. DEMBB DISTILLED-ISO TANK.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.06      2-Bromo-1,3-        Free         No change        No change        On or before 12/  ''.
                         diethyl-5-                                                         31/2009
                         methylbenzene
                         (CAS No. 314084-
                         61-2) (DEMBB)
                         (provided for in
                         subheading
                         2903.69.80)......

SEC. 1477. METHYLIONONE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.10       3-Methyl-4-(2,6,6- Free         No change        No change        On or before 12/  ''.
                         trimethylcyclohex-                                                 31/2009
                         2-enyl)but-3-en-2-
                         one
                         (Methylionone)
                         (CAS No. 1335-46-
                         2) (provided for
                         in subheading
                         2914.23.00.......

SEC. 1478. CERTAIN ACRYLIC FIBER TOW.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.11       Acrylic fiber tow  Free         No change        No change        On or before 12/  ''.
                         (polyacrylonitril                                                  31/2009
                         e tow) containing
                         by weight a
                         minimum of 92
                         percent
                         acrylonitrile,
                         not more than 0.1
                         percent zinc and
                         from 4 to 8
                         percent water,
                         imported in the
                         form of from 1 to
                         12 sub-bundles
                         crimped together,
                         each containing
                         24,000 filaments
                         (plus or minus
                         0.06 percent) and
                         with average
                         filament denier
                         of 1.5 decitex
                         (plus or minus
                         0.08 percent)
                         (provided for in
                         subheading
                         5501.30.00)......

SEC. 1479. CERTAIN ACRYLIC FIBER TOW.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.12       Acrylic fiber tow  Free         No change        No change        On or before 12/  ''.
                         (polyacrylonitril                                                  31/2009
                         e tow) containing
                         by weight a
                         minimum of 92
                         percent
                         acrylonitrile,
                         not more than 0.1
                         percent zinc and
                         from 2 to 8
                         percent water,
                         imported in the
                         form of 6 sub-
                         bundles crimped
                         together, each
                         containing 45,000
                         filaments (plus
                         or minus 0.06
                         percent) and with
                         average filament
                         denier of either
                         1.48 decitex
                         (plus or minus
                         0.08 percent) or
                         1.32 decitex
                         (plus or minus
                         0.09 percent)
                         (provided for in
                         subheading
                         5501.30.00)......

SEC. 1480. MKH 6561 ISOCYANATE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.13       2-(Carbomethoxy)   Free         No change        No change        On or before 12/  ''.
                         benzenesulfonyl                                                    31/2009
                         isocyanate (CAS
                         No. 74222-95-0)
                         (provided for in
                         subheading
                         2930.90.29)......

SEC. 1481. ENDOSULFAN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.14      6,7,8,9,10,10-      Free         No change        No change        On or before 12/  ''.
                         Hexachlorohexahyd                                                  31/2009
                         romethano-2,4,3-
                         benzodioxathiepin-
                         3-oxide
                         (Endosulfan) (CAS
                         No. 115-29-7)
                         (provided for in
                         subheading
                         2920.90.50 or
                         3808.10.50)......

SEC. 1482. TETRACONAZOLE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.15       1-[2-(2,4-         Free         No change        No change        On or before 12/  ''.
                         dichlorophenyl)-3-                                                 31/2009
                         (1,1,2,2-
                         tetrafluoroethoxy
                         )propyl]-1H-1,2,4-
                         triazole
                         (Tetraconazole)
                         (CAS No. 112281-
                         77-3) (provided
                         for in subheading
                         2933.99.22)......

SEC. 1483. M-ALCOHOL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.16       2-(2,4-            1%           No change        No change        On or before 12/  ''.
                         Dichlorophenyl)-3-                                                 31/2009
                         (1H-1,2,4-triazol-
                         1-yl)propanol
                         (CAS No. 112281-
                         82-0) (provided
                         for in subheading
                         2933.99.82)......

SEC. 1484. CERTAIN MACHINES FOR USE IN THE ASSEMBLY OF MOTORCYCLE 
              WHEELS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.17      Wheel spoke         Free         No change        No change        On or before 12/  ''.
                         tightening                                                         31/2009
                         machines
                         (provided for in
                         subheading
                         8479.89.98), for
                         use with wheels
                         of vehicles of
                         heading 8711.....

SEC. 1485. DELTAMETHRIN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.26       (S)-a-Cyano-3-     Free         No change        No change        On or before 12/  ''.
                         phenoxybenzyl                                                      31/2009
                         (1R,3R)-3-(2,2-
                         dibromovinyl)-2,2-
                         dimethylcycloprop
                         anecarboxylate
                         (Deltamethrin)
                         (CAS No. 52918-63-
                         5) (provided for
                         in subheading
                         2926.90.30)......

SEC. 1486. PALM FATTY ACID DISTILLATE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.32      Monocarboxylic      1%           No change        No change        On or before 12/  ''.
                         fatty acids                                                        31/2009
                         derived from palm
                         oil (provided for
                         in subheading
                         3823.19.20)......

SEC. 1487. 4-METHOXY-2-METHYLDIPHENYLAMINE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.35      4-Methoxy-2-        1.1%         No change        No change        On or before 12/  ''.
                         methyldiphenylami                                                  31/2009
                         ne (CAS No. 41317-
                         15-1) (provided
                         for in subheading
                         2922.29.60)......

SEC. 1488. 2-METHYLHYDROQUINONE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.36       2-                 Free         No change        No change        On or before 12/  ''.
                         Methylhydroquinon                                                  31/2009
                         e (CAS No. 95-71-
                         6) (provided for
                         in subheading
                         2907.29.90)......

SEC. 1489. 1-FLUORO-2-NITROBENZENE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.37       1-Fluoro-2-        Free         No change        No change        On or before 12/  ''.
                         nitrobenzene (CAS                                                  31/2009
                         No. 1493-27-2)
                         (provided for in
                         subheading
                         2904.90.30)......

SEC. 1490. COSMETIC BAGS WITH A FLEXIBLE OUTER SURFACE OF REINFORCED OR 
              LAMINATED POLYVINYL CHLORIDE (PVC).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.43      Vanity cases that   13.3%        No change        No change        On or before 12/  ''.
                         are of a soft                                                      31/2009
                         sided
                         construction, of
                         reinforced or
                         laminated
                         polyvinyl
                         chloride
                         plastics, and are
                         of a kind
                         normally carried
                         in the pocket or
                         in the handbag
                         and used to
                         contain and apply
                         cosmetic
                         preparations
                         (provided for in
                         subheading
                         4202.12.20)......

SEC. 1491. MIXTURES OF METHYL 4-IODO-2-[3-(4-METHOXY-6-METHYL-1,3,5-
              TRIAZIN-2-YL)UREIDOSULFONYL]BENZOATE, SODIUM SALT 
              (IODOSULFURON METHYL, SODIUM SALT).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.44       Mixtures of        Free         No change        No change        On or before 12/  ''.
                         methyl 4-iodo-2-                                                   31/2009
                         [3-(4-methoxy-6-
                         methyl-1,3,5-
                         triazin-2-
                         yl)ureidosulfonyl
                         ]benzoate, sodium
                         salt
                         (Iodosulfuron
                         methyl, sodium
                         salt) (CAS No.
                         144550-36-7) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.30.15)......

SEC. 1492. ETHYL 4,5-DIHYDRO-5,5-DIPHENYL-1,2-OXAZOLE-3-CARBOXYLATE 
              (ISOXADIFEN-ETHYL).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.45       Ethyl 4,5-dihydro- Free         No change        No change        On or before 12/  ''.
                         5,5-diphenyl-1,2-                                                  31/2009
                         oxazole-3-
                         carboxylate
                         (Isoxadifen-
                         ethyl) (CAS No.
                         163520-33-0)
                         (provided for in
                         subheading
                         2934.99.39)......

SEC. 1493. (5-CYCLOPROPYL-4-ISOXAZOLYL)[2-(METHYLSULFONYL)-4-
              (TRIFLUOROMETHYL)PHENYL]METHANONE (ISOXAFLUTOLE).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.46       (5-cyclopropyl-4-  4.8%         No change        No change        On or before 12/  ''.
                         isoxazolyl)[2-                                                     31/2009
                         (methylsulfonyl)-
                         4-
                         (trifluoromethyl)
                         phenyl]methanone
                         (Isoxaflutole)
                         (CAS No. 141112-
                         29-0) (provided
                         for in subheading
                         2934.99.15)......

SEC. 1494. METHYL 2-[(4,6-DIMETHOXYPYRIMIDIN-2-YLCARBAMOYL)SULFAMOYL]-
              A-(METHANESULFONAMIDO)-P-TOLUATE (MESOSULFURON-METHYL) 
              WHETHER OR NOT MIXED WITH APPLICATION ADJUVANTS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.48       Methyl 2-[(4,6-    Free         No change        No change        On or before 12/  ''.
                         dimethoxypyrimidi                                                  31/2009
                         n-2-
                         ylcarbamoyl)sulfa
                         moyl]-a-
                         (methanesulfonami
                         do)-p-toluate
                         (Mesosulfuron-
                         methyl) (CAS No.
                         208465-21-8)
                         whether or not
                         mixed with
                         application
                         adjuvants
                         (provided for in
                         subheading
                         2935.00.75 or
                         3808.30.15)......

SEC. 1495. MIXTURES OF FORAMSULFURON AND IODOSULFURON-METHYL-SODIUM.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.49       Mixtures of N,N-   Free         No change        No change        On or before 12/  ''.
                         dimethyl-2[3-(4,6-                                                 31/2009
                         dimethoxypyrimidi
                         n-2-
                         yl)ureidosulfonyl
                         ]-4-
                         formylaminobenzam
                         ide
                         (Foramsulfuron)
                         (CAS No. 173159-
                         57-4), methyl 4-
                         iodo-2-[3-(4-
                         methoxy-6-methyl-
                         1,3,5-triazin-2-
                         yl)ureidosulfonyl
                         ]benzoate, sodium
                         salt
                         (Iodosulfuron-
                         methyl-sodium)
                         (CAS No. 144550-
                         36-7) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.30.15)......

SEC. 1496. VULCUREN UPKA 1988.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.54       1,6-Bis(N,N'-      Free         No change        No change        On or before 12/  ''.
                         dibenzylthiocarba                                                  31/2009
                         moyldithio)hexane
                         (CAS No. 151900-
                         44-6) (provided
                         for in subheading
                         2930.20.20)......

SEC. 1497. VULLCANOX 41010 NA/LG.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.55      N-Isopropyl-N'-     Free         No change        No change        On or before 12/  ''.
                         phenyl-p-                                                          31/2009
                         phenylenediamine
                         (CAS No. 101-72-
                         4) (provided for
                         in subheading
                         2921.51.50)......

SEC. 1498. VULKAZON AFS/LG.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.56       Pentaerythritolbi  Free         No change        No change        On or before 12/  ''.
                         s(tetrahydrobenza                                                  31/2009
                         ldehyde acetal)
                         (CAS No. 6600-31-
                         3) (provided for
                         in subheading
                         2932.99.90)......

SEC. 1499. P-ANISALDEHYDE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.57      P-Anisaldehyde      Free         No change        No change        On or before 12/  ''.
                         (CAS No. 123-11-                                                   31/2009
                         5) (Benzoldehyde,
                         4-methoxy-)
                         (provided for in
                         subheading
                         2912.49.10)......

SEC. 1500. 1,2-PENTANEDIOL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.60       1,2-Pentanediol    Free         No change        No change        On or before 12/  ''.
                         (CAS No. 5343-92-                                                  31/2009
                         0) (provided for
                         in subheading
                         2905.39.90)......

SEC. 1501. AGRUMEX.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following:


``      9902.11.62      o-tert-             Free         No change        No change        On or before 12/  ''.
                         Butylcyclohexyl                                                    31/2009
                         acetate, cis form
                         (CAS No. 20298-69-
                         9) (Agrumex)
                         (Cyclohexanol, 2-
                         (1,1-dimethyl-)
                         (provided for in
                         subheading
                         2915.39.45)......

SEC. 1502. COHEDUR RL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.63       Mixtures of        Free         No change        No change        On or before 12/  ''.
                         resorcinol (CAS                                                    31/2009
                         No. 108-46-3),
                         hexamethylolmelam
                         ine ether (CAS
                         No. 3089-11-0)
                         and dibutyl
                         phthalate (CAS
                         No. 84-74-2)
                         (provided for in
                         subheading
                         3824.90.28)......

SEC. 1503. FORMULATIONS OF PROSULFURON.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.64       Mixtures of        Free         No change        No change        On or before 12/  ''.
                         Prosulfuron (1-(4-                                                 31/2009
                         methoxy-6-methyl-
                         1,3,5-triazin-2-
                         yl)-3-[2-(3,3,3-
                         trifluoropropyl)-
                         phenylsulfonyl]ur
                         ea ) (CAS No.
                         94125-34-5) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.30.15)......

SEC. 1504. LEWATIT.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.71      Ion-exchange        Free         No change        No change        On or before 12/  ''.
                         resins (cationic                                                   31/2009
                         H form),
                         consisting of
                         copolymers of
                         acrylic acid and
                         diethylene glycol
                         divinyl ether
                         (CAS No. 359785-
                         58-3) (provided
                         for in subheading
                         3914.00.60)......

SEC. 1505. PARA-CHLOROPHENOL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.72      para-Chlorophenol   Free         No change        No change        On or before 12/  ''.
                         (CAS No. 106-48-                                                   31/2009
                         9) (provided for
                         in subheading
                         2908.10.60)......

SEC. 1506. CYPERMETHRIN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.74      Cyano(3-            Free         No change        No change        On or before 12/  ''.
                         phenoxyphenyl)met                                                  31/2009
                         hyl 3-(2,2-
                         dichloroethenyl)-
                         2,2-
                         dimethylcycloprop
                         anecarboxylate
                         (Cypermethrin)
                         (CAS No. 52315-07-
                         8) (provided for
                         in subheading
                         2926.90.30)......

SEC. 1507. ION-EXCHANGE RESIN POWDER.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.78       Ion-exchange       Free         No change        No change        On or before 12/  ''.
                         resin powder                                                       31/2009
                         comprised of a
                         copolymer of
                         methacrylic acid
                         cross-linked with
                         divinylbenzene,
                         in the hydrogen
                         ionic form, of a
                         nominal partical
                         size between
                         0.025mm and 0.150
                         mm, dried to less
                         than 5% moisture
                         (CAS No. 50602-21-
                         6)(provided for
                         in subheading
                         3914.00.60)......

SEC. 1508. ION-EXCHANGE RESIN POWDER.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.79       Ion-exchange       Free         No change        No change        On or before 12/  ''.
                         resin powder                                                       31/2009
                         comprised of a
                         copolymer of
                         methacrylic acid
                         cross-linked with
                         divinylbenzene,
                         in the potassium
                         ionic form, of a
                         nominal particle
                         size between
                         0.025mm and 0.150
                         mm, dried to less
                         than 10% moisture
                         (CAS No. 65405-55-
                         2) (provided for
                         in subheading
                         3914.00.60)......

SEC. 1509. DESMODUR E 14.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.80      1,2,3-              Free         No change        No change        On or before 12/  ''.
                         Propanetriol,                                                      31/2009
                         polymer with 2,4-
                         diisocyanato-1-
                         methylbenzene, 2-
                         ethyl-2-
                         (hydroxymethyl)-1
                         ,3-propanediol,
                         methyloxirane and
                         oxirane (CAS No.
                         127821-00-5)
                         (provided for in
                         subheading
                         3909.50.50)......

SEC. 1510. DESMODUR VP LS 2253.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.82      Hexane, 1,6-        Free         No change        No change        On or before 12/  ''.
                         diisocyanato-,                                                     31/2009
                         homopolymer, 3,5-
                         dimethyl-1H-
                         pyrazole-blocked
                         (CAS No. 163206-
                         31-3) (provided
                         for in subheading
                         3911.90.90)......

SEC. 1511. DESMODUR R-E.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.83      4,4, 4-TT Desmodur  Free         No change        No change        On or before 12/  ''.
                         R-E in solvent                                                     31/2009
                         (CAS No. 2422-91-
                         5) in solvent
                         (provided for in
                         subheading
                         3824.90.28)......

SEC. 1512. WALOCEL MW 3000 PFV.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.84      Methyl              Free         No change        No change        On or before 12/  ''.
                         hydroxyethyl                                                       31/2009
                         cellulose
                         products
                         containing 30% or
                         greater content
                         of 2-hydroxyethyl
                         methyl ether
                         cellulose
                         (``MHEC'' )
                         reaction products
                         with glyoxal (CAS
                         No. 68441-63-4)
                         (provided for in
                         subheading
                         3912.39.00)......

SEC. 1513. TSME.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.85      ortho/para-         Free         No change        No change        On or before 12/  ''.
                         Toluenesulfonic                                                    31/2009
                         acid, methyl
                         ester (TSME) (CAS
                         Nos. 23373-38-8
                         and 80-48-8)
                         (provided for in
                         subheading
                         2904.10.32)......

SEC. 1514. WALOCEL VP-M 20660.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.86      Methyl              Free         No change        No change        On or before 12/  ''.
                         Hydroxyethyl                                                       31/2009
                         Cellulose with a
                         77% or greater
                         content of 2-
                         hydroxyethyl
                         methyl ether
                         cellulose (CAS
                         No. 9032-42-2)
                         (provided for in
                         subheading
                         3912.39.00)......

SEC. 1515. XAMA 2.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.87      Trimethylopropane   Free         No change        No change        On or before 12/  ''.
                         tris(3-                                                            31/2009
                         aziridinylpropano
                         ate) (CAS No.
                         52234-82-9)
                         (provided for in
                         subheading
                         2933.99.97)......

SEC. 1516. XAMA 7.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.88      Polyfunctional      Free         No change        No change        On or before 12/  ''.
                         aziridine (CAS                                                     31/2009
                         No. 57116-45-7)
                         (provided for in
                         subheading
                         2933.99.97)......

SEC. 1517. CERTAIN CASES FOR TOYS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.90      Cases or            Free         No change        No change        On or before 12/  ''.
                         containers                                                         31/2009
                         (provided for in
                         subheading
                         4202.92.90 and
                         not including
                         goods described
                         in heading
                         9902.01.81),
                         specially shaped
                         or fitted for,
                         and with
                         labeling, logo or
                         other descriptive
                         information on
                         the exterior of
                         the case or
                         container
                         indicating its
                         intention to be
                         used for,
                         electronic
                         drawing toys or
                         electronic games
                         of heading 9503
                         or 9504..........

SEC. 1518. CERTAIN CASES FOR TOYS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.91      Cases or            Free         No change        No change        On or before 12/  ''.
                         containers                                                         31/2009
                         (provided for in
                         subheadings
                         4402.12.80 or
                         4202.92.90),
                         having one or
                         more molded
                         plastic holders,
                         clips or
                         fasteners, for
                         holding a doll or
                         dolls, whether or
                         not the case or
                         container is also
                         capable of
                         holding other
                         goods............

SEC. 1519. ANILINE 2.5-DISULFONIC ACID.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.92      Aniline 2,5-        Free         No change        No change        On or before 12/  ''.
                         disulfonic acid                                                    31/2009
                         (CAS No. 98-44-2)
                         (1,4-
                         Benzenedisnlfonic
                         acid, 2-amino-)
                         (provided for in
                         subheading
                         2921.42.90)......

SEC. 1520. 1,4-BENZENEDICARBOXYLIC ACID, POLYMER WITH N,N'-BIS(2-
              AMINOETHYL)-1,2-ETHANEDIAMINE, CYCLIZED, METHOSULFATE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.93       1,4-               Free         No change        No change        On or before 12/  ''.
                         Benzenedicarboxyl                                                  31/2009
                         ic acid, polymer
                         With N,N-Bis(2-
                         aminoethyl)-1,2-
                         ethanediamine,
                         cyclized,
                         methosulfate (CAS
                         No. 68187-22-4)
                         (provided for in
                         subheading
                         3908.90.70)......

SEC. 1521. SULFUR BLUE 7.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.94      4-[(4-Amino-3-      Free         No change        No change        On or before 12/  ''.
                         methylphenyl)amin                                                  31/2009
                         o]phenol,
                         reaction products
                         with sodium
                         sulfide (Sulfur
                         Blue 7) (CAS No.
                         1327-57-7)
                         (provided for in
                         subheading
                         3204.19.50)......

SEC. 1522. FORMALDEHYDE, REACTION PRODUCTS WITH 1,4-BENZENEDIOL AND M-
              PHENYLENEDIAMINE, SULFURIZED.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.95       Formaldehyde,      Free         No change        No change        On or before 12/  ''.
                         reaction products                                                  31/2009
                         with 1,4-
                         benzenediol and m-
                         phenylenediamine,
                         sulfurized (CAS
                         No. 110392-46-6)
                         (provided for in
                         subheading
                         3204.19.50)......

SEC. 1523. ISOCYANATOSULFONYL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.96      2-                  Free         No change        No change        On or before 12/  ''.
                         (Isocyanatosulfon                                                  31/2009
                         yl)benzoic acid,
                         ethyl ester (CAS
                         No. 77375-79-2)
                         (provided for in
                         subheading
                         2930.90.29)......

SEC. 1524. ISOCYANATOSULFONYL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.97      2-                  Free         No change        No change        On or before 12/  ''.
                         (Isocyanatosulfon                                                  31/2009
                         yl)benzoic acid,
                         methyl ester (CAS
                         No. 74222-95-0)
                         (provided for in
                         subheading
                         2930.90.29)......

SEC. 1525. GEMIFLOXACIN, GEMIFLOXACIN MESYLATE, AND GEMIFLOXACIN 
              MESYLATE SESQUIHYDRATE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.11.99      Gemifloxacin (CAS   Free         No change        No change        On or before 12/  ''.
                         No. 175463-14-6);                                                  31/2009
                         gemifloxacin
                         mesylate (CAS No.
                         210353-53-0 or
                         204519-65-3); and
                         gemifloxacin
                         mesylate
                         sesquihydrate
                         (CAS No. 210353-
                         56-3 ) (the
                         foregoing
                         provided for in
                         subheading
                         2933.99.46)......

SEC. 1526. BUTRALIN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.01      Butralin (CAS No.   Free         No change        No change        On or before 12/  ''.
                         33629-47-9)                                                        31/2009
                         (Benzenamine, 4-
                         (1,1-
                         dimethylethyl)-N-
                         (1-methylpropyl)-
                         2,6-dintro-)
                         (provided for in
                         subheading
                         2921.43.90)......

SEC. 1527. SPIRODICLOFEN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.02      2,2-                Free         No change        No change        On or before 12/  ''.
                         Dimethylbutanoic                                                   31/2009
                         acid, 3-(2,4-
                         dichlorophenyl)-2-
                         oxo-1-
                         oxaspiro(4.5)dec-
                         3-en-4-yl ester
                         (Spirodiclofen)
                         (CAS No. 148477-
                         71-8) (provided
                         for in subheading
                         2932.29.10)......

SEC. 1528. PROPAMOCARB HCL (PREVICUR).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.03      Mixtures of propyl  Free         No change        No change        On or before 12/  ''.
                         3-(dimethylamino)                                                  31/2009
                         propylcarbamate
                         monohydrochloride
                         (Propamocarb
                         hydrochloride)
                         (CAS No. 25606-41-
                         1) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.20.50)......

SEC. 1529. DESMODUR IL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.04      Poly(toluene        Free         No change        No change        On or before 12/  ''.
                         diisocyanate)                                                      31/2009
                         (CAS No. 26006-20-
                         2) dissolved in
                         organic solvents
                         (provided for in
                         subheading
                         3911.90.45)......

SEC. 1530. CHLOROACETONE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.05      1-Chloro-2-         Free         No change        No change        On or before 12/  ''.
                         propanone (CAS                                                     31/2009
                         No. 78-95-5)
                         (provided for in
                         subheading
                         2914.70.90)......

SEC. 1531. IPN (ISOPHTHALONITRILE).

    (a) Calendar Year 2006.--Subchapter II of chapter 99 is amended by 
inserting in numerical sequence the following new heading:


``      9902.12.06      1,3-                3.04%        No change        No change        On or before 12/  ''.
                         Benzenedicarbonit                                                  31/2006
                         rile (CAS No. 626-
                         17-5) (provided
                         for in subheading
                         2926.90.48)......

    (b) Calendar Year 2007.--
            (1) In general.--Heading 9902.12.06, as added by subsection 
        (a), is amended--
                    (A) by striking ``3.04%'' and inserting ``3.23%''; 
                and
                    (B) by striking ``On or before 12/31/2006'' and 
                inserting ``On or before 12/31/2007''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on January 1, 2007.
    (c) Calendar Years 2008 and 2009.--
            (1) In general.--Heading 9902.12.06, as added by subsection 
        (a) and amended by subsection (b), is further amended--
                    (A) by striking ``3.23%'' and inserting ``3.4%''; 
                and
                    (B) by striking ``On or before 12/31/2007'' and 
                inserting ``On or before 12/31/2009''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on January 1, 2008.

SEC. 1532. NOA 446510 TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.07      4-Chloro-N-[2-[3-   1.2%         No change        No change        On or before 12/  ''.
                         methoxy-4-(2-                                                      31/2009
                         propynyloxy)pheny
                         l]ethyl]-a-(2-
                         propynyloxy)benze
                         neacetamide
                         (Mandipropamid)
                         (CAS No. 374726-
                         62-2) (provided
                         for in subheading
                         2924.29.47)......

SEC. 1533. HEXYTHIAZOX TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.08      trans-5-(4-         Free         No change        No change        On or before 12/  ''.
                         Chlorophenyl)-N-                                                   31/2009
                         cyclohexyl-4-
                         methyl-2-
                         oxothiazolidine-3-
                         carboxamide
                         (Hexythiazox
                         Technical) (CAS
                         No. 78587-05-0)
                         (provided for in
                         subheading
                         2934.10.10)......

SEC. 1534. CRELAN (SELF-BLOCKED CYCLOALIPHATIC POLYURETDIONE).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.10      2-Oxepanone         Free         No change        No change        On or before 12/  ''.
                         polymer with 1,4-                                                  31/2009
                         butanediol and 5-
                         isocyanato-1-
                         (isocyanatomethyl
                         )-1,3,3-
                         trimethylcyclohex
                         ane, 2-ethyl-1-
                         hexanol-blocked
                         (CAS No. 189020-
                         69-7) (provided
                         for in subheading
                         3909.50.50)......

SEC. 1535. ASPIRIN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.11      o-Acetylsalicylic   3.0%         No change        No change        On or before 12/  ''.
                         acid (aspirin)                                                     31/2009
                         (CAS No. 50-78-2)
                         (provided for in
                         subheading
                         2918.22.10)......

SEC. 1536. DESMODUR BL XP 2468.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.12      Copolymer of        Free         No change        No change        On or before 12/  ''.
                         methyl ethyl                                                       31/2009
                         ketoxime and
                         toluenediisocyana
                         te (CAS No.
                         352462-03-4)
                         (provided for in
                         subheading
                         3911.90.45)......

SEC. 1537. DESMODUR RF-E.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.17      Mixtures of tris(4- Free         No change        No change        On or before 12/  ''.
                         isocyanatophenyl)                                                  31/2009
                         thiophosphate
                         (CAS No. 4151-51-
                         3) and ethyl
                         acetate and
                         monochlorobenzene
                         as solvents
                         (provided for in
                         subheading
                         3824.90.28)......

SEC. 1538. DESMODUR HL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.18      Benzene, 1,3-       Free         No change        No change        On or before 12/  ''.
                         diisocyanatomethy                                                  31/2009
                         l-, polymer with
                         1,6-
                         diisocyanatohexan
                         e (CAS No. 63368-
                         95-6) dissolved
                         in n-butyl
                         acetate (provided
                         for in subheading
                         3911.90.45)......

SEC. 1539. D-MANNOSE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.19      D-Mannose (CAS No.  Free         No change        No change        On or before 12/  ''.
                         3458-28-4)                                                         31/2009
                         (provided for in
                         subheading
                         2940.00.60)......

SEC. 1540. CERTAIN CAMEL HAIR.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.20       Camel hair,        Free         No change        No change        On or before 12/  ''.
                         processed beyond                                                   31/2009
                         the degreased or
                         carbonized
                         condition
                         (provided for in
                         subheading
                         5102.19.90)......

SEC. 1541. WASTE OF CAMEL HAIR.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.21       Waste of camel     Free         No change        No change        On or before 12/  ''.
                         hair (provided                                                     31/2009
                         for in subheading
                         5103.20.00)......

SEC. 1542. CERTAIN CAMEL HAIR.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.22       Camel hair carded  Free         No change        No change        On or before 12/  ''.
                         or combed                                                          31/2009
                         (provided for in
                         subheading
                         5105.39.00)......

SEC. 1543. WOVEN FABRIC OF VICUNA HAIR.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.23       Woven fabrics      Free         No change        No change        On or before 12/  ''.
                         containing 85                                                      31/2009
                         percent or more
                         by weight of
                         vicuna hair
                         (provided for in
                         subheadings
                         5111.11.70,
                         5111.19.60,
                         5112.11.60, or
                         5112.19.95)......

SEC. 1544. CERTAIN CAMEL HAIR.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.24       Camel hair, not    Free         No change        No change        On or before 12/  ''.
                         processed in any                                                   31/2009
                         manner beyond the
                         degreased or
                         carbonized
                         condition
                         (provided for in
                         subheading
                         5102.19.20)......

SEC. 1545. NOILS OF CAMEL HAIR.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.25       Noils of camel     Free         No change        No change        On or before 12/  ''.
                         hair (provided                                                     31/2009
                         for in subheading
                         5103.10.00)......

SEC. 1546. CHLOROACETIC ACID, ETHYL ESTER.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.33      Chloroacetic acid,  Free         No change        No change        On or before 12/  ''.
                         ethyl ester (CAS                                                   31/2009
                         No. 105-39-5)
                         (provided for in
                         subheading
                         2915.40.50)......

SEC. 1547. CHLOROACETIC ACID, SODIUM SALT.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.34      Chloroacetic acid,  Free         No change        No change        On or before 12/  ''.
                         sodium salt (CAS                                                   31/2009
                         No. 3926-62-3)
                         (provided for in
                         subheading
                         2915.40.50)......

SEC. 1548. LOW EXPANSION LABORATORY GLASS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.39       Laboratory,        3.6%         No change        No change        On or before 12/  ''.
                         hygienic, or                                                       31/2009
                         pharmaceutical
                         glassware,
                         whether or not
                         graduated or
                         calibrated, of
                         low expansion
                         borosilicate
                         glass or alumino-
                         borosilicate
                         glass, having a
                         linear
                         coefficient of
                         expansion not
                         exceeding 3.3 x
                         10\7\ per Kelvin
                         within a
                         temperature range
                         of 0 to 300 C
                         (provided for in
                         subheading
                         7017.20.00)......

SEC. 1549. STOPPERS, LIDS, AND OTHER CLOSURES.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.40       Stoppers, lids,    Free         No change        No change        On or before 12/  ''.
                         and other                                                          31/2009
                         closures of low
                         expansion
                         borosilicate
                         glass or alumino-
                         borosilicate
                         glass, having a
                         linear
                         coefficient of
                         expansion not
                         exceeding 3.3 x
                         10\7\ per Kelvin
                         within a
                         temperature range
                         of 0 to 300 C,
                         produced by
                         automatic machine
                         (provided for in
                         subheading
                         7010.20.20) or
                         produced by hand
                         (provided for in
                         subheading
                         7010.20.30)......

SEC. 1550. PIGMENT YELLOW 213.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.41      1,4-                Free         No change        No change        On or before 12/  ''.
                         Benzenedicarboxyl                                                  31/2009
                         ic acid, 2-[[2-
                         oxo-1-[[1,2,3,4-
                         tetrahydro-7-
                         methoxy-2,3-dioxo-
                         6-quinoxalinyl)
                         amino]carbonyl]pr
                         opyl]azo]-,
                         dimethyl ester
                         (Pigment Yellow
                         213) (CAS No.
                         220198-21-0)
                         (provided for in
                         subheading
                         3204.17.60)......

SEC. 1551. INDOXACARB.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.42      (4aS) -7-Chloro-2,  Free         No change        No change        On or before 12/  ''.
                         5-dihydro-2-                                                       31/2009
                         [[(methoxycarbony
                         l)[4-
                         (trifluoromethoxy
                         ) phenyl] amino]
                         carbonyl]-indeno
                         [1,2-e][1,3,4]
                         oxadiazine-4a
                         (3H)-carboxylic
                         acid methyl ester
                         (CAS No. 173584-
                         44-6) (provided
                         for in subheading
                         2934.99.16)......

SEC. 1552. DIMETHYL CARBONATE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.43      Dimethyl carbonate  Free         No change        No change        On or before 12/  ''.
                         (CAS No. 616-38-                                                   31/2009
                         6) (provided for
                         in subheading
                         2920.90.50)......

SEC. 1553. 5-CHLORO-1-INDANONE (EK179).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.44      5-Chloro-1-         Free         No change        No change        On or before 12/  ''.
                         indanone (CAS No.                                                  31/2009
                         42348-86-7)
                         (provided for in
                         subheading
                         2914.39.90)......

SEC. 1554. MIXTURES OF FAMOXADONE AND CYMOXANIL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.45      Mixtures of 5-      Free         No change        No change        On or before 12/  ''.
                         methyl-5-(4-                                                       31/2009
                         phenoxyphenyl)-3-
                         (phenylamino)-2,4-
                         oxazolidinedione]
                         (famoxadone) (CAS
                         No. 131807-57-3),
                         2-cyano-N-
                         [(ethylamino)carb
                         onyl]-2-
                         (methoxyimino)ace
                         tamide
                         (Cymoxanil) (CAS
                         No. 57966-95-7)
                         and application
                         adjuvants
                         (provided for in
                         subheading
                         3808.20.15)......

SEC. 1555. DECANEDIOIC ACID, BIS(2,2,6,6-TETRAMETHYL-4-PIPERIDINYL) 
              ESTER.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.47       Decanedioic acid,  Free         No change        No change        On or Before 12/  ''.
                         bis(2,2,6,6-                                                       31/2009
                         tetramethyl-4-
                         piperidinyl)
                         ester (CAS No.
                         52829-07-9)
                         (provided for in
                         subheading
                         2933.39.91)......

SEC. 1556. ACID BLUE 80.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.49      Acid Blue 80 (CAS   Free         No change        No change        On or before 12/  ''.
                         No. 4474-24-2)                                                     31/2009
                         (provided for in
                         subheading
                         3204.12.50)......

SEC. 1557. PIGMENT BROWN 25.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.50      Pigment Brown 25    Free         No change        No change        On or before 12/  ''.
                         (CAS No. 6992-11-                                                  31/2009
                         6) (provided for
                         in subheading
                         3204.17.04)......

SEC. 1558. FORMULATIONS OF AZOXYSTROBIN.

    (a) Calendar Year 2006.--Subchapter II of chapter 99 is amended by 
inserting in numerical sequence the following new heading:


``      9902.12.51       Mixtures of        6.14%        No change        No change        On or before 12/  ''.
                         benzeneacetic                                                      31/2006
                         acid, (a E)- 2-
                         [[6-(2-
                         cyanophenoxy)-4-
                         pyrimidinyl]oxy]-
                         a-
                         (methoxymethylene
                         )-, methyl ester
                         (Azoxystrobin)
                         (CAS No. 131860-
                         33-8) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.20.15)......

    (b) Calendar Year 2007.--
            (1) In general.--Heading 9902.12.51, as added by subsection 
        (a), is amended--
                    (A) by striking ``6.14%'' and inserting ``6.15%''; 
                and
                    (B) by striking ``On or before 12/31/2006'' and 
                inserting ``On or before 12/31/2007''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on January 1, 2007.
    (c) Calendar Years 2008 and 2009.--
            (1) In general.--Heading 9902.12.51, as added by subsection 
        (a) and amended by subsection (b), is further amended--
                    (A) by striking ``6.15%'' and inserting ``6.17%''; 
                and
                    (B) by striking ``On or before 12/31/2007'' and 
                inserting ``On or before 12/31/2009''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on January 1, 2008.

SEC. 1559. FORMULATIONS OF PINOXADEN/CLOQUINTOCET.

    (a) Calendar Years 2006 and 2007.--Subchapter II of chapter 99 is 
amended by inserting in numerical sequence the following new heading:


``      9902.12.52       Mixtures of 8(2,6- Free         No change        No change        On or before 12/  ''.
                         diethyl-p-tolyl)-                                                  31/2007
                         1,2,4,5-
                         tetrahydro-7-oxo-
                         7H-pyrazolo[[1,2-
                         d][1,4,5]
                         oxadiazepin-9-yl
                         2,2-
                         dimethylpropionat
                         e (Pinoxaden)
                         (CAS No. 243973-
                         20-8), acetic
                         acid, [5-chloro-8-
                         quinolinyl]oxy]-,
                         1-methylhexyl
                         ester
                         (Cloquintocet)
                         (CAS No. 99607-70-
                         2) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.30.15)......

    (b) Calendar Years 2008 and 2009.--
            (1) In general.--Heading 9902.12.52, as added by subsection 
        (a), is further amended--
                    (A) by striking ``Free'' and inserting ``1.74%''; 
                and
                    (B) by striking ``On or before 12/31/2007'' and 
                inserting ``On or before 12/31/2009''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on January 1, 2008.

SEC. 1560. MIXTURES OF DIFENOCONAZOLE/MEFENOXAM.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.53      Mixtures of 1H-     Free         No change        No change        On or before 12/  ''.
                         1,2,4-triazole, 1-                                                 31/2009
                         ((2-
                         chlorophenoxy)phe
                         nyl)-4-methyl-1,3-
                         dioxolan-2-
                         yl)methyl)-
                         (Difenoconazole)
                         (CAS No. 119446-
                         68-3), (R,S)-2-
                         ((2,6-
                         dimethylphenyl)
                         methoxyacetylamin
                         o) propionic
                         acid, methyl
                         ester (Mefenoxam)
                         (CAS Nos. 70630-
                         17-0, and 69516-
                         34-3) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.20.15)......

SEC. 1561. FLUDIOXINIL TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.54       1H-Pyrrole-3-      1.6%         No change        No change        On or before 12/  ''.
                         carbonitrile, 4-                                                   31/2009
                         (2,2-difluoro-1,3-
                         benzodioxol-4-yl)-
                          (fludioxinil)
                         (CAS No. 131341-
                         86-1) (provided
                         for in subheading
                         2934.99.12)......

SEC. 1562. MIXTURES OF CLODINAFOP-PROPARGYL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.55       Mixtures of        1.7%         No change        No change        On or before 12/  ''.
                         propionic acid, 2-                                                 31/2009
                         (4-((5-chloro-3-
                         fluoro-2-
                         pyridynyl)oxy)phe
                         noxy-2-propynyl
                         ester,
                         (clodinafop-
                         propargyl) (CAS
                         No. 105512-06-9)
                         (provided for in
                         subheading
                         3808.30.15)......

SEC. 1563. AVERMECTIN B, 1,4"-DEOXY-4"-METHYLAMINO-, (4"R)-, BENZOATE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.56      Avermectin B, 1,4"- Free         No change        No change        On or before 12/  ''.
                         deoxy-4"-                                                          31/2009
                         methylamino-,
                         (4"R)-, benzoate
                         (CAS No. 155569-
                         91-8) (provided
                         for in subheading
                         3824.90.91 or
                         2932.29.50)......

SEC. 1564. CLOQUINTOCET-MEXYL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.57       Acetic acid, 5-    Free         No change        No change        On or before 12/  ''.
                         chloro-8-                                                          31/2009
                         quinolinoxy-, 1-
                         methylhexyl ester
                         (Cloquintocet-
                         mexyl) (CAS No.
                         99607-70-2)
                         (provided for in
                         subheading
                         2933.49.30)......

SEC. 1565. METALAXYL-M TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.58      (R,S)-2-((2,6-      Free         No change        No change        On or before 12/  ''.
                         Dimethylphenyl)                                                    31/2009
                         methoxyacetylamin
                         o) propionic
                         acid, methyl
                         ester (Metalaxyl-
                         M and L-
                         Metalaxylfenoxam)
                         (CAS Nos. 70630-
                         17-0 and 69516-34-
                         3) (provided for
                         in subheading
                         2924.29.47)......

SEC. 1566. CYPROCONAZOLE TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.59      [a-(4-              Free         No change        No change        On or before 12/  ''.
                         Chlorophenyl)-a-                                                   31/2009
                         (1-
                         cyclopropylethyl)
                         -1H-1-1,2,4-
                         triazole-1-
                         ethanol
                         (Cyproconazole)
                         (CAS No. 94361-06-
                         5) (provided for
                         in subheading
                         2934.99.12)......

SEC. 1567. PINOXADEN TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.60      8-(2,6-Diethyl-4-   1.8%         No change        No change        On or before 12/  ''.
                         methylphenyl)-1,2                                                  31/2009
                         ,4,5-tetrahydro-7-
                         oxo-7H-
                         pyrazolo[1,2-
                         d][1,4,5]oxadiaze
                         pin-9-yl 2,2-
                         dimethylpropanoat
                         e (Pinoxaden)
                         (CAS No. 243973-
                         20-8) (provided
                         for in subheading
                         2934.99.15)......

SEC. 1568. MIXTURES OF TRALKOXYDIM.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.12.61       Mixtures of 2-[1-  Free         No change        No change        On or before 12/  ''.
                         (ethoxyimino)prop                                                  31/2009
                         yl]-3-hydroxy-5-
                         (2,4,6-
                         trimethylphenyl)-
                         2-cyclohexen-1-
                         one (Tralkoxydim)
                         (CAS No. 87820-88-
                         0) as the active
                         ingredient and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.30.15)......

SEC. 1569. CERTAIN CHEMICALS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new headings:


``      9902.12.72      Mixtures of zinc    Free         No change        No change        On or before 12/  ...
                         dialkyldithiophos                                                  31/2009
                         phate (CAS No.
                         6990-43-8) with
                         an elastomer
                         binder of
                         ethylene-
                         propylene-diene
                         monomer and ethyl
                         vinyl acetate,
                         dispersing agents
                         and silica
                         (provided for in
                         subheading
                         3812.10.50)......
        9902.12.73      Mixtures of         Free         No change        No change        On or before 12/  ...
                         dithiocarbamate,                                                   31/2009
                         thiazole, thiuram
                         and thiourea with
                         an elastomer
                         binder of
                         ethylene-
                         propylene-diene
                         monomer and ethyl
                         vinyl acetate,
                         and dispersing
                         agents (provided
                         for in subheading
                         3812.10.50)......
        9902.12.74      Mixtures of         Free         No change        No change        On or before 12/  ...
                         caprolactam                                                        31/2009
                         disulfide (CAS
                         No. 23847-08-7)
                         with an elastomer
                         binder of
                         ethylene-
                         propylene-diene
                         monomer and ethyl
                         vinyl acetate,
                         and dispersing
                         agents (provided
                         for in subheading
                         3812.10.50)......
        9902.12.75      Mixtures of N-(3,4- Free         No change        No change        On or before 12/  ...
                         dichloro-phenyl)-                                                  31/2009
                         N,N-dimethylurea
                         (CAS No. 330-54-
                         1) with acrylate
                         rubber (provided
                         for in subheading
                         3812.10.50)......
        9902.12.76      Mixtures of zinc    Free         No change        No change        On or before 12/  ...
                         dicyanato diamine                                                  31/2009
                         (CAS No. 122012-
                         52-6) with an
                         elastomer binder
                         of ethylene-
                         propylene-diene
                         monomer and ethyl
                         vinyl acetate,
                         and dispersing
                         agents (provided
                         for in subheading
                         3812.10.50)......
        9902.12.77      4,8-Dicyclohexyl -  Free         No change        No change        On or before 12/  ...
                         6-2,10-dimethyl -                                                  31/2009
                         12H-dibenzo
                         [d,g][1,3,2]dioxa
                         phosphocin (CAS
                         No. 73912-21-7)
                         (provided for in
                         subheading
                         2920.90.50)......
        9902.12.78      Mixtures of         Free         No change        No change        On or before 12/  ...
                         benzenesulfonic                                                    31/2009
                         acid, dodecyl-,
                         with 2-
                         aminoethanol (CAS
                         No. 26836-07-7)
                         and Poly (oxy-1,2-
                         ethanediyl), a-[1-
                         oxo-9-
                         octadecenyl]-w-
                         hydroxy-, (9Z)
                         (CAS No. 9004-96-
                         0) (provided for
                         in subheading
                         3402.90.50)......
        9902.12.79      1,3-Dihydro-3,3-    Free         No change        No change        On or before 12/  ''.
                         bis (4-hydroxy-m-                                                  31/2009
                         tolyl)-2H-indol-2-
                         one (CAS No.
                         47465-97-4)
                         (provided for in
                         subheading
                         2933.79.08)......

SEC. 1570. MIXTURES OF (<plus-minus>)-(CIS AND TRANS)-1-[[2-(2,4-
              DICHLOROPHENYL)-4-PROPYL-1,3-DIOXOLAN-2-YL]-METHYL]-1H-
              1,2,4-TRIAZOLE.

    (a) In General.--Subchapter II of chapter 99 is amended by 
inserting in numerical sequence the following new heading:


``      9902.12.80       Mixtures of        1.1%         No change        No change        On or before 12/  ''.
                         (<plus-minus>)-(c                                                  31/2009
                         is and trans)-1-
                         [[2-(2,4-
                         Dichlorophenyl)-4-
                         propyl-1,3-
                         dioxolan-2-yl]-
                         methyl]-1H-1,2,4-
                         triazole (CAS No.
                         60207-90-1) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.20.15)......

    (b) Conforming amendment.--Subchapter II of chapter 99 is amended 
by striking heading 9902.32.04.

SEC. 1571. PARAQUAT DICHLORIDE.

    (a) In General.--Subchapter II of chapter 99 is amended by 
inserting in numerical sequence the following new heading:


``      9902.13.06      Paraquat            3.59%        No change        No change        On or before 12/  ''.
                         dichloride                                                         31/2006
                         (1,1'dimethyl-
                         4,4'-bipyridinium
                         dichloride) (CAS
                         No. 1910-42-5)
                         (provided for in
                         subheading
                         2933.39.23)......

    (b) Calendar Year 2007.--
            (1) In general.--Heading 9902.13.06, as added by subsection 
        (a), is amended--
                    (A) by striking ``3.59%'' and inserting ``4.02%''; 
                and
                    (B) by striking ``On or before 12/31/2006'' and 
                inserting ``On or before 12/31/2007''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on January 1, 2007.
    (c) Calendar Years 2008 and 2009.--
            (1) In general.--Heading 9902.13.06, as added by subsection 
        (a) and amended by subsection (b), is further amended--
                    (A) by striking ``4.02%'' and inserting ``4.41%''; 
                and
                    (B) by striking ``On or before 12/31/2007'' and 
                inserting ``On or before 12/31/2009''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall take effect on January 1, 2008.

SEC. 1572. CERTAIN BASKETBALLS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.07      Basketballs,        0.9%         No change        No change        On or before 12/  ''.
                         having an                                                          31/2009
                         external surface
                         other than
                         leather, rubber,
                         or synthetic
                         (provided for in
                         subheading
                         9506.62.80)......

SEC. 1573. CERTAIN LEATHER BASKETBALLS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.08       Leather            Free         No change        No change        On or before 12/  ''.
                         basketballs                                                        31/2009
                         (provided for in
                         subheading
                         9506.62.80)......

SEC. 1574. CERTAIN RUBBER BASKETBALLS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.09       Rubber             1.5%         No change        No change        On or before 12/  ''.
                         basketballs                                                        31/2009
                         (provided for in
                         subheading
                         9506.62.80)......

SEC. 1575. CERTAIN VOLLEYBALLS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.10       Volleyballs        Free         No change        No change        On or before 12/  ''.
                         (provided for in                                                   31/2009
                         subheading
                         9506.62.80)......

SEC. 1576. 4-CHLORO-3-[[3-(4-METHOXYPHENYL)-1,3-DIOXOPROPYL]-AMINO]-
              DODECYL ESTER.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.11      4-Chloro-3-[[3-(4-  Free         No change        No change        On or before 12/  ''.
                         methoxyphenyl)-1,                                                  31/2009
                         3-dioxopropyl]-
                         amino]-dodecyl
                         ester (CAS No.
                         33942-96-0)
                         (provided for in
                         subheading
                         2924.29.71)......

SEC. 1577. LINURON.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.24       3-(3,4-            Free         No change        No change        On or before 12/  ''.
                         Dichlorophenyl)-1-                                                 31/2009
                         methoxy-1-
                         methylurea (CAS
                         No. 330-55-2)
                         (Linuron)
                         (provided for in
                         subheading
                         2924.21.16)......

SEC. 1578. N,N-DIMETHYLPIPERIDINIUM CHLORIDE (MEPIQUAT CHLORIDE).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.25      N,N-                Free         No change        No change        On or before 12/  ''.
                         Dimethylpiperidin                                                  31/2009
                         ium chloride
                         (Mepiquat
                         chloride) (CAS
                         No. 24307-26-4)
                         (provided for in
                         subheading
                         2933.39.25)......

SEC. 1579. DIURON.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.26       Formulations of 3- Free         No change        No change        On or before 12/  ''.
                         (3,4-                                                              31/2009
                         dichlorophenyl)-1
                         ,1-dimethylurea
                         (CAS No. 330-54-
                         1) (Diuron) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.30.15)......

SEC. 1580. FORMULATED PRODUCT KROVAR I DF.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.27      Formulations        2.5%         No change        No change        On or before 12/  ''.
                         containing 5-                                                      31/2009
                         bromo-3-sec-butyl-
                         6-methyluracil
                         (Bromacil) (CAS
                         No. 314-40-9), 3-
                         (3,4-
                         Dichlorophenyl)-1
                         ,1-dimethylurea
                         (Diuron) (CAS No.
                         330-54-1), and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.30.15)......

SEC. 1581. TRIASULFURON TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.28      3-(6-Methoxy-4-     Free         No change        No change        On or before 12/  ''.
                         methyl-1,3,5-                                                      31/2009
                         triazin-2-yl)-1-
                         [2-(2-
                         chloroethoxy)
                         phenylsulfonyl]ur
                         ea (Triasulfuron)
                         (CAS No. 82097-50-
                         5) (provided for
                         in subheading
                         2935.00.75)......

SEC. 1582. BRODIFACOUM TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.29      3-[3-(4'-           Free         No change        No change        On or before 12/  ''.
                         Bromo[1,1'-                                                        31/2009
                         biphenyl]-4-yl)-
                         1,2,3,4-
                         tetrahydro-1-
                         naphthalenyl]-4-
                         hydroxy-2H-1-
                         benzopyran- 2-one
                         (Brodifacoum)
                         (CAS No. 56073-10-
                         0) (provided for
                         in subheading
                         2932.29.10)......

SEC. 1583. PYMETROZINE TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.30      1,2,4-Triazin-      Free         No change        No change        On or before 12/  ''.
                         3(2H)-one, 4,5-                                                    31/2009
                         dihydro-6-methyl-
                         4-[(3-
                         pyridinylmethylen
                         e)amino]-
                         (Pymetrozine)
                         (CAS No. 123312-
                         89-0) (provided
                         for in subheading
                         2933.69.60)......

SEC. 1584. FORMULATIONS OF THIAMETHOXAM, DIFENOCONAZOLE, FLUDIOXINIL, 
              AND MEFENOXAM.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.31      Formulations of 3-  Free         No change        No change        On or before 12/  ''.
                         [(2-chloro-5-                                                      31/2009
                         thiazolyl)methyl]
                         tetrahydro-5-
                         methyl-N-nitro-
                         1,3,5-oxadiazin-4-
                         imine)
                         (Thiamethoxam)
                         (CAS No. 153719-
                         23-4 ); 1H-1,2,4-
                         triazole, 1-[[2-
                         [2-chloro-4-(4-
                         chlorophenoxy)phe
                         nyl]-4-methyl-
                         1,3-dioxolan-2-
                         yl]methyl]-
                         (Difenoconazole)
                         (CAS No. 119446-
                         68-3); 1H-Pyrrole-
                         3-carbonitrile, 4-
                         (2,2-difluoro-1,3-
                         benzodioxol-4-yl)-
                          (Fludioxinil)
                         (CAS No. 131341-
                         86-1); and (R,S)-
                         2-[(2,6-
                         dimethylphenylmet
                         hoxy)acetylamino]-
                         propionic acid
                         methyl ester
                         (Mefenoxam) (CAS
                         Nos. 70630-17-0
                         and 69516-34-3)
                         (provided for in
                         subheading
                         3808.20.15)......

SEC. 1585. TRIFLOXYSULFURON-SODIUM TECHNICAL.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.32       N-[[(4,6-          Free         No change        No change        On or before 12/  ''.
                         Dimethoxy-2-                                                       31/2009
                         pyrimidinyl)amino
                         ]carbonyl]-3-
                         (2,2,2-
                         trifluoroethoxy)-
                         2-
                         pyridinesulfonami
                         de monosodium
                         salt (CAS No.
                         199119-58-9)
                         (trifloxysulfuron-
                         sodium) (provided
                         for in subheading
                         2935.00.75)......

SEC. 1586. 2 BENZYLTHIO-3-ETHYL SULFONYL PYRIDINE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.41      2-Benzylthio-3-     Free         No change        No change        On or before 12/  ''.
                         ethyl sulfonyl                                                     31/2009
                         pyridine (CAS No.
                         175729-82-5)
                         (provided for in
                         subheading
                         2933.39.61)......

SEC. 1587. 2-AMINO-4-METHOXY-6-METHYL-1,3,5-TRIAZINE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.42      2-Amino-4-methoxy-  Free         No change        No change        On or before 12/  ''.
                         6-methyl-1,3,5-                                                    31/2009
                         triazine (CAS No.
                         1668-54-8)
                         (provided for in
                         subheading
                         2933.69.60)......

SEC. 1588. FORMULATED PRODUCTS CONTAINING MIXTURES OF THE ACTIVE 
              INGREDIENT 2-CHLORO-N-[[(4-METHOXY-6-METHYL-1,3,5-
              TRIAZIN-2YL) AMINO]CARBONYL] BENZENESULFONAMIDE AND 
              APPLICATION ADJUVANTS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.43      Formulated          Free         No change        No change        On or before 12/  ''.
                         products                                                           31/2009
                         containing
                         mixtures of the
                         active ingredient
                         2-chloro-N-[[(4-
                         methoxy-6-methyl-
                         1,3,5-triazin-
                         2yl)
                         amino]carbonyl]
                         benzenesulfonamid
                         e and application
                         adjuvants
                         (Chlorosulfuon)
                         (CAS No. 64902-72-
                         3) (provided for
                         in subheading
                         3808.30.15)......

SEC. 1589. 2-METHYL-4-METHOXY-6-METHYLAMINO-1,3,5-TRIAZINE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.44      2-Methyl-4-methoxy- Free         No change        No change        On or before 12/  ''.
                         6-methylamino-                                                     31/2009
                         1,3,5-triazine
                         (CAS No. 5248-39-
                         5) (provided for
                         in subheading
                         2933.69.60)......

SEC. 1590. MIXTURES OF SODIUM-2-CHLORO-6-[(4,6 DIMETHOXYPYRIMIDIN-2-
              YL)THIO]BENZOATE AND APPLICATION ADJUVANTS (PYRITHIOBAC-
              SODIUM).

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.45       Mixtures of        3.5%         No change        No change        On or before 12/  ''.
                         sodium-2-chloro-6-                                                 31/2009
                         [(4,6
                         dimethoxypyrimidi
                         n-2-
                         yl)thio]benzoate
                         (CAS No. 123343-
                         16-8) and
                         application
                         adjuvants
                         (Pyrithiobac-
                         sodium) (provided
                         for in subheading
                         3808.30.15)......

SEC. 1591. CERTAIN DECORATIVE PLATES, DECORATIVE SCULPTURES, DECORATIVE 
              PLAQUES, AND ARCHITECTURAL MINIATURES.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.46      Decorative plates,  Free         No change        No change        12/31/2009        ''.
                         whether or not
                         with decorative
                         rim or attached
                         sculpture;
                         decorative
                         sculptures, each
                         with plate or
                         plaque attached,
                         and decorative
                         plaques each not
                         over 7.65 cm in
                         thickness;
                         architectural
                         miniatures,
                         whether or not
                         put up in sets;
                         all the foregoing
                         of resin
                         materials and
                         containing
                         agglomerated
                         stone, put up for
                         mail order retail
                         sale, whether for
                         wall or tabletop
                         display and each
                         weighing not over
                         1.36 kg together
                         with their retail
                         packaging
                         (provided for in
                         subheading
                         3926.40.00)......

SEC. 1592. CERTAIN MUSIC BOXES.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.47      Music boxes with    Free         No change        No change        On or before 12/  ''.
                         mechanical                                                         31/2009
                         musical
                         movements,
                         presented in the
                         immediate
                         packaging for
                         shipment to the
                         ultimate
                         purchaser, and
                         each weighing not
                         over 6 kg
                         together with
                         retail packaging
                         (provided for in
                         subheading
                         9208.10.00)......

SEC. 1593. 2-METHYL-4-CHLOROPHENOXYACETIC ACID.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.60       2-Methyl-4-        Free         No change        No change        On or before 12/  ''.
                         chlorophenoxyacet                                                  31/2009
                         ic acid (CAS No.
                         94-74-6)
                         (provided for in
                         subheading
                         2918.90.20)......

SEC. 1594. PHENMEDIPHAM.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.76      3-                  Free         No change        No change        On or before 12/  ''.
                         Methylcarbonylami                                                  31/2009
                         nophenyl-3-methyl-
                         carbanilate
                         (Phenmedipham)
                         (CAS No. 13684-63-
                         4) in bulk or
                         mixed with
                         application
                         adjuvants
                         (provided for in
                         subheadings
                         2924.29.47 and
                         3808.30.15)......

SEC. 1595. DESMEDIPHAM.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.77      3-                  Free         No change        No change        On or before 12/  ''.
                         Ethoxycarbonylami                                                  31/2009
                         nophenyl-N-
                         phenylcarbamate
                         (Desmedipham)
                         (CAS No. 13684-56-
                         5) in bulk or
                         mixed with
                         application
                         adjuvants
                         (provided for in
                         subheadings
                         2924.29.43 and
                         3808.30.15)......

SEC. 1596. CERTAIN FOOTWEAR WITH OPEN TOES OR HEELS.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.78      Footwear with       Free         No change        No change        On or before 12/  ''.
                         outer soles of                                                     31/2009
                         rubber or
                         plastics and
                         uppers of
                         vegetable fibers,
                         with open toes or
                         open heels, other
                         than house
                         slippers
                         (provided for in
                         subheading
                         6404.19.25)......

SEC. 1597. CERTAIN WORK FOOTWEAR.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.85      House slippers      Free         No change        No change        On or before 12/  ''.
                         with outer soles                                                   31/2009
                         of rubber,
                         plastics, leather
                         or composition
                         leather and
                         uppers of
                         leather, valued
                         not over $2.50/
                         pair (provided
                         for in subheading
                         6403.99.75);
                         Sports footwear;
                         tennis shoes,
                         basketball shoes,
                         gym shoes,
                         training shoes
                         and the like, all
                         the foregoing
                         with outer soles
                         of rubber or
                         plastics and
                         uppers of textile
                         materials for
                         women (provided
                         for in subheading
                         6404.11.20)......

SEC. 1598. CERTAIN REFRACTING AND REFLECTING TELESCOPES.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.86      Refracting          Free         No change        No change        On or before 12/  ''.
                         telescopes with                                                    31/2009
                         50 mm or smaller
                         objective lenses
                         and reflecting
                         telescopes with
                         76 mm or smaller
                         mirrors, and
                         parts and
                         accessories
                         thereof (provided
                         for in subheading
                         9005.80.40 or
                         9005.90.80)......

SEC. 1600. CERTAIN WORK FOOTWEAR.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.90      Welt footwear with  Free         No change        No change        On or before 12/  ''.
                         outer soles of                                                     31/2009
                         rubber, plastics,
                         leather or
                         composition
                         leather and
                         uppers of
                         pigskin,
                         incorporating a
                         protective metal
                         toe-cap (provided
                         for in subheading
                         6403.40.30)......

SEC. 1601. CERTAIN FOOTWEAR FOR MEN.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.91      Other footwear      4.5%         No change        No change        On or before 12/  ''.
                         with uppers of                                                     31/2009
                         vegetable fibers,
                         for men (provided
                         for in subheading
                         6405.20.30)......

SEC. 1602. CERTAIN RUBBER OR PLASTIC FOOTWEAR.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.92      Other footwear      6.5%         No change        No change        On or before 12/  ''.
                         with uppers of                                                     31/2009
                         vegetable fibers,
                         other than such
                         footwear for men
                         or women
                         (provided for in
                         subheading
                         6405.20.30)......

SEC. 1604. ZINC DIMETHYLDITHIOCARBAMATE.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.13.97      Zinc                Free         No change        No change        On or before 12/  ''.
                         dimethyldithiocar                                                  31/2009
                         bamate (Ziram)
                         (CAS No. 137-30-
                         4) (provided for
                         in subheading
                         3808.20.28)......

SEC. 1605. CERTAIN LIQUID CRYSTAL DEVICE (LCD) PANEL ASSEMBLIES.

    Subchapter II of chapter 99 is amended by inserting in numerical 
sequence the following new heading:


``      9902.85.21      Liquid Crystal      Free         No change        No change        On or before 12/  ''.
                         Device (LCD)                                                       31/2009
                         panel assemblies
                         for use in LCD
                         direct view
                         televisions
                         (provided for in
                         subheading
                         9013.80.90)......

SEC. 1606. CERTAIN WATERTUBE BOILERS AND REACTOR VESSEL HEADS.

    (a) Watertube Boilers.--Subchapter II of chapter 99 is amended by 
inserting in numerical sequence the following new heading:


``      9902.84.01      Watertube boilers   Free         No change        No change        On or before 12/  ''.
                         with a steam                                                       31/2010
                         production
                         exceeding 45 t
                         per hour, for use
                         in nuclear
                         facilities
                         entered after 12/
                         31/2008 and on or
                         before 12/31/2010
                         if the contract
                         for the purchase
                         of such watertube
                         boilers was
                         entered into on
                         or before 7/31/
                         2006 (provided
                         for in subheading
                         8402.11.00)......

    (b) Reactor Vessel Heads.--Subchapter II of chapter 99 is amended 
by inserting in numerical sequence the following new heading:


``      9902.84.04      Reactor vessel      Free         No change        No change        On or before 12/  ''.
                         heads and                                                          31/2010
                         pressurizers for
                         nuclear reactors
                         entered after 12/
                         31/2008 and on or
                         before 12/31/2010
                         if the contract
                         for the purchase
                         of such heads and
                         pressurizers was
                         entered into on
                         or before 7/31/
                         2006 (provided
                         for in subheading
                         8401.40.00)......

          CHAPTER 2--EXISTING DUTY SUSPENSIONS AND REDUCTIONS

SEC. 1611. EXTENSION OF CERTAIN EXISTING DUTY SUSPENSIONS AND 
              REDUCTIONS.

    (a) Existing Duty Suspensions and Reduction.--Each of the following 
headings is amended by striking the date in the effective period column 
and inserting ``12/31/2009'':
            (1) Heading 9902.39.08 (relating to ORGASOL polyamide 
        powders).
            (2) Heading 9902.30.90 (relating to 3-amino-2'-(sulfato-
        ethyl sulfonyl) ethyl benzamide).
            (3) Heading 9902.32.91 (relating to MUB 738 INT).
            (4) Heading 9902.30.31 (relating to 5-amino-N-(2-
        hydroxyethyl)-2,3-xylenesulfonamide).
            (5) Heading 9902.01.83 (relating to Ethoprop).
            (6) Heading 9902.01.73 (relating to Fosetyl-Al).
            (7) Heading 9902.03.38 (relating to Flufenacet (FOE 
        hydroxy)).
            (8) Heading 9902.02.02 (relating to Methidathion 
        Technical).
            (9) Heading 9902.02.12 (relating to difenoconazole).
            (10) Heading 9902.02.09 (relating to Lambda-Cyhalothrin).
            (11) Heading 9902.02.08 (relating to cyprodinil).
            (12) Heading 9902.02.04 (relating to Wakil XL).
            (13) Heading 9902.02.06 (relating to Azoxystrobin 
        Technical).
            (14) Heading 9902.02.05 (relating to mucochloric acid).
            (15) Heading 9902.03.06 (relating to high tenacity multiple 
        (folded) or cabled yarn of viscose rayon).
            (16) Heading 9902.05.07 (relating to high tenacity single 
        yarn of viscose rayon with a decitex equal to or greater than 
        1,000).
            (17) Heading 9902.38.31 (relating to Vulkalent E/C).
            (18) Heading 9902.01.71 (relating to hexanedioic acid, 
        polymer with 1,3-benzenedimethanamine).
            (19) Heading 9902.29.93 (relating to Trinexapac-ethyl).
            (20) Heading 9902.38.52 (relating to formulations of 
        triasulfuron).
            (21) Heading 9902.39.30 (relating to certain ion-exchange 
        resins).
            (22) Heading 9902.32.82 (relating to 2,6 Dichlorotoluene).
            (23) Heading 9902.02.33 (relating to Ion exchange resin 
        comprising a compolymer of styrene crosslinked with 
        ethenylbenzene, aminophosphonic acid sodium form).
            (24) Heading 9902.02.32 (relating toIon exchange resin 
        comprising a copolymer of styrene crosslinked with 
        divinylbenzene, iminodiacetic acid, sodium form)).
            (25) Heading 9902.01.78 (relating to certain bags for 
        toys).
            (26) Heading 9902.01.81 (relating to cases for certain 
        children's products).
            (27) Heading 9902.01.80 (relating to certain children's 
        products).
            (28) Heading 9902.29.34 (relating to certain light 
        absorbing photo dyes).
            (29) Heading 9902.85.04 (relating to certain R-core 
        transformers).
            (30) Heading 9902.03.04 (relating to reduced vat blue 43).
            (31) Heading 9902.03.03 (relating to sulfur black 1).
            (32) Heading 9902.01.22 (relating to DMSIP).
            (33) Heading 9902.29.35 (relating to 2-
        (Methoxycarbonyl)benzylsulfonamide).
            (34) Heading 9902.02.52 (relating to Imidacloprid 
        pesticides).
            (35) Heading 9902.38.15 (relating to Baytron C-R).
            (36) Heading 9902.29.87 (relating to 3,4-
        Ethylenedioxythiophene).
            (37) Heading 9902.01.90 (relating to certain filament 
        yarns).
            (38) Heading 9902.01.91 (relating to certain filament 
        yarns).
            (39) Heading 9902.71.08 (relating to certain semi-
        manufactured forms of gold).
            (40) Heading 9902.04.10 (relating to Crotonic Acid).
            (41) Heading 9902.04.09 (relating to 3,6,9-
        Trioxaundecanedioic acid).
            (42) Heading 9902.02.51 (relating to benzoic acid, 2-amino-
        4-[[(2,5-dichlorophenyl)amino]carbonyl]-, methyl ester).
            (43) Heading 9902.32.73 (relating to Solvent blue 124).
            (44) Heading 9902.32.55 (relating to Methyl thioglycolate 
        (MTG)).
            (45) Heading 9902.01.48 (relating to Ethyl pyruvate).
            (46) Heading 9902.04.11 (relating to 1,3-
        Benzenedicarboxamide, N, N'-Bis (2,2,6,6-tetramethyl-4-
        piperidinyl)-).
            (47) Heading 9902.04.07 (relating to reaction products of 
        phosphorus trichloride with 1,1'-biphenyl and 2,4-bis(1,1-
        dimethylethyl)phenol).
            (48) Heading 9902.04.05 (relating to preparations based on 
        ethanediamide, N-(2-ethoxyphenyl)-N'-(4-isodecylphenyl)-).
            (49) Heading 9902.04.06 (relating to 1-Acetyl-4-(3-dodecyl-
        2,5-dioxo-1-pyrrolidinyl)-2,2,6,6-tetramethylpiperidine).
            (50) Heading 9902.04.12 (relating to 3-Dodecyl-1-(2,2,6,6-
        tetramethyl-4-piperidinyl)-2,5-pyrrolidinedione).
            (51) Heading 9902.29.70 (relating to 
        Tetraacetylethylenediamine).
            (52) Heading 9902.34.01 (relating to sodium petroleum 
        sulfonate).
            (53) Heading 9902.02.75 (relating to esters and sodium 
        esters of parahydroxybenzoic acid).
            (54) Heading 9902.30.16 (relating to Diclofop methyl).
            (55) Heading 9902.33.61 (relating to ((3-
        ((Dimethylamino)carbonyl)-2-pyridinyl)sulfonyl) carbamic acid, 
        phenyl ester).
            (56) Heading 9902.01.45 (relating to Esfenvalerate).
            (57) Heading 9902.05.01 (relating to Methyl 2-[[[[[4-
        (dimethylamino)-6- (2,2,2-trifluoroethoxy)-1,3,5-triazin-2-yl]-
        amino]carbonyl]amino]sulfonyl]-3-methylbenzoate and application 
        adjuvants).
            (58) Heading 9902.01.44 (relating to Benzyl carbazate).
            (59) Heading 9902.05.14 (relating to Pyromellitic 
        Dianhydride).
            (60) Heading 9902.05.13 (relating to 4,4'-Oxydiphthalic 
        Anhydride).
            (61) Heading 9902.05.12 (relating to 4,4'-Oxydianiline).
            (62) Heading 9902.05.11 (relating to 3,3',4,4'-
        Biphenyltetracarboxylic Dianhydride).
            (63) Heading 9902.29.80 (relating to 1-[[2-(2,4- 
        dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl]-methyl]-1H-1,2,4-
        triazole).
            (64) Heading 9902.05.19 (relating to ethofumesate).
            (65) Heading 9902.02.60 (relating to Nemacur VL).
            (66) Heading 9902.03.77 (relating to thiophanate methyl).
            (67) Heading 9902.84.14 (relating to ceiling fans).
    (b) Other Modifications.--
            (1) 2-Chlorobenzyl chloride.--Heading 9902.01.56 is 
        amended--
                    (A) by striking ``2903.69.70'' and inserting 
                ``2903.69.80''; and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2009''.
            (2) Triethylene glycol bis[3-(3-tert-butyl-4-hydroxy-5-
        methylphenyl)propionate] .--Heading 9902.01.88 is amended--
                    (A) by striking ``Free'' and inserting ``4.1%''; 
                and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2009''.
            (3) Formulations of triasulfuron and dicamba.--Heading 
        9902.38.21 is amended--
                    (A) in the article description column--
                            (i) by inserting ``(Triasulfuron)'' before 
                        ``(CAS No. 82097-50-5)''; and
                            (ii) by inserting ``(Dicamba)'' before 
                        ``(CAS No. 1918-00-9)''; and
                    (B) by striking ``12/31/2003'' and inserting ``12/
                31/2009''.
            (4) 11-Aminoundecanoic acid.--Heading 9902.32.49 is 
        amended--
                    (A) by striking ``Free'' and inserting ``2.3%''; 
                and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2009''.
            (5) PHBA.--Heading 9902.29.03 is amended--
                    (A) by striking ``Free'' and inserting ``3.1%''; 
                and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2009''.
            (6) Acetamiprid Technical.--Heading 9902.03.92 is amended--
                    (A) by striking ``Free'' and inserting ``2.5%''; 
                and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2009''.
            (7) Baytron and baytron p.--Heading 9902.39.15 is amended--
                    (A) by inserting ``, whether or not containing 
                binder resin and organic solvent'' before ``(CAS No.''; 
                and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2009''.
            (8) Iprodione.--Heading 9902.01.51 is amended--
                    (A) by striking ``4.1%'' and inserting ``2.0%''; 
                and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2009''.
            (9) Ethanediamide, N-(2-ethoxyphenyl)-N'-(2-ethylphenyl)-
        ).--Heading 9902.04.13 is amended--
                    (A) by striking ``2924.29.76'' and inserting 
                ``2924.29.71''; and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2009''.
            (10) Thiamethoxam technical.--Heading 9902.03.11 is 
        amended--
                    (A) by striking ``3.2%'' and inserting ``3.0%''; 
                and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2009''.
            (11) 1,3-Bis(4-aminophenoxy)benzene (RODA).--Heading 
        9902.05.15 is amended--
                    (A) by inserting ``(RODA)'' after ``benzene''; and
                    (B) by striking ``12/31/2006'' and inserting ``12/
                31/2009''.
            (12) Mixtures of n-[[(4,6-dimethoxypyrimidin-2-
        yl)amino]carbonyl]-3-(ethylsulfonyl)-2-pyridinesulfonamide and 
        application adjuvants.--Heading 9902.33.60 is amended--
                    (A) by striking the article description and 
                inserting the following: ``Mixtures of N-[[(4,6-
                dimethoxypyrimidin-2-yl)amino]carbonyl]-3-
                (ethylsulfonyl)-2-pyridinesulfonamide and application 
                adjuvants (CAS No. 122931-48-0) (provided for in 
                subheading 3808.30.15)''; and
                    (B) by striking ``12/31/2003'' and inserting ``12/
                31/2009''.

                  Subtitle B--Other Tariff Provisions

       CHAPTER 1--LIQUIDATION OR RELIQUIDATION OF CERTAIN ENTRIES

SEC. 1621. CERTAIN TRAMWAY CARS AND ASSOCIATED SPARE PARTS.

    (a) In General.--The Commissioner of the Bureau of Customs and 
Border Protection of the Department of Homeland Security shall admit 
free of duty 3 tramway cars (provided for in subheading 8603.10.00 of 
the Harmonized Tariff Schedule of the United States) manufactured in 
Ostrava, Czech Republic, for the use by the city of Portland, Oregon, 
and imported pursuant to a contract with the city of Portland, Oregon, 
and associated spare parts for such tramway cars (provided for in 
applicable subheadings of heading 8607 or other headings of the 
Harmonized Tariff Schedule of the United States) imported pursuant to 
such contract, the foregoing to be entered into the customs territory 
of the United States by not later than December 31, 2006.
    (b) Reliquidation; Refund of Amounts Owed.-- If the liquidation of 
the entry of any of the tramway cars or associated spare parts 
described in subsection (a) becomes final before the date of the 
enactment of this Act, the Commissioner of the Bureau of Customs and 
Border Protection, notwithstanding any other provision of law, shall--
            (1) within 15 days after such date, reliquidate the entry 
        in accordance with the provisions of this section; and
            (2) at the time of such reliquidation, make the appropriate 
        refund of any duty paid with respect to the entry.

SEC. 1622. RELIQUIDATION OF CERTAIN ENTRIES OF CANDLES.

    (a) Reliquidation of Entries.--Notwithstanding sections 514 and 520 
of the Tariff Act of 1930 (19 U.S.C. 1514 and 1520) or any other 
provision of law, the Bureau of Customs and Border Protection shall, 
not later than 90 days after the date of the enactment of this Act--
            (1) reliquidate the entries listed in subsection (b) 
        without assessment of antidumping duties or interest; and
            (2) refund any antidumping duties and interest which were 
        previously paid on such entries.
    (b) Affected Entries.--The entries referred to in subsection (a) 
are the following:


 
                     Entry number                                    Date of entry                     Port
 
110-3447557-3                                           03/18/00                                    Los Angeles
110-3447591-2                                           03/19/00                                    Los Angeles
110-3447595-3                                           03/19/00                                    Los Angeles
110-1201638-1                                           03/21/00                                        Detroit
110-1201639-9                                           03/21/00                                        Detroit
110-1201640-7                                           03/21/00                                        Detroit
110-3447613-4                                           03/21/00                                    Los Angeles
110-1201697-7                                           03/23/00                                        Detroit
110-1201695-1                                           03/23/00                                        Detroit
110-1201696-9                                           03/23/00                                        Detroit
110-1201756-1                                           03/27/00                                        Detroit
110-1201757-9                                           03/27/00                                        Detroit
110-1201758-7                                           03/27/00                                        Detroit
110-1740905-2                                           03/30/00                                    Los Angeles
110-1740943-3                                           03/30/00                                    Los Angeles
110-1201845-2                                           03/31/00                                        Detroit
110-1201813-0                                           04/03/00                                        Detroit
110-1201814-8                                           04/03/00                                        Detroit
110-1201815-5                                           04/03/00                                        Detroit
110-1201875-9                                           04/04/00                                        Detroit
110-1201868-4                                           04/04/00                                        Detroit
110-1201858-5                                           04/04/00                                        Detroit
110-3447959-1                                           04/11/00                                    Los Angeles
110-3447958-3                                           04/11/00                                    Los Angeles
110-3759536-9                                           04/12/00                                        Detroit
110-3759561-7                                           04/12/00                                        Detroit
110-3759542-7                                           04/12/00                                        Detroit
110-3759540-1                                           04/12/00                                        Detroit
110-3447977-3                                           04/12/00                                    Los Angeles
110-3759539-3                                           04/12/00                                        Detroit
110-3448045-8                                           04/14/00                                    Los Angeles
110-3448046-6                                           04/14/00                                    Los Angeles
110-3448110-0                                           04/20/00                                    Los Angeles
110-3759670-6                                           04/25/00                                        Detroit
110-3759673-0                                           04/25/00                                        Detroit
110-3759669-8                                           04/25/00                                        Detroit
110-3759667-2                                           04/25/00                                        Detroit
110-3759671-4                                           04/25/00                                        Detroit
110-3759668-0                                           04/25/00                                        Detroit
110-3448241-3                                           04/27/00                                    Los Angeles
110-3448247-0                                           04/27/00                                    Los Angeles
110-3448276-9                                           04/28/00                                        Memphis
110-3448274-4                                           04/28/00                                        Memphis
110-3448282-7                                           05/04/00                                        Memphis
101-4081779-1                                           05/07/00                                        Memphis
101-4088945-1                                           05/23/00                                        Memphis
101-4089954-3                                           05/23/00                                        Memphis
101-4088960-0                                           05/23/00                                        Memphis
101-4092192-4                                           05/25/00                                        Memphis
101-4089312-3                                           05/26/00                                        Detroit
101-4089942-7                                           05/26/00                                        Detroit
101-4089893-2                                           05/26/00                                        Detroit
101-4092221-1                                           05/26/00                                        Memphis
101-4089697-7                                           05/26/00                                    Los Angeles
101-4092215-3                                           05/26/00                                        Memphis
101-4086053-6                                           05/26/00                                    Los Angeles
101-4122700-8                                           07/27/00                                    Los Angeles
101-4122707-3                                           07/27/00                                    Los Angeles
101-4122712-3                                           07/27/00                                    Los Angeles
101-4127147-7                                           08/03/00                                    Los Angeles
101-4132485-4                                           08/09/00                                        Norfolk
101-4129989-0                                           08/11/00                                        Detroit
101-4130345-2                                           08/17/00                                        Detroit
101-4129976-7                                           08/23/00                                        Detroit
101-4149476-4                                           09/06/00                                    Los Angeles
101-4149483-0                                           09/06/00                                    Los Angeles
101-4149493-9                                           09/06/00                                    Los Angeles
101-4148595-2                                           09/08/00                                        Detroit
101-4153301-7                                           09/18/00                                        Detroit
101-4154523-5                                           09/14/00                                    Los Angeles
101-4153389-2                                           09/18/00                                        Detroit
101-4157161-1                                           09/20/00                                        Norfolk
101-4153333-0                                           09/21/00                                        Detroit
101-4155542-4                                           09/26/00                                        Detroit
101-4166291-5                                           10/07/00                                    Los Angeles
101-4167325-0                                           10/09/00                                        Detroit
101-4167363-1                                           10/12/00                                        Detroit
101-4164567-0                                           10/13/00                                        Norfolk
101-4168049-5                                           10/14/00                                    Los Angeles
101-4172904-5                                           10/21/00                                    Los Angeles
101-4175579-2                                           10/30/00                                    Los Angeles
101-4183996-8                                           11/07/00                                        Detroit
101-4183234-4                                           11/09/00                                        Detroit
101-4183251-8                                           11/09/00                                        Detroit
101-4183253-4                                           11/09/00                                        Detroit
101-4183257-5                                           11/09/00                                        Detroit
101-4183264-1                                           11/09/00                                        Detroit
101-4183264-1                                           11/09/00                                        Detroit
101-4184811-8                                           11/13/00                                    Los Angeles
101-4184819-1                                           11/13/00                                    Los Angeles
101-4189001-1                                           11/14/00                                          Tampa
101-4185526-1                                           11/16/00                                        Detroit
101-4185535-2                                           11/16/00                                        Detroit
101-4186580-7                                           11/20/00                                        Detroit
101-4189830-3                                           11/20/00                                        Detroit
101-4189774-3                                           11/21/00                                        Detroit
101-4191183-3                                           11/24/00                                    Los Angeles
101-4191188-2                                           11/24/00                                    Los Angeles
101-4191193-2                                           11/24/00                                    Los Angeles
101-4194796-9                                           11/29/00                                        Detroit
101-4194801-7                                           11/29/00                                        Detroit
101-4196383-4                                           12/01/00                                    Los Angeles
101-4196389-1                                           12/01/00                                    Los Angeles
101-4199308-8                                           12/13/00                                        Detroit

SEC. 1623. CERTAIN ENTRIES OF ROLLER CHAIN.

    (a) Liquidation or Reliquidation of Entries.--Notwithstanding 
sections 514 and 520 of the Tariff Act of 1930 (19 U.S.C. 1514 and 
1520) or any other provision of law, the Bureau of Customs and Border 
Protection shall, not later than 90 days after the date of enactment of 
this Act, liquidate or reliquidate the entries listed in subsection (b) 
without assessment of interest and shall refund any interest which was 
previously paid.
    (b) Affected Entries.--The entries referred to in subsections (a) 
and (b) are the following:


 
                     Entry number                                    Date of entry                     Port
 
858442975                                               08/21/85                                               Chicago
868558147                                               01/28/86                                               Chicago
868565499                                               03/14/86                                               Chicago
858440922                                               07/31/85                                               Chicago
868565499                                               03/14/86                                               Chicago
868558147                                               01/28/86                                               Chicago
858442975                                               08/21/85                                               Chicago
858440922                                               07/31/85                                               Chicago
847648353                                               06/18/84                                               Chicago
858268324                                               01/04/85                                               Chicago
858264302                                               11/08/84                                               Chicago
858265107                                               11/19/84                                               Chicago
847650150                                               07/18/84                                               Chicago
847412877                                               05/09/84                                               Chicago
837078386                                               03/21/83                                               Chicago
837077691                                               02/07/83                                               Chicago
837077701                                               02/07/83                                               Chicago
826735834                                               01/13/82                                               Chicago
826736309                                               01/18/82                                               Chicago
821020081                                               02/12/82                                               Chicago
821020052                                               02/17/82                                               Chicago
821026768                                               04/13/82                                               Chicago
827119569                                               06/18/82                                               Chicago
837075114                                               10/06/82                                               Chicago
826727088                                               10/14/81                                               Chicago
837124777                                               05/19/83                                               Chicago
847405240                                               11/28/83                                               Chicago
837127606                                               08/18/83                                               Chicago
837125132                                               06/08/83                                               Chicago
847406100                                               12/22/83                                               Chicago
847404034                                               11/02/83                                               Chicago
837128090                                               09/07/83                                               Chicago
837126762                                               08/05/83                                               Chicago
837125569                                               06/22/83                                               Chicago
837078991                                               04/12/83                                               Chicago
837129222                                               10/03/83                                               Chicago
847406414                                               12/29/83                                               Chicago
847408014                                               01/31/84                                               Chicago
868569204                                               07/03/86                                               Chicago
868730813                                               08/14/86                                               Chicago

SEC. 1624. CERTAIN ENTRIES OF SOUNDSPA CLOCK RADIOS.

    (a) In General.--Notwithstanding section 514 of the Tariff Act of 
1930 (19 U.S.C. 1514) or any other provision of law, the Bureau of 
Customs and Border Protection shall, not later than 90 days after the 
date of the enactment of this Act--
            (1) reliquidate each entry described in subsection (c) 
        containing any merchandise which, on the date of original 
        liquidation, was classified under subheading 8527.19.50 of the 
        Harmonized Tariff Schedule of the United States; and
            (2) make such reliquidation at the rate of duty that would 
        have been applicable to such merchandise if the merchandise had 
        been liquidated under subheading 8527.19.10 of such Schedule on 
        the date of entry of the merchandise.
    (b) Refund of Amounts Owed.--Any amounts owed by the United States 
under subsection (a) shall be refunded with interest.
    (c) Affected Entries.--The entries referred to in subsection (a) 
are as follows:


 
                              Entry number
 
110-1199345-7
110-1199542-9
110-1199558-5
110-1201694-4
110-3759754-8
110-3759785-2
101-4082299-9
101-4088073-2
101-4089053-3
101-4120875-0
101-4133671-8
101-4138302-5
101-4145092-3
101-4148477-3
101-4153108-6
101-4159322-7
101-4158601-5
101-4163243-9
101-4164448-3
101-4168318-4
101-4172197-6
101-4172489-7
101-4193123-7
101-4264820-2
101-4271724-7
101-4277850-4
101-4287672-0
101-4301588-0
101-4306238-7
101-4306235-3
101-6011727-0
101-6012796-4
101-6015492-7
101-6021099-2
101-6026903-0
101-6024120-3
101-6028079-7
101-6027052-5
101-6036728-9
101-6048069-4
101-6079830-1
101-6082949-4
101-6115954-5
101-6119379-1
101-6127048-2
101-6150035-9
101-6148556-9
101-6172630-1
101-6172406-6
101-6186497-9
101-4208407-7
101-6035939-3

                  CHAPTER 2--MISCELLANEOUS PROVISIONS

SEC. 1631. VESSEL REPAIR DUTIES.

    (a) Exemption.--Section 466(h) of the Tariff Act of 1930 (19 U.S.C. 
1466(h)) is amended by striking paragraph (4) and inserting the 
following:
            ``(4) the cost of equipment, repair parts, and materials 
        that are installed on a vessel documented under the laws of the 
        United States and engaged in the foreign or coasting trade, if 
        the installation is done by members of the regular crew of such 
        vessel while the vessel is on the high seas, in foreign waters, 
        or in a foreign port, and does not involve foreign shipyard 
        repairs by foreign labor.''.
    (b) Amendment to HTS.--The U.S. Notes to subchapter XVIII of 
chapter 98 of the Harmonized Tariff Schedule of the United States are 
amended by amending U.S. Note 2 to read as follows:
    ``2. Notwithstanding the provisions of subheadings 9818.00.03 
through 9818.00.07, no duty shall apply to the cost of equipment, 
repair parts, and materials that are installed in a vessel documented 
under the laws of the United States and engaged in the foreign or 
coasting trade, if the installation is done by members of the regular 
crew of such vessel while the vessel is on the high seas, in foreign 
waters, or in a foreign port and does not involve foreign shipyard 
repairs by foreign labor. Declaration and entry shall not be required 
with respect to such installation, equipment, parts, and materials.''.
    (c) Effective Date.--The amendments made by this section apply to 
vessel equipment, repair parts, and materials installed on or after 
April 25, 2001.

SEC. 1632. SUSPENSION OF NEW SHIPPER REVIEW PROVISION.

    (a) Suspension of the Availability of Bonds to New Shippers.--
Clause (iii) of section 751(a)(2)(B) of the Tariff Act of 1930 (19 
U.S.C. 1675(a)(2)(B)(iii)) shall not be effective during the period 
beginning on April 1, 2006, and ending on June 30, 2009.
    (b) Report on the Impact of the Suspension.--Not later than 
December 31, 2008, the Secretary of the Treasury, in consultation with 
the Secretary of Commerce, the United States Trade Representative, and 
the Secretary of Homeland Security, shall submit to the Committee on 
Ways and Means of the House of Representatives and the Committee on 
Finance of the Senate a report containing--
            (1) recommendations on whether the suspension of section 
        751(a)(2)(B)(iii) of the Tariff Act of 1930 should be extended 
        beyond the date provided in subsection (a); and
            (2) an assessment of the effectiveness of any 
        administrative measure that was implemented to address the 
        difficulties that necessitated the suspension under subsection 
        (a), including--
                    (A) any problem in the collection of antidumping 
                duties on imports from new shippers; and
                    (B) any burden imposed on legitimate trade and 
                commerce by the suspension of bonds to new shippers.
    (c) Report on Collection Problems and Analysis of Proposed 
Solutions.--
            (1) Report.--Not later than 180 days after the date of the 
        enactment of this Act, the Secretary of the Treasury, in 
        consultation with the Secretary of Homeland Security and the 
        Secretary of Commerce, shall submit to the Committee on Ways 
        and Means of the House of Representatives and the Committee on 
        Finance of the Senate a report describing--
                    (A) any major problem experienced in the collection 
                of duties during the 4 most recent fiscal years for 
                which data are available, including any fraudulent 
                activity intended to avoid payment of duties; and
                    (B) an estimate of the total amount of duties that 
                were uncollected during the most recent fiscal year for 
                which data are available, including, with respect to 
                each product, a description of why the duties were 
                uncollected.
            (2) Recommendations.--The report shall include--
                    (A) recommendations on any additional action needed 
                to address problems related to the collection of 
                duties; and
                    (B) for each recommendation--
                            (i) an analysis of how the recommendation 
                        would address the specific problem; and
                            (ii) an assessment of the impact that 
                        implementing the recommendation would have on 
                        international trade and commerce (including any 
                        additional costs imposed on United States 
                        businesses).

SEC. 1633. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON WOOL 
              PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY REFUNDS.

    (a) Extension of Temporary Duty Reductions.--Each of the following 
headings of the Harmonized Tariff Schedule of the United States is 
amended by striking the date in the effective period column and 
inserting ``12/31/2009'':
            (1) Heading 9902.51.11 (relating to fabrics of worsted 
        wool).
            (2) Heading 9902.51.13 (relating to yarn of combed wool).
            (3) Heading 9902.51.14 (relating to wool fiber, waste, 
        garnetted stock, combed wool, or wool top).
            (4) Heading 9902.51.15 (relating to fabrics of combed 
        wool).
            (5) Heading 9902.51.16 (relating to fabrics of combed 
        wool).
    (b) Extension of Duty Refunds and Wool Research Trust Fund.--
            (1) In general.--Section 4002(c) of the Wool Suit and 
        Textile Trade Extension Act of 2004 (Public Law 108-429; 118 
        Stat. 2603 (7 U.S.C. 7101 note)) is amended--
                    (A) in paragraph (3)--
                            (i) by striking ``2 additional payments'' 
                        and inserting ``annual additional payments''; 
                        and
                            (ii) by adding at the end the following:
                    ``(C) Each subsequent annual payment to be made 
                after January 1 of each subsequent year, but on or 
                before April 15 of such year through calendar year 
                2010.''; and
                    (B) in paragraph (6)--
                            (i) in subparagraph (A), by striking 
                        ``through 2007'' and inserting ``through 
                        2009''; and
                            (ii) by adding at the end the following:
                    ``(C) Eligible manufacturers.--Only manufacturers 
                who weave worsted wool fabric in the United States 
                shall be eligible for a grant under this paragraph.''.
            (2) Sunset.--Section 506(f) of the Trade and Development 
        Act of 2000 (Public 106-200; 114 Stat. 303), as amended by 
        section 4002(c)(5) of the Wool Suit and Textile Trade Extension 
        Act of 2004 (Public 108-429; 118 Stat. 2603), is amended by 
        striking ``2008'' and inserting ``2010''.

SEC. 1634. AUTHORITIES RELATING TO DR-CAFTA AGREEMENT.

    (a) Authority to Implement Certain Amendments to DR-CAFTA Agreement 
With Nicaragua, El Salvador, Honduras, and Guatemala.--
            (1) Proclamation authority.--The President is authorized to 
        proclaim modifications to the Harmonized Tariff Schedule of the 
        United States as necessary to carry out amendments proposed by 
        the United States and the CAFTA-DR countries to the Agreement, 
        the terms of which are contained in the letters of 
        understanding described in paragraph (2).
            (2) Letters of understanding.--The letters of understanding 
        referred to in paragraph (1) are the following:
                    (A) The letter of March 24, 2006, from Nicaraguan 
                Vice Minister of Trade Julio Teran to United States 
                Special Textile Negotiator Scott Quesenberry.
                    (B) The letter of March 27, 2006, from United 
                States Special Textile Negotiator Scott Quesenberry to 
                Nicaraguan Vice Minister of Trade Julio Teran.
                    (C) The letter of January 27, 2006, from El 
                Salvadoran Vice Minister of Economy Eduardo Ayala to 
                United States Special Textile Negotiator Scott 
                Quesenberry.
                    (D) The letter of January 27, 2006, from United 
                States Special Textile Negotiator Scott Quesenberry to 
                El Salvadoran Vice Minister of Economy Eduardo Ayala.
                    (E) The letter of March 7, 2006, from Honduran Vice 
                Minister of Foreign Trade Jorge Rosa to United States 
                Special Textile Negotiator Scott Quesenberry.
                    (F) The letter of March 7, 2006, from United States 
                Special Textile Negotiator Scott Quesenberry to 
                Honduran Vice Minister of Foreign Trade Jorge Rosa.
                    (G) The letter of June 23, 2006, from Guatemalan 
                Minister of Economy Marcio Cuevas Quezada to United 
                States Special Textile Negotiator Scott Quesenberry.
                    (H) The letter of June 23, 2006, from United States 
                Special Textile Negotiator Scott Quesenberry to 
                Guatemalan Minister of Economy Marcio Cuevas Quezada.
            (3) Sunset.--The authority of the President to proclaim 
        modifications pursuant to paragraph (1) expires on December 31, 
        2007.
    (b) Authority to Implement Certain Amendments to DR-CAFTA Agreement 
With Costa Rica and the Dominican Republic.--
            (1) Proclamation authority.--The President is authorized to 
        proclaim modifications to the Harmonized Tariff Schedule of the 
        United States as necessary to carry out amendments proposed by 
        the United States, Costa Rica, and the Dominican Republic to 
        the Agreement, the terms of which are contained in the letters 
        of understanding described in paragraph (2).
            (2) Letters of understanding.--
                    (A) In general.--The letters of understanding 
                referred to in paragraph (1) are letters of 
                understanding exchanged between the countries described 
                in paragraph (1) relating to the rules of origin for 
                articles containing pocket bag fabric described in 
                subparagraph (B).
                    (B) Pocket bag fabric described.--For purposes of 
                subparagraph (A), the term ``pocket bag fabric'' means 
                pocket bag fabric used in an apparel article 
                classifiable under chapter 61 or 62 of the Harmonized 
                Tariff Schedule of the United States that contains a 
                pocket or pockets.
            (3) Consultation and layover requirements.--Any 
        modification proclaimed by the President pursuant to paragraph 
        (1) shall be subject to the consultation and layover provisions 
        of section 104 of the Dominican Republic-Central America-United 
        States Free Trade Agreement Implementation Act (Public Law 109-
        53; 19 U.S.C. 4014).
            (4) Congressional disapproval.--
                    (A) In general.--Any modification proclaimed by the 
                President pursuant to paragraph (1) shall not be 
                effective if a joint resolution described in 
                subparagraph (B) is enacted into law.
                    (B) Joint resolution described.--For purposes of 
                subparagraph (A), the term ``joint resolution'' means a 
                joint resolution of Congress, the sole matter after the 
                resolving clause of which is as follows: ``That the 
                Congress disapproves the modification proclaimed by the 
                President contained in the report submitted to the 
                Committee on Finance of the Senate and the Committee on 
                Ways and Means of the House of Representatives pursuant 
                to section 104(2) of the Dominican Republic-Central 
                America-United States Free Trade Agreement 
                Implementation Act (Public Law 109-53; 19 U.S.C. 
                4014(2)) on __________.'', with the blank space being 
                filled with the appropriate date.
            (5) Sunset.--The authority of the President to proclaim 
        modifications pursuant to paragraph (1) expires on December 31, 
        2007.
    (c) Authority Relating to Nicaraguan Tariff Preference Level Under 
DR-CAFTA Agreement.--
            (1) Certificate of eligibility.--The Commissioner of 
        Customs may require an importer to submit at the time the 
        importer files a claim for preferential tariff treatment under 
        Annex 3.28 of the Agreement a certificate of eligibility, 
        properly completed and signed, or transmitted pursuant to an 
        authorized electronic data interchange system, by an authorized 
        official of the Government of Nicaragua for purposes of 
        implementing the tariff preference level for Nicaragua provided 
        in Annex 3.28 of the Agreement.
            (2) Enforcement of commitments.--The President is 
        authorized to proclaim a reduction in the overall limit in the 
        tariff preference level for Nicaragua provided in Annex 3.28 of 
        the Agreement if the President determines that Nicaragua has 
        failed to comply with a commitment under an agreement between 
        the United States and Nicaragua with regard to the 
        administration of such tariff preference level.
            (3) Effective date.--Paragraph (1) applies with respect to 
        entries made on or after April 1, 2006.
    (d) Technical Correction Relating to Co-Production of Certain 
Textile and Apparel Goods.--Section 205(a)(2) of the Dominican 
Republic-Central America-United States Free Trade Agreement 
Implementation Act (19 U.S.C. 4034(a)(2)) is amended by inserting after 
``with respect to that country'' the following: ``or any other CAFTA-DR 
country''.
    (e) Reporting Requirements on Certain Negotiations and Amendments 
to DR-CAFTA Agreement.--
            (1) In general.--Not later than 30 days after the date of 
        the enactment of this Act, and at least quarterly thereafter, 
        the United States Trade Representative shall submit to the 
        appropriate congressional committees a report on the status of 
        negotiations and amendments proposed by the United States, 
        Nicaragua, El Salvador, Honduras, Guatemala, Costa Rica, and 
        the Dominican Republic to the Agreement regarding any change to 
        the rule of origin or alteration of the tariff treatment of 
        socks described in paragraph (2) or any technical correction 
        described in paragraph (3). In addition, the United States 
        Trade Representative shall provide to the appropriate 
        congressional committees copies of any amendments to be 
        proposed by the United States before the amendments are offered 
        and copies of any amendments received by the United States 
        relating to such negotiations.
            (2) Socks described.--For purposes of paragraph (1), the 
        term ``socks'' means articles classifiable under subheading 
        6111.20.6050, 6111.30.5050, 6111.90.5050, 6115.91.00, 
        6115.92.60, 6115.92.90, 6115.93.60, 6115.93.90, 6115.99.14, or 
        6115.99.18 of the Harmonized Tariff Schedule of the United 
        States.
            (3) Technical corrections described.--Technical corrections 
        referred to in paragraph (1) are the following:
                    (A) Clarification of references to ``elastomeric 
                yarns'' contained in the notes, subheading notes, 
                additional U.S. notes, and statistical notes to 
                chapters 50 to 63 (section XI) of the Harmonized Tariff 
                Schedule of the United States.
                    (B) Clarification of the ability to apply short 
                supply provisions to sewing thread, narrow elastics, 
                and visible linings.
                    (C) Treatment of women's and girls' woven sleep 
                bottoms under Annex 4.1 of the Agreement.
                    (D) Addition of a rule of origin for women's and 
                girls' woven sleep bottoms to reflect the rule of 
                origin provided for in subheading 6207.11.00 of the 
                Harmonized Tariff Schedule of the United States and 
                contained in Annex 4.1 of the Agreement.
                    (E) Provision of women's and girls sleep bottoms 
                under Annex 4.1-A of the Agreement.
            (4) Definition.--In this subsection, the term ``appropriate 
        congressional committees'' means the Committee on Ways and 
        Means of the House of Representatives and the Committee on 
        Finance of the Senate
            (5) Sunset.--The requirements of paragraph (1) expire on 
        the date on which any change is made to the rule of origin 
        pursuant to article 3.25 of the Agreement for any good 
        described in paragraph (2), or December 31, 2007, whichever 
        occurs later.
    (f) Definitions.--In this section:
            (1) Agreement.--The term ``Agreement'' has the meaning 
        given the term in section 3(1) of the Dominican Republic-
        Central America-United States Free Trade Agreement 
        Implementation Act (Public Law 109-53; 19 U.S.C. 4002(1)).
            (2) CAFTA-dr country.--The term ``CAFTA-DR country'' has 
        the meaning given the term in section 3(2) of the Dominican 
        Republic-Central America-United States Free Trade Agreement 
        Implementation Act (Public Law 109-53; 19 U.S.C. 4002(2)).

SEC. 1635. TECHNICAL AMENDMENTS TO CUSTOMS MODERNIZATION.

    (a) Entry of Merchandise.--Section 484(a) of the Tariff Act of 1930 
(19 U.S.C. 1484(a)) is amended--
            (1) in paragraph (1), by amending subparagraph (A) to read 
        as follows:
                    ``(A) make entry therefor by filing with the Bureau 
                of Customs and Border Protection such documentation or, 
                pursuant to an authorized electronic data interchange 
                system, such information as is necessary to enable the 
                Bureau of Customs and Border Protection to determine 
                whether the merchandise may be released from custody of 
                the Bureau of Customs and Border Protection;''; and
            (2) in paragraph (2)(A), in the second sentence, by 
        inserting after ``covering'' the following: ``merchandise 
        released under a special delivery permit pursuant to section 
        448(b) and''.
    (b) Refunds and Errors.--Section 520(a) of the Tariff Act of 1930 
(19 U.S.C. 1520(a)) is amended--
            (1) in paragraph (1), by striking the semicolon at the end 
        and inserting a period;
            (2) in paragraph (2), by striking ``; and'' at the end and 
        inserting a period; and
            (3) in paragraph (4)--
                    (A) by inserting ``an importer of record declares 
                or'' before ``it is ascertained''; and
                    (B) by striking ``by reason of clerical error''.
    (c) Entry From Warehouse.--Section 557(a) of the Tariff Act of 1930 
(19 U.S.C. 1557(a)) is amended--
            (1) in paragraph (1)--
                    (A) in the second sentence, by inserting after 
                ``the date of importation'' the following: ``, or such 
                longer period of time as the Bureau of Customs and 
                Border Protection may at its discretion permit upon 
                proper request being filed and good cause shown''; and
                    (B) in subparagraph (A), by inserting after ``the 
                date of importation'' the following: ``or such longer 
                period of time as the Bureau of Customs and Border 
                Protection may at its discretion permit upon proper 
                request being filed and good cause shown''; and
            (2) in paragraph (2), by inserting after ``the date of 
        importation'' the following: ``, or such longer period of time 
        as the Bureau of Customs and Border Protection may at its 
        discretion permit upon proper request being filed and good 
        cause shown,''.
    (d) Abandoned Goods.--Section 559 of the Tariff Act of 1930 (19 
U.S.C. 1559) is amended by inserting after ``the date of importation'' 
each place it appears the following: ``, or such longer period of time 
as the Bureau of Customs and Border Protection may at its discretion 
permit upon proper request being filed and good cause shown''.
    (e) Manipulation in Warehouse.--Section 562 of the Tariff Act of 
1930 (19 U.S.C. 1562) is amended--
            (1) by amending the first sentence to read as follows: 
        ``Merchandise shall only be withdrawn from a bonded warehouse 
        in such quantity and in such condition as the Secretary of the 
        Treasury shall by regulation prescribe.''; and
            (2) in the second sentence, by striking ``All merchandise 
        so withdrawn'' and all that follows through ``except that upon 
        permission therefor'' and inserting ``Upon permission''.
    (f) Other Technical Amendments.--(1) Section 629(e) of the Tariff 
Act of 1930 (19 U.S.C. 1629(e)) is amended by striking ``insuring'' and 
inserting ``ensuring''.
    (2) Section 135(f)(2)(B) of the Trade Act of 1974, as amended by 
section 2004(i)(1) of the Miscellaneous Trade and Technical Corrections 
Act of 2004, is amended by striking ``their establishment'' and insert 
``its establishment''.
    (3) Section 245(a) of the Trade Act of 1974 (19 U.S.C. 2317(a)) is 
amended by striking ``, other than subchapter D''.
    (4) Section 291(2) of the Trade Act of 1974 (19 U.S.C. 2401(2)) is 
amended--
            (A) by striking ``1001(5)'' and inserting ``1001(e)''; and
            (B) by striking ``1308(5)'' and inserting ``1308(e)''.
    (5) Section 13031(e)(6)(C)(i) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (19 U.S.C. 58c(e)(6)(C)(i)) is amended by 
striking ``commonly know'' and inserting ``commonly known''.
    (6) Section 2107(a)(4) of the Bipartisan Trade Promotion Authority 
Act of 2002 (19 U.S.C. 3807(a)(4)) is amended--
            (A) by striking ``paragraph (2)(A)'' and inserting 
        ``paragraphs (2)(A)''; and
            (B) by striking ``paragraph (2)(B)'' and inserting 
        ``paragraphs (2)(B)''.
    (7) Section 514(c)(3) of the Tariff Act of 1930 (19 U.S.C. 
1514(c)(3)) is amended by moving the last 2 sentences 2 ems to the left 
as flush left text.

                       Subtitle C--Effective Date

SEC. 1641. EFFECTIVE DATE.

    Except as otherwise provided in this title, the amendments made by 
this title shall apply with respect to goods entered, or withdrawn from 
warehouse for consumption, on or after the 15th day after the date of 
the enactment of this Act.
                                 <all>`