I 

113TH CONGRESS 

2D SESSION H. R. 4275 

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

Internal Revenue Code of 1986 to provide for cooperative and small 

employer charity pension plans. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 18, 2014 

Mrs. BROOKS of Indiana (for herself and Mr. KIND) introduced the following 

bill; which was referred to the Committee on Education and the Workforce, and in addition to the Committee on Ways and Means, for a period 

to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

A BILL 

To amend the Employee Retirement Income Security Act 

of 1974 and the Internal Revenue Code of 1986 to 

provide for cooperative and small employer charity pension plans. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

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


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

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Congressional findings and declarations of policy. 

Sec. 3. Effective date. 

TITLE I—AMENDMENTS TO EMPLOYEE RETIREMENT INCOME 

SECURITY ACT OF 1974 AND OTHER PROVISIONS 

Sec. 101. Definition of cooperative and small employer charity pension plans. 

Sec. 102. Funding rules applicable to cooperative and small employer charity 

pension plans. 

Sec. 103. Elections. 

Sec. 104. Transparency. 

Sec. 105. Sponsor education and assistance. 

TITLE II—AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 

Sec. 201. Definition of cooperative and small employer charity pension plans. 

Sec. 202. Funding rules applicable to cooperative and small employer charity 

pension plans. 

Sec. 203. Election not to be treated as a CSEC plan. 

3 SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATIONS OF 

4 POLICY. 

5 Congress finds as follows: 

6 (1) Defined benefit pension plans are a cost-ef7 fective way for cooperative associations and charities 

8 to provide their employees with economic security in 

9 retirement. 

10 (2) Many cooperative associations and chari11 table organizations are only able to provide their em12 ployees with defined benefit pension plans because 

13 those organizations are able to pool their resources 

14 using the multiple employer plan structure. 


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1 (3) The pension funding rules should encourage 

2 cooperative associations and charities to continue to 

3 provide their employees with pension benefits. 

4 SEC. 3. EFFECTIVE DATE. 

5 Unless otherwise specified in this Act, the provisions 

6 of this Act shall apply to years beginning after December 

7 31, 2013. 

8 TITLE I—AMENDMENTS TO EM9 PLOYEE RETIREMENT IN10 COME SECURITY ACT OF 1974 

11 AND OTHER PROVISIONS 

12 SEC. 101. DEFINITION OF COOPERATIVE AND SMALL EM13 PLOYER CHARITY PENSION PLANS. 

14 Section 210 of the Employee Retirement Income Se15 curity Act of 1974 (29 U.S.C. 1060) is amended by adding 

16 at the end the following new subsection: 

17 ‘‘(f) COOPERATIVE AND SMALL EMPLOYER CHARITY

18 PENSION PLANS.— 

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

20 except as provided in this subsection, a CSEC plan 

21 is an employee pension benefit plan (other than a 

22 multiemployer plan) that is a defined benefit plan— 

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

24 Protection Act of 2006 applies, without regard 

25 to— 


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

2 ‘‘(ii) the amendments to such section 

3 104 by section 202(b) of the Preservation 

4 of Access to Care for Medicare Bene5 ficiaries and Pension Relief Act of 2010; 

6 and 

7 ‘‘(iii) paragraph (3)(B); or 

8 ‘‘(B) that, as of June 25, 2010, was main9 tained by more than one employer and all of the 

10 employers were organizations described in sec11 tion 501(c)(3) of the Internal Revenue Code of 

12 1986. 

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

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

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

16 1986 shall be treated as a single employer for pur17 poses of determining if a plan was maintained by 

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

19 SEC. 102. FUNDING RULES APPLICABLE TO COOPERATIVE 

20 AND SMALL EMPLOYER CHARITY PENSION 

21 PLANS. 

22 (a) IN GENERAL.—Part 3 of title I of the Employee 

23 Retirement Income Security Act of 1974 (29 U.S.C. 1081 

24 et seq.) is amended by adding at the end the following 

25 new section: 


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1 ‘‘SEC. 306. MINIMUM FUNDING STANDARDS. 

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

3 the term ‘accumulated funding deficiency’ for a CSEC 

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

5 standard account for all plan years (beginning with the 

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

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

8 of the total charges to the alternative minimum funding 

9 standard account for such plan years over the total credits 

10 to such account for such years. 

11 ‘‘(b) FUNDING STANDARD ACCOUNT.— 

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

13 this section applies shall establish and maintain a 

14 funding standard account. Such account shall be 

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

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

18 the funding standard account shall be charged with 

19 the sum of— 

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

21 plan year, 

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

23 equal annual installments (until fully amor24 tized)— 

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

26 on January 1, 1974, the unfunded past 


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1 service liability under the plan on the first 

2 day of the first plan year to which section 

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

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

5 into existence after January 1, 1974, but 

6 before the first day of the first plan year 

7 beginning after December 31, 2013, the 

8 unfunded past service liability under the 

9 plan on the first day of the first plan year 

10 to which section 302 applies, over a period 

11 of 30 plan years, 

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

13 plan year, the net increase (if any) in un14 funded past service liability under the plan 

15 arising from plan amendments adopted in 

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

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

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

19 under the plan, over a period of 5 plan 

20 years, and 

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

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

23 from changes in actuarial assumptions 

24 used under the plan, over a period of 10 

25 plan years, 


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1 ‘‘(C) the amount necessary to amortize 

2 each waived funding deficiency (within the 

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

4 plan year in equal annual installments (until 

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

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

7 equal annual installments (until fully amor8 tized) over a period of 5 plan years any amount 

9 credited to the funding standard account under 

10 paragraph (3)(D), and 

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

12 equal annual installments (until fully amor13 tized) over a period of 20 years the contribu14 tions which would be required to be made under 

15 the plan but for the provisions of section 

16 302(c)(7)(A)(i)(I) (as in effect on the day be17 fore the enactment of the Pension Protection 

18 Act of 2006). 

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

20 the funding standard account shall be credited with 

21 the sum of— 

22 ‘‘(A) the amount considered contributed by 

23 the employer to or under the plan for the plan 

24 year, 


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

2 equal annual installments (until fully amor3 tized)— 

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

5 plan year, the net decrease (if any) in un6 funded past service liability under the plan 

7 arising from plan amendments adopted in 

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

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

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

11 under the plan, over a period of 5 plan 

12 years, and 

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

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

15 from changes in actuarial assumptions 

16 used under the plan, over a period of 10 

17 plan years, 

18 ‘‘(C) the amount of the waived funding de19 ficiency (within the meaning of section 

20 302(c)(3)) for the plan year, and 

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

22 the accumulated funding deficiency is deter23 mined under the funding standard account if 

24 such plan year follows a plan year for which 

25 such deficiency was determined under the alterVerDate Mar 15 2010 22:20 Mar 21, 2014 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4275.IH H4275

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1 native minimum funding standard, the excess 

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

3 standard account (determined without regard to 

4 this subparagraph) over any debit balance in 

5 the alternative minimum funding standard ac6 count. 

7 ‘‘(4) COMBINING AND OFFSETTING AMOUNTS

8 TO BE AMORTIZED.—Under regulations prescribed 

9 by the Secretary of the Treasury, amounts required 

10 to be amortized under paragraph (2) or paragraph 

11 (3), as the case may be— 

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

13 under such paragraph to be amortized over a 

14 period determined on the basis of the remaining 

15 amortization period for all items entering into 

16 such combined amount, and 

17 ‘‘(B) may be offset against amounts re18 quired to be amortized under the other such 

19 paragraph, with the resulting amount to be am20 ortized over a period determined on the basis of 

21 the remaining amortization periods for all items 

22 entering into whichever of the two amounts 

23 being offset is the greater. 

24 ‘‘(5) INTEREST.— 


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

2 subparagraph (B), the funding standard ac3 count (and items therein) shall be charged or 

4 credited (as determined under regulations pre5 scribed by the Secretary of the Treasury) with 

6 interest at the appropriate rate consistent with 

7 the rate or rates of interest used under the plan 

8 to determine costs. 

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

10 for purposes of computing the amortization 

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

12 purposes of any arrangement under subsection 

13 (d) for any plan year shall be the greater of— 

14 ‘‘(i) 150 percent of the Federal mid15 term rate (as in effect under section 1274 

16 of the Internal Revenue Code of 1986 for 

17 the 1st month of such plan year), or 

18 ‘‘(ii) the rate of interest determined 

19 under subparagraph (A). 

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

21 Amortization schedules for amounts described in 

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

23 last day of the last plan year beginning before Janu24 ary 1, 2014, by reason of section 104 of the Pension 

25 Protection Act of 2006 shall remain in effect pursuVerDate Mar 15 2010 22:20 Mar 21, 2014 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4275.IH H4275

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1 ant to their terms and this section, except that such 

2 amounts shall not be amortized again under this sec3 tion. 

4 ‘‘(c) SPECIAL RULES.— 

5 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

6 FUNDING METHOD.—For purposes of this section, 

7 normal costs, accrued liability, past service liabilities, 

8 and experience gains and losses shall be determined 

9 under the funding method used to determine costs 

10 under the plan. 

11 ‘‘(2) VALUATION OF ASSETS.— 

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

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

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

17 under regulations prescribed by the Secretary of 

18 the Treasury. 

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

20 Secretary of the Treasury may by regulations 

21 provide that the value of any dedicated bond 

22 portfolio of a plan shall be determined by using 

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

24 effect on the day before the enactment of the 

25 Pension Protection Act of 2006). 


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

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

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

7 into account the experience of the plan and rea8 sonable expectations), and 

9 ‘‘(B) which, in combination, offer the actu10 ary’s best estimate of anticipated experience 

11 under the plan. 

12 ‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX13 PERIENCE GAIN OR LOSS.—For purposes of this sec14 tion, if— 

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

16 Security Act or in other retirement benefits cre17 ated under Federal or State law, or 

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

19 ‘wages’ under section 3121 of the Internal Rev20 enue Code of 1986 or a change in the amount 

21 of such wages taken into account under regula22 tions prescribed for purposes of section 

23 401(a)(5) of such Code, 


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1 results in an increase or decrease in accrued liability 

2 under a plan, such increase or decrease shall be 

3 treated as an experience loss or gain. 

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

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

6 funding methods available to CSEC plans under 

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

8 enactment of the Pension Protection Act of 

9 2006) shall continue to be available under this 

10 section. 

11 ‘‘(B) CHANGES.—If the funding method 

12 for a plan is changed, the new funding method 

13 shall become the funding method used to deter14 mine costs and liabilities under the plan only if 

15 the change is approved by the Secretary of the 

16 Treasury. If the plan year for a plan is 

17 changed, the new plan year shall become the 

18 plan year for the plan only if the change is ap19 proved by the Secretary of the Treasury. 

20 ‘‘(C) APPROVAL REQUIRED FOR CERTAIN

21 CHANGES IN ASSUMPTIONS BY CERTAIN SIN22 GLE-EMPLOYER PLANS SUBJECT TO ADDI23 TIONAL FUNDING REQUIREMENT.— 

24 ‘‘(i) IN GENERAL.—No actuarial as25 sumption (other than the assumptions deVerDate Mar 15 2010 22:20 Mar 21, 2014 Jkt 039200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\H4275.IH H4275

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1 scribed in subsection (h)(3)) used to deter2 mine the current liability for a plan to 

3 which this subparagraph applies may be 

4 changed without the approval of the Sec5 retary of the Treasury. 

6 ‘‘(ii) PLANS TO WHICH SUBPARA7 GRAPH APPLIES.—This subparagraph shall 

8 apply to a plan only if— 

9 ‘‘(I) the plan is a CSEC plan, 

10 ‘‘(II) the aggregate unfunded 

11 vested benefits as of the close of the 

12 preceding plan year (as determined 

13 under section 4006(a)(3)(E)(iii)) of 

14 such plan and all other plans main15 tained by the contributing sponsors 

16 (as defined in section 4001(a)(13)) 

17 and members of such sponsors’ con18 trolled groups (as defined in section 

19 4001(a)(14)) which are covered by 

20 title IV (disregarding plans with no 

21 unfunded vested benefits) exceed 

22 $50,000,000, and 

23 ‘‘(III) the change in assumptions 

24 (determined after taking into account 

25 any changes in interest rate and morVerDate Mar 15 2010 22:20 Mar 21, 2014 Jkt 039200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\H4275.IH H4275

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1 tality table) results in a decrease in 

2 the funding shortfall of the plan for 

3 the current plan year that exceeds 

4 $50,000,000, or that exceeds 

5 $5,000,000 and that is 5 percent or 

6 more of the current liability of the 

7 plan before such change. 

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

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

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

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

15 credited with the amount of such excess, and 

16 ‘‘(B) all amounts described in paragraphs 

17 (2)(B), (C), and (D) and (3)(B) of subsection 

18 (b) which are required to be amortized shall be 

19 considered fully amortized for purposes of such 

20 paragraphs. 

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

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


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

3 under the funding method used for the plan), 

4 over 

5 ‘‘(B) the lesser of— 

6 ‘‘(i) the fair market value of the 

7 plan’s assets, or 

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

10 ‘‘(C) MINIMUM AMOUNT.— 

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

12 the full-funding limitation determined 

13 under subparagraph (A) be less than the 

14 excess (if any) of— 

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

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

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

20 benefits accruing during the plan 

21 year), over 

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

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

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


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1 credit balance in the funding standard ac2 count. 

3 ‘‘(8) ANNUAL VALUATION.— 

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

5 section, a determination of experience gains and 

6 losses and a valuation of the plan’s liability 

7 shall be made not less frequently than once 

8 every year, except that such determination shall 

9 be made more frequently to the extent required 

10 in particular cases under regulations prescribed 

11 by the Secretary of the Treasury. 

12 ‘‘(B) VALUATION DATE.— 

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

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

16 a date within the plan year to which the 

17 valuation refers or within one month prior 

18 to the beginning of such year. 

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

22 within the plan year prior to the year to 

23 which the valuation refers if, as of such 

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


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

3 ‘‘(iii) ADJUSTMENTS.—Information 

4 under clause (ii) shall, in accordance with 

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

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

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

10 unless as of the valuation date within the 

11 prior plan year, the value of the assets of 

12 the plan are not less than 125 percent of 

13 the plan’s current liability. 

14 ‘‘(9) TIME WHEN CERTAIN CONTRIBUTIONS

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

16 contributions for a plan year made by an employer 

17 during the period— 

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

19 day of such plan year, and 

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

21 months after the close of the plan year, 

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

23 ‘‘(10) ANTICIPATION OF BENEFIT INCREASES

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


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1 bargained CSEC plan described in section 413(a) of 

2 the Internal Revenue Code of 1986 shall anticipate 

3 benefit increases scheduled to take effect during the 

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

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

7 period of years required to amortize any unfunded liability 

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

9 plan may be extended by the Secretary of the Treasury 

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

11 Secretary determines that such extension would carry out 

12 the purposes of this Act and provide adequate protection 

13 for participants under the plan and their beneficiaries, and 

14 if such Secretary determines that the failure to permit 

15 such extension would result in— 

16 ‘‘(1) a substantial risk to the voluntary continu17 ation of the plan, or 

18 ‘‘(2) a substantial curtailment of pension ben19 efit levels or employee compensation. 

20 ‘‘(e) ALTERNATIVE MINIMUM FUNDING STAND21 ARD.— 

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

23 funding method that requires contributions in all 

24 years not less than those required under the entry 

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1 native minimum funding standard account for any 

2 plan year. Such account shall be credited and 

3 charged solely as provided in this subsection. 

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

5 For a plan year the alternative minimum funding 

6 standard account shall be— 

7 ‘‘(A) charged with the sum of— 

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

9 the funding method used under the plan or 

10 normal cost determined under the unit 

11 credit method, 

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

13 value of accrued benefits under the plan 

14 over the fair market value of the assets, 

15 and 

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

17 (if any) of credits to the alternative min18 imum standard account for all prior plan 

19 years over charges to such account for all 

20 such years, and 

21 ‘‘(B) credited with the amount considered 

22 contributed by the employer to or under the 

23 plan for the plan year. 

24 ‘‘(3) INTEREST.—The alternative minimum 

25 funding standard account (and items therein) shall 


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1 be charged or credited with interest in the manner 

2 provided under subsection (b)(5) with respect to the 

3 funding standard account. 

4 ‘‘(f) QUARTERLY CONTRIBUTIONS REQUIRED.— 

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

6 a funded current liability percentage for the pre7 ceding plan year of less than 100 percent fails to 

8 pay the full amount of a required installment for the 

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

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

11 with respect to the amount of the underpayment for 

12 the period of the underpayment shall be equal to the 

13 greater of— 

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

15 rate (as in effect under section 1274 of the In16 ternal Revenue Code of 1986 for the 1st month 

17 of such plan year), or 

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

19 plan in determining costs. 

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

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

22 ‘‘(A) AMOUNT.—The amount of the under23 payment shall be the excess of— 

24 ‘‘(i) the required installment, over 


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1 ‘‘(ii) the amount (if any) of the in2 stallment contributed to or under the plan 

3 on or before the due date for the install4 ment. 

5 ‘‘(B) PERIOD OF UNDERPAYMENT.—The 

6 period for which interest is charged under this 

7 subsection with regard to any portion of the un8 derpayment shall run from the due date for the 

9 installment to the date on which such portion is 

10 contributed to or under the plan (determined 

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

12 ‘‘(C) ORDER OF CREDITING CONTRIBU13 TIONS.—For purposes of subparagraph (A)(ii), 

14 contributions shall be credited against unpaid 

15 required installments in the order in which such 

16 installments are required to be paid. 

17 ‘‘(3) NUMBER OF REQUIRED INSTALLMENTS; 

18 DUE DATES.—For purposes of this subsection— 

19 ‘‘(A) PAYABLE IN 4 INSTALLMENTS.— 

20 There shall be 4 required installments for each 

21 plan year. 

22 ‘‘(B) TIME FOR PAYMENT OF INSTALL23 MENTS.— 

‘‘In the case of the following 

required installments: The due date is: 

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


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‘‘In the case of the following 

required installments: The due date is: 

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

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

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

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

2 For purposes of this subsection— 

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

4 required installment shall be 25 percent of the 

5 required annual payment. 

6 ‘‘(B) REQUIRED ANNUAL PAYMENT.—For 

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

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

11 plan by the employer for the plan year 

12 under section 302 (without regard to any 

13 waiver under subsection (c) thereof), or 

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

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

17 year was not a year of 12 months. 

18 ‘‘(5) LIQUIDITY REQUIREMENT.— 

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

20 paragraph applies shall be treated as failing to 

21 pay the full amount of any required installment 

22 to the extent that the value of the liquid assets 


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1 paid in such installment is less than the liquid2 ity shortfall (whether or not such liquidity 

3 shortfall exceeds the amount of such install4 ment required to be paid but for this para5 graph). 

6 ‘‘(B) PLANS TO WHICH PARAGRAPH AP7 PLIES.—This paragraph shall apply to a CSEC 

8 plan other than a plan described in section 

9 302(d)(6)(A) (as in effect on the day before the 

10 enactment of the Pension Protection Act of 

11 2006) which— 

12 ‘‘(i) is required to pay installments 

13 under this subsection for a plan year, and 

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

15 quarter during such plan year. 

16 ‘‘(C) PERIOD OF UNDERPAYMENT.—For 

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

18 installment that is treated as not paid under 

19 subparagraph (A) shall continue to be treated 

20 as unpaid until the close of the quarter in 

21 which the due date for such installment occurs. 

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

23 amount of any required installment is increased 

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

25 shall such increase exceed the amount which, 


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1 when added to prior installments for the plan 

2 year, is necessary to increase the funded cur3 rent liability percentage (taking into account 

4 the expected increase in current liability due to 

5 benefits accruing during the plan year) to 100 

6 percent. 

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

8 paragraph— 

9 ‘‘(i) LIQUIDITY SHORTFALL.—The 

10 term ‘liquidity shortfall’ means, with re11 spect to any required installment, an 

12 amount equal to the excess (as of the last 

13 day of the quarter for which such install14 ment is made) of the base amount with re15 spect to such quarter over the value (as of 

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

17 ‘‘(ii) BASE AMOUNT.— 

18 ‘‘(I) IN GENERAL.—The term 

19 ‘base amount’ means, with respect to 

20 any quarter, an amount equal to 3 

21 times the sum of the adjusted dis22 bursements from the plan for the 12 

23 months ending on the last day of such 

24 quarter. 


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1 ‘‘(II) SPECIAL RULE.—If the 

2 amount determined under subclause 

3 (I) exceeds an amount equal to 2 

4 times the sum of the adjusted dis5 bursements from the plan for the 36 

6 months ending on the last day of the 

7 quarter and an enrolled actuary cer8 tifies to the satisfaction of the Sec9 retary of the Treasury that such ex10 cess is the result of nonrecurring cir11 cumstances, the base amount with re12 spect to such quarter shall be deter13 mined without regard to amounts re14 lated to those nonrecurring cir15 cumstances. 

16 ‘‘(iii) DISBURSEMENTS FROM THE

17 PLAN.—The term ‘disbursements from the 

18 plan’ means all disbursements from the 

19 trust, including purchases of annuities, 

20 payments of single sums and other bene21 fits, and administrative expenses. 

22 ‘‘(iv) ADJUSTED DISBURSEMENTS.— 

23 The term ‘adjusted disbursements’ means 

24 disbursements from the plan reduced by 

25 the product of— 


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1 ‘‘(I) the plan’s funded current li2 ability percentage for the plan year, 

3 and 

4 ‘‘(II) the sum of the purchases of 

5 annuities, payments of single sums, 

6 and such other disbursements as the 

7 Secretary of the Treasury shall pro8 vide in regulations. 

9 ‘‘(v) LIQUID ASSETS.—The term ‘liq10 uid assets’ means cash, marketable securi11 ties and such other assets as specified by 

12 the Secretary of the Treasury in regula13 tions. 

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

15 means, with respect to any required install16 ment, the 3-month period preceding the 

17 month in which the due date for such in18 stallment occurs. 

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

20 Treasury may prescribe such regulations as are 

21 necessary to carry out this paragraph. 

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

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

24 subsection to a plan year beginning on any date 

25 other than January 1, there shall be substituted 


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1 for the months specified in this subsection, the 

2 months which correspond thereto. 

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

4 shall be applied to plan years of less than 12 

5 months in accordance with regulations pre6 scribed by the Secretary of the Treasury. 

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

8 MAKE REQUIRED CONTRIBUTIONS.— 

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

10 which this section applies, if— 

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

12 installment under subsection (f) or any other 

13 payment required under this section before the 

14 due date for such installment or other payment, 

15 and 

16 ‘‘(B) the unpaid balance of such install17 ment or other payment (including interest), 

18 when added to the aggregate unpaid balance of 

19 all preceding such installments or other pay20 ments for which payment was not made before 

21 the due date (including interest), exceeds 

22 $1,000,000, 

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

24 amount determined under paragraph (3) upon all 

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1 sonal, belonging to such person and any other per2 son who is a member of the same controlled group 

3 of which such person is a member. 

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

5 This subsection shall apply to a CSEC plan for any 

6 plan year for which the funded current liability per7 centage of such plan is less than 100 percent. This 

8 subsection shall not apply to any plan to which sec9 tion 4021 does not apply (as such section is in effect 

10 on the date of the enactment of the Retirement Pro11 tection Act of 1994). 

12 ‘‘(3) AMOUNT OF LIEN.—For purposes of para13 graph (1), the amount of the lien shall be equal to 

14 the aggregate unpaid balance of required install15 ments and other payments required under this sec16 tion (including interest)— 

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

18 and 

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

20 made before the due date. 

21 ‘‘(4) NOTICE OF FAILURE; LIEN.— 

22 ‘‘(A) NOTICE OF FAILURE.—A person 

23 committing a failure described in paragraph (1) 

24 shall notify the Pension Benefit Guaranty Cor25 poration of such failure within 10 days of the 


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1 due date for the required installment or other 

2 payment. 

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

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

5 the required installment or other payment and 

6 shall continue until the last day of the first plan 

7 year in which the plan ceases to be described in 

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

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

11 the period referred to in the preceding sentence. 

12 ‘‘(C) CERTAIN RULES TO APPLY.—Any 

13 amount with respect to which a lien is imposed 

14 under paragraph (1) shall be treated as taxes 

15 due and owing the United States and rules 

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

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

18 a lien imposed by subsection (a) and the 

19 amount with respect to such lien. 

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

21 paragraph (1) may be perfected and enforced only 

22 by the Pension Benefit Guaranty Corporation, or at 

23 the direction of the Pension Benefit Guaranty Cor24 poration, by any contributing employer (or any 


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1 member of the controlled group of the contributing 

2 employer). 

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

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

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

9 payment other than a required installment, the 

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

12 ‘‘(B) CONTROLLED GROUP.—The term 

13 ‘controlled group’ means any group treated as 

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

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

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

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

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

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

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


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1 benefit shall not be taken into account until the 

2 event on which the benefit is contingent occurs. 

3 ‘‘(B) UNPREDICTABLE CONTINGENT

4 EVENT BENEFIT.—The term ‘unpredictable 

5 contingent event benefit’ means any benefit 

6 contingent on an event other than— 

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

8 or disability, or 

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

10 reliably predictable (as determined by the 

11 Secretary of the Treasury). 

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

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

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

18 ‘‘(B) MORTALITY TABLES.— 

19 ‘‘(i) SECRETARIAL AUTHORITY.—The 

20 Secretary of the Treasury may by regula21 tion prescribe mortality tables to be used 

22 in determining current liability under this 

23 subsection. Such tables shall be based upon 

24 the actual experience of pension plans and 

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1 scribing such tables, the Secretary of the 

2 Treasury shall take into account results of 

3 available independent studies of mortality 

4 of individuals covered by pension plans. 

5 ‘‘(ii) PERIODIC REVIEW.—The Sec6 retary of the Treasury shall periodically (at 

7 least every 5 years) review any tables in ef8 fect under this subsection and shall, to the 

9 extent the Secretary of the Treasury deter10 mines necessary, by regulation update the 

11 tables to reflect the actual experience of 

12 pension plans and projected trends in such 

13 experience. 

14 ‘‘(C) SEPARATE MORTALITY TABLES FOR

15 THE DISABLED.—Notwithstanding subpara16 graph (B)— 

17 ‘‘(i) IN GENERAL.—In the case of 

18 plan years beginning after December 31, 

19 1995, the Secretary of the Treasury shall 

20 establish mortality tables which may be 

21 used (in lieu of the tables under subpara22 graph (B)) to determine current liability 

23 under this subsection for individuals who 

24 are entitled to benefits under the plan on 

25 account of disability. The Secretary of the 


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1 Treasury shall establish separate tables for 

2 individuals whose disabilities occur in plan 

3 years beginning before January 1, 1995, 

4 and for individuals whose disabilities occur 

5 in plan years beginning on or after such 

6 date. 

7 ‘‘(ii) SPECIAL RULE FOR DISABILITIES

8 OCCURRING AFTER 1994.—In the case of 

9 disabilities occurring in plan years begin10 ning after December 31, 1994, the tables 

11 under clause (i) shall apply only with re12 spect to individuals described in such sub13 clause who are disabled within the meaning 

14 of title II of the Social Security Act and 

15 the regulations thereunder. 

16 ‘‘(4) CERTAIN SERVICE DISREGARDED.— 

17 ‘‘(A) IN GENERAL.—In the case of a par18 ticipant to whom this paragraph applies, only 

19 the applicable percentage of the years of service 

20 before such individual became a participant 

21 shall be taken into account in computing the 

22 current liability of the plan. 

23 ‘‘(B) APPLICABLE PERCENTAGE.—For 

24 purposes of this subparagraph, the applicable 

25 percentage shall be determined as follows: 


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‘‘If the years of participation 

are: 

The applicable percentage 

is: 

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

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

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

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

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

1 ‘‘(C) PARTICIPANTS TO WHOM PARAGRAPH

2 APPLIES.—This subparagraph shall apply to 

3 any participant who, at the time of becoming a 

4 participant— 

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

6 under any defined benefit plan (whether or 

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

9 group of which the employer is a member, 

10 ‘‘(ii) who first becomes a participant 

11 under the plan in a plan year beginning 

12 after December 31, 1987, and 

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

14 the minimum years of service necessary for 

15 eligibility to participate in the plan. 

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

17 not to have this subparagraph apply. Such an 

18 election, once made, may be revoked only with 

19 the consent of the Secretary of the Treasury. 

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

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

2 the percentage which— 

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

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

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

6 ‘‘(j) FUNDING RESTORATION STATUS.—Notwith7 standing any other provisions of this section— 

8 ‘‘(1) NORMAL COST PAYMENT.— 

9 ‘‘(A) IN GENERAL.—In the case of a 

10 CSEC plan that is in funding restoration status 

11 for a plan year, for purposes of section 302, the 

12 term ‘accumulated funding deficiency’ means, 

13 for such plan year, the greater of— 

14 ‘‘(i) the amount described in sub15 section (a), or 

16 ‘‘(ii) the excess of the normal cost of 

17 the plan for the plan year over the amount 

18 actually contributed to or under the plan 

19 for the plan year. 

20 ‘‘(B) NORMAL COST.—In the case of a 

21 CSEC plan that uses a spread gain funding 

22 method, for purposes of this subsection, the 

23 term ‘normal cost’ means normal cost as deter24 mined under the entry age normal funding 

25 method. 


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1 ‘‘(2) PLAN AMENDMENTS.—In the case of a 

2 CSEC plan that is in funding restoration status for 

3 a plan year, no amendment to such plan may take 

4 effect during such plan year if such amendment has 

5 the effect of increasing liabilities of the plan by 

6 means of increases in benefits, establishment of new 

7 benefits, changing the rate of benefit accrual, or 

8 changing the rate at which benefits become non9 forfeitable. This paragraph shall not apply to any 

10 plan amendment that is required to comply with any 

11 applicable law. This paragraph shall cease to apply 

12 with respect to any plan year, effective as of the 

13 first day of the plan year (or if later, the effective 

14 date of the amendment) upon payment by the plan 

15 sponsor of a contribution to the plan (in addition to 

16 any contribution required under this section without 

17 regard to this paragraph) in an amount equal to the 

18 increase in the funding liability of the plan attrib19 utable to the plan amendment. 

20 ‘‘(3) FUNDING RESTORATION PLAN.—The spon21 sor of a CSEC plan shall establish a written funding 

22 restoration plan within 180 days of the receipt by 

23 the plan sponsor of a certification from the plan ac24 tuary that the plan is in funding restoration status 

25 for a plan year. Such funding restoration plan shall 


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1 consist of actions that are calculated, based on rea2 sonably anticipated experience and reasonable actu3 arial assumptions, to increase the plan’s funded per4 centage to 100 percent over a period that is not 

5 longer than the greater of 7 years or the shortest 

6 amount of time practicable. Such funding restora7 tion plan shall take into account contributions re8 quired under this section (without regard to this 

9 paragraph). If a plan remains in funding restoration 

10 status for 2 or more years, such funding restoration 

11 plan shall be updated each year after the 1st such 

12 year within 180 days of receipt by the plan sponsor 

13 of a certification from the plan actuary that the plan 

14 remains in funding restoration status for the plan 

15 year. 

16 ‘‘(4) ANNUAL CERTIFICATION BY PLAN ACTU17 ARY.—Not later than the 90th day of each plan year 

18 of a CSEC plan, the plan actuary shall certify to the 

19 plan sponsor whether or not the plan is in funding 

20 restoration status for the plan year, based on the 

21 plan’s funded percentage as of the beginning of the 

22 plan year. For this purpose, the actuary may conclu23 sively rely on an estimate of— 

24 ‘‘(A) the plan’s funding liability, based on 

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1 ceding plan year and on reasonable actuarial es2 timates, assumptions, and methods, and 

3 ‘‘(B) the amount of any contributions rea4 sonably anticipated to be made for the pre5 ceding plan year. 

6 Contributions described in subparagraph (B) shall 

7 be taken into account in determining the plan’s 

8 funded percentage as of the beginning of the plan 

9 year. 

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

12 ‘‘(A) FUNDING RESTORATION STATUS.—A 

13 CSEC plan shall be treated as in funding res14 toration status for a plan year if the plan’s 

15 funded percentage as of the beginning of such 

16 plan year is less than 80 percent. 

17 ‘‘(B) FUNDED PERCENTAGE.—The term 

18 ‘funded percentage’ means the ratio (expressed 

19 as a percentage) which— 

20 ‘‘(i) the value of plan assets (as deter21 mined under subsection (c)(2)), bears to 

22 ‘‘(ii) the plan’s funding liability. 

23 ‘‘(C) FUNDING LIABILITY.—The term 

24 ‘funding liability’ for a plan year means the 

25 present value of all benefits accrued or earned 


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1 under the plan as of the beginning of the plan 

2 year, based on the assumptions used by the 

3 plan pursuant to this section, including the in4 terest rate described in subsection (b)(5)(A) 

5 (without regard to subsection (b)(5)(B)). 

6 ‘‘(D) SPREAD GAIN FUNDING METHOD.— 

7 The term ‘spread gain funding method’ has the 

8 meaning given such term under rules and forms 

9 issued by the Secretary of the Treasury.’’. 

10 (b) SEPARATE RULES FOR CSEC PLANS.— 

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

12 302(a) of the Employee Retirement Income Security 

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

14 striking ‘‘and’’ at the end of subparagraph (B), by 

15 striking the period at the end of subparagraph (C) 

16 and inserting ‘‘, and’’, and by inserting at the end 

17 thereof the following new subparagraph: 

18 ‘‘(D) in the case of a CSEC plan, the em19 ployers make contributions to or under the plan 

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

21 sufficient to ensure that the plan does not have 

22 an accumulated funding deficiency under sec23 tion 306 as of the end of the plan year.’’. 


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1 (2) CONFORMING AMENDMENTS.—Section 302 

2 of the Employee Retirement Income Security Act of 

3 1974 (29 U.S.C. 1082) is amended— 

4 (A) by striking ‘‘multiemployer plan’’ the 

5 first place it appears in clause (i) of subsection 

6 (c)(1)(A) and the last place it appears in para7 graph (2) of subsection (d), and inserting ‘‘mul8 tiemployer plan or a CSEC plan’’, 

9 (B) by striking ‘‘303(j)’’ in paragraph (1) 

10 of subsection (b) and inserting ‘‘303(j) or under 

11 section 306(f)’’, 

12 (C)(i) by striking ‘‘and’’ at the end of 

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

14 (ii) by striking the period at the end of 

15 clause (ii) of subsection (c)(1)(B), and inserting 

16 ‘‘, and’’, and 

17 (iii) by inserting the following new clause 

18 after clause (ii) of subsection (c)(1)(B): 

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

20 funding standard account shall be credited 

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

22 amount of the waived funding deficiency 

23 and such amount shall be amortized as re24 quired under section 306(b)(2)(C).’’, 


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1 (D) by striking ‘‘under paragraph (1)’’ in 

2 clause (i) of subsection (c)(4)(A) and inserting 

3 ‘‘under paragraph (1) or for granting an exten4 sion under section 306(d)’’, 

5 (E) by striking ‘‘waiver under this sub6 section’’ in subparagraph (B) of subsection 

7 (c)(4) and inserting ‘‘waiver under this sub8 section or an extension under 306(d)’’, 

9 (F) by striking ‘‘waiver or modification’’ in 

10 subclause (I) of subsection (c)(4)(B)(i) and in11 serting ‘‘waiver, modification, or extension’’, 

12 (G) by striking ‘‘waivers’’ in the heading of 

13 subsection (c)(4)(C) and of clause (ii) of sub14 section (c)(4)(C) and inserting ‘‘waivers or ex15 tensions’’, 

16 (H) by striking ‘‘section 304(d)’’ in sub17 paragraph (A) of subsection (c)(7) and in para18 graph (2) of subsection (d) and inserting ‘‘sec19 tion 304(d) or section 306(d)’’, 

20 (I) by striking ‘‘and’’ at the end of sub21 clause (I) of subsection (c)(4)(C)(i) and adding 

22 ‘‘or the accumulated funding deficiency under 

23 section 306, whichever is applicable,’’, 

24 (J) by striking ‘‘303(e)(2),’’ in subclause 

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


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1 ‘‘303(e)(2) or 306(b)(2)(C), whichever is appli2 cable, and’’, 

3 (K) by adding immediately after subclause 

4 (II) of subsection (c)(4)(C)(i) the following new 

5 subclause: 

6 ‘‘(III) the total amounts not paid 

7 by reason of an extension in effect 

8 under section 306(d),’’, 

9 (L) by striking ‘‘for waivers of’’ in clause 

10 (ii) of subsection (c)(4)(C) and inserting ‘‘for 

11 waivers or extensions with respect to’’, and 

12 (M) by striking ‘‘single-employer plan’’ in 

13 subparagraph (A) of subsection (a)(2) and in 

14 clause (i) of subsection (c)(1)(B) and inserting 

15 ‘‘single-employer plan (other than a CSEC 

16 plan)’’. 

17 (3) BENEFIT RESTRICTIONS.—Subsection (g) of 

18 section 206 of the Employee Retirement Income Se19 curity Act of 1974 (29 U.S.C. 1056) is amended by 

20 adding at the end thereof the following new para21 graph: 

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

23 apply to a CSEC plan (as defined in section 

24 210(f)).’’. 


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1 (4) BENEFIT INCREASES.—Paragraph (3) of 

2 section 204(i) of the Employee Retirement Income 

3 Security Act of 1974 (29 U.S.C. 1054(i)) is amend4 ed by striking ‘‘multiemployer plans’’ and inserting 

5 ‘‘multiemployer plans or CSEC plans’’. 

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

7 103(d)(8) of the Employee Retirement Income Secu8 rity Act of 1974 (29 U.S.C. 1023(d)(8)) is amended 

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

10 ‘‘303(h), 304(c)(3), and 306(c)(3)’’. 

11 (6) SECTION 502.—Subsection (c) of section 

12 502 of the Employee Retirement Income Security 

13 Act of 1974 is amended— 

14 (A) by redesignating the last paragraph as 

15 paragraph (11), and 

16 (B) by adding at the end the following new 

17 paragraph: 

18 ‘‘(12) The Secretary may assess a civil penalty 

19 against any sponsor of a CSEC plan of up to $100 

20 a day from the date of the plan sponsor’s failure to 

21 comply with the requirements of section 306(j)(3) to 

22 establish or update a funding restoration plan.’’. 

23 (7) SECTION 4003.—Subparagraph (B) of sec24 tion 4003(e)(1) of the Employee Retirement Income 

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


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

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

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

4 and (B) or 306(g)(1)(A) and (B) of this Act or sec5 tion 430(k)(1)(A) and (B) or 433(g)(1)(A) and (B) 

6 of the Internal Revenue Code of 1986’’. 

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

8 4010(b) of the Employee Retirement Income Secu9 rity Act of 1974 (29 U.S.C. 1310(b)) is amended by 

10 striking ‘‘303(k)(1)(A) and (B) of this Act or sec11 tion 430(k)(1)(A) and (B) of the Internal Revenue 

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

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

14 430(k)(1)(A) and (B) or 433(g)(1)(A) and (B) of 

15 the Internal Revenue Code of 1986’’. 

16 (9) SECTION 4071.—Section 4071 of the Em17 ployee Retirement Income Security Act of 1974 (29 

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

19 303(k)(4)’’ and inserting ‘‘section 303(k)(4) or 

20 306(g)(4)’’. 

21 SEC. 103. ELECTIONS. 

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

23 PLAN.—Subsection (f) of section 210 of the Employee Re24 tirement Income Security Act of 1974, as added by section 


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1 101, is amended by adding at the end the following new 

2 paragraph: 

3 ‘‘(3) ELECTION.— 

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

5 the definition of a CSEC plan under this sub6 section (without regard to this paragraph), such 

7 plan shall be a CSEC plan unless the plan 

8 sponsor elects not later than the close of the 

9 first plan year of the plan beginning after De10 cember 31, 2013, not to be treated as a CSEC 

11 plan. An election under the preceding sentence 

12 shall take effect for such plan year and, once 

13 made, may be revoked only with the consent of 

14 the Secretary of the Treasury. 

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

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

17 section 104 of the Pension Protection Act of 

18 2006, as amended by the Preservation of Ac19 cess to Care for Medicare Beneficiaries and 

20 Pension Relief Act of 2010, shall cease to apply 

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

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

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

24 ELIGIBLE CHARITY PLAN.—Subsection (d) of section 104 

25 of the Pension Protection Act of 2006, as added by section 


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1 202 of the Preservation of Access to Care for Medicare 

2 Beneficiaries and Pension Relief Act of 2010, is amend3 ed— 

4 (1) by striking ‘‘For purposes of’’ and inserting 

5 ‘‘(1) IN GENERAL.—For purposes of’’, and 

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

7 ‘‘(2) ELECTION NOT TO BE AN ELIGIBLE CHAR8 ITY PLAN.—A plan sponsor may elect for a plan to 

9 cease to be treated as an eligible charity plan for 

10 plan years beginning after December 31, 2013. Such 

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

12 and manner as shall be prescribed by the Secretary 

13 of the Treasury. Any such election may be revoked 

14 only with the consent of the Secretary of the Treas15 ury. 

16 ‘‘(3) ELECTION TO USE FUNDING OPTIONS

17 AVAILABLE TO OTHER PLAN SPONSORS.— 

18 ‘‘(A) A plan sponsor that makes the elec19 tion described in paragraph (2) may elect for a 

20 plan to apply the rules described in subpara21 graphs (B), (C), and (D) for plan years begin22 ning after December 31, 2013. Such election 

23 shall be made at such time and in such form 

24 and manner as shall be prescribed by the Sec25 retary of the Treasury. Any such election may 


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1 be revoked only with the consent of the Sec2 retary of the Treasury. 

3 ‘‘(B) Under the rules described in this sub4 paragraph, for the first plan year beginning 

5 after December 31, 2013, a plan has— 

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

7 base, 

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

9 base, and 

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

11 base. 

12 ‘‘(C) Under the rules described in this sub13 paragraph, section 303(c)(2)(A) and (B) of the 

14 Employee Retirement Income Security Act of 

15 1974, and section 430(c)(2)(A) and (B) of the 

16 Internal Revenue Code of 1986 shall be applied 

17 by— 

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

19 amortization base, substituting ‘11-plan20 year period’ for ‘7-plan-year period’ wher21 ever such phrase appears, and 

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

23 amortization base, substituting ‘12-plan24 year period’ for ‘7-plan-year period’ wher25 ever such phrase appears. 


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1 ‘‘(D) Under the rules described in this sub2 paragraph, section 303(c)(7) of the Employee 

3 Retirement Income Security Act of 1974 and 

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

5 of 1986 shall apply to a plan for which an elec6 tion has been made under subparagraph (A). 

7 Such provisions shall apply in the following 

8 manner: 

9 ‘‘(i) The first plan year beginning 

10 after December 31, 2013, shall be treated 

11 as an election year, and no other plan 

12 years shall be so treated. 

13 ‘‘(ii) All references in section 

14 303(c)(7) of such Act and section 

15 430(c)(7) of such Code to ‘February 28, 

16 2010’ or ‘March 1, 2010’ shall be treated 

17 as references to ‘February 28, 2013’ or 

18 ‘March 1, 2013’, respectively. 

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

20 11-year amortization base is an amount, deter21 mined for the first plan year beginning after 

22 December 31, 2013, equal to the unamortized 

23 principal amount of the shortfall amortization 

24 base (as defined in section 303(c)(3) of the Em25 ployee Retirement Income Security Act of 1974 


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

2 Code of 1986) that would have applied to the 

3 plan for the first plan beginning after Decem4 ber 31, 2009, if— 

5 ‘‘(i) the plan had never been an eligi6 ble charity plan, 

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

8 election described in section 

9 303(c)(2)(D)(i) of the Employee Retire10 ment Income Security Act of 1974 and in 

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

12 Revenue Code of 1986 to have section 

13 303(c)(2)(D)(i) of such Act and section 

14 430(c)(2)(D)(iii) of such Code apply with 

15 respect to the shortfall amortization base 

16 for the first plan year beginning after De17 cember 31, 2009, and 

18 ‘‘(iii) no event had occurred under 

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

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

21 430(c) of such Code that, as of the first 

22 day of the first plan year beginning after 

23 December 31, 2013, would have modified 

24 the shortfall amortization base or the 

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1 spect to the first plan year beginning after 

2 December 31, 2009. 

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

4 12-year amortization base is an amount, deter5 mined for the first plan year beginning after 

6 December 31, 2013, equal to the unamortized 

7 principal amount of the shortfall amortization 

8 base (as defined in section 303(c)(3) of the Em9 ployee Retirement Income Security Act of 1974 

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

11 Code of 1986) that would have applied to the 

12 plan for the first plan beginning after Decem13 ber 31, 2010, if— 

14 ‘‘(i) the plan had never been an eligi15 ble charity plan, 

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

17 election described in section 

18 303(c)(2)(D)(i) of the Employee Retire19 ment Income Security Act of 1974 and in 

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

21 Revenue Code of 1986 to have section 

22 303(c)(2)(D)(i) of such Act and section 

23 430(c)(2)(D)(iii) of such Code apply with 

24 respect to the shortfall amortization base 


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1 for the first plan year beginning after De2 cember 31, 2010, and 

3 ‘‘(iii) no event had occurred under 

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

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

6 430(c) of such Code that, as of the first 

7 day of the first plan year beginning after 

8 December 31, 2013, would have modified 

9 the shortfall amortization base or the 

10 shortfall amortization installments with re11 spect to the first plan year beginning after 

12 December 31, 2010. 

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

14 7-year shortfall amortization base is an amount, 

15 determined for the first plan year beginning 

16 after December 31, 2013, equal to— 

17 ‘‘(i) the shortfall amortization base for 

18 the first plan year beginning after Decem19 ber 31, 2013, without regard to this para20 graph, minus 

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

22 amortization base and the 12-year shortfall 

23 amortization base. 

24 ‘‘(4) RETROACTIVE ELECTION.—Not later than 

25 December 31, 2014, a plan sponsor may make a 


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1 one-time, irrevocable, retroactive election to not be 

2 treated as an eligible charity plan. Such election 

3 shall be effective for plan years beginning after De4 cember 31, 2007, and shall be made by providing 

5 reasonable notice to the Secretary of the Treasury.’’. 

6 (c) DEEMED ELECTION.—For purposes of the Inter7 nal Revenue Code of 1986, sections 4(b)(2) and 

8 4021(b)(3) of the Employee Retirement Income Security 

9 Act of 1974, and all other purposes, a plan shall be 

10 deemed to have made an irrevocable election under section 

11 410(d) of the Internal Revenue Code of 1986 if— 

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

13 2014; 

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

15 CSEC plan; 

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

17 under section 210(f)(3)(A) of the Employee Retire18 ment Income Security Act of 1974 and section 

19 414(y)(3)(A) of the Internal Revenue Code of 1986, 

20 as added by this Act; and 

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

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

25 2013. 


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

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

3 Act. 

4 SEC. 104. TRANSPARENCY. 

5 (a) NOTICE TO PARTICIPANTS.— 

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

7 101(f) of the Employee Retirement Income Security 

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

10 ‘‘(E) EFFECT OF CSEC PLAN RULES ON

11 PLAN FUNDING.—In the case of a CSEC plan, 

12 each notice under paragraph (1) shall include— 

13 ‘‘(i) a statement that different rules 

14 apply to CSEC plans than apply to single15 employer plans, 

16 ‘‘(ii) for the first 2 plan years begin17 ning after December 31, 2013, a statement 

18 that, as a result of changes in the law 

19 made by the Cooperative and Small Em20 ployer Charity Pension Flexibility Act, the 

21 contributions to the plan may have 

22 changed, and 

23 ‘‘(iii) in the case of a CSEC plan that 

24 is in funding restoration status for the 

25 plan year, a statement that the plan is in 


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1 funding restoration status for such plan 

2 year. 

3 A copy of the statement required under clause 

4 (iii) shall be provided to the Secretary, the Sec5 retary of the Treasury, and the Director of the 

6 Pension Benefit Guaranty Corporation.’’. 

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

8 may modify the model notice required to be pub9 lished under section 501(c) of the Pension Protec10 tion Act of 2006 to include the information de11 scribed in section 101(f)(2)(E) of the Employee Re12 tirement Income Security Act of 1974, as added by 

13 this subsection. 

14 (b) NOTICE OF FAILURE TO MEET MINIMUM FUND15 ING STANDARDS.— 

16 (1) PENDING WAIVERS.—Paragraph (2) of sec17 tion 101(d) of the Employee Retirement Income Se18 curity Act of 1974 (29 U.S.C. 1021(d)) is amended 

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

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

21 101(d) of the Employee Retirement Income Security 

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

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

24 whichever is applicable’’. 


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1 (c) ADDITIONAL REPORTING REQUIREMENTS.—Sec2 tion 103 of the Employee Retirement Income Security Act 

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

4 end the following new subsection: 

5 ‘‘(g) ADDITIONAL INFORMATION WITH RESPECT TO

6 MULTIPLE EMPLOYER PLANS.—With respect to any mul7 tiple employer plan, an annual report under this section 

8 for a plan year shall include a list of participating employ9 ers and a good faith estimate of the percentage of total 

10 contributions made by such participating employers dur11 ing the plan year.’’. 

12 SEC. 105. SPONSOR EDUCATION AND ASSISTANCE. 

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

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

15 of section 210 of the Employee Retirement Income Secu16 rity Act of 1974 (29 U.S.C. 1060(f)(1)) (as added by this 

17 Act). 

18 (b) EDUCATION.—The Participant and Plan Sponsor 

19 Advocate established under section 4004 of the Employee 

20 Retirement Income Security Act of 1974 (29 U.S.C. 1304) 

21 shall make itself available to assist CSEC plan sponsors 

22 and participants as part of the duties it performs under 

23 the general supervision of the Board of Directors under 

24 section 4004(b) of such Act (29 U.S.C. 1304(b)). 


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1 TITLE II—AMENDMENTS TO IN2 TERNAL REVENUE CODE OF 

3 1986 

4 SEC. 201. DEFINITION OF COOPERATIVE AND SMALL EM5 PLOYER CHARITY PENSION PLANS. 

6 Section 414 of the Internal Revenue Code of 1986 

7 is amended by adding at the end the following new sub8 section: 

9 ‘‘(y) COOPERATIVE AND SMALL EMPLOYER CHARITY

10 PENSION PLANS.— 

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

12 except as provided in this subsection, a CSEC plan 

13 is a defined benefit plan (other than a multiemployer 

14 plan)— 

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

16 Protection Act of 2006 applies, without regard 

17 to— 

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

19 ‘‘(ii) the amendments to such section 

20 104 by section 202(b) of the Preservation 

21 of Access to Care for Medicare Bene22 ficiaries and Pension Relief Act of 2010; 

23 and 

24 ‘‘(iii) paragraph (3)(B); or 


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1 ‘‘(B) that, as of June 25, 2010, was main2 tained by more than one employer and all of the 

3 employers were organizations described in sec4 tion 501(c)(3). 

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

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

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

8 of determining if a plan was maintained by more 

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

10 SEC. 202. FUNDING RULES APPLICABLE TO COOPERATIVE 

11 AND SMALL EMPLOYER CHARITY PENSION 

12 PLANS. 

13 (a) IN GENERAL.—Subpart A of part III of sub14 chapter D of chapter 1 of subtitle A of the Internal Rev15 enue Code of 1986 is amended by adding at the end the 

16 following new section: 

17 ‘‘SEC. 433. MINIMUM FUNDING STANDARDS. 

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

19 the term ‘accumulated funding deficiency’ for a CSEC 

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

21 standard account for all plan years (beginning with the 

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

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

24 of the total charges to the alternative minimum funding 


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1 standard account for such plan years over the total credits 

2 to such account for such years. 

3 ‘‘(b) FUNDING STANDARD ACCOUNT.— 

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

5 this section applies shall establish and maintain a 

6 funding standard account. Such account shall be 

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

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

10 the funding standard account shall be charged with 

11 the sum of— 

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

13 plan year, 

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

15 equal annual installments (until fully amor16 tized)— 

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

18 on January 1, 1974, the unfunded past 

19 service liability under the plan on the first 

20 day of the first plan year to which section 

21 412 applies, over a period of 40 plan years, 

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

23 into existence after January 1, 1974, but 

24 before the first day of the first plan year 

25 beginning after December 31, 2013, the 


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1 unfunded past service liability under the 

2 plan on the first day of the first plan year 

3 to which section 412 applies, over a period 

4 of 30 plan years, 

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

6 plan year, the net increase (if any) in un7 funded past service liability under the plan 

8 arising from plan amendments adopted in 

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

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

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

12 under the plan, over a period of 5 plan 

13 years, and 

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

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

16 from changes in actuarial assumptions 

17 used under the plan, over a period of 10 

18 plan years, 

19 ‘‘(C) the amount necessary to amortize 

20 each waived funding deficiency (within the 

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

22 plan year in equal annual installments (until 

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

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

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1 tized) over a period of 5 plan years any amount 

2 credited to the funding standard account under 

3 paragraph (3)(D), and 

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

5 equal annual installments (until fully amor6 tized) over a period of 20 years the contribu7 tions which would be required to be made under 

8 the plan but for the provisions of section 

9 412(c)(7)(A)(i)(I) (as in effect on the day be10 fore the enactment of the Pension Protection 

11 Act of 2006). 

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

13 the funding standard account shall be credited with 

14 the sum of— 

15 ‘‘(A) the amount considered contributed by 

16 the employer to or under the plan for the plan 

17 year, 

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

19 equal annual installments (until fully amor20 tized)— 

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

22 plan year, the net decrease (if any) in un23 funded past service liability under the plan 

24 arising from plan amendments adopted in 

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


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

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

3 under the plan, over a period of 5 plan 

4 years, and 

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

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

7 from changes in actuarial assumptions 

8 used under the plan, over a period of 10 

9 plan years, 

10 ‘‘(C) the amount of the waived funding de11 ficiency (within the meaning of section 

12 412(c)(3)) for the plan year, and 

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

14 the accumulated funding deficiency is deter15 mined under the funding standard account if 

16 such plan year follows a plan year for which 

17 such deficiency was determined under the alter18 native minimum funding standard, the excess 

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

20 standard account (determined without regard to 

21 this subparagraph) over any debit balance in 

22 the alternative minimum funding standard ac23 count. 

24 ‘‘(4) COMBINING AND OFFSETTING AMOUNTS

25 TO BE AMORTIZED.—Under regulations prescribed 


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1 by the Secretary, amounts required to be amortized 

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

3 may be— 

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

5 under such paragraph to be amortized over a 

6 period determined on the basis of the remaining 

7 amortization period for all items entering into 

8 such combined amount, and 

9 ‘‘(B) may be offset against amounts re10 quired to be amortized under the other such 

11 paragraph, with the resulting amount to be am12 ortized over a period determined on the basis of 

13 the remaining amortization periods for all items 

14 entering into whichever of the two amounts 

15 being offset is the greater. 

16 ‘‘(5) INTEREST.— 

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

18 subparagraph (B), the funding standard ac19 count (and items therein) shall be charged or 

20 credited (as determined under regulations pre21 scribed by the Secretary) with interest at the 

22 appropriate rate consistent with the rate or 

23 rates of interest used under the plan to deter24 mine costs. 


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

2 for purposes of computing the amortization 

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

4 purposes of any arrangement under subsection 

5 (d) for any plan year shall be the greater of— 

6 ‘‘(i) 150 percent of the Federal mid7 term rate (as in effect under section 1274 

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

9 ‘‘(ii) the rate of interest determined 

10 under subparagraph (A). 

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

12 Amortization schedules for amounts described in 

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

14 last day of the last plan year beginning before Janu15 ary 1, 2014, by reason of section 104 of the Pension 

16 Protection Act of 2006 shall remain in effect pursu17 ant to their terms and this section, except that such 

18 amounts shall not be amortized again under this sec19 tion. 

20 ‘‘(c) SPECIAL RULES.— 

21 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

22 FUNDING METHOD.—For purposes of this section, 

23 normal costs, accrued liability, past service liabilities, 

24 and experience gains and losses shall be determined 


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1 under the funding method used to determine costs 

2 under the plan. 

3 ‘‘(2) VALUATION OF ASSETS.— 

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

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

6 determined on the basis of any reasonable actu7 arial method of valuation which takes into ac8 count fair market value and which is permitted 

9 under regulations prescribed by the Secretary. 

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

11 Secretary may by regulations provide that the 

12 value of any dedicated bond portfolio of a plan 

13 shall be determined by using the interest rate 

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

15 before the enactment of the Pension Protection 

16 Act of 2006). 

17 ‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA18 SONABLE.—For purposes of this section, all costs, li19 abilities, rates of interest, and other factors under 

20 the plan shall be determined on the basis of actu21 arial assumptions and methods— 

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

23 into account the experience of the plan and rea24 sonable expectations), and 


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1 ‘‘(B) which, in combination, offer the actu2 ary’s best estimate of anticipated experience 

3 under the plan. 

4 ‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX5 PERIENCE GAIN OR LOSS.—For purposes of this sec6 tion, if— 

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

8 Security Act or in other retirement benefits cre9 ated under Federal or State law, or 

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

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

12 amount of such wages taken into account under 

13 regulations prescribed for purposes of section 

14 401(a)(5), 

15 results in an increase or decrease in accrued liability 

16 under a plan, such increase or decrease shall be 

17 treated as an experience loss or gain. 

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

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

20 funding methods available to CSEC plans under 

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

22 enactment of the Pension Protection Act of 

23 2006) shall continue to be available under this 

24 section. 


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

2 for a plan is changed, the new funding method 

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

5 the change is approved by the Secretary. If the 

6 plan year for a plan is changed, the new plan 

7 year shall become the plan year for the plan 

8 only if the change is approved by the Secretary. 

9 ‘‘(C) APPROVAL REQUIRED FOR CERTAIN

10 CHANGES IN ASSUMPTIONS BY CERTAIN SIN11 GLE-EMPLOYER PLANS SUBJECT TO ADDI12 TIONAL FUNDING REQUIREMENT.— 

13 ‘‘(i) IN GENERAL.—No actuarial as14 sumption (other than the assumptions de15 scribed in subsection (h)(3)) used to deter16 mine the current liability for a plan to 

17 which this subparagraph applies may be 

18 changed without the approval of the Sec19 retary. 

20 ‘‘(ii) PLANS TO WHICH SUBPARA21 GRAPH APPLIES.—This subparagraph shall 

22 apply to a plan only if— 

23 ‘‘(I) the plan is a CSEC plan, 

24 ‘‘(II) the aggregate unfunded 

25 vested benefits as of the close of the 


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1 preceding plan year (as determined 

2 under section 4006(a)(3)(E)(iii) of the 

3 Employee Retirement Income Security 

4 Act of 1974) of such plan and all 

5 other plans maintained by the contrib6 uting sponsors (as defined in section 

7 4001(a)(13) of such Act) and mem8 bers of such sponsors’ controlled 

9 groups (as defined in section 

10 4001(a)(14) of such Act) which are 

11 covered by title IV (disregarding plans 

12 with no unfunded vested benefits) ex13 ceed $50,000,000, and 

14 ‘‘(III) the change in assumptions 

15 (determined after taking into account 

16 any changes in interest rate and mor17 tality table) results in a decrease in 

18 the funding shortfall of the plan for 

19 the current plan year that exceeds 

20 $50,000,000, or that exceeds 

21 $5,000,000 and that is 5 percent or 

22 more of the current liability of the 

23 plan before such change. 

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

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1 graph) have an accumulated funding deficiency (de2 termined without regard to the alternative minimum 

3 funding standard account permitted under sub4 section (e)) in excess of the full funding limitation— 

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

6 credited with the amount of such excess, and 

7 ‘‘(B) all amounts described in paragraphs 

8 (2)(B), (C), and (D) and (3)(B) of subsection 

9 (b) which are required to be amortized shall be 

10 considered fully amortized for purposes of such 

11 paragraphs. 

12 ‘‘(7) FULL-FUNDING LIMITATION.—For pur13 poses of paragraph (6), the term ‘full-funding limita14 tion’ means the excess (if any) of— 

15 ‘‘(A) the accrued liability (including nor16 mal cost) under the plan (determined under the 

17 entry age normal funding method if such ac18 crued liability cannot be directly calculated 

19 under the funding method used for the plan), 

20 over 

21 ‘‘(B) the lesser of— 

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

23 plan’s assets, or 

24 ‘‘(ii) the value of such assets deter25 mined under paragraph (2). 


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1 ‘‘(C) MINIMUM AMOUNT.— 

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

3 the full-funding limitation determined 

4 under subparagraph (A) be less than the 

5 excess (if any) of— 

6 ‘‘(I) 90 percent of the current li7 ability (determined without regard to 

8 paragraph (4) of subsection (h)) of 

9 the plan (including the expected in10 crease in such current liability due to 

11 benefits accruing during the plan 

12 year), over 

13 ‘‘(II) the value of the plan’s as14 sets determined under paragraph (2). 

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

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

17 credit balance in the funding standard ac18 count. 

19 ‘‘(8) ANNUAL VALUATION.— 

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

21 section, a determination of experience gains and 

22 losses and a valuation of the plan’s liability 

23 shall be made not less frequently than once 

24 every year, except that such determination shall 

25 be made more frequently to the extent required 


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1 in particular cases under regulations prescribed 

2 by the Secretary. 

3 ‘‘(B) VALUATION DATE.— 

4 ‘‘(i) CURRENT YEAR.—Except as pro5 vided in clause (ii), the valuation referred 

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

7 a date within the plan year to which the 

8 valuation refers or within one month prior 

9 to the beginning of such year. 

10 ‘‘(ii) USE OF PRIOR YEAR VALU11 ATION.—The valuation referred to in sub12 paragraph (A) may be made as of a date 

13 within the plan year prior to the year to 

14 which the valuation refers if, as of such 

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

16 not less than 100 percent of the plan’s cur17 rent liability. 

18 ‘‘(iii) ADJUSTMENTS.—Information 

19 under clause (ii) shall, in accordance with 

20 regulations, be actuarially adjusted to re21 flect significant differences in participants. 

22 ‘‘(iv) LIMITATION.—A change in fund23 ing method to use a prior year valuation, 

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

25 unless as of the valuation date within the 


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1 prior plan year, the value of the assets of 

2 the plan are not less than 125 percent of 

3 the plan’s current liability. 

4 ‘‘(9) TIME WHEN CERTAIN CONTRIBUTIONS

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

6 contributions for a plan year made by an employer 

7 during the period— 

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

9 day of such plan year, and 

‘‘(B) ending on the day which is 81 10 ⁄2

11 months after the close of the plan year, 

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

13 ‘‘(10) ANTICIPATION OF BENEFIT INCREASES

14 EFFECTIVE IN THE FUTURE.—In determining pro15 jected benefits, the funding method of a collectively 

16 bargained CSEC plan described in section 413(a) 

17 shall anticipate benefit increases scheduled to take 

18 effect during the term of the collective bargaining 

19 agreement applicable to the plan. 

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

21 period of years required to amortize any unfunded liability 

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

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

24 time (not in excess of 10 years) if the Secretary deter25 mines that such extension would carry out the purposes 


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1 of the Employee Retirement Income Security Act of 1974 

2 and provide adequate protection for participants under the 

3 plan and their beneficiaries, and if the Secretary deter4 mines that the failure to permit such extension would re5 sult in— 

6 ‘‘(1) a substantial risk to the voluntary continu7 ation of the plan, or 

8 ‘‘(2) a substantial curtailment of pension ben9 efit levels or employee compensation. 

10 ‘‘(e) ALTERNATIVE MINIMUM FUNDING STAND11 ARD.— 

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

13 funding method that requires contributions in all 

14 years not less than those required under the entry 

15 age normal funding method may maintain an alter16 native minimum funding standard account for any 

17 plan year. Such account shall be credited and 

18 charged solely as provided in this subsection. 

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

20 For a plan year the alternative minimum funding 

21 standard account shall be— 

22 ‘‘(A) charged with the sum of— 

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

24 the funding method used under the plan or 


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1 normal cost determined under the unit 

2 credit method, 

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

4 value of accrued benefits under the plan 

5 over the fair market value of the assets, 

6 and 

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

8 (if any) of credits to the alternative min9 imum standard account for all prior plan 

10 years over charges to such account for all 

11 such years, and 

12 ‘‘(B) credited with the amount considered 

13 contributed by the employer to or under the 

14 plan for the plan year. 

15 ‘‘(3) INTEREST.—The alternative minimum 

16 funding standard account (and items therein) shall 

17 be charged or credited with interest in the manner 

18 provided under subsection (b)(5) with respect to the 

19 funding standard account. 

20 ‘‘(f) QUARTERLY CONTRIBUTIONS REQUIRED.— 

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

22 a funded current liability percentage for the pre23 ceding plan year of less than 100 percent fails to 

24 pay the full amount of a required installment for the 

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


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

2 with respect to the amount of the underpayment for 

3 the period of the underpayment shall be equal to the 

4 greater of— 

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

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

7 month of such plan year), or 

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

9 plan in determining costs. 

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

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

12 ‘‘(A) AMOUNT.—The amount of the under13 payment shall be the excess of— 

14 ‘‘(i) the required installment, over 

15 ‘‘(ii) the amount (if any) of the in16 stallment contributed to or under the plan 

17 on or before the due date for the install18 ment. 

19 ‘‘(B) PERIOD OF UNDERPAYMENT.—The 

20 period for which interest is charged under this 

21 subsection with regard to any portion of the un22 derpayment shall run from the due date for the 

23 installment to the date on which such portion is 

24 contributed to or under the plan (determined 

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


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1 ‘‘(C) ORDER OF CREDITING CONTRIBU2 TIONS.—For purposes of subparagraph (A)(ii), 

3 contributions shall be credited against unpaid 

4 required installments in the order in which such 

5 installments are required to be paid. 

6 ‘‘(3) NUMBER OF REQUIRED INSTALLMENTS; 

7 DUE DATES.—For purposes of this subsection— 

8 ‘‘(A) PAYABLE IN 4 INSTALLMENTS.— 

9 There shall be 4 required installments for each 

10 plan year. 

11 ‘‘(B) TIME FOR PAYMENT OF INSTALL12 MENTS.— 

‘‘In the case of the following 

required installments: The due date is: 

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

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

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

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

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

14 For purposes of this subsection— 

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

16 required installment shall be 25 percent of the 

17 required annual payment. 

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

19 purposes of subparagraph (A), the term ‘re20 quired annual payment’ means the lesser of— 


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1 ‘‘(i) 90 percent of the amount re2 quired to be contributed to or under the 

3 plan by the employer for the plan year 

4 under section 412 (without regard to any 

5 waiver under subsection (c) thereof), or 

6 ‘‘(ii) 100 percent of the amount so re7 quired for the preceding plan year. 

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

9 year was not a year of 12 months. 

10 ‘‘(5) LIQUIDITY REQUIREMENT.— 

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

12 paragraph applies shall be treated as failing to 

13 pay the full amount of any required installment 

14 to the extent that the value of the liquid assets 

15 paid in such installment is less than the liquid16 ity shortfall (whether or not such liquidity 

17 shortfall exceeds the amount of such install18 ment required to be paid but for this para19 graph). 

20 ‘‘(B) PLANS TO WHICH PARAGRAPH AP21 PLIES.—This paragraph shall apply to a CSEC 

22 plan other than a plan described in section 

23 412(l)(6)(A) (as in effect on the day before the 

24 enactment of the Pension Protection Act of 

25 2006) which— 


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1 ‘‘(i) is required to pay installments 

2 under this subsection for a plan year, and 

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

4 quarter during such plan year. 

5 ‘‘(C) PERIOD OF UNDERPAYMENT.—For 

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

7 installment that is treated as not paid under 

8 subparagraph (A) shall continue to be treated 

9 as unpaid until the close of the quarter in 

10 which the due date for such installment occurs. 

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

12 amount of any required installment is increased 

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

14 shall such increase exceed the amount which, 

15 when added to prior installments for the plan 

16 year, is necessary to increase the funded cur17 rent liability percentage (taking into account 

18 the expected increase in current liability due to 

19 benefits accruing during the plan year) to 100 

20 percent. 

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

22 paragraph— 

23 ‘‘(i) LIQUIDITY SHORTFALL.—The 

24 term ‘liquidity shortfall’ means, with re25 spect to any required installment, an 


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1 amount equal to the excess (as of the last 

2 day of the quarter for which such install3 ment is made) of the base amount with re4 spect to such quarter over the value (as of 

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

6 ‘‘(ii) BASE AMOUNT.— 

7 ‘‘(I) IN GENERAL.—The term 

8 ‘base amount’ means, with respect to 

9 any quarter, an amount equal to 3 

10 times the sum of the adjusted dis11 bursements from the plan for the 12 

12 months ending on the last day of such 

13 quarter. 

14 ‘‘(II) SPECIAL RULE.—If the 

15 amount determined under subclause 

16 (I) exceeds an amount equal to 2 

17 times the sum of the adjusted dis18 bursements from the plan for the 36 

19 months ending on the last day of the 

20 quarter and an enrolled actuary cer21 tifies to the satisfaction of the Sec22 retary that such excess is the result of 

23 nonrecurring circumstances, the base 

24 amount with respect to such quarter 

25 shall be determined without regard to 


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1 amounts related to those nonrecurring 

2 circumstances. 

3 ‘‘(iii) DISBURSEMENTS FROM THE

4 PLAN.—The term ‘disbursements from the 

5 plan’ means all disbursements from the 

6 trust, including purchases of annuities, 

7 payments of single sums and other bene8 fits, and administrative expenses. 

9 ‘‘(iv) ADJUSTED DISBURSEMENTS.— 

10 The term ‘adjusted disbursements’ means 

11 disbursements from the plan reduced by 

12 the product of— 

13 ‘‘(I) the plan’s funded current li14 ability percentage for the plan year, 

15 and 

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

17 annuities, payments of single sums, 

18 and such other disbursements as the 

19 Secretary shall provide in regulations. 

20 ‘‘(v) LIQUID ASSETS.—The term ‘liq21 uid assets’ means cash, marketable securi22 ties and such other assets as specified by 

23 the Secretary in regulations. 

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

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1 ment, the 3-month period preceding the 

2 month in which the due date for such in3 stallment occurs. 

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

5 prescribe such regulations as are necessary to 

6 carry out this paragraph. 

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

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

9 subsection to a plan year beginning on any date 

10 other than January 1, there shall be substituted 

11 for the months specified in this subsection, the 

12 months which correspond thereto. 

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

14 shall be applied to plan years of less than 12 

15 months in accordance with regulations pre16 scribed by the Secretary. 

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

18 MAKE REQUIRED CONTRIBUTIONS.— 

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

20 which this section applies, if— 

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

22 installment under subsection (f) or any other 

23 payment required under this section before the 

24 due date for such installment or other payment, 

25 and 


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

3 when added to the aggregate unpaid balance of 

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

6 the due date (including interest), exceeds 

7 $1,000,000, 

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

9 amount determined under paragraph (3) upon all 

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

13 of which such person is a member. 

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

15 This subsection shall apply to a CSEC plan for any 

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

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

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

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

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

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

4 and 

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

6 made before the due date. 

7 ‘‘(4) NOTICE OF FAILURE; LIEN.— 

8 ‘‘(A) NOTICE OF FAILURE.—A person 

9 committing a failure described in paragraph (1) 

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

12 due date for the required installment or other 

13 payment. 

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

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

16 the required installment or other payment and 

17 shall continue until the last day of the first plan 

18 year in which the plan ceases to be described in 

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

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

22 the period referred to in the preceding sentence. 

23 ‘‘(C) CERTAIN RULES TO APPLY.—Any 

24 amount with respect to which a lien is imposed 

25 under paragraph (1) shall be treated as taxes 


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1 due and owing the United States and rules 

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

3 (e) of section 4068 of the Employee Retirement 

4 Income Security Act of 1974 shall apply with 

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

6 the amount with respect to such lien. 

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

8 paragraph (1) may be perfected and enforced only 

9 by the Pension Benefit Guaranty Corporation, or at 

10 the direction of the Pension Benefit Guaranty Cor11 poration, by any contributing employer (or any 

12 member of the controlled group of the contributing 

13 employer). 

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

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

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

20 payment other than a required installment, the 

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

23 ‘‘(B) CONTROLLED GROUP.—The term 

24 ‘controlled group’ means any group treated as 


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

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

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

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

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

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

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

12 benefit shall not be taken into account until the 

13 event on which the benefit is contingent occurs. 

14 ‘‘(B) UNPREDICTABLE CONTINGENT

15 EVENT BENEFIT.—The term ‘unpredictable 

16 contingent event benefit’ means any benefit 

17 contingent on an event other than— 

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

19 or disability, or 

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

21 reliably predictable (as determined by the 

22 Secretary). 

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


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

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

5 ‘‘(B) MORTALITY TABLES.— 

6 ‘‘(i) SECRETARIAL AUTHORITY.—The 

7 Secretary may by regulation prescribe mor8 tality tables to be used in determining cur9 rent liability under this subsection. Such 

10 tables shall be based upon the actual expe11 rience of pension plans and projected 

12 trends in such experience. In prescribing 

13 such tables, the Secretary shall take into 

14 account results of available independent 

15 studies of mortality of individuals covered 

16 by pension plans. 

17 ‘‘(ii) PERIODIC REVIEW.—The Sec18 retary shall periodically (at least every 5 

19 years) review any tables in effect under 

20 this subsection and shall, to the extent the 

21 Secretary determines necessary, by regula22 tion update the tables to reflect the actual 

23 experience of pension plans and projected 

24 trends in such experience. 


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1 ‘‘(C) SEPARATE MORTALITY TABLES FOR

2 THE DISABLED.—Notwithstanding subpara3 graph (B)— 

4 ‘‘(i) IN GENERAL.—In the case of 

5 plan years beginning after December 31, 

6 1995, the Secretary shall establish mor7 tality tables which may be used (in lieu of 

8 the tables under subparagraph (B)) to de9 termine current liability under this sub10 section for individuals who are entitled to 

11 benefits under the plan on account of dis12 ability. The Secretary shall establish sepa13 rate tables for individuals whose disabil14 ities occur in plan years beginning before 

15 January 1, 1995, and for individuals 

16 whose disabilities occur in plan years be17 ginning on or after such date. 

18 ‘‘(ii) SPECIAL RULE FOR DISABILITIES

19 OCCURRING AFTER 1994.—In the case of 

20 disabilities occurring in plan years begin21 ning after December 31, 1994, the tables 

22 under clause (i) shall apply only with re23 spect to individuals described in such sub24 clause who are disabled within the meaning 


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1 of title II of the Social Security Act and 

2 the regulations thereunder. 

3 ‘‘(4) CERTAIN SERVICE DISREGARDED.— 

4 ‘‘(A) IN GENERAL.—In the case of a par5 ticipant to whom this paragraph applies, only 

6 the applicable percentage of the years of service 

7 before such individual became a participant 

8 shall be taken into account in computing the 

9 current liability of the plan. 

10 ‘‘(B) APPLICABLE PERCENTAGE.—For 

11 purposes of this subparagraph, the applicable 

12 percentage shall be determined as follows: 

‘‘If the years of participation 

are: 

The applicable percentage 

is: 

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

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

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

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

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

13 ‘‘(C) PARTICIPANTS TO WHOM PARAGRAPH

14 APPLIES.—This subparagraph shall apply to 

15 any participant who, at the time of becoming a 

16 participant— 

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

18 under any defined benefit plan (whether or 

19 not terminated) maintained by the em20 ployer or a member of the same controlled 

21 group of which the employer is a member, 


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1 ‘‘(ii) who first becomes a participant 

2 under the plan in a plan year beginning 

3 after December 31, 1987, and 

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

5 the minimum years of service necessary for 

6 eligibility to participate in the plan. 

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

8 not to have this subparagraph apply. Such an 

9 election, once made, may be revoked only with 

10 the consent of the Secretary. 

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

12 For purposes of this section, the term ‘funded current li13 ability percentage’ means, with respect to any plan year, 

14 the percentage which— 

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

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

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

18 ‘‘(j) FUNDING RESTORATION STATUS.—Notwith19 standing any other provisions of this section— 

20 ‘‘(1) NORMAL COST PAYMENT.— 

21 ‘‘(A) IN GENERAL.—In the case of a 

22 CSEC plan that is in funding restoration status 

23 for a plan year, for purposes of section 412, the 

24 term ‘accumulated funding deficiency’ means, 

25 for such plan year, the greater of— 


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1 ‘‘(i) the amount described in sub2 section (a), or 

3 ‘‘(ii) the excess of the normal cost of 

4 the plan for the plan year over the amount 

5 actually contributed to or under the plan 

6 for the plan year. 

7 ‘‘(B) NORMAL COST.—In the case of a 

8 CSEC plan that uses a spread gain funding 

9 method, for purposes of this subsection, the 

10 term ‘normal cost’ means normal cost as deter11 mined under the entry age normal funding 

12 method. 

13 ‘‘(2) PLAN AMENDMENTS.—In the case of a 

14 CSEC plan that is in funding restoration status for 

15 a plan year, no amendment to such plan may take 

16 effect during such plan year if such amendment has 

17 the effect of increasing liabilities of the plan by 

18 means of increases in benefits, establishment of new 

19 benefits, changing the rate of benefit accrual, or 

20 changing the rate at which benefits become non21 forfeitable. This paragraph shall not apply to any 

22 plan amendment that is required to comply with any 

23 applicable law. This paragraph shall cease to apply 

24 with respect to any plan year, effective as of the 

25 first day of the plan year (or if later, the effective 


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1 date of the amendment) upon payment by the plan 

2 sponsor of a contribution to the plan (in addition to 

3 any contribution required under this section without 

4 regard to this paragraph) in an amount equal to the 

5 increase in the funding liability of the plan attrib6 utable to the plan amendment. 

7 ‘‘(3) FUNDING RESTORATION PLAN.—The spon8 sor of a CSEC plan shall establish a written funding 

9 restoration plan within 180 days of the receipt by 

10 the plan sponsor of a certification from the plan ac11 tuary that the plan is in funding restoration status 

12 for a plan year. Such funding restoration plan shall 

13 consist of actions that are calculated, based on rea14 sonably anticipated experience and reasonable actu15 arial assumptions, to increase the plan’s funded per16 centage to 100 percent over a period that is not 

17 longer than the greater of 7 years or the shortest 

18 amount of time practicable. Such funding restora19 tion plan shall take into account contributions re20 quired under this section (without regard to this 

21 paragraph). If a plan remains in funding restoration 

22 status for 2 or more years, such funding restoration 

23 plan shall be updated each year after the 1st such 

24 year within 180 days of receipt by the plan sponsor 

25 of a certification from the plan actuary that the plan 


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1 remains in funding restoration status for the plan 

2 year. 

3 ‘‘(4) ANNUAL CERTIFICATION BY PLAN ACTU4 ARY.—Not later than the 90th day of each plan year 

5 of a CSEC plan, the plan actuary shall certify to the 

6 plan sponsor whether or not the plan is in funding 

7 restoration status for the plan year, based on the 

8 plan’s funded percentage as of the beginning of the 

9 plan year. For this purpose, the actuary may conclu10 sively rely on an estimate of— 

11 ‘‘(A) the plan’s funding liability, based on 

12 the funding liability of the plan for the pre13 ceding plan year and on reasonable actuarial es14 timates, assumptions, and methods, and 

15 ‘‘(B) the amount of any contributions rea16 sonably anticipated to be made for the pre17 ceding plan year. 

18 Contributions described in subparagraph (B) shall 

19 be taken into account in determining the plan’s 

20 funded percentage as of the beginning of the plan 

21 year. 

22 ‘‘(5) DEFINITIONS.—For purposes of this sub23 section— 

24 ‘‘(A) FUNDING RESTORATION STATUS.—A 

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1 toration status for a plan year if the plan’s 

2 funded percentage as of the beginning of such 

3 plan year is less than 80 percent. 

4 ‘‘(B) FUNDED PERCENTAGE.—The term 

5 ‘funded percentage’ means the ratio (expressed 

6 as a percentage) which— 

7 ‘‘(i) the value of plan assets (as deter8 mined under subsection (c)(2)), bears to 

9 ‘‘(ii) the plan’s funding liability. 

10 ‘‘(C) FUNDING LIABILITY.—The term 

11 ‘funding liability’ for a plan year means the 

12 present value of all benefits accrued or earned 

13 under the plan as of the beginning of the plan 

14 year, based on the assumptions used by the 

15 plan pursuant to this section, including the in16 terest rate described in subsection (b)(5)(A) 

17 (without regard to subsection (b)(5)(B)). 

18 ‘‘(D) SPREAD GAIN FUNDING METHOD.— 

19 The term ‘spread gain funding method’ has the 

20 meaning given such term under rules and forms 

21 issued by the Secretary. 

22 ‘‘(E) PLAN SPONSOR.—The term ‘plan 

23 sponsor’ means, with respect to a CSEC plan, 

24 the association, committee, joint board of trust25 ees, or other similar group of representatives of 


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1 the parties who establish or maintain the 

2 plan.’’. 

3 (b) CSEC PLANS.—Section 413 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(d) CSEC PLANS.—Notwithstanding any other pro7 vision of this section, in the case of a CSEC plan— 

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

9 412 shall be determined as if all participants in the 

10 plan were employed by a single employer. 

11 ‘‘(2) APPLICATION OF PROVISIONS.—Para12 graphs (1), (2), (3), and (5) of subsection (c) shall 

13 apply. 

14 ‘‘(3) DEDUCTION LIMITATIONS.—Each applica15 ble limitation provided by section 404(a) shall be de16 termined as if all participants in the plan were em17 ployed by a single employer. The amounts contrib18 uted to or under the plan by each employer who 

19 maintains the plan (for the portion of the taxable 

20 year included within a plan year) shall be considered 

21 not to exceed such applicable limitation if the antici22 pated employer contributions for such plan year of 

23 all employers (determined in a reasonable manner 

24 not inconsistent with regulations prescribed by the 

25 Secretary) do not exceed such limitation. If such anVerDate Mar 15 2010 22:20 Mar 21, 2014 Jkt 039200 PO 00000 Frm 00094 Fmt 6652 Sfmt 6201 E:\BILLS\H4275.IH H4275

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1 ticipated contributions exceed such limitation, the 

2 portion of each such employer’s contributions which 

3 is not deductible under section 404 shall be deter4 mined in accordance with regulations prescribed by 

5 the Secretary. 

6 ‘‘(4) ALLOCATIONS.—Allocations of amounts 

7 under paragraph (3) and subsection (c)(5) among 

8 the employers maintaining the plan shall not be in9 consistent with the regulations prescribed for this 

10 purpose by the Secretary.’’. 

11 (c) SEPARATE RULES FOR CSEC PLANS.— 

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

13 412(a) of the Internal Revenue Code of 1986 is 

14 amended by striking ‘‘and’’ at the end of subpara15 graph (B), by striking the period at the end of sub16 paragraph (C) and inserting ‘‘, and’’, and by insert17 ing at the end thereof the following new subpara18 graph: 

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

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

22 sufficient to ensure that the plan does not have 

23 an accumulated funding deficiency under sec24 tion 433 as of the end of the plan year.’’. 


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1 (2) CONFORMING AMENDMENTS.—Section 412 

2 of such Code is amended— 

3 (A) by striking ‘‘multiemployer plan’’ in 

4 paragraph (A) of subsection (a)(2), in clause (i) 

5 of subsection (c)(1)(B), the first place it ap6 pears in clause (i) of subsection (c)(1)(A), and 

7 the last place it appears in paragraph (2) of 

8 subsection (d), and inserting ‘‘multiemployer 

9 plan or a CSEC plan’’, 

10 (B) by striking ‘‘430(j)’’ in paragraph (1) 

11 of subsection (b) and inserting ‘‘430(j) or under 

12 section 433(f)’’, 

13 (C)(i) by striking ‘‘and’’ at the end of 

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

15 (ii) by striking the period at the end of 

16 clause (ii) of subsection (c)(1)(B) and inserting 

17 ‘‘, and’’, and 

18 (iii) by inserting the following new clause 

19 after clause (ii) of subsection (c)(1)(B): 

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

21 funding standard account shall be credited 

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

23 amount of the waived funding deficiency 

24 and such amount shall be amortized as re25 quired under section 433(b)(2)(C).’’, 


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1 (D) by striking ‘‘under paragraph (1)’’ in 

2 clause (i) of subsection (c)(4)(A) and inserting 

3 ‘‘under paragraph (1) or for granting an exten4 sion under section 433(d)’’, 

5 (E) by striking ‘‘waiver under this sub6 section’’ in subparagraph (B) of subsection 

7 (c)(4) and inserting ‘‘waiver under this sub8 section or an extension under 433(d)’’, 

9 (F) by striking ‘‘waiver or modification’’ in 

10 subclause (I) of subsection (c)(4)(B)(i) and in11 serting ‘‘waiver, modification, or extension’’, 

12 (G) by striking ‘‘waivers’’ in the heading of 

13 subsection (c)(4)(C) and of clause (ii) of sub14 section (c)(4)(C) and inserting ‘‘waivers or ex15 tensions’’, 

16 (H) by striking ‘‘section 431(d)’’ in sub17 paragraph (A) of subsection (c)(7) and in para18 graph (2) of subsection (d) and inserting ‘‘sec19 tion 431(d) or section 433(d)’’, 

20 (I) by striking ‘‘and’’ at the end of sub21 clause (I) of subsection (c)(4)(C)(i) and insert22 ing ‘‘or the accumulated funding deficiency 

23 under section 433, whichever is applicable,’’, 

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

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


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1 ‘‘430(e)(2) or 433(b)(2)(C), whichever is appli2 cable, and’’, 

3 (K) by adding immediately after subclause 

4 (II) of subsection (c)(4)(C)(i) the following new 

5 subclause: 

6 ‘‘(III) the total amounts not paid 

7 by reason of an extension in effect 

8 under section 433(d),’’, and 

9 (L) by striking ‘‘for waivers of’’ in clause 

10 (ii) of subsection (c)(4)(C) and inserting ‘‘for 

11 waivers or extensions with respect to’’. 

12 (3) BENEFIT RESTRICTIONS.— 

13 (A) IN GENERAL.—Paragraph (29) of sec14 tion 401(a) of such Code is amended by strik15 ing ‘‘multiemployer plan’’ and inserting ‘‘multi16 employer plan or a CSEC plan’’. 

17 (B) CONFORMING CHANGE.—Subsection 

18 (a) of section 436 of such Code is amended by 

19 striking ‘‘single-employer plan’’ and inserting 

20 ‘‘single-employer plan (other than a CSEC 

21 plan)’’. 

22 (4) BENEFIT INCREASES.—Subparagraph (C) 

23 of section 401(a)(33) of such Code is amended by 

24 striking ‘‘multiemployer plans’’ and inserting ‘‘multi25 employer plans or CSEC plans’’. 


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1 (5) LIQUIDITY SHORTFALLS.— 

2 (A) IN GENERAL.—Subparagraph (A) of 

3 section 401(a)(32) of such Code is amended by 

4 striking ‘‘430(j)(4)’’ each place it appears and 

5 inserting ‘‘430(j)(4) or 433(f)(5)’’. 

6 (B) PERIOD OF SHORTFALL.—Subpara7 graph (C) of section 401(a)(32) of such Code is 

8 amended by striking ‘‘430(j)(3) by reason of 

9 section 430(j)(4)(A) thereof’’ and inserting 

10 ‘‘430(j)(3) or 433(f) by reason of section 

11 430(j)(4)(A) or 433(f)(5), respectively’’. 

12 (6) DEDUCTION LIMITS.—Subsection (o) of sec13 tion 404 of such Code is amended by adding at the 

14 end the following new paragraph: 

15 ‘‘(8) CSEC PLANS.—Solely for purposes of this 

16 subsection, a CSEC plan shall be treated as though 

17 section 430 applied to such plan and the minimum 

18 required contribution for any plan year shall be the 

19 amount described in section 412(a)(2)(D).’’. 

20 (7) SECTION 420.—Paragraph (5) of section 

21 420(e) of such Code is amended by striking ‘‘section 

22 430’’ each place it appears and inserting ‘‘sections 

23 430 and 433’’. 

24 (8) COORDINATION WITH SECTION 4971.— 


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1 (A) Subsection (a) of section 4971 of such 

2 Code is amended by striking ‘‘and’’ at the end 

3 of paragraph (1), by striking the period at the 

4 end of paragraph (2) and inserting ‘‘, and’’, 

5 and by adding at the end thereof the following 

6 new paragraph: 

7 ‘‘(3) in the case of a CSEC plan, 10 percent of 

8 the CSEC accumulated funding deficiency as of the 

9 end of the plan year ending with or within the tax10 able year.’’. 

11 (B) Subsection (b) of section 4971 of such 

12 Code is amended— 

13 (i) by striking ‘‘or’’ at the end of 

14 paragraph (1), by adding ‘‘or’’ at the end 

15 of paragraph (2), and by inserting imme16 diately after paragraph (2) the following 

17 new paragraph: 

18 ‘‘(3) a tax is imposed under subsection (a)(3) 

19 on any CSEC accumulated funding deficiency and 

20 the CSEC accumulated funding deficiency is not cor21 rected within the taxable period,’’, and 

22 (ii) by striking ‘‘minimum required 

23 contributions or accumulated funding defi24 ciency’’ and inserting ‘‘minimum required 

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1 ciency, or CSEC accumulated funding defi2 ciency’’. 

3 (C) Subsection (c) of section 4971 of such 

4 Code is amended— 

5 (i) by striking ‘‘accumulated funding 

6 deficiency’’ each place it appears in para7 graph (2) and inserting ‘‘accumulated 

8 funding deficiency or CSEC accumulated 

9 funding deficiency’’, 

10 (ii) by striking ‘‘accumulated funding 

11 deficiency or unpaid minimum required 

12 contribution’’ each place it appears in 

13 paragraph (3) and inserting ‘‘accumulated 

14 funding deficiency, CSEC accumulated 

15 funding deficiency, or unpaid minimum re16 quired contribution’’, and 

17 (iii) by adding at the end the fol18 lowing new paragraph: 

19 ‘‘(5) CSEC ACCUMULATED FUNDING DEFI20 CIENCY.—The term ‘CSEC accumulated funding de21 ficiency’ means the accumulated funding deficiency 

22 determined under section 433.’’. 

23 (D) Paragraph (1) of section 4971(d) of 

24 such Code is amended by striking ‘‘accumulated 

25 funding deficiency or unpaid minimum required 


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1 contribution’’ and inserting ‘‘accumulated fund2 ing deficiency, CSEC accumulated funding defi3 ciency, or unpaid minimum required contribu4 tion’’. 

5 (E) Subsection (f) of section 4971 of such 

6 Code is amended— 

7 (i) by striking ‘‘430(j)(4)’’ in para8 graph (1) and inserting ‘‘430(j)(4) or 

9 433(f)’’, 

10 (ii) by striking ‘‘430(j)’’ in paragraph 

11 (1)(B) and inserting ‘‘430(j) or 433(f), 

12 whichever is applicable’’, and 

13 (iii) by striking ‘‘412(m)(5)’’ in para14 graph (3)(A) and inserting ‘‘430(j) or 

15 433(f), whichever is applicable’’. 

16 (9) EXCISE TAX ON FAILURE TO ADOPT FUND17 ING RESTORATION PLAN.—Section 4971 of such 

18 Code is amended by redesignating subsection (h) as 

19 subsection (i), and by inserting after subsection (g) 

20 the following new subsection: 

21 ‘‘(h) FAILURE OF A CSEC PLAN SPONSOR TO

22 ADOPT FUNDING RESTORATION PLAN.— 

23 ‘‘(1) IN GENERAL.—In the case of a CSEC plan 

24 that is in funding restoration status (within the 

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1 posed a tax on the failure of such plan to adopt a 

2 funding restoration plan within the time prescribed 

3 under section 433(j)(3). 

4 ‘‘(2) AMOUNT OF TAX.—The amount of the tax 

5 imposed under paragraph (1) with respect to any 

6 plan sponsor for any taxable year shall be the 

7 amount equal to $100 multiplied by the number of 

8 days during the taxable year which are included in 

9 the period beginning on the day following the close 

10 of the 180-day period described in section 433(j)(3) 

11 and ending on the day on which the funding restora12 tion plan is adopted. 

13 ‘‘(3) WAIVER BY SECRETARY.—In the case of a 

14 failure described in paragraph (1) which the Sec15 retary determines is due to reasonable cause and not 

16 to willful neglect, the Secretary may waive a portion 

17 or all of the tax imposed by such paragraph. 

18 ‘‘(4) LIABILITY FOR TAX.—The tax imposed by 

19 paragraph (1) shall be paid by the plan sponsor 

20 (within the meaning of section 433(j)(5)(E)).’’. 

21 (10) REPORTING.— 

22 (A) IN GENERAL.—Paragraph (2) of sec23 tion 6059(b) of such Code is amended by strik24 ing ‘‘430,’’ and inserting ‘‘430, the accumulated 

25 funding deficiency under section 433,’’. 


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1 (B) ASSUMPTIONS.—Subparagraph (B) of 

2 section 6059(b)(3) of such Code is amended by 

3 striking ‘‘430(h)(1) or 431(c)(3)’’ and inserting 

4 ‘‘430(h)(1), 431(c)(3), or 433(c)(3)’’. 

5 SEC. 203. ELECTION NOT TO BE TREATED AS A CSEC PLAN. 

6 (a) IN GENERAL.—Section 414(y) of the Internal 

7 Revenue Code of 1986, as added by section 201, is amend8 ed by adding at the end the following new paragraph: 

9 ‘‘(3) ELECTION.— 

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

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

13 plan shall be a CSEC plan unless the plan 

14 sponsor elects not later than the close of the 

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

17 plan. An election under the preceding sentence 

18 shall take effect for such plan year and, once 

19 made, may be revoked only with the consent of 

20 the Secretary. 

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

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

23 section 104 of the Pension Protection Act of 

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


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1 Pension Relief Act of 2010, shall cease to apply 

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

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

4 (b) EFFECTIVE DATE.—The amendment made by 

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

6 Act. 

Æ 


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