II 

109TH CONGRESS 

2D SESSION S. 4121 

To provide optional funding rules for employers in applicable multiple 

employer pension plans. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 8, 2006 

Mr. STEVENS introduced the following bill; which was read twice, considered, 

read the third time, and passed 

A BILL 

To provide optional funding rules for employers in applicable 

multiple employer 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. TREATMENT OF LIABILITY FOR CERTAIN MUL4 TIPLE EMPLOYER PLANS. 

5 (a) IN GENERAL.—In the case of an applicable pen6 sion plan— 

7 (1) if an eligible employer elects the application 

8 of subsection (b), any liability of the employer with 

9 respect to the applicable pension plan shall be deter10 mined under subsection (b), and 


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1 (2) if an eligible employer does not make such 

2 election, any liability of the employer with respect to 

3 the applicable pension plan shall be determined 

4 under subsection (c). 

5 (b) ELECTION TO SPIN OFF LIABILITY.— 

6 (1) IN GENERAL.—If an eligible employer 

7 elects, within 180 days after the date of the enact8 ment of this Act, to have this subsection apply, the 

9 applicable pension plan shall be treated as having, 

10 effective January 1, 2006, spun off such employer’s 

11 allocable portion of the plan’s assets and liabilities 

12 to an eligible spunoff plan and the employer’s liabil13 ity with respect to the applicable pension plan shall 

14 be determined by reference to the eligible spunoff 

15 plan in the manner provided under paragraph (2). 

16 The employer’s liability, as so determined, shall be 

17 in lieu of any other liability to the Pension Benefit 

18 Guaranty Corporation or to the applicable pension 

19 plan with respect to the applicable pension plan. 

20 (2) LIABILITY OF EMPLOYERS ELECTING SPIN21 OFF.— 

22 (A) ONGOING FUNDING LIABILITY.— 

23 (i) IN GENERAL.—In the case of an 

24 eligible spunoff plan, the amendments 

25 made by section 401, and subtitles A and 


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1 B of title I, of the Pension Protection Act 

2 of 2006 shall not apply to plan years be3 ginning before the first plan year for which 

4 the plan ceases to be an eligible spunoff 

5 plan (or, if earlier, January 1, 2017), and 

6 except as provided in clause (ii), the em7 ployer maintaining such plan shall be liable 

8 for ongoing contributions to the eligible 

9 spunoff plan on the same terms and sub10 ject to the same conditions as under the 

11 provisions of the Employee Retirement In12 come Security Act of 1974 and the Inter13 nal Revenue Code of 1986 as in effect be14 fore such amendments. Such liability shall 

15 be in lieu of any other liability to the Pen16 sion Benefit Guaranty Corporation or to 

17 the applicable pension plan with respect to 

18 the applicable pension plan. 

19 (ii) INTEREST RATE.—In applying 

20 section 302(b)(5)(B) of the Employee Re21 tirement Income Security Act of 1974 and 

22 section 412(b)(5)(B) of the Internal Rev23 enue Code of 1986 (as in effect before the 

24 amendments made by subtitles A and B of 

25 title I of the Pension Protection Act of 


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1 2006) and in applying section 

2 4006(a)(3)(E)(iii) of such Act (as in effect 

3 before the amendments made by section 

4 401 of such Act) to an eligible spunoff 

5 plan for plan years beginning after Decem6 ber 31, 2007, and before the first plan 

7 year to which such amendments apply, the 

8 third segment rate determined under sec9 tion 303(h)(2)(C)(iii) of such Act and sec10 tion 430(h)(2)(C)(iii) of such Code (as 

11 added by such amendments) shall be used 

12 in lieu of the interest rate otherwise used. 

13 (B) TERMINATION LIABILITY.—If an eligi14 ble spunoff plan terminates under title IV of 

15 the Employee Retirement Income Security Act 

16 of 1974 on or before December 31, 2010, the 

17 liability of the employer maintaining such plan 

18 resulting from such termination under section 

19 4062 of the Employee Retirement Income Secu20 rity Act of 1974 shall be determined in accord21 ance with the assumptions and methods de22 scribed in subsection (c)(2)(A). The employer’s 

23 liability, as so determined, shall be in lien of 

24 any other liability to the Pension Benefit GuarVerDate Aug 31 2005 22:23 Dec 12, 2006 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4121.CPS S4121

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1 anty Corporation or to the applicable pension 

2 plan with respect to the applicable pension plan. 

3 (c) LIABILITY OF EMPLOYERS NOT ELECTING SPIN4 OFF.— 

5 (1) IN GENERAL.—If an applicable pension plan 

6 is terminated under the Employee Retirement In7 come Security Act of 1974, an eligible employer 

8 which does not make the election described in sub9 section (b) shall be liable to the corporation with re10 spect to the applicable pension plan (in lieu of any 

11 other liability to the Pension Benefit Guaranty Cor12 poration or to the applicable pension plan with re13 spect to the applicable pension plan ) in an amount 

14 equal to the fractional portion of the adjusted un15 funded benefit liabilities of such plan as of Decem16 ber 31, 2005, determined without regard to any ad17 justed unfunded benefit liabilities to be transferred 

18 to an eligible spunoff plan pursuant to subsection 

19 (b). 

20 (2) DEFINITIONS.—For purposes of this sub21 section— 

22 (A) ADJUSTED UNFUNDED BENEFIT LI23 ABILITIES.—The term ‘‘adjusted unfunded ben24 efit liabilities’’ means the amount of unfunded 

25 benefit liabilities (as defined in section 


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1 4001(a)(18) of the Employee Retirement In2 come Security Act of 1974), except that the in3 terest assumption shall be the rate of interest 

4 under section 302(b) of the Employee Retire5 ment Income Security Act of 1974 and section 

6 412(b) of the Internal Revenue Code of 1986, 

7 as in effect before the amendments made by the 

8 Pension Protection Act of 2006, for the most 

9 recent plan year for which such rate exists. 

10 (B) FRACTIONAL PORTION.—The term 

11 ‘‘fractional portion’’ means a fraction, the nu12 merator of which is the amount required to be 

13 contributed to the applicable pension plan for 

14 the 5 plan years ending before December 31, 

15 2005, by such employer, and the denominator 

16 of which is the amount required to be contrib17 uted to such plan for such plan years by all em18 ployers which do not make the election de19 scribed in subsection (b). 

20 (d) OTHER DEFINITIONS.—For purposes of this sec21 tion— 

22 (1) APPLICABLE PENSION PLAN.—The term 

23 ‘‘applicable pension plan’’ means a single employer 

24 plan which— 


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1 (A) was established in the State of Alaska 

2 on March 18, 1967, and 

3 (B) as of January 1, 2005, had 2 or more 

4 contributing sponsors at least 2 of which were 

5 not under common control. 

6 (2) ALLOCABLE PORTION.—The term ‘‘allocable 

7 portion’’ means, with respect to any eligible em8 ployer making an election under subsection (b), the 

9 portion of an applicable pension plan’s liabilities and 

10 assets which bears the same ratio to all such liabil11 ities and assets as such employer’s share (deter12 mined under subsection (c) as if no eligible employer 

13 made an election under subsection (b)) of the excess 

14 (if any) of— 

15 (A) the liabilities of the plan, valued in ac16 cordance with subsection (c), over 

17 (B) the assets of the plan, 

18 bears to the total amount of such excess. 

19 (3) ELIGIBLE EMPLOYER.—An ‘‘eligible em20 ployer’’ is an employer which participated in an eli21 gible multiple employer plan on or after January 1, 

22 2000. 

Æ 


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