109TH CONGRESS

2D SESSION S. 4121

AN ACT

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,
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S 4121 ES

1 SECTION 1. TREATMENT OF LIABILITY FOR CERTAIN MUL2 TIPLE EMPLOYER PLANS.

3 (a) IN GENERAL.—In the case of an applicable pen4 sion plan—

5 (1) if an eligible employer elects the application

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

7 respect to the applicable pension plan shall be deter8 mined under subsection (b), and

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

10 election, any liability of the employer with respect to

11 the applicable pension plan shall be determined

12 under subsection (c).

13 (b) ELECTION TO SPIN OFF LIABILITY.—

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

15 elects, within 180 days after the date of the enact16 ment of this Act, to have this subsection apply, the

17 applicable pension plan shall be treated as having,

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

19 allocable portion of the plan’s assets and liabilities

20 to an eligible spunoff plan and the employer’s liabil21 ity with respect to the applicable pension plan shall

22 be determined by reference to the eligible spunoff

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

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

25 in lieu of any other liability to the Pension Benefit
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1 Guaranty Corporation or to the applicable pension

2 plan with respect to the applicable pension plan.

3 (2) LIABILITY OF EMPLOYERS ELECTING SPIN4 OFF.—

5 (A) ONGOING FUNDING LIABILITY.—

6 (i) IN GENERAL.—In the case of an

7 eligible spunoff plan, the amendments

8 made by section 401, and subtitles A and

9 B of title I, of the Pension Protection Act

10 of 2006 shall not apply to plan years be11 ginning before the first plan year for which

12 the plan ceases to be an eligible spunoff

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

14 except as provided in clause (ii), the em15 ployer maintaining such plan shall be liable

16 for ongoing contributions to the eligible

17 spunoff plan on the same terms and sub18 ject to the same conditions as under the

19 provisions of the Employee Retirement In20 come Security Act of 1974 and the Inter21 nal Revenue Code of 1986 as in effect be22 fore such amendments. Such liability shall

23 be in lieu of any other liability to the Pen24 sion Benefit Guaranty Corporation or to
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1 the applicable pension plan with respect to

2 the applicable pension plan.

3 (ii) INTEREST RATE.—In applying

4 section 302(b)(5)(B) of the Employee Re5 tirement Income Security Act of 1974 and

6 section 412(b)(5)(B) of the Internal Rev7 enue Code of 1986 (as in effect before the

8 amendments made by subtitles A and B of

9 title I of the Pension Protection Act of

10 2006) and in applying section

11 4006(a)(3)(E)(iii) of such Act (as in effect

12 before the amendments made by section

13 401 of such Act) to an eligible spunoff

14 plan for plan years beginning after Decem15 ber 31, 2007, and before the first plan

16 year to which such amendments apply, the

17 third segment rate determined under sec18 tion 303(h)(2)(C)(iii) of such Act and sec19 tion 430(h)(2)(C)(iii) of such Code (as

20 added by such amendments) shall be used

21 in lieu of the interest rate otherwise used.

22 (B) TERMINATION LIABILITY.—If an eligi23 ble spunoff plan terminates under title IV of

24 the Employee Retirement Income Security Act

25 of 1974 on or before December 31, 2010, the
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1 liability of the employer maintaining such plan

2 resulting from such termination under section

3 4062 of the Employee Retirement Income Secu4 rity Act of 1974 shall be determined in accord5 ance with the assumptions and methods de6 scribed in subsection (c)(2)(A). The employer’s

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

8 any other liability to the Pension Benefit Guar9 anty Corporation or to the applicable pension

10 plan with respect to the applicable pension plan.

11 (c) LIABILITY OF EMPLOYERS NOT ELECTING SPIN12 OFF.—

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

14 is terminated under the Employee Retirement In15 come Security Act of 1974, an eligible employer

16 which does not make the election described in sub17 section (b) shall be liable to the corporation with re18 spect to the applicable pension plan (in lieu of any

19 other liability to the Pension Benefit Guaranty Cor20 poration or to the applicable pension plan with re21 spect to the applicable pension plan ) in an amount

22 equal to the fractional portion of the adjusted un23 funded benefit liabilities of such plan as of Decem24 ber 31, 2005, determined without regard to any ad25 justed unfunded benefit liabilities to be transferred
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1 to an eligible spunoff plan pursuant to subsection

2 (b).

3 (2) DEFINITIONS.—For purposes of this

4 subsection—

5 (A) ADJUSTED UNFUNDED BENEFIT LI6 ABILITIES.—The term ‘‘adjusted unfunded ben7 efit liabilities’’ means the amount of unfunded

8 benefit liabilities (as defined in section

9 4001(a)(18) of the Employee Retirement In10 come Security Act of 1974), except that the in11 terest assumption shall be the rate of interest

12 under section 302(b) of the Employee Retire13 ment Income Security Act of 1974 and section

14 412(b) of the Internal Revenue Code of 1986,

15 as in effect before the amendments made by the

16 Pension Protection Act of 2006, for the most

17 recent plan year for which such rate exists.

18 (B) FRACTIONAL PORTION.—The term

19 ‘‘fractional portion’’ means a fraction, the nu20 merator of which is the amount required to be

21 contributed to the applicable pension plan for

22 the 5 plan years ending before December 31,

23 2005, by such employer, and the denominator

24 of which is the amount required to be contrib25 uted to such plan for such plan years by all em-
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1 ployers which do not make the election de2 scribed in subsection (b).

3 (d) OTHER DEFINITIONS.—For purposes of this

4 section—

5 (1) APPLICABLE PENSION PLAN.—The term

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

7 plan which—

8 (A) was established in the State of Alaska

9 on March 18, 1967, and

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

11 contributing sponsors at least 2 of which were

12 not under common control.

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

14 portion’’ means, with respect to any eligible em15 ployer making an election under subsection (b), the

16 portion of an applicable pension plan’s liabilities and

17 assets which bears the same ratio to all such liabil18 ities and assets as such employer’s share (deter19 mined under subsection (c) as if no eligible employer

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

21 (if any) of—

22 (A) the liabilities of the plan, valued in ac23 cordance with subsection (c), over

24 (B) the assets of the plan,

25 bears to the total amount of such excess.
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1 (3) ELIGIBLE EMPLOYER.—An ‘‘eligible em2 ployer’’ is an employer which participated in an eli3 gible multiple employer plan on or after January 1,

4 2000.

Passed the Senate December 8, 2006.

Attest:

Secretary.
109TH CONGRESS

2D SESSION S. 4121

AN ACT

To provide optional funding rules for employers in

applicable multiple employer pension plans.