226
(A) by striking ‘‘section 412(b)(2)’’ in sub-
paragraph 
(A) 
and 
inserting 
‘‘section 
431(b)(2)’’, and 
(B) by striking ‘‘section 412(b)(3)(B)’’ in 
subparagraph 
(B) 
and 
inserting 
‘‘section 
431(b)(3)(B)’’. 
(2) Section 418B of such Code is amended—
(A) by striking ‘‘section 412(b)(2)(A) or 
(B)’’ in subsection (d)(1)(B) and inserting 
‘‘section 431(b)(2)(A) or (B)’’, 
(B) by striking ‘‘section 412(c)(8)’’ in sub-
section (e) and inserting ‘‘section 412(g)(2)’’, 
and 
(C) by striking ‘‘section 412(c)(3)’’ in sub-
section (g) and inserting ‘‘section 431(c)(3)’’. 
(3) Section 418D(a)(2) of such Code is amend-
ed—
(A) by striking ‘‘section 412(c)(8)’’ and in-
serting ‘‘section 412(g)(2)’’, and 
(B) by striking ‘‘section 412(c)(10)’’ and 
inserting ‘‘section 431(c)(8)’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part III of subchapter D of chapter 1 
of such Code is amended by adding after the item relating 
to section 430 the following new item:
‘‘Sec. 431. Minimum funding standards for multiemployer plans.’’.
227
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after 2005. 
SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEM-
PLOYER PLANS IN ENDANGERED OR CRIT-
ICAL STATUS. 
(a) IN GENERAL.—Subpart A of part III of sub-
chapter D of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 431 the fol-
lowing new section: 
‘‘SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEM-
PLOYER PLANS IN ENDANGERED STATUS OR 
CRITICAL STATUS. 
‘‘(a) ANNUAL CERTIFICATION BY PLAN ACTUARY.—
‘‘(1) IN GENERAL.—During the 90-day period 
beginning on first day of each plan year of a multi-
employer plan, the plan actuary of shall certify to 
the Secretary whether or not the plan is in endan-
gered status for such plan year and whether or not 
the plan is in critical status for such plan year. 
‘‘(2) ACTUARIAL PROJECTIONS OF ASSETS AND 
LIABILITIES.—
‘‘(A) IN GENERAL.—In making the deter-
minations under paragraph (1), the plan actu-
ary shall make projections under subsections 
(b)(2) and (c)(2) for the current and succeeding
228
plan years, using reasonable actuarial assump-
tions and methods, of the current value of the 
assets of the plan and the present value of all 
liabilities to participants and beneficiaries under 
the plan for the current plan year as of the be-
ginning of such year, as set forth in the actu-
arial statement prepared for the preceding plan 
year under section 6058. 
‘‘(B) DETERMINATIONS OF FUTURE CON-
TRIBUTIONS.—Any such actuarial projection of 
plan assets shall assume—
‘‘(i) reasonably anticipated employer 
and employee contributions for the current 
and succeeding plan years, assuming that 
the terms of the one or more collective bar-
gaining agreements pursuant to which the 
plan is maintained for the current plan 
year continue in effect for succeeding plan 
years, or 
‘‘(ii) employer and employee contribu-
tions projected for the current and suc-
ceeding plan years under the terms of such 
collective bargaining agreements (assuming 
the continued application of such terms in-
definitely to such plan years), but only if
229
the plan actuary determines there have 
been no significant demographic changes 
that would make continued application of 
such terms unreasonable. 
‘‘(3) PRESUMED STATUS IN ABSENCE OF TIME-
LY
ACTUARIAL
CERTIFICATION.—If certification 
under this subsection is not made before the end of 
the 90-day period specified in paragraph (1), the 
plan shall be presumed to be in critical status for 
such plan year until such time as the actuary makes 
a contrary certification. 
‘‘(4) NOTICE.—In any case in which a multiem-
ployer plan is certified to be in endangered or crit-
ical status for a plan year under paragraph (1), is 
presumed to be in critical status under paragraph 
(3), or is deemed to be in critical status under sub-
section (b)(7), the plan sponsor shall, not later than 
30 days after the date of the certification, presump-
tion, or deeming, provide notification of the endan-
gered or critical status to the participants and bene-
ficiaries, the bargaining parties, the Pension Benefit 
Guaranty Corporation, the Secretary of the Treas-
ury, and the Secretary of Labor. 
‘‘(b) FUNDING RULES FOR MULTIEMPLOYER PLANS 
IN ENDANGERED STATUS.—
230
‘‘(1) IN
GENERAL.—In any case in which a 
multiemployer plan is in endangered status for a 
plan year, the plan sponsor shall, in accordance with 
this subsection, amend the plan to include a funding 
improvement plan upon approval thereof by the bar-
gaining parties under this subsection. The amend-
ment shall be adopted not later than 240 days after 
the date on which the plan is certified to be in en-
dangered status under subsection (a)(1). 
‘‘(2) ENDANGERED STATUS.—A multiemployer 
plan is in endangered status for a plan year if, as 
determined by the plan actuary under subsection 
(c)—
‘‘(A) the plan’s funded percentage for such 
plan year is less than 80 percent, or 
‘‘(B) the plan has an accumulated funding 
deficiency for such plan year under section 431 
or is projected to have such an accumulated 
funding deficiency for any of the 6 succeeding 
plan years, taking into account any extension of 
amortization periods under section 431(d). 
‘‘(3) FUNDING IMPROVEMENT PLAN.—
‘‘(A) BENCHMARKS.—A funding improve-
ment plan shall consist of amendments to the 
plan formulated to provide, under reasonable
231
actuarial assumptions, for the attainment, dur-
ing the funding improvement period under the 
funding improvement plan, of the following 
benchmarks: 
‘‘(i) REDUCTION IN UNFUNDED CUR-
RENT
LIABILITY.—A percentage decrease 
in the plan’s unfunded current liability 
from the amount for the first plan year of 
the funding improvement period to the 
amount for the last plan year of the fund-
ing improvement period, of at least 331⁄3 
percent. 
‘‘(ii) AVOIDANCE
OF
ACCUMULATED 
FUNDING DEFICIENCIES.—No accumulated 
funding deficiency for any plan year during 
the funding improvement period (taking 
into account any extension of amortization 
periods under section 431(d)). 
‘‘(B) FUNDING IMPROVEMENT PERIOD.—
The funding improvement period for any fund-
ing improvement plan adopted pursuant to this 
subsection is the 10-year period beginning on 
the earlier of—
232
‘‘(i) the second anniversary of the 
date of the adoption of the funding im-
provement plan, or 
‘‘(ii) the first day of the first plan 
year of the multiemployer plan following 
the plan year in which occurs the first date 
after the day of the certification as of 
which collective bargaining agreements cov-
ering on the day of such certification at 
least 75 percent of active participants in 
such multiemployer plan have expired. 
‘‘(C) REPORTING.—A summary of any 
funding improvement plan or modification 
thereto adopted during any plan year shall be 
included in the annual report for such plan year 
under section 104(a) of the Employee Retire-
ment and Income Security Act of 1974 and in 
the summary annual report described in section 
104(b)(3) of such Act. 
‘‘(4) DEVELOPMENT
OF
FUNDING
IMPROVE-
MENT PLAN.—
‘‘(A) ACTIONS BY PLAN SPONSOR PENDING 
APPROVAL.—Pending the approval of a funding 
improvement plan under this paragraph, the 
plan sponsor shall take all reasonable actions,
233
consistent with the terms of the plan and appli-
cable law, necessary to ensure—
‘‘(i) an increase in the plan’s funded 
percentage, and 
‘‘(ii) postponement of an accumulated 
funding deficiency for at least 1 additional 
plan year. 
Such actions include applications for extensions 
of amortization periods under section 431(d), 
use of the shortfall funding method in making 
funding 
standard 
account 
computations, 
amendments to the plan’s benefit structure, re-
ductions in future benefit accruals, and other 
reasonable actions consistent with the terms of 
the plan and applicable law. 
‘‘(B) RECOMMENDATIONS BY PLAN SPON-
SOR.—
‘‘(i) IN GENERAL.—During the period 
of 90 days following the date on which a 
multiemployer plan is certified to be in en-
dangered status, the plan sponsor shall de-
velop and provide to the bargaining parties 
alternative proposals for revised benefit 
structures, 
contribution 
structures, 
or 
both, which, if adopted as amendments to
234
the plan, may be reasonably expected to 
meet the benchmarks described in para-
graph (3)(A). Such proposals shall in-
clude—
‘‘(I) at least one proposal for re-
ductions in the amount of future ben-
efit accruals necessary to achieve the 
benchmarks, assuming no amend-
ments increasing contributions under 
the plan (other than amendments in-
creasing contributions necessary to 
achieve the benchmarks after amend-
ments have reduced future benefit ac-
cruals to the maximum extent per-
mitted by law), and 
‘‘(II) at least one proposal for in-
creases in contributions under the 
plan necessary to achieve the bench-
marks, assuming no amendments re-
ducing future benefit accruals under 
the plan. 
‘‘(ii) REQUESTS BY BARGAINING PAR-
TIES.—Upon the request of any bargaining 
party who—
235
‘‘(I) employs at least 5 percent of 
the active participants, or 
‘‘(II) represents as an employee 
organization, for purposes of collective 
bargaining, at least 5 percent of the 
active participants, 
the plan sponsor shall provide all such par-
ties information as to other combinations 
of increases in contributions and reduc-
tions in future benefit accruals which 
would result in achieving the benchmarks. 
‘‘(iii) 
OTHER
INFORMATION.—The 
plan sponsor may, as it deems appropriate, 
prepare and provide the bargaining parties 
with additional information relating to con-
tribution structures or benefit structures 
or other information relevant to the fund-
ing improvement plan. 
‘‘(5) MAINTENANCE OF CONTRIBUTIONS PEND-
ING APPROVAL OF FUNDING IMPROVEMENT PLAN.—
Pending approval of a funding improvement plan by 
the bargaining parties with respect to a multiem-
ployer plan, the multiemployer plan may not be 
amended so as to provide—
236
‘‘(A) a reduction in the level of contribu-
tions for participants who are not in pay status, 
‘‘(B) a suspension of contributions with re-
spect to any period of service, or 
‘‘(C) any new direct or indirect exclusion 
of younger or newly hired employees from plan 
participation. 
‘‘(6) BENEFIT
RESTRICTIONS
PENDING
AP-
PROVAL OF FUNDING IMPROVEMENT PLAN.—Pend-
ing approval of a funding improvement plan by the 
bargaining parties with respect to a multiemployer 
plan—
‘‘(A) RESTRICTIONS
ON
LUMP
SUM
DIS-
TRIBUTIONS
AND
SIMILAR
DISTRIBUTIONS.—
The multiemployer plan may not be amended so 
as to provide additional forms of benefits. 
‘‘(B) 
PROHIBITION
ON
BENEFIT
IN-
CREASES.—
‘‘(i) IN GENERAL.—No amendment of 
the plan which increases the liabilities of 
the plan by reason of any increase in bene-
fits, any change in the accrual of benefits, 
or any change in the rate at which benefits 
become nonforfeitable under the plan may 
be adopted.
237
‘‘(ii) EXCEPTION.—Clause (i) shall 
not apply to any plan amendment which—
‘‘(I) the Secretary determines to 
be reasonable and which provides for 
only de minimis increases in the liabil-
ities of the plan, 
‘‘(II) only repeals an amendment 
described in section 430(d)(2), or 
‘‘(III) is required as a condition 
of qualification under part I of sub-
chapter D of chapter 1 of subtitle A. 
‘‘(7) DEFAULT CRITICAL STATUS IF NO FUND-
ING
IMPROVEMENT
PLAN
ADOPTED.—If no plan 
amendment adopting a funding improvement plan 
has been adopted by the end of the 240-day period 
referred to in subsection (a)(1), the plan shall be in 
critical status as of the first day of the succeeding 
plan year. 
‘‘(8) RESTRICTIONS UPON APPROVAL OF FUND-
ING
IMPROVEMENT
PLAN.—Upon adoption of a 
funding improvement plan with respect to a multi-
employer plan, the plan may not be amended—
‘‘(A) so as to be inconsistent with the 
funding improvement plan, or
238
‘‘(B) so as to increase future benefit accru-
als, unless the plan actuary certifies in advance 
that, after taking into account the proposed in-
crease, the plan is reasonably expected to meet 
the the benchmarks described in paragraph 
(3)(A). 
‘‘(c) FUNDING RULES FOR MULTIEMPLOYER PLANS 
IN CRITICAL STATUS.—
‘‘(1) IN
GENERAL.—In any case in which a 
multiemployer plan is in critical status for a plan 
year, the plan sponsor shall, in accordance with this 
subsection, amend the plan to include a rehabilita-
tion plan under this subsection. The amendment 
shall be adopted not later than 240 days after the 
date on which the plan is certified to be in critical 
status under subsection (a)(1) or is presumed to be 
in critical status under subsection (a)(3), or the first 
day of the plan year in the case of a plan that is 
deemed to be in critical status under subsection 
(b)(7). 
‘‘(2) CRITICAL STATUS.—A multiemployer plan 
is in critical status for a plan year if—
‘‘(A) the plan is in endangered status for 
the plan year and the requirements of sub-
239
section (b)(1) are not met with respect to the 
plan for such plan year, or 
‘‘(B) as determined by the plan actuary 
under subsection (a), the plan is described in 
paragraph (3). 
Any multiemployer plan which is in critical status 
under subparagraph (A) or (B) for a plan year shall 
be treated as in critical status also for the suc-
ceeding plan year. 
‘‘(3) CRITICALITY DESCRIPTION.—For purposes 
of paragraph (2)(B), a plan is described in this 
paragraph if the plan is described in at least one of 
the following subparagraphs: 
‘‘(A) A plan is described in this subpara-
graph if, as of the beginning of the current plan 
year—
‘‘(i) the funded percentage of the plan 
is less than 65 percent, and 
‘‘(ii) the sum of—
‘‘(I) the market value of plan as-
sets, plus 
‘‘(II) the present value of the 
reasonably anticipated employer and 
employee contributions for the current 
plan year and each of the 6 suc-
240
ceeding plan years, assuming that the 
terms of the one or more collective 
bargaining agreements pursuant to 
which the plan is maintained for the 
current plan year continue in effect 
for succeeding plan years, 
is less than the present value of all non-
forfeitable benefits for all participants and 
beneficiaries projected to be payable under 
the plan during the current plan year and 
each of the 6 succeeding plan years (plus 
administrative expenses for such plan 
years). 
‘‘(B) A plan is described in this subpara-
graph if, as of the beginning of the current plan 
year, the sum of—
‘‘(i) the market value of plan assets, 
plus 
‘‘(ii) the present value of the reason-
ably anticipated employer and employee 
contributions for the current plan year and 
each of the 4 succeeding plan years, as-
suming that the terms of the one or more 
collective bargaining agreements pursuant 
to which the plan is maintained for the