116
less than 12 months in accordance with 
regulations prescribed by the Secretary. 
‘‘(4) LIQUIDITY REQUIREMENT IN CONNECTION 
WITH QUARTERLY CONTRIBUTIONS.—
‘‘(A) IN GENERAL.—A plan to which this 
paragraph applies shall be treated as failing to 
pay the full amount of any required installment 
under paragraph (3) to the extent that the 
value of the liquid assets paid in such install-
ment is less than the liquidity shortfall (wheth-
er or not such liquidity shortfall exceeds the 
amount of such installment required to be paid 
but for this paragraph). 
‘‘(B) PLANS
TO
WHICH
PARAGRAPH
AP-
PLIES.—This paragraph shall apply to a plan 
(other than a plan that would be described in 
subsection (e)(3)(B) if ‘100’ were substituted 
for ‘500’ therein) which—
‘‘(i) is required to pay installments 
under paragraph (3) for a plan year, and 
‘‘(ii) has a liquidity shortfall for any 
quarter during such plan year. 
‘‘(C) PERIOD
OF
UNDERPAYMENT.—For 
purposes of paragraph (3)(A), any portion of an 
installment that is treated as not paid under
117
subparagraph (A) shall continue to be treated 
as unpaid until the close of the quarter in 
which the due date for such installment occurs. 
‘‘(D) LIMITATION
ON
INCREASE.—If the 
amount of any required installment is increased 
by reason of subparagraph (A), in no event 
shall such increase exceed the amount which, 
when added to prior installments for the plan 
year, is necessary to increase the funding target 
attainment percentage of the plan for the plan 
year (taking into account the expected increase 
in funding target due to benefits accruing or 
earned during the plan year) to 100 percent. 
‘‘(E) DEFINITIONS.—For purposes of this 
subparagraph: 
‘‘(i) 
LIQUIDITY
SHORTFALL.—The 
term ‘liquidity shortfall’ means, with re-
spect to any required installment, an 
amount equal to the excess (as of the last 
day of the quarter for which such install-
ment is made) of—
‘‘(I) the base amount with re-
spect to such quarter, over 
‘‘(II) the value (as of such last 
day) of the plan’s liquid assets.
118
‘‘(ii) BASE AMOUNT.—
‘‘(I) IN
GENERAL.—The term 
‘base amount’ means, with respect to 
any quarter, an amount equal to 3 
times the sum of the adjusted dis-
bursements from the plan for the 12 
months ending on the last day of such 
quarter. 
‘‘(II) SPECIAL
RULE.—If the 
amount determined under subclause 
(I) exceeds an amount equal to 2 
times the sum of the adjusted dis-
bursements from the plan for the 36 
months ending on the last day of the 
quarter and an enrolled actuary cer-
tifies to the satisfaction of the Sec-
retary that such excess is the result of 
nonrecurring circumstances, the base 
amount with respect to such quarter 
shall be determined without regard to 
amounts related to those nonrecurring 
circumstances. 
‘‘(iii) DISBURSEMENTS
FROM
THE 
PLAN.—The term ‘disbursements from the 
plan’ means all disbursements from the
119
trust, including purchases of annuities, 
payments of single sums and other bene-
fits, and administrative expenses. 
‘‘(iv) ADJUSTED
DISBURSEMENTS.—
The term ‘adjusted disbursements’ means 
disbursements from the plan reduced by 
the product of—
‘‘(I) the plan’s funding target at-
tainment percentage for the plan year, 
and 
‘‘(II) the sum of the purchases of 
annuities, payments of single sums, 
and such other disbursements as the 
Secretary shall provide in regulations. 
‘‘(v) LIQUID ASSETS.—The term ‘liq-
uid assets’ means cash, marketable securi-
ties, and such other assets as specified by 
the Secretary in regulations. 
‘‘(vi) QUARTER.—The term ‘quarter’ 
means, with respect to any required install-
ment, the 3-month period preceding the 
month in which the due date for such in-
stallment occurs.
120
‘‘(F) REGULATIONS.—The Secretary may 
prescribe such regulations as are necessary to 
carry out this paragraph. 
‘‘(j) WAIVER AMORTIZATION CHARGE.—
‘‘(1) IN
GENERAL.—The minimum required 
contribution for any plan year under subsection (a) 
shall be increased by the amount of the waiver am-
ortization charge (if any) for such plan year. 
‘‘(2) DETERMINATION
OF
WAIVER
AMORTIZA-
TION CHARGE.—The waiver amortization charge for 
a plan for any plan year is the aggregate total of the 
waiver amortization installments for such plan year 
with respect to the waiver amortization bases for 
such plan year and each of the 4 preceding plan 
years. 
‘‘(3) WAIVER AMORTIZATION INSTALLMENT.—
For purposes of paragraph (2), the plan sponsor 
shall determine, with respect to the waiver amortiza-
tion base of the plan for any plan year, the amounts 
necessary to amortize such waiver amortization base, 
in level annual installments over a period of 5 plan 
years beginning with such plan year. The annual in-
stallment of such amortization for each plan year in 
such 5-plan year period is the waiver amortization
121
installment for such plan year with respect to such 
waiver amortization base. 
‘‘(4) COMPUTATION ASSUMPTIONS.—The deter-
mination of any annual installment under paragraph 
(2) for any plan year shall be made as of the valu-
ation date for such plan year, using the effective 
rate of interest for the plan for the preceding plan 
year. 
‘‘(5) WAIVER AMORTIZATION BASE.—The waiv-
er amortization base of a plan for a plan year is the 
excess (if any) of—
‘‘(A) the portion of the minimum required 
contribution of such plan waived under section 
412(c) for such plan year, over 
‘‘(B) the aggregate total of the waiver am-
ortization installments, for such plan year and 
the 3 succeeding plan years, which have been 
determined with respect to the waiver amortiza-
tion bases of the plan for each of the 4 plan 
years preceding such plan year. 
‘‘(k) IMPOSITION
OF LIEN WHERE FAILURE
TO 
MAKE REQUIRED CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—In the case of a plan cov-
ered under section 4021 of the Employee Retirement 
and Income Security Act of 1974 and to which this
122
subsection applies (as provided under paragraph 
(2)), if—
‘‘(A) any person fails to make a contribu-
tion payment required by section 412 and this 
section before the due date for such payment, 
and 
‘‘(B) the unpaid balance of such payment 
(including interest), when added to the aggre-
gate unpaid balance of all preceding such pay-
ments for which payment was not made before 
the due date (including interest), exceeds 
$1,000,000, 
then there shall be a lien in favor of the plan in the 
amount determined under paragraph (3) upon all 
property and rights to property, whether real or per-
sonal, belonging to such person and any other per-
son who is a member of the same controlled group 
of which such person is a member. 
‘‘(2) PLANS TO WHICH SUBSECTION APPLIES.—
This subsection shall apply to a defined benefit plan 
which is a single-employer plan for any plan year for 
which the funding target attainment percentage (as 
defined in subsection (d)(2)) of such plan is less 
than 100 percent.
123
‘‘(3) AMOUNT OF LIEN.—For purposes of para-
graph (1), the amount of the lien shall be equal to 
the aggregate unpaid balance of contribution pay-
ments required under this section and section 412 
for which payment has not been made before the due 
date. 
‘‘(4) NOTICE OF FAILURE; LIEN.—
‘‘(A) NOTICE
OF
FAILURE.—A person 
committing a failure described in paragraph (1) 
shall notify the Pension Benefit Guaranty Cor-
poration of such failure within 10 days of the 
due date for the required contribution payment. 
‘‘(B) PERIOD OF LIEN.—The lien imposed 
by paragraph (1) shall arise on the due date for 
the required contribution payment and shall 
continue until the last day of the first plan year 
in which the plan ceases to be described in 
paragraph (1)(B). Such lien shall continue to 
run without regard to whether such plan con-
tinues to be described in paragraph (2) during 
the period referred to in the preceding sentence. 
‘‘(C) CERTAIN
RULES
TO
APPLY.—Any 
amount with respect to which a lien is imposed 
under paragraph (1) shall be treated as taxes 
due and owing the United States and rules
124
similar to the rules of subsections (c), (d), and 
(e) of section 4068 of the Employee Retirement 
and Income Security Act of 1974 shall apply 
with respect to a lien imposed by subsection (a) 
and the amount with respect to such lien. 
‘‘(5) ENFORCEMENT.—Any lien created under 
paragraph (1) may be perfected and enforced only 
by the Pension Benefit Guaranty Corporation, or at 
the direction of the Pension Benefit Guaranty Cor-
poration, by the contributing sponsor (or any mem-
ber of the controlled group of the contributing spon-
sor). 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) CONTRIBUTION PAYMENT.—The term 
‘contribution payment’ means, in connection 
with a plan, a contribution payment required to 
be made to the plan, including any required in-
stallment under paragraphs (3) and (4) of sub-
section (i). 
‘‘(B) DUE
DATE; 
REQUIRED
INSTALL-
MENT.—The terms ‘due date’ and ‘required in-
stallment’ have the meanings given such terms 
by subsection (i), except that in the case of a 
payment other than a required installment, the
125
due date shall be the date such payment is re-
quired to be made under section 430. 
‘‘(C) CONTROLLED
GROUP.—The term 
‘controlled group’ means any group treated as 
a single employer under subsections (b), (c), 
(m), and (o) of section 414. 
‘‘(l) QUALIFIED TRANSFERS TO HEALTH BENEFIT 
ACCOUNTS.—In the case of a qualified transfer (as de-
fined in section 420), any assets so transferred shall not, 
for purposes of this section, be treated as assets in the 
plan. ’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan years begin-
ning after 2005. 
SEC. 113. LIMITATIONS ON DISTRIBUTIONS AND BENEFIT 
ACCRUALS 
UNDER 
SINGLE-EMPLOYER 
PLANS. 
(a) PROHIBITION
OF SHUTDOWN BENEFITS
AND 
OTHER UNPREDICTABLE CONTINGENT EVENT BENEFITS 
UNDER SINGLE-EMPLOYER PLANS.—Part III of sub-
chapter D of chapter 1 of the Internal Revenue Code of 
1986 (relating to deferred compensation, etc.) is amend-
ed—
(1) by striking the heading and inserting the 
following:
126
‘‘PART III—RULES RELATING TO MINIMUM FUND-
ING STANDARDS AND BENEFIT LIMITATIONS
‘‘Subpart A. Minimum funding standards for pension plans. 
‘‘Subpart B. Benefit limitations under single-employer plans.
‘‘Subpart A—Minimum Funding Standards for 
Pension Plans
‘‘Sec. 430. Minimum funding standards for single-employer defined benefit pen-
sion plans.’’, and
(2) by adding at the end the following new sub-
part: 
‘‘Subpart B—Benefit Limitations Under Single-
employer Plans
‘‘Sec. 436. Prohibition of shutdown benefits and other unpredictable contingent 
event benefits.
‘‘SEC. 436. PROHIBITION OF SHUTDOWN BENEFITS AND 
OTHER 
UNPREDICTABLE 
CONTINGENT 
EVENT BENEFITS. 
‘‘(a) IN GENERAL.—No pension plan which is a sin-
gle-employer plan may provide benefits which are payable 
upon the occurrence of—
‘‘(1) a plant shutdown, or 
‘‘(2) any other unpredictable contingent event. 
‘‘(b) UNPREDICTABLE CONTINGENT EVENT.—For 
purposes of this subsection, the term ‘unpredictable con-
tingent event’ means an event other than—
127
‘‘(1) attainment of any age, performance of any 
service, receipt or derivation of any compensation, or 
the occurrence of death or disability, or 
‘‘(2) an event which is reasonably and reliably 
predictable (as determined by the Secretary).’’. 
(b) OTHER LIMITS ON BENEFITS AND BENEFIT AC-
CRUALS.—
(1) IN GENERAL.—Subpart B of part III of 
subchapter D of chapter 1 of such Code is amended 
by adding at the end the following: 
‘‘SEC. 437. BENEFIT LIMIATIONS ON UNDERFUNDED PLANS. 
‘‘(a) LIMITATIONS ON PLAN AMENDMENTS INCREAS-
ING LIABILITY FOR BENEFITS.—
‘‘(1) IN GENERAL.—No amendment to a de-
fined benefit plan (other than a multiemployer plan) 
which has the effect of increasing liabilities of the 
plan by reason of increases in benefits, establish-
ment of new benefits, changing the rate of benefit 
accrual, or changing the rate at which benefits be-
come nonforfeitable to the plan may take effect dur-
ing any plan year if the funding target attainment 
percentage as of the valuation date of the plan for 
such plan year is—
‘‘(A) less than 80 percent, or
128
‘‘(B) would be less than 80 percent taking 
into account such amendment. 
‘‘(2) EXEMPTION.—Paragraph (1) shall cease 
to apply with respect to any plan year, effective as 
of the first date of the plan year (or if later, the ef-
fective date of the amendment), upon payment by 
the plan sponsor of a contribution equal to—
‘‘(A) in the case of paragraph (1)(A), the 
amount of the increase in the funding target of 
the plan (under section 430) for the plan year 
attributable to the amendment, and 
‘‘(B) in the case of subparagraph (1)(B), 
the amount sufficient to result in a funding tar-
get attainment percentage of 80 percent. 
‘‘(b) FUNDING-BASED
LIMITATION
ON
CERTAIN 
FORMS OF DISTRIBUTION.—A defined benefit plan (other 
than a multiemployer plan) shall provide that, in any case 
in which the plan’s funding target attainment percentage 
as of the valuation date of the plan for a plan year is 
less than 80 percent, the plan may not after such date 
pay any prohibited payment (as defined in section 206(e) 
of the Employee Retirement and Income Security Act of 
1974). 
‘‘(c) LIMITATIONS
ON BENEFIT ACCRUALS
FOR 
PLANS WITH SEVERE FUNDING SHORTFALLS.—A de-
129
fined benefit plan (other than a multiemployer plan) shall 
provide that, in any case in which the plan’s funding tar-
get attainment percentage as of the valuation date of the 
plan for a plan year is less than 60 percent, all future 
benefit accruals under the plan shall cease as of such date. 
‘‘(d) NEW PLANS.—Subsections (a) and (c) shall not 
apply to a plan for the first 5 plan years of the plan. For 
purposes of this subsection, the reference in this sub-
section to a plan shall include a reference to any prede-
cessor plan. 
‘‘(e) PRESUMED UNDERFUNDING FOR PURPOSES OF 
BENEFIT LIMITATIONS BASED ON PRIOR YEAR’S FUND-
ING STATUS.—
‘‘(1) PRESUMPTION
OF
CONTINUED
UNDER-
FUNDING.—In any case in which a benefit limitation 
under subsections (a), (b), or (c) has been applied 
to a plan with respect to the plan year preceding the 
current plan year, the funding target attainment 
percentage of the plan as of the valuation date of 
the plan for the current plan year shall be presumed 
to be equal to the funding target attainment per-
centage of the plan as of the valuation date of the 
plan for the preceding plan year until the enrolled 
actuary of the plan certifies the actual funding tar-
130
get attainment percentage of the plan as of the valu-
ation date of the plan for the current plan year. 
‘‘(2) PRESUMPTION OF UNDERFUNDING AFTER 
10TH MONTH.—In any case in which no such certifi-
cation is made with respect to the plan before the 
first day of the 10th month of the current plan year, 
for purposes of subsections (a), (b), and (c), the 
plan’s funding target attainment percentage shall be 
conclusively presumed to be less than 60 percent as 
of the first day of such 10th month, and such day 
shall be deemed, for purposes of such paragraphs, to 
be the valuation date of the plan for the current 
plan year. 
‘‘(3) PRESUMPTION OF UNDERFUNDING AFTER 
4TH MONTH FOR NEARLY UNDERFUNDED PLANS.—
In any case in which—
‘‘(A) a benefit limitation under subsections 
(a), (b), or (c) did not apply to a plan with re-
spect to the plan year preceding the current 
plan year, but the funding target attainment 
percentage of the plan for such preceding plan 
year was not more than 10 percentage points 
greater than the percentage which would have 
caused such paragraph to apply to the plan 
with respect to such preceding plan year, and
131
‘‘(B) as of the first day of the 4th month 
of the current plan year, the enrolled actuary of 
the plan has not certified the actual funding 
target attainment percentage of the plan as of 
the valuation date of the plan for the current 
plan year, 
until the enrolled actuary so certifies, such first day 
shall be deemed, for purposes of such subsection, to 
be the valuation date of the plan for the current 
plan year and the funding target attainment per-
centage of the plan as of such first day shall, for 
purposes of such subsection, be presumed to be 
equal to 10 percentage points less than the funding 
target attainment percentage of the plan as of the 
valuation date of the plan for such preceding plan 
year. 
‘‘(f) RESTORATION BY PLAN AMENDMENT OF BENE-
FITS OR BENEFIT ACCRUAL.—In any case in which a pro-
hibition under subsection (b) of the payment of lump sum 
distributions or benefits in any other accelerated form or 
a cessation of benefit accruals under subsection (c) is ap-
plied to a plan with respect to any plan year and such 
prohibition or cessation, as the case may be, ceases to 
apply to any subsequent plan year, the plan may provide 
for the resumption of such benefit payment or such benefit
132
accrual only by means of the adoption of a plan amend-
ment after the valuation date of the plan for such subse-
quent plan year. The preceding sentence shall not apply 
to a prohibition or cessation required by reason of sub-
section (e). 
‘‘(g) FUNDING
TARGET
ATTAINMENT
PERCENT-
AGE.—For purposes of this section, the term ‘funding tar-
get attainment percentage’ has the meaning provided such 
term under section 430(d)(2).’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for such subpart is amended by adding at the 
end the following new item:
‘‘Sec. 437. Benefit limitations on underfunded plans.’’.
(c) SPECIAL RULE
FOR PLAN AMENDMENTS.—A 
plan shall not fail to meet the requirements of section 
204(g) of the Employee Retirement Income Security Act 
of 1974 or section 411(d)(6) of the Internal Revenue Code 
of 1986 solely by reason of the adoption by the plan of 
an amendment necessary to meet the requirements of the 
amendments made by this section. 
(d) EFFECTIVE DATE.—
(1) SHUTDOWN BENEFITS.—Except as provided 
in paragraph (3), the amendments made by sub-
section (a) shall apply with respect to plant shut-
downs, or other unpredictable contingent events, oc-
curring after 2006.
133
(2) OTHER BENEFITS.—Except as provided in 
paragraph (3), the amendments made by subsection 
(b) shall apply with respect to plan years beginning 
after 2006. 
(3) COLLECTIVE BARGAINING EXCEPTION.—In 
the case of a plan maintained pursuant to 1 or more 
collective bargaining agreements between employee 
representatives and 1 or more employers ratified be-
fore the date of the enactment of this Act, the 
amendments made by this subsection shall not apply 
to plan years beginning before the earlier of—
(A) the later of—
(i) the date on which the last collec-
tive bargaining agreement relating to the 
plan terminates (determined without re-
gard to any extension thereof agreed to 
after the date of the enactment of this 
Act), or 
(ii) the first day of the first plan year 
to which the amendments made by this 
subsection would (but for this subpara-
graph) apply, or 
(B) January 1, 2009. 
For purposes of clause (i), any plan amendment 
made pursuant to a collective bargaining agreement
134
relating to the plan which amends the plan solely to 
conform to any requirement added by this subsection 
shall not be treated as a termination of such collec-
tive bargaining agreement. 
SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) AMENDMENTS RELATED TO QUALIFICATION RE-
QUIREMENTS.—
(1) Section 401(a)(29) of the Internal Revenue 
Code of 1986 is amended to read as follows: 
‘‘(29) BENEFIT LIMITATIONS ON PLANS IN AT-
RISK STATUS.—In the case of a defined benefit plan 
(other than a multiemployer plan) to which the re-
quirements of section 412 apply, the trust of which 
the plan is a part shall not constitute a qualified 
trust under this subsection unless the plan meets the 
requirements of sections 436 and 437.’’. 
(2) Section 401(a)(32) of such Code is amend-
ed—
(A) in subparagraph (A), by striking 
‘‘412(m)(5)’’ each place it appears and insert-
ing ‘‘section 430(i)(4)’’, and 
(B) in subparagraph (C), by striking ‘‘sec-
tion 412(m)’’ and inserting ‘‘section 430(i)’’.
135
(3) Section 401(a) is amended by striking para-
graph (33) and by redesignating paragraph (34) as 
paragraph (33). 
(b) VESTING RULES.—Section 411 of such Code is 
amended—
(1) by striking ‘‘section 412(c)(8)’’ in sub-
section (a)(3)(C) and inserting ‘‘section 412(d)(2)’’, 
(2) in subsection (b)(1)(F)—
(A) by striking ‘‘paragraphs (2) and (3) of 
section 412(i)’’ in clause (ii) and inserting 
‘‘subparagraphs 
(B) 
and 
(C) 
of 
section 
412(d)(4)’’, and 
(B) by striking ‘‘paragraphs (4), (5), and 
(6) of section 412(i)’’ and inserting ‘‘subpara-
graphs (D), (E), and (F) of section 412(d)(4)’’, 
and 
(3) by striking ‘‘section 412(c)(8)’’ in sub-
section (d)(6)(A) and inserting ‘‘section 412(e)(3)’’. 
(c) MERGERS AND CONSOLIDATIONS OF PLANS.—
Subclause (I) of section 414(l)(2)(B)(i) of such Code is 
amended to read as follows: 
‘‘(I) 
the 
amount 
determined 
under section 431(c)(6)(A)(i) in the 
case of a multiemployer plan (and the 
sum of the target liability amount and
136
target normal cost determined under 
section 430 in the case of any other 
plan), over’’. 
(d) TRANSFER OF EXCESS PENSION ASSETS TO RE-
TIREE HEALTH ACCOUNTS.—
(1) Section 420(e)(2) of such Code is amended 
to read as follows: 
‘‘(2) EXCESS PENSION ASSETS.—The term ‘ex-
cess pension assets’ means the excess (if any) of—
‘‘(A) the lesser of—
‘‘(i) the fair market value of the 
plan’s assets (reduced by the pre-funding 
balance and the funding standard carry-
over balance, as determined under section 
430(e)(1)), or 
‘‘(ii) the value of plan assets as deter-
mined under section 430(e)(4) after reduc-
tion under section 430(e)(1), over 
‘‘(B) 125 percent of the sum of the target 
liability amount and the target normal cost de-
termined under section 430 for such plan 
year.’’. 
(2) Section 420(e)(4) of such Code is amended 
to read as follows:
137
‘‘(4) COORDINATION
WITH
SECTION
430.—In 
the case of a qualified transfer, any assets so trans-
ferred shall not, for purposes of this section, be 
treated as assets in the plan.’’. 
(e) EXCISE TAXES.—
(1) IN GENERAL.—Subsections (a) and (b) of 
section 4971 of such Code are amended to read as 
follows: 
‘‘(a) INITIAL TAX.—If at any time during any taxable 
year an employer maintains a plan to which section 412 
applies, there is hereby imposed for the taxable year a tax 
equal to—
‘‘(1) in the case of a single-employer plan, 10 
percent of the aggregate unpaid minimum required 
contributions for all plan years remaining unpaid as 
of the end of any plan year ending with or within 
the taxable year, and 
‘‘(2) in the case of a multiemployer plan, 5 per-
cent of the accumulated funding deficiency deter-
mined under section 431 as of the end of any plan 
year ending with or within the taxable year. 
‘‘(b) ADDITIONAL TAX.—If—
‘‘(1) a tax is imposed under subsection (a)(1) 
on any unpaid required minimum contribution and
138
such amount remains unpaid as of the close of the 
taxable period, or 
‘‘(2) a tax is imposed under subsection (a)(2) 
on any accumulated funding deficiency and the accu-
mulated funding deficiency is not corrected within 
the taxable period, 
there is hereby imposed a tax equal to 100 percent of the 
unpaid minimum required contribution or accumulated 
funding deficiency, whichever is applicable, to the extent 
not so paid or corrected.’’. 
(2) Section 4971(c) of such Code is amended—
(A) by striking ‘‘the last two sentences of 
section 412(a)’’ in paragraph (1) and inserting 
‘‘section 431’’, and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) UNPAID MINIMUM REQUIRED CONTRIBU-
TION.—
‘‘(A) IN
GENERAL.—The term ‘unpaid 
minimum required contribution’ means, with re-
spect to any plan year, any minimum required 
contribution under section 430 for the plan 
year which is not paid on or before the due date 
(as determined under section 430(i)(1)) for the 
plan year.
139
‘‘(B) ORDERING RULE.—Any payment to 
or under a plan for any plan year shall be allo-
cated first to unpaid minimum required con-
tributions for all preceding plan years on a 
first-in, first-out basis and then to the min-
imum required contribution under section 430 
for the plan year.’’. 
(3) Section 4971(e)(1) of such Code is amended 
by striking ‘‘section 412(b)(3)(A)’’ and inserting 
‘‘section 412(a)(1)(A)’’. 
(4) Section 4971(f)(1) of such Code is amend-
ed—
(A) by striking ‘‘section 412(m)(5)’’ and 
inserting ‘‘section 430(i)(4)’’, and 
(B) by striking ‘‘section 412(m)’’ and in-
serting ‘‘section 430(i)’’. 
(5) Section 4972(c)(7) of such Code is amended 
by striking ‘‘except to the extent that such contribu-
tions exceed the full-funding limitation (as defined in 
section 412(c)(7), determined without regard to sub-
paragraph (A)(i)(I) thereof)’’ and inserting ‘‘except, 
in the case of a multiemployer plan, to the extent 
that such contributions exceed the full-funding limi-
tation (as defined in section 431(c)(6))’’.
140
(f) REPORTING REQUIREMENTS.—Section 6059(b) of 
such Code is amended—
(1) by striking ‘‘the accumulated funding defi-
ciency (as defined in section 412(a))’’ in paragraph 
(2) and inserting ‘‘the minimum required contribu-
tion determined under section 430, or the accumu-
lated funding deficiency determined under section 
431,’’, and 
(2) by striking paragraph (3)(B) and inserting: 
‘‘(B) the requirements for reasonable actu-
arial assumptions under section 430(f)(1) or 
431(c)(3), whichever are applicable, have been 
complied with.’’. 
Subtitle C—Other Provisions 
SEC. 121. MODIFICATION OF TRANSITION RULE TO PEN-
SION FUNDING REQUIREMENTS. 
(a) IN GENERAL.—In the case of a plan that—
(1) was not required to pay a variable rate pre-
mium for the plan year beginning in 1996, 
(2) has not, in any plan year beginning after 
1995, merged with another plan (other than a plan 
sponsored by an employer that was in 1996 within 
the controlled group of the plan sponsor); and
141
(3) is sponsored by a company that is engaged 
primarily in the interurban or interstate passenger 
bus service, 
the rules described in subsection (b) shall apply for any 
plan year beginning after 2005. 
(b) MODIFIED RULES.—The rules described in this 
subsection are as follows: 
(1) For purposes of section 430(i)(3) of the In-
ternal Revenue Code of 1986 and section 303(i)(3) 
of the Employee Retirement Income Security Act of 
1974, the plan shall be treated as not having a fund-
ing shortfall for any plan year. 
(2) For purposes of—
(A) determining unfunded vested benefits 
under section 4006(a)(3)(E)(iii) of such Act, 
and 
(B) determining any present value or mak-
ing any computation under section 412 of such 
Code or section 302 of such Act, 
the mortality table shall be the mortality table used 
by the plan. 
(c) CONFORMING AMENDMENT.—
(1) Section 769 of the Retirement Protection 
Act of 1994 is amended by striking subsection (c).
142
(2) The amendment made this subsection shall 
apply to plan years beginning after 2005. 
SEC. 122. TREATMENT OF NONQUALIFIED DEFERRED COM-
PENSATION PLANS WHEN EMPLOYER DE-
FINED BENEFIT PLAN IN AT-RISK STATUS. 
(a) IN GENERAL.—Subsection (b) of section 409A of 
the Internal Revenue Code of 1986 (providing rules relat-
ing to funding) is amended by redesignating paragraphs 
(3) and (4) as paragraphs (4) and (5), respectively, and 
by inserting after paragraph (2) the following new para-
graph: 
‘‘(3) EMPLOYER’S DEFINED BENEFIT PLAN IN 
AT-RISK STATUS.—In the case of a plan to which 
section 412 applies, if—
‘‘(A) during any period in which any de-
fined benefit plan of an employer is in an at-
risk status (as defined in section 412(g)(3)), as-
sets are set aside (directly or indirectly) in a 
trust (or other arrangement determined by the 
Secretary), or transferred to such a trust or 
other arrangement, for purposes of paying de-
ferred compensation under a nonqualified de-
ferred compensation plan of the employer, or 
‘‘(B) a nonqualified deferred compensation 
plan of the employer provides that assets will