246 
for a preceding plan year is made on 
or after the valuation date of the plan 
for such current plan year, such con-
tribution shall be taken into account, 
except that any such contribution 
made during any such current plan 
year beginning after 2007 shall be 
taken into account only in an amount 
equal to its present value (deter-
mined using the effective rate of in-
terest for the plan for the preceding 
plan year) as of the valuation date of 
the plan for such current plan year. 
‘‘(B) CONTRIBUTIONS FOR CURRENT 
PLAN
YEAR
DISREGARDED.—For pur-
poses of determining the value of 
plan assets for any current plan year, 
contributions which are properly al-
locable to amounts owed for such 
plan year shall not be taken into ac-
count, and, in the case of any such 
contribution made before the valu-
ation date of the plan for such plan 
year, such value of plan assets shall 
be reduced for interest on such
247 
amount determined using the effec-
tive rate of interest of the plan for 
the current plan year for the period 
beginning when such payment was 
made and ending on the valuation 
date of the plan. 
‘‘(5) ACCOUNTING
FOR
PLAN
LIABIL-
ITIES.—For purposes of this section— 
‘‘(A) LIABILITIES
TAKEN
INTO
AC-
COUNT
FOR
CURRENT
PLAN
YEAR.—In 
determining the value of liabilities 
under a plan for a plan year, liabil-
ities shall be taken into account to 
the extent attributable to benefits (in-
cluding any early retirement or simi-
lar benefit) accrued or earned as of 
the beginning of the plan year. 
‘‘(B) ACCRUALS
DURING
CURRENT 
PLAN
YEAR
DISREGARDED.—For pur-
poses of subparagraph (A), benefits 
accrued or earned during such plan 
year shall not be taken into account, 
irrespective of whether the valuation 
date of the plan for such plan year is
248 
later than the first day of such plan 
year. 
‘‘(h) ACTUARIAL ASSUMPTIONS
AND METH-
ODS.— 
‘‘(1) IN GENERAL.—Subject to this sub-
section, the determination of any present 
value or other computation under this 
section shall be made on the basis of ac-
tuarial assumptions and methods— 
‘‘(A) each of which is reasonable 
(taking into account the experience 
of the plan and reasonable expecta-
tions), and 
‘‘(B) which, in combination, offer 
the actuary’s best estimate of antici-
pated experience under the plan. 
‘‘(2) INTEREST RATES.— 
‘‘(A) EFFECTIVE
INTEREST
RATE.— 
For purposes of this section, the term 
‘effective interest rate’ means, with 
respect to any plan for any plan year, 
the single rate of interest which, if 
used to determine the present value 
of the plan’s liabilities referred to in 
subsection (d)(1), would result in an
249 
amount equal to the funding target of 
the plan for such plan year. 
‘‘(B) INTEREST
RATES
FOR
DETER-
MINING
FUNDING
TARGET.—For pur-
poses of determining the funding tar-
get of a plan for any plan year, the in-
terest rate used in determining the 
present value of the liabilities of the 
plan shall be— 
‘‘(i) in the case of liabilities 
reasonably determined to be pay-
able during the 5-year period be-
ginning on the first day of the 
plan year, the first segment rate 
with respect to the applicable 
month, 
‘‘(ii) in the case of liabilities 
reasonably determined to be pay-
able during the 15-year period be-
ginning at the end of the period 
described in clause (i), the second 
segment rate with respect to the 
applicable month, and 
‘‘(iii) in the case of liabilities 
reasonably determined to be pay-
250 
able after the period described in 
clause (ii), the third segment rate 
with respect to the applicable 
month. 
‘‘(C) SEGMENT
RATES.—For pur-
poses of this paragraph— 
‘‘(i) FIRST SEGMENT RATE.—The 
term ‘first segment rate’ means, 
with respect to any month, the 
single rate of interest which shall 
be determined by the Secretary 
for such month on the basis of the 
corporate bond yield curve for 
such month, taking into account 
only that portion of such yield 
curve which is based on bonds 
maturing during the 5-year pe-
riod 
commencing 
with 
such 
month. 
‘‘(ii) SECOND
SEGMENT
RATE.— 
The term ‘second segment rate’ 
means, 
with 
respect 
to 
any 
month, the single rate of interest 
which shall be determined by the 
Secretary for such month on the
251 
basis of the corporate bond yield 
curve for such month, taking into 
account only that portion of such 
yield curve which is based on 
bonds maturing during the 15- 
year period beginning at the end 
of the period described in clause 
(i). 
‘‘(iii) THIRD
SEGMENT
RATE.— 
The term ‘third segment rate’ 
means, 
with 
respect 
to 
any 
month, the single rate of interest 
which shall be determined by the 
Secretary for such month on the 
basis of the corporate bond yield 
curve for such month, taking into 
account only that portion of such 
yield curve which is based on 
bonds maturing during periods 
beginning after the period de-
scribed in clause (ii). 
‘‘(D) 
CORPORATE
BOND
YIELD 
CURVE.—For purposes of this para-
graph—
252 
‘‘(i) IN
GENERAL.—The term 
‘corporate 
bond 
yield 
curve’ 
means, 
with 
respect 
to 
any 
month, a yield curve which is pre-
scribed by the Secretary for such 
month and which reflects a 3-year 
weighted average of yields on in-
vestment grade corporate bonds 
with varying maturities. 
‘‘(ii) 3-YEAR
WEIGHTED
AVER-
AGE.—The term ‘3-year weighted 
average’ means an average deter-
mined by using a methodology 
under which the most recent year 
is weighted 50 percent, the year 
preceding such year is weighted 
35 percent, and the second year 
preceding such year is weighted 
15 percent. 
‘‘(E) APPLICABLE MONTH.—For pur-
poses of this paragraph, the term ‘ap-
plicable month’ means, with respect 
to any plan for any plan year, the 
month which includes the valuation 
date of such plan for such plan year
253 
or, at the election of the plan sponsor, 
any of the 4 months which precede 
such month. Any election made under 
this subparagraph shall apply to the 
plan year for which the election is 
made and all succeeding plan years, 
unless the election is revoked with 
the consent of the Secretary. 
‘‘(F) PUBLICATION REQUIREMENTS.— 
The Secretary shall publish for each 
month the corporate bond yield curve 
(and the corporate bond yield curve 
reflecting the modification described 
in section 417(e)(3)(A)(iv)(I)) for such 
month and each of the rates deter-
mined under subparagraph (B) for 
such month. The Secretary shall also 
publish a description of the method-
ology used to determine such yield 
curve and such rates which is suffi-
ciently detailed to enable plans to 
make reasonable projections regard-
ing the yield curve and such rates for 
future months based on the plan’s 
projection of future interest rates.
254 
‘‘(G) TRANSITION RULE.— 
‘‘(i) 
IN
GENERAL.—Notwith-
standing the preceding provisions 
of this paragraph, for plan years 
beginning in 2007 or 2008, the 
first, second, or third segment 
rate for a plan with respect to 
any month shall be equal to the 
sum of— 
‘‘(I) the product of such 
rate for such month deter-
mined without regard to this 
subparagraph, multiplied by 
the 
applicable 
percentage, 
and 
‘‘(II) the product of the 
rate determined under the 
rules 
of 
section 
412(b)(5)(B)(ii)(II) (as in effect 
for plan years beginning in 
2006), multiplied by a percent-
age 
equal 
to 
100 
percent 
minus the applicable percent-
age.
255 
‘‘(ii) 
APPLICABLE
PERCENT-
AGE.—For purposes of clause (i), 
the applicable percentage is 331⁄3 
percent for plan years beginning 
in 2007 and 662⁄3 percent for plan 
years beginning in 2008. 
‘‘(iii) NEW PLANS INELIGIBLE.— 
Clause (i) shall not apply to any 
plan if the first plan year of the 
plan begins after December 31, 
2006. 
‘‘(3) MORTALITY TABLE.— 
‘‘(A) IN GENERAL.—Except as pro-
vided in subparagraph (C), the mor-
tality table used in determining any 
present value or making any com-
putation under this section shall be 
the 
RP–2000 
Combined 
Mortality 
Table, using Scale AA, as published 
by the Society of Actuaries, as in ef-
fect on the date of the enactment of 
the Pension Protection Act of 2005 
and as revised from time to time 
under subparagraph (B).
256 
‘‘(B) PERIODIC REVISION.—The Sec-
retary shall (at least every 10 years) 
make revisions in any table in effect 
under subparagraph (A) to reflect the 
actual experience of pension plans 
and projected trends in such experi-
ence. 
‘‘(C) 
SUBSTITUTE
MORTALITY 
TABLE.— 
‘‘(i) 
IN
GENERAL.—Upon 
re-
quest by the plan sponsor and ap-
proval by the Secretary for a pe-
riod not to exceed 10 years, a 
mortality table which meets the 
requirements of clause (ii) shall 
be 
used 
in 
determining 
any 
present value or making any com-
putation under this section. A 
mortality table described in this 
clause shall cease to be in effect if 
the plan actuary determines at 
any time that such table does not 
meet the requirements of sub-
clauses (I) and (II) of clause (ii).
257 
‘‘(ii) REQUIREMENTS.—A mor-
tality table meets the require-
ments of this clause if the Sec-
retary determines that— 
‘‘(I) such table reflects the 
actual experience of the pen-
sion 
plan 
and 
projected 
trends in such experience, 
and 
‘‘(II) such table is signifi-
cantly different from the table 
described 
in 
subparagraph 
(A). 
‘‘(iii) DEADLINE
FOR
DISPOSI-
TION
OF
APPLICATION.—Any mor-
tality table submitted to the Sec-
retary for approval under this 
subparagraph shall be treated as 
in effect for the succeeding plan 
year unless the Secretary, during 
the 180-day period beginning on 
the date of such submission, dis-
approves of such table and pro-
vides the reasons that such table
258 
fails to meet the requirements of 
clause (ii). 
‘‘(D) TRANSITION RULE.—Under reg-
ulations of the Secretary, any dif-
ference in assumptions as set forth in 
the mortality table specified in sub-
paragraph (A) and assumptions as set 
forth in the mortality table described 
in section 412(l)(7)(C)(ii) (as in effect 
for plan years beginning in 2006) 
shall be phased in ratably over the 
first period of 5 plan years beginning 
in or after 2007 so as to be fully effec-
tive for the fifth plan year. The pre-
ceding sentence shall not apply to 
any plan if the first plan year of the 
plan begins after December 31, 2006. 
‘‘(4) PROBABILITY OF BENEFIT PAYMENTS 
IN THE FORM OF LUMP SUMS OR OTHER OP-
TIONAL
FORMS.—For purposes of deter-
mining any present value or making any 
computation under this section, there 
shall be taken into account— 
‘‘(A) the probability that future 
benefit payments under the plan will
259 
be made in the form of optional forms 
of benefits provided under the plan 
(including lump sum distributions, 
determined on the basis of the plan’s 
experience and other related assump-
tions), and 
‘‘(B) any difference in the present 
value of such future benefit payments 
resulting from the use of actuarial as-
sumptions, in determining benefit 
payments in any such optional form 
of benefits, which are different from 
those specified in this subsection. 
‘‘(5) APPROVAL
OF
LARGE
CHANGES
IN 
ACTUARIAL ASSUMPTIONS.— 
‘‘(A) IN GENERAL.—No actuarial as-
sumption used to determine the fund-
ing target for a plan to which this 
paragraph applies may be changed 
without the approval of the Sec-
retary. 
‘‘(B) PLANS
TO
WHICH
PARAGRAPH 
APPLIES.—This paragraph shall apply 
to a plan only if—
260 
‘‘(i) the plan is a defined ben-
efit plan (other than a multiem-
ployer plan) to which title IV of 
the Employee Retirement Income 
Security Act of 1974 applies, 
‘‘(ii) the aggregate unfunded 
vested benefits as of the close of 
the preceding plan year (as deter-
mined 
under 
section 
4006(a)(3)(E)(iii) of the Employee 
Retirement Income Security Act 
of 1974) of such plan and all other 
plans maintained by the contrib-
uting sponsors (as defined in sec-
tion 4001(a)(13) of such Act) and 
members of such sponsors’ con-
trolled groups (as defined in sec-
tion 
4001(a)(14) 
of 
such 
Act) 
which are covered by title IV (dis-
regarding 
plans 
with 
no 
un-
funded vested benefits) exceed 
$50,000,000, and 
‘‘(iii) the change in assump-
tions (determined after taking 
into account any changes in inter-
261 
est rate and mortality table) re-
sults in a decrease in the funding 
shortfall of the plan for the cur-
rent 
plan 
year 
that 
exceeds 
$50,000,000, 
or 
that 
exceeds 
$5,000,000 and that is 5 percent or 
more of the funding target of the 
plan before such change. 
‘‘(i) SPECIAL RULES FOR AT-RISK PLANS.— 
‘‘(1) FUNDING TARGET FOR PLANS IN AT- 
RISK STATUS.— 
‘‘(A) IN GENERAL.—In any case in 
which a plan is in at-risk status for a 
plan year, the funding target of the 
plan for the plan year is the sum of— 
‘‘(i) the present value of all li-
abilities to participants and their 
beneficiaries under the plan for 
the plan year, as determined by 
using, in addition to the actuarial 
assumptions described in sub-
section (g), the supplemental ac-
tuarial assumptions described in 
subparagraph (B), plus
262 
‘‘(ii) a loading factor deter-
mined under subparagraph (C). 
‘‘(B) SUPPLEMENTAL ACTUARIAL AS-
SUMPTIONS.—The 
actuarial 
assump-
tions used in determining the valu-
ation of the funding target shall in-
clude, in addition to the actuarial as-
sumptions described in subsection 
(h), an assumption that all partici-
pants will elect benefits at such times 
and in such forms as will result in the 
highest present value of liabilities 
under subparagraph (A)(i). 
‘‘(C) LOADING
FACTOR.—The load-
ing factor applied with respect to a 
plan under this paragraph for any 
plan year is the sum of— 
‘‘(i) $700, times the number of 
participants in the plan, plus 
‘‘(ii) 4 percent of the funding 
target (determined without re-
gard to this paragraph) of the 
plan for the plan year. 
‘‘(2) TARGET NORMAL COST OF AT-RISK 
PLANS.—In any case in which a plan is in
263 
at-risk status for a plan year, the target 
normal cost of the plan for such plan 
year shall be the sum of— 
‘‘(A) the present value of all bene-
fits which are expected to accrue or 
be earned under the plan during the 
plan year, determined under the actu-
arial assumptions used under para-
graph (1), plus 
‘‘(B) the loading factor under 
paragraph (1)(C), excluding the por-
tion of the loading factor described in 
paragraph (1)(C)(i). 
‘‘(3) DETERMINATION
OF
AT-RISK
STA-
TUS.—For purposes of this subsection, a 
plan is in ‘at-risk status’ for a plan year 
if the funding target attainment percent-
age of the plan for the preceding plan 
year was less than 60 percent. 
‘‘(4) TRANSITION
BETWEEN
APPLICABLE 
FUNDING
TARGETS
AND
BETWEEN
APPLICA-
BLE TARGET NORMAL COSTS.— 
‘‘(A) IN GENERAL.—In any case in 
which a plan which is in at-risk sta-
tus for a plan year has been in such
264 
status for a consecutive period of 
fewer than 5 plan years, the applica-
ble amount of the funding target and 
of the target normal cost shall be, in 
lieu of the amount determined with-
out regard to this paragraph, the sum 
of— 
‘‘(i) the amount determined 
under this section without regard 
to this subsection, plus 
‘‘(ii) the transition percentage 
for such plan year of the excess of 
the amount determined under 
this subsection (without regard to 
this paragraph) over the amount 
determined under this section 
without regard to this subsection. 
‘‘(B) TRANSITION PERCENTAGE.—For 
purposes of this paragraph, the ‘tran-
sition percentage’ for a plan year is 
the product derived by multiplying— 
‘‘(i) 20 percent, by 
‘‘(ii) the number of plan years 
during the period described in 
subparagraph (A).
265 
‘‘(j) PAYMENT OF MINIMUM REQUIRED CON-
TRIBUTIONS.— 
‘‘(1) IN GENERAL.—For purposes of this 
section, the due date for any payment of 
any minimum required contribution for 
any plan year shall be 81⁄2 months after 
the close of the plan year. 
‘‘(2) INTEREST.—Any payment required 
under paragraph (1) for a plan year that 
is made on a date other than the valu-
ation date for such plan year shall be ad-
justed for interest accruing for the period 
between the valuation date and the pay-
ment date, at the effective rate of interest 
for the plan for such plan year. 
‘‘(3) 
ACCELERATED
QUARTERLY
CON-
TRIBUTION
SCHEDULE
FOR
UNDERFUNDED 
PLANS.— 
‘‘(A) INTEREST
PENALTY
FOR
FAIL-
URE TO MEET ACCELERATED QUARTERLY 
PAYMENT
SCHEDULE.—In any case in 
which the plan has a funding short-
fall for the preceding plan year, if the 
required installment is not paid in 
full, then the minimum required con-