294
‘‘(i) to provide, without charge, such 
currently accurate information to the re-
cipient of the advice no less than annually, 
‘‘(ii) to make such currently accurate 
information available, upon request and 
without charge, to the recipient of the ad-
vice, or 
‘‘(iii) in the event of a material 
change to the information described in 
subclauses (I) through (IV) of subpara-
graph (B)(i), to provide, without charge, 
such currently accurate information to the 
recipient of the advice at a time reasonably 
contemporaneous to the material change in 
information. 
‘‘(E) MAINTENANCE FOR 6 YEARS OF EVI-
DENCE OF COMPLIANCE.—A fiduciary adviser 
referred to in subparagraph (B) who has pro-
vided advice referred to in such subparagraph 
shall, for a period of not less than 6 years after 
the provision of the advice, maintain any 
records necessary for determining whether the 
requirements of the preceding provisions of this 
paragraph and of subsection (d)(16) have been 
met. A transaction prohibited under subsection
295
(c)(1) shall not be considered to have occurred 
solely because the records are lost or destroyed 
prior to the end of the 6-year period due to cir-
cumstances beyond the control of the fiduciary 
adviser. 
‘‘(F) EXEMPTION FOR PLAN SPONSOR AND 
CERTAIN OTHER FIDUCIARIES.—A plan sponsor 
or other person who is a fiduciary (other than 
a fiduciary adviser) shall not be treated as fail-
ing to meet the requirements of this section 
solely by reason of the provision of investment 
advice referred to in subsection (e)(3)(B) (or 
solely by reason of contracting for or otherwise 
arranging for the provision of the advice), if—
‘‘(i) the advice is provided by a fidu-
ciary adviser pursuant to an arrangement 
between the plan sponsor or other fidu-
ciary and the fiduciary adviser for the pro-
vision by the fiduciary adviser of invest-
ment advice referred to in such section, 
‘‘(ii) the terms of the arrangement re-
quire compliance by the fiduciary adviser 
with the requirements of this paragraph, 
‘‘(iii) the terms of the arrangement 
include a written acknowledgment by the
296
fiduciary adviser that the fiduciary adviser 
is a fiduciary of the plan with respect to 
the provision of the advice, and 
‘‘(iv) the requirements of part 4 of 
subtitle B of title I of the Employee Re-
tirement Income Security Act of 1974 are 
met in connection with the provision of 
such advice. 
‘‘(G) DEFINITIONS.—For purposes of this 
paragraph and subsection (d)(16)—
‘‘(i) FIDUCIARY ADVISER.—The term 
‘fiduciary adviser’ means, with respect to a 
plan, a person who is a fiduciary of the 
plan by reason of the provision of invest-
ment advice by the person to the plan or 
to a participant or beneficiary and who 
is—
‘‘(I) registered as an investment 
adviser under the Investment Advisers 
Act of 1940 (15 U.S.C. 80b–1 et seq.) 
or under the laws of the State in 
which the fiduciary maintains its prin-
cipal office and place of business, 
‘‘(II) a bank or similar financial 
institution referred to in subsection
297
(d)(4) or a savings association (as de-
fined in section 3(b)(1) of the Federal 
Deposit Insurance Act (12 U.S.C. 
1813(b)(1))), but only if the advice is 
provided through a trust department 
of the bank or similar financial insti-
tution or savings association which is 
subject to periodic examination and 
review by Federal or State banking 
authorities, 
‘‘(III) an insurance company 
qualified to do business under the 
laws of a State, 
‘‘(IV) a person registered as a 
broker or dealer under the Securities 
Exchange Act of 1934 (15 U.S.C. 78a 
et seq.), 
‘‘(V) an affiliate of a person de-
scribed in any of subclauses (I) 
through (IV), or 
‘‘(VI) an employee, agent, or reg-
istered representative of a person de-
scribed in any of subclauses (I) 
through (V) who satisfies the require-
ments of applicable insurance, bank-
298
ing, and securities laws relating to the 
provision of the advice. 
‘‘(ii) AFFILIATE.—The term ‘affiliate’ 
of another entity means an affiliated per-
son of the entity (as defined in section 
2(a)(3) of the Investment Company Act of 
1940 (15 U.S.C. 80a–2(a)(3))). 
‘‘(iii) 
REGISTERED
REPRESENTA-
TIVE.—The term ‘registered representa-
tive’ of another entity means a person de-
scribed in section 3(a)(18) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 
78c(a)(18)) (substituting the entity for the 
broker or dealer referred to in such sec-
tion) or a person described in section 
202(a)(17) of the Investment Advisers Act 
of 1940 (15 U.S.C. 80b–2(a)(17)) (sub-
stituting the entity for the investment ad-
viser referred to in such section).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to advice referred to 
in section 4975(c)(3)(B) of the Internal Revenue Code of 
1986 provided on or after January 1, 2006.
299
TITLE VII—DEDUCTION 
LIMITATIONS 
SEC. 701. INCREASE IN DEDUCTION LIMITS. 
(a) INCREASE IN DEDUCTION LIMIT FOR SINGLE-
EMPLOYER PLANS.—Section 404 of the Internal Revenue 
Code of 1986 (relating to deduction for contributions of 
an employer to an employees’ trust or annuity plan and 
compensation under a deferred payment plan) is amend-
ed—
(1) in subsection (a)(1)(A), by inserting ‘‘in the 
case of a defined benefit plan other than a multiem-
ployer plan, in an amount determined under sub-
section (o), and in the case of any other plan’’ after 
‘‘section 501(a),’’, and 
(2) by inserting at the end the following new 
subsection: 
‘‘(o) DEDUCTION LIMIT
FOR SINGLE-EMPLOYER 
PLANS.—For purposes of subsection (a)(1)(A)—
‘‘(1) IN GENERAL.—In the case of a defined 
benefit plan to which subsection (a)(1)(A) applies 
(other than a multiemployer plan), the amount de-
termined under this subsection for any taxable year 
shall be equal to the amount determined under para-
graph (2) with respect to each plan year ending with 
or within the taxable year.
300
‘‘(2) 
DETERMINATION
OF
AMOUNT.—The 
amount determined under this paragraph for any 
plan year shall be equal to the excess (if any) of—
‘‘(A) the greater of—
‘‘(i) the sum of—
‘‘(I) 150 percent of the funding 
target applicable to the plan for such 
plan year, determined under section 
430(e), plus 
‘‘(II) the target normal cost ap-
plicable to the plan for such plan 
year, 
determined 
under 
section 
430(b), or 
‘‘(ii) in the case of a plan that is not 
in an at-risk status (as determined under 
430(g)), the sum of—
‘‘(I) the funding target which 
would be applicable to the plan for 
such plan year if such plan were in an 
at-risk status, determined under sec-
tion 430(e) (with regard to section 
430(g)), plus 
‘‘(II) the target normal cost 
which would be applicable to the plan 
for such plan year if such plan were
301
in an at-risk status, determined under 
section 430(b) (with regard to section 
430(g)), over 
‘‘(B) the value of the plan assets (deter-
mined under section 430(e) as of the valuation 
date of the plan). 
‘‘(3) 
SPECIAL
RULE
FOR
TERMINATING 
PLANS.—In the case of a plan which, subject to sec-
tion 4041 of the Employee Retirement Income Secu-
rity Act of 1974, terminates during the plan year, 
the amount determined under paragraph (2) shall 
not be less than the amount required to make the 
plan sufficient for benefit liabilities (within the 
meaning of section 4041(d) of such Act). 
‘‘(4) DEFINITIONS.—Any term used in this sub-
section which is also used in section 430 shall have 
the same meaning given such term by section 430.’’. 
(b) INCREASE IN DEDUCTION LIMIT FOR MULTIEM-
PLOYER PLANS.—Section 404(a)(1)(D) of such Code is 
amended to read as follows: 
‘‘(D) AMOUNT DETERMINED ON BASIS OF 
UNFUNDED CURRENT LIABILITY.—
‘‘(i) IN GENERAL.—In the case of a 
defined benefit plan which is a multiem-
ployer plan, except as provided in regula-
302
tions, the maximum amount deductible 
under the limitations of this paragraph 
shall not be less than the unfunded current 
liability of the plan. 
‘‘(ii) UNFUNDED
CURRENT
LIABIL-
ITY.—For purposes of clause (i), the term 
‘unfunded current liability’ means the ex-
cess (if any) of—
‘‘(I) 140 percent of the current 
liability of the plan determined under 
section 431(c)(6)(C), over 
‘‘(II) the value of the plan’s as-
sets 
determined 
under 
section 
431(c)(2).’’. 
(c) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) The last sentence of section 404(a)(1)(A) of 
such Code is amended by striking ‘‘section 412’’ 
each place it appears and inserting ‘‘section 431’’. 
(2) Section 404(a)(1)(B) of such Code is 
amended—
(A) by striking ‘‘In the case of a plan’’ and 
inserting ‘‘In the case of a multiemployer plan’’, 
(B) by striking ‘‘section 412(c)(7)’’ each 
place 
it 
appears 
and 
inserting 
‘‘section 
431(c)(6)’’,
303
(C) by striking ‘‘section 412(c)(7)(B)’’ and 
inserting ‘‘section 431(c)(6)(A)(ii)’’, 
(D) by striking ‘‘section 412(c)(7)(A)’’ and 
inserting ‘‘section 431(c)(6)(A)(i)’’, and 
(E) by striking ‘‘section 412’’ and insert-
ing ‘‘section 431’’. 
(3) Section 404(a)(1) of such Code is amended 
by striking subparagraph (F). 
(4) Section 404(a)(7) of such Code is amend-
ed—
(A) in subparagraph (A)(ii), by striking 
‘‘for the plan year’’ and all that follows and in-
serting ‘‘which are multiemployer plans for the 
plan year which ends with or within such tax-
able year (or for any prior plan year) and the 
maximum amount of employer contributions al-
lowable under subsection (o) with respect to any 
such defined benefit plans which are not multi-
employer plans for the plan year.’’, 
(B) by striking ‘‘section 412(l)’’ in the last 
sentence of subparagraph (A) and inserting 
‘‘paragraph (1)(D)(ii)’’, and 
(C) by striking subparagraph (D) and in-
serting:
304
‘‘(D) INSURANCE CONTRACT PLANS.—For 
purposes of this paragraph, a plan described in 
section 412(d)(3) shall be treated as a defined 
benefit plan.’’. 
(5) Section 404A(g)(3)(A) of such Code is 
amended by striking ‘‘paragraphs (3) and (7) of sec-
tion 412(c)’’ and inserting ‘‘sections 430(d)(1) and 
431(c) (3) and (6)’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions for taxable years 
beginning after 2005. 
SEC. 702. UPDATING DEDUCTION RULES FOR COMBINA-
TION OF PLANS. 
(a) IN GENERAL.—Subparagraph (C) of section 
404(a)(7) (relating to limitation on deductions where com-
bination of defined contribution plan and defined benefit 
plan) is amended by adding after clause (ii) the following 
new clause: 
‘‘(iii) LIMITATION.—In the case of 
employer contributions to 1 or more de-
fined contribution plans, this paragraph 
shall only apply to the extent that such 
contributions exceed 6 percent of the com-
pensation otherwise paid or accrued during 
the taxable year to the beneficiaries under
305
such plans. For purposes of this clause, 
amounts carried over from preceding tax-
able years under subparagraph (B) shall 
be treated as employer contributions to 1 
or more defined contributions to the extent 
attributable to employer contributions to 
such plans in such preceding taxable 
years.’’. 
(b) CONFORMING AMENDMENTS.—Subparagraph (A) 
of section 4972(c)(6) of such Code (relating to nondeduct-
ible contributions) is amended to read as follows: 
‘‘(A) so much of the contributions to 1 or 
more defined contribution plans which are not 
deductible when contributed solely because of 
section 404(a)(7) as does not exceed the 
amount of contributions described in section 
401(m)(4)(A), or’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions for taxable years 
beginning after December 31, 2005.
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