182
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-
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:
183
‘‘(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-
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).
184
‘‘(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 
current plan year remain in effect for suc-
ceeding plan years, 
is less than the present value of all nonforfeit-
able benefits for all participants and bene-
ficiaries projected to be payable under the plan 
during the current plan year and each of the 4 
succeeding plan years (plus administrative ex-
penses for such plan years). 
‘‘(C) A plan is described in this subpara-
graph if—
‘‘(i) as of the beginning of the current 
plan year, the funded percentage of the 
plan is less than 65 percent, and
185
‘‘(ii) the plan has an accumulated 
funding deficiency for the current plan 
year or is projected to have an accumu-
lated funding deficiency for any of the 4 
succeeding plan years, taking into account 
any extension of amortization periods 
under section 304(e). 
‘‘(D) A plan is described in this subpara-
graph if—
‘‘(i)(I) the plan’s normal cost for the 
current plan year, plus interest (deter-
mined at the rate used for determining 
cost under the plan) for the current plan 
year on the amount of unfunded benefit li-
abilities under the plan as of the last date 
of the preceding plan year, exceeds 
‘‘(II) the present value, as of the be-
ginning of the current plan year, of the 
reasonably anticipated employer and em-
ployee contributions for the current plan 
year, 
‘‘(ii) the present value, as of the be-
ginning of the current plan year, of non-
forfeitable benefits of inactive participants 
is greater than the present value, as of the
186
beginning of the current plan year, of non-
forfeitable benefits of active participants, 
and 
‘‘(iii) the plan is projected to have an 
accumulated funding deficiency for the 
current plan year or any of the 4 suc-
ceeding plan years. 
‘‘(E) A plan is described in this subpara-
graph if—
‘‘(i) the funded percentage of the plan 
is greater than 65 percent for the current 
plan year, and 
‘‘(ii) the plan is projected to have an 
accumulated funding deficiency during ei-
ther of the following 3 plan years. 
‘‘(4) REHABILITATION PLAN.—
‘‘(A) IN GENERAL.—A rehabilitation plan 
shall consist of—
‘‘(i) amendments to the plan providing 
(under reasonable actuarial assumptions) 
for measures, agreed to by the bargaining 
parties, to increase contributions, reduce 
plan expenditures (including plan mergers 
and consolidations), or reduce future ben-
efit accruals, or to take any combination of
187
such actions, determined necessary to 
cause the plan to cease, during the reha-
bilitation period, to be in critical status, 
‘‘(ii) measures, agreed to by the bar-
gaining parties, to provide funding relief, 
or 
‘‘(iii) reasonable measures to forestall 
possible insolvency (within the meaning of 
section 4245) if the plan sponsor deter-
mines that, upon exhaustion of all reason-
able measures, the plan would not cease 
during the rehabilitation period to be in 
critical status. 
‘‘(B) REHABILITATION PERIOD.—The re-
habilitation period for any rehabilitation plan 
adopted pursuant to this section is the 10-year 
period beginning on the earlier of—
‘‘(i) the second anniversary of the 
date of the adoption of the rehabilitation 
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-
188
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 re-
habilitation plan or modification thereto adopt-
ed during any plan year, together with annual 
updates regarding the funding ratio of the plan, 
shall be included in the annual report for such 
plan year under section 104(a) and in the sum-
mary annual report described in section 
104(b)(3). 
‘‘(5) 
DEVELOPMENT
OF
REHABILITATION 
PLAN.—
‘‘(A) PROPOSALS BY PLAN SPONSOR.—
‘‘(i) IN
GENERAL.—Within 90 days 
after the date of the certification under 
subsection (a) that the plan is in critical 
status (or the date as of which the require-
ments of subsection (b)(1) are not met 
with respect to the plan), the plan sponsor 
shall propose to all bargaining parties a 
range of alternative schedules of increases 
in contributions and reductions in future 
benefit accruals that would serve to carry
189
out a rehabilitation plan under this sub-
section. 
‘‘(ii) PROPOSAL
ASSUMING
NO
CON-
TRIBUTION
INCREASES.—Such proposals 
shall include, as one of the proposed sched-
ules, a schedule of those reductions in fu-
ture benefit accruals that would be nec-
essary to cause the plan to cease to be in 
critical status if there were no further in-
creases in rates of contribution to the plan. 
‘‘(iii) PROPOSAL
WHERE
CONTRIBU-
TIONS ARE NECESSARY.—If the plan spon-
sor determines that the plan will not cease 
to be in critical status during the rehabili-
tation period unless the plan is amended to 
provide for an increase in contributions, 
the plan sponsor’s proposals shall include a 
schedule of those increases in contribution 
rates that would be necessary to cause the 
plan to cease to be in critical status if fu-
ture benefit accruals were reduced to the 
maximum extent permitted by law and the 
rate of future benefit accruals did not ex-
ceed 1 percent per plan year.
190
‘‘(B) REQUESTS FOR ADDITIONAL SCHED-
ULES.—Upon the joint request of all bargaining 
parties, each of whom—
‘‘(i) employs at least 5 percent of the 
active participants, or 
‘‘(ii) represents as an employee orga-
nization, for purposes of collective bar-
gaining, at least 5 percent of the active 
participants, 
the plan sponsor shall include among the pro-
posed schedules such schedules of increases in 
contributions and reductions in future benefit 
accruals as may be specified by the bargaining 
parties. 
‘‘(C) DEFAULT SCHEDULE.—In any case 
in which the bargaining parties, as of 240 days 
after the later of the date of the certification 
under subsection (a) or the first day the plan 
is in critical status under subsection (a)(3) or 
(b)(7), have not agreed to at least one of the 
proposed schedules, the plan sponsor shall 
amend the plan to implement the schedule re-
quired by subparagraph (A)(ii). 
‘‘(D) SUBSEQUENT AMENDMENTS.—Upon 
the adoption of a schedule of increases in con-
191
tributions or reductions in future benefit accru-
als as part of the rehabilitation plan, the plan 
sponsor may amend the plan thereafter to up-
date the schedule to adjust for any experience 
of the plan contrary to past actuarial assump-
tions, except that such an amendment may be 
made not more than once in any 3-year period. 
‘‘(E) ALLOCATION OF REDUCTIONS IN FU-
TURE BENEFIT ACCRUALS.—Any schedule con-
taining reductions in future benefit accruals 
forming a part of a rehabilitation plan shall be 
applicable with respect to any group of active 
participants who are employed by any bar-
gaining party (as an employer obligated to con-
tribute under the plan) in proportion to the ex-
tent to which increases in contributions under 
such schedule apply to such bargaining party. 
‘‘(6) MAINTENANCE
OF
CONTRIBUTIONS
AND 
RESTRICTIONS ON BENEFITS PENDING ADOPTION OF 
REHABILITATION
PLAN.—The rules of paragraphs 
(5) and (6) of subsection (b) shall apply for pur-
poses of this subsection by substituting the term ‘re-
habilitation plan’ for ‘funding improvement plan’. 
‘‘(7) DEEMED WITHDRAWAL.—Upon the failure 
of any employer who has an obligation to contribute
192
under the plan to make contributions in compliance 
with the schedule adopted under paragraph (6) as 
part of the rehabilitation plan, the failure of the em-
ployer may, at the discretion of the plan sponsor, be 
treated as a withdrawal by the employer from the 
plan under section 4203 or a partial withdrawal by 
the employer under section 4205. 
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) BARGAINING
PARTY.—The term ‘bar-
gaining party’ means, in connection with a multiem-
ployer plan—
‘‘(A) an employer who has an obligation to 
contribute under the plan, and 
‘‘(B) an employee organization which, for 
purposes of collective bargaining, represents 
plan participants employed by such an em-
ployer. 
‘‘(2) CURRENT LIABILITY.—The term ‘current 
liability’ has the meaning provided such term in sec-
tion 304(c)(6)(C). 
‘‘(3) UNFUNDED
CURRENT
LIABILITY.—The 
term ‘unfunded current liability’ means the excess 
(if any) of—
‘‘(A) the current liability of the plan, over
193
‘‘(B) the value of the plan’s assets deter-
mined under section 304(c)(2). 
‘‘(4) FUNDED PERCENTAGE.—The term ‘fund-
ed percentage’ means the percentage expressed as a 
ratio of which—
‘‘(A) the numerator of which is the value 
of the plan’s assets, as determined under sec-
tion 304(c)(2), and 
‘‘(B) the denominator of which is the ac-
crued liability of the plan. 
‘‘(5) 
UNFUNDED
VESTED
BENEFITS.—The 
term ‘unfunded vested benefits’ has the meaning 
provided in section 4241(b)(9). 
‘‘(6) ACCUMULATED
FUNDING
DEFICIENCY.—
The term ‘accumulated funding deficiency’ has the 
meaning provided such term in section 304(a). 
‘‘(7) ACTIVE PARTICIPANT.—The term ‘active 
participant’ means, in connection with a multiem-
ployer plan, a participant who is in covered service 
under the plan. 
‘‘(8) INACTIVE PARTICIPANT.—The term ‘inac-
tive participant’ means, in connection with a multi-
employer plan, a participant who—
‘‘(A) is not in covered service under the 
plan, and
194
‘‘(B) is in pay status under the plan or has 
a nonforfeitable right to benefits under the 
plan. 
‘‘(9) PAY STATUS.—A person is in ‘pay status’ 
under a multiemployer plan if—
‘‘(A) at any time during the current plan 
year, such person is a participant or beneficiary 
under the plan and is paid an early, late, nor-
mal, or disability retirement benefit under the 
plan (or a death benefit under the plan related 
to a retirement benefit), or 
‘‘(B) to the extent provided in regulations 
of the Secretary of the Treasury, such person 
is entitled to such a benefit under the plan. 
‘‘(10) OBLIGATION TO CONTRIBUTE.—The term 
‘obligation to contribute’ has the meaning provided 
such term under section 4212(a).’’. 
(b) CONFORMING AMENDMENT.—The table of con-
tents in section 1 of such Act (as amended by the pre-
ceding provisions of this Act) is amended further by in-
serting after the item relating to section 304 the following 
new item:
‘‘Sec. 305. Additional funding rules for multiemployer plans in endangered sta-
tus or critical status.’’.
195
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to plan years begin-
ning after 2005. 
SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MUL-
TIEMPLOYER PLANS. 
(a) ADVANCE DETERMINATION OF IMPENDING IN-
SOLVENCY OVER 5 YEARS.—Section 4245(d)(1) of the 
Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1426(d)(1)) is amended—
(1) by striking ‘‘3 plan years’’ the second place 
it appears and inserting ‘‘5 plan years’’; and 
(2) by adding at the end the following new sen-
tence: ‘‘If the plan sponsor makes such a determina-
tion that the plan will be insolvent in any of the next 
5 plan years, the plan sponsor shall make the com-
parison under this paragraph at least annually until 
the plan sponsor makes a determination that the 
plan will not be insolvent in any of the next 5 plan 
years.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to determinations 
made in plan years beginning after 2005.
196
SEC. 204. WITHDRAWAL LIABILITY REFORMS. 
(a) REPEAL OF LIMITATION ON WITHDRAWAL LI-
ABILITY IN THE EVENT OF CERTAIN SALES OF EM-
PLOYER ASSETS TO UNRELATED PARTIES.—
(1) IN
GENERAL.—Section 4225 of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1405) is repealed. 
(2) CONFORMING AMENDMENT.—The table of 
contents in section 1 of such Act is amended by 
striking the item relating to section 4225. 
(3) EFFECTIVE DATE.—The amendments made 
by this section shall apply with respect to sales oc-
curring on or after January 1, 2006. 
(b) REPEAL OF LIMITATION TO 20 ANNUAL PAY-
MENTS.—
(1) IN GENERAL.—Section 4219(c)(1) of such 
Act (29 U.S.C. 1399(c)(1)) is amended by striking 
subparagraph (B). 
(2) EFFECTIVE DATE.—The amendment made 
by this section shall apply with respect to with-
drawals occurring on or after January 1, 2006. 
(c) 
PARTIAL
WITHDRAWALS
BY
MEANS
OF 
OUTSOURCING.—
(1) IN
GENERAL.—Section 4205(b)(2)(A) of 
such Act (29 U.S.C. 1385(b)(2)(A)) is amended—
197
(A) by striking ‘‘or’’ at the end of clause 
(i); 
(B) by striking ‘‘ceased.’’ at the end of 
clause (ii) and inserting ‘‘ceased, or’’; and 
(C) by adding at the end the following new 
clause: 
‘‘(iii) an employer continues to per-
form work of the type for which contribu-
tions are made under the plan by means of 
services of individuals who are not employ-
ees of such employer covered by such 
plan.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply with respect to work 
performed on or after January 1, 2006. 
(d) REPEAL
OF SPECIAL RULE
FOR LONG
AND 
SHORT HAUL TRUCKING INDUSTRY.—
(1) IN
GENERAL.—Subsection (d) of section 
4203 of such Act (29 U.S.C. 1383(d)) is repealed. 
(2) EFFECTIVE DATE.—The repeal under this 
subsection shall apply with respect to cessations to 
have obligations to contribute to multiemployer 
plans and cessations of covered operations under 
such plans occurring on or after January 1, 2006.
198
(e) APPLICATION OF FORGIVENESS RULE TO PLANS 
PRIMARILY COVERING EMPLOYEES
IN
THE BUILDING 
AND CONSTRUCTION.—
(1) IN GENERAL.—Section 4210(b) of such Act 
(29 U.S.C. 1390(b)) is amended—
(A) by striking paragraph (1); and 
(B) 
by 
redesignating 
paragraphs 
(2) 
through (4) as paragraphs (1) through (3), re-
spectively. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply with respect to plan 
withdrawals occurring on or after January 1, 2006. 
SEC. 205. REMOVAL OF RESTRICTIONS WITH RESPECT TO 
PROCEDURES APPLICABLE TO DISPUTES IN-
VOLVING WITHDRAWAL LIABILITY. 
(a) IN GENERAL.—Section 4221(f)(1) of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1401(f)(1)) is amended—
(1) in subparagraph (A) by inserting ‘‘and’’ 
after ‘‘plan,’’, and 
(2) by striking subparagraphs (B) and (C) and 
inserting the following new subparagraph: 
‘‘(B) such determination is based in whole 
or in part on a finding by the plan sponsor 
under section 4212(c) that a principal purpose
199
of any transaction which occurred at least 5 
years (2 years in the case of a small employer) 
before the date of the complete or partial with-
drawal was to evade or avoid withdrawal liabil-
ity under this subtitle,’’. 
(b) SMALL EMPLOYER.—Paragraph (2) of section 
4221(f) of such Act is amended by adding at the end the 
following new subparagraph: 
‘‘(C) SMALL EMPLOYER.—For purposes of 
paragraph (1)(B)—
‘‘(i) IN GENERAL.—The term ‘small 
employer’ means any employer who (as of 
immediately before the transaction referred 
to in paragraph (1)(B)) employs not more 
than 250 employees. 
‘‘(ii) 
CONTROLLED
GROUP.—Any 
group treated as a single employer under 
subsection (b), (c), (m), or (o) of section 
414 of the Internal Revenue Code of 1986 
shall be treated as a single employer for 
purposes of this subparagraph.’’. 
(c) CONFORMING AMENDMENT.—Subparagraph (A) 
of section 4221(f)(2) of such Act is amended by striking 
‘‘Notwithstanding’’ and inserting ‘‘In the case of a trans-
action occurring before January 1, 1999, and at least 5
200
years before the date of the complete or partial with-
drawal, notwithstanding’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to any employer that receives a 
notification under section 4219(b)(1) of the Employee Re-
tirement Income Security Act of 1974 on or after the date 
of the enactment of this Act. 
Subtitle B—Amendments to 
Internal Revenue Code of 1986
SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED 
BENEFIT PLANS. 
(a) IN GENERAL.—Subpart A of part III of sub-
chapter D of chapter 1 of the Internal Revenue Code of 
1986 (added by section 112 of this Act) is amended by 
adding at the end the following new section: 
‘‘SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEM-
PLOYER PLANS. 
‘‘(a) IN GENERAL.—For purposes of section 412, the 
accumulated funding deficiency of a multiemployer plan 
for any plan year is—
‘‘(1) except as provided in paragraph (2), the 
amount, determined as of the end of the plan year, 
equal to the excess (if any) of the total charges to 
the funding standard account of the plan for all plan 
years (beginning with the first plan year for which
201
this part applies to the plan) over the total credits 
to such account for such years, and 
‘‘(2) if the multiemployer plan is in reorganiza-
tion for any plan year, the accumulated funding de-
ficiency of the plan determined under section 418B. 
‘‘(b) FUNDING STANDARD ACCOUNT.—
‘‘(1) ACCOUNT
REQUIRED.—Each multiem-
ployer plan to which this part applies shall establish 
and maintain a funding standard account. Such ac-
count shall be credited and charged solely as pro-
vided in this section. 
‘‘(2) CHARGES TO ACCOUNT.—For a plan year, 
the funding standard account shall be charged with 
the sum of—
‘‘(A) the normal cost of the plan for the 
plan year, 
‘‘(B) the amounts necessary to amortize in 
equal annual installments (until fully amor-
tized)—
‘‘(i) in the case of a plan in existence 
on January 1, 1974, the unfunded past 
service liability under the plan on the first 
day of the first plan year to which this sec-
tion applies, over a period of 40 plan 
years,