† HR 3962 EAS 
by a plan sponsor for purposes of paying 
deferred compensation of an employee under 
a nonqualified deferred compensation plan 
(as defined in section 409A of such Code) of 
the plan sponsor, then, for purposes of 
clause (i), the amount of such assets shall be 
treated as remuneration of the employee in-
cludible in income for the calendar year un-
less such amount is otherwise includible in 
income for such year. An amount to which 
the preceding sentence applies shall not be 
taken into account under this paragraph for 
any subsequent calendar year. 
‘‘(iii) ONLY REMUNERATION FOR CER-
TAIN
POST-2009
SERVICES
COUNTED.—Re-
muneration shall be taken into account 
under clause (i) only to the extent attrib-
utable to services performed by the employee 
for the plan sponsor after February 28, 
2010. 
‘‘(iv) EXCEPTION FOR CERTAIN EQUITY 
PAYMENTS.— 
‘‘(I) IN
GENERAL.—There shall 
not be taken into account under clause 
(i)(I) any amount includible in income
† HR 3962 EAS 
with respect to the granting after Feb-
ruary 28, 2010, of service recipient 
stock (within the meaning of section 
409A of the Internal Revenue Code of 
1986) that, upon such grant, is subject 
to a substantial risk of forfeiture (as 
defined under section 83(c)(1) of such 
Code) for at least 5 years from the date 
of such grant. 
‘‘(II) 
SECRETARIAL
AUTHOR-
ITY.—The Secretary of the Treasury 
may by regulation provide for the ap-
plication of this clause in the case of a 
person other than a corporation. 
‘‘(v) OTHER
EXCEPTIONS.—The fol-
lowing amounts includible in income shall 
not be taken into account under clause 
(i)(I): 
‘‘(I) COMMISSIONS.—Any remu-
neration payable on a commission 
basis solely on account of income di-
rectly generated by the individual per-
formance of the individual to whom 
such remuneration is payable.
† HR 3962 EAS 
‘‘(II) CERTAIN PAYMENTS UNDER 
EXISTING
CONTRACTS.—Any 
remu-
neration consisting of nonqualified de-
ferred compensation, restricted stock, 
stock options, or stock appreciation 
rights payable or granted under a 
written binding contract that was in 
effect on March 1, 2010, and which 
was not modified in any material re-
spect before such remuneration is paid. 
‘‘(vi) 
SELF-EMPLOYED
INDIVIDUAL 
TREATED
AS
EMPLOYEE.—The term ‘em-
ployee’ includes, with respect to a calendar 
year, a self-employed individual who is 
treated as an employee under section 401(c) 
of such Code for the taxable year ending 
during such calendar year, and the term 
‘compensation’ shall include earned income 
of such individual with respect to such self- 
employment. 
‘‘(vii) INDEXING OF AMOUNT.—In the 
case of any calendar year beginning after 
2010, the dollar amount under clause (i)(II) 
shall be increased by an amount equal to—
† HR 3962 EAS 
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost-of-living adjustment 
determined under section 1(f)(3) of 
such Code for the calendar year, deter-
mined by substituting ‘calendar year 
2009’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
If the amount of any increase under clause 
(i) is not a multiple of $1,000, such in-
crease shall be rounded to the next lowest 
multiple of $1,000. 
‘‘(E) EXTRAORDINARY DIVIDENDS AND RE-
DEMPTIONS.— 
‘‘(i) IN GENERAL.—The amount deter-
mined under this subparagraph for any 
plan year is the excess (if any) of the sum 
of the dividends declared during the plan 
year by the plan sponsor plus the aggregate 
amount paid for the redemption of stock of 
the plan sponsor redeemed during the plan 
year over the greater of— 
‘‘(I) the adjusted net income 
(within the meaning of section 4043) of 
the plan sponsor for the preceding plan
† HR 3962 EAS 
year, determined without regard to 
any reduction by reason of interest, 
taxes, depreciation, or amortization, or 
‘‘(II) in the case of a plan sponsor 
that determined and declared dividends 
in the same manner for at least 5 con-
secutive years immediately preceding 
such plan year, the aggregate amount 
of dividends determined and declared 
for such plan year using such manner. 
‘‘(ii) ONLY
CERTAIN
POST-2009
DIVI-
DENDS AND REDEMPTIONS COUNTED.—For 
purposes of clause (i), there shall only be 
taken into account dividends declared, and 
redemptions occurring, after February 28, 
2010. 
‘‘(iii) EXCEPTION
FOR
INTRA-GROUP 
DIVIDENDS.—Dividends paid by one mem-
ber of a controlled group (as defined in sec-
tion 302(d)(3)) to another member of such 
group shall not be taken into account under 
clause (i). 
‘‘(iv) EXCEPTION
FOR
CERTAIN
RE-
DEMPTIONS.—Redemptions that are made 
pursuant to a plan maintained with respect
† HR 3962 EAS 
to employees, or that are made on account 
of the death, disability, or termination of 
employment of an employee or shareholder, 
shall not be taken into account under clause 
(i). 
‘‘(v) EXCEPTION
FOR
CERTAIN
PRE-
FERRED STOCK.— 
‘‘(I) 
IN
GENERAL.—Dividends 
and redemptions with respect to appli-
cable preferred stock shall not be taken 
into account under clause (i) to the ex-
tent that dividends accrue with respect 
to such stock at a specified rate in all 
events and without regard to the plan 
sponsor’s income, and interest accrues 
on any unpaid dividends with respect 
to such stock. 
‘‘(II) 
APPLICABLE
PREFERRED 
STOCK.—For purposes of subclause (I), 
the term ‘applicable preferred stock’ 
means preferred stock which was issued 
before March 1, 2010 (or which was 
issued after such date and is held by 
an employee benefit plan subject to the 
provisions of this title).
† HR 3962 EAS 
‘‘(F) OTHER
DEFINITIONS
AND
RULES.— 
For purposes of this paragraph— 
‘‘(i) PLAN SPONSOR.—The term ‘ plan 
sponsor’ includes any member of the plan 
sponsor’s controlled group (as defined in 
section 302(d)(3)). 
‘‘(ii) RESTRICTION PERIOD.—The term 
‘restriction period’ means, with respect to 
any election year— 
‘‘(I) except as provided in sub-
clause (II), the 3-year period beginning 
with the election year (or, if later, the 
first plan year beginning after Decem-
ber 31, 2009), and 
‘‘(II) if the plan sponsor elects 15- 
year amortization for the shortfall am-
ortization base for the election year, the 
5-year period beginning with the elec-
tion year (or, if later, the first plan 
year beginning after December 31, 
2009). 
‘‘(iii) 
ELECTIONS
FOR
MULTIPLE 
PLANS.—If a plan sponsor makes elections 
under paragraph (2)(D) with respect to 2 
or more plans, the Secretary of the Treas-
† HR 3962 EAS 
ury shall provide rules for the application 
of this paragraph to such plans, including 
rules for the ratable allocation of any in-
stallment acceleration amount among such 
plans on the basis of each plan’s relative re-
duction in the plan’s shortfall amortization 
installment for the first plan year in the 
amortization period described in subpara-
graph (A) (determined without regard to 
this paragraph). 
‘‘(iv) MERGERS AND ACQUISITIONS.— 
The Secretary of the Treasury shall pre-
scribe rules for the application of paragraph 
(2)(D) and this paragraph in any case 
where there is a merger or acquisition in-
volving a plan sponsor making the election 
under paragraph (2)(D).’’. 
(3) CONFORMING AMENDMENTS.—Section 303 of 
such Act (29 U.S.C. 1083) is amended— 
(A) in subsection (c)(1), by striking ‘‘the 
shortfall amortization bases for such plan year 
and each of the 6 preceding plan years’’ and in-
serting ‘‘any shortfall amortization base which 
has not been fully amortized under this sub-
section’’, and
† HR 3962 EAS 
(B) in subsection (j)(3), by adding at the 
end the following: 
‘‘(F) QUARTERLY CONTRIBUTIONS NOT TO 
INCLUDE
CERTAIN
INCREASED
CONTRIBU-
TIONS.—Subparagraph (D) shall be applied 
without regard to any increase under subsection 
(c)(7).’’. 
(b) AMENDMENTS TO INTERNAL REVENUE CODE OF 
1986.— 
(1) IN
GENERAL.—Paragraph (2) of section 
430(c) is amended by adding at the end the following 
subparagraph: 
‘‘(D) SPECIAL
ELECTION
FOR
ELIGIBLE 
PLAN YEARS.— 
‘‘(i) IN GENERAL.—If a plan sponsor 
elects to apply this subparagraph with re-
spect to the shortfall amortization base of a 
plan for any eligible plan year (in this sub-
paragraph and paragraph (7) referred to as 
an ‘election year’), then, notwithstanding 
subparagraphs (A) and (B)— 
‘‘(I) the shortfall amortization in-
stallments with respect to such base 
shall be determined under clause (ii) or
† HR 3962 EAS 
(iii), whichever is specified in the elec-
tion, and 
‘‘(II) the shortfall amortization 
installment for any plan year in the 9- 
plan-year period described in clause 
(ii) or the 15-plan-year period de-
scribed in clause (iii), respectively, 
with respect to such shortfall amortiza-
tion base is the annual installment de-
termined under the applicable clause 
for that year for that base. 
‘‘(ii) 2 PLUS 7 AMORTIZATION SCHED-
ULE.—The shortfall amortization install-
ments determined under this clause are— 
‘‘(I) in the case of the first 2 plan 
years in the 9-plan-year period begin-
ning with the election year, interest on 
the shortfall amortization base of the 
plan for the election year (determined 
using the effective interest rate for the 
plan for the election year), and 
‘‘(II) in the case of the last 7 plan 
years in such 9-plan-year period, the 
amounts necessary to amortize the re-
maining balance of the shortfall amor-
† HR 3962 EAS 
tization base of the plan for the elec-
tion year in level annual installments 
over such last 7 plan years (using the 
segment rates under subparagraph (C) 
for the election year). 
‘‘(iii) 15-YEAR
AMORTIZATION.—The 
shortfall amortization installments deter-
mined under this subparagraph are the 
amounts necessary to amortize the shortfall 
amortization base of the plan for the elec-
tion year in level annual installments over 
the 15-plan-year period beginning with the 
election year (using the segment rates under 
subparagraph (C) for the election year). 
‘‘(iv) ELECTION.— 
‘‘(I) 
IN
GENERAL.—The 
plan 
sponsor of a plan may elect to have 
this subparagraph apply to not more 
than 2 eligible plan years with respect 
to the plan, except that in the case of 
a plan described in section 106 of the 
Pension Protection Act of 2006, the 
plan sponsor may only elect to have 
this subparagraph apply to a plan 
year beginning in 2011.
† HR 3962 EAS 
‘‘(II) 
AMORTIZATION
SCHED-
ULE.—Such 
election 
shall 
specify 
whether 
the 
amortization 
schedule 
under clause (ii) or (iii) shall apply to 
an election year, except that if a plan 
sponsor elects to have this subpara-
graph apply to 2 eligible plan years, 
the plan sponsor must elect the same 
schedule for both years. 
‘‘(III) OTHER RULES.—Such elec-
tion shall be made at such time, and in 
such form and manner, as shall be pre-
scribed by the Secretary, and may be 
revoked only with the consent of the 
Secretary. The Secretary shall, before 
granting a revocation request, provide 
the Pension Benefit Guaranty Cor-
poration an opportunity to comment 
on the conditions applicable to the 
treatment of any portion of the election 
year shortfall amortization base that 
remains unamortized as of the revoca-
tion date. 
‘‘(v) ELIGIBLE PLAN YEAR.—For pur-
poses of this subparagraph, the term ‘eligi-
† HR 3962 EAS 
ble plan year’ means any plan year begin-
ning in 2008, 2009, 2010, or 2011, except 
that a plan year shall only be treated as an 
eligible plan year if the due date under sub-
section (j)(1) for the payment of the min-
imum required contribution for such plan 
year occurs on or after the date of the enact-
ment of this subparagraph. 
‘‘(vi) REPORTING.—A plan sponsor of 
a plan who makes an election under clause 
(i) shall— 
‘‘(I) give notice of the election to 
participants and beneficiaries of the 
plan, and 
‘‘(II) inform the Pension Benefit 
Guaranty Corporation of such election 
in such form and manner as the Direc-
tor of the Pension Benefit Guaranty 
Corporation may prescribe. 
‘‘(vii) INCREASES
IN
REQUIRED
IN-
STALLMENTS IN CERTAIN CASES.—For in-
creases in required contributions in cases of 
excess compensation or extraordinary divi-
dends or stock redemptions, see paragraph 
(7).’’.
† HR 3962 EAS 
(2) INCREASES IN REQUIRED CONTRIBUTIONS IF 
EXCESS
COMPENSATION
PAID.—Section 430(c) is 
amended by adding at the end the following para-
graph: 
‘‘(7) INCREASES IN ALTERNATE REQUIRED IN-
STALLMENTS IN CASES OF EXCESS COMPENSATION OR 
EXTRAORDINARY
DIVIDENDS
OR
STOCK
REDEMP-
TIONS.— 
‘‘(A) IN GENERAL.—If there is an install-
ment acceleration amount with respect to a plan 
for any plan year in the restriction period with 
respect to an election year under paragraph 
(2)(D), then the shortfall amortization install-
ment otherwise determined and payable under 
such paragraph for such plan year shall, subject 
to the limitation under subparagraph (B), be in-
creased by such amount. 
‘‘(B) TOTAL
INSTALLMENTS
LIMITED
TO 
SHORTFALL BASE.—Subject to rules prescribed 
by the Secretary, if a shortfall amortization in-
stallment with respect to any shortfall amortiza-
tion base for an election year is required to be 
increased for any plan year under subparagraph 
(A)—
† HR 3962 EAS 
‘‘(i) such increase shall not result in 
the amount of such installment exceeding 
the present value of such installment and all 
succeeding installments with respect to such 
base (determined without regard to such in-
crease but after application of clause (ii)), 
and 
‘‘(ii) subsequent shortfall amortization 
installments with respect to such base shall, 
in reverse order of the otherwise required in-
stallments, be reduced to the extent nec-
essary to limit the present value of such 
subsequent shortfall amortization install-
ments (after application of this paragraph) 
to the present value of the remaining 
unamortized shortfall amortization base. 
‘‘(C) 
INSTALLMENT
ACCELERATION 
AMOUNT.—For purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘install-
ment acceleration amount’ means, with re-
spect to any plan year in a restriction pe-
riod with respect to an election year, the 
sum of— 
‘‘(I) the aggregate amount of ex-
cess employee compensation determined
† HR 3962 EAS 
under subparagraph (D) with respect 
to all employees for the plan year, plus 
‘‘(II) the aggregate amount of ex-
traordinary dividends and redemp-
tions determined under subparagraph 
(E) for the plan year. 
‘‘(ii) ANNUAL
LIMITATION.—The in-
stallment acceleration amount for any plan 
year shall not exceed the excess (if any) of— 
‘‘(I) the sum of the shortfall amor-
tization installments for the plan year 
and all preceding plan years in the 
amortization 
period 
elected 
under 
paragraph (2)(D) with respect to the 
shortfall amortization base with respect 
to an election year, determined without 
regard to paragraph (2)(D) and this 
paragraph, over 
‘‘(II) the sum of the shortfall am-
ortization installments for such plan 
year and all such preceding plan 
years, determined after application of 
paragraph (2)(D) (and in the case of 
any preceding plan year, after appli-
cation of this paragraph).
† HR 3962 EAS 
‘‘(iii) CARRYOVER OF EXCESS INSTALL-
MENT ACCELERATION AMOUNTS.— 
‘‘(I) IN GENERAL.—If the install-
ment acceleration amount for any plan 
year (determined without regard to 
clause (ii)) exceeds the limitation 
under clause (ii), then, subject to sub-
clause (II), such excess shall be treated 
as an installment acceleration amount 
with respect to the succeeding plan 
year. 
‘‘(II) CAP
TO
APPLY.—If any 
amount treated as an installment ac-
celeration amount under subclause (I) 
or this subclause with respect any suc-
ceeding plan year, when added to other 
installment acceleration amounts (de-
termined without regard to clause (ii)) 
with respect to the plan year, exceeds 
the limitation under clause (ii), the 
portion of such amount representing 
such excess shall be treated as an in-
stallment acceleration amount with re-
spect to the next succeeding plan year.
† HR 3962 EAS 
‘‘(III) LIMITATION ON YEARS TO 
WHICH
AMOUNTS
CARRIED
FOR.—No 
amount shall be carried under sub-
clause (I) or (II) to a plan year which 
begins after the first plan year fol-
lowing the last plan year in the re-
striction period (or after the second 
plan year following such last plan year 
in the case of an election year with re-
spect to which 15-year amortization 
was elected under paragraph (2)(D)). 
‘‘(IV) 
ORDERING
RULES.—For 
purposes of applying subclause (II), 
installment acceleration amounts for 
the plan year (determined without re-
gard to any carryover under this 
clause) shall be applied first against 
the limitation under clause (ii) and 
then carryovers to such plan year shall 
be applied against such limitation on 
a first-in, first-out basis. 
‘‘(D) EXCESS EMPLOYEE COMPENSATION.— 
For purposes of this paragraph— 
‘‘(i) IN
GENERAL.—The term ‘excess 
employee compensation’ means, with respect
† HR 3962 EAS 
to any employee for any plan year, the ex-
cess (if any) of— 
‘‘(I) the aggregate amount includ-
ible in income under this chapter for 
remuneration during the calendar year 
in which such plan year begins for 
services performed by the employee for 
the plan sponsor (whether or not per-
formed during such calendar year), 
over 
‘‘(II) $1,000,000. 
‘‘(ii) AMOUNTS SET ASIDE FOR NON-
QUALIFIED
DEFERRED
COMPENSATION.—If 
during any calendar year assets are set 
aside or reserved (directly or indirectly) in 
a trust (or other arrangement as determined 
by the Secretary), or transferred to such a 
trust or other arrangement, by a plan spon-
sor for purposes of paying deferred com-
pensation of an employee under a non-
qualified deferred compensation plan (as de-
fined in section 409A) of the plan sponsor, 
then, for purposes of clause (i), the amount 
of such assets shall be treated as remunera-
tion of the employee includible in income
† HR 3962 EAS 
for the calendar year unless such amount is 
otherwise includible in income for such 
year. An amount to which the preceding 
sentence applies shall not be taken into ac-
count under this paragraph for any subse-
quent calendar year. 
‘‘(iii) ONLY REMUNERATION FOR CER-
TAIN
POST-2009
SERVICES
COUNTED.—Re-
muneration shall be taken into account 
under clause (i) only to the extent attrib-
utable to services performed by the employee 
for the plan sponsor after February 28, 
2010. 
‘‘(iv) EXCEPTION FOR CERTAIN EQUITY 
PAYMENTS.— 
‘‘(I) IN
GENERAL.—There shall 
not be taken into account under clause 
(i)(I) any amount includible in income 
with respect to the granting after Feb-
ruary 28, 2010, of service recipient 
stock (within the meaning of section 
409A) that, upon such grant, is subject 
to a substantial risk of forfeiture (as 
defined under section 83(c)(1)) for at
† HR 3962 EAS 
least 5 years from the date of such 
grant. 
‘‘(II) 
SECRETARIAL
AUTHOR-
ITY.—The Secretary may by regulation 
provide for the application of this 
clause in the case of a person other 
than a corporation. 
‘‘(v) OTHER
EXCEPTIONS.—The fol-
lowing amounts includible in income shall 
not be taken into account under clause 
(i)(I): 
‘‘(I) COMMISSIONS.—Any remu-
neration payable on a commission 
basis solely on account of income di-
rectly generated by the individual per-
formance of the individual to whom 
such remuneration is payable. 
‘‘(II) CERTAIN PAYMENTS UNDER 
EXISTING
CONTRACTS.—Any 
remu-
neration consisting of nonqualified de-
ferred compensation, restricted stock, 
stock options, or stock appreciation 
rights payable or granted under a 
written binding contract that was in 
effect on March 1, 2010, and which
† HR 3962 EAS 
was not modified in any material re-
spect before such remuneration is paid. 
‘‘(vi) 
SELF-EMPLOYED
INDIVIDUAL 
TREATED
AS
EMPLOYEE.—The term ‘em-
ployee’ includes, with respect to a calendar 
year, a self-employed individual who is 
treated as an employee under section 401(c) 
for the taxable year ending during such cal-
endar year, and the term ‘compensation’ 
shall include earned income of such indi-
vidual with respect to such self-employment. 
‘‘(vii) INDEXING OF AMOUNT.—In the 
case of any calendar year beginning after 
2010, the dollar amount under clause (i)(II) 
shall be increased by an amount equal to— 
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost-of-living adjustment 
determined under section 1(f)(3) for 
the calendar year, determined by sub-
stituting ‘calendar year 2009’ for ‘cal-
endar year 1992’ in subparagraph (B) 
thereof. 
If the amount of any increase under clause 
(i) is not a multiple of $1,000, such in-
† HR 3962 EAS 
crease shall be rounded to the next lowest 
multiple of $1,000. 
‘‘(E) EXTRAORDINARY DIVIDENDS AND RE-
DEMPTIONS.— 
‘‘(i) IN GENERAL.—The amount deter-
mined under this subparagraph for any 
plan year is the excess (if any) of the sum 
of the dividends declared during the plan 
year by the plan sponsor plus the aggregate 
amount paid for the redemption of stock of 
the plan sponsor redeemed during the plan 
year over the greater of— 
‘‘(I) the adjusted net income 
(within the meaning of section 4043 of 
the Employee Retirement Income Secu-
rity Act of 1974) of the plan sponsor 
for the preceding plan year, deter-
mined without regard to any reduction 
by reason of interest, taxes, deprecia-
tion, or amortization, or 
‘‘(II) in the case of a plan sponsor 
that determined and declared dividends 
in the same manner for at least 5 con-
secutive years immediately preceding 
such plan year, the aggregate amount
† HR 3962 EAS 
of dividends determined and declared 
for such plan year using such manner. 
‘‘(ii) ONLY
CERTAIN
POST-2009
DIVI-
DENDS AND REDEMPTIONS COUNTED.—For 
purposes of clause (i), there shall only be 
taken into account dividends declared, and 
redemptions occurring, after February 28, 
2010. 
‘‘(iii) EXCEPTION
FOR
INTRA-GROUP 
DIVIDENDS.—Dividends paid by one mem-
ber of a controlled group (as defined in sec-
tion 412(d)(3)) to another member of such 
group shall not be taken into account under 
clause (i). 
‘‘(iv) EXCEPTION
FOR
CERTAIN
RE-
DEMPTIONS.—Redemptions that are made 
pursuant to a plan maintained with respect 
to employees, or that are made on account 
of the death, disability, or termination of 
employment of an employee or shareholder, 
shall not be taken into account under clause 
(i). 
‘‘(v) EXCEPTION
FOR
CERTAIN
PRE-
FERRED STOCK.—
† HR 3962 EAS 
‘‘(I) 
IN
GENERAL.—Dividends 
and redemptions with respect to appli-
cable preferred stock shall not be taken 
into account under clause (i) to the ex-
tent that dividends accrue with respect 
to such stock at a specified rate in all 
events and without regard to the plan 
sponsor’s income, and interest accrues 
on any unpaid dividends with respect 
to such stock. 
‘‘(II) 
APPLICABLE
PREFERRED 
STOCK.—For purposes of subclause (I), 
the term ‘applicable preferred stock’ 
means preferred stock which was issued 
before March 1, 2010 (or which was 
issued after such date and is held by 
an employee benefit plan subject to the 
provisions of title I of Employee Re-
tirement Income Security Act of 1974). 
‘‘(F) OTHER
DEFINITIONS
AND
RULES.— 
For purposes of this paragraph— 
‘‘(i) PLAN SPONSOR.—The term ‘ plan 
sponsor’ includes any member of the plan 
sponsor’s controlled group (as defined in 
section 412(d)(3)).
† HR 3962 EAS 
‘‘(ii) RESTRICTION PERIOD.—The term 
‘restriction period’ means, with respect to 
any election year— 
‘‘(I) except as provided in sub-
clause (II), the 3-year period beginning 
with the election year (or, if later, the 
first plan year beginning after Decem-
ber 31, 2009), and 
‘‘(II) if the plan sponsor elects 15- 
year amortization for the shortfall am-
ortization base for the election year, the 
5-year period beginning with the elec-
tion year (or, if later, the first plan 
year beginning after December 31, 
2009). 
‘‘(iii) 
ELECTIONS
FOR
MULTIPLE 
PLANS.—If a plan sponsor makes elections 
under paragraph (2)(D) with respect to 2 
or more plans, the Secretary shall provide 
rules for the application of this paragraph 
to such plans, including rules for the ratable 
allocation of any installment acceleration 
amount among such plans on the basis of 
each plan’s relative reduction in the plan’s 
shortfall amortization installment for the
† HR 3962 EAS 
first plan year in the amortization period 
described in subparagraph (A) (determined 
without regard to this paragraph). 
‘‘(iv) MERGERS AND ACQUISITIONS.— 
The Secretary shall prescribe rules for the 
application of paragraph (2)(D) and this 
paragraph in any case where there is a 
merger or acquisition involving a plan 
sponsor making the election under para-
graph (2)(D).’’. 
(3) CONFORMING AMENDMENTS.—Section 430 is 
amended— 
(A) in subsection (c)(1), by striking ‘‘the 
shortfall amortization bases for such plan year 
and each of the 6 preceding plan years’’ and in-
serting ‘‘any shortfall amortization base which 
has not been fully amortized under this sub-
section’’, and 
(B) in subsection (j)(3), by adding at the 
end the following: 
‘‘(F) QUARTERLY CONTRIBUTIONS NOT TO 
INCLUDE
CERTAIN
INCREASED
CONTRIBU-
TIONS.—Subparagraph (D) shall be applied 
without regard to any increase under subsection 
(c)(7).’’.
† HR 3962 EAS 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to plan years beginning after December 
31, 2007. 
SEC. 202. APPLICATION OF EXTENDED AMORTIZATION PE-
RIOD TO PLANS SUBJECT TO PRIOR LAW 
FUNDING RULES. 
(a) IN GENERAL.—Title I of the Pension Protection 
Act of 2006 is amended by redesignating section 107 as sec-
tion 108 and by inserting the following after section 106: 
‘‘SEC. 107. APPLICATION OF EXTENDED AMORTIZATION PE-
RIODS TO PLANS WITH DELAYED EFFECTIVE 
DATE. 
‘‘(a) IN GENERAL.—If the plan sponsor of a plan to 
which section 104, 105, or 106 of this Act applies elects 
to have this section apply for any eligible plan year (in 
this section referred to as an ‘election year’), section 302 
of the Employee Retirement Income Security Act of 1974 
and section 412 of the Internal Revenue Code of 1986 (as 
in effect before the amendments made by this subtitle and 
subtitle B) shall apply to such year in the manner described 
in subsection (b) or (c), whichever is specified in the elec-
tion. All references in this section to ‘such Act’ or ‘such 
Code’ shall be to such Act or such Code as in effect before 
the amendments made by this subtitle and subtitle B.
† HR 3962 EAS 
‘‘(b) APPLICATION OF 2 AND 7 RULE.—In the case of 
an election year to which this subsection applies— 
‘‘(1) 2-YEAR LOOKBACK FOR DETERMINING DEF-
ICIT
REDUCTION
CONTRIBUTIONS
FOR
CERTAIN 
PLANS.—For purposes of applying section 302(d)(9) 
of such Act and section 412(l)(9) of such Code, the 
funded current liability percentage (as defined in sub-
paragraph (C) thereof) for such plan for such plan 
year shall be such funded current liability percentage 
of such plan for the second plan year preceding the 
first election year of such plan. 
‘‘(2) CALCULATION OF DEFICIT REDUCTION CON-
TRIBUTION.—For purposes of applying section 302(d) 
of such Act and section 412(l) of such Code to a plan 
to which such sections apply (after taking into ac-
count paragraph (1))— 
‘‘(A) in the case of the increased unfunded 
new liability of the plan, the applicable percent-
age described in section 302(d)(4)(C) of such Act 
and section 412(l)(4)(C) of such Code shall be the 
third segment rate described in sections 104(b), 
105(b), and 106(b) of this Act, and 
‘‘(B) in the case of the excess of the un-
funded new liability over the increased unfunded
† HR 3962 EAS 
new liability, such applicable percentage shall be 
determined without regard to this section. 
‘‘(c) APPLICATION
OF 15-YEAR AMORTIZATION.—In 
the case of an election year to which this subsection applies, 
for purposes of applying section 302(d) of such Act and sec-
tion 412(l) of such Code— 
‘‘(1) in the case of the increased unfunded new 
liability of the plan, the applicable percentage de-
scribed in section 302(d)(4)(C) of such Act and sec-
tion 412(l)(4)(C) of such Code for any pre-effective 
date plan year beginning with or after the first elec-
tion year shall be the ratio of— 
‘‘(A) the annual installments payable in 
each year if the increased unfunded new liability 
for such plan year were amortized over 15 years, 
using an interest rate equal to the third segment 
rate described in sections 104(b), 105(b), and 
106(b) of this Act, to 
‘‘(B) the increased unfunded new liability 
for such plan year, and 
‘‘(2) in the case of the excess of the unfunded new 
liability over the increased unfunded new liability, 
such applicable percentage shall be determined with-
out regard to this section. 
‘‘(d) ELECTION.—
† HR 3962 EAS 
(b) ELIGIBLE CHARITY PLANS.—Section 104 of the 
Pension Protection Act of 2006 is amended— 
(1) by striking ‘‘eligible cooperative plan’’ wher-
ever it appears in subsections (a) and (b) and insert-
ing ‘‘eligible cooperative plan or an eligible charity 
plan’’, and 
(2) by adding at the end the following new sub-
section: 
‘‘(d) ELIGIBLE CHARITY PLAN DEFINED.—For pur-
poses of this section, a plan shall be treated as an eligible 
charity plan for a plan year if the plan is maintained by 
more than one employer (determined without regard to sec-
tion 414(c) of the Internal Revenue Code) and 100 percent 
of the employers are described in section 501(c)(3) of such 
Code.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendment made by sub-
section (a) shall take effect as if included in the Pen-
sion Protection Act of 2006. 
(2) ELIGIBLE CHARITY PLAN.—The amendments 
made by subsection (b) shall apply to plan years be-
ginning after December 31, 2007, except that a plan 
sponsor may elect to apply such amendments to plan 
years beginning after December 31, 2008. Any such 
election shall be made at such time, and in such form
† HR 3962 EAS 
and manner, as shall be prescribed by the Secretary 
of the Treasury, and may be revoked only with the 
consent of the Secretary of the Treasury. 
SEC. 203. LOOKBACK FOR CERTAIN BENEFIT RESTRIC-
TIONS. 
(a) IN GENERAL.— 
(1) AMENDMENT TO ERISA.—Section 206(g)(9) of 
the Employee Retirement Income Security Act of 
1974 is amended by adding at the end the following: 
‘‘(D) SPECIAL RULE FOR CERTAIN YEARS.— 
Solely for purposes of any applicable provi-
sion— 
‘‘(i) IN GENERAL.—For plan years be-
ginning on or after October 1, 2008, and be-
fore October 1, 2010, the adjusted funding 
target attainment percentage of a plan shall 
be the greater of— 
‘‘(I) such percentage, as deter-
mined without regard to this subpara-
graph, or 
‘‘(II) the adjusted funding target 
attainment percentage for such plan 
for the plan year beginning after Octo-
ber 1, 2007, and before October 1, 
2008, as determined under rules pre-
† HR 3962 EAS 
scribed by the Secretary of the Treas-
ury. 
‘‘(ii) SPECIAL RULE.—In the case of a 
plan for which the valuation date is not the 
first day of the plan year— 
‘‘(I) clause (i) shall apply to plan 
years beginning after December 31, 
2007, and before January 1, 2010, and 
‘‘(II) clause (i)(II) shall apply 
based on the last plan year beginning 
before November 1, 2007, as determined 
under rules prescribed by the Secretary 
of the Treasury. 
‘‘(iii) APPLICABLE
PROVISION.—For 
purposes of this subparagraph, the term 
‘applicable provision’ means— 
‘‘(I) paragraph (3), but only for 
purposes of applying such paragraph 
to a payment which, as determined 
under rules prescribed by the Secretary 
of the Treasury, is a payment under a 
social security leveling option which 
accelerates payments under the plan 
before, and reduces payments after, a 
participant starts receiving social secu-
† HR 3962 EAS 
rity benefits in order to provide sub-
stantially similar aggregate payments 
both before and after such benefits are 
received, and 
‘‘(II) paragraph (4).’’. 
(2) AMENDMENT TO INTERNAL REVENUE CODE 
OF 1986.—Section 436(j) of the Internal Revenue Code 
of 1986 is amended by adding at the end the fol-
lowing: 
‘‘(3) SPECIAL RULE FOR CERTAIN YEARS.—Sole-
ly for purposes of any applicable provision— 
‘‘(A) IN GENERAL.—For plan years begin-
ning on or after October 1, 2008, and before Oc-
tober 1, 2010, the adjusted funding target attain-
ment percentage of a plan shall be the greater 
of— 
‘‘(i) such percentage, as determined 
without regard to this paragraph, or 
‘‘(ii) the adjusted funding target at-
tainment percentage for such plan for the 
plan year beginning after October 1, 2007, 
and before October 1, 2008, as determined 
under rules prescribed by the Secretary.
† HR 3962 EAS 
‘‘(B) SPECIAL RULE.—In the case of a plan 
for which the valuation date is not the first day 
of the plan year— 
‘‘(i) subparagraph (A) shall apply to 
plan years beginning after December 31, 
2007, and before January 1, 2010, and 
‘‘(ii) subparagraph (A)(ii) shall apply 
based on the last plan year beginning before 
November 1, 2007, as determined under 
rules prescribed by the Secretary. 
‘‘(C) APPLICABLE
PROVISION.—For pur-
poses of this paragraph, the term ‘applicable 
provision’ means— 
‘‘(i) subsection (d), but only for pur-
poses of applying such paragraph to a pay-
ment which, as determined under rules pre-
scribed by the Secretary, is a payment 
under a social security leveling option 
which accelerates payments under the plan 
before, and reduces payments after, a par-
ticipant starts receiving social security ben-
efits in order to provide substantially simi-
lar aggregate payments both before and 
after such benefits are received, and 
‘‘(ii) subsection (e).’’.
† HR 3962 EAS 
(b) INTERACTION WITH WRERA RULE.—Section 203 
of the Worker, Retiree, and Employer Recovery Act of 2008 
shall apply to a plan for any plan year in lieu of the 
amendments made by this section applying to sections 
206(g)(4) of the Employee Retirement Income Security Act 
of 1974 and 436(e) of the Internal Revenue Code of 1986 
only to the extent that such section produces a higher ad-
justed funding target attainment percentage for such plan 
for such year. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to plan years beginning on or after October 1, 
2008. 
(2) SPECIAL RULE.—In the case of a plan for 
which the valuation date is not the first day of the 
plan year, the amendments made by this section shall 
apply to plan years beginning after December 31, 
2007. 
SEC. 204. LOOKBACK FOR CREDIT BALANCE RULE FOR 
PLANS MAINTAINED BY CHARITIES. 
(a) AMENDMENT TO ERISA.—Paragraph (3) of section 
303(f) of the Employee Retirement Income Security Act of 
1974 is amended by adding the following at the end thereof: