H. R. 4—108
‘‘If the liquidation or distribution value of the em-
ployer after the sale or exchange is—
The portion is—
More than $20,000,000, but not more than $22,500,000 ......
$7,625,000, plus 60 percent of 
the amount in excess of 
$20,000,000. 
More than $22,500,000, but not more than $25,000,000 ......
$9,125,000, plus 70 percent of 
the amount in excess of 
$22,500,000.
More than $25,000,000 ............................................................
$10,875,000, plus 80 percent of 
the amount in excess of 
$25,000,000.’’. 
(2) 
PLANS
USING
ATTRIBUTABLE
METHOD.—Section 
4225(a)(1)(B) of such Act (29 U.S.C. 1405(a)(1)(B)) is amended 
to read as follows: 
‘‘(B) in the case of a plan using the attributable method 
of allocating withdrawal liability, the unfunded vested 
benefits attributable to employees of the employer.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to sales occurring on or after January 1, 
2007. 
(b) WITHDRAWAL LIABILITY CONTINUES IF WORK CONTRACTED 
OUT.—
(1) IN GENERAL.—Clause (i) of section 4205(b)(2)(A) of such 
Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting ‘‘or to 
an entity or entities owned or controlled by the employer’’ 
after ‘‘to another location’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply with respect to work transferred on or 
after the date of the enactment of this Act. 
(c) APPLICATION
OF RULES
TO PLANS PRIMARILY COVERING 
EMPLOYEES IN THE BUILDING AND CONSTRUCTION INDUSTRY.—
(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), respectively. 
(2) FRESH START OPTION.—Section 4211(c)(5) of such Act 
(29 U.S.C. 1391(c)(5)) is amended by adding at the end the 
following new subparagraph: 
‘‘(E) FRESH
START
OPTION.—Notwithstanding para-
graph (1), a plan may be amended to provide that the 
withdrawal liability method described in subsection (b) 
shall be applied by substituting the plan year which is 
specified in the amendment and for which the plan has 
no unfunded vested benefits for the plan year ending before 
September 26, 1980.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply with respect to plan withdrawals occurring 
on or after January 1, 2007. 
(d) PROCEDURES APPLICABLE TO DISPUTES INVOLVING PENSION 
PLAN WITHDRAWAL LIABILITY.—
(1) IN GENERAL.—Section 4221 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1401) is amended by 
adding at the end the following: 
‘‘(g) PROCEDURES APPLICABLE TO CERTAIN DISPUTES.—
‘‘(1) IN GENERAL.—If—
‘‘(A) a plan sponsor of a plan determines that—
H. R. 4—109
‘‘(i) a complete or partial withdrawal of an 
employer has occurred, or 
‘‘(ii) an employer is liable for withdrawal liability 
payments with respect to such complete or partial with-
drawal, and 
‘‘(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 of any transaction which occurred 
after December 31, 1998, and at least 5 years (2 years 
in the case of a small employer) before the date of the 
complete or partial withdrawal was to evade or avoid with-
drawal liability under this subtitle, 
then the person against which the withdrawal liability is 
assessed based solely on the application of section 4212(c) may 
elect to use the special rule under paragraph (2) in applying 
subsection (d) of this section and section 4219(c) to such person. 
‘‘(2) SPECIAL RULE.—Notwithstanding subsection (d) and 
section 4219(c), if an electing person contests the plan sponsor’s 
determination with respect to withdrawal liability payments 
under paragraph (1) through an arbitration proceeding pursu-
ant to subsection (a), through an action brought in a court 
of competent jurisdiction for review of such an arbitration deci-
sion, or as otherwise permitted by law, the electing person 
shall not be obligated to make the withdrawal liability pay-
ments until a final decision in the arbitration proceeding, or 
in court, upholds the plan sponsor’s determination, but only 
if the electing person—
‘‘(A) provides notice to the plan sponsor of its election 
to apply the special rule in this paragraph within 90 days 
after the plan sponsor notifies the electing person of its 
liability by reason of the application of section 4212(c); 
and 
‘‘(B) if a final decision in the arbitration proceeding, 
or in court, of the withdrawal liability dispute has not 
been rendered within 12 months from the date of such 
notice, the electing person provides to the plan, effective 
as of the first day following the 12-month period, a bond 
issued by a corporate surety company that is an acceptable 
surety for purposes of section 412 of this Act, or an amount 
held in escrow by a bank or similar financial institution 
satisfactory to the plan, in an amount equal to the sum 
of the withdrawal liability payments that would otherwise 
be due under subsection (d) and section 4219(c) for the 
12-month period beginning with the first anniversary of 
such notice. Such bond or escrow shall remain in effect 
until there is a final decision in the arbitration proceeding, 
or in court, of the withdrawal liability dispute, at which 
time such bond or escrow shall be paid to the plan if 
such final decision upholds the plan sponsor’s determina-
tion. 
‘‘(3) DEFINITION OF SMALL EMPLOYER.—For purposes of this 
subsection—
‘‘(A) IN GENERAL.—The term ‘small employer’ means 
any employer which, for the calendar year in which the 
transaction referred to in paragraph (1)(B) occurred and 
for each of the 3 preceding years, on average—
‘‘(i) employs not more than 500 employees, and
H. R. 4—110
‘‘(ii) is required to make contributions to the plan 
for not more than 250 employees. 
‘‘(B) CONTROLLED
GROUP.—Any group treated as a 
single employer under subsection (b)(1) of section 4001, 
without regard to any transaction that was a basis for 
the plan’s finding under section 4212, shall be treated 
as a single employer for purposes of this subparagraph. 
‘‘(4) ADDITIONAL
SECURITY
PENDING
RESOLUTION
OF
DIS-
PUTE.—If a withdrawal liability dispute to which this subsection 
applies is not concluded by 12 months after the electing person 
posts the bond or escrow described in paragraph (2), the electing 
person shall, at the start of each succeeding 12-month period, 
provide an additional bond or amount held in escrow equal 
to the sum of the withdrawal liability payments that would 
otherwise be payable to the plan during that period. 
‘‘(5) The liability of the party furnishing a bond or escrow 
under this subsection shall be reduced, upon the payment of 
the bond or escrow to the plan, by the amount thereof.’’. 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to any person that receives a notification 
under section 4219(b)(1) of the Employee Retirement Income 
Security Act of 1974 on or after the date of enactment of 
this Act with respect to a transaction that occurred after 
December 31, 1998. 
SEC. 205. PROHIBITION ON RETALIATION AGAINST EMPLOYERS EXER-
CISING THEIR RIGHTS TO PETITION THE FEDERAL 
GOVERNMENT. 
Section 510 of the Employee Retirement Income Security Act 
of 1974 (29 U.S.C. 1140) is amended by inserting before the last 
sentence thereof the following new sentence: ‘‘In the case of a 
multiemployer plan, it shall be unlawful for the plan sponsor or 
any other person to discriminate against any contributing employer 
for exercising rights under this Act or for giving information or 
testifying in any inquiry or proceeding relating to this Act before 
Congress.’’. 
SEC. 206. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED UNDER 
AN AGREEMENT APPROVED BY THE PENSION BENEFIT 
GUARANTY CORPORATION. 
In the case of a multiemployer plan that is a party to an 
agreement that was approved by the Pension Benefit Guaranty 
Corporation prior to June 30, 2005, and that—
(1) increases benefits, and 
(2) provides for special withdrawal liability rules under 
section 4203(f) of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1383), 
the amendments made by sections 201, 202, 211, and 212 of this 
Act shall not apply to the benefit increases under any plan amend-
ment adopted prior to June 30, 2005, that are funded pursuant 
to such agreement if the plan is funded in compliance with such 
agreement (and any amendments thereto).
H. R. 4—111
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 subchapter D of 
chapter 1 of the Internal Revenue Code of 1986 (as added by 
this Act) is amended by inserting after section 430 the following 
new section: 
‘‘SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER 
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, deter-
mined 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 this part applies to the plan) over the total 
credits to such account for such years, and 
‘‘(2) if the multiemployer plan is in reorganization for any 
plan year, the accumulated funding deficiency of the plan deter-
mined under section 4243 of the Employee Retirement Income 
Security Act of 1974. 
‘‘(b) FUNDING STANDARD ACCOUNT.—
‘‘(1) ACCOUNT
REQUIRED.—Each multiemployer plan to 
which this part applies shall establish and maintain a funding 
standard account. Such account shall be credited and charged 
solely as provided 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 amortized)—
‘‘(i) in the case of a plan which comes into existence 
on or after January 1, 2008, the unfunded past service 
liability under the plan on the first day of the first 
plan year to which this section applies, over a period 
of 15 plan years, 
‘‘(ii) separately, with respect to each plan year, 
the net increase (if any) in unfunded past service 
liability under the plan arising from plan amendments 
adopted in such year, over a period of 15 plan years, 
‘‘(iii) separately, with respect to each plan year, 
the net experience loss (if any) under the plan, over 
a period of 15 plan years, and 
‘‘(iv) separately, with respect to each plan year, 
the net loss (if any) resulting from changes in actuarial 
assumptions used under the plan, over a period of 
15 plan years, 
‘‘(C) the amount necessary to amortize each waived 
funding deficiency (within the meaning of section 412(c)(3)) 
for each prior plan year in equal annual installments (until 
fully amortized) over a period of 15 plan years, 
‘‘(D) the amount necessary to amortize in equal annual 
installments (until fully amortized) over a period of 5 plan
H. R. 4—112
years any amount credited to the funding standard account 
under section 412(b)(3)(D) (as in effect on the day before 
the date of the enactment of the Pension Protection Act 
of 2006), and 
‘‘(E) the amount necessary to amortize in equal annual 
installments (until fully amortized) over a period of 20 
years the contributions which would be required to be 
made under the plan but for the provisions of section 
412(c)(7)(A)(i)(I) (as in effect on the day before the date 
of the enactment of the Pension Protection Act of 2006). 
‘‘(3) CREDITS TO ACCOUNT.—For a plan year, the funding 
standard account shall be credited with the sum of—
‘‘(A) the amount considered contributed by the 
employer to or under the plan for the plan year, 
‘‘(B) the amount necessary to amortize in equal annual 
installments (until fully amortized)—
‘‘(i) separately, with respect to each plan year, 
the net decrease (if any) in unfunded past service 
liability under the plan arising from plan amendments 
adopted in such year, over a period of 15 plan years, 
‘‘(ii) separately, with respect to each plan year, 
the net experience gain (if any) under the plan, over 
a period of 15 plan years, and 
‘‘(iii) separately, with respect to each plan year, 
the net gain (if any) resulting from changes in actuarial 
assumptions used under the plan, over a period of 
15 plan years, 
‘‘(C) the amount of the waived funding deficiency 
(within the meaning of section 412(c)(3)) for the plan year, 
and 
‘‘(D) in the case of a plan year for which the accumu-
lated funding deficiency is determined under the funding 
standard account if such plan year follows a plan year 
for which such deficiency was determined under the alter-
native minimum funding standard under section 412(g) 
(as in effect on the day before the date of the enactment 
of the Pension Protection Act of 2006), the excess (if any) 
of any debit balance in the funding standard account (deter-
mined without regard to this subparagraph) over any debit 
balance in the alternative minimum funding standard 
account. 
‘‘(4) SPECIAL RULE FOR AMOUNTS FIRST AMORTIZED IN PLAN 
YEARS
BEFORE
2008.—In the case of any amount amortized 
under section 412(b) (as in effect on the day before the date 
of the enactment of the Pension Protection Act of 2006) over 
any period beginning with a plan year beginning before 2008 
in lieu of the amortization described in paragraphs (2)(B) and 
(3)(B), such amount shall continue to be amortized under such 
section as so in effect. 
‘‘(5) COMBINING AND OFFSETTING AMOUNTS TO BE AMOR-
TIZED.—Under regulations prescribed by the Secretary, amounts 
required to be amortized under paragraph (2) or paragraph 
(3), as the case may be—
‘‘(A) may be combined into one amount under such 
paragraph to be amortized over a period determined on 
the basis of the remaining amortization period for all items 
entering into such combined amount, and
H. R. 4—113
‘‘(B) may be offset against amounts required to be 
amortized under the other such paragraph, with the 
resulting amount to be amortized over a period determined 
on the basis of the remaining amortization periods for 
all items entering into whichever of the two amounts being 
offset is the greater. 
‘‘(6) INTEREST.—The funding standard account (and items 
therein) shall be charged or credited (as determined under 
regulations prescribed by the Secretary of the Treasury) with 
interest at the appropriate rate consistent with the rate or 
rates of interest used under the plan to determine costs. 
‘‘(7) SPECIAL RULES RELATING TO CHARGES AND CREDITS 
TO FUNDING STANDARD ACCOUNT.—For purposes of this part—
‘‘(A) WITHDRAWAL LIABILITY.—Any amount received by 
a multiemployer plan in payment of all or part of an 
employer’s withdrawal liability under part 1 of subtitle 
E of title IV of the Employee Retirement Income Security 
Act of 1974 shall be considered an amount contributed 
by the employer to or under the plan. The Secretary may 
prescribe by regulation additional charges and credits to 
a multiemployer plan’s funding standard account to the 
extent necessary to prevent withdrawal liability payments 
from being unduly reflected as advance funding for plan 
liabilities. 
‘‘(B) ADJUSTMENTS
WHEN
A
MULTIEMPLOYER
PLAN 
LEAVES REORGANIZATION.—If a multiemployer plan is not 
in reorganization in the plan year but was in reorganization 
in the immediately preceding plan year, any balance in 
the funding standard account at the close of such imme-
diately preceding plan year—
‘‘(i) shall be eliminated by an offsetting credit or 
charge (as the case may be), but 
‘‘(ii) shall be taken into account in subsequent 
plan years by being amortized in equal annual install-
ments (until fully amortized) over 30 plan years. 
The preceding sentence shall not apply to the extent of 
any accumulated funding deficiency under section 4243(a) 
of such Act as of the end of the last plan year that the 
plan was in reorganization. 
‘‘(C) PLAN PAYMENTS TO SUPPLEMENTAL PROGRAM OR 
WITHDRAWAL LIABILITY PAYMENT FUND.—Any amount paid 
by a plan during a plan year to the Pension Benefit Guar-
anty Corporation pursuant to section 4222 of such Act 
or to a fund exempt under section 501(c)(22) pursuant 
to section 4223 of such Act shall reduce the amount of 
contributions considered received by the plan for the plan 
year. 
‘‘(D) INTERIM WITHDRAWAL LIABILITY PAYMENTS.—Any 
amount paid by an employer pending a final determination 
of the employer’s withdrawal liability under part 1 of sub-
title E of title IV of such Act and subsequently refunded 
to the employer by the plan shall be charged to the funding 
standard account in accordance with regulations prescribed 
by the Secretary. 
‘‘(E) ELECTION FOR DEFERRAL OF CHARGE FOR PORTION 
OF NET EXPERIENCE LOSS.—If an election is in effect under 
section 412(b)(7)(F) (as in effect on the day before the
H. R. 4—114
date of the enactment of the Pension Protection Act of 
2006) for any plan year, the funding standard account 
shall be charged in the plan year to which the portion 
of the net experience loss deferred by such election was 
deferred with the amount so deferred (and paragraph 
(2)(B)(iii) shall not apply to the amount so charged). 
‘‘(F) FINANCIAL ASSISTANCE.—Any amount of any finan-
cial assistance from the Pension Benefit Guaranty Corpora-
tion to any plan, and any repayment of such amount, 
shall be taken into account under this section and section 
412 in such manner as is determined by the Secretary. 
‘‘(G) SHORT-TERM BENEFITS.—To the extent that any 
plan amendment increases the unfunded past service 
liability under the plan by reason of an increase in benefits 
which are not payable as a life annuity but are payable 
under the terms of the plan for a period that does not 
exceed 14 years from the effective date of the amendment, 
paragraph (2)(B)(ii) shall be applied separately with respect 
to such increase in unfunded past service liability by sub-
stituting the number of years of the period during which 
such benefits are payable for ‘15’. 
‘‘(c) ADDITIONAL RULES.—
‘‘(1) DETERMINATIONS
TO
BE
MADE
UNDER
FUNDING 
METHOD.—For purposes of this part, normal costs, accrued 
liability, past service liabilities, and experience gains and losses 
shall be determined under the funding method used to deter-
mine costs under the plan. I22
‘‘(2) VALUATION OF ASSETS.—
‘‘(A) IN GENERAL.—For purposes of this part, the value 
of the plan’s assets shall be determined on the basis of 
any reasonable actuarial method of valuation which takes 
into account fair market value and which is permitted 
under regulations prescribed by the Secretary. 
‘‘(B) ELECTION WITH RESPECT TO BONDS.—The value 
of a bond or other evidence of indebtedness which is not 
in default as to principal or interest may, at the election 
of the plan administrator, be determined on an amortized 
basis running from initial cost at purchase to par value 
at maturity or earliest call date. Any election under this 
subparagraph shall be made at such time and in such 
manner as the Secretary shall by regulations provide, shall 
apply to all such evidences of indebtedness, and may be 
revoked only with the consent of the Secretary. 
‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REASONABLE.—For 
purposes of this section, all costs, liabilities, rates of interest, 
and other factors under the plan shall be determined on the 
basis of actuarial assumptions and methods—
‘‘(A) each of which is reasonable (taking into account 
the experience of the plan and reasonable expectations), 
and 
‘‘(B) which, in combination, offer the actuary’s best 
estimate of anticipated experience under the plan. 
‘‘(4) TREATMENT OF CERTAIN CHANGES AS EXPERIENCE GAIN 
OR LOSS.—For purposes of this section, if—
‘‘(A) a change in benefits under the Social Security 
Act or in other retirement benefits created under Federal 
or State law, or
H. R. 4—115
‘‘(B) a change in the definition of the term ‘wages’ 
under section 3121, or a change in the amount of such 
wages taken into account under regulations prescribed for 
purposes of section 401(a)(5), 
results in an increase or decrease in accrued liability under 
a plan, such increase or decrease shall be treated as an experi-
ence loss or gain. 
‘‘(5) FULL FUNDING.—If, as of the close of a plan year, 
a plan would (without regard to this paragraph) have an 
accumulated funding deficiency in excess of the full funding 
limitation—
‘‘(A) the funding standard account shall be credited 
with the amount of such excess, and 
‘‘(B) all amounts described in subparagraphs (B), (C), 
and (D) of subsection (b)(2) and subparagraph (B) of sub-
section (b)(3) which are required to be amortized shall 
be considered fully amortized for purposes of such subpara-
graphs. 
‘‘(6) FULL-FUNDING LIMITATION.—
‘‘(A) IN GENERAL.—For purposes of paragraph (5), the 
term ‘full-funding limitation’ means the excess (if any) of—
‘‘(i) the accrued liability (including normal cost) 
under the plan (determined under the entry age normal 
funding method if such accrued liability cannot be 
directly calculated under the funding method used for 
the plan), over 
‘‘(ii) the lesser of—
‘‘(I) the fair market value of the plan’s assets, 
or 
‘‘(II) the value of such assets determined under 
paragraph (2). 
‘‘(B) MINIMUM AMOUNT.—
‘‘(i) IN GENERAL.—In no event shall the full-funding 
limitation determined under subparagraph (A) be less 
than the excess (if any) of—
‘‘(I) 90 percent of the current liability of the 
plan (including the expected increase in current 
liability due to benefits accruing during the plan 
year), over 
‘‘(II) the value of the plan’s assets determined 
under paragraph (2). 
‘‘(ii) ASSETS.—For purposes of clause (i), assets 
shall not be reduced by any credit balance in the 
funding standard account. 
‘‘(C) FULL FUNDING LIMITATION.—For purposes of this 
paragraph, unless otherwise provided by the plan, the 
accrued liability under a multiemployer plan shall not 
include benefits which are not nonforfeitable under the 
plan after the termination of the plan (taking into consider-
ation section 411(d)(3)). 
‘‘(D) CURRENT LIABILITY.—For purposes of this para-
graph—
‘‘(i) IN
GENERAL.—The term ‘current liability’ 
means all liabilities to employees and their bene-
ficiaries under the plan.
H. R. 4—116
‘‘(ii) TREATMENT OF UNPREDICTABLE CONTINGENT 
EVENT BENEFITS.—For purposes of clause (i), any ben-
efit contingent on an event other than—
‘‘(I) age, service, compensation, death, or dis-
ability, or 
‘‘(II) an event which is reasonably and reliably 
predictable (as determined by the Secretary), 
shall not be taken into account until the event on 
which the benefit is contingent occurs. 
‘‘(iii) INTEREST RATE USED.—The rate of interest 
used to determine current liability under this para-
graph shall be the rate of interest determined under 
subparagraph (E). 
‘‘(iv) MORTALITY TABLES.—
‘‘(I) COMMISSIONERS’ STANDARD TABLE.—In the 
case of plan years beginning before the first plan 
year to which the first tables prescribed under 
subclause (II) apply, the mortality table used in 
determining current liability under this paragraph 
shall be the table prescribed by the Secretary 
which is based on the prevailing commissioners’ 
standard table (described in section 807(d)(5)(A)) 
used to determine reserves for group annuity con-
tracts issued on January 1, 1993. 
‘‘(II) SECRETARIAL AUTHORITY.—The Secretary 
may by regulation prescribe for plan years begin-
ning after December 31, 1999, mortality tables 
to be used in determining current liability under 
this subsection. Such tables shall be based upon 
the actual experience of pension plans and pro-
jected trends in such experience. In prescribing 
such tables, the Secretary shall take into account 
results of available independent studies of mor-
tality of individuals covered by pension plans. 
‘‘(v) SEPARATE
MORTALITY
TABLES
FOR
THE
DIS-
ABLED.—Notwithstanding clause (iv)—
‘‘(I) IN GENERAL.—The Secretary shall estab-
lish mortality tables which may be used (in lieu 
of the tables under clause (iv)) to determine cur-
rent liability under this subsection for individuals 
who are entitled to benefits under the plan on 
account of disability. The Secretary shall establish 
separate tables for individuals whose disabilities 
occur in plan years beginning before January 1, 
1995, and for individuals whose disabilities occur 
in plan years beginning on or after such date. 
‘‘(II) SPECIAL RULE FOR DISABILITIES OCCUR-
RING AFTER 1994.—In the case of disabilities occur-
ring in plan years beginning after December 31, 
1994, the tables under subclause (I) shall apply 
only with respect to individuals described in such 
subclause who are disabled within the meaning 
of title II of the Social Security Act and the regula-
tions thereunder. 
‘‘(vi) 
PERIODIC
REVIEW.—The 
Secretary 
shall 
periodically (at least every 5 years) review any tables 
in effect under this subparagraph and shall, to the
H. R. 4—117
extent such Secretary determines necessary, by regula-
tion update the tables to reflect the actual experience 
of pension plans and projected trends in such experi-
ence. 
‘‘(E) REQUIRED CHANGE OF INTEREST RATE.—For pur-
poses of determining a plan’s current liability for purposes 
of this paragraph—
‘‘(i) IN GENERAL.—If any rate of interest used under 
the plan under subsection (b)(6) to determine cost is 
not within the permissible range, the plan shall estab-
lish a new rate of interest within the permissible range. 
‘‘(ii) PERMISSIBLE
RANGE.—For purposes of this 
subparagraph—
‘‘(I) IN GENERAL.—Except as provided in sub-
clause (II), the term ‘permissible range’ means a 
rate of interest which is not more than 5 percent 
above, and not more than 10 percent below, the 
weighted average of the rates of interest on 30-
year Treasury securities during the 4-year period 
ending on the last day before the beginning of 
the plan year. 
‘‘(II) SECRETARIAL
AUTHORITY.—If the Sec-
retary finds that the lowest rate of interest permis-
sible under subclause (I) is unreasonably high, 
the Secretary may prescribe a lower rate of 
interest, except that such rate may not be less 
than 80 percent of the average rate determined 
under such subclause. 
‘‘(iii) ASSUMPTIONS.—Notwithstanding paragraph 
(3)(A), the interest rate used under the plan shall 
be—
‘‘(I) determined without taking into account 
the experience of the plan and reasonable expecta-
tions, but 
‘‘(II) consistent with the assumptions which 
reflect the purchase rates which would be used 
by insurance companies to satisfy the liabilities 
under the plan. 
‘‘(7) ANNUAL VALUATION.—
‘‘(A) IN GENERAL.—For purposes of this section, a deter-
mination of experience gains and losses and a valuation 
of the plan’s liability shall be made not less frequently 
than once every year, except that such determination shall 
be made more frequently to the extent required in par-
ticular cases under regulations prescribed by the Secretary. 
‘‘(B) VALUATION DATE.—
‘‘(i) CURRENT YEAR.—Except as provided in clause 
(ii), the valuation referred to in subparagraph (A) shall 
be made as of a date within the plan year to which 
the valuation refers or within one month prior to the 
beginning of such year. 
‘‘(ii) USE OF PRIOR YEAR VALUATION.—The valu-
ation referred to in subparagraph (A) may be made 
as of a date within the plan year prior to the year 
to which the valuation refers if, as of such date, the 
value of the assets of the plan are not less than 100
H. R. 4—118
percent of the plan’s current liability (as defined in 
paragraph (6)(D) without regard to clause (iv) thereof). 
‘‘(iii) ADJUSTMENTS.—Information under clause (ii) 
shall, in accordance with regulations, be actuarially 
adjusted to reflect significant differences in partici-
pants. 
‘‘(iv) LIMITATION.—A change in funding method to 
use a prior year valuation, as provided in clause (ii), 
may not be made unless as of the valuation date within 
the prior plan year, the value of the assets of the 
plan are not less than 125 percent of the plan’s current 
liability (as defined in paragraph (6)(D) without regard 
to clause (iv) thereof). 
‘‘(8) TIME WHEN CERTAIN CONTRIBUTIONS DEEMED MADE.—
For purposes of this section, any contributions for a plan year 
made by an employer after the last day of such plan year, 
but not later than two and one-half months after such day, 
shall be deemed to have been made on such last day. For 
purposes of this subparagraph, such two and one-half month 
period may be extended for not more than six months under 
regulations prescribed by the Secretary. 
‘‘(d) EXTENSION OF AMORTIZATION PERIODS FOR MULTIEMPLOYER 
PLANS.—
‘‘(1) AUTOMATIC EXTENSION UPON APPLICATION BY CERTAIN 
PLANS.—
‘‘(A) IN GENERAL.—If the plan sponsor of a multiem-
ployer plan—
‘‘(i) submits to the Secretary an application for 
an extension of the period of years required to amortize 
any unfunded liability described in any clause of sub-
section (b)(2)(B) or described in subsection (b)(4), and 
‘‘(ii) includes with the application a certification 
by the plan’s actuary described in subparagraph (B), 
the Secretary shall extend the amortization period for the 
period of time (not in excess of 5 years) specified in the 
application. Such extension shall be in addition to any 
extension under paragraph (2). 
‘‘(B) CRITERIA.—A certification with respect to a multi-
employer plan is described in this subparagraph if the 
plan’s actuary certifies that, based on reasonable assump-
tions—
‘‘(i) absent the extension under subparagraph (A), 
the plan would have an accumulated funding deficiency 
in the current plan year or any of the 9 succeeding 
plan years, 
‘‘(ii) the plan sponsor has adopted a plan to 
improve the plan’s funding status, 
‘‘(iii) the plan is projected to have sufficient assets 
to timely pay expected benefits and anticipated 
expenditures over the amortization period as extended, 
and 
‘‘(iv) the notice required under paragraph (3)(A) 
has been provided. 
‘‘(C) TERMINATION.—The preceding provisions of this 
paragraph shall not apply with respect to any application 
submitted after December 31, 2014. 
‘‘(2) ALTERNATIVE EXTENSION.—
H. R. 4—119
‘‘(A) IN GENERAL.—If the plan sponsor of a multiem-
ployer plan submits to the Secretary an application for 
an extension of the period of years required to amortize 
any unfunded liability described in any clause of subsection 
(b)(2)(B) or described in subsection (b)(4), the Secretary 
may extend the amortization period for a period of time 
(not in excess of 10 years reduced by the number of years 
of any extension under paragraph (1) with respect to such 
unfunded liability) if the Secretary makes the determina-
tion described in subparagraph (B). Such extension shall 
be in addition to any extension under paragraph (1). 
‘‘(B) DETERMINATION.—The Secretary may grant an 
extension under subparagraph (A) if the Secretary deter-
mines that—
‘‘(i) such extension would carry out the purposes 
of this Act and would provide adequate protection for 
participants under the plan and their beneficiaries, 
and 
‘‘(ii) the failure to permit such extension would—
‘‘(I) result in a substantial risk to the vol-
untary continuation of the plan, or a substantial 
curtailment of pension benefit levels or employee 
compensation, and 
‘‘(II) be adverse to the interests of plan partici-
pants in the aggregate. 
‘‘(C) ACTION BY SECRETARY.—The Secretary shall act 
upon any application for an extension under this paragraph 
within 180 days of the submission of such application. 
If the Secretary rejects the application for an extension 
under this paragraph, the Secretary shall provide notice 
to the plan detailing the specific reasons for the rejection, 
including references to the criteria set forth above. 
‘‘(3) ADVANCE NOTICE.—
‘‘(A) IN GENERAL.—The Secretary shall, before granting 
an extension under this subsection, require each applicant 
to provide evidence satisfactory to such Secretary that the 
applicant has provided notice of the filing of the application 
for such extension to each affected party (as defined in 
section 4001(a)(21) of the Employee Retirement Income 
Security Act of 1974) with respect to the affected plan. 
Such notice shall include a description of the extent to 
which the plan is funded for benefits which are guaranteed 
under title IV of such Act and for benefit liabilities. 
‘‘(B) CONSIDERATION OF RELEVANT INFORMATION.—The 
Secretary shall consider any relevant information provided 
by a person to whom notice was given under paragraph 
(1).’’. 
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section 
shall apply to plan years beginning after 2007. 
(2) SPECIAL
RULE
FOR
CERTAIN
AMORTIZATION
EXTEN-
SIONS.—If the Secretary of the Treasury grants an extension 
under section 304 of the Employee Retirement Income Security 
Act of 1974 and section 412(e) of the Internal Revenue Code 
of 1986 with respect to any application filed with the Secretary 
of the Treasury on or before June 30, 2005, the extension
H. R. 4—120
(and any modification thereof) shall be applied and adminis-
tered under the rules of such sections as in effect before the 
enactment of this Act, including the use of the rate of interest 
determined under section 6621(b) of such Code. 
SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS 
IN ENDANGERED OR CRITICAL STATUS. 
(a) IN GENERAL.—Subpart A of part III of subchapter D of 
chapter 1 of the Internal Revenue Code of 1986 (as amended by 
this Act) is amended by inserting after section 431 the following 
new section: 
‘‘SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS 
IN ENDANGERED STATUS OR CRITICAL STATUS. 
‘‘(a) GENERAL RULE.—For purposes of this part, in the case 
of a multiemployer plan in effect on July 16, 2006—
‘‘(1) if the plan is in endangered status—
‘‘(A) the plan sponsor shall adopt and implement a 
funding improvement plan in accordance with the require-
ments of subsection (c), and 
‘‘(B) the requirements of subsection (d) shall apply 
during the funding plan adoption period and the funding 
improvement period, and 
‘‘(2) if the plan is in critical status—
‘‘(A) the plan sponsor shall adopt and implement a 
rehabilitation plan in accordance with the requirements 
of subsection (e), and 
‘‘(B) the requirements of subsection (f) shall apply 
during the rehabilitation plan adoption period and the 
rehabilitation period. 
‘‘(b) DETERMINATION OF ENDANGERED AND CRITICAL STATUS.—
For purposes of this section—
‘‘(1) ENDANGERED
STATUS.—A multiemployer plan is in 
endangered status for a plan year if, as determined by the 
plan actuary under paragraph (3), the plan is not in critical 
status for the plan year and, as of the beginning of the plan 
year, either—
‘‘(A) the plan’s funded percentage for such plan year 
is less than 80 percent, or 
‘‘(B) the plan has an accumulated funding deficiency 
for such plan year, or is projected to have such an accumu-
lated funding deficiency for any of the 6 succeeding plan 
years, taking into account any extension of amortization 
periods under section 431(d). 
For purposes of this section, a plan shall be treated as in 
seriously endangered status for a plan year if the plan is 
described in both subparagraphs (A) and (B). 
‘‘(2) CRITICAL STATUS.—A multiemployer plan is in critical 
status for a plan year if, as determined by the plan actuary 
under paragraph (3), the plan is described in 1 or more of 
the following subparagraphs as of the beginning of the plan 
year: 
‘‘(A) A plan is described in this subparagraph if—
‘‘(i) the funded percentage of the plan is less than 
65 percent, and 
‘‘(ii) the sum of—
‘‘(I) the fair market value of plan assets, plus
H. R. 4—121
‘‘(II) the present value of the reasonably antici-
pated employer contributions for the current plan 
year and each of the 6 succeeding plan years, 
assuming that the terms of all collective bar-
gaining 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 nonforfeitable 
benefits 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). 
‘‘(B) A plan is described in this subparagraph if—
‘‘(i) the plan has an accumulated funding deficiency 
for the current plan year, not taking into account any 
extension of amortization periods under section 431(d), 
or 
‘‘(ii) the plan is projected to have an accumulated 
funding deficiency for any of the 3 succeeding plan 
years (4 succeeding plan years if the funded percentage 
of the plan is 65 percent or less), not taking into 
account any extension of amortization periods under 
section 431(d). 
‘‘(C) A plan is described in this subparagraph if—
‘‘(i)(I) the plan’s normal cost for the current plan 
year, plus interest (determined at the rate used for 
determining costs under the plan) for the current plan 
year on the amount of unfunded benefit liabilities 
under the plan as of the last date of the preceding 
plan year, exceeds 
‘‘(II) the present value of the reasonably antici-
pated employer and employee contributions for the cur-
rent plan year, 
‘‘(ii) the present value, as of the beginning of the 
current plan year, of nonforfeitable benefits of inactive 
participants is greater than the present value of non-
forfeitable benefits of active participants, and 
‘‘(iii) the plan has an accumulated funding defi-
ciency for the current plan year, or is projected to 
have such a deficiency for any of the 4 succeeding 
plan years, not taking into account any extension of 
amortization periods under section 431(d). 
‘‘(D) A plan is described in this subparagraph if the 
sum of—
‘‘(i) the fair market value of plan assets, plus 
‘‘(ii) the present value of the reasonably anticipated 
employer contributions for the current plan year and 
each of the 4 succeeding plan years, assuming that 
the terms of all collective bargaining agreements 
pursuant to which the plan is maintained for the cur-
rent plan year continue in effect for succeeding plan 
years, 
is less than the present value of all benefits projected 
to be payable under the plan during the current plan 
year and each of the 4 succeeding plan years (plus adminis-
trative expenses for such plan years). 
‘‘(3) ANNUAL CERTIFICATION BY PLAN ACTUARY.—
H. R. 4—122
‘‘(A) IN GENERAL.—Not later than the 90th day of each 
plan year of a multiemployer plan, the plan actuary shall 
certify to the Secretary and to the plan sponsor—
‘‘(i) whether or not the plan is in endangered status 
for such plan year and whether or not the plan is 
or will be in critical status for such plan year, and 
‘‘(ii) in the case of a plan which is in a funding 
improvement or rehabilitation period, whether or not 
the plan is making the scheduled progress in meeting 
the requirements of its funding improvement or 
rehabilitation plan. 
‘‘(B) ACTUARIAL PROJECTIONS OF ASSETS AND LIABIL-
ITIES.—
‘‘(i) IN GENERAL.—In making the determinations 
and projections under this subsection, the plan actuary 
shall make projections required for the current and 
succeeding plan years of the current value of the assets 
of the plan and the present value of all liabilities 
to participants and beneficiaries under the plan for 
the current plan year as of the beginning of such 
year. The actuary’s projections shall be based on 
reasonable actuarial estimates, assumptions, and 
methods that, except as provided in clause (iii), offer 
the actuary’s best estimate of anticipated experience 
under the plan. The projected present value of liabil-
ities as of the beginning of such year shall be deter-
mined based on the most recent of either—
‘‘(I) the actuarial statement required under 
section 103(d) of the Employee Retirement Income 
Security Act of 1974 with respect to the most 
recently filed annual report, or 
‘‘(II) the actuarial valuation for the preceding 
plan year. 
‘‘(ii) 
DETERMINATIONS
OF
FUTURE
CONTRIBU-
TIONS.—Any actuarial projection of plan assets shall 
assume—
‘‘(I) reasonably anticipated employer contribu-
tions for the current and succeeding plan years, 
assuming that the terms of the one or more collec-
tive bargaining agreements pursuant to which the 
plan is maintained for the current plan year con-
tinue in effect for succeeding plan years, or 
‘‘(II) that employer contributions for the most 
recent plan year will continue indefinitely, but only 
if the plan actuary determines there have been 
no significant demographic changes that would 
make such assumption unreasonable. 
‘‘(iii) PROJECTED INDUSTRY ACTIVITY.—Any projec-
tion of activity in the industry or industries covered 
by the plan, including future covered employment and 
contribution levels, shall be based on information pro-
vided by the plan sponsor, which shall act reasonably 
and in good faith. 
‘‘(C) PENALTY FOR FAILURE TO SECURE TIMELY ACTU-
ARIAL CERTIFICATION.—Any failure of the plan’s actuary 
to certify the plan’s status under this subsection by the 
date specified in subparagraph (A) shall be treated for
H. R. 4—123
purposes of section 502(c)(2) of the Employee Retirement 
Income Security Act of 1974 as a failure or refusal by 
the plan administrator to file the annual report required 
to be filed with the Secretary under section 101(b)(4) of 
such Act. 
‘‘(D) NOTICE.—
‘‘(i) IN GENERAL.—In any case in which it is cer-
tified under subparagraph (A) that a multiemployer 
plan is or will be in endangered or critical status 
for a plan year, the plan sponsor shall, not later than 
30 days after the date of the certification, provide 
notification of the endangered or critical status to the 
participants and beneficiaries, the bargaining parties, 
the Pension Benefit Guaranty Corporation, and the 
Secretary of Labor. 
‘‘(ii) PLANS IN CRITICAL STATUS.—If it is certified 
under subparagraph (A) that a multiemployer plan 
is or will be in critical status, the plan sponsor shall 
include in the notice under clause (i) an explanation 
of the possibility that—
‘‘(I) adjustable benefits (as defined in sub-
section (e)(8)) may be reduced, and 
‘‘(II) such reductions may apply to participants 
and beneficiaries whose benefit commencement 
date is on or after the date such notice is provided 
for the first plan year in which the plan is in 
critical status. 
‘‘(iii) MODEL NOTICE.—The Secretary of Labor shall 
prescribe a model notice that a multiemployer plan 
may use to satisfy the requirements under clause (ii). 
‘‘(c) FUNDING IMPROVEMENT PLAN MUST BE ADOPTED
FOR 
MULTIEMPLOYER PLANS IN ENDANGERED STATUS.—
‘‘(1) IN GENERAL.—In any case in which a multiemployer 
plan is in endangered status for a plan year, the plan sponsor, 
in accordance with this subsection—
‘‘(A) shall adopt a funding improvement plan not later 
than 240 days following the required date for the actuarial 
certification 
of 
endangered 
status 
under 
subsection 
(b)(3)(A), and 
‘‘(B) within 30 days after the adoption of the funding 
improvement plan—
‘‘(i) shall provide to the bargaining parties 1 or 
more schedules showing revised benefit structures, 
revised contribution structures, or both, which, if 
adopted, may reasonably be expected to enable the 
multiemployer plan to meet the applicable benchmarks 
in accordance with the funding improvement plan, 
including—
‘‘(I) one proposal for reductions in the amount 
of future benefit accruals necessary to achieve the 
applicable benchmarks, assuming no amendments 
increasing contributions under the plan (other 
than amendments increasing contributions nec-
essary to achieve the applicable benchmarks after 
amendments have reduced future benefit accruals 
to the maximum extent permitted by law), and
H. R. 4—124
‘‘(II) one proposal for increases in contributions 
under the plan necessary to achieve the applicable 
benchmarks, assuming no amendments reducing 
future benefit accruals under the plan, and 
‘‘(ii) may, if the plan sponsor deems appropriate, 
prepare and provide the bargaining parties with addi-
tional information relating to contribution rates or ben-
efit reductions, alternative schedules, or other informa-
tion relevant to achieving the applicable benchmarks 
in accordance with the funding improvement plan. 
For purposes of this section, the term ‘applicable bench-
marks’ means the requirements applicable to the multiem-
ployer plan under paragraph (3) (as modified by paragraph 
(5)). 
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS BEGINS.—Para-
graph (1) shall not apply to a plan year if such year is in 
a funding plan adoption period or funding improvement period 
by reason of the plan being in endangered status for a preceding 
plan year. For purposes of this section, such preceding plan 
year shall be the initial determination year with respect to 
the funding improvement plan to which it relates. 
‘‘(3) FUNDING IMPROVEMENT PLAN.—For purposes of this 
section—
‘‘(A) IN GENERAL.—A funding improvement plan is a 
plan which consists of the actions, including options or 
a range of options to be proposed to the bargaining parties, 
formulated to provide, based on reasonably anticipated 
experience and reasonable actuarial assumptions, for the 
attainment by the plan during the funding improvement 
period of the following requirements: 
‘‘(i) INCREASE IN PLAN’S FUNDING PERCENTAGE.—
The plan’s funded percentage as of the close of the 
funding improvement period equals or exceeds a 
percentage equal to the sum of—
‘‘(I) such percentage as of the beginning of 
such period, plus 
‘‘(II) 33 percent of the difference between 100 
percent and the percentage under subclause (I). 
‘‘(ii) AVOIDANCE OF ACCUMULATED FUNDING DEFI-
CIENCIES.—No accumulated funding deficiency for any 
plan year during the funding improvement period 
(taking into account any extension of amortization 
periods under section 304(d)). 
‘‘(B) SERIOUSLY ENDANGERED PLANS.—In the case of 
a plan in seriously endangered status, except as provided 
in paragraph (5), subparagraph (A)(i)(II) shall be applied 
by substituting ‘20 percent’ for ‘33 percent’. 
‘‘(4) FUNDING IMPROVEMENT PERIOD.—For purposes of this 
section—
‘‘(A) IN GENERAL.—The funding improvement period 
for any funding improvement plan adopted pursuant to 
this subsection is the 10-year period beginning on the first 
day of the first plan year of the multiemployer plan begin-
ning after the earlier of—
‘‘(i) the second anniversary of the date of the adop-
tion of the funding improvement plan, or
H. R. 4—125
‘‘(ii) the expiration of the collective bargaining 
agreements in effect on the due date for the actuarial 
certification of endangered status for the initial deter-
mination year under subsection (b)(3)(A) and covering, 
as of such due date, at least 75 percent of the active 
participants in such multiemployer plan. 
‘‘(B) SERIOUSLY ENDANGERED PLANS.—In the case of 
a plan in seriously endangered status, except as provided 
in paragraph (5), subparagraph (A) shall be applied by 
substituting ‘15-year period’ for ‘10-year period’. 
‘‘(C) COORDINATION WITH CHANGES IN STATUS.—
‘‘(i) PLANS NO LONGER IN ENDANGERED STATUS.—
If the plan’s actuary certifies under subsection (b)(3)(A) 
for a plan year in any funding plan adoption period 
or funding improvement period that the plan is no 
longer in endangered status and is not in critical 
status, the funding plan adoption period or funding 
improvement period, whichever is applicable, shall end 
as of the close of the preceding plan year. 
‘‘(ii) PLANS
IN
CRITICAL
STATUS.—If the plan’s 
actuary certifies under subsection (b)(3)(A) for a plan 
year in any funding plan adoption period or funding 
improvement period that the plan is in critical status, 
the funding plan adoption period or funding improve-
ment period, whichever is applicable, shall end as of 
the close of the plan year preceding the first plan 
year in the rehabilitation period with respect to such 
status. 
‘‘(D) PLANS
IN
ENDANGERED
STATUS
AT
END
OF 
PERIOD.—If the plan’s actuary certifies under subsection 
(b)(3)(A) for the first plan year following the close of the 
period described in subparagraph (A) that the plan is in 
endangered status, the provisions of this subsection and 
subsection (d) shall be applied as if such first plan year 
were an initial determination year, except that the plan 
may not be amended in a manner inconsistent with the 
funding improvement plan in effect for the preceding plan 
year until a new funding improvement plan is adopted. 
‘‘(5) SPECIAL
RULES
FOR
SERIOUSLY
ENDANGERED
PLANS 
MORE THAN 70 PERCENT FUNDED.—
‘‘(A) IN GENERAL.—If the funded percentage of a plan 
in seriously endangered status was more than 70 percent 
as of the beginning of the initial determination year—
‘‘(i) paragraphs (3)(B) and (4)(B) shall apply only 
if the plan’s actuary certifies, within 30 days after 
the certification under subsection (b)(3)(A) for the ini-
tial determination year, that, based on the terms of 
the plan and the collective bargaining agreements in 
effect at the time of such certification, the plan is 
not projected to meet the requirements of paragraph 
(3)(A) (without regard to paragraphs (3)(B) and (4)(B)), 
and 
‘‘(ii) if there is a certification under clause (i), 
the plan may, in formulating its funding improvement 
plan, only take into account the rules of paragraph 
(3)(B) and (4)(B) for plan years in the funding improve-
ment period beginning on or before the date on which
H. R. 4—126
the last of the collective bargaining agreements 
described in paragraph (4)(A)(ii) expires. 
‘‘(B) SPECIAL
RULE
AFTER
EXPIRATION
OF
AGREE-
MENTS.—Notwithstanding subparagraph (A)(ii), if, for any 
plan year ending after the date described in subparagraph 
(A)(ii), the plan actuary certifies (at the time of the annual 
certification under subsection (b)(3)(A) for such plan year) 
that, based on the terms of the plan and collective bar-
gaining agreements in effect at the time of that annual 
certification, the plan is not projected to be able to meet 
the requirements of paragraph (3)(A) (without regard to 
paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and (4)(B) 
shall continue to apply for such year. 
‘‘(6) UPDATES TO FUNDING IMPROVEMENT PLANS AND SCHED-
ULES.—
‘‘(A) FUNDING IMPROVEMENT PLAN.—The plan sponsor 
shall annually update the funding improvement plan and 
shall file the update with the plan’s annual report under 
section 104 of the Employee Retirement Income Security 
Act of 1974. 
‘‘(B) SCHEDULES.—The plan sponsor shall annually 
update any schedule of contribution rates provided under 
this subsection to reflect the experience of the plan. 
‘‘(C) DURATION OF SCHEDULE.—A schedule of contribu-
tion rates provided by the plan sponsor and relied upon 
by bargaining parties in negotiating a collective bargaining 
agreement shall remain in effect for the duration of that 
collective bargaining agreement. 
‘‘(7) IMPOSITION OF DEFAULT SCHEDULE WHERE FAILURE TO 
ADOPT FUNDING IMPROVEMENT PLAN.—
‘‘(A) IN GENERAL.—If—
‘‘(i) a collective bargaining agreement providing 
for contributions under a multiemployer plan that was 
in effect at the time the plan entered endangered status 
expires, and 
‘‘(ii) after receiving one or more schedules from 
the plan sponsor under paragraph (1)(B), the bar-
gaining parties with respect to such agreement fail 
to agree on changes to contribution or benefit schedules 
necessary to meet the applicable benchmarks in accord-
ance with the funding improvement plan, 
the plan sponsor shall implement the schedule described 
in paragraph (1)(B)(i)(I) beginning on the date specified 
in subparagraph (B). 
‘‘(B) DATE OF IMPLEMENTATION.—The date specified in 
this subparagraph is the earlier of the date—
‘‘(i) on which the Secretary of Labor certifies that 
the parties are at an impasse, or 
‘‘(ii) which is 180 days after the date on which 
the collective bargaining agreement described in 
subparagraph (A) expires. 
‘‘(8) FUNDING PLAN ADOPTION PERIOD.—For purposes of this 
section, the term ‘funding plan adoption period’ means the 
period beginning on the date of the certification under sub-
section (b)(3)(A) for the initial determination year and ending 
on the day before the first day of the funding improvement 
period.
H. R. 4—127
‘‘(d) RULES FOR OPERATION OF PLAN DURING ADOPTION AND 
IMPROVEMENT PERIODS.—
‘‘(1) SPECIAL RULES FOR PLAN ADOPTION PERIOD.—During 
the funding plan adoption period—
‘‘(A) the plan sponsor may not accept a collective bar-
gaining agreement or participation agreement with respect 
to the multiemployer plan that provides for—
‘‘(i) a reduction in the level of contributions for 
any participants, 
‘‘(ii) a suspension of contributions with respect to 
any period of service, or 
‘‘(iii) any new direct or indirect exclusion of 
younger or newly hired employees from plan participa-
tion, 
‘‘(B) no amendment of the plan which increases the 
liabilities of the plan by reason of any increase in benefits, 
any change in the accrual of benefits, or any change in 
the rate at which benefits become nonforfeitable under 
the plan may be adopted unless the amendment is required 
as a condition of qualification under part I of subchapter 
D of chapter 1 or to comply with other applicable law, 
and 
‘‘(C) in the case of a plan in seriously endangered 
status, the plan sponsor shall take all reasonable actions 
which are consistent with the terms of the plan and 
applicable law and which are expected, based on reasonable 
assumptions, to achieve—
‘‘(i) an increase in the plan’s funded percentage, 
and 
‘‘(ii) postponement of an accumulated funding defi-
ciency for at least 1 additional plan year. 
Actions under subparagraph (C) include applications for exten-
sions of amortization periods under section 431(d), use of the 
shortfall funding method in making funding standard account 
computations, amendments to the plan’s benefit structure, 
reductions in future benefit accruals, and other reasonable 
actions consistent with the terms of the plan and applicable 
law. 
‘‘(2) COMPLIANCE WITH FUNDING IMPROVEMENT PLAN.—
‘‘(A) IN GENERAL.—A plan may not be amended after 
the date of the adoption of a funding improvement plan 
so as to be inconsistent with the funding improvement 
plan. 
‘‘(B) NO REDUCTION IN CONTRIBUTIONS.—A plan sponsor 
may not during any funding improvement period accept 
a collective bargaining agreement or participation agree-
ment with respect to the multiemployer plan that provides 
for—
‘‘(i) a reduction in the level of contributions for 
any participants, 
‘‘(ii) a suspension of contributions with respect to 
any period of service, or 
‘‘(iii) any new direct or indirect exclusion of 
younger or newly hired employees from plan participa-
tion. 
‘‘(C) SPECIAL RULES FOR BENEFIT INCREASES.—A plan 
may not be amended after the date of the adoption of
H. R. 4—128
a funding improvement plan so as to increase benefits, 
including future benefit accruals, unless the plan actuary 
certifies that the benefit increase is consistent with the 
funding improvement plan and is paid for out of contribu-
tions not required by the funding improvement plan to 
meet the applicable benchmark in accordance with the 
schedule contemplated in the funding improvement plan. 
‘‘(e) REHABILITATION PLAN MUST BE ADOPTED FOR MULTIEM-
PLOYER PLANS IN CRITICAL STATUS.—
‘‘(1) IN GENERAL.—In any case in which a multiemployer 
plan is in critical status for a plan year, the plan sponsor, 
in accordance with this subsection—
‘‘(A) shall adopt a rehabilitation plan not later than 
240 days following the required date for the actuarial cer-
tification of critical status under subsection (b)(3)(A), and 
‘‘(B) within 30 days after the adoption of the rehabilita-
tion plan—
‘‘(i) shall provide to the bargaining parties 1 or 
more schedules showing revised benefit structures, 
revised contribution structures, or both, which, if 
adopted, may reasonably be expected to enable the 
multiemployer plan to emerge from critical status in 
accordance with the rehabilitation plan, and 
‘‘(ii) may, if the plan sponsor deems appropriate, 
prepare and provide the bargaining parties with addi-
tional information relating to contribution rates or ben-
efit reductions, alternative schedules, or other informa-
tion relevant to emerging from critical status in accord-
ance with the rehabilitation plan. 
The schedule or schedules described in subparagraph (B)(i) 
shall reflect reductions in future benefit accruals and adjustable 
benefits, and increases in contributions, that the plan sponsor 
determines are reasonably necessary to emerge from critical 
status. One schedule shall be designated as the default schedule 
and such schedule shall assume that there are no increases 
in contributions under the plan other than the increases nec-
essary to emerge from critical status after future benefit 
accruals and other benefits (other than benefits the reduction 
or elimination of which are not permitted under section 
411(d)(6)) have been reduced to the maximum extent permitted 
by law. 
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS BEGINS.—Para-
graph (1) shall not apply to a plan year if such year is in 
a rehabilitation plan adoption period or rehabilitation period 
by reason of the plan being in critical status for a preceding 
plan year. For purposes of this section, such preceding plan 
year shall be the initial critical year with respect to the 
rehabilitation plan to which it relates. 
‘‘(3) REHABILITATION PLAN.—For purposes of this section—
‘‘(A) IN GENERAL.—A rehabilitation plan is a plan which 
consists of—
‘‘(i) actions, including options or a range of options 
to be proposed to the bargaining parties, formulated, 
based on reasonably anticipated experience and reason-
able actuarial assumptions, to enable the plan to cease 
to be in critical status by the end of the rehabilitation 
period and may include reductions in plan expenditures
H. R. 4—129
(including plan mergers and consolidations), reductions 
in future benefit accruals or increases in contributions, 
if agreed to by the bargaining parties, or any combina-
tion of such actions, or 
‘‘(ii) if the plan sponsor determines that, based 
on reasonable actuarial assumptions and upon exhaus-
tion of all reasonable measures, the plan can not 
reasonably be expected to emerge from critical status 
by the end of the rehabilitation period, reasonable 
measures to emerge from critical status at a later 
time or to forestall possible insolvency (within the 
meaning of section 4245 of the Employee Retirement 
Income Security Act of 1974). 
A rehabilitation plan must provide annual standards for 
meeting the requirements of such rehabilitation plan. Such 
plan shall also include the schedules required to be pro-
vided under paragraph (1)(B)(i) and if clause (ii) applies, 
shall set forth the alternatives considered, explain why 
the plan is not reasonably expected to emerge from critical 
status by the end of the rehabilitation period, and specify 
when, if ever, the plan is expected to emerge from critical 
status in accordance with the rehabilitation plan. 
‘‘(B) UPDATES
TO
REHABILITATION
PLAN
AND
SCHED-
ULES.—
‘‘(i) REHABILITATION PLAN.—The plan sponsor shall 
annually update the rehabilitation plan and shall file 
the update with the plan’s annual report under section 
104 of the Employee Retirement Income Security Act 
of 1974. 
‘‘(ii) SCHEDULES.—The plan sponsor shall annually 
update any schedule of contribution rates provided 
under this subsection to reflect the experience of the 
plan. 
‘‘(iii) DURATION OF SCHEDULE.—A schedule of con-
tribution rates provided by the plan sponsor and relied 
upon by bargaining parties in negotiating a collective 
bargaining agreement shall remain in effect for the 
duration of that collective bargaining agreement. 
‘‘(C) IMPOSITION OF DEFAULT SCHEDULE WHERE FAILURE 
TO ADOPT REHABILITATION PLAN.—
‘‘(i) IN GENERAL.—If—
‘‘(I) a collective bargaining agreement pro-
viding for contributions under a multiemployer 
plan that was in effect at the time the plan entered 
critical status expires, and 
‘‘(II) after receiving one or more schedules from 
the plan sponsor under paragraph (1)(B), the bar-
gaining parties with respect to such agreement 
fail to adopt a contribution or benefit schedules 
with terms consistent with the rehabilitation plan 
and the schedule from the plan sponsor under 
paragraph (1)(B)(i), 
the plan sponsor shall implement the default schedule 
described in the last sentence of paragraph (1) begin-
ning on the date specified in clause (ii). 
‘‘(ii) DATE OF IMPLEMENTATION.—The date specified 
in this clause is the earlier of the date—
H. R. 4—130
‘‘(I) on which the Secretary of Labor certifies 
that the parties are at an impasse, or 
‘‘(II) which is 180 days after the date on which 
the collective bargaining agreement described in 
clause (i) expires. 
‘‘(4) REHABILITATION
PERIOD.—For purposes of this sec-
tion—
‘‘(A) IN GENERAL.—The rehabilitation period for a plan 
in critical status is the 10-year period beginning on the 
first day of the first plan year of the multiemployer plan 
following the earlier of—
‘‘(i) the second anniversary of the date of the adop-
tion of the rehabilitation plan, or 
‘‘(ii) the expiration of the collective bargaining 
agreements in effect on the date of the due date for 
the actuarial certification of critical status for the ini-
tial critical year under subsection (a)(1) and covering, 
as of such date at least 75 percent of the active partici-
pants in such multiemployer plan. 
If a plan emerges from critical status as provided under 
subparagraph (B) before the end of such 10-year period, 
the rehabilitation period shall end with the plan year pre-
ceding the plan year for which the determination under 
subparagraph (B) is made. 
‘‘(B) EMERGENCE.—A plan in critical status shall 
remain in such status until a plan year for which the 
plan actuary certifies, in accordance with subsection 
(b)(3)(A), that the plan is not projected to have an accumu-
lated funding deficiency for the plan year or any of the 
9 succeeding plan years, without regard to the use of the 
shortfall method and taking into account any extension 
of amortization periods under section 431(d). 
‘‘(5) REHABILITATION PLAN ADOPTION PERIOD.—For purposes 
of this section, the term ‘rehabilitation plan adoption period’ 
means the period beginning on the date of the certification 
under subsection (b)(3)(A) for the initial critical year and ending 
on the day before the first day of the rehabilitation period. 
‘‘(6) LIMITATION
ON
REDUCTION
IN
RATES
OF
FUTURE 
ACCRUALS.—Any reduction in the rate of future accruals under 
the default schedule described in paragraph (1)(B)(i) shall not 
reduce the rate of future accruals below—
‘‘(A) a monthly benefit (payable as a single life annuity 
commencing at the participant’s normal retirement age) 
equal to 1 percent of the contributions required to be made 
with respect to a participant, or the equivalent standard 
accrual rate for a participant or group of participants under 
the collective bargaining agreements in effect as of the 
first day of the initial critical year, or 
‘‘(B) if lower, the accrual rate under the plan on such 
first day. 
The equivalent standard accrual rate shall be determined by 
the plan sponsor based on the standard or average contribution 
base units which the plan sponsor determines to be representa-
tive for active participants and such other factors as the plan 
sponsor determines to be relevant. Nothing in this paragraph 
shall be construed as limiting the ability of the plan sponsor 
to prepare and provide the bargaining parties with alternative
H. R. 4—131
schedules to the default schedule that established lower or 
higher accrual and contribution rates than the rates otherwise 
described in this paragraph. 
‘‘(7) AUTOMATIC EMPLOYER SURCHARGE.—
‘‘(A) IMPOSITION OF SURCHARGE.—Each employer other-
wise obligated to make a contribution for the initial critical 
year shall be obligated to pay to the plan for such year 
a surcharge equal to 5 percent of the contribution otherwise 
required under the applicable collective bargaining agree-
ment (or other agreement pursuant to which the employer 
contributes). For each succeeding plan year in which the 
plan is in critical status for a consecutive period of years 
beginning with the initial critical year, the surcharge shall 
be 10 percent of the contribution otherwise so required. 
‘‘(B) ENFORCEMENT
OF
SURCHARGE.—The surcharges 
under subparagraph (A) shall be due and payable on the 
same schedule as the contributions on which the surcharges 
are based. Any failure to make a surcharge payment shall 
be treated as a delinquent contribution under section 515 
of the Employee Retirement Income Security Act of 1974 
and shall be enforceable as such. 
‘‘(C) SURCHARGE TO TERMINATE UPON COLLECTIVE BAR-
GAINING
AGREEMENT
RENEGOTIATION.—The 
surcharge 
under this paragraph shall cease to be effective with respect 
to employees covered by a collective bargaining agreement 
(or other agreement pursuant to which the employer 
contributes), beginning on the effective date of a collective 
bargaining agreement (or other such agreement) that 
includes terms consistent with a schedule presented by 
the plan sponsor under paragraph (1)(B)(i), as modified 
under subparagraph (B) of paragraph (3). 
‘‘(D) SURCHARGE
NOT
TO
APPLY
UNTIL
EMPLOYER 
RECEIVES
NOTICE.—The surcharge under this paragraph 
shall not apply to an employer until 30 days after the 
employer has been notified by the plan sponsor that the 
plan is in critical status and that the surcharge is in 
effect. 
‘‘(E) SURCHARGE NOT TO GENERATE INCREASED BENEFIT 
ACCRUALS.—Notwithstanding any provision of a plan to 
the contrary, the amount of any surcharge under this para-
graph shall not be the basis for any benefit accrual under 
the plan. 
‘‘(8) BENEFIT ADJUSTMENTS.—
‘‘(A) ADJUSTABLE BENEFITS.—
‘‘(i) IN GENERAL.—Notwithstanding section 204(g), 
the plan sponsor shall, subject to the notice require-
ment under subparagraph (C), make any reductions 
to adjustable benefits which the plan sponsor deems 
appropriate, based upon the outcome of collective bar-
gaining over the schedule or schedules provided under 
paragraph (1)(B)(i). 
‘‘(ii) EXCEPTION FOR RETIREES.—Except in the case 
of adjustable benefits described in clause (iv)(III), the 
plan sponsor of a plan in critical status shall not reduce 
adjustable benefits of any participant or beneficiary 
whose benefit commencement date is before the date 
on which the plan provides notice to the participant