233 
‘‘(B) FUNDING
STANDARD
CARRY-
OVER BALANCE.— 
‘‘(i) IN
GENERAL.—In the case 
of a defined benefit plan (other 
than a multiemployer plan) de-
scribed in clause (ii), the plan 
sponsor may elect to maintain a 
funding standard carryover bal-
ance, until such balance is re-
duced to zero. 
‘‘(ii) PLANS MAINTAINING FUND-
ING STANDARD ACCOUNT IN 2006.—A 
plan is described in this clause if 
the plan— 
‘‘(I) was in effect for a 
plan year beginning in 2006, 
and 
‘‘(II) had a positive bal-
ance in the funding standard 
account under section 412(b) 
as in effect for such plan year 
and determined as of the end 
of such plan year. 
‘‘(2) APPLICATION OF BALANCES.—A pre- 
funding balance and a funding standard
234 
carryover balance maintained pursuant 
to this paragraph— 
‘‘(A) shall be available for cred-
iting against the minimum required 
contribution, pursuant to an election 
under paragraph (3), 
‘‘(B) shall be applied as a reduc-
tion in the amount treated as the 
value of plan assets for purposes of 
this section, to the extent provided in 
paragraph (4), and 
‘‘(C) may be reduced at any time, 
pursuant to an election under para-
graph (5). 
‘‘(3) ELECTION
TO
APPLY
BALANCES 
AGAINST
MINIMUM
REQUIRED
CONTRIBU-
TION.— 
‘‘(A) IN GENERAL.—Except as pro-
vided in subparagraphs (B) and (C), 
in the case of any plan year in which 
the plan sponsor elects to credit 
against the minimum required con-
tribution for the current plan year all 
or a portion of the pre-funding bal-
ance or the funding standard carry-
235 
over balance for the current plan 
year (not in excess of such minimum 
required contribution), the minimum 
required contribution for the plan 
year shall be reduced by the amount 
so credited by the plan sponsor. For 
purposes of the preceding sentence, 
the minimum required contribution 
shall be determined after taking into 
account any waiver under section 
412(c). 
‘‘(B) COORDINATION
WITH
FUNDING 
STANDARD
CARRYOVER
BALANCE.—To 
the extent that any plan has a fund-
ing standard carryover balance great-
er than zero, no amount of the pre- 
funding balance of such plan may be 
credited under this paragraph in re-
ducing the minimum required con-
tribution. 
‘‘(C) LIMITATION FOR UNDERFUNDED 
PLANS.—The preceding provisions of 
this paragraph shall not apply for 
any plan year if the ratio (expressed 
as a percentage) which—
236 
‘‘(i) the value of plan assets 
for the preceding plan year (as re-
duced under paragraph (4)(C)), 
bears to 
‘‘(ii) the funding target of the 
plan for the preceding plan year 
(determined without regard to 
subsection (i)(1)), 
is less than 80 percent. 
‘‘(4) EFFECT OF BALANCES ON AMOUNTS 
TREATED AS VALUE OF PLAN ASSETS.—In the 
case of any plan maintaining a pre-fund-
ing balance or a funding standard carry-
over balance pursuant to this subsection, 
the amount treated as the value of plan 
assets shall be deemed to be such 
amount, reduced as provided in the fol-
lowing subparagraphs: 
‘‘(A) APPLICABILITY
OF
SHORTFALL 
AMORTIZATION BASE.—For purposes of 
subsection (c)(3), the value of plan as-
sets is deemed to be such amount, re-
duced by the amount of the pre-fund-
ing balance, but only if an election 
under paragraph (2) applying any
237 
portion of the pre-funding balance in 
reducing the minimum required con-
tribution is in effect for the plan year. 
‘‘(B) DETERMINATION OF EXCESS AS-
SETS, FUNDING
SHORTFALL, AND
FUND-
ING TARGET ATTAINMENT PERCENTAGE.— 
For 
purposes 
of 
subsections 
(a), 
(c)(4)(A)(ii), and (d)(2)(A), the value of 
plan assets is deemed to be such 
amount, reduced by the amount of 
the pre-funding balance and the fund-
ing standard carryover balance. 
‘‘(C) AVAILABILITY OF BALANCES IN 
PLAN YEAR FOR CREDITING AGAINST MIN-
IMUM
REQUIRED
CONTRIBUTION.—For 
purposes of paragraph (3)(C)(i) of this 
subsection, the value of plan assets is 
deemed to be such amount, reduced 
by the amount of the pre-funding bal-
ance. 
‘‘(5) ELECTION
TO
REDUCE
BALANCE 
PRIOR
TO
DETERMINATIONS
OF
VALUE
OF 
PLAN ASSETS AND CREDITING AGAINST MIN-
IMUM REQUIRED CONTRIBUTION.—
238 
‘‘(A) IN GENERAL.—The plan spon-
sor may elect to reduce by any 
amount the balance of the pre-fund-
ing balance and the funding standard 
carryover balance for any plan year 
(but not below zero). Such reduction 
shall be effective prior to any deter-
mination of the value of plan assets 
for such plan year under this section 
and application of the balance in re-
ducing the minimum required con-
tribution for such plan for such plan 
year pursuant to an election under 
paragraph (2). 
‘‘(B) COORDINATION
BETWEEN
PRE- 
FUNDING BALANCE AND FUNDING STAND-
ARD CARRYOVER BALANCE.—To the ex-
tent that any plan has a funding 
standard carryover balance greater 
than zero, no election may be made 
under subparagraph (A) with respect 
to the pre-funding balance. 
‘‘(6) PRE-FUNDING BALANCE.— 
‘‘(A) IN
GENERAL.—A pre-funding 
balance maintained by a plan shall
239 
consist of a beginning balance of 
zero, increased and decreased to the 
extent provided in subparagraphs (B) 
and (C), and adjusted further as pro-
vided in paragraph (8). 
‘‘(B) INCREASES.—As of the valu-
ation date for each plan year begin-
ning after 2007, the pre-funding bal-
ance of a plan shall be increased by 
the amount elected by the plan spon-
sor for the plan year. Such amount 
shall not exceed the excess (if any) 
of— 
‘‘(i) the aggregate total of em-
ployer contributions to the plan 
for the preceding plan year, over 
‘‘(ii) the minimum required 
contribution for such preceding 
plan year (increased by interest 
on any portion of such minimum 
required contribution remaining 
unpaid as of the valuation date 
for the current plan year, at the 
effective interest rate for the plan 
for the preceding plan year, for
240 
the period beginning with the 
first day of such preceding plan 
year and ending on the date that 
payment of such portion is made). 
‘‘(C) DECREASES.—As of the valu-
ation date for each plan year after 
2007, the pre-funding balance of a 
plan shall be decreased (but not 
below zero) by the sum of— 
‘‘(i) the amount of such bal-
ance credited under paragraph 
(2) (if any) in reducing the min-
imum required contribution of 
the plan for the preceding plan 
year, and 
‘‘(ii) any reduction in such 
balance elected under paragraph 
(5). 
‘‘(7) FUNDING
STANDARD
CARRYOVER 
BALANCE.— 
‘‘(A) 
IN
GENERAL.—A 
funding 
standard carryover balance main-
tained by a plan shall consist of a be-
ginning balance determined under 
subparagraph (B), decreased to the
241 
extent provided in subparagraph (C), 
and adjusted further as provided in 
paragraph (8). 
‘‘(B) BEGINNING BALANCE.—The be-
ginning balance of the funding stand-
ard carryover balance shall be the 
positive balance described in para-
graph (1)(B)(ii)(II). 
‘‘(C) DECREASES.—As of the valu-
ation date for each plan year after 
2007, the funding standard carryover 
balance of a plan shall be decreased 
(but not below zero) by the sum of— 
‘‘(i) the amount of such bal-
ance credited under paragraph 
(2) (if any) in reducing the min-
imum required contribution of 
the plan for the preceding plan 
year, and 
‘‘(ii) any reduction in such 
balance elected under paragraph 
(5). 
‘‘(8) ADJUSTMENTS
TO
BALANCES.—In 
determining the pre-funding balance or 
the funding standard carryover balance
242 
of a plan as of the valuation date (before 
applying any increase or decrease under 
paragraph (6) or (7)), the plan sponsor 
shall, in accordance with regulations 
which shall be prescribed by the Sec-
retary, adjust such balance so as to re-
flect the rate of net gain or loss (deter-
mined, notwithstanding subsection (g)(3), 
on the basis of fair market value) experi-
enced by all plan assets for the period be-
ginning with the valuation date for the 
preceding plan year and ending with the 
date preceding the valuation date for the 
current plan year, properly taking into 
account, in accordance with such regula-
tions, all contributions, distributions, and 
other plan payments made during such 
period. 
‘‘(9) ELECTIONS.—Elections under this 
subsection shall be made at such times, 
and in such form and manner, as shall be 
prescribed in regulations of the Sec-
retary. 
‘‘(g) VALUATION OF PLAN ASSETS AND LIABIL-
ITIES.—
243 
‘‘(1) TIMING
OF
DETERMINATIONS.—Ex-
cept as otherwise provided under this 
subsection, all determinations under this 
section for a plan year shall be made as 
of the valuation date of the plan for such 
plan year. 
‘‘(2) VALUATION DATE.—For purposes of 
this section— 
‘‘(A) IN GENERAL.—Except as pro-
vided in subparagraph (B), the valu-
ation date of a plan for any plan year 
shall be the first day of the plan year. 
‘‘(B) 
EXCEPTION
FOR
SMALL 
PLANS.—If, on each day during the 
preceding plan year, a plan had 500 
or fewer participants, the plan may 
designate any day during the plan 
year as its valuation date for such 
plan year and succeeding plan years. 
For purposes of this subparagraph, 
all defined benefit plans (other than 
multiemployer plans) maintained by 
the same employer (or any member of 
such employer’s controlled group) 
shall be treated as 1 plan, but only
244 
participants with respect to such em-
ployer or member shall be taken into 
account. 
‘‘(C) 
APPLICATION
OF
CERTAIN 
RULES
IN
DETERMINATION
OF
PLAN 
SIZE.—For 
purposes 
of 
this 
para-
graph— 
‘‘(i) PLANS NOT IN EXISTENCE IN 
PRECEDING
YEAR.—In the case of 
the first plan year of any plan, 
subparagraph (B) shall apply to 
such plan by taking into account 
the number of participants that 
the plan is reasonably expected to 
have on days during such first 
plan year. 
‘‘(ii) PREDECESSORS.—Any ref-
erence in subparagraph (B) to an 
employer shall include a ref-
erence to any predecessor of such 
employer. 
‘‘(3) AUTHORIZATION
OF
USE
OF
ACTU-
ARIAL
VALUE.—For purposes of this sec-
tion, the value of plan assets shall be de-
termined on the basis of any reasonable
245 
actuarial method of valuation which 
takes into account fair market value and 
which is permitted under regulations 
prescribed 
by 
the 
Secretary, 
except 
that— 
‘‘(A) any such method providing 
for averaging of fair market values 
may not provide for averaging of 
such values over more than the 3 
most recent plan years (including the 
current plan year), and 
‘‘(B) any such method may not re-
sult in a determination of the value of 
plan assets which, at any time, is 
lower than 90 percent or greater than 
110 percent of the fair market value 
of such assets at such time. 
‘‘(4) ACCOUNTING FOR CONTRIBUTION RE-
CEIPTS.—For purposes of this section— 
‘‘(A) 
CONTRIBUTIONS
FOR
PRIOR 
PLAN YEARS TAKEN INTO ACCOUNT.—For 
purposes of determining the value of 
plan assets for any current plan year, 
in any case in which a contribution 
properly allocable to amounts owed