II 
Calendar No. 561 
109TH CONGRESS 
2D SESSION 
H. R. 4 
IN THE SENATE OF THE UNITED STATES 
JULY 31, 2006 
Received; deemed read the first time on July 28 (legislative day, July 26), 
2006, pursuant to the order of July 28, 2006 
JULY 31, 2006 
Read the second time and placed on the calendar 
AN ACT 
To provide economic security for all Americans, and for 
other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Pension Protection Act of 2006’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act (other than so much of title XIV as follows section 
1401) is as follows: 
Sec. 1. Short title and table of contents. 
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TITLE I—REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER 
DEFINED BENEFIT PENSION PLANS 
Subtitle A—Amendments to Employee Retirement Income Security Act of 
1974 
Sec. 101. Minimum funding standards. 
Sec. 102. Funding rules for single-employer defined benefit pension plans. 
Sec. 103. Benefit limitations under single-employer plans. 
Sec. 104. Special rules for multiple employer plans of certain cooperatives. 
Sec. 105. Temporary relief for certain PBGC settlement plans. 
Sec. 106. Special rules for plans of certain government contractors. 
Sec. 107. Technical and conforming amendments. 
Subtitle B—Amendments to Internal Revenue Code of 1986 
Sec. 111. Minimum funding standards. 
Sec. 112. Funding rules for single-employer defined benefit pension plans. 
Sec. 113. Benefit limitations under single-employer plans. 
Sec. 114. Technical and conforming amendments. 
Sec. 115. Modification of transition rule to pension funding requirements. 
Sec. 116. Restrictions on funding of nonqualified deferred compensation plans 
by employers maintaining underfunded or terminated single- 
employer plans. 
TITLE II—FUNDING RULES FOR MULTIEMPLOYER DEFINED 
BENEFIT PLANS AND RELATED PROVISIONS 
Subtitle A—Amendments to Employee Retirement Income Security Act of 
1974 
Sec. 201. Funding rules for multiemployer defined benefit plans. 
Sec. 202. Additional funding rules for multiemployer plans in endangered or 
critical status. 
Sec. 203. Measures to forestall insolvency of multiemployer plans. 
Sec. 204. Withdrawal liability reforms. 
Sec. 205. Prohibition on retaliation against employers exercising their rights to 
petition the Federal government. 
Sec. 206. Special rule for certain benefits funded under an agreement approved 
by the Pension Benefit Guaranty Corporation. 
Subtitle B—Amendments to Internal Revenue Code of 1986 
Sec. 211. Funding rules for multiemployer defined benefit plans. 
Sec. 212. Additional funding rules for multiemployer plans in endangered or 
critical status. 
Sec. 213. Measures to forestall insolvency of multiemployer plans. 
Sec. 214. Exemption from excise taxes for certain multiemployer pension plans. 
Subtitle C—Sunset of Additional Funding Rules 
Sec. 221. Sunset of additional funding rules. 
TITLE III—INTEREST RATE ASSUMPTIONS 
Sec. 301. Extension of replacement of 30-year Treasury rates. 
Sec. 302. Interest rate assumption for determination of lump sum distributions. 
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Sec. 303. Interest rate assumption for applying benefit limitations to lump sum 
distributions. 
TITLE IV—PBGC GUARANTEE AND RELATED PROVISIONS 
Sec. 401. PBGC premiums. 
Sec. 402. Special funding rules for certain plans maintained by commercial air-
lines. 
Sec. 403. Limitation on PBGC guarantee of shutdown and other benefits. 
Sec. 404. Rules relating to bankruptcy of employer. 
Sec. 405. PBGC premiums for small plans. 
Sec. 406. Authorization for PBGC to pay interest on premium overpayment re-
funds. 
Sec. 407. Rules for substantial owner benefits in terminated plans. 
Sec. 408. Acceleration of PBGC computation of benefits attributable to recov-
eries from employers. 
Sec. 409. Treatment of certain plans where cessation or change in membership 
of a controlled group. 
Sec. 410. Missing participants. 
Sec. 411. Director of the Pension Benefit Guaranty Corporation. 
Sec. 412. Inclusion of information in the PBGC annual report. 
TITLE V—DISCLOSURE 
Sec. 501. Defined benefit plan funding notice. 
Sec. 502. Access to multiemployer pension plan information. 
Sec. 503. Additional annual reporting requirements. 
Sec. 504. Electronic display of annual report information. 
Sec. 505. Section 4010 filings with the PBGC. 
Sec. 506. Disclosure of termination information to plan participants. 
Sec. 507. Notice of freedom to divest employer securities. 
Sec. 508. Periodic pension benefit statements. 
Sec. 509. Notice to participants or beneficiaries of blackout periods. 
TITLE VI—INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, 
AND FIDUCIARY RULES 
Subtitle A—Investment Advice 
Sec. 601. Prohibited transaction exemption for provision of investment advice. 
Subtitle B—Prohibited Transactions 
Sec. 611. Prohibited transaction rules relating to financial investments. 
Sec. 612. Correction period for certain transactions involving securities and 
commodities. 
Subtitle C—Fiduciary and Other Rules 
Sec. 621. Inapplicability of relief from fiduciary liability during suspension of 
ability of participant or beneficiary to direct investments. 
Sec. 622. Increase in maximum bond amount. 
Sec. 623. Increase in penalties for coercive interference with exercise of ERISA 
rights. 
Sec. 624. Treatment of investment of assets by plan where participant fails to 
exercise investment election. 
Sec. 625. Clarification of fiduciary rules. 
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TITLE VII—BENEFIT ACCRUAL STANDARDS 
Sec. 701. Benefit accrual standards. 
Sec. 702. Regulations relating to mergers and acquisitions. 
TITLE VIII—PENSION RELATED REVENUE PROVISIONS 
Subtitle A—Deduction Limitations 
Sec. 801. Increase in deduction limit for single-employer plans. 
Sec. 802. Deduction limits for multiemployer plans. 
Sec. 803. Updating deduction rules for combination of plans. 
Subtitle B—Certain Pension Provisions Made Permanent 
Sec. 811. Pensions and individual retirement arrangement provisions of Eco-
nomic Growth and Tax Relief Reconciliation Act of 2001 made 
permanent. 
Sec. 812. Saver’s credit. 
Subtitle C—Improvements in Portability, Distribution, and Contribution Rules 
Sec. 821. Clarifications regarding purchase of permissive service credit. 
Sec. 822. Allow rollover of after-tax amounts in annuity contracts. 
Sec. 823. Clarification of minimum distribution rules for governmental plans. 
Sec. 824. Allow direct rollovers from retirement plans to Roth IRAs. 
Sec. 825. Eligibility for participation in retirement plans. 
Sec. 826. Modifications of rules governing hardships and unforseen financial 
emergencies. 
Sec. 827. Penalty-free withdrawals from retirement plans for individuals called 
to active duty for at least 179 days. 
Sec. 828. Waiver of 10 percent early withdrawal penalty tax on certain dis-
tributions of pension plans for public safety employees. 
Sec. 829. Allow rollovers by nonspouse beneficiaries of certain retirement plan 
distributions. 
Sec. 830. Direct payment of tax refunds to individual retirement plans. 
Sec. 831. Allowance of additional IRA payments in certain bankruptcy cases. 
Sec. 832. Determination of average compensation for section 415 limits. 
Sec. 833. Inflation indexing of gross income limitations on certain retirement 
savings incentives. 
Subtitle D—Health and Medical Benefits 
Sec. 841. Use of excess pension assets for future retiree health benefits and col-
lectively bargained retiree health benefits. 
Sec. 842. Transfer of excess pension assets to multiemployer health plan. 
Sec. 843. Allowance of reserve for medical benefits of plans sponsored by bona 
fide associations. 
Sec. 844. Treatment of annuity and life insurance contracts with a long-term 
care insurance feature. 
Sec. 845. Distributions from governmental retirement plans for health and 
Long-Term care insurance for public safety officers. 
Subtitle E—United States Tax Court Modernization 
Sec. 851. Cost-of-living adjustments for Tax Court judicial survivor annuities. 
Sec. 852. Cost of life insurance coverage for Tax Court judges age 65 or over. 
Sec. 853. Participation of Tax Court judges in the Thrift Savings Plan. 
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Sec. 854. Annuities to surviving spouses and dependent children of special trial 
judges of the Tax Court. 
Sec. 855. Jurisdiction of Tax Court over collection due process cases. 
Sec. 856. Provisions for recall. 
Sec. 857. Authority for special trial judges to hear and decide certain employ-
ment status cases. 
Sec. 858. Confirmation of authority of Tax Court to apply doctrine of equitable 
recoupment. 
Sec. 859. Tax Court filing fee in all cases commenced by filing petition. 
Sec. 860. Expanded use of Tax Court practice fee for pro se taxpayers. 
Subtitle F—Other Provisions 
Sec. 861. Extension to all governmental plans of current moratorium on appli-
cation of certain nondiscrimination rules applicable to State 
and local plans. 
Sec. 862. Elimination of aggregate limit for usage of excess funds from black 
lung disability trusts. 
Sec. 863. Treatment of death benefits from corporate-owned life insurance. 
Sec. 864. Treatment of test room supervisors and proctors who assist in the ad-
ministration of college entrance and placement exams. 
Sec. 865. Grandfather rule for church plans which self-annuitize. 
Sec. 866. Exemption for income from leveraged real estate held by church 
plans. 
Sec. 867. Church plan rule. 
Sec. 868. Gratuitous transfer for benefits of employees. 
TITLE IX—INCREASE IN PENSION PLAN DIVERSIFICATION AND 
PARTICIPATION AND OTHER PENSION PROVISIONS 
Sec. 901. Defined contribution plans required to provide employees with free-
dom to invest their plan assets. 
Sec. 902. Increasing participation through automatic contribution arrange-
ments. 
Sec. 903. Treatment of eligible combined defined benefit plans and qualified 
cash or deferred arrangements. 
Sec. 904. Faster vesting of employer nonelective contributions. 
Sec. 905. Distributions during working retirement. 
Sec. 906. Treatment of certain pension plans of Indian tribal governments. 
TITLE X—PROVISIONS RELATING TO SPOUSAL PENSION 
PROTECTION 
Sec. 1001. Regulations on time and order of issuance of domestic relations or-
ders. 
Sec. 1002. Entitlement of divorced spouses to railroad retirement annuities 
independent of actual entitlement of employee. 
Sec. 1003. Extension of tier II railroad retirement benefits to surviving former 
spouses pursuant to divorce agreements. 
Sec. 1004. Requirement for additional survivor annuity option. 
TITLE XI—ADMINISTRATIVE PROVISIONS 
Sec. 1101. Employee plans compliance resolution system. 
Sec. 1102. Notice and consent period regarding distributions. 
Sec. 1103. Reporting simplification. 
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Sec. 1104. Voluntary early retirement incentive and employment retention 
plans maintained by local educational agencies and other enti-
ties. 
Sec. 1105. No reduction in unemployment compensation as a result of pension 
rollovers. 
Sec. 1106. Revocation of election relating to treatment as multiemployer plan. 
Sec. 1107. Provisions relating to plan amendments. 
TITLE XII—PROVISIONS RELATING TO EXEMPT ORGANIZATIONS 
Subtitle A—Charitable Giving Incentives 
Sec. 1201. Tax-free distributions from individual retirement plans for chari-
table purposes. 
Sec. 1202. Extension of modification of charitable deduction for contributions 
of food inventory. 
Sec. 1203. Basis adjustment to stock of S corporation contributing property. 
Sec. 1204. Extension of modification of charitable deduction for contributions 
of book inventory. 
Sec. 1205. Modification of tax treatment of certain payments to controlling ex-
empt organizations. 
Sec. 1206. Encouragement of contributions of capital gain real property made 
for conservation purposes. 
Sec. 1207. Excise taxes exemption for blood collector organizations. 
Subtitle B—Reforming Exempt Organizations 
PART 1—GENERAL REFORMS 
Sec. 1211. Reporting on certain acquisitions of interests in insurance contracts 
in which certain exempt organizations hold an interest. 
Sec. 1212. Increase in penalty excise taxes relating to public charities, social 
welfare organizations, and private foundations. 
Sec. 1213. Reform of charitable contributions of certain easements in registered 
historic districts and reduced deduction for portion of qualified 
conservation contribution attributable to rehabilitation credit. 
Sec. 1214. Charitable contributions of taxidermy property. 
Sec. 1215. Recapture of tax benefit for charitable contributions of exempt use 
property not used for an exempt use. 
Sec. 1216. Limitation of deduction for charitable contributions of clothing and 
household items. 
Sec. 1217. Modification of recordkeeping requirements for certain charitable 
contributions. 
Sec. 1218. Contributions of fractional interests in tangible personal property. 
Sec. 1219. Provisions relating to substantial and gross overstatements of valu-
ations. 
Sec. 1220. Additional standards for credit counseling organizations. 
Sec. 1221. Expansion of the base of tax on private foundation net investment 
income. 
Sec. 1222. Definition of convention or association of churches. 
Sec. 1223. Notification requirement for entities not currently required to file. 
Sec. 1224. Disclosure to State officials relating to exempt organizations. 
Sec. 1225. Public disclosure of information relating to unrelated business in-
come tax returns. 
Sec. 1226. Study on donor advised funds and supporting organizations. 
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PART 2—IMPROVED ACCOUNTABILITY OF DONOR ADVISED FUNDS 
Sec. 1231. Excise taxes relating to donor advised funds. 
Sec. 1232. Excess benefit transactions involving donor advised funds and spon-
soring organizations. 
Sec. 1233. Excess business holdings of donor advised funds. 
Sec. 1234. Treatment of charitable contribution deductions to donor advised 
funds. 
Sec. 1235. Returns of, and applications for recognition by, sponsoring organiza-
tions. 
PART 3—IMPROVED ACCOUNTABILITY OF SUPPORTING ORGANIZATIONS 
Sec. 1241. Requirements for supporting organizations. 
Sec. 1242. Excess benefit transactions involving supporting organizations. 
Sec. 1243. Excess business holdings of supporting organizations. 
Sec. 1244. Treatment of amounts paid to supporting organizations by private 
foundations. 
Sec. 1245. Returns of supporting organizations. 
TITLE XIII—OTHER PROVISIONS 
Sec. 1301. Technical corrections relating to mine safety. 
Sec. 1302. Going-to-the-sun road. 
Sec. 1303. Exception to the local furnishing requirement of the tax-exempt 
bond rules. 
Sec. 1304. Qualified tuition programs. 
TITLE XIV—TARIFF PROVISIONS 
Sec. 1401. Short title; table of contents. 
TITLE I—REFORM OF FUNDING 
RULES 
FOR 
SINGLE-EM-
PLOYER 
DEFINED 
BENEFIT 
PENSION PLANS 
Subtitle A—Amendments to Em-
ployee Retirement Income Secu-
rity Act of 1974 
SEC. 101. MINIMUM FUNDING STANDARDS. 
(a) REPEAL OF EXISTING FUNDING RULES.—Sec-
tions 302 through 308 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1082 through 
1086) are repealed. 
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(b) NEW MINIMUM FUNDING STANDARDS.—Part 3 
of subtitle B of title I of such Act (as amended by sub-
section (a)) is amended by inserting after section 301 the 
following new section: 
‘‘SEC. 302. MINIMUM FUNDING STANDARDS. 
‘‘(a) REQUIREMENT TO MEET MINIMUM FUNDING 
STANDARD.— 
‘‘(1) IN GENERAL.—A plan to which this part 
applies shall satisfy the minimum funding standard 
applicable to the plan for any plan year. 
‘‘(2) MINIMUM FUNDING STANDARD.—For pur-
poses of paragraph (1), a plan shall be treated as 
satisfying the minimum funding standard for a plan 
year if— 
‘‘(A) in the case of a defined benefit plan 
which is a single-employer plan, the employer 
makes contributions to or under the plan for 
the plan year which, in the aggregate, are not 
less than the minimum required contribution 
determined under section 303 for the plan for 
the plan year, 
‘‘(B) in the case of a money purchase plan 
which is a single-employer plan, the employer 
makes contributions to or under the plan for 
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the plan year which are required under the 
terms of the plan, and 
‘‘(C) in the case of a multiemployer plan, 
the employers make contributions to or under 
the plan for any plan year which, in the aggre-
gate, are sufficient to ensure that the plan does 
not have an accumulated funding deficiency 
under section 304 as of the end of the plan 
year. 
‘‘(b) LIABILITY FOR CONTRIBUTIONS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the amount of any contribution required 
by this section (including any required installments 
under paragraphs (3) and (4) of section 303(j)) 
shall be paid by the employer responsible for making 
contributions to or under the plan. 
‘‘(2) JOINT
AND
SEVERAL
LIABILITY
WHERE 
EMPLOYER
MEMBER
OF
CONTROLLED
GROUP.—If 
the employer referred to in paragraph (1) is a mem-
ber of a controlled group, each member of such 
group shall be jointly and severally liable for pay-
ment of such contributions. 
‘‘(c) VARIANCE FROM MINIMUM FUNDING STAND-
ARDS.— 
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‘‘(1) WAIVER
IN
CASE
OF
BUSINESS
HARD-
SHIP.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) an employer is (or in the case of 
a multiemployer plan, 10 percent or more 
of the number of employers contributing to 
or under the plan is) unable to satisfy the 
minimum funding standard for a plan year 
without temporary substantial business 
hardship (substantial business hardship in 
the case of a multiemployer plan), and 
‘‘(ii) application of the standard would 
be adverse to the interests of plan partici-
pants in the aggregate, 
the Secretary of the Treasury may, subject to 
subparagraph (C), waive the requirements of 
subsection (a) for such year with respect to all 
or any portion of the minimum funding stand-
ard. The Secretary of the Treasury shall not 
waive the minimum funding standard with re-
spect to a plan for more than 3 of any 15 (5 
of any 15 in the case of a multiemployer plan) 
consecutive plan years. 
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‘‘(B) EFFECTS OF WAIVER.—If a waiver is 
granted under subparagraph (A) for any plan 
year— 
‘‘(i) in the case of a single-employer 
plan, the minimum required contribution 
under section 303 for the plan year shall 
be reduced by the amount of the waived 
funding deficiency and such amount shall 
be amortized as required under section 
303(e), and 
‘‘(ii) in the case of a multiemployer 
plan, the funding standard account shall 
be credited under section 304(b)(3)(C) 
with the amount of the waived funding de-
ficiency and such amount shall be amor-
tized 
as 
required 
under 
section 
304(b)(2)(C). 
‘‘(C) WAIVER
OF
AMORTIZED
PORTION 
NOT ALLOWED.—The Secretary of the Treasury 
may not waive under subparagraph (A) any 
portion of the minimum funding standard 
under subsection (a) for a plan year which is 
attributable to any waived funding deficiency 
for any preceding plan year. 
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‘‘(2) DETERMINATION
OF
BUSINESS
HARD-
SHIP.—For purposes of this subsection, the factors 
taken into account in determining temporary sub-
stantial business hardship (substantial business 
hardship in the case of a multiemployer plan) shall 
include (but shall not be limited to) whether or 
not— 
‘‘(A) the employer is operating at an eco-
nomic loss, 
‘‘(B) there is substantial unemployment or 
underemployment in the trade or business and 
in the industry concerned, 
‘‘(C) the sales and profits of the industry 
concerned are depressed or declining, and 
‘‘(D) it is reasonable to expect that the 
plan will be continued only if the waiver is 
granted. 
‘‘(3) WAIVED FUNDING DEFICIENCY.—For pur-
poses of this part, the term ‘waived funding defi-
ciency’ means the portion of the minimum funding 
standard under subsection (a) (determined without 
regard to the waiver) for a plan year waived by the 
Secretary of the Treasury and not satisfied by em-
ployer contributions. 
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‘‘(4) SECURITY FOR WAIVERS FOR SINGLE-EM-
PLOYER PLANS, CONSULTATIONS.— 
‘‘(A) SECURITY MAY BE REQUIRED.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in subparagraph (C), the Secretary 
of the Treasury may require an employer 
maintaining a defined benefit plan which is 
a single-employer plan (within the meaning 
of section 4001(a)(15)) to provide security 
to such plan as a condition for granting or 
modifying a waiver under paragraph (1). 
‘‘(ii) SPECIAL
RULES.—Any security 
provided under clause (i) may be perfected 
and enforced only by the Pension Benefit 
Guaranty Corporation, or at the direction 
of the Corporation, by a contributing spon-
sor 
(within 
the 
meaning 
of 
section 
4001(a)(13)), or a member of such spon-
sor’s controlled group (within the meaning 
of section 4001(a)(14)). 
‘‘(B) CONSULTATION WITH THE PENSION 
BENEFIT GUARANTY CORPORATION.—Except as 
provided in subparagraph (C), the Secretary of 
the Treasury shall, before granting or modi-
fying a waiver under this subsection with re-
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spect to a plan described in subparagraph 
(A)(i)— 
‘‘(i) provide the Pension Benefit 
Guaranty Corporation with— 
‘‘(I) notice of the completed ap-
plication for any waiver or modifica-
tion, and 
‘‘(II) an opportunity to comment 
on such application within 30 days 
after receipt of such notice, and 
‘‘(ii) consider— 
‘‘(I) any comments of the Cor-
poration under clause (i)(II), and 
‘‘(II) any views of any employee 
organization (within the meaning of 
section 3(4)) representing participants 
in the plan which are submitted in 
writing to the Secretary of the Treas-
ury in connection with such applica-
tion. 
Information provided to the Corporation under 
this subparagraph shall be considered tax re-
turn information and subject to the safe-
guarding and reporting requirements of section 
6103(p) of the Internal Revenue Code of 1986. 
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‘‘(C) EXCEPTION
FOR
CERTAIN
WAIV-
ERS.— 
‘‘(i) IN
GENERAL.—The preceding 
provisions of this paragraph shall not 
apply to any plan with respect to which the 
sum of— 
‘‘(I) the aggregate unpaid min-
imum required contributions for the 
plan year and all preceding plan 
years, and 
‘‘(II) the present value of all 
waiver amortization installments de-
termined for the plan year and suc-
ceeding plan years under section 
303(e)(2), 
is less than $1,000,000. 
‘‘(ii) TREATMENT
OF
WAIVERS
FOR 
WHICH APPLICATIONS ARE PENDING.—The 
amount described in clause (i)(I) shall in-
clude any increase in such amount which 
would result if all applications for waivers 
of the minimum funding standard under 
this subsection which are pending with re-
spect to such plan were denied. 
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‘‘(iii) UNPAID
MINIMUM
REQUIRED 
CONTRIBUTION.—For purposes of this sub-
paragraph— 
‘‘(I) IN
GENERAL.—The term 
‘unpaid minimum required contribu-
tion’ means, with respect to any plan 
year, any minimum required contribu-
tion under section 303 for the plan 
year which is not paid on or before 
the due date (as determined under 
section 303(j)(1)) for the plan year. 
‘‘(II) 
ORDERING
RULE.—For 
purposes of subclause (I), any pay-
ment to or under a plan for any plan 
year shall be allocated first to unpaid 
minimum required contributions for 
all preceding plan years on a first-in, 
first-out basis and then to the min-
imum required contribution under sec-
tion 303 for the plan year. 
‘‘(5) SPECIAL
RULES
FOR
SINGLE-EMPLOYER 
PLANS.— 
‘‘(A) APPLICATION MUST BE SUBMITTED 
BEFORE DATE 21⁄2 MONTHS AFTER CLOSE OF 
YEAR.—In the case of a single-employer plan, 
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no waiver may be granted under this subsection 
with respect to any plan for any plan year un-
less an application therefor is submitted to the 
Secretary of the Treasury not later than the 
15th day of the 3rd month beginning after the 
close of such plan year. 
‘‘(B) SPECIAL RULE IF EMPLOYER IS MEM-
BER OF CONTROLLED GROUP.—In the case of a 
single-employer plan, if an employer is a mem-
ber of a controlled group, the temporary sub-
stantial business hardship requirements of 
paragraph (1) shall be treated as met only if 
such requirements are met— 
‘‘(i) with respect to such employer, 
and 
‘‘(ii) with respect to the controlled 
group of which such employer is a member 
(determined by treating all members of 
such group as a single employer). 
The Secretary of the Treasury may provide that 
an analysis of a trade or business or industry 
of a member need not be conducted if such Sec-
retary determines such analysis is not necessary 
because the taking into account of such member 
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would not significantly affect the determination 
under this paragraph. 
‘‘(6) ADVANCE NOTICE.— 
‘‘(A) IN GENERAL.—The Secretary of the 
Treasury shall, before granting a waiver under 
this subsection, require each applicant to pro-
vide evidence satisfactory to such Secretary that 
the applicant has provided notice of the filing of 
the application for such waiver to each affected 
party (as defined in section 4001(a)(21)). Such 
notice shall include a description of the extent 
to which the plan is funded for benefits which 
are guaranteed under title IV and for benefit li-
abilities. 
‘‘(B) CONSIDERATION
OF
RELEVANT
IN-
FORMATION.—The Secretary of the Treasury 
shall consider any relevant information provided 
by a person to whom notice was given under 
subparagraph (A). 
‘‘(7) RESTRICTION ON PLAN AMENDMENTS.— 
‘‘(A) IN GENERAL.—No amendment of a 
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 nonforfeit-
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ccoleman on PROD1PC71 with BILLS
able under the plan shall be adopted if a waiver 
under this subsection or an extension of time 
under section 304(d) is in effect with respect to 
the plan, or if a plan amendment described in 
subsection (d)(2) has been made at any time in 
the preceding 12 months (24 months in the 
case of a multiemployer plan). If a plan is 
amended in violation of the preceding sentence, 
any such waiver, or extension of time, shall not 
apply to any plan year ending on or after the 
date on which such amendment is adopted. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply to any plan amendment which— 
‘‘(i) the Secretary of the Treasury de-
termines to be reasonable and which pro-
vides for only de minimis increases in the 
liabilities of the plan, 
‘‘(ii) only repeals an amendment de-
scribed in subsection (d)(2), or 
‘‘(iii) is required as a condition of 
qualification under part I of subchapter D 
of chapter 1 of the Internal Revenue Code 
of 1986. 
‘‘(8) CROSS
REFERENCE.—For corresponding 
duties of the Secretary of the Treasury with regard 
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ccoleman on PROD1PC71 with BILLS
to implementation of the Internal Revenue Code of 
1986, see section 412(c) of such Code. 
‘‘(d) MISCELLANEOUS RULES.— 
‘‘(1) CHANGE
IN
METHOD
OR
YEAR.—If the 
funding method, the valuation date, or a plan year 
for a plan is changed, the change shall take effect 
only if approved by the Secretary of the Treasury. 
‘‘(2) CERTAIN
RETROACTIVE
PLAN
AMEND-
MENTS.—For purposes of this section, any amend-
ment applying to a plan year which— 
‘‘(A) is adopted after the close of such plan 
year but no later than 21⁄2 months after the 
close of the plan year (or, in the case of a mul-
tiemployer plan, no later than 2 years after the 
close of such plan year), 
‘‘(B) does not reduce the accrued benefit 
of any participant determined as of the begin-
ning of the first plan year to which the amend-
ment applies, and 
‘‘(C) does not reduce the accrued benefit of 
any participant determined as of the time of 
adoption except to the extent required by the 
circumstances, 
shall, at the election of the plan administrator, be 
deemed to have been made on the first day of such 
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ccoleman on PROD1PC71 with BILLS
plan year. No amendment described in this para-
graph which reduces the accrued benefits of any par-
ticipant shall take effect unless the plan adminis-
trator files a notice with the Secretary of the Treas-
ury notifying him of such amendment and such Sec-
retary has approved such amendment, or within 90 
days after the date on which such notice was filed, 
failed to disapprove such amendment. No amend-
ment described in this subsection shall be approved 
by the Secretary of the Treasury unless such Sec-
retary determines that such amendment is necessary 
because of a temporary substantial business hard-
ship (as determined under subsection (c)(2)) or a 
substantial business hardship (as so determined) in 
the case of a multiemployer plan and that a waiver 
under subsection (c) (or, in the case of a multiem-
ployer plan, any extension of the amortization period 
under section 304(d)) is unavailable or inadequate. 
‘‘(3) CONTROLLED
GROUP.—For purposes of 
this section, the term ‘controlled group’ means any 
group treated as a single employer under subsection 
(b), (c), (m), or (o) of section 414 of the Internal 
Revenue Code of 1986.’’. 
(c) CLERICAL AMENDMENT.—The table of contents 
in section 1 of such Act is amended by striking the items 
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ccoleman on PROD1PC71 with BILLS
relating to sections 302 through 308 and inserting the fol-
lowing new item: 
‘‘Sec. 302. Minimum funding standards.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after 2007. 
SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DE-
FINED BENEFIT PENSION PLANS. 
(a) IN GENERAL.—Part 3 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 (as 
amended by section 101 of this Act) is amended by insert-
ing after section 302 the following new section: 
‘‘SEC. 303. MINIMUM FUNDING STANDARDS FOR SINGLE- 
EMPLOYER 
DEFINED 
BENEFIT 
PENSION 
PLANS. 
‘‘(a) MINIMUM
REQUIRED
CONTRIBUTION.—For 
purposes of this section and section 302(a)(2)(A), except 
as provided in subsection (f), the term ‘minimum required 
contribution’ means, with respect to any plan year of a 
single-employer plan— 
‘‘(1) in any case in which the value of plan as-
sets of the plan (as reduced under subsection 
(f)(4)(B)) is less than the funding target of the plan 
for the plan year, the sum of— 
‘‘(A) the target normal cost of the plan for 
the plan year, 
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ccoleman on PROD1PC71 with BILLS
‘‘(B) the shortfall amortization charge (if 
any) for the plan for the plan year determined 
under subsection (c), and 
‘‘(C) the waiver amortization charge (if 
any) for the plan for the plan year as deter-
mined under subsection (e); or 
‘‘(2) in any case in which the value of plan as-
sets of the plan (as reduced under subsection 
(f)(4)(B)) equals or exceeds the funding target of 
the plan for the plan year, the target normal cost of 
the plan for the plan year reduced (but not below 
zero) by such excess. 
‘‘(b) TARGET NORMAL COST.—For purposes of this 
section, except as provided in subsection (i)(2) with re-
spect to plans in at-risk status, the term ‘target normal 
cost’ means, for any plan year, the present value of all 
benefits which are expected to accrue or to be earned 
under the plan during the plan year. For purposes of this 
subsection, if any benefit attributable to services per-
formed in a preceding plan year is increased by reason 
of any increase in compensation during the current plan 
year, the increase in such benefit shall be treated as hav-
ing accrued during the current plan year. 
‘‘(c) SHORTFALL AMORTIZATION CHARGE.— 
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ccoleman on PROD1PC71 with BILLS
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the shortfall amortization charge for a plan for 
any plan year is the aggregate total (not less than 
zero) of the shortfall amortization installments for 
such plan year with respect to the shortfall amorti-
zation bases for such plan year and each of the 6 
preceding plan years. 
‘‘(2) 
SHORTFALL
AMORTIZATION
INSTALL-
MENT.—For purposes of paragraph (1)— 
‘‘(A) DETERMINATION.—The shortfall am-
ortization installments are the amounts nec-
essary to amortize the shortfall amortization 
base of the plan for any plan year in level an-
nual installments over the 7-plan-year period 
beginning with such plan year. 
‘‘(B) 
SHORTFALL
INSTALLMENT.—The 
shortfall amortization installment for any plan 
year in the 7-plan-year period under subpara-
graph (A) with respect to any shortfall amorti-
zation base is the annual installment deter-
mined under subparagraph (A) for that year for 
that base. 
‘‘(C) SEGMENT
RATES.—In determining 
any shortfall amortization installment under 
this paragraph, the plan sponsor shall use the 
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ccoleman on PROD1PC71 with BILLS
segment rates determined under subparagraph 
(C) of subsection (h)(2), applied under rules 
similar to the rules of subparagraph (B) of sub-
section (h)(2). 
‘‘(3) SHORTFALL
AMORTIZATION
BASE.—For 
purposes of this section, the shortfall amortization 
base of a plan for a plan year is— 
‘‘(A) the funding shortfall of such plan for 
such plan year, minus 
‘‘(B) the present value (determined using 
the segment rates determined under subpara-
graph (C) of subsection (h)(2), applied under 
rules similar to the rules of subparagraph (B) 
of subsection (h)(2)) of the aggregate total of 
the shortfall amortization installments and 
waiver amortization installments which have 
been determined for such plan year and any 
succeeding plan year with respect to the short-
fall amortization bases and waiver amortization 
bases of the plan for any plan year preceding 
such plan year. 
‘‘(4) FUNDING SHORTFALL.—For purposes of 
this section, the funding shortfall of a plan for any 
plan year is the excess (if any) of— 
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ccoleman on PROD1PC71 with BILLS
‘‘(A) the funding target of the plan for the 
plan year, over 
‘‘(B) the value of plan assets of the plan 
(as reduced under subsection (f)(4)(B)) for the 
plan year which are held by the plan on the 
valuation date. 
‘‘(5) EXEMPTION FROM NEW SHORTFALL AM-
ORTIZATION BASE.— 
‘‘(A) IN GENERAL.—In any case in which 
the value of plan assets of the plan (as reduced 
under subsection (f)(4)(A)) is equal to or great-
er than the funding target of the plan for the 
plan year, the shortfall amortization base of the 
plan for such plan year shall be zero. 
‘‘(B) TRANSITION RULE.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clauses (iii) and (iv), in the case 
of plan years beginning after 2007 and be-
fore 2011, only the applicable percentage 
of the funding target shall be taken into 
account under paragraph (3)(A) in deter-
mining the funding shortfall for the plan 
year for purposes of subparagraph (A). 
‘‘(ii) APPLICABLE PERCENTAGE.—For 
purposes of subparagraph (A), the applica-
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ccoleman on PROD1PC71 with BILLS
ble percentage shall be determined in ac-
cordance with the following table: 
‘‘In the case of a plan year 
The applicable 
beginning in calendar year: 
percentage is 
2008 ...................................................................................................
2009 ...................................................................................................
2010 ...................................................................................................
96. 
‘‘(iii) LIMITATION.—Clause (i) shall 
not apply with respect to any plan year 
after 2008 unless the shortfall amortiza-
tion base for each of the preceding years 
beginning after 2007 was zero (determined 
after application of this subparagraph). 
‘‘(iv) TRANSITION RELIEF NOT AVAIL-
ABLE FOR NEW OR DEFICIT REDUCTION 
PLANS.—Clause (i) shall not apply to a 
plan— 
‘‘(I) which was not in effect for a 
plan year beginning in 2007, or 
‘‘(II) which was in effect for a 
plan year beginning in 2007 and 
which was subject to section 302(d) 
(as in effect for plan years beginning 
in 2007), determined after the appli-
cation of paragraphs (6) and (9) 
thereof. 
‘‘(6) EARLY DEEMED AMORTIZATION UPON AT-
TAINMENT OF FUNDING TARGET.—In any case in 
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ccoleman on PROD1PC71 with BILLS
which the funding shortfall of a plan for a plan year 
is zero, for purposes of determining the shortfall am-
ortization charge for such plan year and succeeding 
plan years, the shortfall amortization bases for all 
preceding plan years (and all shortfall amortization 
installments determined with respect to such bases) 
shall be reduced to zero. 
‘‘(d) RULES RELATING TO FUNDING TARGET.—For 
purposes of this section— 
‘‘(1) FUNDING TARGET.—Except as provided in 
subsection (i)(1) with respect to plans in at-risk sta-
tus, the funding target of a plan for a plan year is 
the present value of all benefits accrued or earned 
under the plan as of the beginning of the plan year. 
‘‘(2) FUNDING TARGET ATTAINMENT PERCENT-
AGE.—The ‘funding target attainment percentage’ of 
a plan for a plan year is the ratio (expressed as a 
percentage) which— 
‘‘(A) the value of plan assets for the plan 
year (as reduced under subsection (f)(4)(B)), 
bears to 
‘‘(B) the funding target of the plan for the 
plan year (determined without regard to sub-
section (i)(1)). 
‘‘(e) WAIVER AMORTIZATION CHARGE.— 
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ccoleman on PROD1PC71 with BILLS
‘‘(1) DETERMINATION
OF
WAIVER
AMORTIZA-
TION CHARGE.—The waiver amortization charge (if 
any) for a plan for any plan year is the aggregate 
total of the waiver amortization installments for 
such plan year with respect to the waiver amortiza-
tion bases for each of the 5 preceding plan years. 
‘‘(2) WAIVER AMORTIZATION INSTALLMENT.— 
For purposes of paragraph (1)— 
‘‘(A) DETERMINATION.—The waiver amor-
tization installments are the amounts necessary 
to amortize the waiver amortization base of the 
plan for any plan year in level annual install-
ments over a period of 5 plan years beginning 
with the succeeding plan year. 
‘‘(B) WAIVER INSTALLMENT.—The waiver 
amortization installment for any plan year in 
the 5-year period under subparagraph (A) with 
respect to any waiver amortization base is the 
annual installment determined under subpara-
graph (A) for that year for that base. 
‘‘(3) INTEREST
RATE.—In determining any 
waiver amortization installment under this sub-
section, the plan sponsor shall use the segment rates 
determined under subparagraph (C) of subsection 
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ccoleman on PROD1PC71 with BILLS
(h)(2), applied under rules similar to the rules of 
subparagraph (B) of subsection (h)(2). 
‘‘(4) WAIVER AMORTIZATION BASE.—The waiv-
er amortization base of a plan for a plan year is the 
amount of the waived funding deficiency (if any) for 
such plan year under section 302(c). 
‘‘(5) EARLY DEEMED AMORTIZATION UPON AT-
TAINMENT OF FUNDING TARGET.—In any case in 
which the funding shortfall of a plan for a plan year 
is zero, for purposes of determining the waiver am-
ortization charge for such plan year and succeeding 
plan years, the waiver amortization bases for all pre-
ceding plan years (and all waiver amortization in-
stallments determined with respect to such bases) 
shall be reduced to zero. 
‘‘(f) REDUCTION OF MINIMUM REQUIRED CONTRIBU-
TION BY PREFUNDING BALANCE AND FUNDING STAND-
ARD CARRYOVER BALANCE.— 
‘‘(1) ELECTION TO MAINTAIN BALANCES.— 
‘‘(A) PREFUNDING
BALANCE.—The plan 
sponsor of a single-employer plan may elect to 
maintain a prefunding balance. 
‘‘(B) FUNDING
STANDARD
CARRYOVER 
BALANCE.— 
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