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payments of estimated tax for taxable years beginning
after December 31, 1994.
SEC. 712. TIME FOR PAYMENTS AND DEPOSITS OF CERTAIN
TAXES.
(a) DEPOSITS REQUIRED FOR SEMIMONTHLY PERI-
ODS.—Subsection (f) of section 6302 (relating to collec-
tion authority) is amended to read as follows:
‘‘(f) TIME
FOR
DEPOSIT
OF
CERTAIN
EXCISE
TAXES.—
‘‘(1) GENERAL
RULE.—Except as otherwise
provided in this subsection and subsection (e), if any
person is required under regulations to make depos-
its of taxes under subtitle D with respect to semi-
monthly periods, such person shall make deposits of
such taxes for the period beginning on September 16
and ending on September 26 not later than Septem-
ber 29. In the case of taxes imposed by sections
4261 and 4271, this paragraph shall not apply to
periods before January 1, 1997.
‘‘(2) TAXES
ON
OZONE
DEPLETING
CHEMI-
CALS.—If any person is required under regulations
to make deposits of taxes under subchapter D of
chapter 38 with respect to semimonthly periods, in
lieu of paragraph (1), such person shall make depos-
its of such taxes for—
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‘‘(A) the second semimonthly period in Au-
gust, and
‘‘(B) the period beginning on September 1
and ending on September 11,
not later than September 29.
‘‘(3) TAXPAYERS NOT REQUIRED TO USE ELEC-
TRONIC FUNDS TRANSFER.—In the case of deposits
not required to be made by electronic funds transfer,
paragraphs (1) and (2) shall be applied by substitut-
ing ‘September 25’ for ‘September 26’, ‘September
10’ for ‘September 11’, and ‘September 28’ for ‘Sep-
tember 29’.
‘‘(4) SPECIAL RULE WHERE DUE DATE ON SAT-
URDAY OR SUNDAY.—If, but for this paragraph, the
due date under paragraph (1), (2), or (3) would fall
on a Saturday or Sunday, such due date shall be
deemed to be—
‘‘(A) in the case of Saturday, the preceding
day, and
‘‘(B) in the case of Sunday, the following
day.’’
(b) TAXES
ON DISTILLED SPIRITS, WINES, AND
BEER.—
(1) Subsection (d) of section 5061 is amended
by redesignating paragraph (4) as paragraph (5)
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and by inserting after paragraph (3) the following
new paragraph:
‘‘(4) SPECIAL RULE FOR TAX DUE IN SEPTEM-
BER.—
‘‘(A) IN
GENERAL.—Notwithstanding the
preceding provisions of this subsection, the
taxes on distilled spirits, wines, and beer for the
period beginning on September 16 and ending
on September 26 shall be paid not later than
September 29.
‘‘(B) SAFE HARBOR.—The requirement of
subparagraph (A) shall be treated as met if the
amount paid not later than September 29 is not
less than 11⁄15 of the taxes on distilled spirits,
wines, and beer for the period beginning on
September 1 and ending on September 15.
‘‘(C) TAXPAYERS NOT REQUIRED TO USE
ELECTRONIC FUNDS TRANSFER.—In the case of
payments not required to be made by electronic
funds transfer, subparagraphs (A) and (B)
shall be applied by substituting ‘September 25’
for ‘September 26’, ‘September 28’ for ‘Sep-
tember 29’, and ‘2⁄3’ for ‘11⁄15’.’’
(2) Section 5061(d)(5), as redesignated by
paragraph (1), is amended—
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(A) by inserting ‘‘(or the immediately fol-
lowing day where the due date described in
paragraph (4) falls on a Sunday)’’ before the
period at the end, and
(B) by striking ‘‘14TH DAY’’ in the heading
and inserting ‘‘DUE DATE’’.
(c) TOBACCO PRODUCTS AND CIGARETTE PAPERS
AND TUBES.—
(1) Paragraph (2) of section 5703(b) is amend-
ed by redesignating subparagraph (D) as subpara-
graph (E) and by inserting after subparagraph (C)
the following new subparagraph:
‘‘(D) SPECIAL RULE FOR TAX DUE IN SEP-
TEMBER.—
‘‘(i) IN
GENERAL.—Notwithstanding
the preceding provisions of this paragraph,
the taxes on tobacco products and cigarette
papers and tubes for the period beginning
on September 16 and ending on September
26 shall be paid not later than September
29.
‘‘(ii) SAFE
HARBOR.—The require-
ment of clause (i) shall be treated as met
if the amount paid not later than Septem-
ber 29 is not less than 11⁄15 of the taxes
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on tobacco products and cigarette papers
and tubes for the period beginning on Sep-
tember 1 and ending on September 15.
‘‘(iii) TAXPAYERS NOT REQUIRED TO
USE
ELECTRONIC
FUNDS
TRANSFER.—In
the case of payments not required to be
made by electronic funds transfer, clauses
(i) and (ii) shall be applied by substituting
‘September 25’ for ‘September 26’, ‘Sep-
tember 28’ for ‘September 29’, and ‘2⁄3’ for
‘11⁄15’.’’
(2) Section 5703(b)(2)(E), as redesignated by
paragraph (1), is amended—
(A) by inserting ‘‘(or the immediately fol-
lowing day where the due date described in sub-
paragraph (D) falls on a Sunday)’’ before the
period at the end, and
(B) by striking ‘‘14TH DAY’’ in the heading
and inserting ‘‘DUE DATE’’.
(d) COMMUNICATION SERVICES AND AIRLINE TICK-
ETS.—Subsection (e) of section 6302 is amended to read
as follows:
‘‘(e) TIME FOR DEPOSIT OF TAXES ON COMMUNICA-
TIONS SERVICES AND AIRLINE TICKETS.—
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‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if, under regulations prescribed by the
Secretary, a person is required to make deposits of
any tax imposed by section 4251 or subsection (a)
or (b) of section 4261 with respect to amounts con-
sidered collected by such person during any semi-
monthly period, such deposit shall be made not later
than the 3rd day (not including Saturdays, Sundays,
or legal holidays) after the close of the 1st week of
the 2nd semimonthly period following the period to
which such amounts relate.
‘‘(2) SPECIAL RULE FOR TAX DUE IN SEPTEM-
BER.—
‘‘(A) 
AMOUNTS
CONSIDERED
COL-
LECTED.—In the case of a person required to
make deposits of the tax imposed by—
‘‘(i) section 4251, or
‘‘(ii) effective on January 1, 1997,
section 4261 or 4271,
with respect to amounts considered collected by
such person during any semimonthly period, the
amount of such tax included in bills rendered or
tickets sold during the period beginning on Sep-
tember 1 and ending on September 11 shall be
deposited not later than September 29.
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‘‘(B) SPECIAL RULE WHERE SEPTEMBER
29 IS ON SATURDAY OR SUNDAY.—If September
29 falls on a Saturday or Sunday, the due date
under subparagraph (A) shall be—
‘‘(i) in the case of Saturday, the pre-
ceding day, and
‘‘(ii) in the case of Sunday, the follow-
ing day.
‘‘(C) TAXPAYERS NOT REQUIRED TO USE
ELECTRONIC FUNDS TRANSFER.—In the case of
deposits not required to be made by electronic
funds transfer, subparagraphs (A) and (B)
shall be applied by substituting ‘September 10’
for ‘September 11’ and ‘September 28’ for
‘September 29’.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1995.
SEC. 713. REDUCTION IN RATE OF INTEREST PAID ON CER-
TAIN CORPORATE OVERPAYMENTS.
(a) IN GENERAL.—Paragraph (1) of section 6621(a)
(defining overpayment rate) is amended by adding at the
end the following new flush sentence:
‘‘To the extent that an overpayment of tax by a cor-
poration for any taxable period (as defined in sub-
section (c)(3)) exceeds $10,000, subparagraph (B)
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shall be applied by substituting ‘0.5 percentage
point’ for ‘2 percentage points’.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply for purposes of determining inter-
est for periods after December 31, 1994.
Subtitle C—Earned Income Tax
Credit
SEC. 721. EXTENSION OF EARNED INCOME TAX CREDIT TO
MILITARY PERSONNEL STATIONED OUTSIDE
THE UNITED STATES.
(a) IN GENERAL.—Subsection (c) of section 32 (re-
lating to earned income credit) is amended by adding at
the end the following new paragraph:
‘‘(4) TREATMENT
OF
MILITARY
PERSONNEL
STATIONED
OUTSIDE
THE
UNITED
STATES.—For
purposes of paragraphs (1)(A)(ii)(I) and (3)(E), the
principal place of abode of a member of the Armed
Forces of the United States shall be treated as in
the United States during any period during which
such member is stationed outside the United States
while serving on extended active duty (as defined in
section 1034(h)(3)) with the Armed Forces of the
United States.’’
(b) REPORTING OF MILITARY EARNED INCOME.—
Subsection (a) of section 6051 (relating to receipts for em-
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ployees) is amended by striking ‘‘and’’ at the end of para-
graph (8), by striking the period at the end of paragraph
(9) and by inserting ‘‘, and’’, and by inserting after para-
graph (9) the following new paragraph:
‘‘(10) in the case of an employee who is a mem-
ber of the Armed Forces of the United States, such
employee’s earned income as determined for pur-
poses of section 32 (relating to earned income cred-
it).’’
(c) ADVANCE PAYMENT OF EARNED INCOME CREDIT
BASED ON MILITARY EARNED INCOME.—Paragraph (1)
of section 3507(c) (defining earned income advance
amount) is amended by adding at the end the following
new sentence:
‘‘In the case of an employee who is a member of the
Armed Forces of the United States, the earned in-
come advance amount shall be determined by taking
into account such employee’s earned income as de-
termined for purposes of section 32.’’
(d) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendment made
by subsection (a) shall apply to taxable years begin-
ning after December 31, 1994.
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(2) SUBSECTIONS (b) AND (c).—The amend-
ments made by subsections (b) and (c) shall apply
to remuneration paid after December 31, 1994.
SEC. 722. CERTAIN NONRESIDENT ALIENS INELIGIBLE FOR
EARNED INCOME TAX CREDIT.
(a) IN GENERAL.—Paragraph (1) of section 32(c)
(defining eligible individual) is amended by adding at the
end the following new subparagraph:
‘‘(E) LIMITATION ON ELIGIBILITY OF NON-
RESIDENT ALIENS.—The term ‘eligible individ-
ual’ shall not include any individual who is a
nonresident alien individual for any portion of
the taxable year unless such individual is treat-
ed for such taxable year as a resident of the
United States for purposes of this chapter by
reason of an election under subsection (g) or
(h) of section 6013.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1994.
SEC. 723. INCOME OF PRISONERS DISREGARDED IN DETER-
MINING EARNED INCOME TAX CREDIT.
(a) IN GENERAL.—Subparagraph (B) of section
32(c)(2) (defining earned income) is amended by striking
‘‘and’’ at the end of clause (ii), by striking the period at
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the end of clause (iii) and inserting ‘‘, and’’, and by adding
at the end the following new clause:
‘‘(iv) no amount received for services
provided by an individual while the individ-
ual is an inmate at a penal institution shall
be taken into account.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1993.
Subtitle D—Provisions Relating To
Retirement Benefits
SEC. 731. TREATMENT OF EXCESS PENSION ASSETS USED
FOR RETIREE HEALTH BENEFITS.
(a) 5-YEAR EXTENSION.—Paragraph (5) of section
420(b) (defining qualified transfer) is amended by striking
‘‘1995’’ and inserting ‘‘2000’’.
(b) MINIMUM
BENEFIT
REQUIREMENTS.—Para-
graph (3) of section 420(c) (relating to requirements of
plans transferring assets) is amended to read as follows:
‘‘(3) MAINTENANCE
OF
BENEFIT
REQUIRE-
MENTS.—
‘‘(A) IN GENERAL.—The requirements of
this paragraph are met if each group health
plan or arrangement under which applicable
health benefits are provided provides that the
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applicable health benefits provided by the em-
ployer during each taxable year during the ben-
efit maintenance period are substantially the
same as the applicable health benefits provided
by the employer during the taxable year imme-
diately preceding the taxable year of the quali-
fied transfer.
‘‘(B) ELECTION TO APPLY SEPARATELY.—
An employer may elect to have this paragraph
applied separately with respect to individuals el-
igible for benefits under title XVIII of the So-
cial Security Act at any time during the taxable
year and with respect to individuals not so eligi-
ble.
‘‘(C) BENEFIT
MAINTENANCE
PERIOD.—
For purposes of this paragraph, the term ‘bene-
fit maintenance period’ means the period of 5
taxable years beginning with the taxable year in
which the qualified transfer occurs. If a taxable
year is in 2 or more benefit maintenance peri-
ods, this paragraph shall be applied by taking
into account the highest level of benefits re-
quired to be provided under subparagraph (A)
for such taxable year.’’
(c) CONFORMING AMENDMENTS.—
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(1) Clause (iii) of section 420(b)(1)(C) is
amended by striking ‘‘cost’’ and inserting ‘‘benefits’’.
(2) Subparagraph (B) of section 420(e)(1) is
amended to read as follows:
‘‘(B) REDUCTIONS
FOR
AMOUNTS
PRE-
VIOUSLY SET ASIDE.—The amount determined
under subparagraph (A) shall be reduced by the
amount which bears the same ratio to such
amount as—
‘‘(i) the value (as of the close of the
plan year preceding the year of the quali-
fied transfer) of the assets in all health
benefits accounts or welfare benefit funds
(as defined in section 419(e)(1)) set aside
to pay for the qualified current retiree
health liability, bears to
‘‘(ii) the present value of the qualified
current retiree health liabilities for all plan
years (determined without regard to this
subparagraph).’’
(3) Subparagraph (D) of section 420(e)(1) is
amended by striking ‘‘or in calculating applicable
employer cost under subsection (c)(3)(B)’’ and in-
serting ‘‘and shall not be subject to the minimum
benefit requirements of subsection (c)(3)’’.
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(4)(A) Section 101(e)(3) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C.
1021(e)(3)) is amended by striking ‘‘1991’’ and in-
serting ‘‘1995’’.
(B) Section 403(c)(1) of such Act (29 U.S.C.
1103(c)(1)) is amended by striking ‘‘1991’’ and in-
serting ‘‘1995’’.
(C) Paragraph (13) of section 408(b) of such
Act (29 U.S.C. 1108(b)(13)) is amended—
(i) by striking ‘‘1996’’ and inserting
‘‘2001’’, and
(ii) by striking ‘‘1991’’ and inserting
‘‘1995’’.
(d) EFFECTIVE DATES.—
(1) EXTENSION.—The amendments made by
subsections (a) and (c)(3) shall apply to taxable
years beginning after December 31, 1995.
(2) BENEFITS.—The amendments made by
subsections (b) and (c)(1) and (2) shall apply to
qualified transfers occurring after the date of the
enactment of this Act.
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SEC. 732. ROUNDING RULES FOR COST-OF-LIVING ADJUST-
MENTS.
(a) COST-OF-LIVING ADJUSTMENT FOR COMPENSA-
TION LIMIT.—Section 401(a)(17)(B) is amended to read
as follows:
‘‘(B) COST-OF-LIVING ADJUSTMENT.—The
Secretary shall adjust annually the $150,000
amount in subparagraph (A) for increases in
the cost-of-living at the same time and in the
same manner as adjustments under section
415(d); except that the base period shall be the
calendar quarter beginning October 1, 1993,
and any increase which is not a multiple of
$10,000 shall be rounded to the next lowest
multiple of $10,000.’’
(b) COST-OF-LIVING ADJUSTMENT
FOR MAXIMUM
DEFINED BENEFIT AMOUNT AND MAXIMUM ANNUAL AD-
DITION.—
(1) IN GENERAL.—Section 415(d) is amended
to read as follows:
‘‘(d) COST-OF-LIVING ADJUSTMENTS.—
‘‘(1) IN GENERAL.—The Secretary shall adjust
annually—
‘‘(A) the $90,000 amount in subsection
(b)(1)(A),
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‘‘(B) in the case of a participant who sepa-
rated from service, the amount taken into ac-
count under subsection (b)(1)(B), and
‘‘(C) the $30,000 amount in subsection
(c)(1)(A),
for increases in the cost-of-living in accordance with
regulations prescribed by the Secretary.
‘‘(2) METHOD.—The regulations prescribed
under paragraph (1) shall provide for—
‘‘(A) an adjustment with respect to any
calendar year based on the increase in the ap-
plicable index for the calendar quarter ending
September 30 of the preceding calendar year
over such index for the base period, and
‘‘(B) adjustment procedures which are
similar to the procedures used to adjust benefit
amounts under section 215(i)(2)(A) of the So-
cial Security Act.
‘‘(3) BASE
PERIOD.—For purposes of para-
graph (2)—
‘‘(A) $90,000 AMOUNT.—The base period
taken into account for purposes of paragraph
(1)(A) is the calendar quarter beginning Octo-
ber 1, 1986.
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‘‘(B) SEPARATIONS AFTER DECEMBER 31,
1994.—The base period taken into account for
purposes of paragraph (1)(B) with respect to
individuals separating from service with the em-
ployer after December 31, 1994, is the calendar
quarter beginning July 1 of the calendar year
preceding the calendar year in which such sepa-
ration occurs.
‘‘(C) SEPARATIONS
BEFORE
JANUARY
1,
1995.—The base period taken into account for
purposes of paragraph (1)(B) with respect to
individuals separating from service with the em-
ployer before January 1, 1995, is the calendar
quarter beginning October 1 of the calendar
year preceding the calendar year in which such
separation occurs.
‘‘(D) $30,000 AMOUNT.—The base period
taken into account for purposes of paragraph
(1)(C) is the calendar quarter beginning Octo-
ber 1, 1993.
‘‘(4) ROUNDING.—Any increase under subpara-
graph (A) or (C) of paragraph (1) which is not a
multiple of $5,000 shall be rounded to the next low-
est multiple of $5,000.’’
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(2) 
CONFORMING
AMENDMENT.—Section
415(c)(1)(A) is amended by striking ‘‘(or, if greater,
1⁄4 of the dollar limitation in effect under subsection
(b)(1)(A))’’.
(c) COST-OF-LIVING ADJUSTMENT
FOR MAXIMUM
SALARY DEFERRAL.—Section 402(g)(5) is amended by
inserting before the period ‘‘; except that any increase
under this paragraph which is not a multiple of $500 shall
be rounded to the next lowest multiple of $500’’.
(d) COST-OF-LIVING ADJUSTMENT FOR ELIGIBILITY
FOR
SIMPLIFIED
EMPLOYEE
PENSIONS.—Section
408(k)(8) is amended by inserting before the period ‘‘; ex-
cept that any increase in the $300 amount which is not
a multiple of $50 shall be rounded to the next lowest mul-
tiple of $50’’.
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to years beginning after December 31,
1994.
(2) ROUNDING
NOT
TO
RESULT
IN
DE-
CREASES.—The amendments made by this section
providing for the rounding of indexed amounts shall
not apply to any year to the extent the rounding
would require the indexed amount to be reduced
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below the amount in effect for years beginning in
1994.
SEC. 733. INCREASE IN INCLUSION OF SOCIAL SECURITY
BENEFITS PAID TO NONRESIDENTS.
(a) IN GENERAL.—Subparagraph (A) of section
871(a)(3) (relating to taxation of Social Security benefits)
is amended by striking ‘‘one-half’’ and inserting ‘‘85 per-
cent’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to benefits paid after December
31, 1994, in taxable years ending after such date.
Subtitle E—Other Provisions
SEC. 741. PARTNERSHIP DISTRIBUTIONS OF MARKETABLE
SECURITIES.
(a) IN GENERAL.—Section 731 (relating to extent of
recognition of gain or loss on distribution) is amended by
redesignating subsection (c) as subsection (d) and by in-
serting after subsection (b) the following new subsection:
‘‘(c) TREATMENT OF MARKETABLE SECURITIES.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a)(1) and section 737—
‘‘(A) the term ‘money’ includes marketable
securities, and
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‘‘(B) such securities shall be taken into ac-
count at their fair market value as of the date
of the distribution.
‘‘(2) MARKETABLE SECURITIES.—For purposes
of this subsection:
‘‘(A) IN GENERAL.—The term ‘marketable
securities’ means financial instruments and for-
eign currencies which are, as of the date of the
distribution, actively traded (within the mean-
ing of section 1092(d)(1)).
‘‘(B) OTHER
PROPERTY.—Such term in-
cludes—
‘‘(i) any interest in—
‘‘(I) a common trust fund, or
‘‘(II) 
a 
regulated 
investment
company which is offering for sale or
has outstanding any redeemable secu-
rity (as defined in section 2(a)(32) of
the Investment Company Act of 1940)
of which it is the issuer,
‘‘(ii) any financial instrument which,
pursuant to its terms or any other ar-
rangement, is readily convertible into, or
exchangeable for, money or marketable se-
curities,
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‘‘(iii) any financial instrument the
value of which is determined substantially
by reference to marketable securities,
‘‘(iv) except to the extent provided in
regulations prescribed by the Secretary,
any interest in a precious metal which, as
of the date of the distribution, is actively
traded (within the meaning of section
1092(d)(1)) unless such metal was pro-
duced, used, or held in the active conduct
of a trade or business by the partnership,
‘‘(v) except as otherwise provided in
regulations prescribed by the Secretary, in-
terests in any entity if substantially all of
the assets of such entity consist (directly
or indirectly) of marketable securities,
money, or both, and
‘‘(vi) to the extent provided in regula-
tions prescribed by the Secretary, any in-
terest in an entity not described in clause
(v) but only to the extent of the value of
such interest which is attributable to mar-
ketable securities, money, or both.
‘‘(C) FINANCIAL INSTRUMENT.—The term
‘financial instrument’ includes stocks and other
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equity interests, evidences of indebtedness, op-
tions, forward or futures contracts, notional
principal contracts, and derivatives.
‘‘(3) EXCEPTIONS.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
not apply to the distribution from a partnership
of a marketable security to a partner if—
‘‘(i) the security was contributed to
the partnership by such partner, except to
the extent that the value of the distributed
security is attributable to marketable secu-
rities or money contributed (directly or in-
directly) to the entity to which the distrib-
uted security relates,
‘‘(ii) to the extent provided in regula-
tions prescribed by the Secretary, the prop-
erty was not a marketable security when
acquired by such partnership, or
‘‘(iii) such partnership is an invest-
ment partnership and such partner is an
eligible partner thereof.
‘‘(B) LIMITATION ON GAIN RECOGNIZED.—
In the case of a distribution of marketable secu-
rities to a partner, the amount taken into ac-
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count under paragraph (1) shall be reduced
(but not below zero) by the excess (if any) of—
‘‘(i) such partner’s distributive share
of the net gain which would be recognized
if all of the marketable securities of the
same class and issuer as the distributed se-
curities held by the partnership were sold
(immediately before the transaction to
which the distribution relates) by the part-
nership for fair market value, over
‘‘(ii) such partner’s distributive share
of the net gain which is attributable to the
marketable securities of the same class and
issuer as the distributed securities held by
the partnership immediately after the
transaction, determined by using the same
fair market value as used under clause (i).
Under regulations prescribed by the Secretary,
all marketable securities held by the partner-
ship may be treated as marketable securities of
the same class and issuer as the distributed se-
curities.
‘‘(C) DEFINITIONS RELATING TO INVEST-
MENT
PARTNERSHIPS.—For purposes of sub-
paragraph (A)(iii):
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‘‘(i) INVESTMENT
PARTNERSHIP.—
The term ‘investment partnership’ means
any partnership which has never been en-
gaged in a trade or business and substan-
tially all of the assets (by value) of which
have always consisted of—
‘‘(I) money,
‘‘(II) stock in a corporation,
‘‘(III) notes, bonds, debentures,
or other evidences of indebtedness,
‘‘(IV) interest rate, currency, or
equity notional principal contracts,
‘‘(V) foreign currencies,
‘‘(VI) interests in or derivative fi-
nancial instruments (including op-
tions, forward or futures contracts,
short positions, and similar financial
instruments) in any asset described in
any other subclause of this clause or
in any commodity traded on or sub-
ject to the rules of a board of trade or
commodity exchange,
‘‘(VII) other assets specified in
regulations prescribed by the Sec-
retary, or
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‘‘(VIII) any combination of the
foregoing.
‘‘(ii) EXCEPTION
FOR
CERTAIN
AC-
TIVITIES.—A partnership shall not be
treated as engaged in a trade or business
by reason of—
‘‘(I) any activity undertaken as
an investor, trader, or dealer in any
asset described in clause (i), or
‘‘(II) any other activity specified
in regulations prescribed by the Sec-
retary.
‘‘(iii) ELIGIBLE PARTNER.—
‘‘(I) IN GENERAL.—The term ‘el-
igible partner’ means any partner
who, before the date of the distribu-
tion, did not contribute to the part-
nership any property other than as-
sets described in clause (i).
‘‘(II) EXCEPTION
FOR
CERTAIN
NONRECOGNITION
TRANSACTIONS.—
The term ‘eligible partner’ shall not
include the transferor or transferee in
a nonrecognition transaction involving
a transfer of any portion of an inter-
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est in a partnership with respect to
which the transferor was not an eligi-
ble partner.
‘‘(iv) LOOK-THRU
OF
PARTNERSHIP
TIERS.—Except as otherwise provided in
regulations prescribed by the Secretary—
‘‘(I) a partnership shall be treat-
ed as engaged in any trade or busi-
ness engaged in by, and as holding
(instead of a partnership interest) a
proportionate share of the assets of,
any other partnership in which the
partnership holds a partnership inter-
est, and
‘‘(II) a partner who contributes
to a partnership an interest in an-
other partnership shall be treated as
contributing a proportionate share of
the assets of the other partnership.
If the preceding sentence does not apply
under such regulations with respect to any
interest held by a partnership in another
partnership, the interest in such other
partnership shall be treated as if it were
specified in a subclause of clause (i).
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‘‘(4) BASIS OF SECURITIES DISTRIBUTED.—
‘‘(A) IN GENERAL.—The basis of market-
able securities with respect to which gain is rec-
ognized by reason of this subsection shall be—
‘‘(i) their basis determined under sec-
tion 732, increased by
‘‘(ii) the amount of such gain.
‘‘(B) ALLOCATION OF BASIS INCREASE.—
Any increase in basis attributable to the gain
described in subparagraph (A)(ii) shall be allo-
cated to marketable securities in proportion to
their respective amounts of unrealized apprecia-
tion before such increase.
‘‘(5) SUBSECTION DISREGARDED IN DETERMIN-
ING BASIS OF PARTNER’S INTEREST IN PARTNER-
SHIP AND OF BASIS OF PARTNERSHIP PROPERTY.—
Sections 733 and 734 shall be applied as if no gain
were recognized, and no adjustment were made to
the basis of property, under this subsection.
‘‘(6) CHARACTER
OF
GAIN
RECOGNIZED.—In
the case of a distribution of a marketable security
which is an unrealized receivable (as defined in sec-
tion 751(c)) or an inventory item (as defined in sec-
tion 751(d)(2)), any gain recognized under this sub-
section shall be treated as ordinary income to the ex-
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tent of any increase in the basis of such security at-
tributable to the gain described in paragraph
(4)(A)(ii).
‘‘(7) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section, including regulations to prevent the avoid-
ance of such purposes.’’
(b) CONFORMING AMENDMENTS.—
(1) The last sentence of section 737(c)(1) is
amended to read as follows: ‘‘For purposes of deter-
mining the basis of the distributed property (other
than money), such increase shall be treated as occur-
ring immediately before the distribution.’’
(2) Section 737 is amended by adding at the
end the following new subsection:
‘‘(e) 
MARKETABLE
SECURITIES
TREATED
AS
MONEY.—
‘‘For treatment of marketable securities as money
for purposes of this section, see section 731(c).’’
(c) EFFECTIVE DATE.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by
this section shall apply to distributions after the
date of the enactment of this Act.
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(2) CERTAIN DISTRIBUTIONS BEFORE JANUARY
1, 1995.—The amendments made by this section
shall not apply to any marketable security distrib-
uted before January 1, 1995, by the partnership
which held such security on July 27, 1994.
(3) DISTRIBUTIONS IN LIQUIDATION OF PART-
NER’S INTEREST.—The amendments made by this
section shall not apply to the distribution of a mar-
ketable security in liquidation of a partner’s interest
in a partnership if—
(A) such liquidation is pursuant to a writ-
ten contract which was binding on July 15,
1994, and at all times thereafter before the dis-
tribution, and
(B) such contract provides for the pur-
chase of such interest not later than a date cer-
tain for—
(i) a fixed value of marketable securi-
ties that are specified in the contract, or
(ii) other property.
The preceding sentence shall not apply if the partner
has the right to elect that such distribution be made
other than in marketable securities.
(4) DISTRIBUTIONS IN COMPLETE LIQUIDATION
OF PUBLICLY TRADED PARTNERSHIPS.—
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(A) IN GENERAL.—The amendments made
by this section shall not apply to the distribu-
tion of a marketable security in a qualified
partnership liquidation if—
(i) the marketable securities were re-
ceived by the partnership in a nonrecogni-
tion transaction in exchange for substan-
tially all of the assets of the partnership,
(ii) the marketable securities are dis-
tributed by the partnership within 90 days
after their receipt by the partnership, and
(iii) the partnership is liquidated be-
fore the beginning of the 1st taxable year
of the partnership beginning after Decem-
ber 31, 1997.
(B) QUALIFIED
PARTNERSHIP
LIQUIDA-
TION.—For purposes of subparagraph (A), the
term 
‘‘qualified 
partnership 
liquidation’’
means—
(i) a complete liquidation of a publicly
traded partnership (as defined in section
7704(b) of the Internal Revenue Code of
1986) which is an existing partnership (as
defined in section 10211(c)(2) of the Reve-
nue Act of 1987), and
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(ii) a complete liquidation of a part-
nership which is related to a partnership
described in clause (i) if such liquidation is
related to a complete liquidation of the
partnership described in clause (i).
(5) MARKETABLE SECURITIES.—For purposes
of this subsection, the term ‘‘marketable securities’’
has the meaning given such term by section 731(c)
of the Internal Revenue Code of 1986, as added by
this section.
SEC. 742. TAXPAYER IDENTIFICATION NUMBERS REQUIRED
AT BIRTH.
(a) EARNED INCOME CREDIT.—Clause (i) of section
32(c)(3)(D) is amended to read as follows:
‘‘(i) IN GENERAL.—The requirements
of this subparagraph are met if the tax-
payer includes the name, age, and TIN of
each qualifying child (without regard to
this subparagraph) on the return of tax for
the taxable year.’’
(b) DEPENDENCY EXEMPTION.—Subsection (e) of
section 6109 is amended to read as follows:
‘‘(e) FURNISHING NUMBER FOR DEPENDENTS.—Any
taxpayer who claims an exemption under section 151 for
any dependent on a return for any taxable year shall in-
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clude on such return the identifying number (for purposes
of this title) of such dependent.’’
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to returns for taxable years beginning
after December 31, 1994.
(2) EXCEPTION.—The amendments made by
this section shall not apply to—
(A) returns for taxable years beginning in
1995 with respect to individuals who are born
after October 31, 1995, and
(B) returns for taxable years beginning in
1996 with respect to individuals who are born
after November 30, 1996.
SEC. 743. EXTENSION OF INTERNAL REVENUE SERVICE
USER FEES.
Subsection (c) of section 10511 of the Revenue Act
of 1987 (relating to fees for requests for ruling, deter-
mination, and similar letters) is amended by striking ‘‘Oc-
tober 1, 1995’’ and inserting ‘‘October 1, 2000’’.
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SEC. 744. MODIFICATION OF SUBSTANTIAL UNDERSTATE-
MENT PENALTY FOR CORPORATIONS PAR-
TICIPATING IN TAX SHELTERS.
(a) IN GENERAL.—Subparagraph (C) of section
6662(d)(2) (relating to special rules in cases involving tax
shelters) is amended by redesignating clause (ii) as clause
(iii) and by inserting after clause (i) the following new
clause:
‘‘(ii) SUBPARAGRAPH
(B)
NOT
TO
APPLY TO CORPORATIONS.—Subparagraph
(B) shall not apply to any item of a cor-
poration which is attributable to a tax
shelter.’’
(b) TECHNICAL AMENDMENTS.—
(1) Clause (i) of section 6662(d)(2)(C) is
amended by striking ‘‘In the case of any item’’ and
inserting ‘‘In the case of any item of a taxpayer
other than a corporation which is’’.
(2) Clause (iii) of section 6662(d)(2)(C), as re-
designated by subsection (a), is amended by striking
‘‘clause (i)’’ and inserting ‘‘this subparagraph’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to items related to transactions
occurring after the date of the enactment of this Act.
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SEC. 745. MODIFICATION OF AUTHORITY TO SET TERMS
AND CONDITIONS FOR SAVINGS BONDS.
(a) IN GENERAL.—Subsection (b) of section 3105 of
title 31, United States Code, is amended to read as fol-
lows:
‘‘(b)(1) The Secretary may—
‘‘(A) fix the investment yield for savings bonds;
and
‘‘(B) change the investment yield on an out-
standing savings bond, except that the yield on a
bond for the period held may not be decreased below
the minimum yield for the period guaranteed on the
date of issue.
‘‘(2) The Secretary may prescribe regulations provid-
ing that—
‘‘(A) owners of savings bonds may keep the
bonds after maturity or after a period beyond matu-
rity during which the bonds have earned interest and
continue to earn interest at rates consistent with
paragraph (1) of this subsection; and
‘‘(B) savings bonds earning a different rate of
interest before the regulations are prescribed shall
earn a rate of interest consistent with paragraph
(1).’’
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(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to bonds issued after October 31,
1994.
Subtitle F—Pension Plan Funding
and Premiums
SEC. 750. SHORT TITLE.
This subtitle may be cited as the ‘‘Retirement Protec-
tion Act of 1994’’.
PART I—PENSION PLAN FUNDING
Subpart A—Amendments to the Internal Revenue
Code of 1986
SEC. 751. MINIMUM FUNDING REQUIREMENTS.
(a) AMENDMENTS
TO ADDITIONAL FUNDING RE-
QUIREMENTS FOR SINGLE-EMPLOYER PLANS.—
(1) LIMITATIONS ON ADDITIONAL FUNDING RE-
QUIREMENT FOR CERTAIN PLANS.—
(A) IN GENERAL.—Paragraph (1) of sec-
tion 412(l) (relating to additional funding re-
quirements for plans which are not multiem-
ployer plans) is amended by striking ‘‘which has
an unfunded current liability’’ and inserting ‘‘to
which this subsection applies under paragraph
(9)’’.
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(B) PLANS TO WHICH REQUIREMENT AP-
PLIES.—Section 412(l) is amended by adding at
the end the following new paragraph:
‘‘(9) APPLICABILITY OF SUBSECTION.—
‘‘(A) IN GENERAL.—Except as provided in
paragraph (6)(A), this subsection shall apply to
a plan for any plan year if its funded current
liability percentage for such year is less than 90
percent.
‘‘(B) EXCEPTION FOR CERTAIN PLANS AT
LEAST
PERCENT
FUNDED.—Subparagraph
(A) shall not apply to a plan for a plan year
if—
‘‘(i) the funded current liability per-
centage for the plan year is at least 80
percent, and
‘‘(ii) such percentage for each of the
2 immediately preceding plan years (or
each of the 2d and 3d immediately preced-
ing plan years) is at least 90 percent.
‘‘(C) FUNDED
CURRENT
LIABILITY
PER-
CENTAGE.—For purposes of subparagraphs (A)
and (B), the term ‘funded current liability per-
centage’ has the meaning given such term by
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paragraph (8)(B), except that such percentage
shall be determined for any plan year—
‘‘(i) without regard to paragraph
(8)(E), and
‘‘(ii) by using the rate of interest
which is the highest rate allowable for the
plan year under paragraph (7)(C).
‘‘(D) TRANSITION RULES.—For purposes
of this paragraph:
‘‘(i) 
FUNDED
PERCENTAGE
FOR
YEARS BEFORE 1995.—The funded current
liability percentage for any plan year be-
ginning before January 1, 1995, shall be
treated as not less than 90 percent only if
for such plan year the plan met one of the
following requirements (as in effect for
such year):
‘‘(I) The full-funding limitation
under subsection (c)(7) for the plan
was zero.
‘‘(II) The plan had no additional
funding requirement under this sub-
section (or would have had no such
requirement if its funded current li-
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ability percentage had been deter-
mined under subparagraph (C)).
‘‘(III) The plan’s additional fund-
ing requirement under this subsection
did not exceed the lesser of 0.5 per-
cent of current liability or $5,000,000.
‘‘(ii) SPECIAL
RULE
FOR
1995
AND
1996.—For purposes of determining wheth-
er subparagraph (B) applies to any plan
year beginning in 1995 or 1996, a plan
shall be treated as meeting the require-
ments of subparagraph (B)(ii) if the plan
met the requirements of clause (i) of this
subparagraph for any two of the plan years
beginning in 1992, 1993, and 1994
(whether or not consecutive).’’
(2) RELATIONSHIP
OF
ADDITIONAL
FUNDING
REQUIREMENT
TO
FUNDING
STANDARD
ACCOUNT
CHARGES AND CREDITS.—
(A) Clause (ii) of section 412(l)(1)(A) is
amended to read as follows:
‘‘(ii) the sum of the charges for such
plan year under subsection (b)(2), reduced
by the sum of the credits for such plan
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year under subparagraph (B) of subsection
(b)(3), plus’’.
(B) The last sentence in section 412(l)(1)
of such Code is amended to read as follows:
‘‘Such increase shall not exceed the amount which,
after taking into account charges (other than the ad-
ditional charge under this subsection) and credits
under subsection (b), is necessary to increase the
funded current liability percentage (taking into ac-
count the expected increase in current liability due
to benefits accruing during the plan year) to 100
percent.’’
(3) AMENDMENT TO DEFICIT REDUCTION CON-
TRIBUTION.—Paragraph (2) of section 412(l) is
amended—
(A) by striking ‘‘plus’’ at the end of sub-
paragraph (A);
(B) by striking the period at the end of
subparagraph (B) and inserting ‘‘, plus’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(C) the expected increase in current li-
ability due to benefits accruing during the plan
year.’’
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(4) INCREASE IN CURRENT LIABILITY DUE TO
CHANGE IN REQUIRED ASSUMPTIONS.—
(A) Paragraph (3) of section 412(l) is
amended by adding at the end the following
new subparagraphs:
‘‘(D) 
SPECIAL
RULE
FOR
REQUIRED
CHANGES IN ACTUARIAL ASSUMPTIONS.—
‘‘(i) IN GENERAL.—The unfunded old
liability amount with respect to any plan
for any plan year shall be increased by the
amount necessary to amortize the amount
of additional unfunded old liability under
the plan in equal annual installments over
a period of 12 plan years (beginning with
the first plan year beginning after Decem-
ber 31, 1994).
‘‘(ii) ADDITIONAL UNFUNDED OLD LI-
ABILITY.—For purposes of clause (i), the
term ‘additional unfunded old liability’
means the amount (if any) by which—
‘‘(I) the current liability of the
plan as of the beginning of the first
plan year beginning after December
31, 1994, valued using the assump-
tions required by paragraph (7)(C) as
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in effect for plan years beginning
after December 31, 1994, exceeds
‘‘(II) the current liability of the
plan as of the beginning of such first
plan year, valued using the same as-
sumptions used under subclause (I)
(other than the assumptions required
by paragraph (7)(C)), using the prior
interest rate, and using such mortality
assumptions as were used to deter-
mine current liability for the first plan
year beginning after December 31,
1992.
‘‘(iii) PRIOR
INTEREST
RATE.—For
purposes of clause (ii), the term ‘prior in-
terest rate’ means the rate of interest that
is the same percentage of the weighted av-
erage under subsection (b)(5)(B)(ii)(I) for
the first plan year beginning after Decem-
ber 31, 1994, as the rate of interest used
by the plan to determine current liability
for the first plan year beginning after De-
cember 31, 1992, is of the weighted aver-
age under subsection (b)(5)(B)(ii)(I) for
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such first plan year beginning after De-
cember 31, 1992.
‘‘(E) OPTIONAL
RULE
FOR
ADDITIONAL
UNFUNDED OLD LIABILITY.—
‘‘(i) IN
GENERAL.—If an employer
makes an election under clause (ii), the ad-
ditional unfunded old liability for purposes
of subparagraph (D) shall be the amount
(if any) by which—
‘‘(I) the unfunded current liabil-
ity of the plan as of the beginning of
the first plan year beginning after De-
cember 31, 1994, valued using the as-
sumptions 
required 
by 
paragraph
(7)(C) as in effect for plan years be-
ginning after December 31, 1994, ex-
ceeds
‘‘(II) the unamortized portion of
the unfunded old liability under the
plan as of the beginning of the first
plan year beginning after December
31, 1994.
‘‘(ii) ELECTION.—
‘‘(I) An employer may irrevocably
elect to apply the provisions of this
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subparagraph as of the beginning of
the first plan year beginning after De-
cember 31, 1994.
‘‘(II) If an election is made under
this clause, the increase under para-
graph (1) for any plan year beginning
after December 31, 1994, and before
January 1, 2002, to which this sub-
section applies (without regard to this
subclause) shall not be less than the
increase that would be required under
paragraph (1) if the provisions of this
title as in effect for the last plan year
beginning before January 1, 1995,
had remained in effect.’’
(B) Clause (i) of section 412(l)(4)(B) is
amended by inserting ‘‘, the unamortized por-
tion of the additional unfunded old liability,’’
after ‘‘old liability’’.
(5) APPLICABLE PERCENTAGE FOR DETERMIN-
ING UNFUNDED NEW LIABILITY AMOUNT.—Subpara-
graph (C) of section 412(l)(4) is amended—
(A) by striking ‘‘.25’’ and inserting ‘‘.40’’,
and
(B) by striking ‘‘35’’ and inserting ‘‘60’’.
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(6) 
UNPREDICTABLE
CONTINGENT
EVENT
AMOUNT.—
(A) Subparagraph (A) of section 412(l)(5)
is amended—
(i) by striking ‘‘greater of’’ and insert-
ing ‘‘greatest of’’ before clause (i);
(ii) by striking ‘‘or’’ at the end of
clause (i);
(iii) by striking the period at the end
of clause (ii) and inserting ‘‘, or’’; and
(iv) by adding after clause (ii) the fol-
lowing new clause:
‘‘(iii) the additional amount that
would be determined under paragraph
(4)(A) if the unpredictable contingent
event benefit liabilities were included in
unfunded new liability notwithstanding
paragraph (4)(B)(ii).’’
(B) Paragraph (5) of section 412(l) is
amended by adding at the end the following
new subparagraph:
‘‘(E) LIMITATION.—The present value of
the amounts described in subparagraph (A)
with respect to any one event shall not exceed
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the unpredictable contingent event benefit li-
abilities attributable to that event.’’
(C) Clause (ii) of section 412(m)(4)(D) is
amended—
(i) by striking ‘‘greater of’’ and insert-
ing ‘‘greatest of’’ before subclause (I);
(ii) by striking ‘‘or’’ at the end of
subclause (I);
(iii) by striking the period at the end
of subclause (II) and inserting ‘‘, or’’; and
(iv) by adding after subclause (II) the
following new clause:
‘‘(III) 25 percent of the amount
determined 
under 
subsection
(l)(5)(A)(iii) for the plan year.’’
(7) REQUIRED INTEREST RATE AND MORTALITY
ASSUMPTIONS FOR DETERMINING CURRENT LIABIL-
ITY.—
(A) IN
GENERAL.—Subparagraph (C) of
section 412(l)(7) is amended to read as follows:
‘‘(C) INTEREST RATE AND MORTALITY AS-
SUMPTIONS USED.—Effective for plan years be-
ginning after December 31, 1994—
‘‘(i) INTEREST RATE.—
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‘‘(I) IN GENERAL.—The rate of
interest used to determine current li-
ability under this subsection shall be
the rate of interest used under sub-
section (b)(5), except that the highest
rate in the permissible range under
subparagraph (B)(ii) thereof shall not
exceed the specified percentage under
subclause (II) of the weighted average
referred to in such subparagraph.
‘‘(II) SPECIFIED PERCENTAGE.—
For purposes of subclause (I), the
specified percentage shall be deter-
mined as follows:
‘‘In the case of plan years be-
ginning in calendar year:
The specified percentage is:
1995 ..................................................................................
109
1996 ..................................................................................
108
1997 ..................................................................................
107
1998 ..................................................................................
106
1999 and thereafter ......................................................
105.
‘‘(ii) MORTALITY TABLES.—
‘‘(I) COMMISSIONERS’ STANDARD
TABLE.—In the case of plan years be-
ginning before the first plan year to
which the first tables prescribed under
subclause (II) apply, the mortality
table used in determining current li-
ability under this subsection shall be
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the table prescribed by the Secretary
which is based on the prevailing com-
missioners’ standard table (described
in section 807(d)(5)(A)) used to de-
termine reserves for group annuity
contracts issued on January 1, 1993.
‘‘(II) 
SECRETARIAL
AUTHOR-
ITY.—The Secretary may by regula-
tion prescribe for plan years beginning
after December 31, 1999, mortality
tables to be used in determining cur-
rent liability under this subsection.
Such tables shall be based upon the
actual experience of pension plans and
projected trends in such experience.
In prescribing such tables, the Sec-
retary shall take into account results
of available independent studies of
mortality of individuals covered by
pension plans.
‘‘(III) PERIODIC
REVIEW.—The
Secretary shall periodically (at least
every 5 years) review any tables in ef-
fect under this subsection and shall,
to the extent the Secretary determines
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necessary, by regulation update the
tables to reflect the actual experience
of pension plans and projected trends
in such experience.
‘‘(iii) SEPARATE MORTALITY TABLES
FOR
THE
DISABLED.—Notwithstanding
clause (ii)—
‘‘(I) IN GENERAL.—In the case
of plan years beginning after Decem-
ber 31, 1995, the Secretary shall es-
tablish mortality tables which may be
used (in lieu of the tables under
clause (ii)) to determine current liabil-
ity under this subsection for individ-
uals who are entitled to benefits under
the plan on account of disability. The
Secretary shall establish separate ta-
bles 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
DIS-
ABILITIES OCCURRING AFTER 1994.—
In the case of disabilities occurring in
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plan years beginning after December
31, 1994, the tables under subclause
(I) shall apply only with respect to in-
dividuals described in such subclause
who are disabled within the meaning
of title II of the Social Security Act
and the regulations thereunder.
‘‘(III) PLAN
YEARS
BEGINNING
IN 1995.—In the case of any plan year
beginning in 1995, a plan may use its
own mortality assumptions for indi-
viduals who are entitled to benefits
under the plan on account of disabil-
ity.’’
(B) AMORTIZATION OF UNFUNDED MOR-
TALITY INCREASE AMOUNT.—
(i) IN
GENERAL.—Paragraph (2) of
section 412(l), as amended by paragraph
(3), is amended by striking ‘‘plus’’ at the
end of subparagraph (B), by striking the
period at the end of subparagraph (C) and
inserting ‘‘, and’’, and by adding at the
end the following new subparagraph:
‘‘(D) the aggregate of the unfunded mor-
tality increase amounts.’’
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(ii) UNFUNDED MORTALITY INCREASE
AMOUNT.—Section 412(l), as amended by
paragraph (1), is amended by adding at
the end the following new paragraph:
‘‘(10) 
UNFUNDED
MORTALITY
INCREASE
AMOUNT.—
‘‘(A) IN GENERAL.—The unfunded mortal-
ity increase amount with respect to each un-
funded mortality increase is the amount nec-
essary to amortize such increase in equal an-
nual installments over a period of 10 plan years
(beginning with the first plan year for which a
plan uses any new mortality table issued under
paragraph (7)(C)(ii)(II) or (III)).
‘‘(B) UNFUNDED MORTALITY INCREASE.—
For purposes of subparagraph (A), the term
‘unfunded mortality increase’ means an amount
equal to the excess of—
‘‘(i) the current liability of the plan
for the first plan year for which a plan
uses any new mortality table issued under
paragraph (7)(C)(ii)(II) or (III), over
‘‘(ii) the current liability of the plan
for such plan year which would have been
determined if the mortality table in effect
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for the preceding plan year had been
used.’’
(iii) 
CONFORMING
AMENDMENT.—
Clause (i) of section 412(l)(4)(B), as
amended by paragraph (4)(B), is amended
by inserting ‘‘the unamortized portion of
each unfunded mortality increase,’’ after
‘‘additional unfunded old liability,’’.
(8) TRANSITION
RULE.—Section 412(l), as
amended by paragraph (7), is amended by adding at
the end the following new paragraph:
‘‘(11) PHASE-IN
OF
INCREASES
IN
FUNDING
REQUIRED
BY
RETIREMENT
PROTECTION
ACT
OF
1994.—
‘‘(A) IN
GENERAL.—For any applicable
plan year, at the election of the employer, the
increase under paragraph (1) shall not exceed
the greater of—
‘‘(i) the increase that would be re-
quired under paragraph (1) if the provi-
sions of this title as in effect for plan years
beginning before January 1, 1995, had re-
mained in effect, or
‘‘(ii) the amount which, after taking
into account charges (other than the addi-
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tional charge under this subsection) and
credits under subsection (b), is necessary
to increase the funded current liability per-
centage (taking into account the expected
increase in current liability due to benefits
accruing during the plan year) for the ap-
plicable plan year to a percentage equal to
the sum of the initial funded current liabil-
ity percentage of the plan plus the applica-
ble number of percentage points for such
applicable plan year.
‘‘(B) APPLICABLE NUMBER OF PERCENT-
AGE POINTS.—
‘‘(i) INITIAL
FUNDED
CURRENT
LI-
ABILITY PERCENTAGE OF 75 PERCENT OR
LESS.—Except as provided in clause (ii),
for plans with an initial funded current li-
ability percentage of 75 percent or less, the
applicable number of percentage points for
the applicable plan year is:
‘‘In the case
The applicable
of applicable
number of
plan years
percentage
beginning in:
points is:
1995 .....................................................
1996 .....................................................
1997 .....................................................
1998 .....................................................
1999 .....................................................
2000 .....................................................
2001 .....................................................
24.
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‘‘(ii) OTHER CASES.—In the case of a
plan to which this clause applies, the appli-
cable number of percentage points for any
such applicable plan year is the sum of—
‘‘(I) 2 percentage points;
‘‘(II) the applicable number of
percentage points (if any) under this
clause for the preceding applicable
plan year;
‘‘(III) the product of .10 multi-
plied by the excess (if any) of (a) 85
percentage points over (b) the sum of
the initial funded current liability per-
centage and the number determined
under subclause (II);
‘‘(IV) for applicable plan years
beginning in 2000, 1 percentage
point; and
‘‘(V) for applicable plan years be-
ginning in 2001, 2 percentage points.
‘‘(iii) PLANS TO WHICH CLAUSE (ii)
APPLIES.—
‘‘(I) IN
GENERAL.—Clause (ii)
shall apply to a plan for an applicable
plan year if the initial funded current
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liability percentage of such plan is
more than 75 percent.
‘‘(II) PLANS
INITIALLY
UNDER
CLAUSE
(i).—In the case of a plan
which (but for this subclause) has an
initial funded current liability percent-
age of 75 percent or less, clause (ii)
(and not clause (i)) shall apply to
such plan with respect to applicable
plan years beginning after the first
applicable plan year for which the
sum of the initial funded current li-
ability percentage and the applicable
number of percentage points (deter-
mined under clause (i)) exceeds 75
percent. For purposes of applying
clause (ii) to such a plan, the initial
funded current liability percentage of
such plan shall be treated as being the
sum referred to in the preceding sen-
tence.
‘‘(C) DEFINITIONS.—For purposes of this
paragraph:
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‘‘(i) The term ‘applicable plan year’
means a plan year beginning after Decem-
ber 31, 1994, and before January 1, 2002.
‘‘(ii) The term ‘initial funded current
liability percentage’ means the funded cur-
rent liability percentage as of the first day
of the first plan year beginning after De-
cember 31, 1994.’’
(9) LIQUIDITY REQUIREMENT.—
(A) IN
GENERAL.—Section 412(m) is
amended by redesignating paragraph (5) as
paragraph (6) and by inserting after paragraph
(4) the following new paragraph:
‘‘(5) LIQUIDITY REQUIREMENT.—
‘‘(A) IN GENERAL.—A plan to which this
paragraph applies shall be treated as failing to
pay the full amount of any required installment
to the extent that the value of the liquid assets
paid in such installment is less than the liquid-
ity shortfall (whether or not such liquidity
shortfall exceeds the amount of such install-
ment required to be paid but for this para-
graph).
‘‘(B) PLANS
TO
WHICH
PARAGRAPH
AP-
PLIES.—This paragraph shall apply to a de-
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fined benefit plan (other than a multiemployer
plan or a plan described in subsection (l)(6)(A))
which—
‘‘(i) is required to pay installments
under this subsection for a plan year, and
‘‘(ii) has a liquidity shortfall for any
quarter during such plan year.
‘‘(C) PERIOD
OF
UNDERPAYMENT.—For
purposes of paragraph (1), any portion of an
installment that is treated as not paid under
subparagraph (A) shall continue to be treated
as unpaid until the close of the quarter in
which the due date for such installment occurs.
‘‘(D) LIMITATION
ON
INCREASE.—If the
amount of any required installment is increased
by reason of subparagraph (A), in no event
shall such increase exceed the amount which,
when added to prior installments for the plan
year, is necessary to increase the funded cur-
rent liability percentage (taking into account
the expected increase in current liability due to
benefits accruing during the plan year) to 100
percent.
‘‘(E) DEFINITIONS.—For purposes of this
paragraph:
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‘‘(i) 
LIQUIDITY
SHORTFALL.—The
term ‘liquidity shortfall’ means, with re-
spect to any required installment, an
amount equal to the excess (as of the last
day of the quarter for which such install-
ment is made) of the base amount with re-
spect to such quarter over the value (as of
such last day) of the plan’s liquid assets.
‘‘(ii) BASE AMOUNT.—
‘‘(I) IN
GENERAL.—The term
‘base amount’ means, with respect to
any quarter, an amount equal to 3
times the sum of the adjusted dis-
bursements from the plan for the 12
months ending on the last day of such
quarter.
‘‘(II) SPECIAL
RULE.—If the
amount determined under clause (i)
exceeds an amount equal to 2 times
the sum of the adjusted disburse-
ments from the plan for the 36
months ending on the last day of the
quarter and an enrolled actuary cer-
tifies to the satisfaction of the Sec-
retary that such excess is the result of
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nonrecurring circumstances, the base
amount with respect to such quarter
shall be determined without regard to
amounts related to those nonrecurring
circumstances.
‘‘(iii) DISBURSEMENTS
FROM
THE
PLAN.—The term ‘disbursements from the
plan’ means all disbursements from the
trust, including purchases of annuities,
payments of single sums and other bene-
fits, and administrative expenses.
‘‘(iv) ADJUSTED
DISBURSEMENTS.—
The term ‘adjusted disbursements’ means
disbursements from the plan reduced by
the product of—
‘‘(I) the plan’s funded current li-
ability percentage (as defined in sub-
section (l)(8)) for the plan year, and
‘‘(II) the sum of the purchases of
annuities, payments of single sums,
and such other disbursements as the
Secretary shall provide in regulations.
‘‘(v) LIQUID ASSETS.—The term ‘liq-
uid assets’ means cash, marketable securi-
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ties and such other assets as specified by
the Secretary in regulations.
‘‘(vi) QUARTER.—The term ‘quarter’
means, with respect to any required install-
ment, the 3-month period preceding the
month in which the due date for such in-
stallment occurs.
‘‘(F) REGULATIONS.—The Secretary may
prescribe such regulations as are necessary to
carry out this paragraph.’’
(B) EXCISE
TAX
ON
UNPAID
LIQUIDITY
SHORTFALL.—
(i) Subsection (e) of section 4971 is
amended by striking ‘‘(a) or (b)’’ wherever
it appears and inserting ‘‘(a), (b), or (f)’’.
(ii) Section 4971 is amended by redes-
ignating subsection (f) as subsection (g)
and adding a new subsection (f) to read as
follows:
‘‘(f) FAILURE TO PAY LIQUIDITY SHORTFALL.—
‘‘(1) IN GENERAL.—In the case of a plan to
which section 412(m)(5) applies, there is hereby im-
posed a tax of 10 percent of the excess (if any) of—
‘‘(A) the amount of the liquidity shortfall
for any quarter, over
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‘‘(B) the amount of such shortfall which is
paid by the required installment under section
412(m) for such quarter (but only if such in-
stallment is paid on or before the due date for
such installment).
‘‘(2) ADDITIONAL TAX.—If the plan has a li-
quidity shortfall as of the close of any quarter and
as of the close of each of the following 4 quarters,
there is hereby imposed a tax equal to 100 percent
of the amount on which tax was imposed by para-
graph (1) for such first quarter.
‘‘(3) DEFINITIONS AND SPECIAL RULE.—
‘‘(A) LIQUIDITY SHORTFALL; QUARTER.—
For purposes of this subsection, the terms ‘li-
quidity shortfall’ and ‘quarter’ have the respec-
tive meanings given such terms by section
412(m)(5).
‘‘(B) SPECIAL RULE.—If the tax imposed
by paragraph (2) is paid with respect to any li-
quidity shortfall for any quarter, no further tax
shall be imposed by this subsection on such
shortfall for such quarter.’’
(C) TREATMENT
OF
FAILURE
TO
MAKE
CERTAIN
PAYMENTS
IF
PLAN
HAS
LIQUIDITY
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SHORTFALL.—Section 401(a) is amended by
adding at the end the following new paragraph:
‘‘(32) TREATMENT OF FAILURE TO MAKE CER-
TAIN
PAYMENTS
IF
PLAN
HAS
LIQUIDITY
SHORT-
FALL.—
‘‘(A) IN GENERAL.—A trust forming part
of a pension plan to which section 412(m)(5)
applies shall not be treated as failing to con-
stitute a qualified trust under this section mere-
ly because such plan ceases to make any pay-
ment described in subparagraph (B) during any
period that such plan has a liquidity shortfall
(as defined in section 412(m)(5)).
‘‘(B) PAYMENTS DESCRIBED.—A payment
is described in this subparagraph if such pay-
ment is—
‘‘(i) any payment, in excess of the
monthly amount paid under a single life
annuity (plus any social security supple-
ments described in the last sentence of sec-
tion 411(a)(9)), to a participant or bene-
ficiary whose annuity starting date (as de-
fined in section 417(f)(2)) occurs during
the period referred to in subparagraph (A),
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‘‘(ii) any payment for the purchase of
an irrevocable commitment from an insurer
to pay benefits, and
‘‘(iii) any other payment specified by
the Secretary by regulations.
‘‘(C) PERIOD OF SHORTFALL.—For pur-
poses of this paragraph, a plan has a liquidity
shortfall during the period that there is an
underpayment of an installment under section
412(m) by reason of paragraph (5)(A) thereof.’’
(10) AMENDMENT
TO
DEFINITION
OF
FULL-
FUNDING LIMITATION.—
(A) Subparagraph (A) of section 412(c)(7)
is amended by inserting ‘‘(including the ex-
pected increase in current liability due to bene-
fits accruing during the plan year)’’ after ‘‘cur-
rent liability’’ in clause (i).
(B) Section 412(c)(7) is amended by add-
ing at the end the following new subparagraph:
‘‘(E) 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—
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‘‘(ii) the plan is terminated under sec-
tion 4041(b) of such Act on or before the
last day of the taxable year, and
‘‘(B) contributions to 1 or more defined
contribution plans which are not deductible
when contributed solely because of section
404(a)(7), but only to the extent such contribu-
tions do not exceed 6 percent of compensation
(within the meaning of section 404(a)) paid or
accrued (during the taxable year for which the
contributions were made) to beneficiaries under
the plans.
If 1 or more defined benefit plans were taken into
account in determining the amount allowable as a
deduction under section 404 for contributions to any
defined contribution plan, subparagraph (B) shall
apply only if such defined benefit plans are described
in section 404(a)(1)(D). For purposes of subpara-
graph (B), the deductible limits under section
404(a)(7) shall first be applied to amounts contrib-
uted to a defined benefit plan and then to amounts
described in subparagraph (B).’’
(b) EFFECTIVE DATE.—
(1) 
SECTION
4972(c)(6)(A).—Section
4972(c)(6)(A) of the Internal Revenue Code of 1986
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(B) Section 302(c)(7) of such Act is
amended by adding at the end the following
new subparagraph:
‘‘(E) 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 li-
ability of the plan (including the ex-
pected increase in current liability due
to benefits accruing during the plan
year), over
‘‘(II) the value of the plan’s as-
sets determined under paragraph (2).
‘‘(ii) CURRENT LIABILITY; ASSETS.—
For purposes of clause (i)—
‘‘(I) the term ‘current liability’
has the meaning given such term by
subsection (d)(7) (without regard to
subparagraph (D) thereof), and
‘‘(II) assets shall not be reduced
by any credit balance in the funding
standard account.’’