270 
ing on the day before the first day of the rehabilita-
tion period. 
‘‘(6) LIMITATION ON REDUCTION IN RATES OF 
FUTURE ACCRUALS.—Any reduction in the rate of 
future accruals under the default schedule described 
in paragraph (1)(B)(i) shall not reduce the rate of 
future accruals below— 
‘‘(A) a monthly benefit (payable as a single 
life annuity commencing at the participant’s 
normal retirement age) equal to 1 percent of 
the contributions required to be made with re-
spect to a participant, or the equivalent stand-
ard accrual rate for a participant or group of 
participants under the collective bargaining 
agreements in effect as of the first day of the 
initial critical year, or 
‘‘(B) if lower, the accrual rate under the 
plan on such first day. 
The equivalent standard accrual rate shall be deter-
mined by the plan sponsor based on the standard or 
average contribution base units which the plan spon-
sor determines to be representative for active partici-
pants and such other factors as the plan sponsor de-
termines to be relevant. Nothing in this paragraph 
shall be construed as limiting the ability of the plan 
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271 
sponsor to prepare and provide the bargaining par-
ties with alternative schedules to the default sched-
ule that established lower or higher accrual and con-
tribution rates than the rates otherwise described in 
this paragraph. 
‘‘(7) AUTOMATIC EMPLOYER SURCHARGE.— 
‘‘(A) IMPOSITION OF SURCHARGE.—Each 
employer otherwise obligated to make contribu-
tions for the initial critical year shall be obli-
gated to pay to the plan for such year a sur-
charge equal to 5 percent of the contributions 
otherwise required under the applicable collec-
tive bargaining agreement (or other agreement 
pursuant to which the employer contributes). 
For each succeeding plan year in which the 
plan is in critical status for a consecutive period 
of years beginning with the initial critical year, 
the surcharge shall be 10 percent of the con-
tributions otherwise so required. 
‘‘(B) ENFORCEMENT
OF
SURCHARGE.— 
The surcharges under subparagraph (A) shall 
be due and payable on the same schedule as the 
contributions on which the surcharges are 
based. Any failure to make a surcharge pay-
ment shall be treated as a delinquent contribu-
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tion under section 515 and shall be enforceable 
as such. 
‘‘(C) SURCHARGE
TO
TERMINATE
UPON 
COLLECTIVE BARGAINING AGREEMENT RENEGO-
TIATION.—The surcharge under this paragraph 
shall cease to be effective with respect to em-
ployees covered by a collective bargaining agree-
ment (or other agreement pursuant to which 
the employer contributes), beginning on the ef-
fective date of a collective bargaining agreement 
(or other such agreement) that includes terms 
consistent with a schedule presented by the 
plan sponsor under paragraph (1)(B)(i), as 
modified under subparagraph (B) of paragraph 
(3). 
‘‘(D) SURCHARGE NOT TO APPLY UNTIL 
EMPLOYER RECEIVES NOTICE.—The surcharge 
under this paragraph shall not apply to an em-
ployer until 30 days after the employer has 
been notified by the plan sponsor that the plan 
is in critical status and that the surcharge is in 
effect. 
‘‘(E) SURCHARGE NOT TO GENERATE IN-
CREASED
BENEFIT
ACCRUALS.—Notwith-
standing any provision of a plan to the con-
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ccoleman on PROD1PC71 with BILLS
273 
trary, the amount of any surcharge under this 
paragraph shall not be the basis for any benefit 
accrual under the plan. 
‘‘(8) BENEFIT ADJUSTMENTS.— 
‘‘(A) ADJUSTABLE BENEFITS.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
section 204(g), the plan sponsor shall, sub-
ject to the notice requirements in subpara-
graph (C), make any reductions to adjust-
able benefits which the plan sponsor deems 
appropriate, based upon the outcome of 
collective bargaining over the schedule or 
schedules 
provided 
under 
paragraph 
(1)(B)(i). 
‘‘(ii) EXCEPTION
FOR
RETIREES.— 
Except in the case of adjustable benefits 
described in clause (iv)(III), the plan spon-
sor of a plan in critical status shall not re-
duce adjustable benefits of any participant 
or beneficiary whose benefit commence-
ment date is before the date on which the 
plan provides notice to the participant or 
beneficiary under subsection (b)(3)(D) for 
the initial critical year. 
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ccoleman on PROD1PC71 with BILLS
274 
‘‘(iii) PLAN SPONSOR FLEXIBILITY.— 
The plan sponsor shall include in the 
schedules provided to the bargaining par-
ties an allowance for funding the benefits 
of participants with respect to whom con-
tributions are not currently required to be 
made, and shall reduce their benefits to 
the extent permitted under this title and 
considered appropriate by the plan sponsor 
based on the plan’s then current overall 
funding status. 
‘‘(iv) 
ADJUSTABLE
BENEFIT
DE-
FINED.—For purposes of this paragraph, 
the term ‘adjustable benefit’ means— 
‘‘(I) benefits, rights, and features 
under the plan, including post-retire-
ment death benefits, 60-month guar-
antees, disability benefits not yet in 
pay status, and similar benefits, 
‘‘(II) any early retirement benefit 
or retirement-type subsidy (within the 
meaning of section 204(g)(2)(A)) and 
any benefit payment option (other 
than the qualified joint-and survivor 
annuity), and 
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‘‘(III) 
benefit 
increases 
that 
would not be eligible for a guarantee 
under section 4022A on the first day 
of initial critical year because the in-
creases were adopted (or, if later, took 
effect) less than 60 months before 
such first day. 
‘‘(B) NORMAL
RETIREMENT
BENEFITS 
PROTECTED.—Except as provided in subpara-
graph (A)(iv)(III), nothing in this paragraph 
shall be construed to permit a plan to reduce 
the level of a participant’s accrued benefit pay-
able at normal retirement age. 
‘‘(C) NOTICE REQUIREMENTS.— 
‘‘(i) IN GENERAL.—No reduction may 
be made to adjustable benefits under sub-
paragraph (A) unless notice of such reduc-
tion has been given at least 30 days before 
the general effective date of such reduction 
for all participants and beneficiaries to— 
‘‘(I) plan participants and bene-
ficiaries, 
‘‘(II) each employer who has an 
obligation to contribute (within the 
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ccoleman on PROD1PC71 with BILLS
276 
meaning of section 4212(a)) under the 
plan, and 
‘‘(III) each employee organization 
which, for purposes of collective bar-
gaining, represents plan participants 
employed by such an employer. 
‘‘(ii) CONTENT OF NOTICE.—The no-
tice under clause (i) shall contain— 
‘‘(I) sufficient information to en-
able participants and beneficiaries to 
understand the effect of any reduction 
on their benefits, including an esti-
mate (on an annual or monthly basis) 
of any affected adjustable benefit that 
a participant or beneficiary would oth-
erwise have been eligible for as of the 
general effective date described in 
clause (i), and 
‘‘(II) information as to the rights 
and remedies of plan participants and 
beneficiaries as well as how to contact 
the Department of Labor for further 
information and assistance where ap-
propriate. 
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ccoleman on PROD1PC71 with BILLS
277 
‘‘(iii) FORM AND MANNER.—Any no-
tice under clause (i)— 
‘‘(I) shall be provided in a form 
and manner prescribed in regulations 
of the Secretary, 
‘‘(II) shall be written in a man-
ner so as to be understood by the av-
erage plan participant, and 
‘‘(III) may be provided in writ-
ten, electronic, or other appropriate 
form to the extent such form is rea-
sonably accessible to persons to whom 
the notice is required to be provided. 
The Secretary shall in the regulations pre-
scribed under subclause (I) establish a 
model notice that a plan sponsor may use 
to meet the requirements of this subpara-
graph. 
‘‘(9) ADJUSTMENTS
DISREGARDED
IN
WITH-
DRAWAL LIABILITY DETERMINATION.— 
‘‘(A) BENEFIT REDUCTIONS.—Any benefit 
reductions under this subsection shall be dis-
regarded in determining a plan’s unfunded vest-
ed benefits for purposes of determining an em-
ployer’s withdrawal liability under section 4201. 
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ccoleman on PROD1PC71 with BILLS
278 
‘‘(B) 
SURCHARGES.—Any 
surcharges 
under paragraph (7) shall be disregarded in de-
termining an employer’s withdrawal liability 
under section 4211, except for purposes of de-
termining the unfunded vested benefits attrib-
utable to an employer under section 4211(c)(4) 
or a comparable method approved under section 
4211(c)(5). 
‘‘(C) 
SIMPLIFIED
CALCULATIONS.—The 
Pension Benefit Guaranty Corporation shall 
prescribe simplified methods for the application 
of this paragraph in determining withdrawal li-
ability. 
‘‘(f) RULES
FOR OPERATION
OF PLAN DURING 
ADOPTION AND REHABILITATION PERIOD.— 
‘‘(1) 
COMPLIANCE
WITH
REHABILITATION 
PLAN.— 
‘‘(A) IN GENERAL.—A plan may not be 
amended after the date of the adoption of a re-
habilitation plan under subsection (e) so as to 
be inconsistent with the rehabilitation plan. 
‘‘(B) SPECIAL
RULES
FOR
BENEFIT
IN-
CREASES.—A plan may not be amended after 
the date of the adoption of a rehabilitation plan 
under subsection (e) so as to increase benefits, 
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ccoleman on PROD1PC71 with BILLS
279 
including future benefit accruals, unless the 
plan actuary certifies that such increase is paid 
for out of additional contributions not con-
templated by the rehabilitation plan, and, after 
taking into account the benefit increase, the 
multiemployer plan still is reasonably expected 
to emerge from critical status by the end of the 
rehabilitation period on the schedule con-
templated in the rehabilitation plan. 
‘‘(2) RESTRICTION ON LUMP SUMS AND SIMI-
LAR BENEFITS.— 
‘‘(A) IN GENERAL.—Effective on the date 
the notice of certification of the plan’s critical 
status for the initial critical year under sub-
section (b)(3)(D) is sent, and notwithstanding 
section 204(g), the plan shall not pay— 
‘‘(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 204(b)(1)(G)), 
‘‘(ii) any payment for the purchase of 
an irrevocable commitment from an insurer 
to pay benefits, and 
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ccoleman on PROD1PC71 with BILLS
280 
‘‘(iii) any other payment specified by 
the Secretary of the Treasury by regula-
tions. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply to a benefit which under section 
203(e) may be immediately distributed without 
the consent of the participant or to any makeup 
payment in the case of a retroactive annuity 
starting date or any similar payment of benefits 
owed with respect to a prior period. 
‘‘(3) ADJUSTMENTS
DISREGARDED
IN
WITH-
DRAWAL
LIABILITY
DETERMINATION.—Any benefit 
reductions under this subsection shall be disregarded 
in determining a plan’s unfunded vested benefits for 
purposes of determining an employer’s withdrawal li-
ability under section 4201. 
‘‘(4) SPECIAL RULES FOR PLAN ADOPTION PE-
RIOD.—During the rehabilitation plan adoption pe-
riod— 
‘‘(A) the plan sponsor may not accept a 
collective bargaining agreement or participation 
agreement with respect to the multiemployer 
plan that provides for— 
‘‘(i) a reduction in the level of con-
tributions for any participants, 
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ccoleman on PROD1PC71 with BILLS
281 
‘‘(ii) a suspension of contributions 
with respect to any period of service, or 
‘‘(iii) any new direct or indirect exclu-
sion of younger or newly hired employees 
from plan participation, and 
‘‘(B) no amendment of the plan which in-
creases the liabilities of the plan by reason of 
any increase in benefits, any change in the ac-
crual of benefits, or any change in the rate at 
which benefits become nonforfeitable under the 
plan may be adopted unless the amendment is 
required as a condition of qualification under 
part I of subchapter D of chapter 1 of the In-
ternal Revenue Code of 1986 or to comply with 
other applicable law. 
‘‘(g) EXPEDITED RESOLUTION OF PLAN SPONSOR 
DECISIONS.—If, within 60 days of the due date for adop-
tion of a funding improvement plan or a rehabilitation 
plan under subsection (e), the plan sponsor of a plan in 
endangered status or a plan in critical status has not 
agreed on a funding improvement plan or rehabilitation 
plan, then any member of the board or group that con-
stitutes the plan sponsor may require that the plan spon-
sor enter into an expedited dispute resolution procedure 
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ccoleman on PROD1PC71 with BILLS
282 
for the development and adoption of a funding improve-
ment plan or rehabilitation plan. 
‘‘(h) NONBARGAINED PARTICIPATION.— 
‘‘(1) BOTH
BARGAINED
AND
NONBARGAINED 
EMPLOYEE-PARTICIPANTS.—In the case of an em-
ployer that contributes to a multiemployer plan with 
respect to both employees who are covered by one or 
more collective bargaining agreements and employ-
ees who are not so covered, if the plan is in endan-
gered status or in critical status, benefits of and 
contributions for the nonbargained employees, in-
cluding surcharges on those contributions, shall be 
determined as if those nonbargained employees were 
covered under the first to expire of the employer’s 
collective bargaining agreements in effect when the 
plan entered endangered or critical status. 
‘‘(2) NONBARGAINED
EMPLOYEES
ONLY.—In 
the case of an employer that contributes to a multi-
employer plan only with respect to employees who 
are not covered by a collective bargaining agreement, 
this section shall be applied as if the employer were 
the bargaining party, and its participation agree-
ment with the plan were a collective bargaining 
agreement with a term ending on the first day of the 
plan year beginning after the employer is provided 
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ccoleman on PROD1PC71 with BILLS
283 
the schedule or schedules described in subsections 
(c) and (e). 
‘‘(i) DEFINITIONS; ACTUARIAL METHOD.—For pur-
poses of this section— 
‘‘(1) BARGAINING
PARTY.—The term ‘bar-
gaining party’ means— 
‘‘(A)(i) except as provided in clause (ii), an 
employer who has an obligation to contribute 
under the plan; or 
‘‘(ii) in the case of a plan described under 
section 404(c) of the Internal Revenue Code of 
1986, or a continuation of such a plan, the as-
sociation of employers that is the employer set-
tlor of the plan; and 
‘‘(B) an employee organization which, for 
purposes of collective bargaining, represents 
plan participants employed by an employer who 
has an obligation to contribute under the plan. 
‘‘(2) FUNDED PERCENTAGE.—The term ‘fund-
ed percentage’ means the percentage equal to a frac-
tion— 
‘‘(A) the numerator of which is the value 
of the plan’s assets, as determined under sec-
tion 304(c)(2), and 
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284 
‘‘(B) the denominator of which is the ac-
crued liability of the plan, determined using ac-
tuarial 
assumptions 
described 
in 
section 
304(c)(3). 
‘‘(3) ACCUMULATED
FUNDING
DEFICIENCY.— 
The term ‘accumulated funding deficiency’ has the 
meaning given such term in section 304(a). 
‘‘(4) ACTIVE PARTICIPANT.—The term ‘active 
participant’ means, in connection with a multiem-
ployer plan, a participant who is in covered service 
under the plan. 
‘‘(5) INACTIVE PARTICIPANT.—The term ‘inac-
tive participant’ means, in connection with a multi-
employer plan, a participant, or the beneficiary or 
alternate payee of a participant, who— 
‘‘(A) is not in covered service under the 
plan, and 
‘‘(B) is in pay status under the plan or has 
a nonforfeitable right to benefits under the 
plan. 
‘‘(6) PAY STATUS.—A person is in pay status 
under a multiemployer plan if— 
‘‘(A) at any time during the current plan 
year, such person is a participant or beneficiary 
under the plan and is paid an early, late, nor-
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ccoleman on PROD1PC71 with BILLS
285 
mal, or disability retirement benefit under the 
plan (or a death benefit under the plan related 
to a retirement benefit), or 
‘‘(B) to the extent provided in regulations 
of the Secretary of the Treasury, such person 
is entitled to such a benefit under the plan. 
‘‘(7) OBLIGATION TO CONTRIBUTE.—The term 
‘obligation to contribute’ has the meaning given such 
term under section 4212(a). 
‘‘(8) ACTUARIAL
METHOD.—Notwithstanding 
any other provision of this section, the actuary’s de-
terminations with respect to a plan’s normal cost, 
actuarial accrued liability, and improvements in a 
plan’s funded percentage under this section shall be 
based upon the unit credit funding method (whether 
or not that method is used for the plan’s actuarial 
valuation). 
‘‘(9) PLAN SPONSOR.—In the case of a plan de-
scribed under section 404(c) of the Internal Revenue 
Code of 1986, or a continuation of such a plan, the 
term ‘plan sponsor’ means the bargaining parties de-
scribed under paragraph (1). 
‘‘(10) BENEFIT
COMMENCEMENT
DATE.—The 
term ‘benefit commencement date’ means the annu-
ity starting date (or in the case of a retroactive an-
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ccoleman on PROD1PC71 with BILLS
286 
nuity starting date, the date on which benefit pay-
ments begin).’’. 
(b) ENFORCEMENT.—Section 502 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1132) 
is amended— 
(1) in subsection (a)(6) by striking ‘‘(6), or 
(7)’’ and inserting ‘‘(6), (7), or (8)’’; 
(2) by redesignating subsection (c)(8) as sub-
section (c)(9); and 
(3) by inserting after subsection (c)(7) the fol-
lowing new paragraph: 
‘‘(8) The Secretary may assess against any plan 
sponsor of a multiemployer plan a civil penalty of 
not more than $1,100 per day— 
‘‘(A) for each violation by such sponsor of 
the requirement under section 305 to adopt by 
the deadline established in that section a fund-
ing improvement plan or rehabilitation plan 
with respect to a multiemployer which is in en-
dangered or critical status, or 
‘‘(B) in the case of a plan in endangered 
status which is not in seriously endangered sta-
tus, for failure by the plan to meet the applica-
ble benchmarks under section 305 by the end of 
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ccoleman on PROD1PC71 with BILLS
287 
the funding improvement period with respect to 
the plan.’’. 
(c) CAUSE OF ACTION TO COMPEL ADOPTION OR IM-
PLEMENTATION OF FUNDING IMPROVEMENT OR REHA-
BILITATION PLAN.—Section 502(a) of the Employee Re-
tirement Income Security Act of 1974 is amended by 
striking ‘‘or’’ at the end of paragraph (8), by striking the 
period at the end of paragraph (9) and inserting ‘‘; or’’ 
and by adding at the end the following: 
‘‘(10) in the case of a multiemployer plan that 
has been certified by the actuary to be in endan-
gered or critical status under section 305, if the plan 
sponsor— 
‘‘(A) has not adopted a funding improve-
ment or rehabilitation plan under that section 
by the deadline established in such section, or 
‘‘(B) fails to update or comply with the 
terms of the funding improvement or rehabilita-
tion plan in accordance with the requirements 
of such section, 
by an employer that has an obligation to contribute 
with respect to the multiemployer plan or an em-
ployee organization that represents active partici-
pants in the multiemployer plan, for an order com-
pelling the plan sponsor to adopt a funding improve-
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288 
ment or rehabilitation plan or to update or comply 
with the terms of the funding improvement or reha-
bilitation plan in accordance with the requirements 
of such section and the funding improvement or re-
habilitation plan.’’. 
(d) NO ADDITIONAL CONTRIBUTIONS REQUIRED.— 
Section 302(b) of the Employee Retirement Income Secu-
rity Act of 1974, as amended by this Act, is amended by 
adding at the end the following new paragraph: 
‘‘(3) MULTIEMPLOYER PLANS IN CRITICAL STA-
TUS.—Paragraph (1) shall not apply in the case of 
a multiemployer plan for any plan year in which the 
plan is in critical status pursuant to section 305. 
This paragraph shall only apply if the plan adopts 
a rehabilitation plan in accordance with section 
305(e) and complies with the terms of such rehabili-
tation plan (and any updates or modifications of the 
plan).’’. 
(e) CONFORMING AMENDMENT.—The table of con-
tents in section 1 of such Act (as amended by the pre-
ceding provisions of this Act) is amended by inserting 
after the item relating to section 304 the following new 
item: 
‘‘Sec. 305. Additional funding rules for multiemployer plans in endangered sta-
tus or critical status.’’. 
(f) EFFECTIVE DATES.— 
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289 
(1) IN GENERAL.—The amendments made by 
this section shall apply with respect to plan years be-
ginning after 2007. 
(2) SPECIAL RULE FOR CERTAIN NOTICES.—In 
any case in which a plan’s actuary certifies that it 
is reasonably expected that a multiemployer plan will 
be in critical status under section 305(b)(3) of the 
Employee Retirement Income Security Act of 1974, 
as added by this section, with respect to the first 
plan year beginning after 2007, the notice required 
under subparagraph (D) of such section may be pro-
vided at any time after the date of enactment, so 
long as it is provided on or before the last date for 
providing the notice under such subparagraph. 
(3) SPECIAL
RULE
FOR
CERTAIN
RESTORED 
BENEFITS.—In the case of a multiemployer plan— 
(A) with respect to which benefits were re-
duced pursuant to a plan amendment adopted 
on or after January 1, 2002, and before June 
30, 2005, and 
(B) which, pursuant to the plan document, 
the trust agreement, or a formal written com-
munication from the plan sponsor to partici-
pants provided before June 30, 2005, provided 
for the restoration of such benefits, 
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290 
the amendments made by this section shall not apply 
to such benefit restorations to the extent that any 
restriction on the providing or accrual of such bene-
fits would otherwise apply by reason of such amend-
ments. 
SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MUL-
TIEMPLOYER PLANS. 
(a) ADVANCE DETERMINATION OF IMPENDING IN-
SOLVENCY OVER 5 YEARS.—Section 4245(d)(1) of the 
Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1426(d)(1)) is amended— 
(1) by striking ‘‘3 plan years’’ the second place 
it appears and inserting ‘‘5 plan years’’; and 
(2) by adding at the end the following new sen-
tence: ‘‘If the plan sponsor makes such a determina-
tion that the plan will be insolvent in any of the next 
5 plan years, the plan sponsor shall make the com-
parison under this paragraph at least annually until 
the plan sponsor makes a determination that the 
plan will not be insolvent in any of the next 5 plan 
years.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to determinations 
made in plan years beginning after 2007. 
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ccoleman on PROD1PC71 with BILLS
291 
SEC. 204. WITHDRAWAL LIABILITY REFORMS. 
(a) UPDATE OF RULES RELATING TO LIMITATIONS 
ON WITHDRAWAL LIABILITY.— 
(1) INCREASE IN LIMITS.—Section 4225(a)(2) 
of such Act (29 U.S.C. 1405(a)(2)) is amended by 
striking the table contained therein and inserting the 
following new table: 
‘‘If the liquidation or distribution value of the em-
ployer after the sale or exchange is— 
The portion is— 
Not more than $5,000,000 .......................................
30 percent of the amount. 
More than $5,000,000, but not more than 
$10,000,000.
$1,500,000, plus 35 per-
cent of the amount in 
excess of $5,000,000. 
More than $10,000,000, but not more than 
$15,000,000.
$3,250,000, plus 40 per-
cent of the amount in 
excess of $10,000,000. 
More than $15,000,000, but not more than 
$17,500,000.
$5,250,000, plus 45 per-
cent of the amount in 
excess of $15,000,000. 
More than $17,500,000, but not more than 
$20,000,000.
$6,375,000, plus 50 per-
cent of the amount in 
excess of $17,500,000. 
More than $20,000,000, but not more than 
$22,500,000.
$7,625,000, plus 60 per-
cent of the amount in 
excess of $20,000,000. 
More than $22,500,000, but not more than 
$25,000,000.
$9,125,000, plus 70 per-
cent of the amount in 
excess of $22,500,000.
More than $25,000,000 ............................................
$10,875,000, plus 80 per-
cent of the amount in 
excess of 
$25,000,000.’’. 
(2) PLANS USING ATTRIBUTABLE METHOD.— 
Section 4225(a)(1)(B) of such Act (29 U.S.C. 
1405(a)(1)(B)) is amended to read as follows: 
‘‘(B) in the case of a plan using the attrib-
utable method of allocating withdrawal liability, 
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ccoleman on PROD1PC71 with BILLS
292 
the unfunded vested benefits attributable to em-
ployees of the employer.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to sales occurring on 
or after January 1, 2007. 
(b) WITHDRAWAL LIABILITY CONTINUES IF WORK 
CONTRACTED OUT.— 
(1) 
IN
GENERAL.—Clause 
(i) 
of 
section 
4205(b)(2)(A) 
of 
such 
Act 
(29 
U.S.C. 
1385(b)(2)(A)) is amended by inserting ‘‘or to an 
entity or entities owned or controlled by the em-
ployer’’ after ‘‘to another location’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply with respect to work 
transferred on or after the date of the enactment of 
this Act. 
(c) APPLICATION OF RULES TO PLANS PRIMARILY 
COVERING EMPLOYEES
IN
THE BUILDING
AND CON-
STRUCTION INDUSTRY.— 
(1) IN GENERAL.—Section 4210(b) of such Act 
(29 U.S.C. 1390(b)) is amended— 
(A) by striking paragraph (1); and 
(B) 
by 
redesignating 
paragraphs 
(2) 
through (4) as paragraphs (1) through (3), re-
spectively. 
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293 
(2) FRESH START OPTION.—Section 4211(c)(5) 
of such Act (29 U.S.C. 1391(c)(5)) is amended by 
adding at the end the following new subparagraph: 
‘‘(E) FRESH
START
OPTION.—Notwith-
standing paragraph (1), a plan may be amend-
ed to provide that the withdrawal liability meth-
od described in subsection (b) shall be applied 
by substituting the plan year which is specified 
in the amendment and for which the plan has 
no unfunded vested benefits for the plan year 
ending before September 26, 1980.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply with respect to plan 
withdrawals occurring on or after January 1, 2007. 
(d) PROCEDURES APPLICABLE
TO DISPUTES IN-
VOLVING PENSION PLAN WITHDRAWAL LIABILITY.— 
(1) IN GENERAL.—Section 4221 of Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1401) is amended by adding at the end the fol-
lowing: 
‘‘(g) PROCEDURES APPLICABLE TO CERTAIN DIS-
PUTES.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) a plan sponsor of a plan determines 
that— 
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294 
‘‘(i) a complete or partial withdrawal 
of an employer has occurred, or 
‘‘(ii) an employer is liable for with-
drawal liability payments with respect to 
such complete or partial withdrawal, and 
‘‘(B) such determination is based in whole 
or in part on a finding by the plan sponsor 
under section 4212(c) that a principal purpose 
of any transaction which occurred after Decem-
ber 31, 1998, and at least 5 years (2 years in 
the case of a small employer) before the date of 
the complete or partial withdrawal was to evade 
or avoid withdrawal liability under this subtitle, 
then the person against which the withdrawal liabil-
ity is assessed based solely on the application of sec-
tion 4212(c) may elect to use the special rule under 
paragraph (2) in applying subsection (d) of this sec-
tion and section 4219(c) to such person. 
‘‘(2) SPECIAL
RULE.—Notwithstanding sub-
section (d) and section 4219(c), if an electing person 
contests the plan sponsor’s determination with re-
spect to withdrawal liability payments under para-
graph (1) through an arbitration proceeding pursu-
ant to subsection (a), through an action brought in 
a court of competent jurisdiction for review of such 
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295 
an arbitration decision, or as otherwise permitted by 
law, the electing person shall not be obligated to 
make the withdrawal liability payments until a final 
decision in the arbitration proceeding, or in court, 
upholds the plan sponsor’s determination, but only if 
the electing person— 
‘‘(A) provides notice to the plan sponsor of 
its election to apply the special rule in this 
paragraph within 90 days after the plan spon-
sor notifies the electing person of its liability by 
reason of the application of section 4212(c); 
and 
‘‘(B) if a final decision in the arbitration 
proceeding, or in court, of the withdrawal liabil-
ity dispute has not been rendered within 12 
months from the date of such notice, the elect-
ing person provides to the plan, effective as of 
the first day following the 12-month period, a 
bond issued by a corporate surety company that 
is an acceptable surety for purposes of section 
412 of this Act, or an amount held in escrow 
by a bank or similar financial institution satis-
factory to the plan, in an amount equal to the 
sum of the withdrawal liability payments that 
would otherwise be due under subsection (d) 
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and section 4219(c) for the 12-month period 
beginning with the first anniversary of such no-
tice. Such bond or escrow shall remain in effect 
until there is a final decision in the arbitration 
proceeding, or in court, of the withdrawal liabil-
ity dispute, at which time such bond or escrow 
shall be paid to the plan if such final decision 
upholds the plan sponsor’s determination. 
‘‘(3) DEFINITION OF SMALL EMPLOYER.—For 
purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘small em-
ployer’ means any employer which, for the cal-
endar year in which the transaction referred to 
in paragraph (1)(B) occurred and for each of 
the 3 preceding years, on average— 
‘‘(i) employs not more than 500 em-
ployees, and 
‘‘(ii) is required to make contributions 
to the plan for not more than 250 employ-
ees. 
‘‘(B) CONTROLLED
GROUP.—Any group 
treated as a single employer under subsection 
(b)(1) of section 4001, without regard to any 
transaction that was a basis for the plan’s find-
ing under section 4212, shall be treated as a 
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297 
single employer for purposes of this subpara-
graph. 
‘‘(4) ADDITIONAL SECURITY PENDING RESOLU-
TION OF DISPUTE.—If a withdrawal liability dispute 
to which this subsection applies is not concluded by 
12 months after the electing person posts the bond 
or escrow described in paragraph (2), the electing 
person shall, at the start of each succeeding 12- 
month period, provide an additional bond or amount 
held in escrow equal to the sum of the withdrawal 
liability payments that would otherwise be payable to 
the plan during that period. 
‘‘(5) The liability of the party furnishing a bond 
or escrow under this subsection shall be reduced, 
upon the payment of the bond or escrow to the plan, 
by the amount thereof.’’ 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to any person that re-
ceives a notification under section 4219(b)(1) of the 
Employee Retirement Income Security Act of 1974 
on or after the date of enactment of this Act with 
respect to a transaction that occurred after Decem-
ber 31, 1998. 
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298 
SEC. 205. PROHIBITION ON RETALIATION AGAINST EM-
PLOYERS EXERCISING THEIR RIGHTS TO PE-
TITION THE FEDERAL GOVERNMENT. 
Section 510 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1140) is amended by insert-
ing before the last sentence thereof the following new sen-
tence:‘‘In the case of a multiemployer plan, it shall be un-
lawful for the plan sponsor or any other person to dis-
criminate against any contributing employer for exercising 
rights under this Act or for giving information or testi-
fying in any inquiry or proceeding relating to this Act be-
fore Congress.’’ 
SEC. 206. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED 
UNDER AN AGREEMENT APPROVED BY THE 
PENSION 
BENEFIT 
GUARANTY 
CORPORA-
TION. 
In the case of a multiemployer plan that is a party 
to an agreement that was approved by the Pension Benefit 
Guaranty Corporation prior to June 30, 2005, and that— 
(1) increases benefits, and 
(2) provides for special withdrawal liability 
rules under section 4203(f) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1383), 
the amendments made by sections 201, 202, 211, and 212 
of this Act shall not apply to the benefit increases under 
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299 
any plan amendment adopted prior to June 30, 2005, that 
are funded pursuant to such agreement if the plan is fund-
ed in compliance with such agreement (and any amend-
ments thereto). 
Subtitle B—Amendments to 
Internal Revenue Code of 1986 
SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED 
BENEFIT PLANS. 
(a) IN GENERAL.—Subpart A of part III of sub-
chapter D of chapter 1 of the Internal Revenue Code of 
1986 (as added by this Act) is amended by inserting after 
section 430 the following new section: 
‘‘SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEM-
PLOYER PLANS. 
‘‘(a) IN GENERAL.—For purposes of section 412, the 
accumulated funding deficiency of a multiemployer plan 
for any plan year is— 
‘‘(1) except as provided in paragraph (2), the 
amount, determined as of the end of the plan year, 
equal to the excess (if any) of the total charges to 
the funding standard account of the plan for all plan 
years (beginning with the first plan year for which 
this part applies to the plan) over the total credits 
to such account for such years, and 
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300 
‘‘(2) if the multiemployer plan is in reorganiza-
tion for any plan year, the accumulated funding de-
ficiency of the plan determined under section 4243 
of the Employee Retirement Income Security Act of 
1974. 
‘‘(b) FUNDING STANDARD ACCOUNT.— 
‘‘(1) ACCOUNT
REQUIRED.—Each multiem-
ployer plan to which this part applies shall establish 
and maintain a funding standard account. Such ac-
count shall be credited and charged solely as pro-
vided in this section. 
‘‘(2) CHARGES TO ACCOUNT.—For a plan year, 
the funding standard account shall be charged with 
the sum of— 
‘‘(A) the normal cost of the plan for the 
plan year, 
‘‘(B) the amounts necessary to amortize in 
equal annual installments (until fully amor-
tized)— 
‘‘(i) in the case of a plan which comes 
into existence on or after January 1, 2008, 
the unfunded past service liability under 
the plan on the first day of the first plan 
year to which this section applies, over a 
period of 15 plan years, 
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301 
‘‘(ii) separately, with respect to each 
plan year, the net increase (if any) in un-
funded past service liability under the plan 
arising from plan amendments adopted in 
such year, over a period of 15 plan years, 
‘‘(iii) separately, with respect to each 
plan year, the net experience loss (if any) 
under the plan, over a period of 15 plan 
years, and 
‘‘(iv) separately, with respect to each 
plan year, the net loss (if any) resulting 
from changes in actuarial assumptions 
used under the plan, over a period of 15 
plan years, 
‘‘(C) the amount necessary to amortize 
each waived funding deficiency (within the 
meaning of section 412(c)(3)) for each prior 
plan year in equal annual installments (until 
fully amortized) over a period of 15 plan years, 
‘‘(D) the amount necessary to amortize in 
equal annual installments (until fully amor-
tized) over a period of 5 plan years any amount 
credited to the funding standard account under 
section 412(b)(3)(D) (as in effect on the day 
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302 
before the date of the enactment of the Pension 
Protection Act of 2006), and 
‘‘(E) the amount necessary to amortize in 
equal annual installments (until fully amor-
tized) over a period of 20 years the contribu-
tions which would be required to be made under 
the plan but for the provisions of section 
412(c)(7)(A)(i)(I) (as in effect on the day be-
fore the date of the enactment of the Pension 
Protection Act of 2006). 
‘‘(3) CREDITS TO ACCOUNT.—For a plan year, 
the funding standard account shall be credited with 
the sum of— 
‘‘(A) the amount considered contributed by 
the employer to or under the plan for the plan 
year, 
‘‘(B) the amount necessary to amortize in 
equal annual installments (until fully amor-
tized)— 
‘‘(i) separately, with respect to each 
plan year, the net decrease (if any) in un-
funded past service liability under the plan 
arising from plan amendments adopted in 
such year, over a period of 15 plan years, 
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303 
‘‘(ii) separately, with respect to each 
plan year, the net experience gain (if any) 
under the plan, over a period of 15 plan 
years, and 
‘‘(iii) separately, with respect to each 
plan year, the net gain (if any) resulting 
from changes in actuarial assumptions 
used under the plan, over a period of 15 
plan years, 
‘‘(C) the amount of the waived funding de-
ficiency 
(within 
the 
meaning 
of 
section 
412(c)(3)) for the plan year, and 
‘‘(D) in the case of a plan year for which 
the accumulated funding deficiency is deter-
mined under the funding standard account if 
such plan year follows a plan year for which 
such deficiency was determined under the alter-
native minimum funding standard under section 
412(g) (as in effect on the day before the date 
of the enactment of the Pension Protection Act 
of 2006), the excess (if any) of any debit bal-
ance in the funding standard account (deter-
mined without regard to this subparagraph) 
over any debit balance in the alternative min-
imum funding standard account. 
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304 
‘‘(4) SPECIAL RULE FOR AMOUNTS FIRST AM-
ORTIZED IN PLAN YEARS BEFORE 2008.—In the case 
of any amount amortized under section 412(b) (as 
in effect on the day before the date of the enactment 
of the Pension Protection Act of 2006) over any pe-
riod beginning with a plan year beginning before 
2008 in lieu of the amortization described in para-
graphs (2)(B) and (3)(B), such amount shall con-
tinue to be amortized under such section as so in ef-
fect. 
‘‘(5) COMBINING
AND
OFFSETTING
AMOUNTS 
TO BE AMORTIZED.—Under regulations prescribed 
by the Secretary, amounts required to be amortized 
under paragraph (2) or paragraph (3), as the case 
may be— 
‘‘(A) may be combined into one amount 
under such paragraph to be amortized over a 
period determined on the basis of the remaining 
amortization period for all items entering into 
such combined amount, and 
‘‘(B) may be offset against amounts re-
quired to be amortized under the other such 
paragraph, with the resulting amount to be am-
ortized over a period determined on the basis of 
the remaining amortization periods for all items 
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305 
entering into whichever of the two amounts 
being offset is the greater. 
‘‘(6) INTEREST.—The funding standard ac-
count (and items therein) shall be charged or cred-
ited (as determined under regulations prescribed by 
the Secretary of the Treasury) with interest at the 
appropriate rate consistent with the rate or rates of 
interest used under the plan to determine costs. 
‘‘(7) SPECIAL RULES RELATING TO CHARGES 
AND CREDITS TO FUNDING STANDARD ACCOUNT.— 
For purposes of this part— 
‘‘(A) 
WITHDRAWAL
LIABILITY.—Any 
amount received by a multiemployer plan in 
payment of all or part of an employer’s with-
drawal liability under part 1 of subtitle E of 
title IV of the Employee Retirement Income Se-
curity Act of 1974 shall be considered an 
amount contributed by the employer to or 
under the plan. The Secretary may prescribe by 
regulation additional charges and credits to a 
multiemployer plan’s funding standard account 
to the extent necessary to prevent withdrawal li-
ability payments from being unduly reflected as 
advance funding for plan liabilities. 
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306 
‘‘(B) ADJUSTMENTS
WHEN
A
MULTIEM-
PLOYER PLAN LEAVES REORGANIZATION.—If a 
multiemployer plan is not in reorganization in 
the plan year but was in reorganization in the 
immediately preceding plan year, any balance in 
the funding standard account at the close of 
such immediately preceding plan year— 
‘‘(i) shall be eliminated by an offset-
ting credit or charge (as the case may be), 
but 
‘‘(ii) shall be taken into account in 
subsequent plan years by being amortized 
in equal annual installments (until fully 
amortized) over 30 plan years. 
The preceding sentence shall not apply to the 
extent of any accumulated funding deficiency 
under section 4243(a) of such Act as of the end 
of the last plan year that the plan was in reor-
ganization. 
‘‘(C) PLAN PAYMENTS TO SUPPLEMENTAL 
PROGRAM OR WITHDRAWAL LIABILITY PAYMENT 
FUND.—Any amount paid by a plan during a 
plan year to the Pension Benefit Guaranty Cor-
poration pursuant to section 4222 of such Act 
or to a fund exempt under section 501(c)(22) 
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307 
pursuant to section 4223 of such Act shall re-
duce the amount of contributions considered re-
ceived by the plan for the plan year. 
‘‘(D) INTERIM
WITHDRAWAL
LIABILITY 
PAYMENTS.—Any amount paid by an employer 
pending a final determination of the employer’s 
withdrawal liability under part 1 of subtitle E 
of title IV of such Act and subsequently re-
funded to the employer by the plan shall be 
charged to the funding standard account in ac-
cordance with regulations prescribed by the 
Secretary. 
‘‘(E) 
ELECTION
FOR
DEFERRAL
OF 
CHARGE
FOR
PORTION
OF
NET
EXPERIENCE 
LOSS.—If an election is in effect under section 
412(b)(7)(F) (as in effect on the day before the 
date of the enactment of the Pension Protection 
Act of 2006) for any plan year, the funding 
standard account shall be charged in the plan 
year to which the portion of the net experience 
loss deferred by such election was deferred with 
the amount so deferred (and paragraph 
(2)(B)(iii) shall not apply to the amount so 
charged). 
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308 
‘‘(F) 
FINANCIAL
ASSISTANCE.—Any 
amount of any financial assistance from the 
Pension Benefit Guaranty Corporation to any 
plan, and any repayment of such amount, shall 
be taken into account under this section and 
section 412 in such manner as is determined by 
the Secretary. 
‘‘(G) SHORT-TERM BENEFITS.—To the ex-
tent that any plan amendment increases the un-
funded past service liability under the plan by 
reason of an increase in benefits which are not 
payable as a life annuity but are payable under 
the terms of the plan for a period that does not 
exceed 14 years from the effective date of the 
amendment, paragraph (2)(B)(ii) shall be ap-
plied separately with respect to such increase in 
unfunded past service liability by substituting 
the number of years of the period during which 
such benefits are payable for ‘15’. 
‘‘(c) ADDITIONAL RULES.— 
‘‘(1) DETERMINATIONS
TO
BE
MADE
UNDER 
FUNDING METHOD.—For purposes of this part, nor-
mal costs, accrued liability, past service liabilities, 
and experience gains and losses shall be determined 
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309 
under the funding method used to determine costs 
under the plan. 
‘‘(2) VALUATION OF ASSETS.— 
‘‘(A) IN GENERAL.—For purposes of this 
part, the value of the plan’s assets shall be de-
termined on the basis of any reasonable actu-
arial method of valuation which takes into ac-
count fair market value and which is permitted 
under regulations prescribed by the Secretary. 
‘‘(B) 
ELECTION
WITH
RESPECT
TO 
BONDS.—The value of a bond or other evidence 
of indebtedness which is not in default as to 
principal or interest may, at the election of the 
plan administrator, be determined on an amor-
tized basis running from initial cost at purchase 
to par value at maturity or earliest call date. 
Any election under this subparagraph shall be 
made at such time and in such manner as the 
Secretary shall by regulations provide, shall 
apply to all such evidences of indebtedness, and 
may be revoked only with the consent of the 
Secretary. 
‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA-
SONABLE.—For purposes of this section, all costs, li-
abilities, rates of interest, and other factors under 
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310 
the plan shall be determined on the basis of actu-
arial assumptions and methods— 
‘‘(A) each of which is reasonable (taking 
into account the experience of the plan and rea-
sonable expectations), and 
‘‘(B) which, in combination, offer the actu-
ary’s best estimate of anticipated experience 
under the plan. 
‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX-
PERIENCE GAIN OR LOSS.—For purposes of this sec-
tion, if— 
‘‘(A) a change in benefits under the Social 
Security Act or in other retirement benefits cre-
ated under Federal or State law, or 
‘‘(B) a change in the definition of the term 
‘wages’ under section 3121, or a change in the 
amount of such wages taken into account under 
regulations prescribed for purposes of section 
401(a)(5), 
results in an increase or decrease in accrued liability 
under a plan, such increase or decrease shall be 
treated as an experience loss or gain. 
‘‘(5) FULL FUNDING.—If, as of the close of a 
plan year, a plan would (without regard to this para-
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311 
graph) have an accumulated funding deficiency in 
excess of the full funding limitation— 
‘‘(A) the funding standard account shall be 
credited with the amount of such excess, and 
‘‘(B) all amounts described in subpara-
graphs (B), (C), and (D) of subsection (b) (2) 
and subparagraph (B) of subsection (b)(3) 
which are required to be amortized shall be con-
sidered fully amortized for purposes of such 
subparagraphs. 
‘‘(6) FULL-FUNDING LIMITATION.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (5), the term ‘full-funding limitation’ 
means the excess (if any) of— 
‘‘(i) the accrued liability (including 
normal cost) under the plan (determined 
under the entry age normal funding meth-
od if such accrued liability cannot be di-
rectly calculated under the funding method 
used for the plan), over 
‘‘(ii) the lesser of— 
‘‘(I) the fair market value of the 
plan’s assets, or 
‘‘(II) the value of such assets de-
termined under paragraph (2). 
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312 
‘‘(B) MINIMUM AMOUNT.— 
‘‘(i) IN GENERAL.—In no event shall 
the 
full-funding 
limitation 
determined 
under subparagraph (A) be less than the 
excess (if any) of— 
‘‘(I) 90 percent of the current 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) ASSETS.—For purposes of clause 
(i), assets shall not be reduced by any 
credit balance in the funding standard ac-
count. 
‘‘(C) FULL
FUNDING
LIMITATION.—For 
purposes of this paragraph, unless otherwise 
provided by the plan, the accrued liability under 
a multiemployer plan shall not include benefits 
which are not nonforfeitable under the plan 
after the termination of the plan (taking into 
consideration section 411(d)(3)). 
‘‘(D) CURRENT LIABILITY.—For purposes 
of this paragraph— 
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313 
‘‘(i) IN GENERAL.—The term ‘current 
liability’ means all liabilities to employees 
and their beneficiaries under the plan. 
‘‘(ii) TREATMENT OF UNPREDICTABLE 
CONTINGENT EVENT BENEFITS.—For pur-
poses of clause (i), any benefit contingent 
on an event other than— 
‘‘(I) age, service, compensation, 
death, or disability, or 
‘‘(II) an event which is reason-
ably and reliably predictable (as deter-
mined by the Secretary), 
shall not be taken into account until the 
event on which the benefit is contingent oc-
curs. 
‘‘(iii) INTEREST
RATE
USED.—The 
rate of interest used to determine current 
liability under this paragraph shall be the 
rate of interest determined under subpara-
graph (E). 
‘‘(iv) 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 
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314 
subclause (II) apply, the mortality 
table used in determining current li-
ability under this paragraph shall be 
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. 
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315 
‘‘(v) SEPARATE
MORTALITY
TABLES 
FOR
THE
DISABLED.—Notwithstanding 
clause (iv)— 
‘‘(I) IN
GENERAL.—The Sec-
retary shall establish mortality tables 
which may be used (in lieu of the ta-
bles under clause (iv)) to determine 
current liability under this subsection 
for individuals who are entitled to 
benefits under the plan on account of 
disability. The Secretary shall estab-
lish separate tables for individuals 
whose disabilities occur in plan years 
beginning before January 1, 1995, 
and for individuals whose disabilities 
occur in plan years beginning on or 
after such date. 
‘‘(II) SPECIAL
RULE
FOR
DIS-
ABILITIES OCCURRING AFTER 1994.— 
In the case of disabilities occurring in 
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 
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316 
of title II of the Social Security Act 
and the regulations thereunder. 
‘‘(vi) PERIODIC
REVIEW.—The Sec-
retary shall periodically (at least every 5 
years) review any tables in effect under 
this subparagraph and shall, to the extent 
such Secretary determines necessary, by 
regulation update the tables to reflect the 
actual experience of pension plans and pro-
jected trends in such experience. 
‘‘(E) REQUIRED
CHANGE
OF
INTEREST 
RATE.—For purposes of determining a plan’s 
current liability for purposes of this para-
graph— 
‘‘(i) IN GENERAL.—If any rate of in-
terest used under the plan under sub-
section (b)(6) to determine cost is not 
within the permissible range, the plan shall 
establish a new rate of interest within the 
permissible range. 
‘‘(ii) PERMISSIBLE RANGE.—For pur-
poses of this subparagraph— 
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), the term 
‘permissible range’ means a rate of in-
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317 
terest which is not more than 5 per-
cent above, and not more than 10 per-
cent below, the weighted average of 
the rates of interest on 30-year Treas-
ury securities during the 4-year period 
ending on the last day before the be-
ginning of the plan year. 
‘‘(II) 
SECRETARIAL
AUTHOR-
ITY.—If the Secretary finds that the 
lowest rate of interest permissible 
under subclause (I) is unreasonably 
high, the Secretary may prescribe a 
lower rate of interest, except that 
such rate may not be less than 80 
percent of the average rate deter-
mined under such subclause. 
‘‘(iii) 
ASSUMPTIONS.—Notwith-
standing paragraph (3)(A), the interest 
rate used under the plan shall be— 
‘‘(I) determined without taking 
into account the experience of the 
plan and reasonable expectations, but 
‘‘(II) consistent with the assump-
tions which reflect the purchase rates 
which would be used by insurance 
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318 
companies to satisfy the liabilities 
under the plan. 
‘‘(7) ANNUAL VALUATION.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, a determination of experience gains and 
losses and a valuation of the plan’s liability 
shall be made not less frequently than once 
every year, except that such determination shall 
be made more frequently to the extent required 
in particular cases under regulations prescribed 
by the Secretary. 
‘‘(B) VALUATION DATE.— 
‘‘(i) CURRENT YEAR.—Except as pro-
vided in clause (ii), the valuation referred 
to in subparagraph (A) shall be made as of 
a date within the plan year to which the 
valuation refers or within one month prior 
to the beginning of such year. 
‘‘(ii) USE
OF
PRIOR
YEAR
VALU-
ATION.—The valuation referred to in sub-
paragraph (A) may be made as of a date 
within the plan year prior to the year to 
which the valuation refers if, as of such 
date, the value of the assets of the plan are 
not less than 100 percent of the plan’s cur-
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