374
is hereby imposed a tax on the failure of such 
plan to adopt a rehabilitation plan within the 
time prescribed under section 432. 
‘‘(B) AMOUNT OF TAX.—The amount of 
the tax imposed under subparagraph (A) with 
respect to any plan sponsor for any taxable year 
shall be the greater of—
‘‘(i) the amount of tax imposed under 
subsection (a) for the taxable year (deter-
mined without regard to this subsection), 
or 
‘‘(ii) the amount equal to $1,100 mul-
tiplied by the number of days during the 
taxable year which are included in the pe-
riod beginning on the first day of the 240-
day 
period 
described 
in 
section 
432(e)(1)(A) and ending on the day on 
which the rehabilitation plan is adopted. 
‘‘(C) LIABILITY FOR TAX.—
‘‘(i) IN GENERAL.—The tax imposed 
by subparagraph (A) shall be paid by each 
plan sponsor. 
‘‘(ii) PLAN SPONSOR.—For purposes 
of clause (i), the term ‘plan sponsor’ in the 
case of a multiemployer plan means the as-
375
sociation, committee, joint board of trust-
ees, or other similar group of representa-
tives of the parties who establish or main-
tain the plan. 
‘‘(5) WAIVER.—In the case of a failure de-
scribed in paragraph (2) or (3) which is due to rea-
sonable cause and not to willful neglect, the Sec-
retary may waive part or all of the tax imposed by 
this subsection. For purposes of this paragraph, rea-
sonable cause includes unanticipated and material 
market fluctuations, the loss of a significant contrib-
uting employer, or other factors to the extent that 
the payment of tax under this subsection with re-
spect to the failure would be excessive or otherwise 
inequitable relative to the failure involved. 
‘‘(6) TERMS USED IN SECTION 432.—For pur-
poses of this subsection, any term used in this sub-
section which is also used in section 432 shall have 
the meaning given such term by section 432.’’. 
(2) CONTROLLED GROUPS.—Section 4971(c)(2) 
of such Code is amended—
(A) by striking ‘‘In the case of a plan 
other than a multiemployer plan, if the’’ and in-
serting ‘‘If an’’, and
376
(B) by striking ‘‘or (f)’’ and inserting ‘‘(f), 
or (g)’’. 
(c) NO ADDITIONAL CONTRIBUTION REQUIRED.—
Section 412(b) of the Internal Revenue Code of 1986, 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 432. 
This paragraph shall only apply if the plan adopts 
a rehabilitation plan in accordance with section 
432(e) and complies with such rehabilitation plan 
(and any modifications of the plan).’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part III of subchapter D of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 432. Additional funding rules for multiemployer plans in endangered sta-
tus or critical status.’’.
(e) EFFECTIVE DATES.—
(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
377
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, 
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.
378
SEC. 213. MEASURES TO FORESTALL INSOLVENCY OF MUL-
TIEMPLOYER PLANS. 
(a) ADVANCE DETERMINATION OF IMPENDING IN-
SOLVENCY OVER 5 YEARS.—Section 418E(d)(1) of the 
Internal Revenue Code of 1986 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 the determinations 
made in plan years beginning after 2007. 
SEC. 214. EXEMPTION FROM EXCISE TAXES FOR CERTAIN 
MULTIEMPLOYER PENSION PLANS. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, no tax shall be imposed under subsection (a) 
or (b) of section 4971 of the Internal Revenue Code of 
1986 with respect to any accumulated funding deficiency 
of a plan described in subsection (b) of this section for 
any taxable year beginning before the earlier of—
379
(1) the taxable year in which the plan sponsor 
adopts a rehabilitation plan under section 305(e) of 
the Employee Retirement Income Security Act of 
1974 and section 432(e) of such Code (as added by 
this Act); or 
(2) the taxable year that contains January 1, 
2009. 
(b) PLAN DESCRIBED.—A plan described under this 
subsection is a multiemployer pension plan—
(1) with less than 100 participants; 
(2) with respect to which the contributing em-
ployers participated in a Federal fishery capacity re-
duction program; 
(3) with respect to which employers under the 
plan participated in the Northeast Fisheries Assist-
ance Program; and 
(4) with respect to which the annual normal 
cost is less than $100,000 and the plan is experi-
encing a funding deficiency on the date of enactment 
of this Act. 
Subtitle C—Sunset of Additional 
Funding Rules 
SEC. 221. SUNSET OF ADDITIONAL FUNDING RULES. 
(a) REPORT.—Not later than December 31, 2011, 
the Secretary of Labor, the Secretary of the Treasury, and
380
the Executive Director of the Pension Benefit Guaranty 
Corporation shall conduct a study of the effect of the 
amendments made by this subtitle on the operation and 
funding status of multiemployer plans and shall report the 
results of such study, including any recommendations for 
legislation, to the Congress. 
(b) MATTERS INCLUDED IN STUDY.—The study re-
quired under subsection (a) shall include—
(1) the effect of funding difficulties, funding 
rules in effect before the date of the enactment of 
this Act, and the amendments made by this subtitle 
on small businesses participating in multiemployer 
plans, 
(2) the effect on the financial status of small 
employers of—
(A) funding targets set in funding im-
provement and rehabilitation plans and associ-
ated contribution increases, 
(B) funding deficiencies, 
(C) excise taxes, 
(D) withdrawal liability, 
(E) the possibility of alternatives schedules 
and procedures for financially-troubled employ-
ers, and
381
(F) other aspects of the multiemployer sys-
tem, and 
(3) the role of the multiemployer pension plan 
system in helping small employers to offer pension 
benefits. 
(c) SUNSET.—
(1) IN GENERAL.—Except as provided in this 
subsection, notwithstanding any other provision of 
this Act, the provisions of, and the amendments 
made by, sections 201(b), 202, and 212 shall not 
apply to plan years beginning after December 31, 
2014. 
(2) FUNDING IMPROVEMENT AND REHABILITA-
TION PLANS.—If a plan is operating under a fund-
ing improvement or rehabilitation plan under section 
305 of such Act or 432 of such Code for its last 
year beginning before January 1, 2015, such plan 
shall continue to operate under such funding im-
provement or rehabilitation plan during any period 
after December 31, 2014, such funding improvement 
or rehabilitation plan is in effect and all provisions 
of such Act or Code relating to the operation of such 
funding improvement or rehabilitation plan shall 
continue in effect during such period.
382
TITLE III—INTEREST RATE 
ASSUMPTIONS 
SEC. 301. EXTENSION OF REPLACEMENT OF 30-YEAR 
TREASURY RATES. 
(a) AMENDMENTS OF ERISA.—
(1) DETERMINATION
OF
RANGE.—Subclause 
(II) of section 302(b)(5)(B)(ii) of the Employee Re-
tirement Income Security Act of 1974 is amended—
(A) by striking ‘‘2006’’ and inserting 
‘‘2008’’, and 
(B) by striking ‘‘AND 2005’’ in the heading 
and inserting ‘‘, 2005, 2006, AND 2007’’. 
(2) DETERMINATION OF CURRENT LIABILITY.—
Subclause (IV) of section 302(d)(7)(C)(i) of such 
Act is amended—
(A) by striking ‘‘or 2005’’ and inserting ‘‘, 
2005, 2006, or 2007’’, and 
(B) by striking ‘‘AND 2005’’ in the heading 
and inserting ‘‘, 2005, 2006, AND 2007’’. 
(3) PBGC PREMIUM RATE.—Subclause (V) of 
section 4006(a)(3)(E)(iii) of such Act is amended by 
striking ‘‘2006’’ and inserting ‘‘2008’’. 
(b) AMENDMENTS OF INTERNAL REVENUE CODE.—
383
(1) DETERMINATION
OF
RANGE.—Subclause 
(II) of section 412(b)(5)(B)(ii) of the Internal Rev-
enue Code of 1986 is amended—
(A) by striking ‘‘2006’’ and inserting 
‘‘2008’’, and 
(B) by striking ‘‘AND 2005’’ in the heading 
and inserting ‘‘, 2005, 2006, AND 2007’’. 
(2) DETERMINATION OF CURRENT LIABILITY.—
Subclause (IV) of section 412(l)(7)(C)(i) of such 
Code is amended—
(A) by striking ‘‘or 2005’’ and inserting ‘‘, 
2005, 2006, or 2007’’, and 
(B) by striking ‘‘AND 2005’’ in the heading 
and inserting ‘‘, 2005, 2006, AND 2007’’. 
(c) PLAN AMENDMENTS.—Clause (ii) of section 
101(c)(2)(A) of the Pension Funding Equity Act of 2004 
is amended by striking ‘‘2006’’ and inserting ‘‘2008’’. 
SEC. 302. INTEREST RATE ASSUMPTION FOR DETERMINA-
TION OF LUMP SUM DISTRIBUTIONS. 
(a) AMENDMENT TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.—Paragraph (3) of section 
205(g) of the Employee Retirement Income Security Act 
of 1974 (29 U.S.C. 1055(g)(3)) is amended to read as 
follows:
384
‘‘(3)(A) For purposes of paragraphs (1) and (2), the 
present value shall not be less than the present value cal-
culated by using the applicable mortality table and the ap-
plicable interest rate. 
‘‘(B) For purposes of subparagraph (A)—
‘‘(i) The term ‘applicable mortality table’ means 
a mortality table, modified as appropriate by the 
Secretary of the Treasury, based on the mortality 
table specified for the plan year under subparagraph 
(A) of section 303(h)(3) (without regard to subpara-
graph (C) or (D) of such section). 
‘‘(ii) The term ‘applicable interest rate’ means 
the adjusted first, second, and third segment rates 
applied under rules similar to the rules of section 
303(h)(2)(C) for the month before the date of the 
distribution or such other time as the Secretary of 
the Treasury may by regulations prescribe. 
‘‘(iii) For purposes of clause (ii), the adjusted 
first, second, and third segment rates are the first, 
second, and third segment rates which would be de-
termined under section 303(h)(2)(C) if—
‘‘(I) section 303(h)(2)(D) were applied by 
substituting the average yields for the month 
described in clause (ii) for the average yields for 
the 24-month period described in such section,
385
‘‘(II) section 303(h)(2)(G)(i)(II) were ap-
plied 
by 
substituting 
‘section 
205(g)(3)(B)(iii)(II)’ 
for 
‘section 
302(b)(5)(B)(ii)(II)’, and 
‘‘(III) the applicable percentage under sec-
tion 303(h)(2)(G) were determined in accord-
ance with the following table:
In the case of plan years beginning in:
The applicable 
percentage is:
2008 .......................................................................
20 percent
2009 .......................................................................
40 percent
2010 .......................................................................
60 percent
2011 .......................................................................
80 percent.’’. 
(b) AMENDMENT TO INTERNAL REVENUE CODE OF 
1986.—Paragraph (3) of section 417(e) of the Internal 
Revenue Code of 1986 is amended to read as follows: 
‘‘(3) DETERMINATION OF PRESENT VALUE.—
‘‘(A) IN GENERAL.—For purposes of para-
graphs (1) and (2), the present value shall not 
be less than the present value calculated by 
using the applicable mortality table and the ap-
plicable interest rate. 
‘‘(B) APPLICABLE
MORTALITY
TABLE.—
For purposes of subparagraph (A), the term 
‘applicable mortality table’ means a mortality 
table, modified as appropriate by the Secretary, 
based on the mortality table specified for the
386
plan year under subparagraph (A) of section 
430(h)(3) (without regard to subparagraph (C) 
or (D) of such section). 
‘‘(C) APPLICABLE
INTEREST
RATE.—For 
purposes of subparagraph (A), the term ‘appli-
cable interest rate’ means the adjusted first, 
second, and third segment rates applied under 
rules 
similar 
to 
the 
rules 
of 
section 
430(h)(2)(C) for the month before the date of 
the distribution or such other time as the Sec-
retary may by regulations prescribe. 
‘‘(D) APPLICABLE SEGMENT RATES.—For 
purposes of subparagraph (C), the adjusted 
first, second, and third segment rates are the 
first, second, and third segment rates which 
would 
be 
determined 
under 
section 
430(h)(2)(C) if—
‘‘(i) section 430(h)(2)(D) were applied 
by substituting the average yields for the 
month described in clause (ii) for the aver-
age yields for the 24-month period de-
scribed in such section, 
‘‘(ii) section 430(h)(2)(G)(i)(II) were 
applied 
by 
substituting 
‘section
387
417(e)(3)(A)(ii)(II)’ 
for 
‘section 
412(b)(5)(B)(ii)(II)’, and 
‘‘(iii) the applicable percentage under 
section 430(h)(2)(G) were determined in 
accordance with the following table:
In the case of plan years beginning in:
The applicable 
percentage is:
2008 .......................................................................
20 percent
2009 .......................................................................
40 percent
2010 .......................................................................
60 percent
2011 .......................................................................
80 percent.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan years begin-
ning after December 31, 2007. 
SEC. 303. INTEREST RATE ASSUMPTION FOR APPLYING 
BENEFIT LIMITATIONS TO LUMP SUM DIS-
TRIBUTIONS. 
(a) 
IN
GENERAL.—Clause 
(ii) 
of 
section 
415(b)(2)(E) of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(ii) For purposes of adjusting any 
benefit under subparagraph (B) for any 
form 
of 
benefit 
subject 
to 
section 
417(e)(3), the interest rate assumption 
shall not be less than the greatest of—
‘‘(I) 5.5 percent,
388
‘‘(II) the rate that provides a 
benefit of not more than 105 percent 
of the benefit that would be provided 
if the applicable interest rate (as de-
fined in section 417(e)(3)) were the 
interest rate assumption, or 
‘‘(III) the rate specified under 
the plan.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to distributions made in years 
beginning after December 31, 2005. 
TITLE IV—PBGC GUARANTEE 
AND RELATED PROVISIONS 
SEC. 401. PBGC PREMIUMS. 
(a) VARIABLE-RATE PREMIUMS.—
(1) CONFORMING
AMENDMENTS
RELATED
TO 
FUNDING RULES FOR SINGLE-EMPLOYER PLANS.—
Section 4006(a)(3)(E) of the Employee Retirement 
Income and Security Act of 1974 (29 U.S.C. 
1306(a)(3)(E)) is amended by striking clauses (iii) 
and (iv) and inserting the following: 
‘‘(iii) For purposes of clause (ii), the term ‘unfunded 
vested benefits’ means, for a plan year, the excess (if any) 
of—
389
‘‘(I) the funding target of the plan as deter-
mined under section 303(d) for the plan year by 
only taking into account vested benefits and by 
using the interest rate described in clause (iv), over 
‘‘(II) the fair market value of plan assets for 
the plan year which are held by the plan on the 
valuation date. 
‘‘(iv) The interest rate used in valuing benefits for 
purposes of subclause (I) of clause (iii) shall be equal to 
the first, second, or third segment rate for the month pre-
ceding the month in which the plan year begins, which 
would be determined under section 303(h)(2)(C) if section 
303(h)(2)(D) were applied by using the monthly yields for 
the month preceding the month in which the plan year 
begins on investment grade corporate bonds with varying 
maturities and in the top 3 quality levels rather than the 
average of such yields for a 24-month period.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply with respect to plan 
years beginning after 2007. 
(b) TERMINATION PREMIUMS.—
(1) REPEAL OF SUNSET PROVISION.—Subpara-
graph (E) of section 4006(a)(7) of such Act is re-
pealed. 
(2) TECHNICAL CORRECTION.—