CREDITING AGAINST MINIMUM REQUIRED CONTRIBU-
TION.—
‘‘(A) IN GENERAL.—The plan sponsor may 
elect to reduce by any amount the balance of 
the prefunding balance and the funding stand-
ard carryover balance for any plan year (but 
not below zero). Such reduction shall be effec-
tive prior to any determination of the value of 
plan assets for such plan year under this sec-
tion and application of the balance in reducing 
the minimum required contribution for such 
plan for such plan year pursuant to an election 
under paragraph (2). 
‘‘(B) 
COORDINATION
BETWEEN 
PREFUNDING BALANCE AND FUNDING STAND-
ARD CARRYOVER BALANCE.—To the extent that 
any plan has a funding standard carryover bal-
ance greater than zero, no election may be 
made under subparagraph (A) with respect to 
the prefunding balance. 
‘‘(6) PREFUNDING BALANCE.—
‘‘(A) IN GENERAL.—A prefunding balance 
maintained by a plan shall consist of a begin-
ning balance of zero, increased and decreased to 
the extent provided in subparagraphs (B) and
(C), and adjusted further as provided in para-
graph (8). 
‘‘(B) INCREASES.—
‘‘(i) IN GENERAL.—As of the first day 
of each plan year beginning after 2008, the 
prefunding balance of a plan shall be in-
creased by the amount elected by the plan 
sponsor for the plan year. Such amount 
shall not exceed the excess (if any) of—
‘‘(I) the aggregate total of em-
ployer contributions to the plan for 
the preceding plan year, over—
‘‘(II) the minimum required con-
tribution for such preceding plan year. 
‘‘(ii) ADJUSTMENTS FOR INTEREST.—
Any excess contributions under clause (i) 
shall be properly adjusted for interest ac-
cruing for the periods between the first 
day of the current plan year and the dates 
on which the excess contributions were 
made, determined by using the effective in-
terest rate for the preceding plan year and 
by treating contributions as being first 
used to satisfy the minimum required con-
tribution.
‘‘(iii) CERTAIN CONTRIBUTIONS NEC-
ESSARY TO AVOID BENEFIT LIMITATIONS 
DISREGARDED.—The excess described in 
clause (i) with respect to any preceding 
plan year shall be reduced (but not below 
zero) by the amount of contributions an 
employer would be required to make under 
paragraph (1), (2), or (4) of section 206(g) 
to avoid a benefit limitation which would 
otherwise be imposed under such para-
graph for the preceding plan year. Any 
contribution which may be taken into ac-
count in satisfying the requirements of 
more than 1 of such paragraphs shall be 
taken into account only once for purposes 
of this clause. 
‘‘(C) DECREASE.—The prefunding balance 
of a plan shall be decreased (but not below 
zero) by—
‘‘(i) as of the first day of each plan 
year after 2008, the amount of such bal-
ance credited under paragraph (2) (if any) 
in reducing the minimum required con-
tribution of the plan for the preceding plan 
year, and
‘‘(ii) as of the time specified in para-
graph (5))(A), any reduction in such bal-
ance elected under paragraph (5). 
‘‘(7) FUNDING
STANDARD
CARRYOVER
BAL-
ANCE.—
‘‘(A) IN
GENERAL.—A funding standard 
carryover balance maintained by a plan shall 
consist of a beginning balance determined 
under subparagraph (B), decreased to the ex-
tent provided in subparagraph (C), and ad-
justed further as provided in paragraph (8). 
‘‘(B) BEGINNING
BALANCE.—The begin-
ning balance of the funding standard carryover 
balance shall be the positive balance described 
in paragraph (1)(B)(ii)(II). 
‘‘(C) DECREASES.—The funding standard 
carryover balance of a plan shall be decreased 
(but not below zero) by—
‘‘(i) as of the first day of each plan 
year after 2008, the amount of such bal-
ance credited under paragraph (2) (if any) 
in reducing the minimum required con-
tribution of the plan for the preceding plan 
year, and
‘‘(ii) as of the time specified in para-
graph (5))(A), any reduction in such bal-
ance elected under paragraph (5). 
‘‘(8) ADJUSTMENTS FOR INVESTMENT EXPERI-
ENCE.—In determining the prefunding balance or 
the funding standard carryover balance of a plan as 
of the first day of the plan year, the plan sponsor 
shall, in accordance with regulations prescribed by 
the Secretary of the Treasury, adjust such balance 
to reflect the rate of return on plan assets for the 
preceding plan year. Notwithstanding subsection 
(g)(3), such rate of return shall be determined on 
the basis of fair market value and shall properly 
take into account, in accordance with such regula-
tions, all contributions, distributions, and other plan 
payments made during such period. 
‘‘(9) ELECTIONS.—Elections under this sub-
section shall be made at such times, and in such 
form and manner, as shall be prescribed in regula-
tions of the Secretary of the Treasury. 
‘‘(g) VALUATION
OF PLAN ASSETS
AND LIABIL-
ITIES.—
‘‘(1) TIMING OF DETERMINATIONS.—Except as 
otherwise provided under this subsection, all deter-
minations under this section for a plan year shall be
made as of the valuation date of the plan for such 
plan year. 
‘‘(2) VALUATION DATE.—For purposes of this 
section—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the valuation date of a plan 
for any plan year shall be the first day of the 
plan year. 
‘‘(B) EXCEPTION FOR SMALL PLANS.—If, 
on each day during the preceding plan year, a 
plan had 100 or fewer participants, the plan 
may designate any day during the plan year as 
its valuation date for such plan year and suc-
ceeding plan years. For purposes of this sub-
paragraph, all defined benefit plans which are 
single-employer plans and are maintained by 
the same employer (or any member of such em-
ployer’s controlled group) shall be treated as 1 
plan, but only participants with respect to such 
employer or member shall be taken into ac-
count. 
‘‘(C) APPLICATION OF CERTAIN RULES IN 
DETERMINATION OF PLAN SIZE.—For purposes 
of this paragraph—
‘‘(i) PLANS
NOT
IN
EXISTENCE
IN 
PRECEDING YEAR.—In the case of the first 
plan year of any plan, subparagraph (B) 
shall apply to such plan by taking into ac-
count the number of participants that the 
plan is reasonably expected to have on 
days during such first plan year. 
‘‘(ii) PREDECESSORS.—Any reference 
in subparagraph (B) to an employer shall 
include a reference to any predecessor of 
such employer. 
‘‘(3) DETERMINATION OF VALUE OF PLAN AS-
SETS.—For purposes of this section—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the value of plan assets shall 
be the fair market value of the assets. 
‘‘(B) AVERAGING ALLOWED.—A plan may 
determine the value of plan assets on the basis 
of the averaging of fair market values, but only 
if such method—
‘‘(i) is permitted under regulations 
prescribed by the Secretary of the Treas-
ury, 
‘‘(ii) does not provide for averaging of 
such values over more than the period be-
ginning on the last day of the 25th month 
preceding the month in which the valuation 
date occurs and ending on the valuation 
date (or a similar period in the case of a 
valuation date which is not the 1st day of 
a month), and 
‘‘(iii) does not result in a determina-
tion of the value of plan assets which, at 
any time, is lower than 90 percent or 
greater than 110 percent of the fair mar-
ket value of such assets at such time. 
Any such averaging shall be adjusted for con-
tributions and distributions (as provided by the 
Secretary of the Treasury). 
‘‘(4) ACCOUNTING
FOR
CONTRIBUTION
RE-
CEIPTS.—For purposes of determining the value of 
assets under paragraph (3)—
‘‘(A) PRIOR YEAR CONTRIBUTIONS.—If—
‘‘(i) an employer makes any contribu-
tion to the plan after the valuation date for 
the plan year in which the contribution is 
made, and 
‘‘(ii) the contribution is for a pre-
ceding plan year,
the contribution shall be taken into account as 
an asset of the plan as of the valuation date, 
except that in the case of any plan year begin-
ning after 2008, only the present value (deter-
mined as of the valuation date) of such con-
tribution may be taken into account. For pur-
poses of the preceding sentence, present value 
shall be determined using the effective interest 
rate for the preceding plan year to which the 
contribution is properly allocable. 
‘‘(B) SPECIAL RULE FOR CURRENT YEAR 
CONTRIBUTIONS
MADE
BEFORE
VALUATION 
DATE.—If any contributions for any plan year 
are made to or under the plan during the plan 
year but before the valuation date for the plan 
year, the assets of the plan as of the valuation 
date shall not include—
‘‘(i) such contributions, and 
‘‘(ii) interest on such contributions for 
the period between the date of the con-
tributions and the valuation date, deter-
mined by using the effective interest rate 
for the plan year. 
‘‘(h) ACTUARIAL ASSUMPTIONS AND METHODS.—
‘‘(1) IN GENERAL.—Subject to this subsection, 
the determination of any present value or other com-
putation under this section shall be made on the 
basis of actuarial 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. 
‘‘(2) INTEREST RATES.—
‘‘(A) EFFECTIVE
INTEREST
RATE.—For 
purposes of this section, the term ‘effective in-
terest rate’ means, with respect to any plan for 
any plan year, the single rate of interest which, 
if used to determine the present value of the 
plan’s accrued or earned benefits referred to in 
subsection (d)(1), would result in an amount 
equal to the funding target of the plan for such 
plan year. 
‘‘(B) INTEREST RATES FOR DETERMINING 
FUNDING
TARGET.—For purposes of deter-
mining the funding target and normal cost of a 
plan for any plan year, the interest rate used in
determining the present value of the benefits of 
the plan shall be—
‘‘(i) in the case of benefits reasonably 
determined to be payable during the 5-year 
period beginning on the first day of the 
plan year, the first segment rate with re-
spect to the applicable month, 
‘‘(ii) in the case of benefits reasonably 
determined to be payable during the 15-
year period beginning at the end of the pe-
riod described in clause (i), the second seg-
ment rate with respect to the applicable 
month, and 
‘‘(iii) in the case of benefits reason-
ably determined to be payable after the pe-
riod described in clause (ii), the third seg-
ment rate with respect to the applicable 
month. 
‘‘(C) SEGMENT RATES.—For purposes of 
this paragraph—
‘‘(i) FIRST
SEGMENT
RATE.—The 
term ‘first segment rate’ means, with re-
spect to any month, the single rate of in-
terest which shall be determined by the 
Secretary of the Treasury for such month
on the basis of the corporate bond yield 
curve for such month, taking into account 
only that portion of such yield curve which 
is based on bonds maturing during the 5-
year period commencing with such month. 
‘‘(ii) SECOND
SEGMENT
RATE.—The 
term ‘second segment rate’ means, with re-
spect to any month, the single rate of in-
terest which shall be determined by the 
Secretary of the Treasury for such month 
on the basis of the corporate bond yield 
curve for such month, taking into account 
only that portion of such yield curve which 
is based on bonds maturing during the 15-
year period beginning at the end of the pe-
riod described in clause (i). 
‘‘(iii) THIRD
SEGMENT
RATE.—The 
term ‘third segment rate’ means, with re-
spect to any month, the single rate of in-
terest which shall be determined by the 
Secretary of the Treasury for such month 
on the basis of the corporate bond yield 
curve for such month, taking into account 
only that portion of such yield curve which 
is based on bonds maturing during periods
beginning after the period described in 
clause (ii). 
‘‘(D) CORPORATE BOND YIELD CURVE.—
For purposes of this paragraph—
‘‘(i) IN
GENERAL.—The term ‘cor-
porate bond yield curve’ means, with re-
spect to any month, a yield curve which is 
prescribed by the Secretary of the Treas-
ury for such month and which reflects the 
average, for the 24-month period ending 
with the month preceding such month, of 
monthly yields on investment grade cor-
porate bonds with varying maturities and 
that are in the top 3 quality levels avail-
able. 
‘‘(ii) 
ELECTION
TO
USE
YIELD 
CURVE.—Solely for purposes of deter-
mining the minimum required contribution 
under this section, the plan sponsor may, 
in lieu of the segment rates determined 
under subparagraph (C), elect to use inter-
est rates under the corporate bond yield 
curve. For purposes of the preceding sen-
tence such curve shall be determined with-
out regard to the 24-month averaging de-
scribed in clause (i). Such election, once 
made, may be revoked only with the con-
sent of the Secretary of the Treasury. 
‘‘(E) APPLICABLE MONTH.—For purposes 
of this paragraph, the term ‘applicable month’ 
means, with respect to any plan for any plan 
year, the month which includes the valuation 
date of such plan for such plan year or, at the 
election of the plan sponsor, any of the 4 
months which precede such month. Any election 
made under this subparagraph shall apply to 
the plan year for which the election is made and 
all succeeding plan years, unless the election is 
revoked with the consent of the Secretary of the 
Treasury. 
‘‘(F) PUBLICATION REQUIREMENTS.—The 
Secretary of the Treasury shall publish for each 
month the corporate bond yield curve (and the 
corporate bond yield curve reflecting the modi-
fication 
described 
in 
section 
205(g)(3)(B)(iii)(I)) for such month and each 
of the rates determined under subparagraph 
(B) for such month. The Secretary of the 
Treasury shall also publish a description of the 
methodology used to determine such yield curve
and such rates which is sufficiently detailed to 
enable plans to make reasonable projections re-
garding the yield curve and such rates for fu-
ture months based on the plan’s projection of 
future interest rates. 
‘‘(G) TRANSITION RULE.—
‘‘(i) IN
GENERAL.—Notwithstanding 
the preceding provisions of this paragraph, 
for plan years beginning in 2008 or 2009, 
the first, second, or third segment rate for 
a plan with respect to any month shall be 
equal to the sum of—
‘‘(I) the product of such rate for 
such month determined without re-
gard to this subparagraph, multiplied 
by the applicable percentage, and 
‘‘(II) the product of the rate de-
termined under the rules of section 
302(b)(5)(B)(ii)(II) (as in effect for 
plan years beginning in 2007), multi-
plied by a percentage equal to 100 
percent minus the applicable percent-
age. 
‘‘(ii) APPLICABLE PERCENTAGE.—For 
purposes of clause (i), the applicable per-
centage is 331⁄3 percent for plan years be-
ginning in 2008 and 662⁄3 percent for plan 
years beginning in 2009. 
‘‘(iii) 
NEW
PLANS
INELIGIBLE.—
Clause (i) shall not apply to any plan if the 
first plan year of the plan begins after De-
cember 31, 2007. 
‘‘(iv) ELECTION.—The plan sponsor 
may elect not to have this subparagraph 
apply. Such election, once made, may be 
revoked only with the consent of the Sec-
retary of the Treasury. 
‘‘(3) MORTALITY TABLES.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (C) or (D), the Secretary of the 
Treasury shall by regulation prescribe mortality 
tables to be used in determining any present 
value or making any computation under this 
section. Such tables shall be based on the actual 
experience of pension plans and projected 
trends in such experience. In prescribing such 
tables, the Secretary of the Treasury shall take 
into account results of available independent 
studies of mortality of individuals covered by 
pension plans.
‘‘(B) PERIODIC REVISION.—The Secretary 
of the Treasury shall (at least every 10 years) 
make revisions in any table in effect under sub-
paragraph (A) to reflect the actual experience 
of pension plans and projected trends in such 
experience. 
‘‘(C) SUBSTITUTE MORTALITY TABLE.—
‘‘(i) IN GENERAL.—Upon request by 
the plan sponsor and approval by the Sec-
retary of the Treasury, a mortality table 
which meets the requirements of clause 
(iii) shall be used in determining any 
present value or making any computation 
under this section during the period of 
consecutive plan years (not to exceed 10) 
specified in the request. 
‘‘(ii) EARLY
TERMINATION
OF
PE-
RIOD.—Notwithstanding clause (i), a mor-
tality table described in clause (i) shall 
cease to be in effect as of the earliest of—
‘‘(I) the date on which there is a 
significant change in the participants 
in the plan by reason of a plan spinoff 
or merger or otherwise, or
‘‘(II) the date on which the plan 
actuary determines that such table 
does not meet the requirements of 
clause (iii). 
‘‘(iii) REQUIREMENTS.—A mortality 
table meets the requirements of this clause 
if—
‘‘(I) there is a sufficient number 
of plan participants, and the pension 
plans have been maintained for a suf-
ficient period of time, to have credible 
information necessary for purposes of 
subclause (II), and 
‘‘(II) such table reflects the ac-
tual experience of the pension plans 
maintained by the sponsor and pro-
jected trends in general mortality ex-
perience. 
‘‘(iv) ALL
PLANS
IN
CONTROLLED 
GROUP MUST USE SEPARATE TABLE.—Ex-
cept as provided by the Secretary of the 
Treasury, a plan sponsor may not use a 
mortality table under this subparagraph 
for any plan maintained by the plan spon-
sor unless—
‘‘(I) a separate mortality table is 
established and used under this sub-
paragraph for each other plan main-
tained by the plan sponsor and if the 
plan sponsor is a member of a con-
trolled group, each member of the 
controlled group, and 
‘‘(II) the requirements of clause 
(iii) are met separately with respect to 
the table so established for each such 
plan, determined by only taking into 
account the participants of such plan, 
the time such plan has been in exist-
ence, and the actual experience of 
such plan. 
‘‘(v) DEADLINE FOR SUBMISSION AND 
DISPOSITION OF APPLICATION.—
‘‘(I) 
SUBMISSION.—The 
plan 
sponsor shall submit a mortality table 
to the Secretary of the Treasury for 
approval under this subparagraph at 
least 7 months before the 1st day of 
the period described in clause (i). 
‘‘(II) DISPOSITION.—Any mor-
tality table submitted to the Secretary
of the Treasury for approval under 
this subparagraph shall be treated as 
in effect as of the 1st day of the pe-
riod described in clause (i) unless the 
Secretary of the Treasury, during the 
180-day period beginning on the date 
of such submission, disapproves of 
such table and provides the reasons 
that such table fails to meet the re-
quirements of clause (iii). The 180-
day period shall be extended upon mu-
tual agreement of the Secretary of the 
Treasury and the plan sponsor. 
‘‘(D) SEPARATE MORTALITY TABLES FOR 
THE
DISABLED.—Notwithstanding 
subpara-
graph (A)—
‘‘(i) IN GENERAL.—The Secretary of 
the Treasury shall establish mortality ta-
bles which may be used (in lieu of the ta-
bles under subparagraph (A)) under this 
subsection for individuals who are entitled 
to benefits under the plan on account of 
disability. The Secretary of the Treasury 
shall establish separate tables for individ-
uals 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 DISABILITIES 
OCCURRING AFTER 1994.—In the case of 
disabilities occurring in plan years begin-
ning after December 31, 1994, the tables 
under clause (i) shall apply only with re-
spect to individuals described in such sub-
clause who are disabled within the meaning 
of title II of the Social Security Act and 
the regulations thereunder. 
‘‘(iii) PERIODIC REVISION.—The Sec-
retary of the Treasury shall (at least every 
10 years) make revisions in any table in ef-
fect under clause (i) to reflect the actual 
experience of pension plans and projected 
trends in such experience. 
‘‘(4) PROBABILITY OF BENEFIT PAYMENTS IN 
THE FORM OF LUMP SUMS OR OTHER OPTIONAL 
FORMS.—For purposes of determining any present 
value or making any computation under this section, 
there shall be taken into account—
‘‘(A) the probability that future benefit 
payments under the plan will be made in the
form of optional forms of benefits provided 
under the plan (including lump sum distribu-
tions, determined on the basis of the plan’s ex-
perience and other related assumptions), and 
‘‘(B) any difference in the present value of 
such future benefit payments resulting from the 
use of actuarial assumptions, in determining 
benefit payments in any such optional form of 
benefits, which are different from those speci-
fied in this subsection. 
‘‘(5) APPROVAL OF LARGE CHANGES IN ACTU-
ARIAL ASSUMPTIONS.—
‘‘(A) IN GENERAL.—No actuarial assump-
tion used to determine the funding target for a 
plan to which this paragraph applies may be 
changed without the approval of the Secretary 
of the Treasury. 
‘‘(B) PLANS
TO
WHICH
PARAGRAPH
AP-
PLIES.—This paragraph shall apply to a plan 
only if—
‘‘(i) the plan is a single-employer plan 
to which title IV applies, 
‘‘(ii) the aggregate unfunded vested 
benefits as of the close of the preceding 
plan year (as determined under section
4006(a)(3)(E)(iii)) of such plan and all 
other plans maintained by the contributing 
sponsors 
(as 
defined 
in 
section 
4001(a)(13)) and members of such spon-
sors’ controlled groups (as defined in sec-
tion 4001(a)(14)) which are covered by 
title IV (disregarding plans with no un-
funded 
vested 
benefits) 
exceed 
$50,000,000, and 
‘‘(iii) the change in assumptions (de-
termined after taking into account any 
changes in interest rate and mortality 
table) results in a decrease in the funding 
shortfall of the plan for the current plan 
year that exceeds $50,000,000, or that ex-
ceeds $5,000,000 and that is 5 percent or 
more of the funding target of the plan be-
fore such change. 
‘‘(i) SPECIAL RULES FOR AT-RISK PLANS.—
‘‘(1) FUNDING TARGET FOR PLANS IN AT-RISK 
STATUS.—
‘‘(A) IN GENERAL.—In the case of a plan 
which is in at-risk status for a plan year, the 
funding target of the plan for the plan year 
shall be equal to the sum of—
‘‘(i) the present value of all benefits 
accrued or earned under the plan as of the 
beginning of the plan year, as determined 
by using the additional actuarial assump-
tions described in subparagraph (B), and 
‘‘(ii) in the case of a plan which also 
has been in at-risk status for at least 2 of 
the 4 preceding plan years, a loading fac-
tor determined under subparagraph (C). 
‘‘(B) ADDITIONAL
ACTUARIAL
ASSUMP-
TIONS.—The actuarial assumptions described in 
this subparagraph are as follows: 
‘‘(i) All employees who are not other-
wise assumed to retire as of the valuation 
date but who will be eligible to elect bene-
fits during the plan year and the 10 suc-
ceeding plan years shall be assumed to re-
tire at the earliest retirement date under 
the plan but not before the end of the plan 
year for which the at-risk funding target 
and at-risk target normal cost are being 
determined. 
‘‘(ii) All employees shall be assumed 
to elect the retirement benefit available 
under the plan at the assumed retirement
age (determined after application of clause 
(i)) which would result in the highest 
present value of benefits. 
‘‘(C) LOADING FACTOR.—The loading fac-
tor applied with respect to a plan under this 
paragraph for any plan year is the sum of—
‘‘(i) $700, times the number of par-
ticipants in the plan, plus 
‘‘(ii) 4 percent of the funding target 
(determined without regard to this para-
graph) of the plan for the plan year. 
‘‘(2) TARGET
NORMAL
COST
OF
AT-RISK 
PLANS.—In the case of a plan which is in at-risk 
status for a plan year, the target normal cost of the 
plan for such plan year shall be equal to the sum 
of—
‘‘(A) the present value of all benefits which 
are expected to accrue or be earned under the 
plan during the plan year, determined using the 
additional actuarial assumptions described in 
paragraph (1)(B), plus 
‘‘(B) in the case of a plan which also has 
been in at-risk status for at least 2 of the 4 
preceding plan years, a loading factor equal to 
4 percent of the target normal cost (determined
without regard to this paragraph) of the plan 
for the plan year. 
‘‘(3) MINIMUM AMOUNT.—In no event shall—
‘‘(A) the at-risk funding target be less 
than the funding target, as determined without 
regard to this subsection, or 
‘‘(B) the at-risk target normal cost be less 
than the target normal cost, as determined 
without regard to this subsection. 
‘‘(4) DETERMINATION OF AT-RISK STATUS.—
For purposes of this subsection—
‘‘(A) IN GENERAL.—A plan is in at-risk 
status for a plan year if—
‘‘(i) the funding target attainment 
percentage for the preceding plan year (de-
termined under this section without regard 
to this subsection) is less than 80 percent, 
and 
‘‘(ii) the funding target attainment 
percentage for the preceding plan year (de-
termined under this section by using the 
additional actuarial assumptions described 
in paragraph (1)(B) in computing the 
funding target) is less than 70 percent.
‘‘(B) TRANSITION RULE.—In the case of 
plan years beginning in 2008, 2009, and 2010, 
subparagraph (A)(i) shall be applied by sub-
stituting the following percentages for ‘80 per-
cent’: 
‘‘(i) 65 percent in the case of 2008. 
‘‘(ii) 70 percent in the case of 2009. 
‘‘(iii) 75 percent in the case of 2010. 
In the case of plan years beginning in 2008, the 
funding target attainment percentage for the 
preceding plan year under subparagraph (A)(ii) 
may be determined using such methods of esti-
mation as the Secretary of the Treasury may 
provide. 
‘‘(C) SPECIAL RULE FOR EMPLOYEES OF-
FERED EARLY RETIREMENT IN 2006.—
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(ii), the additional actu-
arial assumptions described in paragraph 
(1)(B) shall not be taken into account with 
respect to any employee if—
‘‘(I) such employee is employed 
by a specified automobile manufac-
turer,
‘‘(II) such employee is offered a 
substantial amount of additional cash 
compensation, substantially enhanced 
retirement benefits under the plan, or 
materially reduced employment duties 
on the condition that by a specified 
date (not later than December 31, 
2010) the employee retires (as defined 
under the terms of the plan), 
‘‘(III) such offer is made during 
2006 and pursuant to a bona fide re-
tirement incentive program and re-
quires, by the terms of the offer, that 
such offer can be accepted not later 
than a specified date (not later than 
December 31, 2006), and 
‘‘(IV) such employee does not 
elect to accept such offer before the 
specified date on which the offer ex-
pires. 
‘‘(ii) SPECIFIED AUTOMOBILE MANU-
FACTURER.—For purposes of clause (i), 
the term ‘specified automobile manufac-
turer’ means—
‘‘(I) any manufacturer of auto-
mobiles, and 
‘‘(II) any manufacturer of auto-
mobile parts which supplies such parts 
directly to a manufacturer of auto-
mobiles and which, after a transaction 
or series of transactions ending in 
1999, ceased to be a member of a 
controlled group which included such 
manufacturer of automobiles. 
‘‘(5) TRANSITION BETWEEN APPLICABLE FUND-
ING TARGETS AND BETWEEN APPLICABLE TARGET 
NORMAL COSTS.—
‘‘(A) IN GENERAL.—In any case in which 
a plan which is in at-risk status for a plan year 
has been in such status for a consecutive period 
of fewer than 5 plan years, the applicable 
amount of the funding target and of the target 
normal cost shall be, in lieu of the amount de-
termined without regard to this paragraph, the 
sum of—
‘‘(i) the amount determined under this 
section without regard to this subsection, 
plus
‘‘(ii) the transition percentage for 
such plan year of the excess of the amount 
determined under this subsection (without 
regard to this paragraph) over the amount 
determined under this section without re-
gard to this subsection. 
‘‘(B) 
TRANSITION
PERCENTAGE.—For 
purposes of subparagraph (A), the transition 
percentage shall be determined in accordance 
with the following table:
‘‘If the consecutive number of 
years (including the plan year) 
The transition 
the plan is in at-risk status is—
percentage is—
1 .........................................................................................................
2 .........................................................................................................
3 .........................................................................................................
4 .........................................................................................................
80.
‘‘(C) YEARS BEFORE EFFECTIVE DATE.—
For purposes of this paragraph, plan years be-
ginning before 2008 shall not be taken into ac-
count. 
‘‘(6) SMALL PLAN EXCEPTION.—If, on each day 
during the preceding plan year, a plan had 500 or 
fewer participants, the plan shall not be treated as 
in at-risk status for the plan year. For purposes of 
this paragraph, all defined benefit plans (other than 
multiemployer plans) maintained by the same em-
ployer (or any member of such employer’s controlled 
group) shall be treated as 1 plan, but only partici-
pants with respect to such employer or member shall 
be taken into account and the rules of subsection 
(g)(2)(C) shall apply. 
‘‘(j) PAYMENT OF MINIMUM REQUIRED CONTRIBU-
TIONS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the due date for any payment of any minimum 
required contribution for any plan year shall be 81⁄2 
months after the close of the plan year. 
‘‘(2) INTEREST.—Any payment required under 
paragraph (1) for a plan year that is made on a date 
other than the valuation date for such plan year 
shall be adjusted for interest accruing for the period 
between the valuation date and the payment date, at 
the effective rate of interest for the plan for such 
plan year. 
‘‘(3) ACCELERATED QUARTERLY CONTRIBUTION 
SCHEDULE FOR UNDERFUNDED PLANS.—
‘‘(A) FAILURE
TO
TIMELY
MAKE
RE-
QUIRED INSTALLMENT.—In any case in which 
the plan has a funding shortfall for the pre-
ceding plan year, the employer maintaining the 
plan shall make the required installments under 
this paragraph and if the employer fails to pay 
the full amount of a required installment for
the plan year, then the amount of interest 
charged under paragraph (2) on the under-
payment for the period of underpayment shall 
be determined by using a rate of interest equal 
to the rate otherwise used under paragraph (2) 
plus 5 percentage points. 
‘‘(B) AMOUNT
OF
UNDERPAYMENT, PE-
RIOD
OF
UNDERPAYMENT.—For purposes of 
subparagraph (A)—
‘‘(i) AMOUNT.—The amount of the 
underpayment shall be the excess of—
‘‘(I) the required installment, 
over 
‘‘(II) the amount (if any) of the 
installment contributed to or under 
the plan on or before the due date for 
the installment. 
‘‘(ii) PERIOD OF UNDERPAYMENT.—
The period for which any interest is 
charged under this paragraph with respect 
to any portion of the underpayment shall 
run from the due date for the installment 
to the date on which such portion is con-
tributed to or under the plan.
‘‘(iii) ORDER
OF
CREDITING
CON-
TRIBUTIONS.—For 
purposes 
of 
clause 
(i)(II), contributions shall be credited 
against unpaid required installments in the 
order in which such installments are re-
quired to be paid. 
‘‘(C) NUMBER
OF
REQUIRED
INSTALL-
MENTS; DUE
DATES.—For purposes of this 
paragraph—
‘‘(i) PAYABLE IN 4 INSTALLMENTS.—
There shall be 4 required installments for 
each plan year. 
‘‘(ii) TIME
FOR
PAYMENT
OF
IN-
STALLMENTS.—The due dates for required 
installments are set forth in the following 
table:
In the case of the following 
required installment:
The due date is:
1st ...........................................................................
April 15
2nd .........................................................................
July 15
3rd ..........................................................................
October 15
4th ..........................................................................
January 15 of the fol-
lowing year. 
‘‘(D) AMOUNT
OF
REQUIRED
INSTALL-
MENT.—For purposes of this paragraph—
‘‘(i) IN
GENERAL.—The amount of 
any required installment shall be 25 per-
cent of the required annual payment. 
‘‘(ii) REQUIRED ANNUAL PAYMENT.—
For purposes of clause (i), the term ‘re-
quired annual payment’ means the lesser 
of—
‘‘(I) 90 percent of the minimum 
required 
contribution 
(determined 
without regard to this subsection) to 
the plan for the plan year under this 
section, or 
‘‘(II) 100 percent of the min-
imum required contribution (deter-
mined without regard to this sub-
section or to any waiver under section 
302(c)) to the plan for the preceding 
plan year. 
Subclause (II) shall not apply if the pre-
ceding plan year referred to in such clause 
was not a year of 12 months. 
‘‘(E) FISCAL YEARS AND SHORT YEARS.—
‘‘(i) FISCAL YEARS.—In applying this 
paragraph to a plan year beginning on any 
date other than January 1, there shall be
substituted for the months specified in this 
paragraph, the months which correspond 
thereto. 
‘‘(ii) SHORT PLAN YEAR.—This sub-
paragraph shall be applied to plan years of 
less than 12 months in accordance with 
regulations prescribed by the Secretary of 
the Treasury. 
‘‘(4) LIQUIDITY REQUIREMENT IN CONNECTION 
WITH QUARTERLY CONTRIBUTIONS.—
‘‘(A) IN GENERAL.—A plan to which this 
paragraph applies shall be treated as failing to 
pay the full amount of any required installment 
under paragraph (3) to the extent that the 
value of the liquid assets paid in such install-
ment is less than the liquidity shortfall (wheth-
er or not such liquidity shortfall exceeds the 
amount of such installment required to be paid 
but for this paragraph). 
‘‘(B) PLANS
TO
WHICH
PARAGRAPH
AP-
PLIES.—This paragraph shall apply to a plan 
(other than a plan described in subsection 
(g)(2)(B)) which—
‘‘(i) is required to pay installments 
under paragraph (3) 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 (3)(A), 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 funding target 
attainment percentage of the plan for the plan 
year (taking into account the expected increase 
in funding target due to benefits accruing or 
earned during the plan year) to 100 percent. 
‘‘(E) DEFINITIONS.—For purposes of this 
paragraph—
‘‘(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—
‘‘(I) the base amount with re-
spect to such quarter, over 
‘‘(II) 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 subclause 
(I) exceeds an amount equal to 2 
times the sum of the adjusted dis-
bursements 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 of the Treasury that such ex-
cess is the result of nonrecurring cir-
cumstances, the base amount with re-
spect to such quarter shall be deter-
mined without regard to amounts re-
lated 
to 
those 
nonrecurring 
cir-
cumstances. 
‘‘(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 funding target at-
tainment percentage for the plan year, 
and 
‘‘(II) the sum of the purchases of 
annuities, payments of single sums, 
and such other disbursements as the 
Secretary of the Treasury shall pro-
vide in regulations. 
‘‘(v) LIQUID ASSETS.—The term ‘liq-
uid assets’ means cash, marketable securi-
ties, and such other assets as specified by
the Secretary of the Treasury in regula-
tions. 
‘‘(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 of the 
Treasury may prescribe such regulations as are 
necessary to carry out this paragraph. 
‘‘(k) IMPOSITION
OF LIEN WHERE FAILURE
TO 
MAKE REQUIRED CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—In the case of a plan to 
which this subsection applies (as provided under 
paragraph (2)), if—
‘‘(A) any person fails to make a contribu-
tion payment required by section 302 and this 
section before the due date for such payment, 
and 
‘‘(B) the unpaid balance of such payment 
(including interest), when added to the aggre-
gate unpaid balance of all preceding such pay-
ments for which payment was not made before 
the due date (including interest), exceeds 
$1,000,000,
then there shall be a lien in favor of the plan in the 
amount determined under paragraph (3) upon all 
property and rights to property, whether real or per-
sonal, belonging to such person and any other per-
son who is a member of the same controlled group 
of which such person is a member. 
‘‘(2) PLANS TO WHICH SUBSECTION APPLIES.—
This subsection shall apply to a single-employer plan 
covered under section 4021 for any plan year for 
which the funding target attainment percentage (as 
defined in subsection (d)(2)) of such plan is less 
than 100 percent. 
‘‘(3) AMOUNT OF LIEN.—For purposes of para-
graph (1), the amount of the lien shall be equal to 
the aggregate unpaid balance of contribution pay-
ments required under this section and section 302 
for which payment has not been made before the due 
date. 
‘‘(4) NOTICE OF FAILURE; LIEN.—
‘‘(A) NOTICE
OF
FAILURE.—A person 
committing a failure described in paragraph (1) 
shall notify the Pension Benefit Guaranty Cor-
poration of such failure within 10 days of the 
due date for the required contribution payment.
‘‘(B) PERIOD OF LIEN.—The lien imposed 
by paragraph (1) shall arise on the due date for 
the required contribution payment and shall 
continue until the last day of the first plan year 
in which the plan ceases to be described in 
paragraph (1)(B). Such lien shall continue to 
run without regard to whether such plan con-
tinues to be described in paragraph (2) during 
the period referred to in the preceding sentence. 
‘‘(C) CERTAIN
RULES
TO
APPLY.—Any 
amount with respect to which a lien is imposed 
under paragraph (1) shall be treated as taxes 
due and owing the United States and rules 
similar to the rules of subsections (c), (d), and 
(e) of section 4068 shall apply with respect to 
a lien imposed by subsection (a) and the 
amount with respect to such lien. 
‘‘(5) ENFORCEMENT.—Any lien created under 
paragraph (1) may be perfected and enforced only 
by the Pension Benefit Guaranty Corporation, or at 
the direction of the Pension Benefit Guaranty Cor-
poration, by the contributing sponsor (or any mem-
ber of the controlled group of the contributing spon-
sor).
‘‘(6) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) CONTRIBUTION PAYMENT.—The term 
‘contribution payment’ means, in connection 
with a plan, a contribution payment required to 
be made to the plan, including any required in-
stallment under paragraphs (3) and (4) of sub-
section (j). 
‘‘(B) DUE
DATE; 
REQUIRED
INSTALL-
MENT.—The terms ‘due date’ and ‘required in-
stallment’ have the meanings given such terms 
by subsection (j), except that in the case of a 
payment other than a required installment, the 
due date shall be the date such payment is re-
quired to be made under section 303. 
‘‘(C) CONTROLLED
GROUP.—The term 
‘controlled group’ means any group treated as 
a single employer under subsections (b), (c), 
(m), and (o) of section 414 of the Internal Rev-
enue Code of 1986. 
‘‘(l) QUALIFIED TRANSFERS TO HEALTH BENEFIT 
ACCOUNTS.—In the case of a qualified transfer (as de-
fined in section 420 of the Internal Revenue Code of 
1986), any assets so transferred shall not, for purposes 
of this section, be treated as assets in the plan.’’.
(b) CLERICAL AMENDMENT.—The table of sections 
in section 1 of such Act (as amended by section 101) is 
amended by inserting after the item relating to section 
302 the following new item:
‘‘Sec. 303. Minimum funding standards for single-employer defined benefit pen-
sion plans.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan years begin-
ning after 2007. 
SEC. 
103. 
BENEFIT 
LIMITATIONS 
UNDER 
SINGLE-EM-
PLOYER PLANS. 
(a) FUNDING-BASED LIMITS
ON BENEFITS
AND 
BENEFIT
ACCRUALS
UNDER
SINGLE-EMPLOYER 
PLANS.—Section 206 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1056) is amended by 
adding at the end the following new subsection: 
‘‘(g) FUNDING-BASED LIMITS
ON BENEFITS
AND 
BENEFIT
ACCRUALS
UNDER
SINGLE-EMPLOYER 
PLANS.—
‘‘(1) FUNDING-BASED
LIMITATION
ON
SHUT-
DOWN BENEFITS AND OTHER UNPREDICTABLE CON-
TINGENT
EVENT
BENEFITS
UNDER
SINGLE-EM-
PLOYER PLANS.—
‘‘(A) IN GENERAL.—If a participant of a 
defined benefit plan which is a single-employer 
plan is entitled to an unpredictable contingent
event benefit payable with respect to any event 
occurring during any plan year, the plan shall 
provide that such benefit may not be provided 
if the adjusted funding target attainment per-
centage for such plan year—
‘‘(i) is less than 60 percent, or 
‘‘(ii) would be less than 60 percent 
taking into account such occurrence. 
‘‘(B) 
EXEMPTION.—Subparagraph 
(A) 
shall cease to apply with respect to any plan 
year, effective as of the first day of the plan 
year, upon payment by the plan sponsor of a 
contribution (in addition to any minimum re-
quired contribution under section 303) equal 
to—
‘‘(i) in the case of subparagraph 
(A)(i), the amount of the increase in the 
funding target of the plan (under section 
303) for the plan year attributable to the 
occurrence referred to in subparagraph 
(A), and 
‘‘(ii) in the case of subparagraph 
(A)(ii), the amount sufficient to result in a 
funding target attainment percentage of 60 
percent.
‘‘(C) 
UNPREDICTABLE
CONTINGENT 
EVENT.—For purposes of this paragraph, the 
term ‘unpredictable contingent event benefit’ 
means any benefit payable solely by reason of—
‘‘(i) a plant shutdown (or similar 
event, as determined by the Secretary of 
the Treasury), or 
‘‘(ii) an event other than the attain-
ment of any age, performance of any serv-
ice, receipt or derivation of any compensa-
tion, or occurrence of death or disability. 
‘‘(2) LIMITATIONS ON PLAN AMENDMENTS IN-
CREASING LIABILITY FOR BENEFITS.—
‘‘(A) IN GENERAL.—No amendment to a 
defined benefit plan which is a single-employer 
plan which has the effect of increasing liabilities 
of the plan by reason of increases in benefits, 
establishment of new benefits, changing the 
rate of benefit accrual, or changing the rate at 
which benefits become nonforfeitable may take 
effect during any plan year if the adjusted 
funding target attainment percentage for such 
plan year is—
‘‘(i) less than 80 percent, or
‘‘(ii) would be less than 80 percent 
taking into account such amendment. 
‘‘(B) 
EXEMPTION.—Subparagraph 
(A) 
shall cease to apply with respect to any plan 
year, effective as of the first day of the plan 
year (or if later, the effective date of the 
amendment), upon payment by the plan sponsor 
of a contribution (in addition to any minimum 
required contribution under section 303) equal 
to—
‘‘(i) in the case of subparagraph 
(A)(i), the amount of the increase in the 
funding target of the plan (under section 
303) for the plan year attributable to the 
amendment, and 
‘‘(ii) in the case of subparagraph 
(A)(ii), the amount sufficient to result in 
an adjusted funding target attainment per-
centage of 80 percent. 
‘‘(C) EXCEPTION FOR CERTAIN BENEFIT 
INCREASES.—Subparagraph (A) shall not apply 
to any amendment which provides for an in-
crease in benefits under a formula which is not 
based on a participant’s compensation, but only 
if the rate of such increase is not in excess of
the contemporaneous rate of increase in average 
wages of participants covered by the amend-
ment. 
‘‘(3) LIMITATIONS ON ACCELERATED BENEFIT 
DISTRIBUTIONS.—
‘‘(A) FUNDING PERCENTAGE LESS THAN 
60 PERCENT.—A defined benefit plan which is 
a single-employer plan shall provide that, in any 
case in which the plan’s adjusted funding target 
attainment percentage for a plan year is less 
than 60 percent, the plan may not pay any pro-
hibited payment after the valuation date for the 
plan year. 
‘‘(B) BANKRUPTCY.—A defined benefit 
plan which is a single-employer plan shall pro-
vide that, during any period in which the plan 
sponsor is a debtor in a case under title 11, 
United States Code, or similar Federal or State 
law, the plan may not pay any prohibited pay-
ment. The preceding sentence shall not apply 
on or after the date on which the enrolled actu-
ary of the plan certifies that the adjusted fund-
ing target attainment percentage of such plan 
is not less than 100 percent.
‘‘(C) LIMITED PAYMENT IF PERCENTAGE 
AT LEAST 60 PERCENT BUT LESS THAN 80 PER-
CENT.—
‘‘(i) IN GENERAL.—A defined benefit 
plan which is a single-employer plan shall 
provide that, in any case in which the 
plan’s adjusted funding target attainment 
percentage for a plan year is 60 percent or 
greater but less than 80 percent, the plan 
may not pay any prohibited payment after 
the valuation date for the plan year to the 
extent the amount of the payment exceeds 
the lesser of—
‘‘(I) 50 percent of the amount of 
the payment which could be made 
without regard to this subsection, or 
‘‘(II) the present value (deter-
mined under guidance prescribed by 
the Pension Benefit Guaranty Cor-
poration, using the interest and mor-
tality 
assumptions 
under 
section 
205(g)) of the maximum guarantee 
with respect to the participant under 
section 4022. 
‘‘(ii) ONE-TIME APPLICATION.—
‘‘(I) IN
GENERAL.—The plan 
shall also provide that only 1 prohib-
ited payment meeting the require-
ments of clause (i) may be made with 
respect to any participant during any 
period of consecutive plan years to 
which the limitations under either 
subparagraph (A) or (B) or this sub-
paragraph applies. 
‘‘(II) TREATMENT
OF
BENE-
FICIARIES.—For 
purposes 
of 
this 
clause, a participant and any bene-
ficiary on his behalf (including an al-
ternate payee, as defined in section 
206(d)(3)(K)) shall be treated as 1 
participant. If the accrued benefit of a 
participant is allocated to such an al-
ternate payee and 1 or more other 
persons, the amount under clause (i) 
shall be allocated among such persons 
in the same manner as the accrued 
benefit is allocated unless the quali-
fied domestic relations order (as de-
fined in section 206(d)(3)(B)(i)) pro-
vides otherwise.
‘‘(D) EXCEPTION.—This paragraph shall 
not apply to any plan for any plan year if the 
terms of such plan (as in effect for the period 
beginning on September 1, 2005, and ending 
with such plan year) provide for no benefit ac-
cruals with respect to any participant during 
such period. 
‘‘(E) PROHIBITED
PAYMENT.—For pur-
pose of this paragraph, the term ‘prohibited 
payment’ means—
‘‘(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)), to a participant or ben-
eficiary whose annuity starting date (as de-
fined in section 205(h)(2)) occurs during 
any period a limitation under subpara-
graph (A) or (B) is in effect, 
‘‘(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 of the Treasury by regula-
tions.
‘‘(4) LIMITATION ON BENEFIT ACCRUALS FOR 
PLANS WITH SEVERE FUNDING SHORTFALLS.—
‘‘(A) IN GENERAL.—A defined benefit plan 
which is a single-employer plan shall provide 
that, in any case in which the plan’s adjusted 
funding target attainment percentage for a plan 
year is less than 60 percent, benefit accruals 
under the plan shall cease as of the valuation 
date for the plan year. 
‘‘(B) 
EXEMPTION.—Subparagraph 
(A) 
shall cease to apply with respect to any plan 
year, effective as of the first day of the plan 
year, upon payment by the plan sponsor of a 
contribution (in addition to any minimum re-
quired contribution under section 303) equal to 
the amount sufficient to result in an adjusted 
funding target attainment percentage of 60 per-
cent. 
‘‘(5) RULES RELATING TO CONTRIBUTIONS RE-
QUIRED TO AVOID BENEFIT LIMITATIONS.—
‘‘(A) SECURITY MAY BE PROVIDED.—
‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the adjusted funding tar-
get attainment percentage shall be deter-
mined by treating as an asset of the plan
any security provided by a plan sponsor in 
a form meeting the requirements of clause 
(ii). 
‘‘(ii) FORM OF SECURITY.—The secu-
rity required under clause (i) shall consist 
of—
‘‘(I) a bond issued by a corporate 
surety company that is an acceptable 
surety for purposes of section 412 of 
this Act, 
‘‘(II) cash, or United States obli-
gations which mature in 3 years or 
less, held in escrow by a bank or simi-
lar financial institution, or 
‘‘(III) such other form of security 
as is satisfactory to the Secretary of 
the Treasury and the parties involved. 
‘‘(iii) ENFORCEMENT.—Any security 
provided under clause (i) may be perfected 
and enforced at any time after the earlier 
of—
‘‘(I) the date on which the plan 
terminates, 
‘‘(II) if there is a failure to make 
a payment of the minimum required
contribution for any plan year begin-
ning after the security is provided, the 
due date for the payment under sec-
tion 303(j), or 
‘‘(III) if the adjusted funding 
target attainment percentage is less 
than 60 percent for a consecutive pe-
riod of 7 years, the valuation date for 
the last year in the period. 
‘‘(iv) RELEASE
OF
SECURITY.—The 
security 
shall 
be 
released 
(and 
any 
amounts thereunder shall be refunded to-
gether with any interest accrued thereon) 
at such time as the Secretary of the Treas-
ury may prescribe in regulations, including 
regulations for partial releases of the secu-
rity by reason of increases in the funding 
target attainment percentage. 
‘‘(B) PREFUNDING BALANCE OR FUNDING 
STANDARD CARRYOVER BALANCE MAY NOT BE 
USED.—No prefunding balance or funding 
standard carryover balance under section 303(f) 
may be used under paragraph (1), (2), or (4) 
to satisfy any payment an employer may make 
under any such paragraph to avoid or terminate
the application of any limitation under such 
paragraph. 
‘‘(C) DEEMED
REDUCTION
OF
FUNDING 
BALANCES.—
‘‘(i) IN GENERAL.—Subject to clause 
(iii), in any case in which a benefit limita-
tion under paragraph (1), (2), (3), or (4) 
would (but for this subparagraph and de-
termined without regard to paragraph 
(1)(B), (2)(B), or (4)(B)) apply to such 
plan for the plan year, the plan sponsor of 
such plan shall be treated for purposes of 
this Act as having made an election under 
section 303(f) to reduce the prefunding 
balance or funding standard carryover bal-
ance by such amount as is necessary for 
such benefit limitation to not apply to the 
plan for such plan year. 
‘‘(ii) EXCEPTION
FOR
INSUFFICIENT 
FUNDING BALANCES.—Clause (i) shall not 
apply with respect to a benefit limitation 
for any plan year if the application of 
clause (i) would not result in the benefit 
limitation not applying for such plan year.
‘‘(iii) 
RESTRICTIONS
OF
CERTAIN 
RULES
TO
COLLECTIVELY
BARGAINED 
PLANS.—With respect to any benefit limi-
tation under paragraph (1), (2), or (4), 
clause (i) shall only apply in the case of a 
plan maintained pursuant to 1 or more col-
lective bargaining agreements between em-
ployee representatives and 1 or more em-
ployers. 
‘‘(6) NEW PLANS.—Paragraphs (1), (2) and (4) 
shall not apply to a plan for the first 5 plan years 
of the plan. For purposes of this paragraph, the ref-
erence in this paragraph to a plan shall include a 
reference to any predecessor plan. 
‘‘(7) PRESUMED
UNDERFUNDING
FOR
PUR-
POSES OF BENEFIT LIMITATIONS.—
‘‘(A) 
PRESUMPTION
OF
CONTINUED 
UNDERFUNDING.—In any case in which a ben-
efit limitation under paragraph (1), (2), (3), or 
(4) has been applied to a plan with respect to 
the plan year preceding the current plan year, 
the adjusted funding target attainment percent-
age of the plan for the current plan year shall 
be presumed to be equal to the adjusted fund-
ing target attainment percentage of the plan for
the preceding plan year until the enrolled actu-
ary of the plan certifies the actual adjusted 
funding target attainment percentage of the 
plan for the current plan year. 
‘‘(B) PRESUMPTION
OF
UNDERFUNDING 
AFTER 10TH MONTH.—In any case in which no 
certification of the adjusted funding target at-
tainment percentage for the current plan year 
is made with respect to the plan before the first 
day of the 10th month of such year, for pur-
poses of paragraphs (1), (2), (3), and (4), such 
first day shall be deemed, for purposes of such 
paragraph, to be the valuation date of the plan 
for the current plan year and the plan’s ad-
justed funding target attainment percentage 
shall be conclusively presumed to be less than 
60 percent as of such first day. 
‘‘(C) PRESUMPTION
OF
UNDERFUNDING 
AFTER
4TH
MONTH
FOR
NEARLY
UNDER-
FUNDED PLANS.—In any case in which—
‘‘(i) a benefit limitation under para-
graph (1), (2), (3), or (4) did not apply to 
a plan with respect to the plan year pre-
ceding the current plan year, but the ad-
justed funding target attainment percent-
age of the plan for such preceding plan 
year was not more than 10 percentage 
points greater than the percentage which 
would have caused such paragraph to 
apply to the plan with respect to such pre-
ceding plan year, and 
‘‘(ii) as of the first day of the 4th 
month of the current plan year, the en-
rolled actuary of the plan has not certified 
the actual adjusted funding target attain-
ment percentage of the plan for the cur-
rent plan year, 
until the enrolled actuary so certifies, such first 
day shall be deemed, for purposes of such para-
graph, to be the valuation date of the plan for 
the current plan year and the adjusted funding 
target attainment percentage of the plan as of 
such first day shall, for purposes of such para-
graph, be presumed to be equal to 10 percent-
age points less than the adjusted funding target 
attainment percentage of the plan for such pre-
ceding plan year. 
‘‘(8) TREATMENT OF PLAN AS OF CLOSE OF 
PROHIBITED OR CESSATION PERIOD.—For purposes 
of applying this part—
‘‘(A) OPERATION
OF
PLAN
AFTER
PE-
RIOD.—Unless the plan provides otherwise, pay-
ments and accruals will resume effective as of 
the day following the close of the period for 
which any limitation of payment or accrual of 
benefits under paragraph (3) or (4) applies. 
‘‘(B) TREATMENT
OF
AFFECTED
BENE-
FITS.—Nothing in this paragraph shall be con-
strued as affecting the plan’s treatment of ben-
efits which would have been paid or accrued but 
for this subsection. 
‘‘(9) TERMS RELATING TO FUNDING TARGET 
ATTAINMENT
PERCENTAGE.—For purposes of this 
subsection—
‘‘(A) IN
GENERAL.—The term ‘funding 
target attainment percentage’ has the same 
meaning given such term by section 303(d)(2). 
‘‘(B) ADJUSTED
FUNDING
TARGET
AT-
TAINMENT PERCENTAGE.—The term ‘adjusted 
funding target attainment percentage’ means 
the funding target attainment percentage which 
is determined under subparagraph (A) by in-
creasing each of the amounts under subpara-
graphs (A) and (B) of section 303(d)(2) by the 
aggregate amount of purchases of annuities for
employees other than highly compensated em-
ployees (as defined in section 414(q) of the In-
ternal Revenue Code of 1986) which were made 
by the plan during the preceding 2 plan years. 
‘‘(C) APPLICATION TO PLANS WHICH ARE 
FULLY FUNDED WITHOUT REGARD TO REDUC-
TIONS FOR FUNDING BALANCES.—
‘‘(i) IN GENERAL.—In the case of a 
plan for any plan year, if the funding tar-
get attainment percentage is 100 percent 
or more (determined without regard to this 
subparagraph and without regard to the 
reduction in the value of assets under sec-
tion 303(f)(4)), the funding target attain-
ment percentage for purposes of subpara-
graphs (A) and (B) shall be determined 
without regard to such reduction. 
‘‘(ii) TRANSITION
RULE.—Clause (i) 
shall be applied to plan years beginning 
after 2007 and before 2011 by substituting 
for ‘100 percent’ the applicable percentage 
determined in accordance with the fol-
lowing table:
‘‘In the case of a plan year 
The applicable 
beginning in calendar year: 
percentage is 
2008 ...................................................................................................
2009 ...................................................................................................
2010 ...................................................................................................
96.