tized 
as 
required 
under 
section 
304(b)(2)(C). 
‘‘(C) WAIVER
OF
AMORTIZED
PORTION 
NOT ALLOWED.—The Secretary of the Treasury 
may not waive under subparagraph (A) any 
portion of the minimum funding standard 
under subsection (a) for a plan year which is 
attributable to any waived funding deficiency 
for any preceding plan year. 
‘‘(2) DETERMINATION
OF
BUSINESS
HARD-
SHIP.—For purposes of this subsection, the factors 
taken into account in determining temporary sub-
stantial business hardship (substantial business 
hardship in the case of a multiemployer plan) shall 
include (but shall not be limited to) whether or 
not— 
‘‘(A) the employer is operating at an eco-
nomic loss, 
‘‘(B) there is substantial unemployment or 
underemployment in the trade or business and 
in the industry concerned, 
‘‘(C) the sales and profits of the industry 
concerned are depressed or declining, and 
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ccoleman on PROD1PC71 with BILLS
‘‘(D) it is reasonable to expect that the 
plan will be continued only if the waiver is 
granted. 
‘‘(3) WAIVED FUNDING DEFICIENCY.—For pur-
poses of this part, the term ‘waived funding defi-
ciency’ means the portion of the minimum funding 
standard under subsection (a) (determined without 
regard to the waiver) for a plan year waived by the 
Secretary of the Treasury and not satisfied by em-
ployer contributions. 
‘‘(4) SECURITY FOR WAIVERS FOR SINGLE-EM-
PLOYER PLANS, CONSULTATIONS.— 
‘‘(A) SECURITY MAY BE REQUIRED.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in subparagraph (C), the Secretary 
of the Treasury may require an employer 
maintaining a defined benefit plan which is 
a single-employer plan (within the meaning 
of section 4001(a)(15)) to provide security 
to such plan as a condition for granting or 
modifying a waiver under paragraph (1). 
‘‘(ii) SPECIAL
RULES.—Any security 
provided under clause (i) may be perfected 
and enforced only by the Pension Benefit 
Guaranty Corporation, or at the direction 
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ccoleman on PROD1PC71 with BILLS
of the Corporation, by a contributing spon-
sor 
(within 
the 
meaning 
of 
section 
4001(a)(13)), or a member of such spon-
sor’s controlled group (within the meaning 
of section 4001(a)(14)). 
‘‘(B) CONSULTATION WITH THE PENSION 
BENEFIT GUARANTY CORPORATION.—Except as 
provided in subparagraph (C), the Secretary of 
the Treasury shall, before granting or modi-
fying a waiver under this subsection with re-
spect to a plan described in subparagraph 
(A)(i)— 
‘‘(i) provide the Pension Benefit 
Guaranty Corporation with— 
‘‘(I) notice of the completed ap-
plication for any waiver or modifica-
tion, and 
‘‘(II) an opportunity to comment 
on such application within 30 days 
after receipt of such notice, and 
‘‘(ii) consider— 
‘‘(I) any comments of the Cor-
poration under clause (i)(II), and 
‘‘(II) any views of any employee 
organization (within the meaning of 
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ccoleman on PROD1PC71 with BILLS
section 3(4)) representing participants 
in the plan which are submitted in 
writing to the Secretary of the Treas-
ury in connection with such applica-
tion. 
Information provided to the Corporation under 
this subparagraph shall be considered tax re-
turn information and subject to the safe-
guarding and reporting requirements of section 
6103(p) of the Internal Revenue Code of 1986. 
‘‘(C) EXCEPTION
FOR
CERTAIN
WAIV-
ERS.— 
‘‘(i) IN
GENERAL.—The preceding 
provisions of this paragraph shall not 
apply to any plan with respect to which the 
sum of— 
‘‘(I) the aggregate unpaid min-
imum required contributions for the 
plan year and all preceding plan 
years, and 
‘‘(II) the present value of all 
waiver amortization installments de-
termined for the plan year and suc-
ceeding plan years under section 
303(e)(2), 
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ccoleman on PROD1PC71 with BILLS
is less than $1,000,000. 
‘‘(ii) TREATMENT
OF
WAIVERS
FOR 
WHICH APPLICATIONS ARE PENDING.—The 
amount described in clause (i)(I) shall in-
clude any increase in such amount which 
would result if all applications for waivers 
of the minimum funding standard under 
this subsection which are pending with re-
spect to such plan were denied. 
‘‘(iii) UNPAID
MINIMUM
REQUIRED 
CONTRIBUTION.—For purposes of this sub-
paragraph— 
‘‘(I) IN
GENERAL.—The term 
‘unpaid minimum required contribu-
tion’ means, with respect to any plan 
year, any minimum required contribu-
tion under section 303 for the plan 
year which is not paid on or before 
the due date (as determined under 
section 303(j)(1)) for the plan year. 
‘‘(II) 
ORDERING
RULE.—For 
purposes of subclause (I), any pay-
ment to or under a plan for any plan 
year shall be allocated first to unpaid 
minimum required contributions for 
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ccoleman on PROD1PC71 with BILLS
all preceding plan years on a first-in, 
first-out basis and then to the min-
imum required contribution under sec-
tion 303 for the plan year. 
‘‘(5) SPECIAL
RULES
FOR
SINGLE-EMPLOYER 
PLANS.— 
‘‘(A) APPLICATION MUST BE SUBMITTED 
BEFORE DATE 21⁄2 MONTHS AFTER CLOSE OF 
YEAR.—In the case of a single-employer plan, 
no waiver may be granted under this subsection 
with respect to any plan for any plan year un-
less an application therefor is submitted to the 
Secretary of the Treasury not later than the 
15th day of the 3rd month beginning after the 
close of such plan year. 
‘‘(B) SPECIAL RULE IF EMPLOYER IS MEM-
BER OF CONTROLLED GROUP.—In the case of a 
single-employer plan, if an employer is a mem-
ber of a controlled group, the temporary sub-
stantial business hardship requirements of 
paragraph (1) shall be treated as met only if 
such requirements are met— 
‘‘(i) with respect to such employer, 
and 
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ccoleman on PROD1PC71 with BILLS
‘‘(ii) with respect to the controlled 
group of which such employer is a member 
(determined by treating all members of 
such group as a single employer). 
The Secretary of the Treasury may provide that 
an analysis of a trade or business or industry 
of a member need not be conducted if such Sec-
retary determines such analysis is not necessary 
because the taking into account of such member 
would not significantly affect the determination 
under this paragraph. 
‘‘(6) ADVANCE NOTICE.— 
‘‘(A) IN GENERAL.—The Secretary of the 
Treasury shall, before granting a waiver under 
this subsection, require each applicant to pro-
vide evidence satisfactory to such Secretary that 
the applicant has provided notice of the filing of 
the application for such waiver to each affected 
party (as defined in section 4001(a)(21)). Such 
notice shall include a description of the extent 
to which the plan is funded for benefits which 
are guaranteed under title IV and for benefit li-
abilities. 
‘‘(B) CONSIDERATION
OF
RELEVANT
IN-
FORMATION.—The Secretary of the Treasury 
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ccoleman on PROD1PC71 with BILLS
shall consider any relevant information provided 
by a person to whom notice was given under 
subparagraph (A). 
‘‘(7) RESTRICTION ON PLAN AMENDMENTS.— 
‘‘(A) IN GENERAL.—No amendment of a 
plan which increases the liabilities of the plan 
by reason of any increase in benefits, any 
change in the accrual of benefits, or any change 
in the rate at which benefits become nonforfeit-
able under the plan shall be adopted if a waiver 
under this subsection or an extension of time 
under section 304(d) is in effect with respect to 
the plan, or if a plan amendment described in 
subsection (d)(2) has been made at any time in 
the preceding 12 months (24 months in the 
case of a multiemployer plan). If a plan is 
amended in violation of the preceding sentence, 
any such waiver, or extension of time, shall not 
apply to any plan year ending on or after the 
date on which such amendment is adopted. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply to any plan amendment which— 
‘‘(i) the Secretary of the Treasury de-
termines to be reasonable and which pro-
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ccoleman on PROD1PC71 with BILLS
vides for only de minimis increases in the 
liabilities of the plan, 
‘‘(ii) only repeals an amendment de-
scribed in subsection (d)(2), or 
‘‘(iii) is required as a condition of 
qualification under part I of subchapter D 
of chapter 1 of the Internal Revenue Code 
of 1986. 
‘‘(8) CROSS
REFERENCE.—For corresponding 
duties of the Secretary of the Treasury with regard 
to implementation of the Internal Revenue Code of 
1986, see section 412(c) of such Code. 
‘‘(d) MISCELLANEOUS RULES.— 
‘‘(1) CHANGE
IN
METHOD
OR
YEAR.—If the 
funding method, the valuation date, or a plan year 
for a plan is changed, the change shall take effect 
only if approved by the Secretary of the Treasury. 
‘‘(2) CERTAIN
RETROACTIVE
PLAN
AMEND-
MENTS.—For purposes of this section, any amend-
ment applying to a plan year which— 
‘‘(A) is adopted after the close of such plan 
year but no later than 21⁄2 months after the 
close of the plan year (or, in the case of a mul-
tiemployer plan, no later than 2 years after the 
close of such plan year), 
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ccoleman on PROD1PC71 with BILLS
‘‘(B) does not reduce the accrued benefit 
of any participant determined as of the begin-
ning of the first plan year to which the amend-
ment applies, and 
‘‘(C) does not reduce the accrued benefit of 
any participant determined as of the time of 
adoption except to the extent required by the 
circumstances, 
shall, at the election of the plan administrator, be 
deemed to have been made on the first day of such 
plan year. No amendment described in this para-
graph which reduces the accrued benefits of any par-
ticipant shall take effect unless the plan adminis-
trator files a notice with the Secretary of the Treas-
ury notifying him of such amendment and such Sec-
retary has approved such amendment, or within 90 
days after the date on which such notice was filed, 
failed to disapprove such amendment. No amend-
ment described in this subsection shall be approved 
by the Secretary of the Treasury unless such Sec-
retary determines that such amendment is necessary 
because of a temporary substantial business hard-
ship (as determined under subsection (c)(2)) or a 
substantial business hardship (as so determined) in 
the case of a multiemployer plan and that a waiver 
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ccoleman on PROD1PC71 with BILLS
under subsection (c) (or, in the case of a multiem-
ployer plan, any extension of the amortization period 
under section 304(d)) is unavailable or inadequate. 
‘‘(3) CONTROLLED
GROUP.—For purposes of 
this section, the term ‘controlled group’ means any 
group treated as a single employer under subsection 
(b), (c), (m), or (o) of section 414 of the Internal 
Revenue Code of 1986.’’. 
(c) CLERICAL AMENDMENT.—The table of contents 
in section 1 of such Act is amended by striking the items 
relating to sections 302 through 308 and inserting the fol-
lowing new item: 
‘‘Sec. 302. Minimum funding standards.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after 2007. 
SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DE-
FINED BENEFIT PENSION PLANS. 
(a) IN GENERAL.—Part 3 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 (as 
amended by section 101 of this Act) is amended by insert-
ing after section 302 the following new section: 
‘‘SEC. 303. MINIMUM FUNDING STANDARDS FOR SINGLE- 
EMPLOYER 
DEFINED 
BENEFIT 
PENSION 
PLANS. 
‘‘(a) MINIMUM
REQUIRED
CONTRIBUTION.—For 
purposes of this section and section 302(a)(2)(A), except 
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ccoleman on PROD1PC71 with BILLS
as provided in subsection (f), the term ‘minimum required 
contribution’ means, with respect to any plan year of a 
single-employer plan— 
‘‘(1) in any case in which the value of plan as-
sets of the plan (as reduced under subsection 
(f)(4)(B)) is less than the funding target of the plan 
for the plan year, the sum of— 
‘‘(A) the target normal cost of the plan for 
the plan year, 
‘‘(B) the shortfall amortization charge (if 
any) for the plan for the plan year determined 
under subsection (c), and 
‘‘(C) the waiver amortization charge (if 
any) for the plan for the plan year as deter-
mined under subsection (e); or 
‘‘(2) in any case in which the value of plan as-
sets of the plan (as reduced under subsection 
(f)(4)(B)) equals or exceeds the funding target of 
the plan for the plan year, the target normal cost of 
the plan for the plan year reduced (but not below 
zero) by such excess. 
‘‘(b) TARGET NORMAL COST.—For purposes of this 
section, except as provided in subsection (i)(2) with re-
spect to plans in at-risk status, the term ‘target normal 
cost’ means, for any plan year, the present value of all 
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ccoleman on PROD1PC71 with BILLS
benefits which are expected to accrue or to be earned 
under the plan during the plan year. For purposes of this 
subsection, if any benefit attributable to services per-
formed in a preceding plan year is increased by reason 
of any increase in compensation during the current plan 
year, the increase in such benefit shall be treated as hav-
ing accrued during the current plan year. 
‘‘(c) SHORTFALL AMORTIZATION CHARGE.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the shortfall amortization charge for a plan for 
any plan year is the aggregate total (not less than 
zero) of the shortfall amortization installments for 
such plan year with respect to the shortfall amorti-
zation bases for such plan year and each of the 6 
preceding plan years. 
‘‘(2) 
SHORTFALL
AMORTIZATION
INSTALL-
MENT.—For purposes of paragraph (1)— 
‘‘(A) DETERMINATION.—The shortfall am-
ortization installments are the amounts nec-
essary to amortize the shortfall amortization 
base of the plan for any plan year in level an-
nual installments over the 7-plan-year period 
beginning with such plan year. 
‘‘(B) 
SHORTFALL
INSTALLMENT.—The 
shortfall amortization installment for any plan 
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year in the 7-plan-year period under subpara-
graph (A) with respect to any shortfall amorti-
zation base is the annual installment deter-
mined under subparagraph (A) for that year for 
that base. 
‘‘(C) SEGMENT
RATES.—In determining 
any shortfall amortization installment under 
this paragraph, the plan sponsor shall use the 
segment rates determined under subparagraph 
(C) of subsection (h)(2), applied under rules 
similar to the rules of subparagraph (B) of sub-
section (h)(2). 
‘‘(3) SHORTFALL
AMORTIZATION
BASE.—For 
purposes of this section, the shortfall amortization 
base of a plan for a plan year is— 
‘‘(A) the funding shortfall of such plan for 
such plan year, minus 
‘‘(B) the present value (determined using 
the segment rates determined under subpara-
graph (C) of subsection (h)(2), applied under 
rules similar to the rules of subparagraph (B) 
of subsection (h)(2)) of the aggregate total of 
the shortfall amortization installments and 
waiver amortization installments which have 
been determined for such plan year and any 
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ccoleman on PROD1PC71 with BILLS
succeeding plan year with respect to the short-
fall amortization bases and waiver amortization 
bases of the plan for any plan year preceding 
such plan year. 
‘‘(4) FUNDING SHORTFALL.—For purposes of 
this section, the funding shortfall of a plan for any 
plan year is the excess (if any) of— 
‘‘(A) the funding target of the plan for the 
plan year, over 
‘‘(B) the value of plan assets of the plan 
(as reduced under subsection (f)(4)(B)) for the 
plan year which are held by the plan on the 
valuation date. 
‘‘(5) EXEMPTION FROM NEW SHORTFALL AM-
ORTIZATION BASE.— 
‘‘(A) IN GENERAL.—In any case in which 
the value of plan assets of the plan (as reduced 
under subsection (f)(4)(A)) is equal to or great-
er than the funding target of the plan for the 
plan year, the shortfall amortization base of the 
plan for such plan year shall be zero. 
‘‘(B) TRANSITION RULE.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clauses (iii) and (iv), in the case 
of plan years beginning after 2007 and be-
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ccoleman on PROD1PC71 with BILLS
fore 2011, only the applicable percentage 
of the funding target shall be taken into 
account under paragraph (3)(A) in deter-
mining the funding shortfall for the plan 
year for purposes of subparagraph (A). 
‘‘(ii) APPLICABLE PERCENTAGE.—For 
purposes of subparagraph (A), the applica-
ble percentage shall be determined in ac-
cordance with the following table: 
‘‘In the case of a plan year 
The applicable 
beginning in calendar year: 
percentage is 
2008 ...................................................................................................
2009 ...................................................................................................
2010 ...................................................................................................
96. 
‘‘(iii) LIMITATION.—Clause (i) shall 
not apply with respect to any plan year 
after 2008 unless the shortfall amortiza-
tion base for each of the preceding years 
beginning after 2007 was zero (determined 
after application of this subparagraph). 
‘‘(iv) TRANSITION RELIEF NOT AVAIL-
ABLE FOR NEW OR DEFICIT REDUCTION 
PLANS.—Clause (i) shall not apply to a 
plan— 
‘‘(I) which was not in effect for a 
plan year beginning in 2007, or 
‘‘(II) which was in effect for a 
plan year beginning in 2007 and 
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ccoleman on PROD1PC71 with BILLS
which was subject to section 302(d) 
(as in effect for plan years beginning 
in 2007), determined after the appli-
cation of paragraphs (6) and (9) 
thereof. 
‘‘(6) EARLY DEEMED AMORTIZATION UPON AT-
TAINMENT OF FUNDING TARGET.—In any case in 
which the funding shortfall of a plan for a plan year 
is zero, for purposes of determining the shortfall am-
ortization charge for such plan year and succeeding 
plan years, the shortfall amortization bases for all 
preceding plan years (and all shortfall amortization 
installments determined with respect to such bases) 
shall be reduced to zero. 
‘‘(d) RULES RELATING TO FUNDING TARGET.—For 
purposes of this section— 
‘‘(1) FUNDING TARGET.—Except as provided in 
subsection (i)(1) with respect to plans in at-risk sta-
tus, the funding target of a plan for a plan year is 
the present value of all benefits accrued or earned 
under the plan as of the beginning of the plan year. 
‘‘(2) FUNDING TARGET ATTAINMENT PERCENT-
AGE.—The ‘funding target attainment percentage’ of 
a plan for a plan year is the ratio (expressed as a 
percentage) which— 
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‘‘(A) the value of plan assets for the plan 
year (as reduced under subsection (f)(4)(B)), 
bears to 
‘‘(B) the funding target of the plan for the 
plan year (determined without regard to sub-
section (i)(1)). 
‘‘(e) WAIVER AMORTIZATION CHARGE.— 
‘‘(1) DETERMINATION
OF
WAIVER
AMORTIZA-
TION CHARGE.—The waiver amortization charge (if 
any) for a plan for any plan year is the aggregate 
total of the waiver amortization installments for 
such plan year with respect to the waiver amortiza-
tion bases for each of the 5 preceding plan years. 
‘‘(2) WAIVER AMORTIZATION INSTALLMENT.— 
For purposes of paragraph (1)— 
‘‘(A) DETERMINATION.—The waiver amor-
tization installments are the amounts necessary 
to amortize the waiver amortization base of the 
plan for any plan year in level annual install-
ments over a period of 5 plan years beginning 
with the succeeding plan year. 
‘‘(B) WAIVER INSTALLMENT.—The waiver 
amortization installment for any plan year in 
the 5-year period under subparagraph (A) with 
respect to any waiver amortization base is the 
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ccoleman on PROD1PC71 with BILLS
annual installment determined under subpara-
graph (A) for that year for that base. 
‘‘(3) INTEREST
RATE.—In determining any 
waiver amortization installment under this sub-
section, the plan sponsor shall use the segment rates 
determined under subparagraph (C) of subsection 
(h)(2), applied under rules similar to the rules of 
subparagraph (B) of subsection (h)(2). 
‘‘(4) WAIVER AMORTIZATION BASE.—The waiv-
er amortization base of a plan for a plan year is the 
amount of the waived funding deficiency (if any) for 
such plan year under section 302(c). 
‘‘(5) EARLY DEEMED AMORTIZATION UPON AT-
TAINMENT OF FUNDING TARGET.—In any case in 
which the funding shortfall of a plan for a plan year 
is zero, for purposes of determining the waiver am-
ortization charge for such plan year and succeeding 
plan years, the waiver amortization bases for all pre-
ceding plan years (and all waiver amortization in-
stallments determined with respect to such bases) 
shall be reduced to zero. 
‘‘(f) REDUCTION OF MINIMUM REQUIRED CONTRIBU-
TION BY PREFUNDING BALANCE AND FUNDING STAND-
ARD CARRYOVER BALANCE.— 
‘‘(1) ELECTION TO MAINTAIN BALANCES.— 
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‘‘(A) PREFUNDING
BALANCE.—The plan 
sponsor of a single-employer plan may elect to 
maintain a prefunding balance. 
‘‘(B) FUNDING
STANDARD
CARRYOVER 
BALANCE.— 
‘‘(i) IN GENERAL.—In the case of a 
single-employer plan described in clause 
(ii), the plan sponsor may elect to maintain 
a funding standard carryover balance, until 
such balance is reduced to zero. 
‘‘(ii) PLANS
MAINTAINING
FUNDING 
STANDARD ACCOUNT IN 2007.—A plan is 
described in this clause if the plan— 
‘‘(I) was in effect for a plan year 
beginning in 2007, and 
‘‘(II) had a positive balance in 
the funding standard account under 
section 302(b) as in effect for such 
plan year and determined as of the 
end of such plan year. 
‘‘(2) 
APPLICATION
OF
BALANCES.—A 
prefunding balance and a funding standard carry-
over balance maintained pursuant to this para-
graph— 
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ccoleman on PROD1PC71 with BILLS
‘‘(A) shall be available for crediting against 
the minimum required contribution, pursuant to 
an election under paragraph (3), 
‘‘(B) shall be applied as a reduction in the 
amount treated as the value of plan assets for 
purposes of this section, to the extent provided 
in paragraph (4), and 
‘‘(C) may be reduced at any time, pursu-
ant to an election under paragraph (5). 
‘‘(3) ELECTION TO APPLY BALANCES AGAINST 
MINIMUM REQUIRED CONTRIBUTION.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraphs (B) and (C), in the case of any 
plan year in which the plan sponsor elects to 
credit against the minimum required contribu-
tion for the current plan year all or a portion 
of the prefunding balance or the funding stand-
ard carryover balance for the current plan year 
(not in excess of such minimum required con-
tribution), the minimum required contribution 
for the plan year shall be reduced as of the first 
day of the plan year by the amount so credited 
by the plan sponsor. For purposes of the pre-
ceding sentence, the minimum required con-
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ccoleman on PROD1PC71 with BILLS
tribution shall be determined after taking into 
account any waiver under section 302(c). 
‘‘(B) 
COORDINATION
WITH
FUNDING 
STANDARD CARRYOVER BALANCE.—To the ex-
tent that any plan has a funding standard car-
ryover balance greater than zero, no amount of 
the prefunding balance of such plan may be 
credited under this paragraph in reducing the 
minimum required contribution. 
‘‘(C) LIMITATION
FOR
UNDERFUNDED 
PLANS.—The preceding provisions of this para-
graph shall not apply for any plan year if the 
ratio (expressed as a percentage) which— 
‘‘(i) the value of plan assets for the 
preceding plan year (as reduced under 
paragraph (4)(C)), bears to 
‘‘(ii) the funding target of the plan for 
the preceding plan year (determined with-
out regard to subsection (i)(1)), 
is less than 80 percent. In the case of plan 
years beginning in 2008, the ratio under this 
subparagraph may be determined using such 
methods of estimation as the Secretary of the 
Treasury may prescribe. 
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‘‘(4) EFFECT
OF
BALANCES
ON
AMOUNTS 
TREATED AS VALUE OF PLAN ASSETS.—In the case 
of any plan maintaining a prefunding balance or a 
funding standard carryover balance pursuant to this 
subsection, the amount treated as the value of plan 
assets shall be deemed to be such amount, reduced 
as provided in the following subparagraphs: 
‘‘(A) APPLICABILITY OF SHORTFALL AM-
ORTIZATION BASE.—For purposes of subsection 
(c)(5), the value of plan assets is deemed to be 
such amount, reduced by the amount of the 
prefunding balance, but only if an election 
under paragraph (2) applying any portion of 
the prefunding balance in reducing the min-
imum required contribution is in effect for the 
plan year. 
‘‘(B) DETERMINATION OF EXCESS ASSETS, 
FUNDING SHORTFALL, AND FUNDING TARGET 
ATTAINMENT PERCENTAGE.— 
‘‘(i) IN
GENERAL.—For purposes of 
subsections (a), (c)(4)(B), and (d)(2)(A), 
the value of plan assets is deemed to be 
such amount, reduced by the amount of 
the prefunding balance and the funding 
standard carryover balance. 
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‘‘(ii) SPECIAL
RULE
FOR
CERTAIN 
BINDING AGREEMENTS WITH PBGC.—For 
purposes of subsection (c)(4)(B), the value 
of plan assets shall not be deemed to be re-
duced for a plan year by the amount of the 
specified balance if, with respect to such 
balance, there is in effect for a plan year 
a binding written agreement with the Pen-
sion Benefit Guaranty Corporation which 
provides that such balance is not available 
to reduce the minimum required contribu-
tion for the plan year. For purposes of the 
preceding sentence, the term ‘specified bal-
ance’ means the prefunding balance or the 
funding standard carryover balance, as the 
case may be. 
‘‘(C) AVAILABILITY OF BALANCES IN PLAN 
YEAR FOR CREDITING AGAINST MINIMUM RE-
QUIRED
CONTRIBUTION.—For 
purposes 
of 
paragraph (3)(C)(i) of this subsection, the value 
of plan assets is deemed to be such amount, re-
duced by the amount of the prefunding balance. 
‘‘(5) ELECTION TO REDUCE BALANCE PRIOR TO 
DETERMINATIONS OF VALUE OF PLAN ASSETS AND 
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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 
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(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. 
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‘‘(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 
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‘‘(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 
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‘‘(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 
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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— 
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‘‘(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-
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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, 
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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.— 
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‘‘(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 
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ccoleman on PROD1PC71 with BILLS
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 
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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 
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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-
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ccoleman on PROD1PC71 with BILLS
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 
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