241
current plan year remain in effect for suc-
ceeding plan years, 
is less than the present value of all nonforfeit-
able benefits for all participants and bene-
ficiaries projected to be payable under the plan 
during the current plan year and each of the 4 
succeeding plan years (plus administrative ex-
penses for such plan years). 
‘‘(C) A plan is described in this subpara-
graph if—
‘‘(i) as of the beginning of the current 
plan year, the funded percentage of the 
plan is less than 65 percent, and 
‘‘(ii) the plan has an accumulated 
funding deficiency for the current plan 
year or is projected to have an accumu-
lated funding deficiency for any of the 4 
succeeding plan years, taking into account 
any extension of amortization periods 
under section 431(d). 
‘‘(D) A plan is described in this subpara-
graph if—
‘‘(i)(I) the plan’s normal cost for the 
current plan year, plus interest (deter-
mined at the rate used for determining
242
cost under the plan) for the current plan 
year on the amount of unfunded benefit li-
abilities under the plan as of the last date 
of the preceding plan year, exceeds 
‘‘(II) the present value, as of the be-
ginning of the current plan year, of the 
reasonably anticipated employer and em-
ployee contributions for the current plan 
year, 
‘‘(ii) the present value, as of the be-
ginning of the current plan year, of non-
forfeitable benefits of inactive participants 
is greater than the present value, as of the 
beginning of the current plan year, of non-
forfeitable benefits of active participants, 
and 
‘‘(iii) the plan is projected to have an 
accumulated funding deficiency for the 
current plan year or any of the 4 suc-
ceeding plan years. 
‘‘(E) A plan is described in this subpara-
graph if—
‘‘(i) the funded percentage of the plan 
is greater than 65 percent for the current 
plan year, and
243
‘‘(ii) the plan is projected to have an 
accumulated funding deficiency during ei-
ther of the following 3 plan years. 
‘‘(4) REHABILITATION PLAN.—
‘‘(A) IN GENERAL.—A rehabilitation plan 
shall consist of—
‘‘(i) amendments to the plan providing 
(under reasonable actuarial assumptions) 
for measures, agreed to by the bargaining 
parties, to increase contributions, reduce 
plan expenditures (including plan mergers 
and consolidations), or reduce future ben-
efit accruals, or to take any combination of 
such actions, determined necessary to 
cause the plan to cease, during the reha-
bilitation period, to be in critical status, 
‘‘(ii) measures, agreed to by the bar-
gaining parties, to provide funding relief, 
or 
‘‘(iii) reasonable measures to forestall 
possible insolvency (within the meaning of 
section 418E) if the plan sponsor deter-
mines that, upon exhaustion of all reason-
able measures, the plan would not cease
244
during the rehabilitation period to be in 
critical status. 
‘‘(B) REHABILITATION PERIOD.—The re-
habilitation period for any rehabilitation plan 
adopted pursuant to this section is the 10-year 
period beginning on the earlier of—
‘‘(i) the second anniversary of the 
date of the adoption of the rehabilitation 
plan, or 
‘‘(ii) the first day of the first plan 
year of the multiemployer plan following 
the plan year in which occurs the first date 
after the day of the certification as of 
which collective bargaining agreements cov-
ering on the day of such certification at 
least 75 percent of active participants in 
such multiemployer plan have expired. 
‘‘(C) REPORTING.—A summary of any re-
habilitation plan or modification thereto adopt-
ed during any plan year, together with annual 
updates regarding the funding ratio of the plan, 
shall be included in the annual report for such 
plan year under section 104(a) and in the sum-
mary annual report described in section
245
104(b)(3) of the Employee Retirement and In-
come Security Act of 1974. 
‘‘(5) 
DEVELOPMENT
OF
REHABILITATION 
PLAN.—
‘‘(A) PROPOSALS BY PLAN SPONSOR.—
‘‘(i) IN
GENERAL.—Within 90 days 
after the date of the certification under 
subsection (a) that the plan is in critical 
status (or the date as of which the require-
ments of subsection (b)(1) are not met 
with respect to the plan), the plan sponsor 
shall propose to all bargaining parties a 
range of alternative schedules of increases 
in contributions and reductions in future 
benefit accruals that would serve to carry 
out a rehabilitation plan under this sub-
section. 
‘‘(ii) PROPOSAL
ASSUMING
NO
CON-
TRIBUTION
INCREASES.—Such proposals 
shall include, as one of the proposed sched-
ules, a schedule of those reductions in fu-
ture benefit accruals that would be nec-
essary to cause the plan to cease to be in 
critical status if there were no further in-
creases in rates of contribution to the plan.
246
‘‘(iii) PROPOSAL
WHERE
CONTRIBU-
TIONS ARE NECESSARY.—If the plan spon-
sor determines that the plan will not cease 
to be in critical status during the rehabili-
tation period unless the plan is amended to 
provide for an increase in contributions, 
the plan sponsor’s proposals shall include a 
schedule of those increases in contribution 
rates that would be necessary to cause the 
plan to cease to be in critical status if fu-
ture benefit accruals were reduced to the 
maximum extent permitted by law and the 
rate of future benefit accruals did not ex-
ceed 1 percent per plan year. 
‘‘(B) REQUESTS FOR ADDITIONAL SCHED-
ULES.—Upon the joint request of all bargaining 
parties, each of whom—
‘‘(i) employs at least 5 percent of the 
active participants, or 
‘‘(ii) represents as an employee orga-
nization, for purposes of collective bar-
gaining, at least 5 percent of the active 
participants, 
the plan sponsor shall include among the pro-
posed schedules such schedules of increases in
247
contributions and reductions in future benefit 
accruals as may be specified by the bargaining 
parties. 
‘‘(C) DEFAULT SCHEDULE.—In any case 
in which the bargaining parties, as of 240 days 
after the later of the date of the certification 
under subsection (a) or the first day the plan 
is in critical status under subsection (a)(3) or 
(b)(7), have not agreed to at least one of the 
proposed schedules, the plan sponsor shall 
amend the plan to implement the schedule re-
quired by subparagraph (A)(ii). 
‘‘(D) SUBSEQUENT AMENDMENTS.—Upon 
the adoption of a schedule of increases in con-
tributions or reductions in future benefit accru-
als as part of the rehabilitation plan, the plan 
sponsor may amend the plan thereafter to up-
date the schedule to adjust for any experience 
of the plan contrary to past actuarial assump-
tions, except that such an amendment may be 
made not more than once in any 3-year period. 
‘‘(E) ALLOCATION OF REDUCTIONS IN FU-
TURE BENEFIT ACCRUALS.—Any schedule con-
taining reductions in future benefit accruals 
forming a part of a rehabilitation plan shall be
248
applicable with respect to any group of active 
participants who are employed by any bar-
gaining party (as an employer obligated to con-
tribute under the plan) in proportion to the ex-
tent to which increases in contributions under 
such schedule apply to such bargaining party. 
‘‘(6) MAINTENANCE
OF
CONTRIBUTIONS
AND 
RESTRICTIONS ON BENEFITS PENDING ADOPTION OF 
REHABILITATION
PLAN.—The rules of paragraphs 
(5) and (6) of subsection (b) shall apply for pur-
poses of this subsection by substituting the term ‘re-
habilitation plan’ for ‘funding improvement plan’. 
‘‘(7) DEEMED WITHDRAWAL.—Upon the failure 
of any employer who has an obligation to contribute 
under the plan to make contributions in compliance 
with the schedule adopted under paragraph (6) as 
part of the rehabilitation plan, the failure of the em-
ployer may, at the discretion of the plan sponsor, be 
treated as a withdrawal by the employer from the 
plan under section 4203 of the Employee Retirement 
and Income Security Act of 1974 or a partial with-
drawal by the employer under section 4205 of such 
Act. 
‘‘(d) DEFINITIONS.—For purposes of this section—
249
‘‘(1) BARGAINING
PARTY.—The term ‘bar-
gaining party’ means, in connection with a multiem-
ployer plan—
‘‘(A) an employer who has an obligation to 
contribute under the plan, and 
‘‘(B) an employee organization which, for 
purposes of collective bargaining, represents 
plan participants employed by such an em-
ployer. 
‘‘(2) CURRENT LIABILITY.—The term ‘current 
liability’ has the meaning provided such term in sec-
tion 431(c)(6)(C). 
‘‘(3) UNFUNDED
CURRENT
LIABILITY.—The 
term ‘unfunded current liability’ means the excess 
(if any) of—
‘‘(A) the current liability of the plan, over 
‘‘(B) the value of the plan’s assets deter-
mined under section 431(c)(2). 
‘‘(4) FUNDED PERCENTAGE.—The term ‘fund-
ed percentage’ means the percentage expressed as a 
ratio of which—
‘‘(A) the numerator of which is the value 
of the plan’s assets, as determined under sec-
tion 431(c)(2), and
250
‘‘(B) the denominator of which is the ac-
crued liability of the plan. 
‘‘(5) 
UNFUNDED
VESTED
BENEFITS.—The 
term ‘unfunded vested benefits’ has the meaning 
provided in section 418(b)(7). 
‘‘(6) ACCUMULATED
FUNDING
DEFICIENCY.—
The term ‘accumulated funding deficiency’ has the 
meaning provided such term in section 431(a). 
‘‘(7) ACTIVE PARTICIPANT.—The term ‘active 
participant’ means, in connection with a multiem-
ployer plan, a participant who is in covered service 
under the plan. 
‘‘(8) INACTIVE PARTICIPANT.—The term ‘inac-
tive participant’ means, in connection with a multi-
employer plan, a participant who—
‘‘(A) is not in covered service under the 
plan, and 
‘‘(B) is in pay status under the plan or has 
a nonforfeitable right to benefits under the 
plan. 
‘‘(9) PAY STATUS.—A person is in ‘pay status’ 
under a multiemployer plan if—
‘‘(A) at any time during the current plan 
year, such person is a participant or beneficiary 
under the plan and is paid an early, late, nor-