208 
rectly or indirectly) in a trust (or other ar-
rangement as determined by the Secretary) 
or transferred to such a trust or other ar-
rangement for purposes of paying deferred 
compensation of an applicable covered em-
ployee under a nonqualified deferred com-
pensation plan of the plan sponsor or 
member of a controlled group which in-
cludes the plan sponsor, or 
‘‘(ii) a nonqualified deferred com-
pensation plan of the plan sponsor or 
member of a controlled group which in-
cludes the plan sponsor provides that as-
sets will become restricted to the provision 
of benefits under the plan in connection 
with such restricted period (or other simi-
lar financial measure determined by the 
Secretary) with respect to the defined ben-
efit plan, or assets are so restricted, 
such assets shall, for purposes of section 83, be 
treated as property transferred in connection 
with the performance of services whether or not 
such assets are available to satisfy claims of 
general creditors. Clause (i) shall not apply with 
respect to any assets which are so set aside be-
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209 
fore the restricted period with respect to the de-
fined benefit plan. 
‘‘(B) RESTRICTED PERIOD.—For purposes 
of this section, the term ‘restricted period’ 
means, with respect to any plan described in 
subparagraph (A)— 
‘‘(i) any period during which the plan 
is in at-risk status (as defined in section 
430(i)); 
‘‘(ii) any period the plan sponsor is a 
debtor in a case under title 11, United 
States Code, or similar Federal or State 
law, and 
‘‘(iii) the 12-month period beginning 
on the date which is 6 months before the 
termination date of the plan if, as of the 
termination date, the plan is not sufficient 
for benefit liabilities (within the meaning 
of section 4041 of the Employee Retire-
ment Income Security Act of 1974). 
‘‘(C) SPECIAL
RULE
FOR
PAYMENT
OF 
TAXES
ON
DEFERRED
COMPENSATION
IN-
CLUDED IN INCOME.—If an employer provides 
directly or indirectly for the payment of any 
Federal, State, or local income taxes with re-
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210 
spect to any compensation required to be in-
cluded in gross income by reason of this para-
graph— 
‘‘(i) interest shall be imposed under 
subsection (a)(1)(B)(i)(I) on the amount of 
such payment in the same manner as if 
such payment was part of the deferred 
compensation to which it relates, 
‘‘(ii) such payment shall be taken into 
account in determining the amount of the 
additional 
tax 
under 
subsection 
(a)(1)(B)(i)(II) in the same manner as if 
such payment was part of the deferred 
compensation to which it relates, and 
‘‘(iii) no deduction shall be allowed 
under this title with respect to such pay-
ment. 
‘‘(D) OTHER DEFINITIONS.—For purposes 
of this section— 
‘‘(i) 
APPLICABLE
COVERED
EM-
PLOYEE.—The term ‘applicable covered 
employee’ means any— 
‘‘(I) covered employee of a plan 
sponsor, 
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211 
‘‘(II) covered employee of a mem-
ber of a controlled group which in-
cludes the plan sponsor, and 
‘‘(III) former employee who was 
a covered employee at the time of ter-
mination of employment with the plan 
sponsor or a member of a controlled 
group which includes the plan spon-
sor. 
‘‘(ii) COVERED EMPLOYEE.—The term 
‘covered employee’ means an individual de-
scribed in section 162(m)(3) or an indi-
vidual subject to the requirements of sec-
tion 16(a) of the Securities Exchange Act 
of 1934.’’. 
(b) CONFORMING AMENDMENTS.—Paragraphs (4) 
and (5) of section 409A(b) of such Code, as redesignated 
by subsection (a) of this subsection, are each amended by 
striking ‘‘paragraph (1) or (2)’’ each place it appears and 
inserting ‘‘paragraph (1), (2), or (3)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers or other reservation 
of assets after the date of the enactment of this Act. 
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212 
TITLE II—FUNDING RULES FOR 
MULTIEMPLOYER 
DEFINED 
BENEFIT 
PLANS 
AND 
RE-
LATED PROVISIONS 
Subtitle A—Amendments to Em-
ployee Retirement Income Secu-
rity Act of 1974 
SEC. 201. FUNDING RULES FOR MULTIEMPLOYER DEFINED 
BENEFIT PLANS. 
(a) IN GENERAL.—Part 3 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 (as 
amended by this Act) is amended by inserting after section 
303 the following new section: 
‘‘MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER 
PLANS 
‘‘SEC. 304. (a) IN GENERAL.—For purposes of sec-
tion 302, the accumulated funding deficiency of a multi-
employer plan for any plan year is— 
‘‘(1) except as provided in paragraph (2), the 
amount, determined as of the end of the plan year, 
equal to the excess (if any) of the total charges to 
the funding standard account of the plan for all plan 
years (beginning with the first plan year for which 
this part applies to the plan) over the total credits 
to such account for such years, and 
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213 
‘‘(2) if the multiemployer plan is in reorganiza-
tion for any plan year, the accumulated funding de-
ficiency of the plan determined under section 4243. 
‘‘(b) FUNDING STANDARD ACCOUNT.— 
‘‘(1) ACCOUNT
REQUIRED.—Each multiem-
ployer plan to which this part applies shall establish 
and maintain a funding standard account. Such ac-
count shall be credited and charged solely as pro-
vided in this section. 
‘‘(2) CHARGES TO ACCOUNT.—For a plan year, 
the funding standard account shall be charged with 
the sum of— 
‘‘(A) the normal cost of the plan for the 
plan year, 
‘‘(B) the amounts necessary to amortize in 
equal annual installments (until fully amor-
tized)— 
‘‘(i) in the case of a plan which comes 
into existence on or after January 1, 2008, 
the unfunded past service liability under 
the plan on the first day of the first plan 
year to which this section applies, over a 
period of 15 plan years, 
‘‘(ii) separately, with respect to each 
plan year, the net increase (if any) in un-
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funded past service liability under the plan 
arising from plan amendments adopted in 
such year, over a period of 15 plan years, 
‘‘(iii) separately, with respect to each 
plan year, the net experience loss (if any) 
under the plan, over a period of 15 plan 
years, and 
‘‘(iv) separately, with respect to each 
plan year, the net loss (if any) resulting 
from changes in actuarial assumptions 
used under the plan, over a period of 15 
plan years, 
‘‘(C) the amount necessary to amortize 
each waived funding deficiency (within the 
meaning of section 302(c)(3)) for each prior 
plan year in equal annual installments (until 
fully amortized) over a period of 15 plan years, 
‘‘(D) the amount necessary to amortize in 
equal annual installments (until fully amor-
tized) over a period of 5 plan years any amount 
credited to the funding standard account under 
section 302(b)(3)(D) (as in effect on the day 
before the date of the enactment of the Pension 
Protection Act of 2006), and 
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215 
‘‘(E) the amount necessary to amortize in 
equal annual installments (until fully amor-
tized) over a period of 20 years the contribu-
tions which would be required to be made under 
the plan but for the provisions of section 
302(c)(7)(A)(i)(I) (as in effect on the day be-
fore the date of the enactment of the Pension 
Protection Act of 2006). 
‘‘(3) CREDITS TO ACCOUNT.—For a plan year, 
the funding standard account shall be credited with 
the sum of— 
‘‘(A) the amount considered contributed by 
the employer to or under the plan for the plan 
year, 
‘‘(B) the amount necessary to amortize in 
equal annual installments (until fully amor-
tized)— 
‘‘(i) separately, with respect to each 
plan year, the net decrease (if any) in un-
funded past service liability under the plan 
arising from plan amendments adopted in 
such year, over a period of 15 plan years, 
‘‘(ii) separately, with respect to each 
plan year, the net experience gain (if any) 
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216 
under the plan, over a period of 15 plan 
years, and 
‘‘(iii) separately, with respect to each 
plan year, the net gain (if any) resulting 
from changes in actuarial assumptions 
used under the plan, over a period of 15 
plan years, 
‘‘(C) the amount of the waived funding de-
ficiency 
(within 
the 
meaning 
of 
section 
302(c)(3)) for the plan year, and 
‘‘(D) in the case of a plan year for which 
the accumulated funding deficiency is deter-
mined under the funding standard account if 
such plan year follows a plan year for which 
such deficiency was determined under the alter-
native minimum funding standard under section 
305 (as in effect on the day before the date of 
the enactment of the Pension Protection Act of 
2006), the excess (if any) of any debit balance 
in the funding standard account (determined 
without regard to this subparagraph) over any 
debit balance in the alternative minimum fund-
ing standard account. 
‘‘(4) SPECIAL RULE FOR AMOUNTS FIRST AM-
ORTIZED IN PLAN YEARS BEFORE 2008.—In the case 
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217 
of any amount amortized under section 302(b) (as 
in effect on the day before the date of the enactment 
of the Pension Protection Act of 2006) over any pe-
riod beginning with a plan year beginning before 
2008, in lieu of the amortization described in para-
graphs (2)(B) and (3)(B), such amount shall con-
tinue to be amortized under such section as so in ef-
fect. 
‘‘(5) COMBINING
AND
OFFSETTING
AMOUNTS 
TO BE AMORTIZED.—Under regulations prescribed 
by the Secretary of the Treasury, amounts required 
to be amortized under paragraph (2) or paragraph 
(3), as the case may be— 
‘‘(A) may be combined into one amount 
under such paragraph to be amortized over a 
period determined on the basis of the remaining 
amortization period for all items entering into 
such combined amount, and 
‘‘(B) may be offset against amounts re-
quired to be amortized under the other such 
paragraph, with the resulting amount to be am-
ortized over a period determined on the basis of 
the remaining amortization periods for all items 
entering into whichever of the two amounts 
being offset is the greater. 
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218 
‘‘(6) INTEREST.—The funding standard ac-
count (and items therein) shall be charged or cred-
ited (as determined under regulations prescribed by 
the Secretary of the Treasury) with interest at the 
appropriate rate consistent with the rate or rates of 
interest used under the plan to determine costs. 
‘‘(7) SPECIAL RULES RELATING TO CHARGES 
AND CREDITS TO FUNDING STANDARD ACCOUNT.— 
For purposes of this part— 
‘‘(A) 
WITHDRAWAL
LIABILITY.—Any 
amount received by a multiemployer plan in 
payment of all or part of an employer’s with-
drawal liability under part 1 of subtitle E of 
title IV shall be considered an amount contrib-
uted by the employer to or under the plan. The 
Secretary of the Treasury may prescribe by reg-
ulation additional charges and credits to a mul-
tiemployer plan’s funding standard account to 
the extent necessary to prevent withdrawal li-
ability payments from being unduly reflected as 
advance funding for plan liabilities. 
‘‘(B) ADJUSTMENTS
WHEN
A
MULTIEM-
PLOYER PLAN LEAVES REORGANIZATION.—If a 
multiemployer plan is not in reorganization in 
the plan year but was in reorganization in the 
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219 
immediately preceding plan year, any balance in 
the funding standard account at the close of 
such immediately preceding plan year— 
‘‘(i) shall be eliminated by an offset-
ting credit or charge (as the case may be), 
but 
‘‘(ii) shall be taken into account in 
subsequent plan years by being amortized 
in equal annual installments (until fully 
amortized) over 30 plan years. 
The preceding sentence shall not apply to the 
extent of any accumulated funding deficiency 
under section 4243(a) as of the end of the last 
plan year that the plan was in reorganization. 
‘‘(C) PLAN PAYMENTS TO SUPPLEMENTAL 
PROGRAM OR WITHDRAWAL LIABILITY PAYMENT 
FUND.—Any amount paid by a plan during a 
plan year to the Pension Benefit Guaranty Cor-
poration pursuant to section 4222 of this Act or 
to a fund exempt under section 501(c)(22) of 
the Internal Revenue Code of 1986 pursuant to 
section 4223 of this Act shall reduce the 
amount of contributions considered received by 
the plan for the plan year. 
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220 
‘‘(D) INTERIM
WITHDRAWAL
LIABILITY 
PAYMENTS.—Any amount paid by an employer 
pending a final determination of the employer’s 
withdrawal liability under part 1 of subtitle E 
of title IV and subsequently refunded to the 
employer by the plan shall be charged to the 
funding standard account in accordance with 
regulations prescribed by the Secretary of the 
Treasury. 
‘‘(E) 
ELECTION
FOR
DEFERRAL
OF 
CHARGE
FOR
PORTION
OF
NET
EXPERIENCE 
LOSS.—If an election is in effect under section 
302(b)(7)(F) (as in effect on the day before the 
date of the enactment of the Pension Protection 
Act of 2006) for any plan year, the funding 
standard account shall be charged in the plan 
year to which the portion of the net experience 
loss deferred by such election was deferred with 
the amount so deferred (and paragraph 
(2)(B)(iii) shall not apply to the amount so 
charged). 
‘‘(F) 
FINANCIAL
ASSISTANCE.—Any 
amount of any financial assistance from the 
Pension Benefit Guaranty Corporation to any 
plan, and any repayment of such amount, shall 
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221 
be taken into account under this section and 
section 302 in such manner as is determined by 
the Secretary of the Treasury. 
‘‘(G) SHORT-TERM BENEFITS.—To the ex-
tent that any plan amendment increases the un-
funded past service liability under the plan by 
reason of an increase in benefits which are not 
payable as a life annuity but are payable under 
the terms of the plan for a period that does not 
exceed 14 years from the effective date of the 
amendment, paragraph (2)(B)(ii) shall be ap-
plied separately with respect to such increase in 
unfunded past service liability by substituting 
the number of years of the period during which 
such benefits are payable for ‘15’. 
‘‘(c) ADDITIONAL RULES.— 
‘‘(1) DETERMINATIONS
TO
BE
MADE
UNDER 
FUNDING METHOD.—For purposes of this part, nor-
mal costs, accrued liability, past service liabilities, 
and experience gains and losses shall be determined 
under the funding method used to determine costs 
under the plan. 
‘‘(2) VALUATION OF ASSETS.— 
‘‘(A) IN GENERAL.—For purposes of this 
part, the value of the plan’s assets shall be de-
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222 
termined on the basis of any reasonable actu-
arial method of valuation which takes into ac-
count fair market value and which is permitted 
under regulations prescribed by the Secretary of 
the Treasury. 
‘‘(B) 
ELECTION
WITH
RESPECT
TO 
BONDS.—The value of a bond or other evidence 
of indebtedness which is not in default as to 
principal or interest may, at the election of the 
plan administrator, be determined on an amor-
tized basis running from initial cost at purchase 
to par value at maturity or earliest call date. 
Any election under this subparagraph shall be 
made at such time and in such manner as the 
Secretary of the Treasury shall by regulations 
provide, shall apply to all such evidences of in-
debtedness, and may be revoked only with the 
consent of such Secretary. 
‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA-
SONABLE.—For purposes of this section, all costs, li-
abilities, rates of interest, and other factors under 
the plan shall be determined on the basis of actu-
arial assumptions and methods— 
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223 
‘‘(A) each of which is reasonable (taking 
into account the experience of the plan and rea-
sonable expectations), and 
‘‘(B) which, in combination, offer the actu-
ary’s best estimate of anticipated experience 
under the plan. 
‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX-
PERIENCE GAIN OR LOSS.—For purposes of this sec-
tion, if— 
‘‘(A) a change in benefits under the Social 
Security Act or in other retirement benefits cre-
ated under Federal or State law, or 
‘‘(B) a change in the definition of the term 
‘wages’ under section 3121 of the Internal Rev-
enue Code of 1986, or a change in the amount 
of such wages taken into account under regula-
tions 
prescribed 
for 
purposes 
of 
section 
401(a)(5) of such Code, 
results in an increase or decrease in accrued liability 
under a plan, such increase or decrease shall be 
treated as an experience loss or gain. 
‘‘(5) FULL FUNDING.—If, as of the close of a 
plan year, a plan would (without regard to this para-
graph) have an accumulated funding deficiency in 
excess of the full funding limitation— 
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224 
‘‘(A) the funding standard account shall be 
credited with the amount of such excess, and 
‘‘(B) all amounts described in subpara-
graphs (B), (C), and (D) of subsection (b) (2) 
and subparagraph (B) of subsection (b)(3) 
which are required to be amortized shall be con-
sidered fully amortized for purposes of such 
subparagraphs. 
‘‘(6) FULL-FUNDING LIMITATION.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (5), the term ‘full-funding limitation’ 
means the excess (if any) of— 
‘‘(i) the accrued liability (including 
normal cost) under the plan (determined 
under the entry age normal funding meth-
od if such accrued liability cannot be di-
rectly calculated under the funding method 
used for the plan), over 
‘‘(ii) the lesser of— 
‘‘(I) the fair market value of the 
plan’s assets, or 
‘‘(II) the value of such assets de-
termined under paragraph (2). 
‘‘(B) MINIMUM AMOUNT.— 
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225 
‘‘(i) IN GENERAL.—In no event shall 
the 
full-funding 
limitation 
determined 
under subparagraph (A) be less than the 
excess (if any) of— 
‘‘(I) 90 percent of the current li-
ability of the plan (including the ex-
pected increase in current liability due 
to benefits accruing during the plan 
year), over 
‘‘(II) the value of the plan’s as-
sets determined under paragraph (2). 
‘‘(ii) ASSETS.—For purposes of clause 
(i), assets shall not be reduced by any 
credit balance in the funding standard ac-
count. 
‘‘(C) FULL
FUNDING
LIMITATION.—For 
purposes of this paragraph, unless otherwise 
provided by the plan, the accrued liability under 
a multiemployer plan shall not include benefits 
which are not nonforfeitable under the plan 
after the termination of the plan (taking into 
consideration section 411(d)(3) of the Internal 
Revenue Code of 1986). 
‘‘(D) CURRENT LIABILITY.—For purposes 
of this paragraph— 
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226 
‘‘(i) IN GENERAL.—The term ‘current 
liability’ means all liabilities to employees 
and their beneficiaries under the plan. 
‘‘(ii) TREATMENT OF UNPREDICTABLE 
CONTINGENT EVENT BENEFITS.—For pur-
poses of clause (i), any benefit contingent 
on an event other than— 
‘‘(I) age, service, compensation, 
death, or disability, or 
‘‘(II) an event which is reason-
ably and reliably predictable (as deter-
mined by the Secretary of the Treas-
ury), 
shall not be taken into account until the 
event on which the benefit is contingent oc-
curs. 
‘‘(iii) INTEREST
RATE
USED.—The 
rate of interest used to determine current 
liability under this paragraph shall be the 
rate of interest determined under subpara-
graph (E). 
‘‘(iv) MORTALITY TABLES.— 
‘‘(I) COMMISSIONERS’ STANDARD 
TABLE.—In the case of plan years be-
ginning before the first plan year to 
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227 
which the first tables prescribed under 
subclause (II) apply, the mortality 
table used in determining current li-
ability under this paragraph shall be 
the table prescribed by the Secretary 
of the Treasury which is based on the 
prevailing 
commissioners’ 
standard 
table 
(described 
in 
section 
807(d)(5)(A) of the Internal Revenue 
Code of 1986) used to determine re-
serves for group annuity contracts 
issued on January 1, 1993. 
‘‘(II) 
SECRETARIAL
AUTHOR-
ITY.—The Secretary of the Treasury 
may by regulation prescribe for plan 
years beginning after December 31, 
1999, mortality tables to be used in 
determining current liability under 
this subsection. Such tables shall be 
based upon the actual experience of 
pension plans and projected trends in 
such experience. In prescribing such 
tables, such Secretary shall take into 
account results of available inde-
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228 
pendent studies of mortality of indi-
viduals covered by pension plans. 
‘‘(v) SEPARATE
MORTALITY
TABLES 
FOR
THE
DISABLED.—Notwithstanding 
clause (iv)— 
‘‘(I) IN
GENERAL.—The Sec-
retary of the Treasury shall establish 
mortality tables which may be used 
(in lieu of the tables under clause (iv)) 
to determine current liability under 
this subsection for individuals who are 
entitled to benefits under the plan on 
account of disability. Such Secretary 
shall establish separate tables for indi-
viduals whose disabilities occur in 
plan years beginning before January 
1, 1995, and for individuals whose 
disabilities occur in plan years begin-
ning on or after such date. 
‘‘(II) SPECIAL
RULE
FOR
DIS-
ABILITIES OCCURRING AFTER 1994.— 
In the case of disabilities occurring in 
plan years beginning after December 
31, 1994, the tables under subclause 
(I) shall apply only with respect to in-
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229 
dividuals described in such subclause 
who are disabled within the meaning 
of title II of the Social Security Act 
and the regulations thereunder. 
‘‘(vi) PERIODIC
REVIEW.—The Sec-
retary of the Treasury shall periodically (at 
least every 5 years) review any tables in ef-
fect under this subparagraph and shall, to 
the extent such Secretary determines nec-
essary, by regulation update the tables to 
reflect the actual experience of pension 
plans and projected trends in such experi-
ence. 
‘‘(E) REQUIRED
CHANGE
OF
INTEREST 
RATE.—For purposes of determining a plan’s 
current liability for purposes of this para-
graph— 
‘‘(i) IN GENERAL.—If any rate of in-
terest used under the plan under sub-
section (b)(6) to determine cost is not 
within the permissible range, the plan shall 
establish a new rate of interest within the 
permissible range. 
‘‘(ii) PERMISSIBLE RANGE.—For pur-
poses of this subparagraph— 
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230 
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), the term 
‘permissible range’ means a rate of in-
terest which is not more than 5 per-
cent above, and not more than 10 per-
cent below, the weighted average of 
the rates of interest on 30-year Treas-
ury securities during the 4-year period 
ending on the last day before the be-
ginning of the plan year. 
‘‘(II) 
SECRETARIAL
AUTHOR-
ITY.—If the Secretary of the Treasury 
finds that the lowest rate of interest 
permissible under subclause (I) is un-
reasonably high, such Secretary may 
prescribe a lower rate of interest, ex-
cept that such rate may not be less 
than 80 percent of the average rate 
determined under such subclause. 
‘‘(iii) 
ASSUMPTIONS.—Notwith-
standing paragraph (3)(A), the interest 
rate used under the plan shall be— 
‘‘(I) determined without taking 
into account the experience of the 
plan and reasonable expectations, but 
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ccoleman on PROD1PC71 with BILLS
231 
‘‘(II) consistent with the assump-
tions which reflect the purchase rates 
which would be used by insurance 
companies to satisfy the liabilities 
under the plan. 
‘‘(7) ANNUAL VALUATION.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, a determination of experience gains and 
losses and a valuation of the plan’s liability 
shall be made not less frequently than once 
every year, except that such determination shall 
be made more frequently to the extent required 
in particular cases under regulations prescribed 
by the Secretary of the Treasury. 
‘‘(B) VALUATION DATE.— 
‘‘(i) CURRENT YEAR.—Except as pro-
vided in clause (ii), the valuation referred 
to in subparagraph (A) shall be made as of 
a date within the plan year to which the 
valuation refers or within one month prior 
to the beginning of such year. 
‘‘(ii) USE
OF
PRIOR
YEAR
VALU-
ATION.—The valuation referred to in sub-
paragraph (A) may be made as of a date 
within the plan year prior to the year to 
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ccoleman on PROD1PC71 with BILLS
232 
which the valuation refers if, as of such 
date, the value of the assets of the plan are 
not less than 100 percent of the plan’s cur-
rent liability (as defined in paragraph 
(6)(D) without regard to clause (iv) there-
of). 
‘‘(iii) 
ADJUSTMENTS.—Information 
under clause (ii) shall, in accordance with 
regulations, be actuarially adjusted to re-
flect significant differences in participants. 
‘‘(iv) LIMITATION.—A change in fund-
ing method to use a prior year valuation, 
as provided in clause (ii), may not be made 
unless as of the valuation date within the 
prior plan year, the value of the assets of 
the plan are not less than 125 percent of 
the plan’s current liability (as defined in 
paragraph (6)(D) without regard to clause 
(iv) thereof). 
‘‘(8) TIME
WHEN
CERTAIN
CONTRIBUTIONS 
DEEMED MADE.—For purposes of this section, any 
contributions for a plan year made by an employer 
after the last day of such plan year, but not later 
than two and one-half months after such day, shall 
be deemed to have been made on such last day. For 
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ccoleman on PROD1PC71 with BILLS
233 
purposes of this subparagraph, such two and one- 
half month period may be extended for not more 
than six months under regulations prescribed by the 
Secretary of the Treasury. 
‘‘(d) EXTENSION OF AMORTIZATION PERIODS FOR 
MULTIEMPLOYER PLANS.— 
‘‘(1) AUTOMATIC
EXTENSION
UPON
APPLICA-
TION BY CERTAIN PLANS.— 
‘‘(A) IN GENERAL.—If the plan sponsor of 
a multiemployer plan— 
‘‘(i) submits to the Secretary of the 
Treasury an application for an extension of 
the period of years required to amortize 
any unfunded liability described in any 
clause of subsection (b)(2)(B) or described 
in subsection (b)(4), and 
‘‘(ii) includes with the application a 
certification by the plan’s actuary de-
scribed in subparagraph (B), 
the Secretary of the Treasury shall extend the 
amortization period for the period of time (not 
in excess of 5 years) specified in the applica-
tion. Such extension shall be in addition to any 
extension under paragraph (2). 
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ccoleman on PROD1PC71 with BILLS
234 
‘‘(B) CRITERIA.—A certification with re-
spect to a multiemployer plan is described in 
this subparagraph if the plan’s actuary certifies 
that, based on reasonable assumptions— 
‘‘(i) absent the extension under sub-
paragraph (A), the plan would have an ac-
cumulated funding deficiency in the cur-
rent plan year or any of the 9 succeeding 
plan years, 
‘‘(ii) the plan sponsor has adopted a 
plan to improve the plan’s funding status, 
‘‘(iii) the plan is projected to have suf-
ficient assets to timely pay expected bene-
fits and anticipated expenditures over the 
amortization period as extended, and 
‘‘(iv) the notice required under para-
graph (3)(A) has been provided. 
‘‘(C) TERMINATION.—The preceding provi-
sions of this paragraph shall not apply with re-
spect to any application submitted after Decem-
ber 31, 2014. 
‘‘(2) ALTERNATIVE EXTENSION.— 
‘‘(A) IN GENERAL.—If the plan sponsor of 
a multiemployer plan submits to the Secretary 
of the Treasury an application for an extension 
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ccoleman on PROD1PC71 with BILLS
235 
of the period of years required to amortize any 
unfunded liability described in any clause of 
subsection (b)(2)(B) or described in subsection 
(b)(4), the Secretary of the Treasury may ex-
tend the amortization period for a period of 
time (not in excess of 10 years reduced by the 
number of years of any extension under para-
graph (1) with respect to such unfunded liabil-
ity) if the Secretary of the Treasury makes the 
determination described in subparagraph (B). 
Such extension shall be in addition to any ex-
tension under paragraph (1). 
‘‘(B) DETERMINATION.—The Secretary of 
the Treasury may grant an extension under 
subparagraph (A) if such Secretary determines 
that— 
‘‘(i) such extension would carry out 
the purposes of this Act and would provide 
adequate protection for participants under 
the plan and their beneficiaries, and 
‘‘(ii) the failure to permit such exten-
sion would— 
‘‘(I) result in a substantial risk 
to the voluntary continuation of the 
plan, or a substantial curtailment of 
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ccoleman on PROD1PC71 with BILLS
236 
pension benefit levels or employee 
compensation, and 
‘‘(II) be adverse to the interests 
of plan participants in the aggregate. 
‘‘(C) ACTION
BY
SECRETARY
OF
THE 
TREASURY.—The Secretary of the Treasury 
shall act upon any application for an extension 
under this paragraph within 180 days of the 
submission of such application. If such Sec-
retary rejects the application for an extension 
under this paragraph, such Secretary shall pro-
vide notice to the plan detailing the specific rea-
sons for the rejection, including references to 
the criteria set forth above. 
‘‘(3) ADVANCE NOTICE.— 
‘‘(A) IN GENERAL.—The Secretary of the 
Treasury shall, before granting an extension 
under this subsection, require each applicant to 
provide evidence satisfactory to such Secretary 
that the applicant has provided notice of the fil-
ing of the application for such extension to each 
affected 
party 
(as 
defined 
in 
section 
4001(a)(21)) with respect to the affected plan. 
Such notice shall include a description of the 
extent to which the plan is funded for benefits 
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ccoleman on PROD1PC71 with BILLS
237 
which are guaranteed under title IV and for 
benefit liabilities. 
‘‘(B) CONSIDERATION
OF
RELEVANT
IN-
FORMATION.—The Secretary of the Treasury 
shall consider any relevant information provided 
by a person to whom notice was given under 
paragraph (1).’’. 
(b) SHORTFALL FUNDING METHOD.— 
(1) IN GENERAL.—A multiemployer plan meet-
ing the criteria of paragraph (2) may adopt, use, or 
cease using, the shortfall funding method and such 
adoption, use, or cessation of use of such method, 
shall be deemed approved by the Secretary of the 
Treasury under section 302(d)(1) of the Employee 
Retirement Income Security Act of 1974 and section 
412(d)(1) of the Internal Revenue Code of 1986. 
(2) CRITERIA.—A multiemployer pension plan 
meets the criteria of this clause if— 
(A) the plan has not used the shortfall 
funding method during the 5-year period ending 
on the day before the date the plan is to use 
the method under paragraph (1); and 
(B) the plan is not operating under an am-
ortization period extension under section 304(d) 
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ccoleman on PROD1PC71 with BILLS
238 
of such Act and did not operate under such an 
extension during such 5-year period. 
(3) SHORTFALL FUNDING METHOD DEFINED.— 
For purposes of this subsection, the term ‘‘shortfall 
funding method’’ means the shortfall funding meth-
od described in Treasury Regulations section 
1.412(c)(1)–2 (26 C.F.R. 1.412(c)(1)–2). 
(4) BENEFIT
RESTRICTIONS
TO
APPLY.—The 
benefit restrictions under section 302(c)(7) of such 
Act and section 412(c)(7) of such Code shall apply 
during any period a multiemployer plan is on the 
shortfall funding method pursuant to this sub-
section. 
(5) USE OF SHORTFALL METHOD NOT TO PRE-
CLUDE OTHER OPTIONS.—Nothing in this subsection 
shall be construed to affect a multiemployer plan’s 
ability to adopt the shortfall funding method with 
the Secretary’s permission under otherwise applica-
ble regulations or to affect a multiemployer plan’s 
right to change funding methods, with or without 
the Secretary’s consent, as provided in applicable 
rules and regulations. 
(c) CONFORMING AMENDMENTS.— 
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ccoleman on PROD1PC71 with BILLS
239 
(1) Section 301 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1081) is 
amended by striking subsection (d). 
(2) The table of contents in section 1 of such 
Act (as amended by this Act) is amended by insert-
ing after the item relating to section 303 the fol-
lowing new item: 
‘‘Sec. 304. Minimum funding standards for multiemployer plans.’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to plan years beginning after 
2007. 
(2) SPECIAL RULE FOR CERTAIN AMORTIZATION 
EXTENSIONS.—If the Secretary of the Treasury 
grants an extension under section 304 of the Em-
ployee Retirement Income Security Act of 1974 and 
section 412(e) of the Internal Revenue Code of 1986 
with respect to any application filed with the Sec-
retary of the Treasury on or before June 30, 2005, 
the extension (and any modification thereof) shall be 
applied and administered under the rules of such 
sections as in effect before the enactment of this 
Act, including the use of the rate of interest deter-
mined under section 6621(b) of such Code. 
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ccoleman on PROD1PC71 with BILLS
240 
SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEM-
PLOYER PLANS IN ENDANGERED OR CRIT-
ICAL STATUS. 
(a) IN GENERAL.—Part 3 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 (as 
amended by the preceding provisions of this Act) is 
amended by inserting after section 304 the following new 
section: 
‘‘ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER 
PLANS IN ENDANGERED STATUS OR CRITICAL STATUS 
‘‘SEC. 305. (a) GENERAL RULE.—For purposes of 
this part, in the case of a multiemployer plan in effect 
on July 16, 2006— 
‘‘(1) if the plan is in endangered status— 
‘‘(A) the plan sponsor shall adopt and im-
plement a funding improvement plan in accord-
ance with the requirements of subsection (c), 
and 
‘‘(B) the requirements of subsection (d) 
shall apply during the funding plan adoption 
period and the funding improvement period, 
and 
‘‘(2) if the plan is in critical status— 
‘‘(A) the plan sponsor shall adopt and im-
plement a rehabilitation plan in accordance with 
the requirements of subsection (e), and 
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ccoleman on PROD1PC71 with BILLS
241 
‘‘(B) the requirements of subsection (f) 
shall apply during the rehabilitation plan adop-
tion period and the rehabilitation period. 
‘‘(b) DETERMINATION OF ENDANGERED AND CRIT-
ICAL STATUS.—For purposes of this section— 
‘‘(1) ENDANGERED STATUS.—A multiemployer 
plan is in endangered status for a plan year if, as 
determined by the plan actuary under paragraph 
(3), the plan is not in critical status for the plan 
year and, as of the beginning of the plan year, ei-
ther— 
‘‘(A) the plan’s funded percentage for such 
plan year is less than 80 percent, or 
‘‘(B) the plan has an accumulated funding 
deficiency for such plan year, or is projected to 
have such an accumulated funding deficiency 
for any of the 6 succeeding plan years, taking 
into account any extension of amortization peri-
ods under section 304(d). 
For purposes of this section, a plan shall be treated 
as in seriously endangered status for a plan year if 
the plan is described in both subparagraphs (A) and 
(B). 
‘‘(2) CRITICAL STATUS.—A multiemployer plan 
is in critical status for a plan year if, as determined 
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ccoleman on PROD1PC71 with BILLS
242 
by the plan actuary under paragraph (3), the plan 
is described in 1 or more of the following subpara-
graphs as of the beginning of the plan year: 
‘‘(A) A plan is described in this subpara-
graph if— 
‘‘(i) the funded percentage of the plan 
is less than 65 percent, and 
‘‘(ii) the sum of— 
‘‘(I) the fair market value of plan 
assets, plus 
‘‘(II) the present value of the 
reasonably anticipated employer con-
tributions for the current plan year 
and each of the 6 succeeding plan 
years, assuming that the terms of all 
collective bargaining agreements pur-
suant to which the plan is maintained 
for the current plan year continue in 
effect for succeeding plan years, 
is less than the present value of all non-
forfeitable benefits projected to be payable 
under the plan during the current plan 
year and each of the 6 succeeding plan 
years (plus administrative expenses for 
such plan years). 
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ccoleman on PROD1PC71 with BILLS
243 
‘‘(B) A plan is described in this subpara-
graph if— 
‘‘(i) the plan has an accumulated 
funding deficiency for the current plan 
year, not taking into account any extension 
of amortization periods under section 
304(d), or 
‘‘(ii) the plan is projected to have an 
accumulated funding deficiency for any of 
the 3 succeeding plan years (4 succeeding 
plan years if the funded percentage of the 
plan is 65 percent or less), not taking into 
account any extension of amortization peri-
ods under section 304(d). 
‘‘(C) 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 
costs 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 
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ccoleman on PROD1PC71 with BILLS
244 
‘‘(II) the present value of the reason-
ably anticipated employer and employee 
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 of non-
forfeitable benefits of active participants, 
and 
‘‘(iii) the plan has an accumulated 
funding deficiency for the current plan 
year, or is projected to have such a defi-
ciency for any of the 4 succeeding plan 
years, not taking into account any exten-
sion of amortization periods under section 
304(d). 
‘‘(D) A plan is described in this subpara-
graph if the sum of— 
‘‘(i) the fair market value of plan as-
sets, plus 
‘‘(ii) the present value of the reason-
ably anticipated employer contributions for 
the current plan year and each of the 4 
succeeding plan years, assuming that the 
terms of all collective bargaining agree-
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245 
ments pursuant to which the plan is main-
tained for the current plan year continue 
in effect for succeeding plan years, 
is less than the present value of all benefits pro-
jected to be payable under the plan during the 
current plan year and each of the 4 succeeding 
plan years (plus administrative expenses for 
such plan years). 
‘‘(3) ANNUAL CERTIFICATION BY PLAN ACTU-
ARY.— 
‘‘(A) IN
GENERAL.—Not later than the 
90th day of each plan year of a multiemployer 
plan, the plan actuary shall certify to the Sec-
retary of the Treasury and to the plan spon-
sor— 
‘‘(i) whether or not the plan is in en-
dangered status for such plan year and 
whether or not the plan is or will be in 
critical status for such plan year, and 
‘‘(ii) in the case of a plan which is in 
a funding improvement or rehabilitation 
period, whether or not the plan is making 
the scheduled progress in meeting the re-
quirements of its funding improvement or 
rehabilitation plan. 
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246 
‘‘(B) ACTUARIAL PROJECTIONS OF ASSETS 
AND LIABILITIES.— 
‘‘(i) IN GENERAL.—In making the de-
terminations and projections under this 
subsection, the plan actuary shall make 
projections required for the current and 
succeeding plan years of the current value 
of the assets of the plan and the present 
value of all liabilities to participants and 
beneficiaries under the plan for the current 
plan year as of the beginning of such year. 
The actuary’s projections shall be based on 
reasonable actuarial estimates, assump-
tions, and methods that, except as pro-
vided in clause (iii), offer the actuary’s 
best estimate of anticipated experience 
under the plan. The projected present 
value of liabilities as of the beginning of 
such year shall be determined based on the 
most recent of either— 
‘‘(I) the actuarial statement re-
quired under section 103(d) with re-
spect to the most recently filed annual 
report, or 
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247 
‘‘(II) the actuarial valuation for 
the preceding plan year. 
‘‘(ii) DETERMINATIONS
OF
FUTURE 
CONTRIBUTIONS.—Any actuarial projection 
of plan assets shall assume— 
‘‘(I) reasonably anticipated em-
ployer contributions for the current 
and succeeding plan years, assuming 
that the terms of the one or more col-
lective bargaining agreements pursu-
ant to which the plan is maintained 
for the current plan year continue in 
effect for succeeding plan years, or 
‘‘(II) that employer contributions 
for the most recent plan year will con-
tinue indefinitely, but only if the plan 
actuary determines there have been no 
significant demographic changes that 
would make such assumption unrea-
sonable. 
‘‘(iii) PROJECTED
INDUSTRY
ACTIV-
ITY.—Any projection of activity in the in-
dustry or industries covered by the plan, 
including future covered employment and 
contribution levels, shall be based on infor-
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248 
mation provided by the plan sponsor, 
which shall act reasonably and in good 
faith. 
‘‘(C) PENALTY FOR FAILURE TO SECURE 
TIMELY ACTUARIAL CERTIFICATION.—Any fail-
ure of the plan’s actuary to certify the plan’s 
status under this subsection by the date speci-
fied in subparagraph (A) shall be treated for 
purposes of section 502(c)(2) as a failure or re-
fusal by the plan administrator to file the an-
nual report required to be filed with the Sec-
retary under section 101(b)(4). 
‘‘(D) NOTICE.— 
‘‘(i) IN
GENERAL.—In any case in 
which it is certified under subparagraph 
(A) that a multiemployer plan is or will be 
in endangered or critical status for a plan 
year, the plan sponsor shall, not later than 
30 days after the date of the certification, 
provide notification of the endangered or 
critical status to the participants and bene-
ficiaries, the bargaining parties, the Pen-
sion Benefit Guaranty Corporation, and 
the Secretary. 
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249 
‘‘(ii) PLANS IN CRITICAL STATUS.—If 
it is certified under subparagraph (A) that 
a multiemployer plan is or will be in crit-
ical status, the plan sponsor shall include 
in the notice under clause (i) an expla-
nation of the possibility that— 
‘‘(I) adjustable benefits (as de-
fined in subsection (e)(8)) may be re-
duced, and 
‘‘(II) such reductions may apply 
to 
participants 
and 
beneficiaries 
whose benefit commencement date is 
on or after the date such notice is 
provided for the first plan year in 
which the plan is in critical status. 
‘‘(iii) MODEL NOTICE.—The Secretary 
shall prescribe a model notice that a multi-
employer plan may use to satisfy the re-
quirements under clause (ii). 
‘‘(c) FUNDING
IMPROVEMENT
PLAN
MUST
BE 
ADOPTED FOR MULTIEMPLOYER PLANS IN ENDANGERED 
STATUS.— 
‘‘(1) IN
GENERAL.—In any case in which a 
multiemployer plan is in endangered status for a 
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ccoleman on PROD1PC71 with BILLS
250 
plan year, the plan sponsor, in accordance with this 
subsection— 
‘‘(A) shall adopt a funding improvement 
plan not later than 240 days following the re-
quired date for the actuarial certification of en-
dangered status under subsection (b)(3)(A), 
and 
‘‘(B) within 30 days after the adoption of 
the funding improvement plan— 
‘‘(i) shall provide to the bargaining 
parties 1 or more schedules showing re-
vised benefit structures, revised contribu-
tion structures, or both, which, if adopted, 
may reasonably be expected to enable the 
multiemployer plan to meet the applicable 
benchmarks in accordance with the fund-
ing improvement plan, including— 
‘‘(I) one proposal for reductions 
in the amount of future benefit accru-
als necessary to achieve the applicable 
benchmarks, assuming no amend-
ments increasing contributions under 
the plan (other than amendments in-
creasing contributions necessary to 
achieve the applicable benchmarks 
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251 
after amendments have reduced fu-
ture benefit accruals to the maximum 
extent permitted by law), and 
‘‘(II) one proposal for increases 
in contributions under the plan nec-
essary to achieve the applicable bench-
marks, assuming no amendments re-
ducing future benefit accruals under 
the plan, and 
‘‘(ii) may, if the plan sponsor deems 
appropriate, prepare and provide the bar-
gaining parties with additional information 
relating to contribution rates or benefit re-
ductions, alternative schedules, or other in-
formation relevant to achieving the appli-
cable benchmarks in accordance with the 
funding improvement plan. 
For purposes of this section, the term ‘applica-
ble benchmarks’ means the requirements appli-
cable to the multiemployer plan under para-
graph (3) (as modified by paragraph (5)). 
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS 
BEGINS.—Paragraph (1) shall not apply to a plan 
year if such year is in a funding plan adoption pe-
riod or funding improvement period by reason of the 
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ccoleman on PROD1PC71 with BILLS
252 
plan being in endangered status for a preceding plan 
year. For purposes of this section, such preceding 
plan year shall be the initial determination year with 
respect to the funding improvement plan to which it 
relates. 
‘‘(3) FUNDING IMPROVEMENT PLAN.—For pur-
poses of this section— 
‘‘(A) IN
GENERAL.—A funding improve-
ment plan is a plan which consists of the ac-
tions, including options or a range of options to 
be proposed to the bargaining parties, formu-
lated to provide, based on reasonably antici-
pated experience and reasonable actuarial as-
sumptions, for the attainment by the plan dur-
ing the funding improvement period of the fol-
lowing requirements: 
‘‘(i) INCREASE
IN
PLAN’S
FUNDING 
PERCENTAGE.—The plan’s funded percent-
age as of the close of the funding improve-
ment period equals or exceeds a percentage 
equal to the sum of— 
‘‘(I) such percentage as of the 
beginning of such period, plus 
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‘‘(II) 33 percent of the difference 
between 100 percent and the percent-
age under subclause (I). 
‘‘(ii) AVOIDANCE
OF
ACCUMULATED 
FUNDING DEFICIENCIES.—No accumulated 
funding deficiency for any plan year during 
the funding improvement period (taking 
into account any extension of amortization 
periods under section 304(d)). 
‘‘(B) SERIOUSLY ENDANGERED PLANS.— 
In the case of a plan in seriously endangered 
status, except as provided in paragraph (5), 
subparagraph (A)(i)(II) shall be applied by sub-
stituting ‘20 percent’ for ‘33 percent’. 
‘‘(4) FUNDING
IMPROVEMENT
PERIOD.—For 
purposes of this section— 
‘‘(A) IN GENERAL.—The funding improve-
ment period for any funding improvement plan 
adopted pursuant to this subsection is the 10- 
year period beginning on the first day of the 
first plan year of the multiemployer plan begin-
ning after the earlier of— 
‘‘(i) the second anniversary of the 
date of the adoption of the funding im-
provement plan, or 
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254 
‘‘(ii) the expiration of the collective 
bargaining agreements in effect on the due 
date for the actuarial certification of en-
dangered status for the initial determina-
tion year under subsection (b)(3)(A) and 
covering, as of such due date, at least 75 
percent of the active participants in such 
multiemployer plan. 
‘‘(B) SERIOUSLY ENDANGERED PLANS.— 
In the case of a plan in seriously endangered 
status, except as provided in paragraph (5), 
subparagraph (A) shall be applied by sub-
stituting ‘15-year period’ for ‘10-year period’. 
‘‘(C) COORDINATION
WITH
CHANGES
IN 
STATUS.— 
‘‘(i) PLANS
NO
LONGER
IN
ENDAN-
GERED STATUS.—If the plan’s actuary cer-
tifies under subsection (b)(3)(A) for a plan 
year in any funding plan adoption period 
or funding improvement period that the 
plan is no longer in endangered status and 
is not in critical status, the funding plan 
adoption period or funding improvement 
period, whichever is applicable, shall end as 
of the close of the preceding plan year. 
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255 
‘‘(ii) PLANS IN CRITICAL STATUS.—If 
the plan’s actuary certifies under sub-
section (b)(3)(A) for a plan year in any 
funding plan adoption period or funding 
improvement period that the plan is in 
critical status, the funding plan adoption 
period or funding improvement period, 
whichever is applicable, shall end as of the 
close of the plan year preceding the first 
plan year in the rehabilitation period with 
respect to such status. 
‘‘(D) PLANS IN ENDANGERED STATUS AT 
END OF PERIOD.—If the plan’s actuary certifies 
under subsection (b)(3)(A) for the first plan 
year following the close of the period described 
in subparagraph (A) that the plan is in endan-
gered status, the provisions of this subsection 
and subsection (d) shall be applied as if such 
first plan year were an initial determination 
year, except that the plan may not be amended 
in a manner inconsistent with the funding im-
provement plan in effect for the preceding plan 
year until a new funding improvement plan is 
adopted. 
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256 
‘‘(5) SPECIAL RULES FOR SERIOUSLY ENDAN-
GERED PLANS MORE THAN 70 PERCENT FUNDED.— 
‘‘(A) IN GENERAL.—If the funded percent-
age of a plan in seriously endangered status 
was more than 70 percent as of the beginning 
of the initial determination year— 
‘‘(i) paragraphs (3)(B) and (4)(B) 
shall apply only if the plan’s actuary cer-
tifies, within 30 days after the certification 
under subsection (b)(3)(A) for the initial 
determination year, that, based on the 
terms of the plan and the collective bar-
gaining agreements in effect at the time of 
such certification, the plan is not projected 
to meet the requirements of paragraph 
(3)(A) (without regard to paragraphs 
(3)(B) and (4)(B)), and 
‘‘(ii) if there is a certification under 
clause (i), the plan may, in formulating its 
funding improvement plan, only take into 
account the rules of paragraph (3)(B) and 
(4)(B) for plan years in the funding im-
provement period beginning on or before 
the date on which the last of the collective 
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ccoleman on PROD1PC71 with BILLS
257 
bargaining agreements described in para-
graph (4)(A)(ii) expires. 
‘‘(B) SPECIAL
RULE
AFTER
EXPIRATION 
OF
AGREEMENTS.—Notwithstanding subpara-
graph (A)(ii), if, for any plan year ending after 
the date described in subparagraph (A)(ii), the 
plan actuary certifies (at the time of the annual 
certification under subsection (b)(3)(A) for such 
plan year) that, based on the terms of the plan 
and collective bargaining agreements in effect 
at the time of that annual certification, the plan 
is not projected to be able to meet the require-
ments of paragraph (3)(A) (without regard to 
paragraphs (3)(B) and (4)(B)), paragraphs 
(3)(B) and (4)(B) shall continue to apply for 
such year. 
‘‘(6) UPDATES
TO
FUNDING
IMPROVEMENT 
PLAN AND SCHEDULES.— 
‘‘(A) FUNDING IMPROVEMENT PLAN.—The 
plan sponsor shall annually update the funding 
improvement plan and shall file the update with 
the plan’s annual report under section 104. 
‘‘(B) SCHEDULES.—The plan sponsor shall 
annually update any schedule of contribution 
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258 
rates provided under this subsection to reflect 
the experience of the plan. 
‘‘(C) DURATION OF SCHEDULE.—A sched-
ule of contribution rates provided by the plan 
sponsor and relied upon by bargaining parties 
in negotiating a collective bargaining agreement 
shall remain in effect for the duration of that 
collective bargaining agreement. 
‘‘(7) IMPOSITION
OF
DEFAULT
SCHEDULE 
WHERE FAILURE TO ADOPT FUNDING IMPROVEMENT 
PLAN.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) a collective bargaining agreement 
providing for contributions under a multi-
employer plan that was in effect at the 
time the plan entered endangered status 
expires, and 
‘‘(ii) after receiving one or more 
schedules from the plan sponsor under 
paragraph (1)(B), the bargaining parties 
with respect to such agreement fail to 
agree on changes to contribution or benefit 
schedules necessary to meet the applicable 
benchmarks in accordance with the fund-
ing improvement plan, 
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ccoleman on PROD1PC71 with BILLS
259 
the plan sponsor shall implement the schedule 
described in paragraph (1)(B)(i)(I) beginning 
on the date specified in subparagraph (B). 
‘‘(B) DATE
OF
IMPLEMENTATION.—The 
date specified in this subparagraph is the ear-
lier of the date— 
‘‘(i) on which the Secretary certifies 
that the parties are at an impasse, or 
‘‘(ii) which is 180 days after the date 
on which the collective bargaining agree-
ment described in subparagraph (A) ex-
pires. 
‘‘(8) FUNDING PLAN ADOPTION PERIOD.—For 
purposes of this section, the term ‘funding plan 
adoption period’ means the period beginning on the 
date of the certification under subsection (b)(3)(A) 
for the initial determination year and ending on the 
day before the first day of the funding improvement 
period. 
‘‘(d) RULES
FOR OPERATION
OF PLAN DURING 
ADOPTION AND IMPROVEMENT PERIODS.— 
‘‘(1) SPECIAL RULES FOR PLAN ADOPTION PE-
RIOD.—During the funding plan adoption period— 
‘‘(A) the plan sponsor may not accept a 
collective bargaining agreement or participation 
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260 
agreement with respect to the multiemployer 
plan that provides for— 
‘‘(i) a reduction in the level of con-
tributions for any participants, 
‘‘(ii) a suspension of contributions 
with respect to any period of service, or 
‘‘(iii) any new direct or indirect exclu-
sion of younger or newly hired employees 
from plan participation, 
‘‘(B) no amendment of the plan which in-
creases the liabilities of the plan by reason of 
any increase in benefits, any change in the ac-
crual of benefits, or any change in the rate at 
which benefits become nonforfeitable under the 
plan may be adopted unless the amendment is 
required as a condition of qualification under 
part I of subchapter D of chapter 1 of the In-
ternal Revenue Code of 1986 or to comply with 
other applicable law, and 
‘‘(C) in the case of a plan in seriously en-
dangered status, the plan sponsor shall take all 
reasonable actions which are consistent with the 
terms of the plan and applicable law and which 
are expected, based on reasonable assumptions, 
to achieve— 
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ccoleman on PROD1PC71 with BILLS
261 
‘‘(i) an increase in the plan’s funded 
percentage, and 
‘‘(ii) postponement of an accumulated 
funding deficiency for at least 1 additional 
plan year. 
Actions under subparagraph (C) include applications 
for extensions of amortization periods under section 
304(d), use of the shortfall funding method in mak-
ing funding standard account computations, amend-
ments to the plan’s benefit structure, reductions in 
future benefit accruals, and other reasonable actions 
consistent with the terms of the plan and applicable 
law. 
‘‘(2) COMPLIANCE
WITH
FUNDING
IMPROVE-
MENT PLAN.— 
‘‘(A) IN GENERAL.—A plan may not be 
amended after the date of the adoption of a 
funding improvement plan so as to be incon-
sistent with the funding improvement plan. 
‘‘(B) 
NO
REDUCTION
IN
CONTRIBU-
TIONS.—A plan sponsor may not during any 
funding improvement period accept a collective 
bargaining agreement or participation agree-
ment with respect to the multiemployer plan 
that provides for— 
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ccoleman on PROD1PC71 with BILLS
262 
‘‘(i) a reduction in the level of con-
tributions for any participants, 
‘‘(ii) a suspension of contributions 
with respect to any period of service, or 
‘‘(iii) any new direct or indirect exclu-
sion of younger or newly hired employees 
from plan participation. 
‘‘(C) SPECIAL
RULES
FOR
BENEFIT
IN-
CREASES.—A plan may not be amended after 
the date of the adoption of a funding improve-
ment plan so as to increase benefits, including 
future benefit accruals, unless the plan actuary 
certifies that the benefit increase is consistent 
with the funding improvement plan and is paid 
for out of contributions not required by the 
funding improvement plan to meet the applica-
ble benchmark in accordance with the schedule 
contemplated in the funding improvement plan. 
‘‘(e) REHABILITATION PLAN MUST BE ADOPTED 
FOR MULTIEMPLOYER PLANS IN CRITICAL STATUS.— 
‘‘(1) IN
GENERAL.—In any case in which a 
multiemployer plan is in critical status for a plan 
year, the plan sponsor, in accordance with this sub-
section— 
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263 
‘‘(A) shall adopt a rehabilitation plan not 
later than 240 days following the required date 
for the actuarial certification of critical status 
under subsection (b)(3)(A), and 
‘‘(B) within 30 days after the adoption of 
the rehabilitation plan— 
‘‘(i) shall provide to the bargaining 
parties 1 or more schedules showing re-
vised benefit structures, revised contribu-
tion structures, or both, which, if adopted, 
may reasonably be expected to enable the 
multiemployer plan to emerge from critical 
status in accordance with the rehabilitation 
plan, and 
‘‘(ii) may, if the plan sponsor deems 
appropriate, prepare and provide the bar-
gaining parties with additional information 
relating to contribution rates or benefit re-
ductions, alternative schedules, or other in-
formation relevant to emerging from crit-
ical status in accordance with the rehabili-
tation plan. 
The schedule or schedules described in subparagraph 
(B)(i) shall reflect reductions in future benefit ac-
cruals and adjustable benefits, and increases in con-
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264 
tributions, that the plan sponsor determines are rea-
sonably necessary to emerge from critical status. 
One schedule shall be designated as the default 
schedule and such schedule shall assume that there 
are no increases in contributions under the plan 
other than the increases necessary to emerge from 
critical status after future benefit accruals and other 
benefits (other than benefits the reduction or elimi-
nation of which are not permitted under section 
204(g)) have been reduced to the maximum extent 
permitted by law. 
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS 
BEGINS.—Paragraph (1) shall not apply to a plan 
year if such year is in a rehabilitation plan adoption 
period or rehabilitation period by reason of the plan 
being in critical status for a preceding plan year. 
For purposes of this section, such preceding plan 
year shall be the initial critical year with respect to 
the rehabilitation plan to which it relates. 
‘‘(3) REHABILITATION PLAN.—For purposes of 
this section— 
‘‘(A) IN GENERAL.—A rehabilitation plan 
is a plan which consists of— 
‘‘(i) actions, including options or a 
range of options to be proposed to the bar-
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ccoleman on PROD1PC71 with BILLS
265 
gaining parties, formulated, based on rea-
sonably anticipated experience and reason-
able actuarial assumptions, to enable the 
plan to cease to be in critical status by the 
end of the rehabilitation period and may 
include reductions in plan expenditures (in-
cluding plan mergers and consolidations), 
reductions in future benefit accruals or in-
creases in contributions, if agreed to by the 
bargaining parties, or any combination of 
such actions, or 
‘‘(ii) if the plan sponsor determines 
that, based on reasonable actuarial as-
sumptions and upon exhaustion of all rea-
sonable measures, the plan can not reason-
ably be expected to emerge from critical 
status by the end of the rehabilitation pe-
riod, reasonable measures to emerge from 
critical status at a later time or to forestall 
possible insolvency (within the meaning of 
section 4245). 
A rehabilitation plan must provide annual 
standards for meeting the requirements of such 
rehabilitation plan. Such plan shall also include 
the schedules required to be provided under 
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paragraph (1)(B)(i) and if clause (ii) applies, 
shall set forth the alternatives considered, ex-
plain why the plan is not reasonably expected to 
emerge from critical status by the end of the re-
habilitation period, and specify when, if ever, 
the plan is expected to emerge from critical sta-
tus in accordance with the rehabilitation plan. 
‘‘(B) UPDATES TO REHABILITATION PLAN 
AND SCHEDULES.— 
‘‘(i) 
REHABILITATION
PLAN.—The 
plan sponsor shall annually update the re-
habilitation plan and shall file the update 
with the plan’s annual report under section 
104. 
‘‘(ii) SCHEDULES.—The plan sponsor 
shall annually update any schedule of con-
tribution rates provided under this sub-
section to reflect the experience of the 
plan. 
‘‘(iii) DURATION
OF
SCHEDULE.—A 
schedule of contribution rates provided by 
the plan sponsor and relied upon by bar-
gaining parties in negotiating a collective 
bargaining agreement shall remain in ef-
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ccoleman on PROD1PC71 with BILLS
267 
fect for the duration of that collective bar-
gaining agreement. 
‘‘(C) IMPOSITION OF DEFAULT SCHEDULE 
WHERE
FAILURE
TO
ADOPT
REHABILITATION 
PLAN.— 
‘‘(i) IN GENERAL.—If— 
‘‘(I) a collective bargaining agree-
ment 
providing 
for 
contributions 
under a multiemployer plan that was 
in effect at the time the plan entered 
critical status expires, and 
‘‘(II) after receiving one or more 
schedules from the plan sponsor under 
paragraph (1)(B), the bargaining par-
ties with respect to such agreement 
fail to adopt a contribution or benefit 
schedules with terms consistent with 
the rehabilitation plan and the sched-
ule from the plan sponsor under para-
graph (1)(B)(i), 
the plan sponsor shall implement the de-
fault schedule described in the last sen-
tence of paragraph (1) beginning on the 
date specified in clause (ii). 
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268 
‘‘(ii) DATE
OF
IMPLEMENTATION.— 
The date specified in this clause is the ear-
lier of the date— 
‘‘(I) on which the Secretary cer-
tifies that the parties are at an im-
passe, or 
‘‘(II) which is 180 days after the 
date on which the collective bar-
gaining agreement described in clause 
(i) expires. 
‘‘(4) REHABILITATION PERIOD.—For purposes 
of this section— 
‘‘(A) IN GENERAL.—The rehabilitation pe-
riod for a plan in critical status is the 10-year 
period beginning on the first day of the first 
plan year of the multiemployer plan following 
the earlier of— 
‘‘(i) the second anniversary of the 
date of the adoption of the rehabilitation 
plan, or 
‘‘(ii) the expiration of the collective 
bargaining agreements in effect on the 
date of the due date for the actuarial cer-
tification of critical status for the initial 
critical year under subsection (a)(1) and 
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ccoleman on PROD1PC71 with BILLS
269 
covering, as of such date at least 75 per-
cent of the active participants in such mul-
tiemployer plan. 
If a plan emerges from critical status as pro-
vided under subparagraph (B) before the end of 
such 10-year period, the rehabilitation period 
shall end with the plan year preceding the plan 
year for which the determination under sub-
paragraph (B) is made. 
‘‘(B) EMERGENCE.—A plan in critical sta-
tus shall remain in such status until a plan 
year for which the plan actuary certifies, in ac-
cordance with subsection (b)(3)(A), that the 
plan is not projected to have an accumulated 
funding deficiency for the plan year or any of 
the 9 succeeding plan years, without regard to 
the use of the shortfall method and taking into 
account any extension of amortization periods 
under section 304(d). 
‘‘(5) REHABILITATION
PLAN
ADOPTION
PE-
RIOD.—For purposes of this section, the term ‘reha-
bilitation plan adoption period’ means the period be-
ginning on the date of the certification under sub-
section (b)(3)(A) for the initial critical year and end-
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