H. R. 4
One Hundred Ninth Congress
of the
United States of America 
AT THE SECOND SESSION 
Begun and held at the City of Washington on Tuesday, 
the third day of January, two thousand and six 
An Act 
To provide economic security for all Americans, and for other purposes.
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the ‘‘Pension Protec-
tion Act of 2006’’. 
(b) TABLE OF CONTENTS.—The table of contents for this Act 
(other than so much of title XIV as follows section 1401) is as 
follows:
Sec. 1. Short title and table of contents. 
TITLE I—REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED 
BENEFIT PENSION PLANS 
Subtitle A—Amendments to Employee Retirement Income Security Act of 1974
Sec. 101. Minimum funding standards. 
Sec. 102. Funding rules for single-employer defined benefit pension plans. 
Sec. 103. Benefit limitations under single-employer plans. 
Sec. 104. Special rules for multiple employer plans of certain cooperatives. 
Sec. 105. Temporary relief for certain PBGC settlement plans. 
Sec. 106. Special rules for plans of certain government contractors. 
Sec. 107. Technical and conforming amendments. 
Subtitle B—Amendments to Internal Revenue Code of 1986
Sec. 111. Minimum funding standards. 
Sec. 112. Funding rules for single-employer defined benefit pension plans. 
Sec. 113. Benefit limitations under single-employer plans. 
Sec. 114. Technical and conforming amendments. 
Sec. 115. Modification of transition rule to pension funding requirements. 
Sec. 116. Restrictions on funding of nonqualified deferred compensation plans by 
employers maintaining underfunded or terminated single-employer 
plans. 
TITLE II—FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT 
PLANS AND RELATED PROVISIONS 
Subtitle A—Amendments to Employee Retirement Income Security Act of 1974
Sec. 201. Funding rules for multiemployer defined benefit plans. 
Sec. 202. Additional funding rules for multiemployer plans in endangered or critical 
status. 
Sec. 203. Measures to forestall insolvency of multiemployer plans. 
Sec. 204. Withdrawal liability reforms. 
Sec. 205. Prohibition on retaliation against employers exercising their rights to
petition the Federal Government. 
Sec. 206. Special rule for certain benefits funded under an agreement approved by 
the Pension Benefit Guaranty Corporation. 
Subtitle B—Amendments to Internal Revenue Code of 1986
Sec. 211. Funding rules for multiemployer defined benefit plans. 
Sec. 212. Additional funding rules for multiemployer plans in endangered or critical 
status.
H. R. 4—2
Sec. 213. Measures to forestall insolvency of multiemployer plans. 
Sec. 214. Exemption from excise taxes for certain multiemployer pension plans. 
Subtitle C—Sunset of Additional Funding Rules 
Sec. 221. Sunset of additional funding rules. 
TITLE III—INTEREST RATE ASSUMPTIONS 
Sec. 301. Extension of replacement of 30-year Treasury rates. 
Sec. 302. Interest rate assumption for determination of lump sum distributions. 
Sec. 303. Interest rate assumption for applying benefit limitations to lump sum dis-
tributions. 
TITLE IV—PBGC GUARANTEE AND RELATED PROVISIONS 
Sec. 401. PBGC premiums. 
Sec. 402. Special funding rules for certain plans maintained by commercial airlines. 
Sec. 403. Limitation on PBGC guarantee of shutdown and other benefits. 
Sec. 404. Rules relating to bankruptcy of employer. 
Sec. 405. PBGC premiums for small plans. 
Sec. 406. Authorization for PBGC to pay interest on premium overpayment re-
funds. 
Sec. 407. Rules for substantial owner benefits in terminated plans. 
Sec. 408. Acceleration of PBGC computation of benefits attributable to recoveries 
from employers. 
Sec. 409. Treatment of certain plans where cessation or change in membership of 
a controlled group. 
Sec. 410. Missing participants. 
Sec. 411. Director of the Pension Benefit Guaranty Corporation. 
Sec. 412. Inclusion of information in the PBGC annual report. 
TITLE V—DISCLOSURE 
Sec. 501. Defined benefit plan funding notice. 
Sec. 502. Access to multiemployer pension plan information. 
Sec. 503. Additional annual reporting requirements. 
Sec. 504. Electronic display of annual report information. 
Sec. 505. Section 4010 filings with the PBGC. 
Sec. 506. Disclosure of termination information to plan participants. 
Sec. 507. Notice of freedom to divest employer securities. 
Sec. 508. Periodic pension benefit statements. 
Sec. 509. Notice to participants or beneficiaries of blackout periods. 
TITLE VI—INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND 
FIDUCIARY RULES 
Subtitle A—Investment Advice 
Sec. 601. Prohibited transaction exemption for provision of investment advice. 
Subtitle B—Prohibited Transactions 
Sec. 611. Prohibited transaction rules relating to financial investments. 
Sec. 612. Correction period for certain transactions involving securities and com-
modities. 
Subtitle C—Fiduciary and Other Rules 
Sec. 621. Inapplicability of relief from fiduciary liability during suspension of abil-
ity of participant or beneficiary to direct investments. 
Sec. 622. Increase in maximum bond amount. 
Sec. 623. Increase in penalties for coercive interference with exercise of ERISA 
rights. 
Sec. 624. Treatment of investment of assets by plan where participant fails to exer-
cise investment election. 
Sec. 625. Clarification of fiduciary rules. 
TITLE VII—BENEFIT ACCRUAL STANDARDS 
Sec. 701. Benefit accrual standards. 
Sec. 702. Regulations relating to mergers and acquisitions. 
TITLE VIII—PENSION RELATED REVENUE PROVISIONS 
Subtitle A—Deduction Limitations 
Sec. 801. Increase in deduction limit for single-employer plans. 
Sec. 802. Deduction limits for multiemployer plans.
H. R. 4—3
Sec. 803. Updating deduction rules for combination of plans. 
Subtitle B—Certain Pension Provisions Made Permanent 
Sec. 811. Pensions and individual retirement arrangement provisions of Economic 
Growth and Tax Relief Reconciliation Act of 2001 made permanent. 
Sec. 812. Saver’s credit. 
Subtitle C—Improvements in Portability, Distribution, and Contribution Rules 
Sec. 821. Clarifications regarding purchase of permissive service credit. 
Sec. 822. Allow rollover of after-tax amounts in annuity contracts. 
Sec. 823. Clarification of minimum distribution rules for governmental plans. 
Sec. 824. Allow direct rollovers from retirement plans to Roth IRAs. 
Sec. 825. Eligibility for participation in retirement plans. 
Sec. 826. Modifications of rules governing hardships and unforseen financial emer-
gencies. 
Sec. 827. Penalty-free withdrawals from retirement plans for individuals called to 
active duty for at least 179 days. 
Sec. 828. Waiver of 10 percent early withdrawal penalty tax on certain distribu-
tions of pension plans for public safety employees. 
Sec. 829. Allow rollovers by nonspouse beneficiaries of certain retirement plan dis-
tributions. 
Sec. 830. Direct payment of tax refunds to individual retirement plans. 
Sec. 831. Allowance of additional IRA payments in certain bankruptcy cases. 
Sec. 832. Determination of average compensation for section 415 limits. 
Sec. 833. Inflation indexing of gross income limitations on certain retirement sav-
ings incentives. 
Subtitle D—Health and Medical Benefits 
Sec. 841. Use of excess pension assets for future retiree health benefits and collec-
tively bargained retiree health benefits. 
Sec. 842. Transfer of excess pension assets to multiemployer health plan. 
Sec. 843. Allowance of reserve for medical benefits of plans sponsored by bona fide 
associations. 
Sec. 844. Treatment of annuity and life insurance contracts with a long-term care 
insurance feature. 
Sec. 845. Distributions from governmental retirement plans for health and long-
term care insurance for public safety officers. 
Subtitle E—United States Tax Court Modernization 
Sec. 851. Cost-of-living adjustments for Tax Court judicial survivor annuities. 
Sec. 852. Cost of life insurance coverage for Tax Court judges age 65 or over. 
Sec. 853. Participation of Tax Court judges in the Thrift Savings Plan. 
Sec. 854. Annuities to surviving spouses and dependent children of special trial 
judges of the Tax Court. 
Sec. 855. Jurisdiction of Tax Court over collection due process cases. 
Sec. 856. Provisions for recall. 
Sec. 857. Authority for special trial judges to hear and decide certain employment 
status cases. 
Sec. 858. Confirmation of authority of Tax Court to apply doctrine of equitable 
recoupment. 
Sec. 859. Tax Court filing fee in all cases commenced by filing petition. 
Sec. 860. Expanded use of Tax Court practice fee for pro se taxpayers. 
Subtitle F—Other Provisions 
Sec. 861. Extension to all governmental plans of current moratorium on application 
of certain nondiscrimination rules applicable to State and local plans. 
Sec. 862. Elimination of aggregate limit for usage of excess funds from black lung 
disability trusts. 
Sec. 863. Treatment of death benefits from corporate-owned life insurance. 
Sec. 864. Treatment of test room supervisors and proctors who assist in the admin-
istration of college entrance and placement exams. 
Sec. 865. Grandfather rule for church plans which self-annuitize. 
Sec. 866. Exemption for income from leveraged real estate held by church plans. 
Sec. 867. Church plan rule. 
Sec. 868. Gratuitous transfer for benefits of employees. 
TITLE IX—INCREASE IN PENSION PLAN DIVERSIFICATION AND 
PARTICIPATION AND OTHER PENSION PROVISIONS 
Sec. 901. Defined contribution plans required to provide employees with freedom to 
invest their plan assets.
H. R. 4—4
Sec. 902. Increasing participation through automatic contribution arrangements. 
Sec. 903. Treatment of eligible combined defined benefit plans and qualified cash 
or deferred arrangements. 
Sec. 904. Faster vesting of employer nonelective contributions. 
Sec. 905. Distributions during working retirement. 
Sec. 906. Treatment of certain pension plans of Indian tribal governments. 
TITLE X—PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION 
Sec. 1001. Regulations on time and order of issuance of domestic relations orders. 
Sec. 1002. Entitlement of divorced spouses to railroad retirement annuities inde-
pendent of actual entitlement of employee. 
Sec. 1003. Extension of tier II railroad retirement benefits to surviving former 
spouses pursuant to divorce agreements. 
Sec. 1004. Requirement for additional survivor annuity option. 
TITLE XI—ADMINISTRATIVE PROVISIONS 
Sec. 1101. Employee plans compliance resolution system. 
Sec. 1102. Notice and consent period regarding distributions. 
Sec. 1103. Reporting simplification. 
Sec. 1104. Voluntary early retirement incentive and employment retention plans 
maintained by local educational agencies and other entities. 
Sec. 1105. No reduction in unemployment compensation as a result of pension roll-
overs. 
Sec. 1106. Revocation of election relating to treatment as multiemployer plan. 
Sec. 1107. Provisions relating to plan amendments. 
TITLE XII—PROVISIONS RELATING TO EXEMPT ORGANIZATIONS 
Subtitle A—Charitable Giving Incentives 
Sec. 1201. Tax-free distributions from individual retirement plans for charitable 
purposes. 
Sec. 1202. Extension of modification of charitable deduction for contributions of 
food inventory. 
Sec. 1203. Basis adjustment to stock of S corporation contributing property. 
Sec. 1204. Extension of modification of charitable deduction for contributions of 
book inventory. 
Sec. 1205. Modification of tax treatment of certain payments to controlling exempt 
organizations. 
Sec. 1206. Encouragement of contributions of capital gain real property made for 
conservation purposes. 
Sec. 1207. Excise taxes exemption for blood collector organizations. 
Subtitle B—Reforming Exempt Organizations 
PART 1—GENERAL REFORMS 
Sec. 1211. Reporting on certain acquisitions of interests in insurance contracts in 
which certain exempt organizations hold an interest. 
Sec. 1212. Increase in penalty excise taxes relating to public charities, social wel-
fare organizations, and private foundations. 
Sec. 1213. Reform of charitable contributions of certain easements in registered 
historic districts and reduced deduction for portion of qualified conserva-
tion contribution attributable to rehabilitation credit. 
Sec. 1214. Charitable contributions of taxidermy property. 
Sec. 1215. Recapture of tax benefit for charitable contributions of exempt use prop-
erty not used for an exempt use. 
Sec. 1216. Limitation of deduction for charitable contributions of clothing and 
household items. 
Sec. 1217. Modification of recordkeeping requirements for certain charitable con-
tributions. 
Sec. 1218. Contributions of fractional interests in tangible personal property. 
Sec. 1219. Provisions relating to substantial and gross overstatements of valu-
ations. 
Sec. 1220. Additional standards for credit counseling organizations. 
Sec. 1221. Expansion of the base of tax on private foundation net investment in-
come. 
Sec. 1222. Definition of convention or association of churches. 
Sec. 1223. Notification requirement for entities not currently required to file. 
Sec. 1224. Disclosure to State officials relating to exempt organizations. 
Sec. 1225. Public disclosure of information relating to unrelated business income 
tax returns. 
Sec. 1226. Study on donor advised funds and supporting organizations.
H. R. 4—5
PART 2—IMPROVED ACCOUNTABILITY OF DONOR ADVISED FUNDS 
Sec. 1231. Excise taxes relating to donor advised funds. 
Sec. 1232. Excess benefit transactions involving donor advised funds and spon-
soring organizations. 
Sec. 1233. Excess business holdings of donor advised funds. 
Sec. 1234. Treatment of charitable contribution deductions to donor advised funds. 
Sec. 1235. Returns of, and applications for recognition by, sponsoring organizations. 
PART 3—IMPROVED ACCOUNTABILITY OF SUPPORTING ORGANIZATIONS 
Sec. 1241. Requirements for supporting organizations. 
Sec. 1242. Excess benefit transactions involving supporting organizations. 
Sec. 1243. Excess business holdings of supporting organizations. 
Sec. 1244. Treatment of amounts paid to supporting organizations by private foun-
dations. 
Sec. 1245. Returns of supporting organizations. 
TITLE XIII—OTHER PROVISIONS 
Sec. 1301. Technical corrections relating to mine safety. 
Sec. 1302. Going-to-the-sun road. 
Sec. 1303. Exception to the local furnishing requirement of the tax-exempt bond 
rules. 
Sec. 1304. Qualified tuition programs. 
TITLE XIV—TARIFF PROVISIONS 
Sec. 1401. Short title; table of contents.
TITLE I—REFORM OF FUNDING RULES 
FOR 
SINGLE-EMPLOYER 
DEFINED 
BENEFIT PENSION PLANS 
Subtitle A—Amendments to Employee 
Retirement Income Security Act of 1974
SEC. 101. MINIMUM FUNDING STANDARDS. 
(a) REPEAL OF EXISTING FUNDING RULES.—Sections 302 through 
308 of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1082 through 1086) are repealed. 
(b) NEW MINIMUM FUNDING STANDARDS.—Part 3 of subtitle 
B of title I of such Act (as amended by subsection (a)) is amended 
by inserting after section 301 the following new section: 
‘‘SEC. 302. MINIMUM FUNDING STANDARDS. 
‘‘(a) REQUIREMENT TO MEET MINIMUM FUNDING STANDARD.—
‘‘(1) IN GENERAL.—A plan to which this part applies shall 
satisfy the minimum funding standard applicable to the plan 
for any plan year. 
‘‘(2) MINIMUM FUNDING STANDARD.—For purposes of para-
graph (1), a plan shall be treated as satisfying the minimum 
funding standard for a plan year if—
‘‘(A) in the case of a defined benefit plan which is 
a single-employer plan, the employer makes contributions 
to or under the plan for the plan year which, in the aggre-
gate, are not less than the minimum required contribution 
determined under section 303 for the plan for the plan 
year, 
‘‘(B) in the case of a money purchase plan which is 
a single-employer plan, the employer makes contributions 
to or under the plan for the plan year which are required 
under the terms of the plan, and
H. R. 4—6
‘‘(C) in the case of a multiemployer plan, the employers 
make contributions to or under the plan for any plan year 
which, in the aggregate, are sufficient to ensure that the 
plan does not have an accumulated funding deficiency 
under section 304 as of the end of the plan year. 
‘‘(b) LIABILITY FOR CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2), 
the amount of any contribution required by this section 
(including any required installments under paragraphs (3) and 
(4) of section 303(j)) shall be paid by the employer responsible 
for making contributions to or under the plan. 
‘‘(2) JOINT
AND
SEVERAL
LIABILITY
WHERE
EMPLOYER 
MEMBER OF CONTROLLED GROUP.—If the employer referred to 
in paragraph (1) is a member of a controlled group, each 
member of such group shall be jointly and severally liable 
for payment of such contributions. 
‘‘(c) VARIANCE FROM MINIMUM FUNDING STANDARDS.—
‘‘(1) WAIVER IN CASE OF BUSINESS HARDSHIP.—
‘‘(A) IN GENERAL.—If—
‘‘(i) an employer is (or in the case of a multiem-
ployer plan, 10 percent or more of the number of 
employers contributing to or under the plan is) unable 
to satisfy the minimum funding standard for a plan 
year without temporary substantial business hardship 
(substantial business hardship in the case of a multi-
employer plan), and 
‘‘(ii) application of the standard would be adverse 
to the interests of plan participants in the aggregate, 
the Secretary of the Treasury may, subject to subparagraph 
(C), waive the requirements of subsection (a) for such year 
with respect to all or any portion of the minimum funding 
standard. The Secretary of the Treasury shall not waive 
the minimum funding standard with respect to a plan 
for more than 3 of any 15 (5 of any 15 in the case of 
a multiemployer plan) consecutive plan years. 
‘‘(B) EFFECTS OF WAIVER.—If a waiver is granted under 
subparagraph (A) for any plan year—
‘‘(i) in the case of a single-employer plan, the min-
imum required contribution under section 303 for the 
plan year shall be reduced by the amount of the waived 
funding deficiency and such amount shall be amortized 
as required under section 303(e), and 
‘‘(ii) in the case of a multiemployer plan, the 
funding standard account shall be credited under sec-
tion 304(b)(3)(C) with the amount of the waived 
funding deficiency and such amount shall be amortized 
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 pre-
ceding plan year. 
‘‘(2) DETERMINATION OF BUSINESS HARDSHIP.—For purposes 
of this subsection, the factors taken into account in determining 
temporary substantial business hardship (substantial business
H. R. 4—7
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 economic loss, 
‘‘(B) there is substantial unemployment or under-
employment in the trade or business and in the industry 
concerned, 
‘‘(C) the sales and profits of the industry concerned 
are depressed or declining, and 
‘‘(D) it is reasonable to expect that the plan will be 
continued only if the waiver is granted. 
‘‘(3) WAIVED FUNDING DEFICIENCY.—For purposes of this 
part, the term ‘waived funding deficiency’ means the portion 
of the minimum funding standard under subsection (a) (deter-
mined without regard to the waiver) for a plan year waived 
by the Secretary of the Treasury and not satisfied by employer 
contributions. 
‘‘(4) SECURITY FOR WAIVERS FOR SINGLE-EMPLOYER PLANS, 
CONSULTATIONS.—
‘‘(A) SECURITY MAY BE REQUIRED.—
‘‘(i) IN GENERAL.—Except as provided in subpara-
graph (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 sec-
tion 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 direc-
tion of the Corporation, by a contributing sponsor 
(within the meaning of section 4001(a)(13)), or a 
member of such sponsor’s controlled group (within the 
meaning of section 4001(a)(14)). 
‘‘(B) CONSULTATION WITH THE PENSION BENEFIT GUAR-
ANTY CORPORATION.—Except as provided in subparagraph 
(C), the Secretary of the Treasury shall, before granting 
or modifying a waiver under this subsection with respect 
to a plan described in subparagraph (A)(i)—
‘‘(i) provide the Pension Benefit Guaranty Corpora-
tion with—
‘‘(I) notice of the completed application for any 
waiver or modification, 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 Corporation under 
clause (i)(II), and 
‘‘(II) any views of any employee organization 
(within the meaning of section 3(4)) representing 
participants in the plan which are submitted in 
writing to the Secretary of the Treasury in connec-
tion with such application. 
Information provided to the Corporation under this 
subparagraph shall be considered tax return information 
and subject to the safeguarding and reporting requirements 
of section 6103(p) of the Internal Revenue Code of 1986.
H. R. 4—8
‘‘(C) EXCEPTION FOR CERTAIN WAIVERS.—
‘‘(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 minimum required 
contributions for the plan year and all preceding 
plan years, and 
‘‘(II) the present value of all waiver amortiza-
tion installments determined for the plan year and 
succeeding plan years under section 303(e)(2), 
is less than $1,000,000. 
‘‘(ii) TREATMENT OF WAIVERS FOR WHICH APPLICA-
TIONS ARE PENDING.—The amount described in clause 
(i)(I) shall include any increase in such amount which 
would result if all applications for waivers of the min-
imum funding standard under this subsection which 
are pending with respect to such plan were denied. 
‘‘(iii) UNPAID MINIMUM REQUIRED CONTRIBUTION.—
For purposes of this subparagraph—
‘‘(I) IN GENERAL.—The term ‘unpaid minimum 
required contribution’ means, with respect to any 
plan year, any minimum required contribution 
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 sub-
clause (I), any payment to or under a plan for 
any plan year shall be allocated first to unpaid 
minimum required contributions for all preceding 
plan years on a first-in, first-out basis and then 
to the minimum 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 sub-
section with respect to any plan for any plan year unless 
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 MEMBER OF CON-
TROLLED GROUP.—In the case of a single-employer plan, 
if an employer is a member of a controlled group, the 
temporary substantial business hardship requirements of 
paragraph (1) shall be treated as met only if such require-
ments are met—
‘‘(i) with respect to such employer, and 
‘‘(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 Secretary 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.—
H. R. 4—9
‘‘(A) IN GENERAL.—The Secretary of the Treasury shall, 
before granting a waiver under this subsection, require 
each applicant to provide evidence satisfactory to such Sec-
retary 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 liabilities. 
‘‘(B) CONSIDERATION OF RELEVANT INFORMATION.—The 
Secretary of the Treasury 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 non-
forfeitable 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 determines to 
be reasonable and which provides for only de minimis 
increases in the liabilities of the plan, 
‘‘(ii) only repeals an amendment described in sub-
section (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 AMENDMENTS.—For pur-
poses of this section, any amendment 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 multiemployer plan, no later than 
2 years after the close of such plan year), 
‘‘(B) does not reduce the accrued benefit of any partici-
pant determined as of the beginning of the first plan year 
to which the amendment applies, and
H. R. 4—10
‘‘(C) does not reduce the accrued benefit of any partici-
pant 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 paragraph which reduces the 
accrued benefits of any participant shall take effect unless 
the plan administrator files a notice with the Secretary of 
the Treasury 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 amendment described in this subsection 
shall be approved by the Secretary of the Treasury unless 
such Secretary determines that such amendment is necessary 
because of a temporary substantial business hardship (as deter-
mined under subsection (c)(2)) or a substantial business hard-
ship (as so determined) in the case of a multiemployer plan 
and that a waiver under subsection (c) (or, in the case of 
a multiemployer 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 following 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 DEFINED 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 inserting 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 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 assets 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 determined under subsection 
(e); or 
‘‘(2) in any case in which the value of plan assets of the 
plan (as reduced under subsection (f)(4)(B)) equals or exceeds
H. R. 4—11
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 respect to plans in at-risk 
status, the term ‘target normal cost’ means, for any plan year, 
the present value of all 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 performed 
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 having accrued during the current 
plan year. 
‘‘(c) SHORTFALL AMORTIZATION CHARGE.—
‘‘(1) IN GENERAL.—For purposes of this section, the shortfall 
amortization charge for a plan for any plan year is the aggre-
gate total (not less than zero) of the shortfall amortization 
installments for such plan year with respect to the shortfall 
amortization bases for such plan year and each of the 6 pre-
ceding plan years. 
‘‘(2) SHORTFALL AMORTIZATION INSTALLMENT.—For purposes 
of paragraph (1)—
‘‘(A) 
DETERMINATION.—The 
shortfall 
amortization 
installments are the amounts necessary to amortize the 
shortfall amortization base of the plan for any plan year 
in level annual installments over the 7-plan-year period 
beginning with such plan year. 
‘‘(B) SHORTFALL INSTALLMENT.—The shortfall amortiza-
tion installment for any plan year in the 7-plan-year period 
under subparagraph (A) with respect to any shortfall 
amortization base is the annual installment determined 
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 subsection (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 subparagraph (C) of subsection 
(h)(2), applied under rules similar to the rules of subpara-
graph (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 succeeding plan year with respect 
to the shortfall 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
H. R. 4—12
‘‘(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
AMORTIZATION 
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 greater 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 provided in clauses 
(iii) and (iv), in the case of plan years beginning after 
2007 and before 2011, only the applicable percentage 
of the funding target shall be taken into account under 
paragraph (3)(A) in determining the funding shortfall 
for the plan year for purposes of subparagraph (A). 
‘‘(ii) APPLICABLE
PERCENTAGE.—For purposes of 
subparagraph (A), the applicable percentage shall be 
determined in accordance 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 
amortization base for each of the preceding years begin-
ning after 2007 was zero (determined after application 
of this subparagraph). 
‘‘(iv) TRANSITION RELIEF NOT AVAILABLE 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 begin-
ning in 2007 and which was subject to section 
302(d) (as in effect for plan years beginning in 
2007), determined after the application of para-
graphs (6) and (9) thereof. 
‘‘(6) EARLY DEEMED AMORTIZATION UPON ATTAINMENT 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 amortization charge for such plan year and suc-
ceeding plan years, the shortfall amortization bases for all 
preceding plan years (and all shortfall amortization install-
ments 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 status, 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.
H. R. 4—13
‘‘(2) FUNDING
TARGET
ATTAINMENT
PERCENTAGE.—The 
‘funding target attainment percentage’ of a plan for a plan 
year is the ratio (expressed as a percentage) which—
‘‘(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 subsection (i)(1)). 
‘‘(e) WAIVER AMORTIZATION CHARGE.—
‘‘(1) DETERMINATION OF WAIVER AMORTIZATION 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 
amortization bases for each of the 5 preceding plan years. 
‘‘(2) WAIVER AMORTIZATION INSTALLMENT.—For purposes of 
paragraph (1)—
‘‘(A) 
DETERMINATION.—The 
waiver 
amortization 
installments are the amounts necessary to amortize the 
waiver amortization base of the plan for any plan year 
in level annual installments 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 annual installment determined under subpara-
graph (A) for that year for that base. 
‘‘(3) INTEREST RATE.—In determining any waiver amortiza-
tion installment under this subsection, 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 waiver 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 ATTAINMENT 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 amortization charge for such plan year and suc-
ceeding plan years, the waiver amortization bases for all pre-
ceding plan years (and all waiver amortization installments 
determined with respect to such bases) shall be reduced to 
zero. 
‘‘(f) REDUCTION
OF
MINIMUM
REQUIRED
CONTRIBUTION
BY 
PREFUNDING BALANCE AND FUNDING STANDARD CARRYOVER BAL-
ANCE.—
‘‘(1) ELECTION TO MAINTAIN BALANCES.—
‘‘(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—
H. R. 4—14
‘‘(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 carryover balance maintained pursuant to 
this paragraph—
‘‘(A) shall be available for crediting against the min-
imum 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, pursuant to an elec-
tion under paragraph (5). 
‘‘(3) ELECTION
TO
APPLY
BALANCES
AGAINST
MINIMUM 
REQUIRED CONTRIBUTION.—
‘‘(A) IN
GENERAL.—Except as provided in subpara-
graphs (B) and (C), in the case of any plan year in which 
the plan sponsor elects to credit against the minimum 
required contribution for the current plan year all or a 
portion of the prefunding balance or the funding standard 
carryover balance for the current plan year (not in excess 
of such minimum required contribution), 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 preceding 
sentence, the minimum required contribution shall be 
determined after taking into account any waiver under 
section 302(c). 
‘‘(B) COORDINATION WITH FUNDING STANDARD CARRY-
OVER BALANCE.—To the extent that any plan has a funding 
standard carryover 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 pre-
ceding provisions of this paragraph 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 without 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 deter-
mined using such methods of estimation as the Secretary 
of the Treasury may prescribe. 
‘‘(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:
H. R. 4—15
‘‘(A) 
APPLICABILITY
OF
SHORTFALL
AMORTIZATION 
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 bal-
ance in reducing the minimum required contribution is 
in effect for the plan year. 
‘‘(B) DETERMINATION
OF
EXCESS
ASSETS, FUNDING 
SHORTFALL, AND FUNDING TARGET ATTAINMENT PERCENT-
AGE.—
‘‘(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. 
‘‘(ii) SPECIAL RULE FOR CERTAIN BINDING AGREE-
MENTS
WITH
PBGC.—For 
purposes 
of 
subsection 
(c)(4)(B), the value of plan assets shall not be deemed 
to be reduced 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 Pension Benefit Guaranty Corporation which 
provides that such balance is not available to reduce 
the minimum required contribution for the plan year. 
For purposes of the preceding sentence, the term ‘speci-
fied balance’ 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
REQUIRED
CONTRIBUTION.—
For purposes of paragraph (3)(C)(i) of this subsection, the 
value of plan assets is deemed to be such amount, reduced 
by the amount of the prefunding balance. 
‘‘(5) ELECTION TO REDUCE BALANCE PRIOR TO DETERMINA-
TIONS OF VALUE OF PLAN ASSETS AND CREDITING AGAINST MIN-
IMUM REQUIRED CONTRIBUTION.—
‘‘(A) IN
GENERAL.—The plan sponsor may elect to 
reduce by any amount the balance of the prefunding bal-
ance and the funding standard carryover balance for any 
plan year (but not below zero). Such reduction shall be 
effective prior to any determination of the value of plan 
assets for such plan year under this section and application 
of the balance in reducing the minimum required contribu-
tion for such plan for such plan year pursuant to an election 
under paragraph (2). 
‘‘(B) COORDINATION
BETWEEN
PREFUNDING
BALANCE 
AND
FUNDING
STANDARD
CARRYOVER
BALANCE.—To the 
extent that any plan has a funding standard carryover 
balance 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 beginning balance of zero, 
increased and decreased to the extent provided in subpara-
graphs (B) and (C), and adjusted further as provided in 
paragraph (8). 
‘‘(B) INCREASES.—
H. R. 4—16
‘‘(i) IN GENERAL.—As of the first day of each plan 
year beginning after 2008, the prefunding balance of 
a plan shall be increased 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 employer contribu-
tions to the plan for the preceding plan year, 
over—
‘‘(II) the minimum required contribution for 
such preceding plan year. 
‘‘(ii) ADJUSTMENTS FOR INTEREST.—Any excess con-
tributions under clause (i) shall be properly adjusted 
for interest accruing 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 interest rate for the preceding plan 
year and by treating contributions as being first used 
to satisfy the minimum required contribution. 
‘‘(iii) CERTAIN CONTRIBUTIONS NECESSARY 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 paragraph for the 
preceding plan year. Any contribution which may be 
taken into account 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 balance credited under para-
graph (2) (if any) in reducing the minimum required 
contribution of the plan for the preceding plan year, 
and 
‘‘(ii) as of the time specified in paragraph (5)(A), 
any reduction in such balance elected under paragraph 
(5). 
‘‘(7) FUNDING STANDARD CARRYOVER BALANCE.—
‘‘(A) IN GENERAL.—A funding standard carryover bal-
ance maintained by a plan shall consist of a beginning 
balance determined under subparagraph (B), decreased to 
the extent provided in subparagraph (C), and adjusted 
further as provided in paragraph (8). 
‘‘(B) BEGINNING BALANCE.—The beginning balance of 
the funding standard carryover balance shall be the posi-
tive balance described in paragraph (1)(B)(ii)(II). 
‘‘(C) DECREASES.—The funding standard carryover bal-
ance 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 balance credited under para-
graph (2) (if any) in reducing the minimum required 
contribution of the plan for the preceding plan year, 
and
H. R. 4—17
‘‘(ii) as of the time specified in paragraph (5)(A), 
any reduction in such balance elected under paragraph 
(5). 
‘‘(8) ADJUSTMENTS FOR INVESTMENT EXPERIENCE.—In deter-
mining the prefunding balance or the funding standard carry-
over balance of a plan as of the first day of the plan year, 
the plan sponsor shall, in accordance with regulations pre-
scribed 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 
regulations, all contributions, distributions, and other plan pay-
ments made during such period. 
‘‘(9) ELECTIONS.—Elections under this subsection shall be 
made at such times, and in such form and manner, as shall 
be prescribed in regulations of the Secretary of the Treasury. 
‘‘(g) VALUATION OF PLAN ASSETS AND LIABILITIES.—
‘‘(1) TIMING OF DETERMINATIONS.—Except as otherwise pro-
vided under this subsection, all determinations under this sec-
tion for a plan year shall be made as of the valuation date 
of the plan for such plan year. 
‘‘(2) VALUATION DATE.—For purposes of this section—
‘‘(A) IN GENERAL.—Except as provided in subparagraph 
(B), the valuation date of a plan for any plan year shall 
be the first day of the plan year. 
‘‘(B) EXCEPTION FOR SMALL PLANS.—If, on each day 
during the preceding plan year, a plan had 100 or fewer 
participants, the plan may designate any day during the 
plan year as its valuation date for such plan year and 
succeeding plan years. For purposes of this subparagraph, 
all defined benefit plans which are single-employer plans 
and are maintained by the same employer (or any member 
of such employer’s controlled group) shall be treated as 
1 plan, but only participants with respect to such employer 
or member shall be taken into account. 
‘‘(C) APPLICATION OF CERTAIN RULES IN DETERMINATION 
OF PLAN SIZE.—For purposes of this paragraph—
‘‘(i) PLANS NOT IN EXISTENCE IN PRECEDING YEAR.—
In the case of the first plan year of any plan, subpara-
graph (B) shall apply to such plan by taking into 
account the number of participants that the plan is 
reasonably expected to have on days during such first 
plan year. 
‘‘(ii) PREDECESSORS.—Any reference in subpara-
graph (B) to an employer shall include a reference 
to any predecessor of such employer. 
‘‘(3) DETERMINATION OF VALUE OF PLAN ASSETS.—For pur-
poses 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 Treasury,
H. R. 4—18
‘‘(ii) does not provide for averaging of such values 
over more than the period beginning 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 determination of the 
value of plan assets which, at any time, is lower than 
90 percent or greater than 110 percent of the fair 
market value of such assets at such time. 
Any such averaging shall be adjusted for contributions 
and distributions (as provided by the Secretary of the 
Treasury). 
‘‘(4) ACCOUNTING FOR CONTRIBUTION RECEIPTS.—For pur-
poses of determining the value of assets under paragraph (3)—
‘‘(A) PRIOR YEAR CONTRIBUTIONS.—If—
‘‘(i) an employer makes any contribution to the 
plan after the valuation date for the plan year in 
which the contribution is made, and 
‘‘(ii) the contribution is for a preceding plan year, 
the contribution shall be taken into account as an asset 
of the plan as of the valuation date, except that in the 
case of any plan year beginning after 2008, only the present 
value (determined as of the valuation date) of such con-
tribution may be taken into account. For purposes 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 contributions and the valuation 
date, determined by using the effective interest rate 
for the plan year. 
‘‘(h) ACTUARIAL ASSUMPTIONS AND METHODS.—
‘‘(1) IN GENERAL.—Subject to this subsection, the deter-
mination of any present value or other computation 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 reasonable expectations), 
and 
‘‘(B) which, in combination, offer the actuary’s best 
estimate of anticipated experience under the plan. 
‘‘(2) INTEREST RATES.—
‘‘(A) EFFECTIVE INTEREST RATE.—For purposes of this 
section, the term ‘effective interest 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.
H. R. 4—19
‘‘(B) INTEREST RATES FOR DETERMINING FUNDING TAR-
GET.—For purposes of determining the funding target and 
normal cost of a plan for any plan year, the interest rate 
used in determining the present value of the benefits of 
the plan shall be—
‘‘(i) in the case of benefits reasonably determined 
to be payable during the 5-year period beginning on 
the first day of the plan year, the first segment rate 
with respect 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 period described in clause (i), the second 
segment rate with respect to the applicable month, 
and 
‘‘(iii) in the case of benefits reasonably determined 
to be payable after the period described in clause (ii), 
the third segment rate with respect to the applicable 
month. 
‘‘(C) SEGMENT
RATES.—For purposes of this para-
graph—
‘‘(i) FIRST SEGMENT RATE.—The term ‘first segment 
rate’ means, with respect to any month, the single 
rate of interest which shall be determined by the Sec-
retary of the Treasury for such month on the basis 
of the corporate bond yield curve for such month, 
taking into account only that portion of such yield 
curve which is based on bonds maturing during the 
5-year period commencing with such month. 
‘‘(ii) SECOND
SEGMENT
RATE.—The term ‘second 
segment rate’ means, with respect to any month, the 
single rate of interest 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 period 
described in clause (i). 
‘‘(iii) THIRD SEGMENT RATE.—The term ‘third seg-
ment rate’ means, with respect to any month, the 
single rate of interest which shall be determined by 
the Secretary of the Treasury for such month on the 
basis of the corporate bond yield curve for such month, 
taking into account only that portion of such yield 
curve which is based on bonds maturing during periods 
beginning after the period described in clause (ii). 
‘‘(D) CORPORATE BOND YIELD CURVE.—For purposes of 
this paragraph—
‘‘(i) IN GENERAL.—The term ‘corporate bond yield 
curve’ means, with respect to any month, a yield curve 
which is prescribed by the Secretary of the Treasury 
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 
corporate bonds with varying maturities and that are 
in the top 3 quality levels available.
H. R. 4—20
‘‘(ii) ELECTION TO USE YIELD CURVE.—Solely for 
purposes of determining the minimum required con-
tribution under this section, the plan sponsor may, 
in lieu of the segment rates determined under subpara-
graph (C), elect to use interest rates under the cor-
porate bond yield curve. For purposes of the preceding 
sentence such curve shall be determined without 
regard to the 24-month averaging described in clause 
(i). Such election, once made, may be revoked only 
with the consent of the Secretary of the Treasury. 
‘‘(E) APPLICABLE MONTH.—For purposes of this para-
graph, 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 
modification 
described 
in 
section 
205(g)(3)(B)(iii)(I)) for such month and each of the rates 
determined under subparagraph (B) for such month. The 
Secretary of the Treasury shall also publish a description 
of the methodology used to determine such yield curve 
and such rates which is sufficiently detailed to enable 
plans to make reasonable projections regarding the yield 
curve and such rates for future months based on the plan’s 
projection of future interest rates. 
‘‘(G) TRANSITION RULE.—
‘‘(i) IN GENERAL.—Notwithstanding the preceding 
provisions of this paragraph, for plan years beginning 
in 2008 or 2009, the first, second, or third segment 
rate for a plan with respect to any month shall be 
equal to the sum of—
‘‘(I) the product of such rate for such month 
determined without regard to this subparagraph, 
multiplied by the applicable percentage, and 
‘‘(II) the product of the rate determined under 
the rules of section 302(b)(5)(B)(ii)(II) (as in effect 
for plan years beginning in 2007), multiplied by 
a percentage equal to 100 percent minus the 
applicable percentage. 
‘‘(ii) APPLICABLE
PERCENTAGE.—For purposes of 
clause (i), the applicable percentage is 331⁄3 percent 
for plan years beginning in 2008 and 662⁄3 percent 
for plan years beginning in 2009. 
‘‘(iii) NEW PLANS INELIGIBLE.—Clause (i) shall not 
apply to any plan if the first plan year of the plan 
begins after December 31, 2007. 
‘‘(iv) ELECTION.—The plan sponsor may elect not 
to have this subparagraph apply. Such election, once 
made, may be revoked only with the consent of the 
Secretary of the Treasury.
H. R. 4—21
‘‘(3) MORTALITY TABLES.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph 
(C) or (D), the Secretary of the Treasury shall by regulation 
prescribe mortality tables to be used in determining any 
present value or making any computation under this sec-
tion. Such tables shall be based on the actual experience 
of pension plans and projected trends in such experience. 
In prescribing such tables, the Secretary of the Treasury 
shall take into account results of available independent 
studies of mortality of individuals covered by pension plans. 
‘‘(B) 
PERIODIC
REVISION.—The 
Secretary 
of 
the 
Treasury shall (at least every 10 years) make revisions 
in any table in effect under subparagraph (A) to reflect 
the actual experience of pension plans and projected trends 
in such experience. 
‘‘(C) SUBSTITUTE MORTALITY TABLE.—
‘‘(i) IN
GENERAL.—Upon request by the plan 
sponsor and approval by the Secretary of the Treasury, 
a mortality table which meets the requirements of 
clause (iii) shall be used in determining any present 
value or making any computation under this section 
during the period of consecutive plan years (not to 
exceed 10) specified in the request. 
‘‘(ii) EARLY
TERMINATION
OF
PERIOD.—Notwith-
standing clause (i), a mortality table described in clause 
(i) shall cease to be in effect as of the earliest of—
‘‘(I) the date on which there is a significant 
change in the participants in the plan by reason 
of a plan spinoff or merger or otherwise, or 
‘‘(II) the date on which the plan actuary deter-
mines that such table does not meet the require-
ments of clause (iii). 
‘‘(iii) REQUIREMENTS.—A mortality table meets the 
requirements of this clause if—
‘‘(I) there is a sufficient number of plan partici-
pants, and the pension plans have been main-
tained for a sufficient period of time, to have cred-
ible information necessary for purposes of sub-
clause (II), and 
‘‘(II) such table reflects the actual experience 
of the pension plans maintained by the sponsor 
and projected trends in general mortality experi-
ence. 
‘‘(iv) ALL PLANS IN CONTROLLED GROUP MUST USE 
SEPARATE TABLE.—Except as provided by the Secretary 
of the Treasury, a plan sponsor may not use a mortality 
table under this subparagraph for any plan maintained 
by the plan sponsor unless—
‘‘(I) a separate mortality table is established 
and used under this subparagraph for each other 
plan maintained by the plan sponsor and if the 
plan sponsor is a member of a controlled group, 
each member of the controlled group, and 
‘‘(II) the requirements of clause (iii) are met 
separately with respect to the table so established 
for each such plan, determined by only taking 
into account the participants of such plan, the
H. R. 4—22
time such plan has been in existence, and the 
actual experience of such plan. 
‘‘(v) DEADLINE FOR SUBMISSION AND DISPOSITION 
OF APPLICATION.—
‘‘(I) SUBMISSION.—The plan sponsor shall 
submit a mortality table to the Secretary of the 
Treasury for approval under this subparagraph 
at least 7 months before the 1st day of the period 
described in clause (i). 
‘‘(II) DISPOSITION.—Any mortality table sub-
mitted to the Secretary of the Treasury for 
approval under this subparagraph shall be treated 
as in effect as of the 1st day of the period described 
in clause (i) unless the Secretary of the Treasury, 
during the 180-day period beginning on the date 
of such submission, disapproves of such table and 
provides the reasons that such table fails to meet 
the requirements of clause (iii). The 180-day period 
shall be extended upon mutual agreement of the 
Secretary of the Treasury and the plan sponsor. 
‘‘(D) SEPARATE MORTALITY TABLES FOR THE DISABLED.—
Notwithstanding subparagraph (A)—
‘‘(i) IN GENERAL.—The Secretary of the Treasury 
shall establish mortality tables which may be used 
(in lieu of the tables under subparagraph (A)) under 
this subsection for individuals who are entitled to bene-
fits under the plan on account of disability. The Sec-
retary of the Treasury shall establish separate tables 
for individuals whose disabilities occur in plan years 
beginning before January 1, 1995, and for individuals 
whose disabilities occur in plan years beginning on 
or after such date. 
‘‘(ii) SPECIAL
RULE
FOR
DISABILITIES
OCCURRING 
AFTER 1994.—In the case of disabilities occurring in 
plan years beginning after December 31, 1994, the 
tables under clause (i) shall apply only with respect 
to individuals described in such subclause who are 
disabled within the meaning of title II of the Social 
Security Act and the regulations thereunder. 
‘‘(iii) PERIODIC
REVISION.—The Secretary of the 
Treasury shall (at least every 10 years) make revisions 
in any table in effect under clause (i) to reflect the 
actual experience of pension plans and projected trends 
in such experience. 
‘‘(4) PROBABILITY OF BENEFIT PAYMENTS IN THE FORM OF 
LUMP SUMS OR OTHER OPTIONAL FORMS.—For purposes of deter-
mining any present value or making any computation under 
this section, there shall be taken into account—
‘‘(A) the probability that future benefit payments under 
the plan will be made in the form of optional forms of 
benefits provided under the plan (including lump sum dis-
tributions, determined on the basis of the plan’s experience 
and other related assumptions), and 
‘‘(B) any difference in the present value of such future 
benefit payments resulting from the use of actuarial 
assumptions, in determining benefit payments in any such
H. R. 4—23
optional form of benefits, which are different from those 
specified in this subsection. 
‘‘(5) APPROVAL OF LARGE CHANGES IN ACTUARIAL ASSUMP-
TIONS.—
‘‘(A) IN GENERAL.—No actuarial assumption used to 
determine the funding target for a plan to which this 
paragraph applies may be changed without the approval 
of the Secretary of the Treasury. 
‘‘(B) PLANS TO WHICH PARAGRAPH APPLIES.—This para-
graph shall apply to a plan only if—
‘‘(i) the plan is a single-employer plan to which 
title IV applies, 
‘‘(ii) the aggregate unfunded vested benefits as of 
the close of the preceding plan year (as determined 
under section 4006(a)(3)(E)(iii)) of such plan and all 
other plans maintained by the contributing sponsors 
(as defined in section 4001(a)(13)) and members of 
such sponsors’ controlled groups (as defined in section 
4001(a)(14)) which are covered by title IV (disregarding 
plans with no unfunded vested benefits) exceed 
$50,000,000, and 
‘‘(iii) the change in assumptions (determined after 
taking into account any changes in interest rate and 
mortality table) results in a decrease in the funding 
shortfall of the plan for the current plan year that 
exceeds $50,000,000, or that exceeds $5,000,000 and 
that is 5 percent or more of the funding target of 
the plan before such change. 
‘‘(i) SPECIAL RULES FOR AT-RISK PLANS.—
‘‘(1) FUNDING TARGET FOR PLANS IN AT-RISK STATUS.—
‘‘(A) IN GENERAL.—In the case of a plan which is in 
at-risk status for a plan year, the funding target of the 
plan for the plan year shall be equal to the sum of—
‘‘(i) the present value of all benefits accrued or 
earned under the plan as of the beginning of the plan 
year, as determined by using the additional actuarial 
assumptions described in subparagraph (B), and 
‘‘(ii) in the case of a plan which also has been 
in at-risk status for at least 2 of the 4 preceding 
plan years, a loading factor determined under subpara-
graph (C). 
‘‘(B) ADDITIONAL ACTUARIAL ASSUMPTIONS.—The actu-
arial assumptions described in this subparagraph are as 
follows: 
‘‘(i) All employees who are not otherwise assumed 
to retire as of the valuation date but who will be 
eligible to elect benefits during the plan year and the 
10 succeeding plan years shall be assumed to retire 
at the earliest retirement date under the plan but 
not before the end of the plan year for which the 
at-risk funding target and at-risk target normal cost 
are being determined. 
‘‘(ii) All employees shall be assumed to elect the 
retirement benefit available under the plan at the 
assumed retirement age (determined after application 
of clause (i)) which would result in the highest present 
value of benefits.
H. R. 4—24
‘‘(C) LOADING FACTOR.—The loading factor applied with 
respect to a plan under this paragraph for any plan year 
is the sum of—
‘‘(i) $700, times the number of participants in the 
plan, plus 
‘‘(ii) 4 percent of the funding target (determined 
without regard to this paragraph) of the plan for the 
plan year. 
‘‘(2) TARGET NORMAL COST OF AT-RISK PLANS.—In the case 
of a plan which is in at-risk status for a plan year, the target 
normal cost of the plan for such plan year shall be equal 
to the sum of—
‘‘(A) the present value of all benefits which are expected 
to accrue or be earned under the plan during the plan 
year, determined using the additional actuarial assump-
tions described in paragraph (1)(B), plus 
‘‘(B) in the case of a plan which also has been in 
at-risk status for at least 2 of the 4 preceding plan years, 
a loading factor equal to 4 percent of the target normal 
cost (determined without regard to this paragraph) of the 
plan for the plan year. 
‘‘(3) MINIMUM AMOUNT.—In no event shall—
‘‘(A) the at-risk funding target be less than the funding 
target, as determined without regard to this subsection, 
or 
‘‘(B) the at-risk target normal cost be less than the 
target normal cost, as determined without regard to this 
subsection. 
‘‘(4) DETERMINATION OF AT-RISK STATUS.—For purposes of 
this subsection—
‘‘(A) IN GENERAL.—A plan is in at-risk status for a 
plan year if—
‘‘(i) the funding target attainment percentage for 
the preceding plan year (determined under this section 
without regard to this subsection) is less than 80 per-
cent, and 
‘‘(ii) the funding target attainment percentage for 
the preceding plan year (determined under this section 
by 
using 
the 
additional 
actuarial 
assumptions 
described in paragraph (1)(B) in computing the funding 
target) is less than 70 percent. 
‘‘(B) TRANSITION RULE.—In the case of plan years begin-
ning in 2008, 2009, and 2010, subparagraph (A)(i) shall 
be applied by substituting the following percentages for 
‘80 percent’: 
‘‘(i) 65 percent in the case of 2008. 
‘‘(ii) 70 percent in the case of 2009. 
‘‘(iii) 75 percent in the case of 2010. 
In the case of plan years beginning in 2008, the funding 
target attainment percentage for the preceding plan year 
under subparagraph (A)(ii) may be determined using such 
methods of estimation as the Secretary of the Treasury 
may provide. 
‘‘(C) SPECIAL
RULE
FOR
EMPLOYEES
OFFERED
EARLY 
RETIREMENT IN 2006.—
‘‘(i) IN GENERAL.—For purposes of subparagraph 
(A)(ii), the additional actuarial assumptions described
H. R. 4—25
in paragraph (1)(B) shall not be taken into account 
with respect to any employee if—
‘‘(I) such employee is employed by a specified 
automobile manufacturer, 
‘‘(II) such employee is offered a substantial 
amount of additional cash compensation, substan-
tially enhanced retirement benefits under the plan, 
or materially reduced employment duties on the 
condition that by a specified date (not later than 
December 31, 2010) the employee retires (as 
defined under the terms of the plan), 
‘‘(III) such offer is made during 2006 and 
pursuant to a bona fide retirement incentive pro-
gram and requires, by the terms of the offer, that 
such offer can be accepted not later than a specified 
date (not later than December 31, 2006), and 
‘‘(IV) such employee does not elect to accept 
such offer before the specified date on which the 
offer expires. 
‘‘(ii) SPECIFIED AUTOMOBILE MANUFACTURER.—For 
purposes of clause (i), the term ‘specified automobile 
manufacturer’ means—
‘‘(I) any manufacturer of automobiles, and 
‘‘(II) any manufacturer of automobile parts 
which supplies such parts directly to a manufac-
turer of automobiles and which, after a transaction 
or series of transactions ending in 1999, ceased 
to be a member of a controlled group which 
included such manufacturer of automobiles. 
‘‘(5) TRANSITION BETWEEN APPLICABLE FUNDING TARGETS 
AND BETWEEN APPLICABLE TARGET NORMAL COSTS.—
‘‘(A) IN GENERAL.—In any case in which a plan which 
is in at-risk status for a plan year has been in such status 
for a consecutive period of fewer than 5 plan years, the 
applicable amount of the funding target and of the target 
normal cost shall be, in lieu of the amount determined 
without regard to this paragraph, the sum of—
‘‘(i) the amount determined under this section 
without regard to this subsection, plus 
‘‘(ii) the transition percentage for such plan year 
of the excess of the amount determined under this 
subsection (without regard to this paragraph) over the 
amount determined under this section without regard 
to this subsection. 
‘‘(B) 
TRANSITION
PERCENTAGE.—For 
purposes 
of 
subparagraph (A), the transition percentage shall be deter-
mined in accordance with the following table:
‘‘If the consecutive number of 
years (including the plan year) 
The 
transition 
the plan is in at-risk status is—
percentage 
is—
1 ..............................................................................................
2 ..............................................................................................
3 ..............................................................................................
4 ..............................................................................................
80.
H. R. 4—26
‘‘(C) YEARS BEFORE EFFECTIVE DATE.—For purposes of 
this paragraph, plan years beginning before 2008 shall 
not be taken into account. 
‘‘(6) SMALL PLAN EXCEPTION.—If, on each day during the 
preceding plan year, a plan had 500 or fewer participants, 
the plan shall not be treated as in at-risk status for the plan 
year. For purposes of this paragraph, all defined benefit plans 
(other than multiemployer plans) maintained by the same 
employer (or any member of such employer’s controlled group) 
shall be treated as 1 plan, but only participants with respect 
to such employer or member shall be taken into account and 
the rules of subsection (g)(2)(C) shall apply. 
‘‘(j) PAYMENT OF MINIMUM REQUIRED CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—For purposes of this section, the due 
date for any payment of any minimum required contribution 
for any plan year shall be 81⁄2 months after the close of the 
plan year. 
‘‘(2) INTEREST.—Any payment required under paragraph 
(1) for a plan year that is made on a date other than the 
valuation date for such plan year shall be adjusted for interest 
accruing for the period between the valuation date and the 
payment date, at the effective rate of interest for the plan 
for such plan year. 
‘‘(3) ACCELERATED QUARTERLY CONTRIBUTION SCHEDULE FOR 
UNDERFUNDED PLANS.—
‘‘(A) FAILURE
TO
TIMELY
MAKE
REQUIRED
INSTALL-
MENT.—In any case in which the plan has a funding short-
fall for the preceding plan year, the employer maintaining 
the plan shall make the required installments under this 
paragraph and if the employer fails to pay the full amount 
of a required installment for the plan year, then the amount 
of interest charged under paragraph (2) on the under-
payment for the period of underpayment shall be deter-
mined by using a rate of interest equal to the rate otherwise 
used under paragraph (2) plus 5 percentage points. 
‘‘(B) AMOUNT OF UNDERPAYMENT, PERIOD OF UNDER-
PAYMENT.—For purposes of subparagraph (A)—
‘‘(i) AMOUNT.—The amount of the underpayment 
shall be the excess of—
‘‘(I) the required installment, over 
‘‘(II) the amount (if any) of the installment 
contributed to or under the plan on or before the 
due date for the installment. 
‘‘(ii) PERIOD OF UNDERPAYMENT.—The period for 
which any interest is charged under this paragraph 
with respect to any portion of the underpayment shall 
run from the due date for the installment to the date 
on which such portion is contributed to or under the 
plan. 
‘‘(iii) ORDER
OF
CREDITING
CONTRIBUTIONS.—For 
purposes of clause (i)(II), contributions shall be credited 
against unpaid required installments in the order in 
which such installments are required to be paid. 
‘‘(C) 
NUMBER
OF
REQUIRED
INSTALLMENTS; 
DUE 
DATES.—For purposes of this paragraph—
‘‘(i) PAYABLE IN 4 INSTALLMENTS.—There shall be 
4 required installments for each plan year.
H. R. 4—27
‘‘(ii) TIME FOR PAYMENT OF INSTALLMENTS.—The 
due dates for required installments are set forth in 
the following table:
‘‘In the case of the following
required installment:
The due date is:
1st ......................................................................
April 15
2nd ....................................................................
July 15
3rd .....................................................................
October 15
4th .....................................................................
January 15 of the
following year. 
‘‘(D) AMOUNT
OF
REQUIRED
INSTALLMENT.—For pur-
poses of this paragraph—
‘‘(i) IN
GENERAL.—The amount of any required 
installment shall be 25 percent of the required annual 
payment. 
‘‘(ii) REQUIRED
ANNUAL
PAYMENT.—For purposes 
of clause (i), the term ‘required annual payment’ means 
the lesser of—
‘‘(I) 90 percent of the minimum required con-
tribution (determined without regard to this sub-
section) to the plan for the plan year under this 
section, or 
‘‘(II) 100 percent of the minimum required con-
tribution (determined without regard to this sub-
section or to any waiver under section 302(c)) to 
the plan for the preceding plan year. 
Subclause (II) shall not apply if the preceding plan 
year referred to in such clause was not a year of 
12 months. 
‘‘(E) FISCAL YEARS AND SHORT YEARS.—
‘‘(i) FISCAL YEARS.—In applying this paragraph to 
a plan year beginning on any date other than January 
1, there shall be substituted for the months specified 
in this paragraph, the months which correspond 
thereto. 
‘‘(ii) SHORT PLAN YEAR.—This subparagraph shall 
be applied to plan years of less than 12 months in 
accordance with regulations prescribed by the Sec-
retary of the Treasury. 
‘‘(4) LIQUIDITY REQUIREMENT IN CONNECTION WITH QUAR-
TERLY CONTRIBUTIONS.—
‘‘(A) IN
GENERAL.—A plan to which this paragraph 
applies shall be treated as failing to pay the full amount 
of any required installment under paragraph (3) to the 
extent that the value of the liquid assets paid in such 
installment is less than the liquidity shortfall (whether 
or not such liquidity shortfall exceeds the amount of such 
installment required to be paid but for this paragraph). 
‘‘(B) PLANS TO WHICH PARAGRAPH APPLIES.—This para-
graph shall apply to a plan (other than a plan described 
in subsection (g)(2)(B)) which—
‘‘(i) is required to pay installments under para-
graph (3) for a plan year, and 
‘‘(ii) has a liquidity shortfall for any quarter during 
such plan year.
H. R. 4—28
‘‘(C) PERIOD OF UNDERPAYMENT.—For purposes of para-
graph (3)(A), any portion of an installment that is treated 
as not paid under subparagraph (A) shall continue to be 
treated as unpaid until the close of the quarter in which 
the due date for such installment occurs. 
‘‘(D) LIMITATION ON INCREASE.—If the amount of any 
required installment is increased by reason of subpara-
graph (A), in no event shall such increase exceed the 
amount which, when added to prior installments for the 
plan year, is necessary to increase the funding target 
attainment percentage of the plan for the plan year (taking 
into account the expected increase in funding target due 
to benefits accruing or earned during the plan year) to 
100 percent. 
‘‘(E) DEFINITIONS.—For purposes of this paragraph—
‘‘(i) LIQUIDITY
SHORTFALL.—The term ‘liquidity 
shortfall’ means, with respect to any required install-
ment, an amount equal to the excess (as of the last 
day of the quarter for which such installment is made) 
of—
‘‘(I) the base amount with respect to such 
quarter, over 
‘‘(II) the value (as of such last day) of the 
plan’s liquid assets. 
‘‘(ii) BASE AMOUNT.—
‘‘(I) IN
GENERAL.—The term ‘base amount’ 
means, with respect to any quarter, an amount 
equal to 3 times the sum of the adjusted disburse-
ments from the plan for the 12 months ending 
on the last day of such quarter. 
‘‘(II) SPECIAL RULE.—If the amount determined 
under subclause (I) exceeds an amount equal to 
2 times the sum of the adjusted disbursements 
from the plan for the 36 months ending on the 
last day of the quarter and an enrolled actuary 
certifies to the satisfaction of the Secretary of the 
Treasury that such excess is the result of non-
recurring circumstances, the base amount with 
respect to such quarter shall be determined with-
out regard to amounts related to those non-
recurring circumstances. 
‘‘(iii) DISBURSEMENTS FROM THE PLAN.—The term 
‘disbursements from the plan’ means all disbursements 
from the trust, including purchases of annuities, pay-
ments of single sums and other benefits, and adminis-
trative expenses. 
‘‘(iv) 
ADJUSTED
DISBURSEMENTS.—The 
term 
‘adjusted disbursements’ means disbursements from 
the plan reduced by the product of—
‘‘(I) the plan’s funding target attainment 
percentage for the plan year, and 
‘‘(II) the sum of the purchases of annuities, 
payments of single sums, and such other disburse-
ments as the Secretary of the Treasury shall pro-
vide in regulations. 
‘‘(v) LIQUID
ASSETS.—The term ‘liquid assets’ 
means cash, marketable securities, and such other
H. R. 4—29
assets as specified by the Secretary of the Treasury 
in regulations. 
‘‘(vi) QUARTER.—The term ‘quarter’ means, with 
respect to any required installment, the 3-month period 
preceding the month in which the due date for such 
installment occurs. 
‘‘(F) REGULATIONS.—The Secretary of the Treasury may 
prescribe such regulations as are necessary to carry out 
this paragraph. 
‘‘(k) IMPOSITION OF LIEN WHERE FAILURE TO MAKE REQUIRED 
CONTRIBUTIONS.—
‘‘(1) IN
GENERAL.—In the case of a plan to which this 
subsection applies (as provided under paragraph (2)), if—
‘‘(A) any person fails to make a contribution payment 
required by section 302 and this section before the due 
date for such payment, and 
‘‘(B) the unpaid balance of such payment (including 
interest), when added to the aggregate unpaid balance 
of all preceding such payments for which payment was 
not made before the due date (including interest), exceeds 
$1,000,000, 
then there shall be a lien in favor of the plan in the amount 
determined under paragraph (3) upon all property and rights 
to property, whether real or personal, belonging to such person 
and any other person who is a member of the same controlled 
group of which such person is a member. 
‘‘(2) PLANS TO WHICH SUBSECTION APPLIES.—This subsection 
shall apply to a single-employer plan covered under section 
4021 for any plan year for which the funding target attainment 
percentage (as defined in subsection (d)(2)) of such plan is 
less than 100 percent. 
‘‘(3) AMOUNT OF LIEN.—For purposes of paragraph (1), the 
amount of the lien shall be equal to the aggregate unpaid 
balance of contribution payments required under this section 
and section 302 for which payment has not been made before 
the due date. 
‘‘(4) NOTICE OF FAILURE; LIEN.—
‘‘(A) NOTICE
OF
FAILURE.—A person committing a 
failure described in paragraph (1) shall notify the Pension 
Benefit Guaranty Corporation of such failure within 10 
days of the due date for the required contribution payment. 
‘‘(B) PERIOD OF LIEN.—The lien imposed by paragraph 
(1) shall arise on the due date for the required contribution 
payment and shall continue until the last day of the first 
plan year in which the plan ceases to be described in 
paragraph (1)(B). Such lien shall continue to run without 
regard to whether such plan continues to be described 
in paragraph (2) during the period referred to in the pre-
ceding sentence. 
‘‘(C) CERTAIN
RULES
TO
APPLY.—Any amount with 
respect to which a lien is imposed under paragraph (1) 
shall be treated as taxes due and owing the United States 
and rules similar to the rules of subsections (c), (d), and 
(e) of section 4068 shall apply with respect to a lien imposed 
by subsection (a) and the amount with respect to such 
lien.
H. R. 4—30
‘‘(5) ENFORCEMENT.—Any lien created under paragraph (1) 
may be perfected and enforced only by the Pension Benefit 
Guaranty Corporation, or at the direction of the Pension Benefit 
Guaranty Corporation, by the contributing sponsor (or any 
member of the controlled group of the contributing sponsor). 
‘‘(6) DEFINITIONS.—For purposes of this subsection—
‘‘(A) CONTRIBUTION PAYMENT.—The term ‘contribution 
payment’ means, in connection with a plan, a contribution 
payment required to be made to the plan, including any 
required installment under paragraphs (3) and (4) of sub-
section (j). 
‘‘(B) DUE DATE; REQUIRED INSTALLMENT.—The terms 
‘due date’ and ‘required installment’ have the meanings 
given such terms by subsection (j), except that in the case 
of a payment other than a required installment, the due 
date shall be the date such payment is required to be 
made under section 303. 
‘‘(C) CONTROLLED GROUP.—The term ‘controlled group’ 
means any group treated as a single employer under sub-
sections (b), (c), (m), and (o) of section 414 of the Internal 
Revenue Code of 1986. 
‘‘(l) QUALIFIED TRANSFERS TO HEALTH BENEFIT ACCOUNTS.—
In the case of a qualified transfer (as defined in section 420 of 
the Internal Revenue Code of 1986), any assets so transferred 
shall not, for purposes of this section, be treated as assets in 
the plan.’’. 
(b) CLERICAL AMENDMENT.—The table of sections in section 
1 of such Act (as amended by section 101) is amended by inserting 
after the item relating to section 302 the following new item:
‘‘Sec. 303. Minimum funding standards for single-employer defined benefit pension 
plans.’’.
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply with respect to plan years beginning after 2007. 
SEC. 103. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS. 
(a) FUNDING-BASED
LIMITS
ON
BENEFITS
AND
BENEFIT 
ACCRUALS UNDER SINGLE-EMPLOYER PLANS.—Section 206 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1056) 
is amended by adding at the end the following new subsection: 
‘‘(g) FUNDING-BASED
LIMITS
ON
BENEFITS
AND
BENEFIT 
ACCRUALS UNDER SINGLE-EMPLOYER PLANS.—
‘‘(1) FUNDING-BASED LIMITATION ON SHUTDOWN BENEFITS 
AND
OTHER
UNPREDICTABLE
CONTINGENT
EVENT
BENEFITS 
UNDER SINGLE-EMPLOYER PLANS.—
‘‘(A) IN GENERAL.—If a participant of a defined benefit 
plan which is a single-employer plan is entitled to an 
unpredictable contingent event benefit payable with respect 
to any event occurring during any plan year, the plan 
shall provide that such benefit may not be provided if 
the adjusted funding target attainment percentage for such 
plan year—
‘‘(i) is less than 60 percent, or 
‘‘(ii) would be less than 60 percent taking into 
account such occurrence. 
‘‘(B) EXEMPTION.—Subparagraph (A) shall cease to 
apply with respect to any plan year, effective as of the 
first day of the plan year, upon payment by the plan
H. R. 4—31
sponsor of a contribution (in addition to any minimum 
required contribution under section 303) equal to—
‘‘(i) in the case of subparagraph (A)(i), the amount 
of the increase in the funding target of the plan (under 
section 303) for the plan year attributable to the occur-
rence referred to in subparagraph (A), and 
‘‘(ii) in the case of subparagraph (A)(ii), the amount 
sufficient to result in a funding target attainment 
percentage of 60 percent. 
‘‘(C) UNPREDICTABLE
CONTINGENT
EVENT.—For pur-
poses of this paragraph, the term ‘unpredictable contingent 
event benefit’ means any benefit payable solely by reason 
of—
‘‘(i) a plant shutdown (or similar event, as deter-
mined by the Secretary of the Treasury), or 
‘‘(ii) an event other than the attainment of any 
age, performance of any service, receipt or derivation 
of any compensation, or occurrence of death or dis-
ability. 
‘‘(2) LIMITATIONS
ON
PLAN
AMENDMENTS
INCREASING 
LIABILITY FOR BENEFITS.—
‘‘(A) IN GENERAL.—No amendment to a defined benefit 
plan which is a single-employer plan which has the effect 
of increasing liabilities of the plan by reason of increases 
in benefits, establishment of new benefits, changing the 
rate of benefit accrual, or changing the rate at which bene-
fits become nonforfeitable may take effect during any plan 
year if the adjusted funding target attainment percentage 
for such plan year is—
‘‘(i) less than 80 percent, or 
‘‘(ii) would be less than 80 percent taking into 
account such amendment. 
‘‘(B) EXEMPTION.—Subparagraph (A) shall cease to 
apply with respect to any plan year, effective as of the 
first day of the plan year (or if later, the effective date 
of the amendment), upon payment by the plan sponsor 
of a contribution (in addition to any minimum required 
contribution under section 303) equal to—
‘‘(i) in the case of subparagraph (A)(i), the amount 
of the increase in the funding target of the plan (under 
section 303) for the plan year attributable to the 
amendment, and 
‘‘(ii) in the case of subparagraph (A)(ii), the amount 
sufficient to result in an adjusted funding target attain-
ment percentage of 80 percent. 
‘‘(C) EXCEPTION
FOR
CERTAIN
BENEFIT
INCREASES.—
Subparagraph (A) shall not apply to any amendment which 
provides for an increase in benefits under a formula which 
is not based on a participant’s compensation, but only 
if the rate of such increase is not in excess of the contem-
poraneous rate of increase in average wages of participants 
covered by the amendment. 
‘‘(3) LIMITATIONS
ON
ACCELERATED
BENEFIT
DISTRIBU-
TIONS.—
‘‘(A) FUNDING PERCENTAGE LESS THAN 60 PERCENT.—
A defined benefit plan which is a single-employer plan 
shall provide that, in any case in which the plan’s adjusted
H. R. 4—32
funding target attainment percentage for a plan year is 
less than 60 percent, the plan may not pay any prohibited 
payment after the valuation date for the plan year. 
‘‘(B) BANKRUPTCY.—A defined benefit plan which is 
a single-employer plan shall provide that, during any period 
in which the plan sponsor is a debtor in a case under 
title 11, United States Code, or similar Federal or State 
law, the plan may not pay any prohibited payment. The 
preceding sentence shall not apply on or after the date 
on which the enrolled actuary of the plan certifies that 
the adjusted funding target attainment percentage of such 
plan is not less than 100 percent. 
‘‘(C) LIMITED
PAYMENT
IF
PERCENTAGE
AT
LEAST
PERCENT BUT LESS THAN 80 PERCENT.—
‘‘(i) IN
GENERAL.—A defined benefit plan which 
is a single-employer plan shall provide that, in any 
case in which the plan’s adjusted funding target attain-
ment percentage for a plan year is 60 percent or greater 
but less than 80 percent, the plan may not pay any 
prohibited payment after the valuation date for the 
plan year to the extent the amount of the payment 
exceeds the lesser of—
‘‘(I) 50 percent of the amount of the payment 
which could be made without regard to this sub-
section, or 
‘‘(II) the present value (determined under guid-
ance prescribed by the Pension Benefit Guaranty 
Corporation, using the interest and mortality 
assumptions under section 205(g)) of the maximum 
guarantee with respect to the participant under 
section 4022. 
‘‘(ii) ONE-TIME APPLICATION.—
‘‘(I) IN GENERAL.—The plan shall also provide 
that only 1 prohibited payment meeting the 
requirements of clause (i) may be made with 
respect to any participant during any period of 
consecutive plan years to which the limitations 
under either subparagraph (A) or (B) or this 
subparagraph applies. 
‘‘(II) TREATMENT OF BENEFICIARIES.—For pur-
poses of this clause, a participant and any bene-
ficiary on his behalf (including an alternate payee, 
as defined in section 206(d)(3)(K)) shall be treated 
as 1 participant. If the accrued benefit of a partici-
pant is allocated to such an alternate payee and 
1 or more other persons, the amount under clause 
(i) shall be allocated among such persons in the 
same manner as the accrued benefit is allocated 
unless the qualified domestic relations order (as 
defined in section 206(d)(3)(B)(i)) provides other-
wise. 
‘‘(D) EXCEPTION.—This paragraph shall not apply to 
any plan for any plan year if the terms of such plan 
(as in effect for the period beginning on September 1, 
2005, and ending with such plan year) provide for no 
benefit accruals with respect to any participant during 
such period.
H. R. 4—33
‘‘(E) PROHIBITED PAYMENT.—For purpose of this para-
graph, the term ‘prohibited payment’ means—
‘‘(i) any payment, in excess of the monthly amount 
paid under a single life annuity (plus any social secu-
rity supplements described in the last sentence of sec-
tion 204(b)(1)(G)), to a participant or beneficiary whose 
annuity starting date (as defined in section 205(h)(2)) 
occurs during any period a limitation under subpara-
graph (A) or (B) is in effect, 
‘‘(ii) any payment for the purchase of an irrevocable 
commitment from an insurer to pay benefits, and 
‘‘(iii) any other payment specified by the Secretary 
of the Treasury by regulations. 
‘‘(4) LIMITATION ON BENEFIT ACCRUALS FOR PLANS WITH 
SEVERE FUNDING SHORTFALLS.—
‘‘(A) IN GENERAL.—A defined benefit plan which is a 
single-employer plan shall provide that, in any case in 
which the plan’s adjusted funding target attainment 
percentage for a plan year is less than 60 percent, benefit 
accruals under the plan shall cease as of the valuation 
date for the plan year. 
‘‘(B) EXEMPTION.—Subparagraph (A) shall cease to 
apply with respect to any plan year, effective as of the 
first day of the plan year, upon payment by the plan 
sponsor of a contribution (in addition to any minimum 
required contribution under section 303) equal to the 
amount sufficient to result in an adjusted funding target 
attainment percentage of 60 percent. 
‘‘(5) RULES RELATING TO CONTRIBUTIONS REQUIRED TO AVOID 
BENEFIT LIMITATIONS.—
‘‘(A) SECURITY MAY BE PROVIDED.—
‘‘(i) IN GENERAL.—For purposes of this subsection, 
the adjusted funding target attainment percentage 
shall be determined by treating as an asset of the 
plan any security provided by a plan sponsor in a 
form meeting the requirements of clause (ii). 
‘‘(ii) FORM
OF
SECURITY.—The security required 
under clause (i) shall consist of—
‘‘(I) a bond issued by a corporate surety com-
pany that is an acceptable surety for purposes 
of section 412 of this Act, 
‘‘(II) cash, or United States obligations which 
mature in 3 years or less, held in escrow by a 
bank or similar financial institution, or 
‘‘(III) such other form of security as is satisfac-
tory to the Secretary of the Treasury and the par-
ties involved. 
‘‘(iii) ENFORCEMENT.—Any security provided under 
clause (i) may be perfected and enforced at any time 
after the earlier of—
‘‘(I) the date on which the plan terminates, 
‘‘(II) if there is a failure to make a payment 
of the minimum required contribution for any plan 
year beginning after the security is provided, the 
due date for the payment under section 303(j), 
or
H. R. 4—34
‘‘(III) if the adjusted funding target attainment 
percentage is less than 60 percent for a consecutive 
period of 7 years, the valuation date for the last 
year in the period. 
‘‘(iv) RELEASE OF SECURITY.—The security shall be 
released (and any amounts thereunder shall be 
refunded together with any interest accrued thereon) 
at such time as the Secretary of the Treasury may 
prescribe in regulations, including regulations for par-
tial releases of the security by reason of increases 
in the funding target attainment percentage. 
‘‘(B) PREFUNDING
BALANCE
OR
FUNDING
STANDARD 
CARRYOVER BALANCE MAY NOT BE USED.—No prefunding 
balance or funding standard carryover balance under sec-
tion 303(f) may be used under paragraph (1), (2), or (4) 
to satisfy any payment an employer may make under any 
such paragraph to avoid or terminate the application of 
any limitation under such paragraph. 
‘‘(C) DEEMED REDUCTION OF FUNDING BALANCES.—
‘‘(i) IN GENERAL.—Subject to clause (iii), in any 
case in which a benefit limitation under paragraph 
(1), (2), (3), or (4) would (but for this subparagraph 
and determined without regard to paragraph (1)(B), 
(2)(B), or (4)(B)) apply to such plan for the plan year, 
the plan sponsor of such plan shall be treated for 
purposes of this Act as having made an election under 
section 303(f) to reduce the prefunding balance or 
funding standard carryover balance by such amount 
as is necessary for such benefit limitation to not apply 
to the plan for such plan year. 
‘‘(ii) EXCEPTION FOR INSUFFICIENT FUNDING BAL-
ANCES.—Clause (i) shall not apply with respect to a 
benefit limitation for any plan year if the application 
of clause (i) would not result in the benefit limitation 
not applying for such plan year. 
‘‘(iii) RESTRICTIONS OF CERTAIN RULES TO COLLEC-
TIVELY BARGAINED PLANS.—With respect to any benefit 
limitation under paragraph (1), (2), or (4), clause (i) 
shall only apply in the case of a plan maintained 
pursuant to 1 or more collective bargaining agreements 
between employee representatives and 1 or more 
employers. 
‘‘(6) NEW PLANS.—Paragraphs (1), (2), and (4) shall not 
apply to a plan for the first 5 plan years of the plan. For 
purposes of this paragraph, the reference in this paragraph 
to a plan shall include a reference to any predecessor plan. 
‘‘(7) PRESUMED UNDERFUNDING FOR PURPOSES OF BENEFIT 
LIMITATIONS.—
‘‘(A) PRESUMPTION OF CONTINUED UNDERFUNDING.—In 
any case in which a benefit limitation under paragraph 
(1), (2), (3), or (4) has been applied to a plan with respect 
to the plan year preceding the current plan year, the 
adjusted funding target attainment percentage of the plan 
for the current plan year shall be presumed to be equal 
to the adjusted funding target attainment percentage of 
the plan for the preceding plan year until the enrolled 
actuary of the plan certifies the actual adjusted funding
H. R. 4—35
target attainment percentage of the plan for the current 
plan year. 
‘‘(B) PRESUMPTION
OF
UNDERFUNDING
AFTER
10TH 
MONTH.—In any case in which no certification of the 
adjusted funding target attainment percentage for the cur-
rent plan year is made with respect to the plan before 
the first day of the 10th month of such year, for purposes 
of paragraphs (1), (2), (3), and (4), such first day shall 
be deemed, for purposes of such paragraph, to be the valu-
ation date of the plan for the current plan year and the 
plan’s adjusted funding target attainment percentage shall 
be conclusively presumed to be less than 60 percent as 
of such first day. 
‘‘(C) PRESUMPTION
OF
UNDERFUNDING
AFTER
4TH 
MONTH
FOR
NEARLY
UNDERFUNDED
PLANS.—In any case 
in which—
‘‘(i) a benefit limitation under paragraph (1), (2), 
(3), or (4) did not apply to a plan with respect to 
the plan year preceding the current plan year, but 
the adjusted funding target attainment percentage of 
the plan for such preceding plan year was not more 
than 10 percentage points greater than the percentage 
which would have caused such paragraph to apply 
to the plan with respect to such preceding plan year, 
and 
‘‘(ii) as of the first day of the 4th month of the 
current plan year, the enrolled actuary of the plan 
has not certified the actual adjusted funding target 
attainment percentage of the plan for the current plan 
year, 
until the enrolled actuary so certifies, such first day shall 
be deemed, for purposes of such paragraph, to be the valu-
ation date of the plan for the current plan year and the 
adjusted funding target attainment percentage of the plan 
as of such first day shall, for purposes of such paragraph, 
be presumed to be equal to 10 percentage points less than 
the adjusted funding target attainment percentage of the 
plan for such preceding plan year. 
‘‘(8) TREATMENT OF PLAN AS OF CLOSE OF PROHIBITED OR 
CESSATION PERIOD.—For purposes of applying this part—
‘‘(A) OPERATION OF PLAN AFTER PERIOD.—Unless the 
plan provides otherwise, payments and accruals will 
resume effective as of the day following the close of the 
period for which any limitation of payment or accrual of 
benefits under paragraph (3) or (4) applies. 
‘‘(B) TREATMENT OF AFFECTED BENEFITS.—Nothing in 
this paragraph shall be construed as affecting the plan’s 
treatment of benefits which would have been paid or 
accrued but for this subsection. 
‘‘(9) TERMS
RELATING
TO
FUNDING
TARGET
ATTAINMENT 
PERCENTAGE.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘funding target attainment 
percentage’ has the same meaning given such term by 
section 303(d)(2). 
‘‘(B) ADJUSTED FUNDING TARGET ATTAINMENT PERCENT-
AGE.—The term ‘adjusted funding target attainment
H. R. 4—36
percentage’ means the funding target attainment percent-
age which is determined under subparagraph (A) by 
increasing each of the amounts under subparagraphs (A) 
and (B) of section 303(d)(2) by the aggregate amount of 
purchases of annuities for employees other than highly 
compensated employees (as defined in section 414(q) of 
the Internal Revenue Code of 1986) which were made by 
the plan during the preceding 2 plan years. 
‘‘(C) APPLICATION TO PLANS WHICH ARE FULLY FUNDED 
WITHOUT REGARD TO REDUCTIONS FOR FUNDING BALANCES.—
‘‘(i) IN GENERAL.—In the case of a plan for any 
plan year, if the funding target attainment percentage 
is 100 percent or more (determined without regard 
to this subparagraph and without regard to the reduc-
tion in the value of assets under section 303(f)(4)), 
the funding target attainment percentage for purposes 
of subparagraphs (A) and (B) shall be determined with-
out regard to such reduction. 
‘‘(ii) TRANSITION RULE.—Clause (i) shall be applied 
to plan years beginning after 2007 and before 2011 
by substituting for ‘100 percent’ the applicable percent-
age determined in accordance 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 (ii) shall not apply with 
respect to any plan year after 2008 unless the funding 
target attainment percentage (determined without 
regard to this subparagraph) of the plan for each pre-
ceding plan year after 2007 was not less than the 
applicable percentage with respect to such preceding 
plan year determined under clause (ii). 
‘‘(10) SPECIAL RULE FOR 2008.—For purposes of this sub-
section, in the case of plan years beginning in 2008, the funding 
target attainment percentage for the preceding plan year may 
be determined using such methods of estimation as the Sec-
retary of the Treasury may provide.’’. 
(b) NOTICE REQUIREMENT.—
(1) IN GENERAL.—Section 101 of such Act (29 U.S.C. 1021) 
is amended—
(A) by redesignating subsection (j) as subsection (k); 
and 
(B) by inserting after subsection (i) the following new 
subsection: 
‘‘(j) NOTICE OF FUNDING-BASED LIMITATION ON CERTAIN FORMS 
OF DISTRIBUTION.—The plan administrator of a single-employer 
plan shall provide a written notice to plan participants and bene-
ficiaries within 30 days—
‘‘(1) after the plan has become subject to a restriction 
described in paragraph (1) or (3) of section 206(g)), 
‘‘(2) in the case of a plan to which section 206(g)(4) applies, 
after the valuation date for the plan year described in section 
206(g)(4)(B) for which the plan’s adjusted funding target attain-
ment percentage for the plan year is less than 60 percent
H. R. 4—37
(or, if earlier, the date such percentage is deemed to be less 
than 60 percent under section 206(g)(7)), and 
‘‘(3) at such other time as may be determined by the Sec-
retary of the Treasury. 
The notice required to be provided under this subsection shall 
be in writing, except that such notice may be in electronic or 
other form to the extent that such form is reasonably accessible 
to the recipient.’’. 
(2) ENFORCEMENT.—Section 502(c)(4) of such Act (29 U.S.C. 
1132(c)(4)) is amended by striking ‘‘section 302(b)(7)(F)(iv)’’ and 
inserting ‘‘section 101(j) or 302(b)(7)(F)(iv)’’. 
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by this section 
shall apply to plan years beginning after December 31, 2007. 
(2) COLLECTIVE
BARGAINING
EXCEPTION.—In the case of 
a plan maintained pursuant to 1 or more collective bargaining 
agreements between employee representatives and 1 or more 
employers ratified before January 1, 2008, the amendments 
made by this section shall not apply to plan years beginning 
before the earlier of—
(A) the later of—
(i) the date on which the last collective bargaining 
agreement relating to the plan terminates (determined 
without regard to any extension thereof agreed to after 
the date of the enactment of this Act), or 
(ii) the first day of the first plan year to which 
the amendments made by this subsection would (but 
for this subparagraph) apply, or 
(B) January 1, 2010. 
For purposes of subparagraph (A)(i), any plan amendment made 
pursuant to a collective bargaining agreement relating to the 
plan which amends the plan solely to conform to any require-
ment added by this section shall not be treated as a termination 
of such collective bargaining agreement. 
SEC. 104. SPECIAL RULES FOR MULTIPLE EMPLOYER PLANS OF CER-
TAIN COOPERATIVES. 
(a) GENERAL RULE.—Except as provided in this section, if a 
plan in existence on July 26, 2005, was an eligible cooperative 
plan for its plan year which includes such date, the amendments 
made by this subtitle and subtitle B shall not apply to plan years 
beginning before the earlier of—
(1) the first plan year for which the plan ceases to be 
an eligible cooperative plan, or 
(2) January 1, 2017. 
(b) INTEREST RATE.—In applying section 302(b)(5)(B) of the 
Employee Retirement Income Security Act of 1974 and section 
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect 
before the amendments made by this subtitle and subtitle B) to 
an eligible cooperative plan for plan years beginning after December 
31, 2007, and before the first plan year to which such amendments 
apply, 
the 
third 
segment 
rate 
determined 
under 
section 
303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii) of such 
Code (as added by such amendments) shall be used in lieu of 
the interest rate otherwise used. 
(c) ELIGIBLE COOPERATIVE PLAN DEFINED.—For purposes of 
this section, a plan shall be treated as an eligible cooperative
H. R. 4—38
plan for a plan year if the plan is maintained by more than 1 
employer and at least 85 percent of the employers are—
(1) rural cooperatives (as defined in section 401(k)(7)(B) 
of such Code without regard to clause (iv) thereof), or 
(2) organizations which are—
(A) cooperative organizations described in section 
1381(a) of such Code which are more than 50-percent owned 
by agricultural producers or by cooperatives owned by agri-
cultural producers, or 
(B) more than 50-percent owned, or controlled by, one 
or more cooperative organizations described in subpara-
graph (A). 
A plan shall also be treated as an eligible cooperative plan for 
any plan year for which it is described in section 210(a) of the 
Employee Retirement Income Security Act of 1974 and is main-
tained by a rural telephone cooperative association described in 
section 3(40)(B)(v) of such Act. 
SEC. 105. TEMPORARY RELIEF FOR CERTAIN PBGC SETTLEMENT 
PLANS. 
(a) GENERAL RULE.—Except as provided in this section, if a 
plan in existence on July 26, 2005, was a PBGC settlement plan 
as of such date, the amendments made by this subtitle and subtitle 
B shall not apply to plan years beginning before January 1, 2014. 
(b) INTEREST RATE.—In applying section 302(b)(5)(B) of the 
Employee Retirement Income Security Act of 1974 and section 
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect 
before the amendments made by this subtitle and subtitle B), to 
a PBGC settlement plan for plan years beginning after December 
31, 2007, and before January 1, 2014, the third segment rate 
determined under section 303(h)(2)(C)(iii) of such Act and section 
430(h)(2)(C)(iii) of such Code (as added by such amendments) shall 
be used in lieu of the interest rate otherwise used. 
(c) PBGC SETTLEMENT PLAN.—For purposes of this section, 
the term ‘‘PBGC settlement plan’’ means a defined benefit plan 
(other than a multiemployer plan) to which section 302 of such 
Act and section 412 of such Code apply and—
(1) which was sponsored by an employer which was in 
bankruptcy, giving rise to a claim by the Pension Benefit Guar-
anty Corporation of not greater than $150,000,000, and the 
sponsorship of which was assumed by another employer that 
was not a member of the same controlled group as the bankrupt 
sponsor and the claim of the Pension Benefit Guaranty Corpora-
tion was settled or withdrawn in connection with the assump-
tion of the sponsorship, or 
(2) which, by agreement with the Pension Benefit Guaranty 
Corporation, was spun off from a plan subsequently terminated 
by such Corporation under section 4042 of the Employee Retire-
ment Income Security Act of 1974. 
SEC. 106. SPECIAL RULES FOR PLANS OF CERTAIN GOVERNMENT CON-
TRACTORS. 
(a) GENERAL RULE.—Except as provided in this section, if a 
plan is an eligible government contractor plan, this subtitle and 
subtitle B shall not apply to plan years beginning before the earliest 
of—
(1) the first plan year for which the plan ceases to be 
an eligible government contractor plan,
H. R. 4—39
(2) the effective date of the Cost Accounting Standards 
Pension Harmonization Rule, or 
(3) January 1, 2011. 
(b) INTEREST RATE.—In applying section 302(b)(5)(B) of the 
Employee Retirement Income Security Act of 1974 and section 
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect 
before the amendments made by this subtitle and subtitle B) to 
an eligible government contractor plan for plan years beginning 
after December 31, 2007, and before the first plan year to which 
such amendments apply, the third segment rate determined under 
section 303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii) of 
such Code (as added by such amendments) shall be used in lieu 
of the interest rate otherwise used. 
(c) ELIGIBLE GOVERNMENT CONTRACTOR PLAN DEFINED.—For 
purposes of this section, a plan shall be treated as an eligible 
government contractor plan if it is maintained by a corporation 
or a member of the same affiliated group (as defined by section 
1504(a) of the Internal Revenue Code of 1986), whose primary 
source of revenue is derived from business performed under con-
tracts with the United States that are subject to the Federal 
Acquisition Regulations (chapter 1 of title 48, CFR) and that are 
also subject to the Defense Federal Acquisition Regulation Supple-
ment (chapter 2 of title 48, CFR), and whose revenue derived 
from such business in the previous fiscal year exceeded 
$5,000,000,000, and whose pension plan costs that are assignable 
under those contracts are subject to sections 412 and 413 of the 
Cost Accounting Standards (48 CFR 9904.412 and 9904.413). 
(d) COST ACCOUNTING STANDARDS PENSION HARMONIZATION 
RULE.—The Cost Accounting Standards Board shall review and 
revise sections 412 and 413 of the Cost Accounting Standards 
(48 CFR 9904.412 and 9904.413) to harmonize the minimum 
required contribution under the Employee Retirement Income Secu-
rity Act of 1974 of eligible government contractor plans and govern-
ment reimbursable pension plan costs not later than January 1, 
2010. Any final rule adopted by the Cost Accounting Standards 
Board shall be deemed the Cost Accounting Standards Pension 
Harmonization Rule. 
SEC. 107. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) MISCELLANEOUS AMENDMENTS TO TITLE I.—Subtitle B of 
title I of such Act (29 U.S.C. 1021 et seq.) is amended—
(1) in section 101(d)(3), by striking ‘‘section 302(e)’’ and 
inserting ‘‘section 303(j)’’; 
(2) in section 103(d)(8)(B), by striking ‘‘the requirements 
of section 302(c)(3)’’ and inserting ‘‘the applicable requirements 
of sections 303(h) and 304(c)(3)’’; 
(3) in section 103(d), by striking paragraph (11) and 
inserting the following: 
‘‘(11) If the current value of the assets of the plan is 
less than 70 percent of—
‘‘(A) in the case of a single-employer plan, the funding 
target (as defined in section 303(d)(1)) of the plan, or 
‘‘(B) in the case of a multiemployer plan, the current 
liability (as defined in section 304(c)(6)(D)) under the plan, 
the percentage which such value is of the amount described 
in subparagraph (A) or (B).’’;
H. R. 4—40
(4) in section 203(a)(3)(C), by striking ‘‘section 302(c)(8)’’ 
and inserting ‘‘section 302(d)(2)’’; 
(5) in section 204(g)(1), by striking ‘‘section 302(c)(8)’’ and 
inserting ‘‘section 302(d)(2)’’; 
(6) in section 204(i)(2)(B), by striking ‘‘section 302(c)(8)’’ 
and inserting ‘‘section 302(d)(2)’’; 
(7) in section 204(i)(3), by striking ‘‘funded current liability 
percentage (within the meaning of section 302(d)(8) of this 
Act)’’ and inserting ‘‘funding target attainment percentage (as 
defined in section 303(d)(2))’’; 
(8) in section 204(i)(4), by striking ‘‘section 302(c)(11)(A), 
without regard to section 302(c)(11)(B)’’ and inserting ‘‘section 
302(b)(1), without regard to section 302(b)(2)’’; 
(9) in section 206(e)(1), by striking ‘‘section 302(d)’’ and 
inserting ‘‘section 303(j)(4)’’, and by striking ‘‘section 302(e)(5)’’ 
and inserting ‘‘section 303(j)(4)(E)(i)’’; 
(10) in section 206(e)(3), by striking ‘‘section 302(e) by 
reason of paragraph (5)(A) thereof’’ and inserting ‘‘section 
303(j)(3) by reason of section 303(j)(4)(A)’’; and 
(11) in sections 101(e)(3), 403(c)(1), and 408(b)(13), by 
striking ‘‘American Jobs Creation Act of 2004’’ and inserting 
‘‘Pension Protection Act of 2006’’. 
(b) MISCELLANEOUS AMENDMENTS TO TITLE IV.—Title IV of 
such Act is amended—
(1) in section 4001(a)(13) (29 U.S.C. 1301(a)(13)), by 
striking ‘‘302(c)(11)(A)’’ and inserting ‘‘302(b)(1)’’, by striking 
‘‘412(c)(11)(A)’’ 
and 
inserting 
‘‘412(b)(1)’’, 
by 
striking 
‘‘302(c)(11)(B)’’ and inserting ‘‘302(b)(2)’’, and by striking 
‘‘412(c)(11)(B)’’ and inserting ‘‘412(b)(2)’’; 
(2) in section 4003(e)(1) (29 U.S.C. 1303(e)(1)), by striking 
‘‘302(f)(1)(A) and (B)’’ and inserting ‘‘303(k)(1)(A) and (B)’’, and 
by striking ‘‘412(n)(1)(A) and (B)’’ and inserting ‘‘430(k)(1)(A) 
and (B)’’; 
(3) in section 4010(b)(2) (29 U.S.C. 1310(b)(2)), by striking 
‘‘302(f)(1)(A) and (B)’’ and inserting ‘‘303(k)(1)(A) and (B)’’, and 
by striking ‘‘412(n)(1)(A) and (B)’’ and inserting ‘‘430(k)(1)(A) 
and (B)’’; 
(4) in section 4062(c) (29 U.S.C. 1362(c)), by striking para-
graphs (1), (2), and (3) and inserting the following: 
‘‘(1) the sum of the shortfall amortization charge (within 
the meaning of section 303(c)(1) of this Act and 430(d)(1) of 
the Internal Revenue Code of 1986) with respect to the plan 
(if any) for the plan year in which the termination date occurs, 
plus the aggregate total of shortfall amortization installments 
(if any) determined for succeeding plan years under section 
303(c)(2) of this Act and section 430(d)(2) of such Code (which, 
for purposes of this subparagraph, shall include any increase 
in such sum which would result if all applications for waivers 
of the minimum funding standard under section 302(c) of this 
Act and section 412(c) of such Code which are pending with 
respect to such plan were denied and if no additional contribu-
tions (other than those already made by the termination date) 
were made for the plan year in which the termination date 
occurs or for any previous plan year), and 
‘‘(2) the sum of the waiver amortization charge (within 
the meaning of section 303(e)(1) of this Act and 430(e)(1) of 
the Internal Revenue Code of 1986) with respect to the plan
H. R. 4—41
(if any) for the plan year in which the termination date occurs, 
plus the aggregate total of waiver amortization installments 
(if any) determined for succeeding plan years under section 
303(e)(2) of this Act and section 430(e)(2) of such Code,’’; 
(5) in section 4071 (29 U.S.C. 1371), by striking ‘‘302(f)(4)’’ 
and inserting ‘‘303(k)(4)’’; 
(6) in section 4243(a)(1)(B) (29 U.S.C. 1423(a)(1)(B)), by 
striking ‘‘302(a)’’ and inserting ‘‘304(a)’’, and, in clause (i), by 
striking ‘‘302(a)’’ and inserting ‘‘304(a)’’; 
(7) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)), by striking 
‘‘303(a)’’ and inserting ‘‘302(c)’’; 
(8) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)), by striking 
‘‘303(c)’’ and inserting ‘‘302(c)(3)’’; and 
(9) in section 4243(g) (29 U.S.C. 1423(g)), by striking 
‘‘302(c)(3)’’ and inserting ‘‘304(c)(3)’’. 
(c) AMENDMENTS TO REORGANIZATION PLAN NO. 4 OF 1978.—
Section 106(b)(ii) of Reorganization Plan No. 4 of 1978 (ratified 
and affirmed as law by Public Law 98–532 (98 Stat. 2705)) is 
amended by striking ‘‘302(c)(8)’’ and inserting ‘‘302(d)(2)’’, by 
striking ‘‘304(a) and (b)(2)(A)’’ and inserting ‘‘304(d)(1), (d)(2), and 
(e)(2)(A)’’, and by striking ‘‘412(c)(8), (e), and (f)(2)(A)’’ and inserting 
‘‘412(c)(2) and 431(d)(1), (d)(2), and (e)(2)(A)’’. 
(d) 
REPEAL
OF
EXPIRED
AUTHORITY
FOR
TEMPORARY 
VARIANCES.—Section 207 of such Act (29 U.S.C. 1057) is repealed. 
(e) EFFECTIVE DATE.—The amendments made by this section 
shall apply to plan years beginning after 2007. 
Subtitle B—Amendments to Internal 
Revenue Code of 1986
SEC. 111. MINIMUM FUNDING STANDARDS. 
(a) NEW MINIMUM FUNDING STANDARDS.—Section 412 of the 
Internal Revenue Code of 1986 (relating to minimum funding stand-
ards) is amended to read as follows: 
‘‘SEC. 412. MINIMUM FUNDING STANDARDS. 
‘‘(a) REQUIREMENT TO MEET MINIMUM FUNDING STANDARD.—
‘‘(1) IN GENERAL.—A plan to which this section applies 
shall satisfy the minimum funding standard applicable to the 
plan for any plan year. 
‘‘(2) MINIMUM FUNDING STANDARD.—For purposes of para-
graph (1), a plan shall be treated as satisfying the minimum 
funding standard for a plan year if—
‘‘(A) in the case of a defined benefit plan which is 
not a multiemployer plan, the employer makes contribu-
tions to or under the plan for the plan year which, in 
the aggregate, are not less than the minimum required 
contribution determined under section 430 for the plan 
for the plan year, 
‘‘(B) in the case of a money purchase plan which is 
not a multiemployer plan, the employer makes contribu-
tions to or under the plan for the plan year which are 
required under the terms of the plan, and 
‘‘(C) in the case of a multiemployer plan, the employers 
make contributions to or under the plan for any plan year 
which, in the aggregate, are sufficient to ensure that the
H. R. 4—42
plan does not have an accumulated funding deficiency 
under section 431 as of the end of the plan year. 
‘‘(b) LIABILITY FOR CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2), 
the amount of any contribution required by this section 
(including any required installments under paragraphs (3) and 
(4) of section 430(j)) shall be paid by the employer responsible 
for making contributions to or under the plan. 
‘‘(2) JOINT
AND
SEVERAL
LIABILITY
WHERE
EMPLOYER 
MEMBER OF CONTROLLED GROUP.—If the employer referred to 
in paragraph (1) is a member of a controlled group, each 
member of such group shall be jointly and severally liable 
for payment of such contributions. 
‘‘(c) VARIANCE FROM MINIMUM FUNDING STANDARDS.—
‘‘(1) WAIVER IN CASE OF BUSINESS HARDSHIP.—
‘‘(A) IN GENERAL.—If—
‘‘(i) an employer is (or in the case of a multiem-
ployer plan, 10 percent or more of the number of 
employers contributing to or under the plan is) unable 
to satisfy the minimum funding standard for a plan 
year without temporary substantial business hardship 
(substantial business hardship in the case of a multi-
employer plan), and 
‘‘(ii) application of the standard would be adverse 
to the interests of plan participants in the aggregate, 
the Secretary may, subject to subparagraph (C), waive 
the requirements of subsection (a) for such year with 
respect to all or any portion of the minimum funding 
standard. The Secretary shall not waive the minimum 
funding standard with respect to a plan for more than 
3 of any 15 (5 of any 15 in the case of a multiemployer 
plan) consecutive plan years 
‘‘(B) EFFECTS OF WAIVER.—If a waiver is granted under 
subparagraph (A) for any plan year—
‘‘(i) in the case of a defined benefit plan which 
is not a multiemployer plan, the minimum required 
contribution under section 430 for the plan year shall 
be reduced by the amount of the waived funding defi-
ciency and such amount shall be amortized as required 
under section 430(e), and 
‘‘(ii) in the case of a multiemployer plan, the 
funding standard account shall be credited under sec-
tion 431(b)(3)(C) with the amount of the waived 
funding deficiency and such amount shall be amortized 
as required under section 431(b)(2)(C). 
‘‘(C) WAIVER OF AMORTIZED PORTION NOT ALLOWED.—
The Secretary 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 HARDSHIP.—For purposes 
of this subsection, the factors taken into account in determining 
temporary substantial 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 economic loss,
H. R. 4—43
‘‘(B) there is substantial unemployment or under-
employment in the trade or business and in the industry 
concerned, 
‘‘(C) the sales and profits of the industry concerned 
are depressed or declining, and 
‘‘(D) it is reasonable to expect that the plan will be 
continued only if the waiver is granted. 
‘‘(3) WAIVED FUNDING DEFICIENCY.—For purposes of this 
section and part III of this subchapter, the term ‘waived funding 
deficiency’ 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 and not satisfied 
by employer contributions. 
‘‘(4) SECURITY FOR WAIVERS FOR SINGLE-EMPLOYER PLANS, 
CONSULTATIONS.—
‘‘(A) SECURITY MAY BE REQUIRED.—
‘‘(i) IN GENERAL.—Except as provided in subpara-
graph (C), the Secretary may require an employer 
maintaining a defined benefit plan which is a single-
employer 
plan 
(within 
the 
meaning 
of 
section 
4001(a)(15) of the Employee Retirement Income Secu-
rity Act of 1974) 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 direc-
tion of the Corporation, by a contributing sponsor 
(within the meaning of section 4001(a)(13) of the 
Employee Retirement Income Security Act of 1974), 
or a member of such sponsor’s controlled group (within 
the meaning of section 4001(a)(14) of such Act). 
‘‘(B) CONSULTATION WITH THE PENSION BENEFIT GUAR-
ANTY CORPORATION.—Except as provided in subparagraph 
(C), the Secretary shall, before granting or modifying a 
waiver under this subsection with respect to a plan 
described in subparagraph (A)(i)—
‘‘(i) provide the Pension Benefit Guaranty Corpora-
tion with—
‘‘(I) notice of the completed application for any 
waiver or modification, 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 Corporation under 
clause (i)(II), and 
‘‘(II) any views of any employee organization 
(within the meaning of section 3(4) of the Employee 
Retirement Income Security Act of 1974) rep-
resenting participants in the plan which are sub-
mitted in writing to the Secretary in connection 
with such application. 
Information provided to the Corporation under this 
subparagraph shall be considered tax return information 
and subject to the safeguarding and reporting requirements 
of section 6103(p).
H. R. 4—44
‘‘(C) EXCEPTION FOR CERTAIN WAIVERS.—
‘‘(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 minimum required 
contributions (within the meaning of section 
4971(c)(4)) for the plan year and all preceding 
plan years, and 
‘‘(II) the present value of all waiver amortiza-
tion installments determined for the plan year and 
succeeding plan years under section 430(e)(2), 
is less than $1,000,000. 
‘‘(ii) TREATMENT OF WAIVERS FOR WHICH APPLICA-
TIONS ARE PENDING.—The amount described in clause 
(i)(I) shall include any increase in such amount which 
would result if all applications for waivers of the min-
imum funding standard under this subsection which 
are pending with respect to such plan were denied. 
‘‘(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 defined 
benefit plan which is not a multiemployer plan, no waiver 
may be granted under this subsection with respect to any 
plan for any plan year unless an application therefor is 
submitted to the Secretary not later than the 15th day 
of the 3rd month beginning after the close of such plan 
year. 
‘‘(B) SPECIAL RULE IF EMPLOYER IS MEMBER OF CON-
TROLLED GROUP.—In the case of a defined benefit plan 
which is not a multiemployer plan, if an employer is a 
member of a controlled group, the temporary substantial 
business hardship requirements of paragraph (1) shall be 
treated as met only if such requirements are met—
‘‘(i) with respect to such employer, and 
‘‘(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 may provide that an analysis of a trade 
or business or industry of a member need not be conducted 
if the Secretary determines such analysis is not necessary 
because the taking into account of such member would 
not significantly affect the determination under this para-
graph. 
‘‘(6) ADVANCE NOTICE.—
‘‘(A) IN GENERAL.—The Secretary shall, before granting 
a waiver under this subsection, require each applicant to 
provide evidence satisfactory to the 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) of the Employee Retirement Income Security 
Act of 1974). Such notice shall include a description of 
the extent to which the plan is funded for benefits which 
are guaranteed under title IV of the Employee Retirement 
Income Security Act of 1974 and for benefit liabilities. 
‘‘(B) CONSIDERATION OF RELEVANT INFORMATION.—The 
Secretary shall consider any relevant information provided
H. R. 4—45
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 non-
forfeitable under the plan shall be adopted if a waiver 
under this subsection or an extension of time under section 
431(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 determines to be reasonable and 
which provides for only de minimis increases in the 
liabilities of the plan, 
‘‘(ii) only repeals an amendment described in sub-
section (d)(2), or 
‘‘(iii) is required as a condition of qualification 
under part I of subchapter D, of chapter 1. 
‘‘(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. 
‘‘(2) CERTAIN RETROACTIVE PLAN AMENDMENTS.—For pur-
poses of this section, any amendment 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 multiemployer plan, no later than 
2 years after the close of such plan year), 
‘‘(B) does not reduce the accrued benefit of any partici-
pant determined as of the beginning of the first plan year 
to which the amendment applies, and 
‘‘(C) does not reduce the accrued benefit of any partici-
pant 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 paragraph which reduces the 
accrued benefits of any participant shall take effect unless 
the plan administrator files a notice with the Secretary noti-
fying him of such amendment and the Secretary has approved 
such amendment, or within 90 days after the date on which 
such notice was filed, failed to disapprove such amendment. 
No amendment described in this subsection shall be approved 
by the Secretary unless the Secretary determines that such 
amendment is necessary because of a temporary substantial 
business hardship (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 under subsection
H. R. 4—46
(c) (or, in the case of a multiemployer plan, any extension 
of the amortization period under section 431(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. 
‘‘(e) PLANS TO WHICH SECTION APPLIES.—
‘‘(1) IN GENERAL.—Except as provided in paragraphs (2) 
and (4), this section applies to a plan if, for any plan year 
beginning on or after the effective date of this section for 
such plan under the Employee Retirement Income Security 
Act of 1974—
‘‘(A) such plan included a trust which qualified (or 
was determined by the Secretary to have qualified) under 
section 401(a), or 
‘‘(B) such plan satisfied (or was determined by the 
Secretary to have satisfied) the requirements of section 
403(a). 
‘‘(2) EXCEPTIONS.—This section shall not apply to—
‘‘(A) any profit-sharing or stock bonus plan, 
‘‘(B) any insurance contract plan described in para-
graph (3), 
‘‘(C) any governmental plan (within the meaning of 
section 414(d)), 
‘‘(D) any church plan (within the meaning of section 
414(e)) with respect to which the election provided by sec-
tion 410(d) has not been made, 
‘‘(E) any plan which has not, at any time after Sep-
tember 2, 1974, provided for employer contributions, or 
‘‘(F) any plan established and maintained by a society, 
order, or association described in section 501(c)(8) or (9), 
if no part of the contributions to or under such plan are 
made by employers of participants in such plan. 
No plan described in subparagraph (C), (D), or (F) shall be 
treated as a qualified plan for purposes of section 401(a) unless 
such plan meets the requirements of section 401(a)(7) as in 
effect on September 1, 1974. 
‘‘(3) CERTAIN
INSURANCE
CONTRACT
PLANS.—A plan is 
described in this paragraph if—
‘‘(A) the plan is funded exclusively by the purchase 
of individual insurance contracts, 
‘‘(B) such contracts provide for level annual premium 
payments to be paid extending not later than the retire-
ment age for each individual participating in the plan, 
and commencing with the date the individual became a 
participant in the plan (or, in the case of an increase 
in benefits, commencing at the time such increase becomes 
effective), 
‘‘(C) benefits provided by the plan are equal to the 
benefits provided under each contract at normal retirement 
age under the plan and are guaranteed by an insurance 
carrier (licensed under the laws of a State to do business 
with the plan) to the extent premiums have been paid, 
‘‘(D) premiums payable for the plan year, and all prior 
plan years, under such contracts have been paid before 
lapse or there is reinstatement of the policy,
H. R. 4—47
‘‘(E) no rights under such contracts have been subject 
to a security interest at any time during the plan year, 
and 
‘‘(F) no policy loans are outstanding at any time during 
the plan year. 
A plan funded exclusively by the purchase of group insurance 
contracts which is determined under regulations prescribed 
by the Secretary to have the same characteristics as contracts 
described in the preceding sentence shall be treated as a plan 
described in this paragraph. 
‘‘(4) CERTAIN
TERMINATED
MULTIEMPLOYER
PLANS.—This 
section applies with respect to a terminated multiemployer 
plan to which section 4021 of the Employee Retirement Income 
Security Act of 1974 applies until the last day of the plan 
year in which the plan terminates (within the meaning of 
section 4041A(a)(2) of such Act).’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to plan years beginning after December 31, 2007. 
SEC. 112. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
PENSION PLANS. 
(a) IN GENERAL.—Subchapter D of chapter 1 of the Internal 
Revenue Code of 1986 (relating to deferred compensation, etc.) 
is amended by adding at the end the following new part: 
‘‘PART III—MINIMUM FUNDING STANDARDS 
FOR SINGLE-EMPLOYER DEFINED BENEFIT 
PENSION PLANS 
‘‘SEC. 430. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER 
DEFINED BENEFIT PENSION PLANS. 
‘‘(a) MINIMUM REQUIRED CONTRIBUTION.—For purposes of this 
section and section 412(a)(2)(A), except as provided in subsection 
(f), the term ‘minimum required contribution’ means, with respect 
to any plan year of a defined benefit plan which is not a multiem-
ployer plan—
‘‘(1) in any case in which the value of plan assets 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 determined under subsection 
(e); 
‘‘(2) in any case in which the value of plan assets 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 respect to plans in at-risk 
status, the term ‘target normal cost’ means, for any plan year, 
the present value of all benefits which are expected to accrue
H. R. 4—48
or to be earned under the plan during the plan year. For purposes 
of this subsection, if any benefit attributable to services performed 
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 having accrued during the current 
plan year. 
‘‘(c) SHORTFALL AMORTIZATION CHARGE.—
‘‘(1) IN GENERAL.—For purposes of this section, the shortfall 
amortization charge for a plan for any plan year is the aggre-
gate total (not less than zero) of the shortfall amortization 
installments for such plan year with respect to the shortfall 
amortization bases for such plan year and each of the 6 pre-
ceding plan years. 
‘‘(2) SHORTFALL AMORTIZATION INSTALLMENT.—For purposes 
of paragraph (1)—
‘‘(A) 
DETERMINATION.—The 
shortfall 
amortization 
installments are the amounts necessary to amortize the 
shortfall amortization base of the plan for any plan year 
in level annual installments over the 7-plan-year period 
beginning with such plan year. 
‘‘(B) SHORTFALL INSTALLMENT.—The shortfall amortiza-
tion installment for any plan year in the 7-plan-year period 
under subparagraph (A) with respect to any shortfall 
amortization base is the annual installment determined 
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 subsection (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 subparagraph (C) of subsection 
(h)(2), applied under rules similar to the rules of subpara-
graph (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 succeeding plan year with respect 
to the shortfall 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
AMORTIZATION 
BASE.—
‘‘(A) IN
GENERAL.—In any case in which the value 
of plan assets of the plan (as reduced under subsection
H. R. 4—49
(f)(4)(A)) is equal to or greater 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 provided in clauses 
(iii) and (iv), in the case of plan years beginning after 
2007 and before 2011, only the applicable percentage 
of the funding target shall be taken into account under 
paragraph (3)(A) in determining the funding shortfall 
for the plan year for purposes of subparagraph (A). 
‘‘(ii) APPLICABLE
PERCENTAGE.—For purposes of 
subparagraph (A), the applicable percentage shall be 
determined in accordance 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 
amortization base for each of the preceding years begin-
ning after 2007 was zero (determined after application 
of this subparagraph). 
‘‘(iv) TRANSITION RELIEF NOT AVAILABLE 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 begin-
ning in 2007 and which was subject to section 
412(l) (as in effect for plan years beginning in 
2007), determined after the application of para-
graphs (6) and (9) thereof. 
‘‘(6) EARLY DEEMED AMORTIZATION UPON ATTAINMENT 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 amortization charge for such plan year and suc-
ceeding plan years, the shortfall amortization bases for all 
preceding plan years (and all shortfall amortization install-
ments 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 status, 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
PERCENTAGE.—The 
‘funding target attainment percentage’ of a plan for a plan 
year is the ratio (expressed as a percentage) which—
‘‘(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 subsection (i)(1)). 
‘‘(e) WAIVER AMORTIZATION CHARGE.—
H. R. 4—50
‘‘(1) DETERMINATION OF WAIVER AMORTIZATION 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 
amortization bases for each of the 5 preceding plan years. 
‘‘(2) WAIVER AMORTIZATION INSTALLMENT.—For purposes of 
paragraph (1)—
‘‘(A) 
DETERMINATION.—The 
waiver 
amortization 
installments are the amounts necessary to amortize the 
waiver amortization base of the plan for any plan year 
in level annual installments 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 annual installment determined under subpara-
graph (A) for that year for that base. 
‘‘(3) INTEREST RATE.—In determining any waiver amortiza-
tion installment under this subsection, 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 waiver 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 
412(c). 
‘‘(5) EARLY DEEMED AMORTIZATION UPON ATTAINMENT 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 amortization charge for such plan year and suc-
ceeding plan years, the waiver amortization bases for all pre-
ceding plan years (and all waiver amortization installments 
determined with respect to such bases) shall be reduced to 
zero. 
‘‘(f) REDUCTION
OF
MINIMUM
REQUIRED
CONTRIBUTION
BY 
PREFUNDING BALANCE AND FUNDING STANDARD CARRYOVER BAL-
ANCE.—
‘‘(1) ELECTION TO MAINTAIN BALANCES.—
‘‘(A) PREFUNDING
BALANCE.—The plan sponsor of a 
defined benefit plan which is not a multiemployer plan 
may elect to maintain a prefunding balance. 
‘‘(B) FUNDING STANDARD CARRYOVER BALANCE.—
‘‘(i) IN GENERAL.—In the case of a defined benefit 
plan (other than a multiemployer plan) described in 
clause (ii), the plan sponsor may elect to maintain 
a funding standard carryover balance, until such bal-
ance 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 412(b) as in effect 
for such plan year and determined as of the end 
of such plan year.
H. R. 4—51
‘‘(2) APPLICATION OF BALANCES.—A prefunding balance and 
a funding standard carryover balance maintained pursuant to 
this paragraph—
‘‘(A) shall be available for crediting against the min-
imum 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, pursuant to an elec-
tion under paragraph (5). 
‘‘(3) ELECTION
TO
APPLY
BALANCES
AGAINST
MINIMUM 
REQUIRED CONTRIBUTION.—
‘‘(A) IN
GENERAL.—Except as provided in subpara-
graphs (B) and (C), in the case of any plan year in which 
the plan sponsor elects to credit against the minimum 
required contribution for the current plan year all or a 
portion of the prefunding balance or the funding standard 
carryover balance for the current plan year (not in excess 
of such minimum required contribution), 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 as of the first day of the 
plan year. For purposes of the preceding sentence, the 
minimum required contribution shall be determined after 
taking into account any waiver under section 412(c). 
‘‘(B) COORDINATION WITH FUNDING STANDARD CARRY-
OVER BALANCE.—To the extent that any plan has a funding 
standard carryover 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 pre-
ceding provisions of this paragraph 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 without 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 deter-
mined using such methods of estimation as the Secretary 
may prescribe. 
‘‘(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
AMORTIZATION 
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
H. R. 4—52
paragraph (2) applying any portion of the prefunding bal-
ance in reducing the minimum required contribution is 
in effect for the plan year. 
‘‘(B) DETERMINATION
OF
EXCESS
ASSETS, FUNDING 
SHORTFALL, AND FUNDING TARGET ATTAINMENT PERCENT-
AGE.—
‘‘(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. 
‘‘(ii) SPECIAL RULE FOR CERTAIN BINDING AGREE-
MENTS
WITH
PBGC.—For 
purposes 
of 
subsection 
(c)(4)(B), the value of plan assets shall not be deemed 
to be reduced 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 Pension Benefit Guaranty Corporation which 
provides that such balance is not available to reduce 
the minimum required contribution for the plan year. 
For purposes of the preceding sentence, the term ‘speci-
fied balance’ 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
REQUIRED
CONTRIBUTION.—
For purposes of paragraph (3)(C)(i) of this subsection, the 
value of plan assets is deemed to be such amount, reduced 
by the amount of the prefunding balance. 
‘‘(5) ELECTION TO REDUCE BALANCE PRIOR TO DETERMINA-
TIONS OF VALUE OF PLAN ASSETS AND CREDITING AGAINST MIN-
IMUM REQUIRED CONTRIBUTION.—
‘‘(A) IN
GENERAL.—The plan sponsor may elect to 
reduce by any amount the balance of the prefunding bal-
ance and the funding standard carryover balance for any 
plan year (but not below zero). Such reduction shall be 
effective prior to any determination of the value of plan 
assets for such plan year under this section and application 
of the balance in reducing the minimum required contribu-
tion for such plan for such plan year pursuant to an election 
under paragraph (2). 
‘‘(B) COORDINATION
BETWEEN
PREFUNDING
BALANCE 
AND
FUNDING
STANDARD
CARRYOVER
BALANCE.—To the 
extent that any plan has a funding standard carryover 
balance 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 beginning balance of zero, 
increased and decreased to the extent provided in subpara-
graphs (B) and (C), and adjusted further as provided in 
paragraph (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 increased by the amount elected by
H. R. 4—53
the plan sponsor for the plan year. Such amount shall 
not exceed the excess (if any) of—
‘‘(I) the aggregate total of employer contribu-
tions to the plan for the preceding plan year, 
over—
‘‘(II) the minimum required contribution for 
such preceding plan year. 
‘‘(ii) ADJUSTMENTS FOR INTEREST.—Any excess con-
tributions under clause (i) shall be properly adjusted 
for interest accruing 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 interest rate for the preceding plan 
year and by treating contributions as being first used 
to satisfy the minimum required contribution. 
‘‘(iii) CERTAIN CONTRIBUTIONS NECESSARY 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 paragraph for the 
preceding plan year. Any contribution which may be 
taken into account in satisfying the requirements of 
more than 1 of such paragraphs shall be taken into 
account only once for purposes of this clause. 
‘‘(C) DECREASES.—The prefunding balance of a plan 
shall be decreased (but not below zero) by the sum of—
‘‘(i) as of the first day of each plan year after 
2008, the amount of such balance credited under para-
graph (2) (if any) in reducing the minimum required 
contribution of the plan for the preceding plan year, 
and 
‘‘(ii) as of the time specified in paragraph (5)(A), 
any reduction in such balance elected under paragraph 
(5). 
‘‘(7) FUNDING STANDARD CARRYOVER BALANCE.—
‘‘(A) IN GENERAL.—A funding standard carryover bal-
ance maintained by a plan shall consist of a beginning 
balance determined under subparagraph (B), decreased to 
the extent provided in subparagraph (C), and adjusted 
further as provided in paragraph (8). 
‘‘(B) BEGINNING BALANCE.—The beginning balance of 
the funding standard carryover balance shall be the posi-
tive balance described in paragraph (1)(B)(ii)(II). 
‘‘(C) DECREASES.—The funding standard carryover bal-
ance 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 balance credited under para-
graph (2) (if any) in reducing the minimum required 
contribution of the plan for the preceding plan year, 
and 
‘‘(ii) as of the time specified in paragraph (5)(A), 
any reduction in such balance elected under paragraph 
(5).
H. R. 4—54
‘‘(8) ADJUSTMENTS FOR INVESTMENT EXPERIENCE.—In deter-
mining the prefunding balance or the funding standard carry-
over balance of a plan as of the first day of the plan year, 
the plan sponsor shall, in accordance with regulations pre-
scribed 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 
regulations, all contributions, distributions, and other plan pay-
ments made during such period. 
‘‘(9) ELECTIONS.—Elections under this subsection shall be 
made at such times, and in such form and manner, as shall 
be prescribed in regulations of the Secretary. 
‘‘(g) VALUATION OF PLAN ASSETS AND LIABILITIES.—
‘‘(1) TIMING OF DETERMINATIONS.—Except as otherwise pro-
vided under this subsection, all determinations under this sec-
tion for a plan year shall be made as of the valuation date 
of the plan for such plan year. 
‘‘(2) VALUATION DATE.—For purposes of this section—
‘‘(A) IN GENERAL.—Except as provided in subparagraph 
(B), the valuation date of a plan for any plan year shall 
be the first day of the plan year. 
‘‘(B) EXCEPTION FOR SMALL PLANS.—If, on each day 
during the preceding plan year, a plan had 100 or fewer 
participants, the plan may designate any day during the 
plan year as its valuation date for such plan year and 
succeeding plan years. For purposes of this subparagraph, 
all defined benefit plans (other than multiemployer plans) 
maintained by the same employer (or any member of such 
employer’s controlled group) shall be treated as 1 plan, 
but only participants with respect to such employer or 
member shall be taken into account. 
‘‘(C) APPLICATION OF CERTAIN RULES IN DETERMINATION 
OF PLAN SIZE.—For purposes of this paragraph—
‘‘(i) PLANS NOT IN EXISTENCE IN PRECEDING YEAR.—
In the case of the first plan year of any plan, subpara-
graph (B) shall apply to such plan by taking into 
account the number of participants that the plan is 
reasonably expected to have on days during such first 
plan year. 
‘‘(ii) PREDECESSORS.—Any reference in subpara-
graph (B) to an employer shall include a reference 
to any predecessor of such employer. 
‘‘(3) DETERMINATION OF VALUE OF PLAN ASSETS.—For pur-
poses 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, 
‘‘(ii) does not provide for averaging of such values 
over more than the period beginning on the last day 
of the 25th month preceding the month in which the