H. R. 3962 
One Hundred Eleventh Congress 
of the 
United States of America 
AT THE SECOND SESSION 
Begun and held at the City of Washington on Tuesday, 
the fifth day of January, two thousand and ten 
An Act 
To provide a physician payment update, to provide pension funding relief, 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. 
This Act may be cited as the ‘‘Preservation of Access to Care 
for Medicare Beneficiaries and Pension Relief Act of 2010’’. 
TITLE I—HEALTH PROVISIONS 
SEC. 101. PHYSICIAN PAYMENT UPDATE. 
(a) IN GENERAL.—Section 1848(d) of the Social Security Act 
(42 U.S.C. 1395w–4(d)) is amended— 
(1) in paragraph (10), in the heading, by striking ‘‘PORTION’’ 
and inserting ‘‘JANUARY THROUGH MAY ’’; and 
(2) by adding at the end the following new paragraph: 
‘‘(11) UPDATE
FOR
JUNE
THROUGH
NOVEMBER
OF
2010.— 
‘‘(A) IN GENERAL.—Subject to paragraphs (7)(B), (8)(B), 
(9)(B), and (10)(B), in lieu of the update to the single 
conversion factor established in paragraph (1)(C) that 
would otherwise apply for 2010 for the period beginning 
on June 1, 2010, and ending on November 30, 2010, the 
update to the single conversion factor shall be 2.2 percent. 
‘‘(B) NO
EFFECT
ON
COMPUTATION
OF
CONVERSION 
FACTOR FOR REMAINING PORTION OF 2010 AND SUBSEQUENT 
YEARS.—The conversion factor under this subsection shall 
be computed under paragraph (1)(A) for the period begin-
ning on December 1, 2010, and ending on December 31, 
2010, and for 2011 and subsequent years as if subpara-
graph (A) had never applied.’’. 
(b) STATUTORY PAYGO.—The budgetary effects of this Act, for 
the purpose of complying with the Statutory Pay-As-You-Go Act 
of 2010, shall be determined by reference to the latest statement 
titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this Act, jointly 
submitted for printing in the Congressional Record by the Chairmen 
of the House and Senate Budget Committees, provided that such 
statement has been submitted prior to the vote on passage in 
the House acting first on this conference report or amendment 
between the Houses.
H. R. 3962—2 
SEC. 102. CLARIFICATION OF 3-DAY PAYMENT WINDOW. 
(a) IN GENERAL.—Section 1886 of the Social Security Act (42 
U.S.C. 1395ww) is amended— 
(1) by adding at the end of subsection (a)(4) the following 
new sentence: ‘‘In applying the first sentence of this paragraph, 
the term ‘other services related to the admission’ includes all 
services that are not diagnostic services (other than ambulance 
and maintenance renal dialysis services) for which payment 
may be made under this title that are provided by a hospital 
(or an entity wholly owned or operated by the hospital) to 
a patient— 
‘‘(A) on the date of the patient’s inpatient admission; 
or 
‘‘(B) during the 3 days (or, in the case of a hospital 
that is not a subsection (d) hospital, during the 1 day) 
immediately preceding the date of such admission unless 
the hospital demonstrates (in a form and manner, and 
at a time, specified by the Secretary) that such services 
are not related (as determined by the Secretary) to such 
admission.’’; and 
(2) in subsection (d)(7)— 
(A) in subparagraph (A), by striking ‘‘and’’ at the end; 
(B) in subparagraph (B), by striking the period and 
inserting ‘‘, and’’; and 
(C) by adding at the end the following new subpara-
graph: 
‘‘(C) the determination of whether services provided 
prior to a patient’s inpatient admission are related to the 
admission (as described in subsection (a)(4)).’’. 
(b) EFFECTIVE DATE.—The amendments made by subsection 
(a) shall apply to services furnished on or after the date of the 
enactment of this Act. 
(c) NO REOPENING OF PREVIOUSLY BUNDLED CLAIMS.— 
(1) IN
GENERAL.—The Secretary of Health and Human 
Services may not reopen a claim, adjust a claim, or make 
a payment pursuant to any request for payment under title 
XVIII of the Social Security Act, submitted by an entity 
(including a hospital or an entity wholly owned or operated 
by the hospital) for services described in paragraph (2) for 
purposes of treating, as unrelated to a patient’s inpatient admis-
sion, services provided during the 3 days (or, in the case of 
a hospital that is not a subsection (d) hospital, during the 
1 day) immediately preceding the date of the patient’s inpatient 
admission. 
(2) SERVICES DESCRIBED.—For purposes of paragraph (1), 
the services described in this paragraph are other services 
related to the admission (as described in section 1886(a)(4) 
of the Social Security Act (42 U.S.C. 1395ww(a)(4)), as amended 
by subsection (a)) which were previously included on a claim 
or request for payment submitted under part A of title XVIII 
of such Act for which a reopening, adjustment, or request 
for payment under part B of such title, was not submitted 
prior to the date of the enactment of this Act. 
(d) IMPLEMENTATION.—Notwithstanding any other provision of 
law, the Secretary of Health and Human Services may implement 
the provisions of this section (and amendments made by this section) 
by program instruction or otherwise.
H. R. 3962—3 
(e) RULE OF CONSTRUCTION.—Nothing in the amendments made 
by this section shall be construed as changing the policy described 
in section 1886(a)(4) of the Social Security Act (42 U.S.C. 
1395ww(a)(4)), as applied by the Secretary of Health and Human 
Services before the date of the enactment of this Act, with respect 
to diagnostic services. 
SEC. 103. ESTABLISH A CMS–IRS DATA MATCH TO IDENTIFY FRAUDU-
LENT PROVIDERS. 
(a) AUTHORITY TO DISCLOSE RETURN INFORMATION CONCERNING 
OUTSTANDING TAX DEBTS FOR PURPOSES OF ENHANCING MEDICARE 
PROGRAM INTEGRITY.— 
(1) IN GENERAL.—Section 6103(l) of the Internal Revenue 
Code of 1986 is amended by adding at the end the following 
new paragraph: 
‘‘(22) DISCLOSURE OF RETURN INFORMATION TO DEPARTMENT 
OF HEALTH AND HUMAN SERVICES FOR PURPOSES OF ENHANCING 
MEDICARE PROGRAM INTEGRITY.— 
‘‘(A) IN GENERAL.—The Secretary shall, upon written 
request from the Secretary of Health and Human Services, 
disclose to officers and employees of the Department of 
Health and Human Services return information with 
respect to a taxpayer who has applied to enroll, or reenroll, 
as a provider of services or supplier under the Medicare 
program under title XVIII of the Social Security Act. Such 
return information shall be limited to— 
‘‘(i) the taxpayer identity information with respect 
to such taxpayer; 
‘‘(ii) the amount of the delinquent tax debt owed 
by that taxpayer; and 
‘‘(iii) the taxable year to which the delinquent tax 
debt pertains. 
‘‘(B) RESTRICTION ON DISCLOSURE.—Return information 
disclosed under subparagraph (A) may be used by officers 
and employees of the Department of Health and Human 
Services for the purposes of, and to the extent necessary 
in, establishing the taxpayer’s eligibility for enrollment 
or reenrollment in the Medicare program, or in any 
administrative or judicial proceeding relating to, or arising 
from, a denial of such enrollment or reenrollment, or in 
determining the level of enhanced oversight to be applied 
with respect to such taxpayer pursuant to section 1866(j)(3) 
of the Social Security Act. 
‘‘(C) DELINQUENT TAX DEBT.—For purposes of this para-
graph, the term ‘delinquent tax debt’ means an outstanding 
debt under this title for which a notice of lien has been 
filed pursuant to section 6323, but the term does not 
include a debt that is being paid in a timely manner 
pursuant to an agreement under section 6159 or 7122, 
or a debt with respect to which a collection due process 
hearing under section 6330 is requested, pending, or com-
pleted and no payment is required.’’. 
(2) CONFORMING AMENDMENTS.—Section 6103(p)(4) of such 
Code, as amended by sections 1414 and 3308 of Public Law 
111–148, in the matter preceding subparagraph (A) and in 
subparagraph (F)(ii), is amended by striking ‘‘or (17)’’ and 
inserting ‘‘(17), or (22)’’ each place it appears.
H. R. 3962—4 
(b) SECRETARY’S AUTHORITY TO USE INFORMATION FROM THE 
DEPARTMENT OF TREASURY IN MEDICARE ENROLLMENTS AND RE-
ENROLLMENTS.—Section 1866(j)(2) of the Social Security Act (42 
U.S.C. 1395cc(j)), as inserted by section 6401(a) of Public Law 
111–148, is further amended— 
(1) by redesignating subparagraph (E) as subparagraph 
(F); and 
(2) by inserting after subparagraph (D) the following new 
subparagraph: 
‘‘(E) USE OF INFORMATION FROM THE DEPARTMENT OF 
TREASURY
CONCERNING
TAX
DEBTS.—In reviewing the 
application of a provider of services or supplier to enroll 
or reenroll under the program under this title, the Sec-
retary shall take into account the information supplied 
by the Secretary of the Treasury pursuant to section 
6103(l)(22) of the Internal Revenue Code of 1986, in deter-
mining whether to deny such application or to apply 
enhanced oversight to such provider of services or supplier 
pursuant to paragraph (3) if the Secretary determines such 
provider of services or supplier owes such a debt.’’. 
(c) AUTHORITY TO ADJUST PAYMENTS OF PROVIDERS OF SERV-
ICES AND SUPPLIERS WITH THE SAME TAX IDENTIFICATION NUMBER 
FOR MEDICARE OBLIGATIONS.—Section 1866(j)(6) of the Social Secu-
rity Act (42 U.S.C. 1395cc(j)(6)), as inserted by section 6401(a) 
of Public Law 111–148 and as redesignated by section 1304 of 
Public Law 111–152, is amended— 
(1) in the paragraph heading, by striking ‘‘PAST-DUE’’ and 
inserting ‘‘MEDICARE’’; 
(2) in subparagraph (A), by striking ‘‘past-due obligations 
described in subparagraph (B)(ii) of an’’ and inserting ‘‘amount 
described in subparagraph (B)(ii) due from such’’; and 
(3) in subparagraph (B)(ii), by striking ‘‘a past-due obliga-
tion’’ and inserting ‘‘an amount that is more than the amount 
required to be paid’’. 
TITLE II—PENSION FUNDING RELIEF 
Subtitle A—Single Employer Plans 
SEC. 201. EXTENDED PERIOD FOR SINGLE-EMPLOYER DEFINED BEN-
EFIT 
PLANS 
TO 
AMORTIZE 
CERTAIN 
SHORTFALL 
AMORTIZATION BASES. 
(a) AMENDMENTS TO ERISA.— 
(1) IN GENERAL.—Paragraph (2) of section 303(c) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1083(c)) is amended by adding at the end the following subpara-
graph: 
‘‘(D) SPECIAL ELECTION FOR ELIGIBLE PLAN YEARS.— 
‘‘(i) IN GENERAL.—If a plan sponsor elects to apply 
this subparagraph with respect to the shortfall 
amortization base of a plan for any eligible plan year 
(in this subparagraph and paragraph (7) referred to 
as an ‘election year’), then, notwithstanding subpara-
graphs (A) and (B)— 
‘‘(I) the shortfall amortization installments 
with respect to such base shall be determined
H. R. 3962—5 
under clause (ii) or (iii), whichever is specified 
in the election, and 
‘‘(II) the shortfall amortization installment for 
any plan year in the 9-plan-year period described 
in clause (ii) or the 15-plan-year period described 
in clause (iii), respectively, with respect to such 
shortfall amortization base is the annual install-
ment determined under the applicable clause for 
that year for that base. 
‘‘(ii) 2 PLUS 7 AMORTIZATION SCHEDULE.—The short-
fall amortization installments determined under this 
clause are— 
‘‘(I) in the case of the first 2 plan years in 
the 9-plan-year period beginning with the election 
year, interest on the shortfall amortization base 
of the plan for the election year (determined using 
the effective interest rate for the plan for the elec-
tion year), and 
‘‘(II) in the case of the last 7 plan years in 
such 9-plan-year period, the amounts necessary 
to amortize the remaining balance of the shortfall 
amortization base of the plan for the election year 
in level annual installments over such last 7 plan 
years (using the segment rates under subpara-
graph (C) for the election year). 
‘‘(iii) 
15-YEAR
AMORTIZATION.—The 
shortfall 
amortization installments determined under this 
subparagraph are the amounts necessary to amortize 
the shortfall amortization base of the plan for the 
election year in level annual installments over the 
15-plan-year period beginning with the election year 
(using the segment rates under subparagraph (C) for 
the election year). 
‘‘(iv) ELECTION.— 
‘‘(I) IN GENERAL.—The plan sponsor of a plan 
may elect to have this subparagraph apply to not 
more than 2 eligible plan years with respect to 
the plan, except that in the case of a plan described 
in section 106 of the Pension Protection Act of 
2006, the plan sponsor may only elect to have 
this subparagraph apply to a plan year beginning 
in 2011. 
‘‘(II) AMORTIZATION SCHEDULE.—Such election 
shall specify whether the amortization schedule 
under clause (ii) or (iii) shall apply to an election 
year, except that if a plan sponsor elects to have 
this subparagraph apply to 2 eligible plan years, 
the plan sponsor must elect the same schedule 
for both years. 
‘‘(III) OTHER RULES.—Such election shall be 
made at such time, and in such form and manner, 
as shall be prescribed by the Secretary of the 
Treasury, and may be revoked only with the con-
sent of the Secretary of the Treasury. The Sec-
retary of the Treasury shall, before granting a 
revocation request, provide the Pension Benefit 
Guaranty Corporation an opportunity to comment
H. R. 3962—6 
on the conditions applicable to the treatment of 
any portion of the election year shortfall amortiza-
tion base that remains unamortized as of the rev-
ocation date. 
‘‘(v) ELIGIBLE PLAN YEAR.—For purposes of this 
subparagraph, the term ‘eligible plan year’ means any 
plan year beginning in 2008, 2009, 2010, or 2011, 
except that a plan year shall only be treated as an 
eligible plan year if the due date under subsection 
(j)(1) for the payment of the minimum required con-
tribution for such plan year occurs on or after the 
date of the enactment of this subparagraph. 
‘‘(vi) REPORTING.—A plan sponsor of a plan who 
makes an election under clause (i) shall— 
‘‘(I) give notice of the election to participants 
and beneficiaries of the plan, and 
‘‘(II) inform the Pension Benefit Guaranty Cor-
poration of such election in such form and manner 
as the Director of the Pension Benefit Guaranty 
Corporation may prescribe. 
‘‘(vii) INCREASES
IN
REQUIRED
INSTALLMENTS
IN 
CERTAIN CASES.—For increases in required contribu-
tions in cases of excess compensation or extraordinary 
dividends or stock redemptions, see paragraph (7).’’. 
(2) INCREASES
IN
REQUIRED
INSTALLMENTS
IN
CERTAIN 
CASES.—Section 303(c) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1083(c)) is amended by adding 
at the end the following paragraph: 
‘‘(7) INCREASES IN ALTERNATE REQUIRED INSTALLMENTS IN 
CASES OF EXCESS COMPENSATION OR EXTRAORDINARY DIVIDENDS 
OR STOCK REDEMPTIONS.— 
‘‘(A) IN GENERAL.—If there is an installment accelera-
tion amount with respect to a plan for any plan year 
in the restriction period with respect to an election year 
under paragraph (2)(D), then the shortfall amortization 
installment otherwise determined and payable under such 
paragraph for such plan year shall, subject to the limitation 
under subparagraph (B), be increased by such amount. 
‘‘(B) TOTAL
INSTALLMENTS
LIMITED
TO
SHORTFALL 
BASE.—Subject to rules prescribed by the Secretary of the 
Treasury, if a shortfall amortization installment with 
respect to any shortfall amortization base for an election 
year is required to be increased for any plan year under 
subparagraph (A)— 
‘‘(i) such increase shall not result in the amount 
of such installment exceeding the present value of such 
installment and all succeeding installments with 
respect to such base (determined without regard to 
such increase but after application of clause (ii)), and 
‘‘(ii) subsequent shortfall amortization installments 
with respect to such base shall, in reverse order of 
the otherwise required installments, be reduced to the 
extent necessary to limit the present value of such 
subsequent shortfall amortization installments (after 
application of this paragraph) to the present value 
of the remaining unamortized shortfall amortization 
base.
H. R. 3962—7 
‘‘(C) INSTALLMENT ACCELERATION AMOUNT.—For pur-
poses of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘installment accelera-
tion amount’ means, with respect to any plan year 
in a restriction period with respect to an election year, 
the sum of— 
‘‘(I) the aggregate amount of excess employee 
compensation determined under subparagraph (D) 
with respect to all employees for the plan year, 
plus 
‘‘(II) the aggregate amount of extraordinary 
dividends and redemptions determined under 
subparagraph (E) for the plan year. 
‘‘(ii) ANNUAL LIMITATION.—The installment accel-
eration amount for any plan year shall not exceed 
the excess (if any) of— 
‘‘(I) the sum of the shortfall amortization 
installments for the plan year and all preceding 
plan years in the amortization period elected under 
paragraph (2)(D) with respect to the shortfall 
amortization base with respect to an election year, 
determined without regard to paragraph (2)(D) and 
this paragraph, over 
‘‘(II) the sum of the shortfall amortization 
installments for such plan year and all such pre-
ceding plan years, determined after application of 
paragraph (2)(D) (and in the case of any preceding 
plan year, after application of this paragraph). 
‘‘(iii) CARRYOVER OF EXCESS INSTALLMENT ACCEL-
ERATION AMOUNTS.— 
‘‘(I) IN GENERAL.—If the installment accelera-
tion amount for any plan year (determined without 
regard to clause (ii)) exceeds the limitation under 
clause (ii), then, subject to subclause (II), such 
excess shall be treated as an installment accelera-
tion amount with respect to the succeeding plan 
year. 
‘‘(II) CAP TO APPLY.—If any amount treated 
as an installment acceleration amount under sub-
clause (I) or this subclause with respect any suc-
ceeding plan year, when added to other installment 
acceleration amounts (determined without regard 
to clause (ii)) with respect to the plan year, exceeds 
the limitation under clause (ii), the portion of such 
amount representing such excess shall be treated 
as an installment acceleration amount with respect 
to the next succeeding plan year. 
‘‘(III) 
LIMITATION
ON
YEARS
TO
WHICH 
AMOUNTS CARRIED FOR.—No amount shall be car-
ried under subclause (I) or (II) to a plan year 
which begins after the first plan year following 
the last plan year in the restriction period (or 
after the second plan year following such last plan 
year in the case of an election year with respect 
to which 15-year amortization was elected under 
paragraph (2)(D)).
H. R. 3962—8 
‘‘(IV) ORDERING
RULES.—For purposes of 
applying subclause (II), installment acceleration 
amounts for the plan year (determined without 
regard to any carryover under this clause) shall 
be applied first against the limitation under clause 
(ii) and then carryovers to such plan year shall 
be applied against such limitation on a first-in, 
first-out basis. 
‘‘(D) EXCESS EMPLOYEE COMPENSATION.—For purposes 
of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘excess employee com-
pensation’ means, with respect to any employee for 
any plan year, the excess (if any) of— 
‘‘(I) the aggregate amount includible in income 
under chapter 1 of the Internal Revenue Code 
of 1986 for remuneration during the calendar year 
in which such plan year begins for services per-
formed by the employee for the plan sponsor 
(whether or not performed during such calendar 
year), over 
‘‘(II) $1,000,000. 
‘‘(ii) AMOUNTS
SET
ASIDE
FOR
NONQUALIFIED 
DEFERRED
COMPENSATION.—If during any calendar 
year assets are set aside or reserved (directly or 
indirectly) in a trust (or other arrangement as deter-
mined by the Secretary of the Treasury), or transferred 
to such a trust or other arrangement, by a plan sponsor 
for purposes of paying deferred compensation of an 
employee under a nonqualified deferred compensation 
plan (as defined in section 409A of such Code) of the 
plan sponsor, then, for purposes of clause (i), the 
amount of such assets shall be treated as remuneration 
of the employee includible in income for the calendar 
year unless such amount is otherwise includible in 
income for such year. An amount to which the pre-
ceding sentence applies shall not be taken into account 
under this paragraph for any subsequent calendar 
year. 
‘‘(iii) ONLY REMUNERATION FOR CERTAIN POST-2009 
SERVICES COUNTED.—Remuneration shall be taken into 
account under clause (i) only to the extent attributable 
to services performed by the employee for the plan 
sponsor after February 28, 2010. 
‘‘(iv) EXCEPTION FOR CERTAIN EQUITY PAYMENTS.— 
‘‘(I) IN GENERAL.—There shall not be taken 
into account under clause (i)(I) any amount includ-
ible in income with respect to the granting after 
February 28, 2010, of service recipient stock 
(within the meaning of section 409A of the Internal 
Revenue Code of 1986) that, upon such grant, is 
subject to a substantial risk of forfeiture (as 
defined under section 83(c)(1) of such Code) for 
at least 5 years from the date of such grant. 
‘‘(II) SECRETARIAL AUTHORITY.—The Secretary 
of the Treasury may by regulation provide for the 
application of this clause in the case of a person 
other than a corporation.
H. R. 3962—9 
‘‘(v) OTHER EXCEPTIONS.—The following amounts 
includible in income shall not be taken into account 
under clause (i)(I): 
‘‘(I) COMMISSIONS.—Any remuneration payable 
on a commission basis solely on account of income 
directly generated by the individual performance 
of the individual to whom such remuneration is 
payable. 
‘‘(II) CERTAIN PAYMENTS UNDER EXISTING CON-
TRACTS.—Any remuneration consisting of non-
qualified deferred compensation, restricted stock, 
stock options, or stock appreciation rights payable 
or granted under a written binding contract that 
was in effect on March 1, 2010, and which was 
not modified in any material respect before such 
remuneration is paid. 
‘‘(vi) SELF-EMPLOYED
INDIVIDUAL
TREATED
AS 
EMPLOYEE.—The term ‘employee’ includes, with respect 
to a calendar year, a self-employed individual who 
is treated as an employee under section 401(c) of such 
Code for the taxable year ending during such calendar 
year, and the term ‘compensation’ shall include earned 
income of such individual with respect to such self- 
employment. 
‘‘(vii) INDEXING OF AMOUNT.—In the case of any 
calendar year beginning after 2010, the dollar amount 
under clause (i)(II) shall be increased by an amount 
equal to— 
‘‘(I) such dollar amount, multiplied by 
‘‘(II) the cost-of-living adjustment determined 
under section 1(f)(3) of such Code for the calendar 
year, determined by substituting ‘calendar year 
2009’ for ‘calendar year 1992’ in subparagraph (B) 
thereof. 
If the amount of any increase under clause (i) is not 
a multiple of $1,000, such increase shall be rounded 
to the next lowest multiple of $1,000. 
‘‘(E) EXTRAORDINARY DIVIDENDS AND REDEMPTIONS.— 
‘‘(i) IN GENERAL.—The amount determined under 
this subparagraph for any plan year is the excess (if 
any) of the sum of the dividends declared during the 
plan year by the plan sponsor plus the aggregate 
amount paid for the redemption of stock of the plan 
sponsor redeemed during the plan year over the greater 
of— 
‘‘(I) the adjusted net income (within the 
meaning of section 4043) of the plan sponsor for 
the preceding plan year, determined without 
regard to any reduction by reason of interest, 
taxes, depreciation, or amortization, or 
‘‘(II) in the case of a plan sponsor that deter-
mined and declared dividends in the same manner 
for at least 5 consecutive years immediately pre-
ceding such plan year, the aggregate amount of 
dividends determined and declared for such plan 
year using such manner.
H. R. 3962—10 
‘‘(ii) ONLY
CERTAIN
POST-2009
DIVIDENDS
AND 
REDEMPTIONS
COUNTED.—For purposes of clause (i), 
there shall only be taken into account dividends 
declared, and redemptions occurring, after February 
28, 2010. 
‘‘(iii) EXCEPTION
FOR
INTRA-GROUP
DIVIDENDS.— 
Dividends paid by one member of a controlled group 
(as defined in section 302(d)(3)) to another member 
of such group shall not be taken into account under 
clause (i). 
‘‘(iv) EXCEPTION
FOR
CERTAIN
REDEMPTIONS.— 
Redemptions that are made pursuant to a plan main-
tained with respect to employees, or that are made 
on account of the death, disability, or termination of 
employment of an employee or shareholder, shall not 
be taken into account under clause (i). 
‘‘(v) EXCEPTION FOR CERTAIN PREFERRED STOCK.— 
‘‘(I) IN GENERAL.—Dividends and redemptions 
with respect to applicable preferred stock shall 
not be taken into account under clause (i) to the 
extent that dividends accrue with respect to such 
stock at a specified rate in all events and without 
regard to the plan sponsor’s income, and interest 
accrues on any unpaid dividends with respect to 
such stock. 
‘‘(II) APPLICABLE PREFERRED STOCK.—For pur-
poses of subclause (I), the term ‘applicable pre-
ferred stock’ means preferred stock which was 
issued before March 1, 2010 (or which was issued 
after such date and is held by an employee benefit 
plan subject to the provisions of this title). 
‘‘(F) OTHER DEFINITIONS AND RULES.—For purposes of 
this paragraph— 
‘‘(i) PLAN
SPONSOR.—The term ‘ plan sponsor’ 
includes any member of the plan sponsor’s controlled 
group (as defined in section 302(d)(3)). 
‘‘(ii) RESTRICTION
PERIOD.—The term ‘restriction 
period’ means, with respect to any election year— 
‘‘(I) except as provided in subclause (II), the 
3-year period beginning with the election year (or, 
if later, the first plan year beginning after 
December 31, 2009), and 
‘‘(II) if the plan sponsor elects 15-year 
amortization for the shortfall amortization base 
for the election year, the 5-year period beginning 
with the election year (or, if later, the first plan 
year beginning after December 31, 2009). 
‘‘(iii) ELECTIONS FOR MULTIPLE PLANS.—If a plan 
sponsor makes elections under paragraph (2)(D) with 
respect to 2 or more plans, the Secretary of the 
Treasury shall provide rules for the application of this 
paragraph to such plans, including rules for the ratable 
allocation of any installment acceleration amount 
among such plans on the basis of each plan’s relative 
reduction in the plan’s shortfall amortization install-
ment for the first plan year in the amortization period
H. R. 3962—11 
described in subparagraph (A) (determined without 
regard to this paragraph). 
‘‘(iv) MERGERS AND ACQUISITIONS.—The Secretary 
of the Treasury shall prescribe rules for the application 
of paragraph (2)(D) and this paragraph in any case 
where there is a merger or acquisition involving a 
plan sponsor making the election under paragraph 
(2)(D).’’. 
(3) CONFORMING AMENDMENTS.—Section 303 of such Act 
(29 U.S.C. 1083) is amended— 
(A) in subsection (c)(1), by striking ‘‘the shortfall 
amortization bases for such plan year and each of the 
6 preceding plan years’’ and inserting ‘‘any shortfall 
amortization base which has not been fully amortized under 
this subsection’’, and 
(B) in subsection (j)(3), by adding at the end the fol-
lowing: 
‘‘(F) QUARTERLY CONTRIBUTIONS NOT TO INCLUDE CER-
TAIN INCREASED CONTRIBUTIONS.—Subparagraph (D) shall 
be applied without regard to any increase under subsection 
(c)(7).’’. 
(b) AMENDMENTS TO INTERNAL REVENUE CODE OF 1986.— 
(1) IN
GENERAL.—Paragraph (2) of section 430(c) is 
amended by adding at the end the following subparagraph: 
‘‘(D) SPECIAL ELECTION FOR ELIGIBLE PLAN YEARS.— 
‘‘(i) IN GENERAL.—If a plan sponsor elects to apply 
this subparagraph with respect to the shortfall 
amortization base of a plan for any eligible plan year 
(in this subparagraph and paragraph (7) referred to 
as an ‘election year’), then, notwithstanding subpara-
graphs (A) and (B)— 
‘‘(I) the shortfall amortization installments 
with respect to such base shall be determined 
under clause (ii) or (iii), whichever is specified 
in the election, and 
‘‘(II) the shortfall amortization installment for 
any plan year in the 9-plan-year period described 
in clause (ii) or the 15-plan-year period described 
in clause (iii), respectively, with respect to such 
shortfall amortization base is the annual install-
ment determined under the applicable clause for 
that year for that base. 
‘‘(ii) 2 PLUS 7 AMORTIZATION SCHEDULE.—The short-
fall amortization installments determined under this 
clause are— 
‘‘(I) in the case of the first 2 plan years in 
the 9-plan-year period beginning with the election 
year, interest on the shortfall amortization base 
of the plan for the election year (determined using 
the effective interest rate for the plan for the elec-
tion year), and 
‘‘(II) in the case of the last 7 plan years in 
such 9-plan-year period, the amounts necessary 
to amortize the remaining balance of the shortfall 
amortization base of the plan for the election year 
in level annual installments over such last 7 plan
H. R. 3962—12 
years (using the segment rates under subpara-
graph (C) for the election year). 
‘‘(iii) 
15-YEAR
AMORTIZATION.—The 
shortfall 
amortization installments determined under this 
subparagraph are the amounts necessary to amortize 
the shortfall amortization base of the plan for the 
election year in level annual installments over the 
15-plan-year period beginning with the election year 
(using the segment rates under subparagraph (C) for 
the election year). 
‘‘(iv) ELECTION.— 
‘‘(I) IN GENERAL.—The plan sponsor of a plan 
may elect to have this subparagraph apply to not 
more than 2 eligible plan years with respect to 
the plan, except that in the case of a plan described 
in section 106 of the Pension Protection Act of 
2006, the plan sponsor may only elect to have 
this subparagraph apply to a plan year beginning 
in 2011. 
‘‘(II) AMORTIZATION SCHEDULE.—Such election 
shall specify whether the amortization schedule 
under clause (ii) or (iii) shall apply to an election 
year, except that if a plan sponsor elects to have 
this subparagraph apply to 2 eligible plan years, 
the plan sponsor must elect the same schedule 
for both years. 
‘‘(III) OTHER RULES.—Such election shall be 
made at such time, and in such form and manner, 
as shall be prescribed by the Secretary, and may 
be revoked only with the consent of the Secretary. 
The Secretary shall, before granting a revocation 
request, provide the Pension Benefit Guaranty 
Corporation an opportunity to comment on the 
conditions applicable to the treatment of any por-
tion of the election year shortfall amortization base 
that remains unamortized as of the revocation 
date. 
‘‘(v) ELIGIBLE PLAN YEAR.—For purposes of this 
subparagraph, the term ‘eligible plan year’ means any 
plan year beginning in 2008, 2009, 2010, or 2011, 
except that a plan year shall only be treated as an 
eligible plan year if the due date under subsection 
(j)(1) for the payment of the minimum required con-
tribution for such plan year occurs on or after the 
date of the enactment of this subparagraph. 
‘‘(vi) REPORTING.—A plan sponsor of a plan who 
makes an election under clause (i) shall— 
‘‘(I) give notice of the election to participants 
and beneficiaries of the plan, and 
‘‘(II) inform the Pension Benefit Guaranty Cor-
poration of such election in such form and manner 
as the Director of the Pension Benefit Guaranty 
Corporation may prescribe. 
‘‘(vii) INCREASES
IN
REQUIRED
INSTALLMENTS
IN 
CERTAIN CASES.—For increases in required contribu-
tions in cases of excess compensation or extraordinary 
dividends or stock redemptions, see paragraph (7).’’.
H. R. 3962—13 
(2) INCREASES IN REQUIRED CONTRIBUTIONS IF EXCESS COM-
PENSATION PAID.—Section 430(c) is amended by adding at the 
end the following paragraph: 
‘‘(7) INCREASES IN ALTERNATE REQUIRED INSTALLMENTS IN 
CASES OF EXCESS COMPENSATION OR EXTRAORDINARY DIVIDENDS 
OR STOCK REDEMPTIONS.— 
‘‘(A) IN GENERAL.—If there is an installment accelera-
tion amount with respect to a plan for any plan year 
in the restriction period with respect to an election year 
under paragraph (2)(D), then the shortfall amortization 
installment otherwise determined and payable under such 
paragraph for such plan year shall, subject to the limitation 
under subparagraph (B), be increased by such amount. 
‘‘(B) TOTAL
INSTALLMENTS
LIMITED
TO
SHORTFALL 
BASE.—Subject to rules prescribed by the Secretary, if a 
shortfall amortization installment with respect to any 
shortfall amortization base for an election year is required 
to be increased for any plan year under subparagraph 
(A)— 
‘‘(i) such increase shall not result in the amount 
of such installment exceeding the present value of such 
installment and all succeeding installments with 
respect to such base (determined without regard to 
such increase but after application of clause (ii)), and 
‘‘(ii) subsequent shortfall amortization installments 
with respect to such base shall, in reverse order of 
the otherwise required installments, be reduced to the 
extent necessary to limit the present value of such 
subsequent shortfall amortization installments (after 
application of this paragraph) to the present value 
of the remaining unamortized shortfall amortization 
base. 
‘‘(C) INSTALLMENT ACCELERATION AMOUNT.—For pur-
poses of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘installment accelera-
tion amount’ means, with respect to any plan year 
in a restriction period with respect to an election year, 
the sum of— 
‘‘(I) the aggregate amount of excess employee 
compensation determined under subparagraph (D) 
with respect to all employees for the plan year, 
plus 
‘‘(II) the aggregate amount of extraordinary 
dividends and redemptions determined under 
subparagraph (E) for the plan year. 
‘‘(ii) ANNUAL LIMITATION.—The installment accel-
eration amount for any plan year shall not exceed 
the excess (if any) of— 
‘‘(I) the sum of the shortfall amortization 
installments for the plan year and all preceding 
plan years in the amortization period elected under 
paragraph (2)(D) with respect to the shortfall 
amortization base with respect to an election year, 
determined without regard to paragraph (2)(D) and 
this paragraph, over
H. R. 3962—14 
‘‘(II) the sum of the shortfall amortization 
installments for such plan year and all such pre-
ceding plan years, determined after application of 
paragraph (2)(D) (and in the case of any preceding 
plan year, after application of this paragraph). 
‘‘(iii) CARRYOVER OF EXCESS INSTALLMENT ACCEL-
ERATION AMOUNTS.— 
‘‘(I) IN GENERAL.—If the installment accelera-
tion amount for any plan year (determined without 
regard to clause (ii)) exceeds the limitation under 
clause (ii), then, subject to subclause (II), such 
excess shall be treated as an installment accelera-
tion amount with respect to the succeeding plan 
year. 
‘‘(II) CAP TO APPLY.—If any amount treated 
as an installment acceleration amount under sub-
clause (I) or this subclause with respect any suc-
ceeding plan year, when added to other installment 
acceleration amounts (determined without regard 
to clause (ii)) with respect to the plan year, exceeds 
the limitation under clause (ii), the portion of such 
amount representing such excess shall be treated 
as an installment acceleration amount with respect 
to the next succeeding plan year. 
‘‘(III) 
LIMITATION
ON
YEARS
TO
WHICH 
AMOUNTS CARRIED FOR.—No amount shall be car-
ried under subclause (I) or (II) to a plan year 
which begins after the first plan year following 
the last plan year in the restriction period (or 
after the second plan year following such last plan 
year in the case of an election year with respect 
to which 15-year amortization was elected under 
paragraph (2)(D)). 
‘‘(IV) ORDERING
RULES.—For purposes of 
applying subclause (II), installment acceleration 
amounts for the plan year (determined without 
regard to any carryover under this clause) shall 
be applied first against the limitation under clause 
(ii) and then carryovers to such plan year shall 
be applied against such limitation on a first-in, 
first-out basis. 
‘‘(D) EXCESS EMPLOYEE COMPENSATION.—For purposes 
of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘excess employee com-
pensation’ means, with respect to any employee for 
any plan year, the excess (if any) of— 
‘‘(I) the aggregate amount includible in income 
under this chapter for remuneration during the 
calendar year in which such plan year begins for 
services performed by the employee for the plan 
sponsor (whether or not performed during such 
calendar year), over 
‘‘(II) $1,000,000. 
‘‘(ii) AMOUNTS
SET
ASIDE
FOR
NONQUALIFIED 
DEFERRED
COMPENSATION.—If during any calendar 
year assets are set aside or reserved (directly or
H. R. 3962—15 
indirectly) in a trust (or other arrangement as deter-
mined by the Secretary), or transferred to such a trust 
or other arrangement, by a plan sponsor for purposes 
of paying deferred compensation of an employee under 
a nonqualified deferred compensation plan (as defined 
in section 409A) of the plan sponsor, then, for purposes 
of clause (i), the amount of such assets shall be treated 
as remuneration of the employee includible in income 
for the calendar year unless such amount is otherwise 
includible in income for such year. An amount to which 
the preceding sentence applies shall not be taken into 
account under this paragraph for any subsequent cal-
endar year. 
‘‘(iii) ONLY REMUNERATION FOR CERTAIN POST-2009 
SERVICES COUNTED.—Remuneration shall be taken into 
account under clause (i) only to the extent attributable 
to services performed by the employee for the plan 
sponsor after February 28, 2010. 
‘‘(iv) EXCEPTION FOR CERTAIN EQUITY PAYMENTS.— 
‘‘(I) IN GENERAL.—There shall not be taken 
into account under clause (i)(I) any amount includ-
ible in income with respect to the granting after 
February 28, 2010, of service recipient stock 
(within the meaning of section 409A) that, upon 
such grant, is subject to a substantial risk of for-
feiture (as defined under section 83(c)(1)) for at 
least 5 years from the date of such grant. 
‘‘(II) SECRETARIAL AUTHORITY.—The Secretary 
may by regulation provide for the application of 
this clause in the case of a person other than 
a corporation. 
‘‘(v) OTHER EXCEPTIONS.—The following amounts 
includible in income shall not be taken into account 
under clause (i)(I): 
‘‘(I) COMMISSIONS.—Any remuneration payable 
on a commission basis solely on account of income 
directly generated by the individual performance 
of the individual to whom such remuneration is 
payable. 
‘‘(II) CERTAIN PAYMENTS UNDER EXISTING CON-
TRACTS.—Any remuneration consisting of non-
qualified deferred compensation, restricted stock, 
stock options, or stock appreciation rights payable 
or granted under a written binding contract that 
was in effect on March 1, 2010, and which was 
not modified in any material respect before such 
remuneration is paid. 
‘‘(vi) SELF-EMPLOYED
INDIVIDUAL
TREATED
AS 
EMPLOYEE.—The term ‘employee’ includes, with respect 
to a calendar year, a self-employed individual who 
is treated as an employee under section 401(c) for 
the taxable year ending during such calendar year, 
and the term ‘compensation’ shall include earned 
income of such individual with respect to such self- 
employment. 
‘‘(vii) INDEXING OF AMOUNT.—In the case of any 
calendar year beginning after 2010, the dollar amount
H. R. 3962—16 
under clause (i)(II) shall be increased by an amount 
equal to— 
‘‘(I) such dollar amount, multiplied by 
‘‘(II) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year, deter-
mined by substituting ‘calendar year 2009’ for ‘cal-
endar year 1992’ in subparagraph (B) thereof. 
If the amount of any increase under clause (i) is not 
a multiple of $1,000, such increase shall be rounded 
to the next lowest multiple of $1,000. 
‘‘(E) EXTRAORDINARY DIVIDENDS AND REDEMPTIONS.— 
‘‘(i) IN GENERAL.—The amount determined under 
this subparagraph for any plan year is the excess (if 
any) of the sum of the dividends declared during the 
plan year by the plan sponsor plus the aggregate 
amount paid for the redemption of stock of the plan 
sponsor redeemed during the plan year over the greater 
of— 
‘‘(I) the adjusted net income (within the 
meaning of section 4043 of the Employee Retire-
ment Income Security Act of 1974) of the plan 
sponsor for the preceding plan year, determined 
without regard to any reduction by reason of 
interest, taxes, depreciation, or amortization, or 
‘‘(II) in the case of a plan sponsor that deter-
mined and declared dividends in the same manner 
for at least 5 consecutive years immediately pre-
ceding such plan year, the aggregate amount of 
dividends determined and declared for such plan 
year using such manner. 
‘‘(ii) ONLY
CERTAIN
POST-2009
DIVIDENDS
AND 
REDEMPTIONS
COUNTED.—For purposes of clause (i), 
there shall only be taken into account dividends 
declared, and redemptions occurring, after February 
28, 2010. 
‘‘(iii) EXCEPTION
FOR
INTRA-GROUP
DIVIDENDS.— 
Dividends paid by one member of a controlled group 
(as defined in section 412(d)(3)) to another member 
of such group shall not be taken into account under 
clause (i). 
‘‘(iv) EXCEPTION
FOR
CERTAIN
REDEMPTIONS.— 
Redemptions that are made pursuant to a plan main-
tained with respect to employees, or that are made 
on account of the death, disability, or termination of 
employment of an employee or shareholder, shall not 
be taken into account under clause (i). 
‘‘(v) EXCEPTION FOR CERTAIN PREFERRED STOCK.— 
‘‘(I) IN GENERAL.—Dividends and redemptions 
with respect to applicable preferred stock shall 
not be taken into account under clause (i) to the 
extent that dividends accrue with respect to such 
stock at a specified rate in all events and without 
regard to the plan sponsor’s income, and interest 
accrues on any unpaid dividends with respect to 
such stock.
H. R. 3962—17 
‘‘(II) APPLICABLE PREFERRED STOCK.—For pur-
poses of subclause (I), the term ‘applicable pre-
ferred stock’ means preferred stock which was 
issued before March 1, 2010 (or which was issued 
after such date and is held by an employee benefit 
plan subject to the provisions of title I of Employee 
Retirement Income Security Act of 1974). 
‘‘(F) OTHER DEFINITIONS AND RULES.—For purposes of 
this paragraph— 
‘‘(i) PLAN
SPONSOR.—The term ‘ plan sponsor’ 
includes any member of the plan sponsor’s controlled 
group (as defined in section 412(d)(3)). 
‘‘(ii) RESTRICTION
PERIOD.—The term ‘restriction 
period’ means, with respect to any election year— 
‘‘(I) except as provided in subclause (II), the 
3-year period beginning with the election year (or, 
if later, the first plan year beginning after 
December 31, 2009), and 
‘‘(II) if the plan sponsor elects 15-year 
amortization for the shortfall amortization base 
for the election year, the 5-year period beginning 
with the election year (or, if later, the first plan 
year beginning after December 31, 2009). 
‘‘(iii) ELECTIONS FOR MULTIPLE PLANS.—If a plan 
sponsor makes elections under paragraph (2)(D) with 
respect to 2 or more plans, the Secretary shall provide 
rules for the application of this paragraph to such 
plans, including rules for the ratable allocation of any 
installment acceleration amount among such plans on 
the basis of each plan’s relative reduction in the plan’s 
shortfall amortization installment for the first plan 
year in the amortization period described in subpara-
graph (A) (determined without regard to this para-
graph). 
‘‘(iv) MERGERS AND ACQUISITIONS.—The Secretary 
shall prescribe rules for the application of paragraph 
(2)(D) and this paragraph in any case where there 
is a merger or acquisition involving a plan sponsor 
making the election under paragraph (2)(D).’’. 
(3) CONFORMING AMENDMENTS.—Section 430 is amended— 
(A) in subsection (c)(1), by striking ‘‘the shortfall 
amortization bases for such plan year and each of the 
6 preceding plan years’’ and inserting ‘‘any shortfall 
amortization base which has not been fully amortized under 
this subsection’’, and 
(B) in subsection (j)(3), by adding at the end the fol-
lowing: 
‘‘(F) QUARTERLY CONTRIBUTIONS NOT TO INCLUDE CER-
TAIN INCREASED CONTRIBUTIONS.—Subparagraph (D) shall 
be applied without regard to any increase under subsection 
(c)(7).’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to plan years beginning after December 31, 2007.
H. R. 3962—18 
SEC. 202. APPLICATION OF EXTENDED AMORTIZATION PERIOD TO 
PLANS SUBJECT TO PRIOR LAW FUNDING RULES. 
(a) IN GENERAL.—Title I of the Pension Protection Act of 2006 
is amended by redesignating section 107 as section 108 and by 
inserting the following after section 106: 
‘‘SEC. 107. APPLICATION OF EXTENDED AMORTIZATION PERIODS TO 
PLANS WITH DELAYED EFFECTIVE DATE. 
‘‘(a) IN GENERAL.—If the plan sponsor of a plan to which section 
104, 105, or 106 of this Act applies elects to have this section 
apply for any eligible plan year (in this section referred to as 
an ‘election year’), section 302 of the Employee Retirement Income 
Security Act of 1974 and section 412 of the Internal Revenue 
Code of 1986 (as in effect before the amendments made by this 
subtitle and subtitle B) shall apply to such year in the manner 
described in subsection (b) or (c), whichever is specified in the 
election. All references in this section to ‘such Act’ or ‘such Code’ 
shall be to such Act or such Code as in effect before the amendments 
made by this subtitle and subtitle B. 
‘‘(b) APPLICATION OF 2 AND 7 RULE.—In the case of an election 
year to which this subsection applies— 
‘‘(1) 2-YEAR LOOKBACK FOR DETERMINING DEFICIT REDUC-
TION
CONTRIBUTIONS
FOR
CERTAIN
PLANS.—For purposes of 
applying section 302(d)(9) of such Act and section 412(l)(9) 
of such Code, the funded current liability percentage (as defined 
in subparagraph (C) thereof) for such plan for such plan year 
shall be such funded current liability percentage of such plan 
for the second plan year preceding the first election year of 
such plan. 
‘‘(2) CALCULATION OF DEFICIT REDUCTION CONTRIBUTION.— 
For purposes of applying section 302(d) of such Act and section 
412(l) of such Code to a plan to which such sections apply 
(after taking into account paragraph (1))— 
‘‘(A) in the case of the increased unfunded new liability 
of the plan, the applicable percentage described in section 
302(d)(4)(C) of such Act and section 412(l)(4)(C) of such 
Code shall be the third segment rate described in sections 
104(b), 105(b), and 106(b) of this Act, and 
‘‘(B) in the case of the excess of the unfunded new 
liability over the increased unfunded new liability, such 
applicable percentage shall be determined without regard 
to this section. 
‘‘(c) APPLICATION OF 15-YEAR AMORTIZATION.—In the case of 
an election year to which this subsection applies, for purposes 
of applying section 302(d) of such Act and section 412(l) of such 
Code— 
‘‘(1) in the case of the increased unfunded new liability 
of the plan, the applicable percentage described in section 
302(d)(4)(C) of such Act and section 412(l)(4)(C) of such Code 
for any pre-effective date plan year beginning with or after 
the first election year shall be the ratio of— 
‘‘(A) the annual installments payable in each year if 
the increased unfunded new liability for such plan year 
were amortized over 15 years, using an interest rate equal 
to the third segment rate described in sections 104(b), 
105(b), and 106(b) of this Act, to
H. R. 3962—19 
‘‘(B) the increased unfunded new liability for such plan 
year, and 
‘‘(2) in the case of the excess of the unfunded new liability 
over the increased unfunded new liability, such applicable 
percentage shall be determined without regard to this section. 
‘‘(d) ELECTION.— 
‘‘(1) IN GENERAL.—The plan sponsor of a plan may elect 
to have this section apply to not more than 2 eligible plan 
years with respect to the plan, except that in the case of 
a plan to which section 106 of this Act applies, the plan sponsor 
may only elect to have this section apply to 1 eligible plan 
year. 
‘‘(2) AMORTIZATION SCHEDULE.—Such election shall specify 
whether the rules under subsection (b) or (c) shall apply to 
an election year, except that if a plan sponsor elects to have 
this section apply to 2 eligible plan years, the plan sponsor 
must elect the same rule for both years. 
‘‘(3) OTHER RULES.—Such election shall be made at such 
time, and in such form and manner, as shall be prescribed 
by the Secretary of the Treasury, and may be revoked only 
with the consent of the Secretary of the Treasury. 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE PLAN YEAR.—For purposes of this subpara-
graph, the term ‘eligible plan year’ means any plan year begin-
ning in 2008, 2009, 2010, or 2011, except that a plan year 
beginning in 2008 shall only be treated as an eligible plan 
year if the due date for the payment of the minimum required 
contribution for such plan year occurs on or after the date 
of the enactment of this clause. 
‘‘(2) PRE-EFFECTIVE DATE PLAN YEAR.—The term ‘pre-effec-
tive date plan year’ means, with respect to a plan, any plan 
year prior to the first year in which the amendments made 
by this subtitle and subtitle B apply to the plan. 
‘‘(3) INCREASED
UNFUNDED
NEW
LIABILITY.—The term 
‘increased unfunded new liability’ means, with respect to a 
year, the excess (if any) of the unfunded new liability over 
the amount of unfunded new liability determined as if the 
value of the plan’s assets determined under subsection 302(c)(2) 
of such Act and section 412(c)(2) of such Code equaled the 
product of the current liability of the plan for the year multi-
plied by the funded current liability percentage (as defined 
in section 302(d)(8)(B) of such Act and 412(l)(8)(B) of such 
Code) of the plan for the second plan year preceding the first 
election year of such plan. 
‘‘(4) OTHER
DEFINITIONS.—The terms ‘unfunded new 
liability’ and ‘current liability’ shall have the meanings set 
forth in section 302(d) of such Act and section 412(l) of such 
Code.’’. 
(b) ELIGIBLE CHARITY PLANS.—Section 104 of the Pension 
Protection Act of 2006 is amended— 
(1) by striking ‘‘eligible cooperative plan’’ wherever it 
appears in subsections (a) and (b) and inserting ‘‘eligible 
cooperative plan or an eligible charity plan’’, and 
(2) by adding at the end the following new subsection: 
‘‘(d) ELIGIBLE CHARITY PLAN DEFINED.—For purposes of this 
section, a plan shall be treated as an eligible charity plan for 
a plan year if the plan is maintained by more than one employer
H. R. 3962—20 
(determined without regard to section 414(c) of the Internal Revenue 
Code) and 100 percent of the employers are described in section 
501(c)(3) of such Code.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendment made by subsection (a) 
shall take effect as if included in the Pension Protection Act 
of 2006. 
(2) ELIGIBLE CHARITY PLAN.—The amendments made by 
subsection (b) shall apply to plan years beginning after 
December 31, 2007, except that a plan sponsor may elect to 
apply such amendments to plan years beginning after December 
31, 2008. Any such election shall be made at such time, and 
in such form and manner, as shall be prescribed by the Sec-
retary of the Treasury, and may be revoked only with the 
consent of the Secretary of the Treasury. 
SEC. 203. LOOKBACK FOR CERTAIN BENEFIT RESTRICTIONS. 
(a) IN GENERAL.— 
(1) AMENDMENT
TO
ERISA.—Section 206(g)(9) of the 
Employee Retirement Income Security Act of 1974 is amended 
by adding at the end the following: 
‘‘(D) SPECIAL RULE FOR CERTAIN YEARS.—Solely for pur-
poses of any applicable provision— 
‘‘(i) IN GENERAL.—For plan years beginning on or 
after October 1, 2008, and before October 1, 2010, 
the adjusted funding target attainment percentage of 
a plan shall be the greater of— 
‘‘(I) such percentage, as determined without 
regard to this subparagraph, or 
‘‘(II) the adjusted funding target attainment 
percentage for such plan for the plan year begin-
ning after October 1, 2007, and before October 
1, 2008, as determined under rules prescribed by 
the Secretary of the Treasury. 
‘‘(ii) SPECIAL RULE.—In the case of a plan for which 
the valuation date is not the first day of the plan 
year— 
‘‘(I) clause (i) shall apply to plan years begin-
ning after December 31, 2007, and before January 
1, 2010, and 
‘‘(II) clause (i)(II) shall apply based on the 
last plan year beginning before November 1, 2007, 
as determined under rules prescribed by the Sec-
retary of the Treasury. 
‘‘(iii) APPLICABLE PROVISION.—For purposes of this 
subparagraph, the term ‘applicable provision’ means— 
‘‘(I) paragraph (3), but only for purposes of 
applying such paragraph to a payment which, as 
determined under rules prescribed by the Sec-
retary of the Treasury, is a payment under a social 
security leveling option which accelerates pay-
ments under the plan before, and reduces pay-
ments after, a participant starts receiving social 
security benefits in order to provide substantially 
similar aggregate payments both before and after 
such benefits are received, and 
‘‘(II) paragraph (4).’’.
H. R. 3962—21 
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.— 
Section 436(j) of the Internal Revenue Code of 1986 is amended 
by adding at the end the following: 
‘‘(3) SPECIAL RULE FOR CERTAIN YEARS.—Solely for purposes 
of any applicable provision— 
‘‘(A) IN GENERAL.—For plan years beginning on or after 
October 1, 2008, and before October 1, 2010, the adjusted 
funding target attainment percentage of a plan shall be 
the greater of— 
‘‘(i) such percentage, as determined without regard 
to this paragraph, or 
‘‘(ii) the adjusted funding target attainment 
percentage for such plan for the plan year beginning 
after October 1, 2007, and before October 1, 2008, 
as determined under rules prescribed by the Secretary. 
‘‘(B) SPECIAL RULE.—In the case of a plan for which 
the valuation date is not the first day of the plan year— 
‘‘(i) subparagraph (A) shall apply to plan years 
beginning after December 31, 2007, and before January 
1, 2010, and 
‘‘(ii) subparagraph (A)(ii) shall apply based on the 
last plan year beginning before November 1, 2007, 
as determined under rules prescribed by the Secretary. 
‘‘(C) APPLICABLE PROVISION.—For purposes of this para-
graph, the term ‘applicable provision’ means— 
‘‘(i) subsection (d), but only for purposes of applying 
such paragraph to a payment which, as determined 
under rules prescribed by the Secretary, is a payment 
under a social security leveling option which acceler-
ates payments under the plan before, and reduces pay-
ments after, a participant starts receiving social secu-
rity benefits in order to provide substantially similar 
aggregate payments both before and after such benefits 
are received, and 
‘‘(ii) subsection (e).’’. 
(b) INTERACTION WITH WRERA RULE.—Section 203 of the 
Worker, Retiree, and Employer Recovery Act of 2008 shall apply 
to a plan for any plan year in lieu of the amendments made 
by this section applying to sections 206(g)(4) of the Employee Retire-
ment Income Security Act of 1974 and 436(e) of the Internal Rev-
enue Code of 1986 only to the extent that such section produces 
a higher adjusted funding target attainment percentage for such 
plan for such year. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to plan years 
beginning on or after October 1, 2008. 
(2) SPECIAL RULE.—In the case of a plan for which the 
valuation date is not the first day of the plan year, the amend-
ments made by this section shall apply to plan years beginning 
after December 31, 2007. 
SEC. 204. LOOKBACK FOR CREDIT BALANCE RULE FOR PLANS MAIN-
TAINED BY CHARITIES. 
(a) AMENDMENT TO ERISA.—Paragraph (3) of section 303(f) of 
the Employee Retirement Income Security Act of 1974 is amended 
by adding the following at the end thereof:
H. R. 3962—22 
‘‘(D) SPECIAL RULE FOR CERTAIN YEARS OF PLANS MAIN-
TAINED BY CHARITIES.— 
‘‘(i) IN
GENERAL.—For purposes of applying 
subparagraph (C) for plan years beginning after August 
31, 2009, and before September 1, 2011, the ratio deter-
mined under such subparagraph for the preceding plan 
year shall be the greater of— 
‘‘(I) such ratio, as determined without regard 
to this subparagraph, or 
‘‘(II) the ratio for such plan for the plan year 
beginning after August 31, 2007, and before Sep-
tember 1, 2008, as determined under rules pre-
scribed by the Secretary of the Treasury. 
‘‘(ii) SPECIAL RULE.—In the case of a plan for which 
the valuation date is not the first day of the plan 
year— 
‘‘(I) clause (i) shall apply to plan years begin-
ning after December 31, 2008, and before January 
1, 2011, and 
‘‘(II) clause (i)(II) shall apply based on the 
last plan year beginning before September 1, 2007, 
as determined under rules prescribed by the Sec-
retary of the Treasury. 
‘‘(iii) LIMITATION
TO
CHARITIES.—This subpara-
graph shall not apply to any plan unless such plan 
is maintained exclusively by one or more organizations 
described in section 501(c)(3) of the Internal Revenue 
Code of 1986.’’. 
(b) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.—Para-
graph (3) of section 430(f) of the Internal Revenue Code of 1986 
is amended by adding the following at the end thereof: 
‘‘(D) SPECIAL RULE FOR CERTAIN YEARS OF PLANS MAIN-
TAINED BY CHARITIES.— 
‘‘(i) IN
GENERAL.—For purposes of applying 
subparagraph (C) for plan years beginning after August 
31, 2009, and before September 1, 2011, the ratio deter-
mined under such subparagraph for the preceding plan 
year of a plan shall be the greater of— 
‘‘(I) such ratio, as determined without regard 
to this subsection, or 
‘‘(II) the ratio for such plan for the plan year 
beginning after August 31, 2007 and before Sep-
tember 1, 2008, as determined under rules pre-
scribed by the Secretary. 
‘‘(ii) SPECIAL RULE.—In the case of a plan for which 
the valuation date is not the first day of the plan 
year— 
‘‘(I) clause (i) shall apply to plan years begin-
ning after December 31, 2007, and before January 
1, 2010, and 
‘‘(II) clause (i)(II) shall apply based on the 
last plan year beginning before September 1, 2007, 
as determined under rules prescribed by the Sec-
retary. 
‘‘(iii) LIMITATION
TO
CHARITIES.—This subpara-
graph shall not apply to any plan unless such plan
H. R. 3962—23 
is maintained exclusively by one or more organizations 
described in section 501(c)(3).’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to plan years 
beginning after August 31, 2009. 
(2) SPECIAL RULE.—In the case of a plan for which the 
valuation date is not the first day of the plan year, the amend-
ments made by this section shall apply to plan years beginning 
after December 31, 2008. 
Subtitle B—Multiemployer Plans 
SEC. 211. ADJUSTMENTS TO FUNDING STANDARD ACCOUNT RULES. 
(a) ADJUSTMENTS.— 
(1) AMENDMENT TO ERISA.—Section 304(b) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1084(b)) 
is amended by adding at the end the following new paragraph: 
‘‘(8) SPECIAL
RELIEF
RULES.—Notwithstanding any other 
provision of this subsection— 
‘‘(A) AMORTIZATION OF NET INVESTMENT LOSSES.— 
‘‘(i) IN
GENERAL.—A multiemployer plan with 
respect to which the solvency test under subparagraph 
(C) is met may treat the portion of any experience 
loss or gain attributable to net investment losses 
incurred in either or both of the first two plan years 
ending after August 31, 2008, as an item separate 
from other experience losses, to be amortized in equal 
annual installments (until fully amortized) over the 
period — 
‘‘(I) beginning with the plan year in which 
such portion is first recognized in the actuarial 
value of assets, and 
‘‘(II) ending with the last plan year in the 
30-plan year period beginning with the plan year 
in which such net investment loss was incurred. 
‘‘(ii) COORDINATION
WITH
EXTENSIONS.—If this 
subparagraph applies for any plan year— 
‘‘(I) no extension of the amortization period 
under clause (i) shall be allowed under subsection 
(d), and 
‘‘(II) if an extension was granted under sub-
section (d) for any plan year before the election 
to have this subparagraph apply to the plan year, 
such extension shall not result in such amortiza-
tion period exceeding 30 years. 
‘‘(iii) NET INVESTMENT LOSSES.—For purposes of 
this subparagraph— 
‘‘(I) IN GENERAL.—Net investment losses shall 
be determined in the manner prescribed by the 
Secretary of the Treasury on the basis of the dif-
ference between actual and expected returns 
(including any difference attributable to any crimi-
nally fraudulent investment arrangement). 
‘‘(II) CRIMINALLY
FRAUDULENT
INVESTMENT 
ARRANGEMENTS.—The determination as to whether
H. R. 3962—24 
an arrangement is a criminally fraudulent invest-
ment arrangement shall be made under rules 
substantially similar to the rules prescribed by 
the Secretary of the Treasury for purposes of sec-
tion 165 of the Internal Revenue Code of 1986. 
‘‘(B) EXPANDED SMOOTHING PERIOD.— 
‘‘(i) IN
GENERAL.—A multiemployer plan with 
respect to which the solvency test under subparagraph 
(C) is met may change its asset valuation method 
in a manner which— 
‘‘(I) spreads the difference between expected 
and actual returns for either or both of the first 
2 plan years ending after August 31, 2008, over 
a period of not more than 10 years, 
‘‘(II) provides that for either or both of the 
first 2 plan years beginning after August 31, 2008, 
the value of plan assets at any time shall not 
be less than 80 percent or greater than 130 percent 
of the fair market value of such assets at such 
time, or 
‘‘(III) makes both changes described in sub-
clauses (I) and (II) to such method. 
‘‘(ii) ASSET VALUATION METHODS.—If this subpara-
graph applies for any plan year— 
‘‘(I) the Secretary of the Treasury shall not 
treat the asset valuation method of the plan as 
unreasonable solely because of the changes in such 
method described in clause (i), and 
‘‘(II) such changes shall be deemed approved 
by such Secretary under section 302(d)(1) and sec-
tion 412(d)(1) of such Code. 
‘‘(iii) AMORTIZATION OF REDUCTION IN UNFUNDED 
ACCRUED
LIABILITY.—If 
this 
subparagraph 
and 
subparagraph (A) both apply for any plan year, the 
plan shall treat any reduction in unfunded accrued 
liability resulting from the application of this subpara-
graph as a separate experience amortization base, to 
be amortized in equal annual installments (until fully 
amortized) over a period of 30 plan years rather than 
the period such liability would otherwise be amortized 
over. 
‘‘(C) SOLVENCY
TEST.—The solvency test under this 
paragraph is met only if the plan actuary certifies that 
the plan is projected to have sufficient assets to timely 
pay expected benefits and anticipated expenditures over 
the amortization period, taking into account the changes 
in the funding standard account under this paragraph. 
‘‘(D) RESTRICTION ON BENEFIT INCREASES.—If subpara-
graph (A) or (B) apply to a multiemployer plan for any 
plan year, then, in addition to any other applicable restric-
tions on benefit increases, a plan amendment increasing 
benefits may not go into effect during either of the 2 
plan years immediately following such plan year unless— 
‘‘(i) the plan actuary certifies that—
H. R. 3962—25 
‘‘(I) any such increase is paid for out of addi-
tional contributions not allocated to the plan imme-
diately before the application of this paragraph 
to the plan, and 
‘‘(II) the plan’s funded percentage and pro-
jected credit balances for such 2 plan years are 
reasonably expected to be at least as high as such 
percentage and balances would have been if the 
benefit increase had not been adopted, or 
‘‘(ii) the amendment is required as a condition 
of qualification under part I of subchapter D of chapter 
1 of the Internal Revenue Code of 1986 or to comply 
with other applicable law. 
‘‘(E) REPORTING.—A plan sponsor of a plan to which 
this paragraph applies shall— 
‘‘(i) give notice of such application to participants 
and beneficiaries of the plan, and 
‘‘(ii) inform the Pension Benefit Guaranty Corpora-
tion of such application in such form and manner as 
the Director of the Pension Benefit Guaranty Corpora-
tion may prescribe.’’. 
(2) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.— 
Section 431(b) is amended by adding at the end the following 
new paragraph: 
‘‘(8) SPECIAL
RELIEF
RULES.—Notwithstanding any other 
provision of this subsection— 
‘‘(A) AMORTIZATION OF NET INVESTMENT LOSSES.— 
‘‘(i) IN
GENERAL.—A multiemployer plan with 
respect to which the solvency test under subparagraph 
(C) is met may treat the portion of any experience 
loss or gain attributable to net investment losses 
incurred in either or both of the first two plan years 
ending after August 31, 2008, as an item separate 
from other experience losses, to be amortized in equal 
annual installments (until fully amortized) over the 
period — 
‘‘(I) beginning with the plan year in which 
such portion is first recognized in the actuarial 
value of assets, and 
‘‘(II) ending with the last plan year in the 
30-plan year period beginning with the plan year 
in which such net investment loss was incurred. 
‘‘(ii) COORDINATION
WITH
EXTENSIONS.—If this 
subparagraph applies for any plan year— 
‘‘(I) no extension of the amortization period 
under clause (i) shall be allowed under subsection 
(d), and 
‘‘(II) if an extension was granted under sub-
section (d) for any plan year before the election 
to have this subparagraph apply to the plan year, 
such extension shall not result in such amortiza-
tion period exceeding 30 years. 
‘‘(iii) NET INVESTMENT LOSSES.—For purposes of 
this subparagraph— 
‘‘(I) IN GENERAL.—Net investment losses shall 
be determined in the manner prescribed by the 
Secretary on the basis of the difference between
H. R. 3962—26 
actual and expected returns (including any dif-
ference attributable to any criminally fraudulent 
investment arrangement). 
‘‘(II) CRIMINALLY
FRAUDULENT
INVESTMENT 
ARRANGEMENTS.—The determination as to whether 
an arrangement is a criminally fraudulent invest-
ment arrangement shall be made under rules 
substantially similar to the rules prescribed by 
the Secretary for purposes of section 165. 
‘‘(B) EXPANDED SMOOTHING PERIOD.— 
‘‘(i) IN
GENERAL.—A multiemployer plan with 
respect to which the solvency test under subparagraph 
(C) is met may change its asset valuation method 
in a manner which— 
‘‘(I) spreads the difference between expected 
and actual returns for either or both of the first 
2 plan years ending after August 31, 2008, over 
a period of not more than 10 years, 
‘‘(II) provides that for either or both of the 
first 2 plan years beginning after August 31, 2008, 
the value of plan assets at any time shall not 
be less than 80 percent or greater than 130 percent 
of the fair market value of such assets at such 
time, or 
‘‘(III) makes both changes described in sub-
clauses (I) and (II) to such method. 
‘‘(ii) ASSET VALUATION METHODS.—If this subpara-
graph applies for any plan year— 
‘‘(I) the Secretary shall not treat the asset 
valuation method of the plan as unreasonable 
solely because of the changes in such method 
described in clause (i), and 
‘‘(II) such changes shall be deemed approved 
by the Secretary under section 302(d)(1) of the 
Employee Retirement Income Security Act of 1974 
and section 412(d)(1). 
‘‘(iii) AMORTIZATION OF REDUCTION IN UNFUNDED 
ACCRUED
LIABILITY.—If 
this 
subparagraph 
and 
subparagraph (A) both apply for any plan year, the 
plan shall treat any reduction in unfunded accrued 
liability resulting from the application of this subpara-
graph as a separate experience amortization base, to 
be amortized in equal annual installments (until fully 
amortized) over a period of 30 plan years rather than 
the period such liability would otherwise be amortized 
over. 
‘‘(C) SOLVENCY
TEST.—The solvency test under this 
paragraph is met only if the plan actuary certifies that 
the plan is projected to have sufficient assets to timely 
pay expected benefits and anticipated expenditures over 
the amortization period, taking into account the changes 
in the funding standard account under this paragraph. 
‘‘(D) RESTRICTION ON BENEFIT INCREASES.—If subpara-
graph (A) or (B) apply to a multiemployer plan for any 
plan year, then, in addition to any other applicable restric-
tions on benefit increases, a plan amendment increasing
H. R. 3962—27 
benefits may not go into effect during either of the 2 
plan years immediately following such plan year unless— 
‘‘(i) the plan actuary certifies that— 
‘‘(I) any such increase is paid for out of addi-
tional contributions not allocated to the plan imme-
diately before the application of this paragraph 
to the plan, and 
‘‘(II) the plan’s funded percentage and pro-
jected credit balances for such 2 plan years are 
reasonably expected to be at least as high as such 
percentage and balances would have been if the 
benefit increase had not been adopted, or 
‘‘(ii) the amendment is required as a condition 
of qualification under part I of subchapter D or to 
comply with other applicable law. 
‘‘(E) REPORTING.—A plan sponsor of a plan to which 
this paragraph applies shall— 
‘‘(i) give notice of such application to participants 
and beneficiaries of the plan, and 
‘‘(ii) inform the Pension Benefit Guaranty Corpora-
tion of such application in such form and manner as 
the Director of the Pension Benefit Guaranty Corpora-
tion may prescribe.’’. 
(b) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by this section 
shall take effect as of the first day of the first plan year 
ending after August 31, 2008, except that any election a plan 
makes pursuant to this section that affects the plan’s funding 
standard account for the first plan year beginning after August 
31, 2008, shall be disregarded for purposes of applying the 
provisions of section 305 of the Employee Retirement Income 
Security Act of 1974 and section 432 of the Internal Revenue 
Code of 1986 to such plan year. 
(2) 
RESTRICTIONS
ON
BENEFIT
INCREASES.—Notwith-
standing paragraph (1), the restrictions on plan amendments 
increasing benefits in sections 304(b)(8)(D) of such Act and 
431(b)(8)(D) of such Code, as added by this section, shall take 
effect on the date of enactment of this Act. 
TITLE III—BUDGETARY PROVISIONS 
SEC. 301. BUDGETARY PROVISIONS. 
The budgetary effects of this Act, for the purpose of complying 
with the Statutory Pay-As-You-Go-Act of 2010, shall be determined 
by reference to the latest statement titled ‘‘Budgetary Effects of 
PAYGO Legislation’’ for this Act, submitted for printing in the
H. R. 3962—28 
Congressional Record by the Chairman of the Senate Budget Com-
mittee, provided that such statement has been submitted prior 
to the vote on passage. 
Speaker of the House of Representatives. 
Vice President of the United States and
President of the Senate.