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‘‘(i) the fair market value of the 
plan’s assets (reduced by the pre-funding 
balance and the funding standard carry-
over balance, as determined under section 
430(f)), or 
‘‘(ii) the value of plan assets as deter-
mined under section 430(g)(3) (reduced by 
the pre-funding balance and the funding 
standard carryover balance, as determined 
under section 430(f)), over 
‘‘(B) 125 percent of the sum of the target 
liability amount and the target normal cost de-
termined under section 430 for such plan 
year.’’. 
(2) Section 420(e)(4) of such Code is amended 
to read as follows: 
‘‘(4) COORDINATION
WITH
SECTION
430.—In 
the case of a qualified transfer, any assets so trans-
ferred shall not, for purposes of this section, be 
treated as assets in the plan.’’. 
(e) EXCISE TAXES.— 
(1) IN GENERAL.—Subsections (a) and (b) of 
section 4971 of such Code are amended to read as 
follows:
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‘‘(a) INITIAL TAX.—If at any time during any taxable 
year an employer maintains a plan to which section 412 
applies, there is hereby imposed for the taxable year a tax 
equal to— 
‘‘(1) in the case of a defined benefit plan which 
is not a multiemployer plan, 10 percent of the aggre-
gate unpaid minimum required contributions for all 
plan years remaining unpaid as of the end of any 
plan year ending with or within the taxable year, 
and 
‘‘(2) in the case of a multiemployer plan, 5 per-
cent of the accumulated funding deficiency deter-
mined under section 431 as of the end of any plan 
year ending with or within the taxable year. 
‘‘(b) ADDITIONAL TAX.—If— 
‘‘(1) a tax is imposed under subsection (a)(1) 
on any unpaid required minimum contribution and 
such amount remains unpaid as of the close of the 
taxable period, or 
‘‘(2) a tax is imposed under subsection (a)(2) 
on any accumulated funding deficiency and the accu-
mulated funding deficiency is not corrected within 
the taxable period, 
there is hereby imposed a tax equal to 100 percent of the 
unpaid minimum required contribution or accumulated
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funding deficiency, whichever is applicable, to the extent 
not so paid or corrected.’’. 
(2) Section 4971(c) of such Code is amended— 
(A) by striking ‘‘the last two sentences of 
section 412(a)’’ in paragraph (1) and inserting 
‘‘section 431’’, and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) UNPAID MINIMUM REQUIRED CONTRIBU-
TION.— 
‘‘(A) IN
GENERAL.—The term ‘unpaid 
minimum required contribution’ means, with re-
spect to any plan year, any minimum required 
contribution under section 430 for the plan 
year which is not paid on or before the due date 
(as determined under section 430(j)(1)) for the 
plan year. 
‘‘(B) ORDERING RULE.—Any payment to 
or under a plan for any plan year shall be allo-
cated first to unpaid minimum required con-
tributions for all preceding plan years in the 
order in which such contributions became due 
and then to the minimum required contribution 
under section 430 for the plan year.’’.
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(3) Section 4971(e)(1) of such Code is amended 
by striking ‘‘section 412(b)(3)(A)’’ and inserting 
‘‘section 412(a)(2)’’. 
(4) Section 4971(f)(1) of such Code is amend-
ed— 
(A) by striking ‘‘section 412(m)(5)’’ and 
inserting ‘‘section 430(j)(4)’’, and 
(B) by striking ‘‘section 412(m)’’ and in-
serting ‘‘section 430(j)(3)’’. 
(5) Section 4972(c)(7) of such Code is amended 
by striking ‘‘except to the extent that such contribu-
tions exceed the full-funding limitation (as defined in 
section 412(c)(7), determined without regard to sub-
paragraph (A)(i)(I) thereof)’’ and inserting ‘‘except, 
in the case of a multiemployer plan, to the extent 
that such contributions exceed the full-funding limi-
tation (as defined in section 431(c)(6))’’. 
(f) REPORTING REQUIREMENTS.—Section 6059(b) of 
such Code is amended— 
(1) by striking ‘‘the accumulated funding defi-
ciency (as defined in section 412(a))’’ in paragraph 
(2) and inserting ‘‘the minimum required contribu-
tion determined under section 430, or the accumu-
lated funding deficiency determined under section 
431,’’, and
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(2) by striking paragraph (3)(B) and inserting: 
‘‘(B) the requirements for reasonable actu-
arial assumptions under section 430(h)(1) or 
431(c)(3), whichever are applicable, have been 
complied with,’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2006. 
Subtitle C—Other Provisions 
SEC. 121. MODIFICATION OF TRANSITION RULE TO PEN-
SION FUNDING REQUIREMENTS. 
(a) IN GENERAL.—In the case of a plan that— 
(1) was not required to pay a variable rate pre-
mium for the plan year beginning in 1996, 
(2) has not, in any plan year beginning after 
1995, merged with another plan (other than a plan 
sponsored by an employer that was in 1996 within 
the controlled group of the plan sponsor); and 
(3) is sponsored by a company that is engaged 
primarily in the interurban or interstate passenger 
bus service, 
the rules described in subsection (b) shall apply for any 
plan year beginning after December 31, 2006. 
(b) MODIFIED RULES.—The rules described in this 
subsection are as follows:
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(1) For purposes of section 430(j)(3) of the In-
ternal Revenue Code of 1986 and section 303(j)(3) 
of the Employee Retirement Income Security Act of 
1974, the plan shall be treated as not having a fund-
ing shortfall for any plan year. 
(2) For purposes of— 
(A) determining unfunded vested benefits 
under section 4006(a)(3)(E)(iii) of such Act, 
and 
(B) determining any present value or mak-
ing any computation under section 412 of such 
Code or section 302 of such Act, 
the mortality table shall be the mortality table used 
by the plan. 
(3) Section 430(c)(5)(B) of such Code and sec-
tion 303(c)(5)(B) of such Act (relating to phase-in 
of funding target for exemption from new shortfall 
amortization base) shall each be applied by sub-
stituting ‘‘2012’’ for ‘‘2011’’ therein and by sub-
stituting for the table therein the following: 
In the case of a plan year beginning in calendar 
year: 
The appli-
cable per-
centage is: 
2007 ..............................................................................................
90 percent
2008 ..............................................................................................
92 percent
2009 ..............................................................................................
94 percent
2010 ..............................................................................................
96 percent
2011 ..............................................................................................
98 percent.
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(c) DEFINITIONS.—Any term used in this section 
which is also used in section 430 of such Code or section 
303 of such Act shall have the meaning provided such 
term in such section. If the same term has a different 
meaning in such Code and such Act, such term shall, for 
purposes of this section, have the meaning provided by 
such Code when applied with respect to such Code and 
the meaning provided by such Act when applied with re-
spect to such Act. 
(d) SPECIAL RULE FOR 2006.— 
(1) IN GENERAL.—Section 769(c)(3) of the Re-
tirement Protection Act of 1994, as added by section 
201 of the Pension Funding Equity Act of 2004, is 
amended by striking ‘‘and 2005’’ and inserting ‘‘, 
2005, and 2006’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to plan years beginning 
after December 31, 2005. 
(e) CONFORMING AMENDMENT.— 
(1) Section 769 of the Retirement Protection 
Act of 1994 is amended by striking subsection (c). 
(2) The amendment made by paragraph (1) 
shall take effect on December 31, 2006, and shall 
apply to plan years beginning after such date.
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SEC. 122. TREATMENT OF NONQUALIFIED DEFERRED COM-
PENSATION PLANS WHEN EMPLOYER DE-
FINED BENEFIT PLAN IN AT-RISK STATUS. 
(a) IN GENERAL.—Subsection (b) of section 409A of 
the Internal Revenue Code of 1986 (providing rules relat-
ing to funding) is amended by redesignating paragraphs 
(3) and (4) as paragraphs (4) and (5), respectively, and 
by inserting after paragraph (2) the following new para-
graph: 
‘‘(3) EMPLOYER’S DEFINED BENEFIT PLAN IN 
AT-RISK STATUS.—If— 
‘‘(A) during any period in which a defined 
benefit plan to which section 412 applies is in 
an at-risk status (as defined in section 
430(i)(3)), assets are set aside (directly or indi-
rectly) in a trust (or other arrangement deter-
mined by the Secretary), or transferred to such 
a trust or other arrangement, for purposes of 
paying deferred compensation under a non-
qualified deferred compensation plan of the em-
ployer maintaining the defined benefit plan, or 
‘‘(B) a nonqualified deferred compensation 
plan of the employer provides that assets will 
become restricted to the provision of benefits 
under the plan in connection with such at-risk 
status (or other similar financial measure deter-
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mined by the Secretary) of the defined benefit 
plan, or assets are so restricted, 
such assets shall for purposes of section 83 be treat-
ed as property transferred in connection with the 
performance of services whether or not such assets 
are available to satisfy claims of general creditors. 
Subparagraph (A) shall not apply with respect to 
any assets which are so set aside before the defined 
benefit plan is in at-risk status.’’. 
(b) CONFORMING AMENDMENTS.—Paragraphs (4) 
and (5) of section 409A(b) of such Code, as redesignated 
by subsection (a) of this subsection, are each amended by 
striking ‘‘paragraph (1) or (2)’’ each place it appears and 
inserting ‘‘paragraph (1), (2), or (3)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers or reservations of as-
sets after December 31, 2005. 
(d) SPECIAL RULE FOR 2006.—For purposes of de-
termining if a plan is in at-risk status (within the meaning 
of section 409A of such Code, as added by this section) 
for any plan year beginning in 2006, such section shall 
be applied by substituting the plan’s modified funded cur-
rent liability percentage for the plan’s funding target at-
tainment percentage. For purposes of the preceding sen-
tence, the term ‘‘modified funded current liability percent-
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age’’ means the funded current liability percentage (as de-
fined in section 412(l)(8) of such Code), reduced as de-
scribed in subparagraph (E) thereof. 
TITLE II—FUNDING RULES FOR 
MULTIEMPLOYER 
DEFINED 
BENEFIT PLANS 
Subtitle A—Amendments to Em-
ployee Retirement Income Secu-
rity Act of 1974 
SEC. 201. FUNDING RULES FOR MULTIEMPLOYER DEFINED 
BENEFIT PLANS. 
(a) IN GENERAL.—Part 3 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 (as 
amended by section 102) is amended further by inserting 
after section 303 the following new section: 
‘‘MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER 
PLANS 
‘‘SEC. 304. (a) IN GENERAL.—For purposes of sec-
tion 302, the accumulated funding deficiency of a multi-
employer plan for any plan year is— 
‘‘(1) except as provided in paragraph (2), the 
amount, determined as of the end of the plan year, 
equal to the excess (if any) of the total charges to 
the funding standard account of the plan for all plan 
years (beginning with the first plan year for which
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this part applies to the plan) over the total credits 
to such account for such years, and 
‘‘(2) if the multiemployer plan is in reorganiza-
tion for any plan year, the accumulated funding de-
ficiency of the plan determined under section 4243. 
‘‘(b) FUNDING STANDARD ACCOUNT.— 
‘‘(1) ACCOUNT
REQUIRED.—Each multiem-
ployer plan to which this part applies shall establish 
and maintain a funding standard account. Such ac-
count shall be credited and charged solely as pro-
vided in this section. 
‘‘(2) CHARGES TO ACCOUNT.—For a plan year, 
the funding standard account shall be charged with 
the sum of— 
‘‘(A) the normal cost of the plan for the 
plan year, 
‘‘(B) the amounts necessary to amortize in 
equal annual installments (until fully amor-
tized)— 
‘‘(i) in the case of a plan in existence 
on January 1, 1974, the unfunded past 
service liability under the plan on the first 
day of the first plan year to which this 
part applies, over a period of 40 plan 
years,
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‘‘(ii) in the case of a plan which comes 
into existence after January 1, 1974, the 
unfunded past service liability under the 
plan on the first day of the first plan year 
to which this part applies, over a period of 
15 plan years, 
‘‘(iii) separately, with respect to each 
plan year, the net increase (if any) in un-
funded past service liability under the plan 
arising from plan amendments adopted in 
such year, over a period of 15 plan years, 
‘‘(iv) separately, with respect to each 
plan year, the net experience loss (if any) 
under the plan, over a period of 15 plan 
years, and 
‘‘(v) separately, with respect to each 
plan year, the net loss (if any) resulting 
from changes in actuarial assumptions 
used under the plan, over a period of 15 
plan years, 
‘‘(C) the amount necessary to amortize 
each waived funding deficiency (within the 
meaning of section 302(c)(3)) for each prior 
plan year in equal annual installments (until 
fully amortized) over a period of 15 plan years,
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‘‘(D) the amount necessary to amortize in 
equal annual installments (until fully amor-
tized) over a period of 5 plan years any amount 
credited to the funding standard account under 
section 302(b)(3)(D) (as in effect on the day 
before the date of the enactment of the Pension 
Protection Act of 2005), and 
‘‘(E) the amount necessary to amortize in 
equal annual installments (until fully amor-
tized) over a period of 20 years the contribu-
tions which would be required to be made under 
the plan but for the provisions of section 
302(c)(7)(A)(i)(I) (as in effect on the day be-
fore the date of the enactment of the Pension 
Protection Act of 2005). 
‘‘(3) CREDITS TO ACCOUNT.—For a plan year, 
the funding standard account shall be credited with 
the sum of— 
‘‘(A) the amount considered contributed by 
the employer to or under the plan for the plan 
year, 
‘‘(B) the amount necessary to amortize in 
equal annual installments (until fully amor-
tized)—
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‘‘(i) separately, with respect to each 
plan year, the net decrease (if any) in un-
funded past service liability under the plan 
arising from plan amendments adopted in 
such year, over a period of 15 plan years, 
‘‘(ii) separately, with respect to each 
plan year, the net experience gain (if any) 
under the plan, over a period of 15 plan 
years, and 
‘‘(iii) separately, with respect to each 
plan year, the net gain (if any) resulting 
from changes in actuarial assumptions 
used under the plan, over a period of 15 
plan years, 
‘‘(C) the amount of the waived funding de-
ficiency 
(within 
the 
meaning 
of 
section 
302(c)(3)) for the plan year, and 
‘‘(D) in the case of a plan year for which 
the accumulated funding deficiency is deter-
mined under the funding standard account if 
such plan year follows a plan year for which 
such deficiency was determined under the alter-
native minimum funding standard under section 
305 (as in effect on the day before the date of 
the enactment of the Pension Protection Act of
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2005), the excess (if any) of any debit balance 
in the funding standard account (determined 
without regard to this subparagraph) over any 
debit balance in the alternative minimum fund-
ing standard account. 
‘‘(4) SPECIAL
RULES
FOR
CERTAIN
PRE-2007 
AMORTIZATIONS.— 
‘‘(A) IN
GENERAL.—In the case of any 
amount amortized under section 302(b) (as in 
effect on the day before the date of the enact-
ment of the Pension Protection Act of 2005) 
over any period beginning with a plan year be-
ginning before 2007, in lieu of the amortization 
described in paragraphs (2)(B) and (3)(B), 
such amount shall continue to be amortized 
under such section as so in effect. 
‘‘(B) INTEREST
RATE.—For purposes of 
amortizations under section 302(b) (as in effect 
on the day before the date of the enactment of 
the Pension Protection Act of 2005), in the 
case of any waiver under section 303 (as so in 
effect) or extension under section 304 (as so in 
effect) with respect to which application has 
been made before June 30, 2005, the interest 
rate under section 303(a)(2) (as so in effect) or
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section 304(a) (as so in effect), as the case may 
be, shall apply. 
‘‘(5) COMBINING
AND
OFFSETTING
AMOUNTS 
TO BE AMORTIZED.—Under regulations prescribed 
by the Secretary of the Treasury, amounts required 
to be amortized under paragraph (2) or paragraph 
(3), as the case may be— 
‘‘(A) may be combined into one amount 
under such paragraph to be amortized over a 
period determined on the basis of the remaining 
amortization period for all items entering into 
such combined amount, and 
‘‘(B) may be offset against amounts re-
quired to be amortized under the other such 
paragraph, with the resulting amount to be am-
ortized over a period determined on the basis of 
the remaining amortization periods for all items 
entering into whichever of the two amounts 
being offset is the greater. 
‘‘(6) INTEREST.—Except as provided in sub-
section (c)(9), the funding standard account (and 
items therein) shall be charged or credited (as deter-
mined under regulations prescribed by the Secretary 
of the Treasury) with interest at the appropriate
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rate consistent with the rate or rates of interest used 
under the plan to determine costs. 
‘‘(7) CERTAIN
AMORTIZATION
CHARGES
AND 
CREDITS.—In the case of a plan which, immediately 
before the date of the enactment of the Multiem-
ployer Pension Plan Amendments Act of 1980, was 
a multiemployer plan (within the meaning of section 
3(37) as in effect immediately before such date)— 
‘‘(A) any amount described in paragraph 
(2)(B)(ii), (2)(B)(iii), or (3)(B)(i) of this sub-
section which arose in a plan year beginning be-
fore such date shall be amortized in equal an-
nual installments (until fully amortized) over 40 
plan years, beginning with the plan year in 
which the amount arose, 
‘‘(B) any amount described in paragraph 
(2)(B)(iv) or (3)(B)(ii) of this subsection which 
arose in a plan year beginning before such date 
shall be amortized in equal annual installments 
(until fully amortized) over 20 plan years, be-
ginning with the plan year in which the amount 
arose, 
‘‘(C) any change in past service liability 
which arises during the period of 3 plan years 
beginning on or after such date, and results
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from a plan amendment adopted before such 
date, shall be amortized in equal annual install-
ments (until fully amortized) over 40 plan 
years, beginning with the plan year in which the 
change arises, and 
‘‘(D) any change in past service liability 
which arises during the period of 2 plan years 
beginning on or after such date, and results 
from the changing of a group of participants 
from one benefit level to another benefit level 
under a schedule of plan benefits which— 
‘‘(i) was adopted before such date, 
and 
‘‘(ii) was effective for any plan partici-
pant before the beginning of the first plan 
year beginning on or after such date, 
shall be amortized in equal annual installments 
(until fully amortized) over 40 plan years, be-
ginning with the plan year in which the change 
arises. 
‘‘(8) SPECIAL RULES RELATING TO CHARGES 
AND CREDITS TO FUNDING STANDARD ACCOUNT.— 
For purposes of this section— 
‘‘(A) 
WITHDRAWAL
LIABILITY.—Any 
amount received by a multiemployer plan in
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payment of all or part of an employer’s with-
drawal liability under part 1 of subtitle E of 
title IV shall be considered an amount contrib-
uted by the employer to or under the plan. The 
Secretary of the Treasury may prescribe by reg-
ulation additional charges and credits to a mul-
tiemployer plan’s funding standard account to 
the extent necessary to prevent withdrawal li-
ability payments from being unduly reflected as 
advance funding for plan liabilities. 
‘‘(B) ADJUSTMENTS
WHEN
A
MULTIEM-
PLOYER PLAN LEAVES REORGANIZATION.—If a 
multiemployer plan is not in reorganization in 
the plan year but was in reorganization in the 
immediately preceding plan year, any balance in 
the funding standard account at the close of 
such immediately preceding plan year— 
‘‘(i) shall be eliminated by an offset-
ting credit or charge (as the case may be), 
but 
‘‘(ii) shall be taken into account in 
subsequent plan years by being amortized 
in equal annual installments (until fully 
amortized) over 30 plan years.
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The preceding sentence shall not apply to the 
extent of any accumulated funding deficiency 
under section 4243(a) as of the end of the last 
plan year that the plan was in reorganization. 
‘‘(C) PLAN PAYMENTS TO SUPPLEMENTAL 
PROGRAM OR WITHDRAWAL LIABILITY PAYMENT 
FUND.—Any amount paid by a plan during a 
plan year to the Pension Benefit Guaranty Cor-
poration pursuant to section 4222 of this Act or 
to a fund exempt under section 501(c)(22) of 
the Internal Revenue Code of 1986 pursuant to 
section 4223 of this Act shall reduce the 
amount of contributions considered received by 
the plan for the plan year. 
‘‘(D) INTERIM
WITHDRAWAL
LIABILITY 
PAYMENTS.—Any amount paid by an employer 
pending a final determination of the employer’s 
withdrawal liability under part 1 of subtitle E 
of title IV and subsequently refunded to the 
employer by the plan shall be charged to the 
funding standard account in accordance with 
regulations prescribed by the Secretary of the 
Treasury. 
‘‘(E) 
ELECTION
FOR
DEFERRAL
OF 
CHARGE
FOR
PORTION
OF
NET
EXPERIENCE
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LOSS.—If an election is in effect under section 
302(b)(7)(F) (as in effect on the day before the 
date of the enactment of the Pension Protection 
Act of 2005) for any plan year, the funding 
standard account shall be charged in the plan 
year to which the portion of the net experience 
loss deferred by such election was deferred with 
the amount so deferred (and paragraph 
(2)(B)(iv) shall not apply to the amount so 
charged). 
‘‘(F) 
FINANCIAL
ASSISTANCE.—Any 
amount of any financial assistance from the 
Pension Benefit Guaranty Corporation to any 
plan, and any repayment of such amount, shall 
be taken into account under this section and 
section 302 in such manner as is determined by 
the Secretary of the Treasury. 
‘‘(G) SHORT-TERM BENEFITS.—To the ex-
tent that any plan amendment increases the un-
funded past service liability under the plan by 
reason of an increase in benefits which are pay-
able under the plan during a period that does 
not exceed 14 years, paragraph (2)(B)(iii) shall 
be applied separately with respect to such in-
crease in unfunded past service liability by sub-
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stituting the number of years of the period dur-
ing which such benefits are payable for ‘15’. 
‘‘(c) ADDITIONAL RULES.— 
‘‘(1) DETERMINATIONS
TO
BE
MADE
UNDER 
FUNDING METHOD.—For purposes of this section, 
normal costs, accrued liability, past service liabilities, 
and experience gains and losses shall be determined 
under the funding method used to determine costs 
under the plan. 
‘‘(2) VALUATION OF ASSETS.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the value of the plan’s assets shall be 
determined on the basis of any reasonable actu-
arial method of valuation which takes into ac-
count fair market value and which is permitted 
under regulations prescribed by the Secretary of 
the Treasury. 
‘‘(B) 
ELECTION
WITH
RESPECT
TO 
BONDS.—The value of a bond or other evidence 
of indebtedness which is not in default as to 
principal or interest may, at the election of the 
plan administrator, be determined on an amor-
tized basis running from initial cost at purchase 
to par value at maturity or earliest call date. 
Any election under this subparagraph shall be
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made at such time and in such manner as the 
Secretary of the Treasury shall by regulations 
provide, shall apply to all such evidences of in-
debtedness, and may be revoked only with the 
consent of such Secretary. 
‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA-
SONABLE.—For purposes of this section, all costs, li-
abilities, rates of interest, and other factors under 
the plan shall be determined on the basis of actu-
arial assumptions and methods— 
‘‘(A) each of which is reasonable (taking 
into account the experience of the plan and rea-
sonable expectations), and 
‘‘(B) which, in combination, offer the actu-
ary’s best estimate of anticipated experience 
under the plan. 
‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX-
PERIENCE GAIN OR LOSS.—For purposes of this sec-
tion, if— 
‘‘(A) a change in benefits under the Social 
Security Act or in other retirement benefits cre-
ated under Federal or State law, or 
‘‘(B) a change in the definition of the term 
‘wages’ under section 3121 of the Internal Rev-
enue Code of 1986, or a change in the amount
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of such wages taken into account under regula-
tions 
prescribed 
for 
purposes 
of 
section 
401(a)(5) of such Code, 
results in an increase or decrease in accrued liability 
under a plan, such increase or decrease shall be 
treated as an experience loss or gain. 
‘‘(5) FULL FUNDING.—If, as of the close of a 
plan year, a plan would (without regard to this para-
graph) have an accumulated funding deficiency in 
excess of the full funding limitation— 
‘‘(A) the funding standard account shall be 
credited with the amount of such excess, and 
‘‘(B) all amounts described in subpara-
graphs (B), (C), and (D) of subsection (b)(2) 
and subparagraph (B) of subsection (b)(3) 
which are required to be amortized shall be con-
sidered fully amortized for purposes of such 
subparagraphs. 
‘‘(6) FULL-FUNDING LIMITATION.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (5), the term ‘full-funding limitation’ 
means the excess (if any) of— 
‘‘(i) the accrued liability (including 
normal cost) under the plan (determined 
under the entry age normal funding meth-
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od if such accrued liability cannot be di-
rectly calculated under the funding method 
used for the plan), over 
‘‘(ii) the lesser of— 
‘‘(I) the fair market value of the 
plan’s assets, or 
‘‘(II) the value of such assets de-
termined under paragraph (2). 
‘‘(B) MINIMUM AMOUNT.— 
‘‘(i) IN GENERAL.—In no event shall 
the 
full-funding 
limitation 
determined 
under subparagraph (A) be less than the 
excess (if any) of— 
‘‘(I) 90 percent of the current li-
ability of the plan (including the ex-
pected increase in current liability due 
to benefits accruing during the plan 
year), over 
‘‘(II) the value of the plan’s as-
sets determined under paragraph (2). 
‘‘(ii) ASSETS.—For purposes of clause 
(i), assets shall not be reduced by any 
credit balance in the funding standard ac-
count.
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‘‘(C) FULL
FUNDING
LIMITATION.—For 
purposes of this paragraph, unless otherwise 
provided by the plan, the accrued liability under 
a multiemployer plan shall not include benefits 
which are not nonforfeitable under the plan 
after the termination of the plan (taking into 
consideration section 411(d)(3) of the Internal 
Revenue Code of 1986). 
‘‘(D) CURRENT LIABILITY.—For purposes 
of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘current 
liability’ means all liabilities to employees 
and their beneficiaries under the plan. 
‘‘(ii) TREATMENT OF UNPREDICTABLE 
CONTINGENT EVENT BENEFITS.—For pur-
poses of clause (i), any benefit contingent 
on an event other than— 
‘‘(I) age, service, compensation, 
death, or disability, or 
‘‘(II) an event which is reason-
ably and reliably predictable (as deter-
mined by the Secretary of the Treas-
ury),
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shall not be taken into account until the 
event on which the benefit is contingent oc-
curs. 
‘‘(iii) INTEREST
RATE
USED.—The 
rate of interest used to determine current 
liability under this paragraph shall be the 
rate of interest determined under subpara-
graph (E). 
‘‘(iv) MORTALITY TABLES.— 
‘‘(I) COMMISSIONERS’ STANDARD 
TABLE.—In the case of plan years be-
ginning before the first plan year to 
which the first tables prescribed under 
subclause (II) apply, the mortality 
table used in determining current li-
ability under this paragraph shall be 
the table prescribed by the Secretary 
of the Treasury which is based on the 
prevailing 
commissioners’ 
standard 
table 
(described 
in 
section 
807(d)(5)(A) of the Internal Revenue 
Code of 1986) used to determine re-
serves for group annuity contracts 
issued on January 1, 1993.
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‘‘(II) 
SECRETARIAL
AUTHOR-
ITY.—The Secretary of the Treasury 
may by regulation prescribe for plan 
years beginning after December 31, 
1999, mortality tables to be used in 
determining current liability under 
this subsection. Such tables shall be 
based upon the actual experience of 
pension plans and projected trends in 
such experience. In prescribing such 
tables, such Secretary shall take into 
account results of available inde-
pendent studies of mortality of indi-
viduals covered by pension plans. 
‘‘(v) SEPARATE
MORTALITY
TABLES 
FOR
THE
DISABLED.—Notwithstanding 
clause (iv)— 
‘‘(I) IN GENERAL.—In the case 
of plan years beginning after Decem-
ber 31, 1995, the Secretary of the 
Treasury shall establish mortality ta-
bles which may be used (in lieu of the 
tables under clause (iv)) to determine 
current liability under this subsection 
for individuals who are entitled to
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benefits under the plan on account of 
disability. Such Secretary shall estab-
lish 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
DIS-
ABILITIES OCCURRING AFTER 1994.— 
In the case of disabilities occurring in 
plan years beginning after December 
31, 1994, the tables under subclause 
(I) shall apply only with respect to in-
dividuals described in such subclause 
who are disabled within the meaning 
of title II of the Social Security Act 
and the regulations thereunder. 
‘‘(vi) PERIODIC
REVIEW.—The Sec-
retary of the Treasury shall periodically (at 
least every 5 years) review any tables in ef-
fect under this subparagraph and shall, to 
the extent such Secretary determines nec-
essary, by regulation update the tables to 
reflect the actual experience of pension
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plans and projected trends in such experi-
ence. 
‘‘(E) REQUIRED
CHANGE
OF
INTEREST 
RATE.—For purposes of determining a plan’s 
current liability for purposes of this para-
graph— 
‘‘(i) IN GENERAL.—If any rate of in-
terest used under the plan under sub-
section (b)(6) to determine cost is not 
within the permissible range, the plan shall 
establish a new rate of interest within the 
permissible range. 
‘‘(ii) PERMISSIBLE RANGE.—For pur-
poses of this subparagraph— 
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), the term 
‘permissible range’ means a rate of in-
terest which is not more than 5 per-
cent above, and not more than 10 per-
cent below, the weighted average of 
the rates of interest on 30-year Treas-
ury securities during the 4-year period 
ending on the last day before the be-
ginning of the plan year.
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‘‘(II) 
SECRETARIAL
AUTHOR-
ITY.—If the Secretary of the Treasury 
finds that the lowest rate of interest 
permissible under subclause (I) is un-
reasonably high, such Secretary may 
prescribe a lower rate of interest, ex-
cept that such rate may not be less 
than 80 percent of the average rate 
determined under such subclause. 
‘‘(iii) 
ASSUMPTIONS.—Notwith-
standing paragraph (3)(A), the interest 
rate used under the plan shall be— 
‘‘(I) determined without taking 
into account the experience of the 
plan and reasonable expectations, but 
‘‘(II) consistent with the assump-
tions which reflect the purchase rates 
which would be used by insurance 
companies to satisfy the liabilities 
under the plan. 
‘‘(7) ANNUAL VALUATION.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, a determination of experience gains and 
losses and a valuation of the plan’s liability 
shall be made not less frequently than once
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every year, except that such determination shall 
be made more frequently to the extent required 
in particular cases under regulations prescribed 
by the Secretary of the Treasury. 
‘‘(B) VALUATION DATE.— 
‘‘(i) CURRENT YEAR.—Except as pro-
vided in clause (ii), the valuation referred 
to in subparagraph (A) shall be made as of 
a date within the plan year to which the 
valuation refers or within one month prior 
to the beginning of such year. 
‘‘(ii) USE
OF
PRIOR
YEAR
VALU-
ATION.—The valuation referred to in sub-
paragraph (A) may be made as of a date 
within the plan year prior to the year to 
which the valuation refers if, as of such 
date, the value of the assets of the plan are 
not less than 100 percent of the plan’s cur-
rent liability (as defined in paragraph 
(6)(D) without regard to clause (iv) there-
of). 
‘‘(iii) 
ADJUSTMENTS.—Information 
under clause (ii) shall, in accordance with 
regulations, be actuarially adjusted to re-
flect significant differences in participants.
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‘‘(iv) LIMITATION.—A change in fund-
ing method to use a prior year valuation, 
as provided in clause (ii), may not be made 
unless as of the valuation date within the 
prior plan year, the value of the assets of 
the plan are not less than 125 percent of 
the plan’s current liability (as defined in 
paragraph (6)(D) without regard to clause 
(iv) thereof). 
‘‘(8) TIME
WHEN
CERTAIN
CONTRIBUTIONS 
DEEMED MADE.—For purposes of this section, any 
contributions for a plan year made by an employer 
after the last day of such plan year, but not later 
than two and one-half months after such day, shall 
be deemed to have been made on such last day. For 
purposes of this subparagraph, such two and one- 
half month period may be extended for not more 
than six months under regulations prescribed by the 
Secretary of the Treasury. 
‘‘(9) INTEREST RULE FOR WAIVERS AND EX-
TENSIONS.—The interest rate applicable for any 
plan year for purposes of computing the amortiza-
tion charge described in subsection (b)(2)(C) and in 
connection with an extension granted under sub-
section (d) shall be the greater of—
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‘‘(A) 150 percent of the Federal mid-term 
rate (as in effect under section 1274 of the In-
ternal Revenue Code of 1986 for the 1st month 
of such plan year), or 
‘‘(B) the rate of interest used under the 
plan for determining costs. 
‘‘(d) EXTENSION OF AMORTIZATION PERIODS FOR 
MULTIEMPLOYER PLANS.—In the case of a multiemployer 
plan— 
‘‘(1) EXTENSION.—The period of years re-
quired to amortize any unfunded liability (described 
in any clause of subsection (b)(2)(B)) of any multi-
employer plan shall be extended by the Secretary of 
the Treasury for a period of time (not in excess of 
5 years) if it is demonstrated to such Secretary 
that— 
‘‘(A) absent the extension, the plan would 
have an accumulated funding deficiency in any 
of the next 10 plan years, 
‘‘(B) the plan sponsor has adopted a plan 
to improve the plan’s funding status, and 
‘‘(C) taking into account the extension, the 
plan is projected to have sufficient assets to 
timely pay its expected benefit liabilities and 
other anticipated expenditures.
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‘‘(2) ADDITIONAL EXTENSION.—The period of 
years required to amortize any unfunded liability 
(described in any clause of subsection (b)(2)(B)) of 
any multiemployer plan may be extended (in addi-
tion to any extension under paragraph (1)) by the 
Secretary of the Treasury for a period of time (not 
in excess of 5 years) if such Secretary determines 
that such extension would carry out the purposes of 
this Act and would provide adequate protection for 
participants under the plan and their beneficiaries 
and if such Secretary determines that the failure to 
permit such extension would— 
‘‘(A) result in— 
‘‘(i) a substantial risk to the voluntary 
continuation of the plan, or 
‘‘(ii) a substantial curtailment of pen-
sion benefit levels or employee compensa-
tion, and 
‘‘(B) be adverse to the interests of plan 
participants in the aggregate. 
‘‘(3) ADVANCE NOTICE.— 
‘‘(A) IN GENERAL.—The Secretary of the 
Treasury shall, before granting an extension 
under this section, require each applicant to 
provide evidence satisfactory to such Secretary
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that the applicant has provided notice of the fil-
ing of the application for such extension to each 
affected 
party 
(as 
defined 
in 
section 
4001(a)(21)) with respect to the affected plan. 
Such notice shall include a description of the 
extent to which the plan is funded for benefits 
which are guaranteed under title IV and for 
benefit liabilities. 
‘‘(B) CONSIDERATION
OF
RELEVANT
IN-
FORMATION.—The Secretary of the Treasury 
shall consider any relevant information provided 
by a person to whom notice was given under 
paragraph (1).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 301 of such Act (29 U.S.C. 1081) 
is amended by striking subsection (d). 
(2) The table of contents in section 1 of such 
Act (as amended by section 102 of this Act) is 
amended further by inserting after the item relating 
to section 303 the following new item: 
‘‘Sec. 304. Minimum funding standards for multiemployer plans.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after De-
cember 31, 2006.
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SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEM-
PLOYER PLANS IN ENDANGERED OR CRIT-
ICAL STATUS. 
(a) IN GENERAL.—Part 3 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 (as 
amended by the preceding provisions of this Act) is 
amended further by inserting after section 304 the fol-
lowing new section: 
‘‘ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER 
PLANS IN ENDANGERED STATUS OR CRITICAL STATUS 
‘‘SEC. 305. (a) ANNUAL CERTIFICATION BY PLAN 
ACTUARY.— 
‘‘(1) IN GENERAL.—During the 90-day period 
beginning on first day of each plan year of a multi-
employer plan, the plan actuary shall certify to the 
Secretary of the Treasury whether or not the plan 
is in endangered status for such plan year and 
whether or not the plan is in critical status for such 
plan year. 
‘‘(2) ACTUARIAL PROJECTIONS OF ASSETS AND 
LIABILITIES.— 
‘‘(A) IN GENERAL.—In making the deter-
minations under paragraph (1), the plan actu-
ary shall make projections under subsections 
(b)(2) and (c)(2) for the current and succeeding 
plan years, using reasonable actuarial assump-
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tions and methods, of the current value of the 
assets of the plan and the present value of all 
liabilities to participants and beneficiaries under 
the plan for the current plan year as of the be-
ginning of such year, as based on the actuarial 
statement prepared for the preceding plan year 
under section 103(d). 
‘‘(B) DETERMINATIONS OF FUTURE CON-
TRIBUTIONS.—Any such actuarial projection of 
plan assets shall assume— 
‘‘(i) reasonably anticipated employer 
and employee contributions for the current 
and succeeding plan years, assuming that 
the terms of the one or more collective bar-
gaining agreements pursuant to which the 
plan is maintained for the current plan 
year continue in effect for succeeding plan 
years, or 
‘‘(ii) that employer and employee con-
tributions for the most recent plan year 
will continue indefinitely, but only if the 
plan actuary determines there have been 
no significant demographic changes that 
would make continued application of such 
terms unreasonable.
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‘‘(3) PRESUMED STATUS IN ABSENCE OF TIME-
LY
ACTUARIAL
CERTIFICATION.—If certification 
under this subsection is not made before the end of 
the 90-day period specified in paragraph (1), the 
plan shall be presumed to be in critical status for 
such plan year until such time as the plan actuary 
makes a contrary certification. 
‘‘(4) NOTICE.—In any case in which a multiem-
ployer plan is certified to be in endangered status 
under paragraph (1) or enters into critical status, 
the plan sponsor shall, not later than 30 days after 
the date of the certification or entry, provide notifi-
cation of the endangered or critical status to the 
participants and beneficiaries, the bargaining par-
ties, the Pension Benefit Guaranty Corporation, the 
Secretary of the Treasury, and the Secretary of 
Labor. 
‘‘(b) FUNDING RULES FOR MULTIEMPLOYER PLANS 
IN ENDANGERED STATUS.— 
‘‘(1) IN
GENERAL.—In any case in which a 
multiemployer plan is in endangered status for a 
plan year and no funding improvement plan under 
this subsection with respect to such multiemployer 
plan is in effect for the plan year, the plan sponsor 
shall, in accordance with this subsection, amend the
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multiemployer plan to include a funding improve-
ment plan upon approval thereof by the bargaining 
parties under this subsection. The amendment shall 
be adopted not later than 240 days after the date 
on which the plan is certified to be in endangered 
status under subsection (a)(1). 
‘‘(2) ENDANGERED STATUS.—A multiemployer 
plan is in endangered status for a plan year if, as 
determined by the plan actuary under subsection 
(a)— 
‘‘(A) the plan’s funded percentage for such 
plan year is less than 80 percent, or 
‘‘(B) the plan has an accumulated funding 
deficiency for such plan year under section 304 
or is projected to have such an accumulated 
funding deficiency for any of the 6 succeeding 
plan years, taking into account any extension of 
amortization periods under section 304(d). 
‘‘(3) FUNDING IMPROVEMENT PLAN.— 
‘‘(A) BENCHMARKS.—A funding improve-
ment plan shall consist of amendments to the 
plan formulated to provide, under reasonable 
actuarial assumptions, for the attainment, dur-
ing the funding improvement period under the
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funding improvement plan, of the following 
benchmarks: 
‘‘(i) INCREASE IN FUNDED PERCENT-
AGE.—An increase in the plan’s funded 
percentage such that— 
‘‘(I) the difference between 100 
percent and the plan’s funded per-
centage for the last year of the fund-
ing improvement period, is not more 
than 
‘‘(II) 2⁄3 of the difference between 
100 percent and the plan’s funded 
percentage for the first year of the 
funding improvement period. 
‘‘(ii) AVOIDANCE
OF
ACCUMULATED 
FUNDING DEFICIENCIES.—No accumulated 
funding deficiency for any plan year during 
the funding improvement period (taking 
into account any extension of amortization 
periods under section 304(d)). 
‘‘(B) FUNDING IMPROVEMENT PERIOD.— 
The funding improvement period for any fund-
ing improvement plan adopted pursuant to this 
subsection is the 10-year period beginning on 
the earlier of—
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‘‘(i) the second anniversary of the 
date of the adoption of the funding im-
provement plan, or 
‘‘(ii) the first day of the first plan 
year of the multiemployer plan following 
the plan year in which occurs the first date 
after the day of the certification as of 
which collective bargaining agreements cov-
ering on the day of such certification at 
least 75 percent of active participants in 
such multiemployer plan have expired. 
‘‘(C) SPECIAL RULES FOR CERTAIN SERI-
OUSLY UNDERFUNDED PLANS.— 
‘‘(i) In the case of a plan in which the 
funded percentage of a plan for the plan 
year is 70 percent or less, subparagraph 
(A)(i)(II) shall be applied by substituting 
‘4⁄5’ for ‘2⁄3’ and subparagraph (B) shall be 
applied by substituting ‘the 15-year period’ 
for ‘the 10-year period’. 
‘‘(ii) In the case of a plan in which 
the funded percentage of a plan for the 
plan year is more than 70 percent but less 
than 80 percent, and—
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‘‘(I) the plan actuary certifies 
within 30 days after certification 
under subsection (a)(1) that the plan 
is not able to attain the increase de-
scribed in subparagraph (A)(i) over 
the period described in subparagraph 
(B), and 
‘‘(II) the plan year is prior to the 
day described in subparagraph (B)(ii), 
subparagraph (A)(i)(II) shall be applied by 
substituting ‘4⁄5’ for ‘2⁄3’ and subparagraph 
(B) shall be applied by substituting ‘the 
15-year period’ for ‘the 10-year period’. 
‘‘(iii) For any plan year following the 
year described in clause (ii)(II), subpara-
graph (A)(i)(II) and subparagraph (B) 
shall apply, except that for each plan year 
ending after such date for which the plan 
actuary certifies (at the time of the annual 
certification under subsection (a)(1) for 
such plan year) that the plan is not able 
to attain the increase described in subpara-
graph (A)(i) over the period described in 
subparagraph (B), subparagraph (B) shall