868 
‘‘(2) NOTICE.—Not later than 30 days after a de-
termination by a plan sponsor of a composite plan 
that an agreement fails to satisfy the requirements de-
scribed in paragraph (1), the plan sponsor shall pro-
vide notification of such failure and the reasons for 
such determination— 
‘‘(A) to the parties to the agreement; 
‘‘(B) to active participants of the composite 
plan who have ceased to accrue or otherwise earn 
benefits with respect to service with an employer 
pursuant to paragraph (1); and 
‘‘(C) to the Secretary, the Secretary of the 
Treasury, and the Pension Benefit Guaranty 
Corporation. 
‘‘(3) LIMITATION
ON
RETROACTIVE
EFFECT.— 
This subsection shall not apply to benefits accrued be-
fore the date on which notice is provided under para-
graph (2). 
‘‘(c) RESTRICTION ON ACCRUAL OF BENEFITS UNDER 
A COMPOSITE PLAN.— 
‘‘(1) IN GENERAL.—In any case in which an em-
ployer, under a collective bargaining agreement en-
tered into after the date of enactment of the Giving 
Retirement Options to Workers Act of 2020, ceases to 
have an obligation to contribute to a multiemployer
869 
defined benefit plan, no employees employed by the 
employer may accrue or otherwise earn benefits under 
any composite plan, with respect to service with that 
employer, for a 60-month period beginning on the 
date on which the employer entered into such collec-
tive bargaining agreement. 
‘‘(2) NOTICE OF CESSATION OF OBLIGATION.— 
Within 30 days of determining that an employer has 
ceased to have an obligation to contribute to a legacy 
plan with respect to employees employed by an em-
ployer that is or will be contributing to a composite 
plan with respect to service of such employees, the 
plan sponsor of the legacy plan shall notify the plan 
sponsor of the composite plan of that cessation. 
‘‘(3) NOTICE OF CESSATION OF ACCRUALS.—Not 
later than 30 days after determining that an em-
ployer has ceased to have an obligation to contribute 
to a legacy plan, the plan sponsor of the composite 
plan shall notify the bargaining parties, the active 
participants affected by the cessation of accruals, the 
Secretary, the Secretary of the Treasury, and the Pen-
sion Benefit Guaranty Corporation of the cessation of 
accruals, the period during which such cessation is in 
effect, and the reasons therefor.
870 
‘‘(4) LIMITATION
ON
RETROACTIVE
EFFECT.— 
This subsection shall not apply to benefits accrued be-
fore the date on which notice is provided under para-
graph (3). 
‘‘(d) TRANSITION CONTRIBUTION REQUIREMENTS.— 
‘‘(1) IN
GENERAL.—A collective bargaining 
agreement satisfies the transition contribution re-
quirements of this subsection if the agreement— 
‘‘(A) authorizes payment of contributions to 
a legacy plan at a rate or rates equal to or 
greater than the transition contribution rate es-
tablished by the legacy plan under paragraph 
(2); and 
‘‘(B) does not provide for— 
‘‘(i) a suspension of contributions to 
the legacy plan with respect to any period 
of service; or 
‘‘(ii) any new direct or indirect exclu-
sion of younger or newly hired employees of 
the employer from being taken into account 
in determining contributions owed to the 
legacy plan. 
‘‘(2) TRANSITION CONTRIBUTION RATE.— 
‘‘(A) IN
GENERAL.—The transition con-
tribution rate for a plan year is the contribution
871 
rate that, as certified by the actuary of the leg-
acy plan in accordance with the principles in 
section 305(b)(3)(B), is reasonably expected to be 
adequate— 
‘‘(i) to fund the normal cost for the 
plan year; 
‘‘(ii) to amortize the plan’s unfunded 
liabilities in level annual installments over 
25 years, beginning with the plan year in 
which the transition contribution rate is 
first established; and 
‘‘(iii) to amortize any subsequent 
changes in the legacy plan’s unfunded li-
ability due to experience gains or losses (in-
cluding investment gains or losses, gains or 
losses due to contributions greater or less 
than the contributions made under the prior 
transition contribution rate, and other actu-
arial gains or losses), changes in actuarial 
assumptions, changes to the legacy plan’s 
benefits, or changes in funding method over 
a period of 15 plan years beginning with 
the plan year in which such change in un-
funded liability is incurred.
872 
The transition contribution rate for any plan 
year may not be less than the transition con-
tribution rate for the plan year in which such 
rate is first established. 
‘‘(B) MULTIPLE RATES.—If different rates 
of contribution are payable to the legacy plan by 
different employers or for different classes of em-
ployees, the certification shall specify a transi-
tion contribution rate for each such employer. 
‘‘(C) RATE APPLICABLE TO EMPLOYER.— 
‘‘(i) IN GENERAL.—Except as provided 
by clause (ii), the transition contribution 
rate applicable to an employer for a plan 
year is the rate in effect for the plan year 
of the legacy plan that commences on or 
after 180 days before the earlier of— 
‘‘(I) the effective date of the collec-
tive bargaining agreement pursuant to 
which the employer contributes to the 
legacy plan; or 
‘‘(II) 5 years after the last plan 
year for which the transition contribu-
tion rate applicable to the employer 
was established or updated.
873 
‘‘(ii) EXCEPTION.—The transition con-
tribution rate applicable to an employer for 
the first plan year beginning on or after the 
commencement of the employer’s obligation 
to contribute to the composite plan is the 
rate in effect for the plan year of the legacy 
plan that commences on or after 180 days 
before such first plan year. 
‘‘(D) EFFECT OF LEGACY PLAN FINANCIAL 
CIRCUMSTANCES.—If the plan actuary of the leg-
acy plan has certified under section 305 that the 
plan is in endangered or critical status for a 
plan year, the transition contribution rate for 
the following plan year is the rate determined 
with respect to the employer under the legacy 
plan’s funding improvement or rehabilitation 
plan under section 305, if greater than the rate 
otherwise determined, but in no event greater 
than 75 percent of the sum of the contribution 
rates applicable to the legacy plan and the com-
posite plan for the plan year. 
‘‘(E) OTHER ACTUARIAL ASSUMPTIONS AND 
METHODS.—Except as provided in subparagraph 
(A), the determination of the transition contribu-
tion rate for a plan year shall be based on actu-
874 
arial assumptions and methods consistent with 
the minimum funding determinations made 
under section 304 (or, if applicable, section 305) 
with respect to the legacy plan for the plan year. 
‘‘(F) ADJUSTMENTS
IN
RATE.—The plan 
sponsor of a legacy plan from time to time may 
adjust the transition contribution rate or rates 
applicable to an employer under this paragraph 
by increasing some rates and decreasing others if 
the actuary certifies that such adjusted rates in 
combination will produce projected contribution 
income for the plan year beginning on or after 
the date of certification that is not less than 
would be produced by the transition contribution 
rates in effect at the time of the certification. 
‘‘(G) NOTICE OF TRANSITION CONTRIBUTION 
RATE.—The plan sponsor of a legacy plan shall 
provide notice to the parties to collective bar-
gaining agreements pursuant to which contribu-
tions are made to the legacy plan of changes to 
the transition contribution rate requirements at 
least 30 days before the beginning of the plan 
year for which the rate is effective. 
‘‘(H) NOTICE TO COMPOSITE PLAN SPON-
SOR.—Not later than 30 days after a determina-
875 
tion by the plan sponsor of a legacy plan that 
a collective bargaining agreement provides for a 
rate of contributions that is below the transition 
contribution rate applicable to one or more em-
ployers that are parties to the collective bar-
gaining agreement, the plan sponsor of the leg-
acy plan shall notify the plan sponsor of any 
composite plan under which employees of such 
employer would otherwise be eligible to accrue a 
benefit. 
‘‘(3) CORRECTION
PROCEDURES.—Pursuant to 
standards prescribed by the Secretary, the plan spon-
sor of a composite plan shall adopt rules and proce-
dures that give the parties to the collective bargaining 
agreement notice of the failure of such agreement to 
satisfy the transition contribution requirements of 
this subsection, and a reasonable opportunity to cor-
rect such failure, not to exceed 180 days from the date 
of notice given under subsection (b)(2). 
‘‘(4) SUPPLEMENTAL CONTRIBUTIONS.—A collec-
tive bargaining agreement may provide for supple-
mental contributions to the legacy plan for a plan 
year in excess of the transition contribution rate de-
termined under paragraph (2), regardless of whether
876 
the legacy plan is in endangered or critical status for 
such plan year. 
‘‘(e) NONAPPLICATION OF COMPOSITE PLAN RESTRIC-
TIONS.— 
‘‘(1) IN GENERAL.—The provisions of subsections 
(a), (b), and (c) shall not apply with respect to a col-
lective bargaining agreement, to the extent the agree-
ment, or a predecessor agreement, provides or pro-
vided for contributions to a defined benefit plan that 
is a legacy plan, as of the first day of the first plan 
year following a plan year for which the plan actuary 
certifies that the plan is fully funded, has been fully 
funded for at least three out of the immediately pre-
ceding 5 plan years, and is projected to remain fully 
funded for at least the following 4 plan years. 
‘‘(2) DETERMINATION
OF
FULLY
FUNDED.—A 
plan is fully funded for purposes of paragraph (1) if, 
as of the valuation date of the plan for a plan year, 
the value of the plan’s assets equals or exceeds the 
present value of the plan’s liabilities, determined in 
accordance with the rules prescribed by the Pension 
Benefit 
Guaranty 
Corporation 
under 
sections 
4219(c)(1)(D) and 4281 for multiemployer plans ter-
minating by mass withdrawal, as in effect for the 
date of the determination, except the plan’s reasonable
877 
assumption regarding the starting date of benefits 
may be used. 
‘‘(3) OTHER
APPLICABLE
RULES.—Except as 
provided in paragraph (2), actuarial determinations 
and projections under this section shall be based on 
the rules in section 305(b)(3) and section 802(b). 
‘‘SEC. 806. MERGERS AND ASSET TRANSFERS OF COM-
POSITE PLANS. 
‘‘(a) IN GENERAL.—Assets and liabilities of a com-
posite plan may only be merged with, or transferred to, an-
other plan if— 
‘‘(1) the other plan is a composite plan; 
‘‘(2) the plan or plans resulting from the merger 
or transfer is a composite plan; 
‘‘(3) no participant’s accrued benefit or adjust-
able benefit is lower immediately after the transaction 
than it was immediately before the transaction; and 
‘‘(4) the value of the assets transferred in the 
case of a transfer reasonably reflects the value of the 
amounts contributed with respect to the participants 
whose benefits are being transferred, adjusted for allo-
cable distributions, investment gains and losses, and 
administrative expenses. 
‘‘(b) LEGACY PLAN.—
878 
‘‘(1) IN GENERAL.—After a merger or transfer 
involving a composite plan, the legacy plan with re-
spect to an employer that is obligated to contribute to 
the resulting composite plan is the legacy plan that 
applied to that employer immediately before the 
merger or transfer. 
‘‘(2) MULTIPLE LEGACY PLANS.—If an employer 
is obligated to contribute to more than one legacy 
plan with respect to employees eligible to accrue bene-
fits under more than one composite plan and there is 
a merger or transfer of such legacy plans, the transi-
tion contribution rate applicable to the legacy plan 
resulting from the merger or transfer with respect to 
that employer shall be determined in accordance with 
the provisions of section 805(d)(2)(B).’’. 
(2) PENALTIES.— 
(A) CIVIL ENFORCEMENT OF FAILURE TO 
COMPLY WITH REALIGNMENT PROGRAM.—Section 
502(a) of such Act (29 U.S.C. 1132(a)) is 
amended— 
(i) in paragraph (10), by striking ‘‘or’’ 
at the end; 
(ii) in paragraph (11), by striking the 
period at the end and inserting ‘‘; or’’; and
879 
(iii) by adding at the end the fol-
lowing: 
‘‘(12) in the case of a composite plan required to 
adopt a realignment program under section 803, if 
the plan sponsor— 
‘‘(A) has not adopted a realignment pro-
gram under that section by the deadline estab-
lished in such section; or 
‘‘(B) fails to update or comply with the 
terms of the realignment program in accordance 
with the requirements of such section, 
by the Secretary, by an employer that has an obliga-
tion to contribute with respect to the composite plan, 
or by an employee organization that represents active 
participants in the composite plan, for an order com-
pelling the plan sponsor to adopt a realignment pro-
gram, or to update or comply with the terms of the 
realignment program, in accordance with the require-
ments of such section and the realignment program.’’. 
(B) CIVIL
PENALTIES.—Section 502(c) of 
such Act (29 U.S.C. 1132(c)) is amended— 
(i) by moving paragraphs (8), (10), 
and (12) each 2 ems to the left;
880 
(ii) by redesignating paragraphs (9) 
through (12) as paragraphs (12) through 
(15), respectively; and 
(iii) by inserting after paragraph (8) 
the following: 
‘‘(9) The Secretary may assess against any plan 
sponsor of a composite plan a civil penalty of not 
more than $1,100 per day for each violation by such 
sponsor— 
‘‘(A) of the requirement under section 
802(a) on the plan actuary to certify the plan’s 
current or projected funded ratio by the date 
specified in such subsection; or 
‘‘(B) of the requirement under section 803 
to adopt a realignment program by the deadline 
established in that section and to comply with its 
terms. 
‘‘(10)(A) The Secretary may assess against any 
plan sponsor of a composite plan a civil penalty of 
not more than $100 per day for each violation by 
such sponsor of the requirement under section 803(b) 
to provide notice as described in such section, except 
that no penalty may be assessed in any case in which 
the plan sponsor exercised reasonable diligence to 
meet the requirements of such section and—
881 
‘‘(i) the plan sponsor did not know that the 
violation existed; or 
‘‘(ii) the plan sponsor provided such notice 
during the 30-day period beginning on the first 
date on which the plan sponsor knew, or in exer-
cising reasonable due diligence should have 
known, that such violation existed. 
‘‘(B) In any case in which the plan sponsor exer-
cised reasonable diligence to meet the requirements of 
section 803(b)— 
‘‘(i) the total penalty assessed under this 
paragraph against such sponsor for a plan year 
may not exceed $500,000; and 
‘‘(ii) the Secretary may waive part or all of 
such penalty to the extent that the payment of 
such penalty would be excessive or otherwise in-
equitable relative to the violation involved. 
‘‘(11) The Secretary may assess against any 
plan sponsor of a composite plan a civil penalty of 
not more than $100 per day for each violation by 
such sponsor of the notice requirements under sections 
801(b)(5) and 805(b)(2).’’. 
(3) CONFORMING
AMENDMENT.—The table of 
contents in section 1 of such Act (29 U.S.C. 1001
882 
note) is amended by inserting after the item relating 
to section 734 the following: 
‘‘PART 8—COMPOSITE PLANS AND LEGACY PLANS 
‘‘Sec. 801. Composite plan defined. 
‘‘Sec. 802. Funded ratios; actuarial assumptions. 
‘‘Sec. 803. Realignment program. 
‘‘Sec. 804. Limitation on increasing benefits. 
‘‘Sec. 805. Composite plan restrictions to preserve legacy plan funding. 
‘‘Sec. 806. Mergers and asset transfers of composite plans.’’. 
(b) AMENDMENT TO THE INTERNAL REVENUE CODE 
OF 1986.— 
(1) IN GENERAL.—Part III of subchapter D of 
chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following: 
‘‘Subpart C—Composite Plans and Legacy Plans 
‘‘Sec. 437. Composite plan defined. 
‘‘Sec. 438. Funded ratios; actuarial assumptions. 
‘‘Sec. 439. Realignment program. 
‘‘Sec. 440. Limitation on increasing benefits. 
‘‘Sec. 440A. Composite plan restrictions to preserve legacy plan funding. 
‘‘Sec. 440B. Mergers and asset transfers of composite plans. 
‘‘SEC. 437. COMPOSITE PLAN DEFINED. 
‘‘(a) IN GENERAL.—For purposes of this title, the term 
‘composite plan’ means a pension plan— 
‘‘(1) which is a multiemployer plan that is nei-
ther a defined benefit plan nor a defined contribution 
plan, 
‘‘(2) the terms of which provide that the plan is 
a composite plan for purposes of this title with re-
spect to which not more than one multiemployer de-
fined benefit plan is treated as a legacy plan within
884 
‘‘(C) corrective action through a realign-
ment program pursuant to section 439 whenever 
the plan’s projected funded ratio is below 120 
percent for the plan year, and 
‘‘(D) an annual notification to each partici-
pant describing the participant’s benefits under 
the plan and explaining that such benefits may 
be subject to reduction under a realignment pro-
gram pursuant to section 439 based on the plan’s 
funded status in future plan years, and 
‘‘(6) the board of trustees of which includes at 
least one retiree or beneficiary in pay status during 
each plan year following the first plan year in which 
at least 5 percent of the participants in the plan are 
retirees or beneficiaries in pay status. 
‘‘(b) TRANSITION FROM A MULTIEMPLOYER DEFINED 
BENEFIT PLAN.— 
‘‘(1) IN GENERAL.—The plan sponsor of a de-
fined benefit plan that is a multiemployer plan may, 
subject to paragraph (2), amend the plan to incor-
porate the features of a composite plan as a compo-
nent of the multiemployer plan separate from the de-
fined benefit plan component, except in the case of a 
defined benefit plan for which the plan actuary has 
certified under section 432(b)(3) that the plan is or
885 
will be in critical status for the plan year in which 
such amendment would become effective or for any of 
the succeeding 5 plan years. 
‘‘(2) REQUIREMENTS.—Any amendment pursu-
ant to paragraph (1) to incorporate the features of a 
composite plan as a component of a multiemployer 
plan shall— 
‘‘(A) apply with respect to all collective bar-
gaining agreements providing for contributions 
to the multiemployer plan on or after the effec-
tive date of the amendment, 
‘‘(B) apply with respect to all participants 
in the multiemployer plan for whom contribu-
tions are made to the multiemployer plan on or 
after the effective date of the amendment, 
‘‘(C) specify that the effective date of the 
amendment is— 
‘‘(i) the first day of a specified plan 
year following the date of the adoption of 
the amendment, except that the plan spon-
sor may alternatively provide for a separate 
effective date with respect to each collective 
bargaining agreement under which con-
tributions to the multiemployer plan are re-
quired, which shall occur on the first day of
886 
the first plan year beginning after the ter-
mination, or if earlier, the re-opening, of 
each such agreement, or such earlier date as 
the parties to the agreement and the plan 
sponsor of the multiemployer plan shall 
agree to, and 
‘‘(ii) not later than the first day of the 
fifth plan year beginning on or after the 
date of the adoption of the amendment, 
‘‘(D) specify that, as of the amendment’s ef-
fective date, no further benefits shall accrue 
under the defined benefit component of the multi-
employer plan, and 
‘‘(E) specify that, as of the amendment’s ef-
fective date, the plan sponsor of the multiem-
ployer plan shall be the plan sponsor of both the 
composite plan component and the defined ben-
efit plan component of the plan. 
‘‘(3) SPECIAL RULES.—If a multiemployer plan 
is amended pursuant to paragraph (1)— 
‘‘(A) the requirements of this title shall be 
applied to the composite plan component and the 
defined benefit plan component of the multiem-
ployer plan as if each such component were 
maintained as a separate plan, and
887 
‘‘(B) the assets of the composite plan compo-
nent and the defined benefit plan component of 
the plan shall be held in a single trust forming 
part of the plan under which the trust instru-
ment expressly provides— 
‘‘(i) for separate accounts (and appro-
priate records) to be maintained to reflect 
the interest which each of the plan compo-
nents has in the trust, including separate 
accounting for additions to the trust for the 
benefit of each plan component, disburse-
ments made from each plan component’s ac-
count in the trust, investment experience of 
the trust allocable to that account, and ad-
ministrative expenses (whether direct ex-
penses or shared expenses allocated propor-
tionally), and permits, but does not require, 
the pooling of some or all of the assets of the 
two plan components for investment pur-
poses, and 
‘‘(ii) that the assets of each of the two 
plan components shall be held, invested, re-
invested, managed, administered and dis-
tributed for the exclusive benefit of the par-
ticipants and beneficiaries of each such
888 
plan component, and in no event shall the 
assets of one of the plan components be 
available to pay benefits due under the 
other plan component. 
‘‘(4) NOT
A
TERMINATION
EVENT.—Notwith-
standing section 4041A of the Employee Retirement 
Income Security Act of 1974, an amendment pursu-
ant to paragraph (1) to incorporate the features of a 
composite plan as a component of a multiemployer 
plan does not constitute termination of the multiem-
ployer plan. 
‘‘(5) NOTICE TO THE SECRETARY.— 
‘‘(A) NOTICE.—The plan sponsor of a com-
posite plan shall provide notice to the Secretary 
of the intent to establish the composite plan (or, 
in the case of a composite plan incorporated as 
a component of a multiemployer plan as de-
scribed in paragraph (1), the intent to amend 
the multiemployer plan to incorporate such com-
posite plan) at least 30 days prior to the effective 
date of such establishment or amendment. 
‘‘(B) CERTIFICATION.—In the case of a 
composite plan incorporated as a component of 
a multiemployer plan as described in paragraph 
(1), such notice shall include a certification by
889 
the plan actuary under section 432(b)(3) that the 
effective date of the amendment occurs in a plan 
year for which the multiemployer plan is not in 
critical status for that plan year and any of the 
succeeding 5 plan years. 
‘‘(6) REFERENCES TO COMPOSITE PLAN COMPO-
NENT.—As used in this subpart, the term ‘composite 
plan’ includes a composite plan component added to 
a defined benefit plan pursuant to paragraph (1). 
‘‘(7) 
RULE
OF
CONSTRUCTION.—Paragraph 
(2)(A) shall not be construed as preventing the plan 
sponsor of a multiemployer plan from adopting an 
amendment pursuant to paragraph (1) because some 
collective bargaining agreements are amended to cease 
any covered employer’s obligation to contribute to the 
multiemployer plan before or after the plan amend-
ment is effective. Paragraph (2)(B) shall not be con-
strued as preventing the plan sponsor of a multiem-
ployer plan from adopting an amendment pursuant 
to paragraph (1) because some participants cease to 
have contributions made to the multiemployer plan 
on their behalf before or after the plan amendment is 
effective.
890 
‘‘(c) COORDINATION WITH FUNDING RULES.—Except 
as otherwise provided in this title, sections 412, 431, and 
432 shall not apply to a composite plan. 
‘‘(d) TREATMENT OF A COMPOSITE PLAN.—For pur-
poses of this title (other than sections 412 and 418E), a 
composite plan shall be treated as if it were a defined ben-
efit plan unless a different treatment is provided for under 
applicable law. 
‘‘SEC. 438. FUNDED RATIOS; ACTUARIAL ASSUMPTIONS. 
‘‘(a) CERTIFICATION OF FUNDED RATIOS.— 
‘‘(1) IN GENERAL.—Not later than the one-hun-
dred twentieth day of each plan year of a composite 
plan, the plan actuary of the composite plan shall 
certify to the Secretary, the Secretary of Labor, and 
the plan sponsor the plan’s current funded ratio and 
projected funded ratio for the plan year. 
‘‘(2) DETERMINATION
OF
CURRENT
FUNDED 
RATIO
AND
PROJECTED
FUNDED
RATIO.—For pur-
poses of this section— 
‘‘(A) CURRENT FUNDED RATIO.—The cur-
rent funded ratio is the ratio (expressed as a 
percentage) of— 
‘‘(i) the value of the plan’s assets as of 
the first day of the plan year, to
891 
‘‘(ii) the plan actuary’s best estimate of 
the present value of the plan liabilities as of 
the first day of the plan year. 
‘‘(B) PROJECTED FUNDED RATIO.—The pro-
jected funded ratio is the current funded ratio 
projected to the first day of the fifteenth plan 
year following the plan year for which the deter-
mination is being made. 
‘‘(3) CONSIDERATION
OF
CONTRIBUTION
RATE 
INCREASES.—For purposes of projections under this 
subsection, the plan sponsor may anticipate contribu-
tion rate increases beyond the term of the current col-
lective bargaining agreement and any agreed-to sup-
plements, up to a maximum of 2.5 percent per year, 
compounded annually, unless it would be unreason-
able under the circumstances to assume that contribu-
tions would increase by that amount. 
‘‘(b) ACTUARIAL ASSUMPTIONS AND METHODS.—For 
purposes of this part— 
‘‘(1) IN GENERAL.—All costs, liabilities, rates of 
interest, and other factors under the plan shall be de-
termined for a plan year on the basis of actuarial as-
sumptions and methods—
892 
‘‘(A) each of which is reasonable (taking 
into account the experience of the plan and rea-
sonable expectations), 
‘‘(B) which, in combination, offer the actu-
ary’s best estimate of anticipated experience 
under the plan, and 
‘‘(C) with respect to which any change from 
the actuarial assumptions and methods used in 
the previous plan year shall be certified by the 
plan actuary and the actuarial rationale for 
such change provided in the annual report re-
quired by section 6058. 
‘‘(2) FAIR
MARKET
VALUE
OF
ASSETS.—The 
value of the plan’s assets shall be taken into account 
on the basis of their fair market value. 
‘‘(3) DETERMINATION
OF
NORMAL
COST
AND 
PLAN LIABILITIES.—A plan’s normal cost and liabil-
ities shall be based on the most recent actuarial valu-
ation required under section 437(a)(5)(A) and the 
unit credit funding method. 
‘‘(4) TIME
WHEN
CERTAIN
CONTRIBUTIONS 
DEEMED MADE.—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
893 
such last day. For purposes of this paragraph, such 
two and one-half month period may be extended for 
not more than six months under regulations pre-
scribed by the Secretary. 
‘‘(5) ADDITIONAL
ACTUARIAL
ASSUMPTIONS.— 
Except where otherwise provided in this subpart, the 
provisions of section 432(b)(3)(B) shall apply to any 
determination or projection under this subpart. 
‘‘SEC. 439. REALIGNMENT PROGRAM. 
‘‘(a) REALIGNMENT PROGRAM.— 
‘‘(1) ADOPTION.—In any case in which the plan 
actuary certifies under section 438(a) that the plan’s 
projected funded ratio is below 120 percent for the 
plan year, the plan sponsor shall adopt a realignment 
program under paragraph (2) not later than 210 
days after the due date of the certification required 
under section 438(a). The plan sponsor shall adopt an 
updated realignment program for each succeeding 
plan year for which a certification described in the 
preceding sentence is made. 
‘‘(2) CONTENT OF REALIGNMENT PROGRAM.— 
‘‘(A) IN GENERAL.—A realignment program 
adopted under this paragraph is a written pro-
gram which consists of all reasonable measures, 
including options or a range of options to be un-
894 
dertaken by the plan sponsor or proposed to the 
bargaining parties, formulated, based on reason-
ably anticipated experience and reasonable actu-
arial assumptions, to enable the plan to achieve 
a projected funded ratio of at least 120 percent 
for the following plan year. 
‘‘(B) INITIAL
PROGRAM
ELEMENTS.—Rea-
sonable measures under a realignment program 
described in subparagraph (A) may include any 
of the following: 
‘‘(i) Proposed contribution increases. 
‘‘(ii) A reduction in the rate of future 
benefit accruals, so long as the resulting 
rate shall not be less than 1 percent of the 
contributions on which benefits are based as 
of the start of the plan year (or the equiva-
lent standard accrual rate as described in 
section 432(e)(6)). 
‘‘(iii) A modification or elimination of 
adjustable benefits of participants that are 
not in pay status before the date of the no-
tice required under subsection (b)(1). 
‘‘(iv) Any other legally available meas-
ures not specifically described in this sub-
895 
paragraph or subparagraph (C) or (D) that 
the plan sponsor determines are reasonable. 
‘‘(C) ADDITIONAL PROGRAM ELEMENTS.—If 
the plan sponsor has determined that all reason-
able measures available under subparagraph (B) 
will not enable the plan to achieve a projected 
funded ratio of at least 120 percent the following 
plan year, such reasonable measures may also 
include— 
‘‘(i) a reduction of accrued benefits 
that are not in pay status by the date of the 
notice required under subsection (b)(1), or 
‘‘(ii) a reduction of any benefits of 
participants that are in pay status before 
the date of the notice required under sub-
section (b)(1) other than core benefits as de-
fined in paragraph (4). 
‘‘(D) ADDITIONAL
REDUCTIONS.—In the 
case of a composite plan for which the plan 
sponsor has determined that all reasonable meas-
ures available under subparagraphs (B) and (C) 
will not enable the plan to achieve a projected 
funded ratio of at least 120 percent for the fol-
lowing plan year, such reasonable measures may 
also include—
896 
‘‘(i) a further reduction in the rate of 
future benefit accruals without regard to the 
limitation applicable under subparagraph 
(B)(ii), or 
‘‘(ii) a reduction of core benefits, 
provided that such reductions shall be equitably 
distributed across the participant and bene-
ficiary population, taking into account factors, 
with respect to participants and beneficiaries 
and their benefits, that may include one or more 
of the factors listed in subclauses (I) through (X) 
of section 432(e)(9)(D)(vi), to the extent nec-
essary to enable the plan to achieve a projected 
funded ratio of at least 120 percent for the fol-
lowing plan year, or at the election of the plan 
sponsor, a projected funded ratio of at least 100 
percent for the following plan year and a current 
funded ratio of at least 90 percent. 
‘‘(3) ADJUSTABLE BENEFIT DEFINED.—For pur-
poses of this subpart, the term ‘adjustable benefit’ 
means— 
‘‘(A) benefits, rights, and features under the 
plan, including post-retirement death benefits, 
60-month guarantees, disability benefits not yet 
in pay status, and similar benefits,
897 
‘‘(B) any early retirement benefit or retire-
ment-type subsidy (within the meaning of sec-
tion 411(d)(6)(B)(i)) and any benefit payment 
option (other than the qualified joint and sur-
vivor annuity), and 
‘‘(C) benefit increases that were adopted (or, 
if later, took effect) less than 60 months before 
the first day such realignment program took ef-
fect. 
‘‘(4) CORE BENEFIT DEFINED.—For purposes of 
this subpart, the term ‘core benefit’ means a partici-
pant’s accrued benefit payable in the normal form of 
an annuity commencing at normal retirement age, 
determined without regard to— 
‘‘(A) any early retirement benefits, retire-
ment-type subsidies, or other benefits, rights, or 
features that may be associated with that benefit, 
and 
‘‘(B) any cost-of-living adjustments or ben-
efit increases effective after the date of retire-
ment. 
‘‘(5) COORDINATION
WITH
CONTRIBUTION
IN-
CREASES.— 
‘‘(A) IN GENERAL.—A realignment program 
may provide that some or all of the benefit modi-
898 
fications described in the program will only take 
effect if the bargaining parties fail to agree to 
specified levels of increases in contributions to 
the plan, effective as of specified dates. 
‘‘(B) INDEPENDENT
BENEFIT
MODIFICA-
TIONS.—If a realignment program adopts any 
changes to the benefit formula that are inde-
pendent of potential contribution increases, such 
changes shall take effect not later than 180 days 
following the first day of the first plan year that 
begins following the adoption of the realignment 
program. 
‘‘(C) 
CONDITIONAL
BENEFIT
MODIFICA-
TIONS.—If a realignment program adopts any 
changes to the benefit formula that take effect 
only if the bargaining parties fail to agree to 
contribution increases, such changes shall take ef-
fect not later than the first day of the first plan 
year beginning after the third anniversary of the 
date of adoption of the realignment program. 
‘‘(D) REVOCATION
OF
CERTAIN
BENEFIT 
MODIFICATIONS.—Benefit 
modifications 
de-
scribed in paragraph (3) may be revoked, in 
whole or in part, and retroactively or prospec-
tively, when contributions to the plan are in-
899 
creased, as specified in the realignment program, 
including any amendments thereto. The pre-
ceding sentence shall not apply unless the con-
tribution increases are to be effective not later 
than the fifth anniversary of the first day of the 
first plan year that begins after the adoption of 
the realignment program. 
‘‘(b) NOTICE.— 
‘‘(1) IN GENERAL.—In any case in which it is 
certified under section 438(a) that the projected fund-
ed ratio is less than 120 percent, the plan sponsor 
shall, not later than 30 days after the date of the cer-
tification, provide notification of the current and pro-
jected funded ratios to the participants and bene-
ficiaries, the bargaining parties, and the Secretary. 
Such notice shall include— 
‘‘(A) an explanation that contribution rate 
increases or benefit reductions may be necessary, 
‘‘(B) a description of the types of benefits 
that might be reduced, and 
‘‘(C) an estimate of the contribution in-
creases and benefit reductions that may be nec-
essary to achieve a projected funded ratio of 120 
percent. 
‘‘(2) NOTICE OF BENEFIT MODIFICATIONS.—
900 
‘‘(A) IN GENERAL.—No modifications may 
be made that reduce the rate of future benefit ac-
crual or that reduce core benefits or adjustable 
benefits unless notice of such reduction has been 
given at least 180 days before the general effec-
tive date of such reduction for all participants 
and beneficiaries to— 
‘‘(i) plan participants and bene-
ficiaries, 
‘‘(ii) each employer who has an obliga-
tion to contribute to the composite plan, 
and 
‘‘(iii) 
each 
employee 
organization 
which, for purposes of collective bargaining, 
represents plan participants employed by 
such employers. 
‘‘(B) CONTENT
OF
NOTICE.—The notice 
under subparagraph (A) shall contain— 
‘‘(i) sufficient information to enable 
participants and beneficiaries to under-
stand the effect of any reduction on their 
benefits, including an illustration of any af-
fected benefit or subsidy, on an annual or 
monthly basis that a participant or bene-
ficiary would otherwise have been eligible
901 
for as of the general effective date described 
in subparagraph (A), and 
‘‘(ii) information as to the rights and 
remedies of plan participants and bene-
ficiaries as well as how to contact the De-
partment of Labor for further information 
and assistance, where appropriate. 
‘‘(C) FORM
AND
MANNER.—Any notice 
under subparagraph (A)— 
‘‘(i) shall be provided in a form and 
manner prescribed in regulations of the Sec-
retary of Labor, 
‘‘(ii) shall be written in a manner so 
as to be understood by the average plan 
participant. 
‘‘(3) MODEL NOTICES.—The Secretary shall— 
‘‘(A) prescribe model notices that the plan 
sponsor of a composite plan may use to satisfy 
the notice requirements under this subsection, 
and 
‘‘(B) by regulation enumerate any details 
related to the elements listed in paragraph (1) 
that any notice under this subsection must in-
clude.
902 
‘‘(4) DELIVERY METHOD.—Any notice under this 
part shall be provided in writing and may also be 
provided in electronic form to the extent that the form 
is reasonably accessible to persons to whom the notice 
is provided. 
‘‘SEC. 440. LIMITATION ON INCREASING BENEFITS. 
‘‘(a) LEVEL OF CURRENT FUNDED RATIOS.—Except 
as provided in subsections (c), (d), and (e), no plan amend-
ment increasing benefits or establishing new benefits under 
a composite plan may be adopted for a plan year unless— 
‘‘(1) the plan’s current funded ratio is at least 
110 percent (without regard to the benefit increase or 
new benefits), 
‘‘(2) taking the benefit increase or new benefits 
into account, the current funded ratio is at least 100 
percent and the projected funded ratio for the current 
plan year is at least 120 percent, 
‘‘(3) in any case in which, after taking the ben-
efit increase or new benefits into account, the current 
funded ratio is less than 140 percent or the projected 
funded ratio is less than 140 percent, the benefit in-
crease or new benefits are projected by the plan actu-
ary to increase the present value of the plan’s liabil-
ities for the plan year by not more than 3 percent, 
and
903 
‘‘(4) expected contributions for the current plan 
year are at least 120 percent of normal cost for the 
plan year, determined using the unit credit funding 
method and treating the benefit increase or new bene-
fits as in effect for the entire plan year. 
‘‘(b) ADDITIONAL REQUIREMENTS WHERE CORE BEN-
EFITS REDUCED.—If a plan has been amended to reduce 
core benefits pursuant to a realignment program under sec-
tion 439(a)(2)(D), such plan may not be subsequently 
amended to increase core benefits unless the amendment— 
‘‘(1) increases the level of future benefit pay-
ments only, and 
‘‘(2) provides for an equitable distribution of 
benefit increases across the participant and bene-
ficiary population, taking into account the extent to 
which the benefits of participants were previously re-
duced pursuant to such realignment program. 
‘‘(c) EXCEPTION
TO
COMPLY
WITH
APPLICABLE 
LAW.—Subsection (a) shall not apply in connection with 
a plan amendment if the amendment is required as a condi-
tion of qualification under part I of subchapter D of chapter 
1 or to comply with other applicable law. 
‘‘(d) EXCEPTION
WHERE
MAXIMUM
DEDUCTIBLE 
LIMIT APPLIES.—Subsection (a) shall not apply in connec-
tion with a plan amendment if and to the extent that con-
904 
tributions to the composite plan would not be deductible for 
the plan year under section 404(a)(1)(E) if the plan amend-
ment is not adopted. The Secretary of the Treasury shall 
issue regulations to implement this paragraph. 
‘‘(e) EXCEPTION FOR CERTAIN BENEFIT MODIFICA-
TIONS.—Subsection (a) shall not apply in connection with 
a plan amendment under section 439(a)(5)(C), regarding 
conditional benefit modifications. 
‘‘(f) TREATMENT OF PLAN AMENDMENTS.—For pur-
poses of this section— 
‘‘(1) if two or more plan amendments increasing 
benefits or establishing new benefits are adopted in a 
plan year, such amendments shall be treated as a sin-
gle amendment adopted on the last day of the plan 
year, 
‘‘(2) all benefit increases and new benefits adopt-
ed in a single amendment are treated as a single ben-
efit increase, irrespective of whether the increases and 
new benefits take effect in more than one plan year, 
and 
‘‘(3) increases in contributions or decreases in 
plan liabilities which are scheduled to take effect in 
future plan years may be taken into account in con-
nection with a plan amendment if they have been
905 
agreed to in writing or otherwise formalized by the 
date the plan amendment is adopted. 
‘‘SEC. 440A. COMPOSITE PLAN RESTRICTIONS TO PRESERVE 
LEGACY PLAN FUNDING. 
‘‘(a) TREATMENT AS A LEGACY PLAN.— 
‘‘(1) IN GENERAL.—For purposes of this sub-
chapter, a defined benefit plan shall be treated as a 
legacy plan with respect to the composite plan under 
which the employees who were eligible to accrue a 
benefit under the defined benefit plan become eligible 
to accrue a benefit under such composite plan. 
‘‘(2) COMPONENT PLANS.—In any case in which 
a defined benefit plan is amended to add a composite 
plan component pursuant to section 437(b), para-
graph (1) shall be applied by substituting ‘defined 
benefit component’ for ‘defined benefit plan’ and 
‘composite plan component’ for ‘composite plan’. 
‘‘(3) ELIGIBLE
TO
ACCRUE
A
BENEFIT.—For 
purposes of paragraph (1), an employee is considered 
eligible to accrue a benefit under a composite plan as 
of the first day in which the employee completes an 
hour of service under a collective bargaining agree-
ment that provides for contributions to and accruals 
under the composite plan in lieu of accruals under the 
legacy plan.
906 
‘‘(4) COLLECTIVE BARGAINING AGREEMENT.—As 
used in this subpart, the term ‘collective bargaining 
agreement’ includes any agreement under which an 
employer has an obligation to contribute to a plan. 
‘‘(5) OTHER
TERMS.—Any term used in this 
subpart which is not defined in this part and which 
is also used in section 432 shall have the same mean-
ing provided such term in such section. 
‘‘(b) RESTRICTIONS ON ACCEPTANCE BY COMPOSITE 
PLAN OF AGREEMENTS AND CONTRIBUTIONS.— 
‘‘(1) IN GENERAL.—The plan sponsor of a com-
posite plan shall not accept or recognize a collective 
bargaining agreement (or any modification to such 
agreement), and no contributions may be accepted 
and no benefits may be accrued or otherwise earned 
under the agreement— 
‘‘(A) in any case in which the plan actuary 
of any defined benefit plan that would be treated 
as a legacy plan with respect to such composite 
plan has certified under section 432(b)(3) that 
such defined benefit plan is or will be in critical 
status for the plan year in which such agreement 
would take effect or for any of the succeeding 5 
plan years, and
907 
‘‘(B) unless the agreement requires each em-
ployer who is a party to such agreement, includ-
ing employers whose employees are not partici-
pants in the legacy plan, to provide contribu-
tions to the legacy plan with respect to such com-
posite plan in a manner that satisfies the transi-
tion contribution requirements of subsection (d). 
‘‘(2) NOTICE.—Not later than 30 days after a de-
termination by a plan sponsor of a composite plan 
that an agreement fails to satisfy the requirements de-
scribed in paragraph (1), the plan sponsor shall pro-
vide notification of such failure and the reasons for 
such determination to— 
‘‘(A) the parties to the agreement, 
‘‘(B) active participants of the composite 
plan who have ceased to accrue or otherwise earn 
benefits with respect to service with an employer 
pursuant to paragraph (1), and 
‘‘(C) the Secretary of Labor, the Secretary 
of the Treasury, and the Pension Benefit Guar-
anty Corporation. 
‘‘(3) LIMITATION
ON
RETROACTIVE
EFFECT.— 
This subsection shall not apply to benefits accrued be-
fore the date on which notice is provided under para-
graph (2).
908 
‘‘(c) RESTRICTION ON ACCRUAL OF BENEFITS UNDER 
A COMPOSITE PLAN.— 
‘‘(1) IN GENERAL.—In any case in which an em-
ployer, under a collective bargaining agreement en-
tered into after the date of enactment of the Giving 
Retirement Options to Workers Act of 2020, ceases to 
have an obligation to contribute to a multiemployer 
defined benefit plan, no employees employed by the 
employer may accrue or otherwise earn benefits under 
any composite plan, with respect to service with that 
employer, for a 60-month period beginning on the 
date on which the employer entered into such collec-
tive bargaining agreement. 
‘‘(2) NOTICE OF CESSATION OF OBLIGATION.— 
Within 30 days of determining that an employer has 
ceased to have an obligation to contribute to a legacy 
plan with respect to employees employed by an em-
ployer that is or will be contributing to a composite 
plan with respect to service of such employees, the 
plan sponsor of the legacy plan shall notify the plan 
sponsor of the composite plan of that cessation. 
‘‘(3) NOTICE OF CESSATION OF ACCRUALS.—Not 
later than 30 days after determining that an em-
ployer has ceased to have an obligation to contribute 
to a legacy plan, the plan sponsor of the composite
909 
plan shall notify the bargaining parties, the active 
participants affected by the cessation of accruals, the 
Secretary, the Secretary of Labor, and the Pension 
Benefit Guaranty Corporation of the cessation of ac-
cruals, the period during which such cessation is in 
effect, and the reasons therefor. 
‘‘(4) LIMITATION
ON
RETROACTIVE
EFFECT.— 
This subsection shall not apply to benefits accrued be-
fore the date on which notice is provided under para-
graph (3). 
‘‘(d) TRANSITION CONTRIBUTION REQUIREMENTS.— 
‘‘(1) IN
GENERAL.—A collective bargaining 
agreement satisfies the transition contribution re-
quirements of this subsection if the agreement— 
‘‘(A) authorizes for payment of contribu-
tions to a legacy plan at a rate or rates equal 
to or greater than the transition contribution 
rate established under paragraph (2), and 
‘‘(B) does not provide for— 
‘‘(i) a suspension of contributions to 
the legacy plan with respect to any period 
of service, or 
‘‘(ii) any new direct or indirect exclu-
sion of younger or newly hired employees of 
the employer from being taken into account
910 
in determining contributions owed to the 
legacy plan. 
‘‘(2) TRANSITION CONTRIBUTION RATE.— 
‘‘(A) IN
GENERAL.—The transition con-
tribution rate for a plan year is the contribution 
rate that, as certified by the actuary of the leg-
acy plan in accordance with the principles in 
section 432(b)(3)(B), is reasonably expected to be 
adequate— 
‘‘(i) to fund the normal cost for the 
plan year, 
‘‘(ii) to amortize the plan’s unfunded 
liabilities in level annual installments over 
25 years, beginning with the plan year in 
which the transition contribution rate is 
first established, and 
‘‘(iii) to amortize any subsequent 
changes in the legacy plan’s unfunded li-
ability due to experience gains or losses (in-
cluding investment gains or losses, gains or 
losses due to contributions greater or less 
than the contributions made under the prior 
transition contribution rate, and other actu-
arial gains or losses), changes in actuarial 
assumptions, changes to the legacy plan’s
911 
benefits, or changes in funding method over 
a period of 15 plan years beginning with 
the plan year in which such change in un-
funded liability is incurred. 
The transition contribution rate for any plan 
year may not be less than the transition con-
tribution rate for the plan year in which such 
rate is first established. 
‘‘(B) MULTIPLE RATES.—If different rates 
of contribution are payable to the legacy plan by 
different employers or for different classes of em-
ployees, the certification shall specify a transi-
tion contribution rate for each such employer. 
‘‘(C) RATE APPLICABLE TO EMPLOYER.— 
‘‘(i) IN GENERAL.—Except as provided 
by clause (ii), the transition contribution 
rate applicable to an employer for a plan 
year is the rate in effect for the plan year 
of the legacy plan that commences on or 
after 180 days before the earlier of— 
‘‘(I) the effective date of the collec-
tive bargaining agreement pursuant to 
which the employer contributes to the 
legacy plan, or