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current plan year continue in effect for
succeeding plan years,
is less than the present value of all benefits
projected to be payable under the plan dur-
ing the current plan year and each of the
5 succeeding plan years (plus administra-
tive expenses for such plan years).
‘‘(B) A plan is described in this subpara-
graph if—
‘‘(i) the plan has an accumulated
funding deficiency for the current plan
year, not taking into account any extension
of 
amortization 
periods 
under 
section
431(d), or
‘‘(ii) the plan is projected to have an
accumulated funding deficiency for any of
the 3 succeeding plan years (4 succeeding
plan years if the funded percentage of the
plan is 65 percent or less), not taking into
account any extension of amortization peri-
ods under section 431(d).
‘‘(C) A plan is described in this subpara-
graph if—
‘‘(i)(I) the plan’s normal cost for the
current plan year, plus interest (determined
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at the rate used for determining costs under
the plan) for the current plan year on the
amount of unfunded benefit liabilities under
the plan as of the last date of the preceding
plan year, exceeds
‘‘(II) the present value of the reason-
ably anticipated employer contributions for
the current plan year,
‘‘(ii) the present value of nonforfeitable
benefits of inactive participants is greater
than the present value of nonforfeitable ben-
efits of active participants, and
‘‘(iii) the plan has an accumulated
funding deficiency for the current plan
year, or is projected to have such a defi-
ciency for any of the 4 succeeding plan
years, not taking into account any exten-
sion of amortization periods under section
431(d).
‘‘(D) A plan is described in this subpara-
graph if the sum of—
‘‘(i) the market value of plan assets,
plus
‘‘(ii) the present value of the reason-
ably anticipated employer contributions for
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the current plan year and each of the 4 suc-
ceeding plan years, assuming that the terms
of all collective bargaining agreements pur-
suant to which the plan is maintained for
the current plan year continue in effect for
succeeding plan years,
is less than the present value of all benefits pro-
jected to be payable under the plan during the
current plan year and each of the 4 succeeding
plan years (plus administrative expenses for
such plan years).
‘‘(3) ANNUAL
CERTIFICATION
BY
PLAN
ACTU-
ARY.—
‘‘(A) IN GENERAL.—During the 90-day pe-
riod beginning on the first day of each plan year
of a multiemployer plan, the plan actuary shall
certify to the Secretary—
‘‘(i) whether or not the plan is in en-
dangered status for such plan year and
whether or not the plan is in critical status
for such plan year, and
‘‘(ii) in the case of a plan which is in
a funding improvement or rehabilitation
period, whether or not the plan is making
the scheduled progress in meeting the re-
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quirements of its funding improvement or
rehabilitation plan.
‘‘(B) ACTUARIAL PROJECTIONS OF ASSETS
AND LIABILITIES.—
‘‘(i) IN GENERAL.—In making the de-
terminations and projections under this
subsection, the plan actuary shall make pro-
jections required for the current and suc-
ceeding plan years, using reasonable actu-
arial estimates, assumptions, 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. The projected present
value of liabilities as of the beginning of
such year shall be determined based on the
actuarial statement required under section
103(d) of the Employee Retirement Income
Security Act of 1974 with respect to the
most recently filed annual report or the ac-
tuarial valuation for the preceding plan
year.
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‘‘(ii) DETERMINATIONS
OF
FUTURE
CONTRIBUTIONS.—Any actuarial projection
of plan assets shall assume—
‘‘(I) reasonably anticipated em-
ployer contributions for the current
and succeeding plan years, assuming
that the terms of the one or more col-
lective bargaining agreements pursuant
to which the plan is maintained for the
current plan year continue in effect for
succeeding plan years, or
‘‘(II) that employer contributions
for the most recent plan year will con-
tinue indefinitely, but only if the plan
actuary determines there have been no
significant demographic changes that
would make such assumption unrea-
sonable.
‘‘(C) PENALTY
FOR
FAILURE
TO
SECURE
TIMELY
ACTUARIAL
CERTIFICATION.—Any fail-
ure of the plan’s actuary to certify the plan’s
status under this subsection by the date specified
in subparagraph (A) shall be treated for pur-
poses of section 502(c)(2) of such Act as a failure
or refusal by the plan administrator to file the
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annual report required to be filed with the Sec-
retary under section 101(b)(4) of such Act.
‘‘(D) NOTICE.—In any case in which a
multiemployer plan is certified to be in endan-
gered or critical status under subparagraph (A),
the plan sponsor shall, not later than 30 days
after the date of the certification, provide notifi-
cation of the endangered or critical status to the
participants and beneficiaries, the bargaining
parties, the Pension Benefit Guaranty Corpora-
tion, the Secretary, and the Secretary of Labor.
‘‘(c) FUNDING IMPROVEMENT PLAN MUST BE ADOPT-
ED FOR MULTIEMPLOYER PLANS IN ENDANGERED STA-
TUS.—
‘‘(1) IN GENERAL.—In any case in which a mul-
tiemployer plan is in endangered status for a plan
year, the plan sponsor, in accordance with this
subsection—
‘‘(A) shall adopt a funding improvement
plan not later than 240 days following the re-
quired date for the actuarial certification of en-
dangered status under subsection (b)(3)(A), and
‘‘(B) within 30 days after the adoption of
the funding improvement plan—
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‘‘(i) in the case of a plan in seriously
endangered status, shall provide to the bar-
gaining parties 1 or more schedules showing
revised benefit structures, revised contribu-
tion structures, or both, which, if adopted,
may reasonably be expected to enable the
multiemployer plan to meet the applicable
requirements under paragraph (3) in ac-
cordance with the funding improvement
plan, including a description of the reduc-
tions in future benefit accruals and in-
creases in contributions that the plan spon-
sor determines are reasonably necessary to
meet the applicable requirements if the plan
sponsor assumes that there are no increases
in contributions under the plan other than
the increases necessary to meet the applica-
ble requirements after future benefit accru-
als have been reduced to the maximum ex-
tent permitted by law, and
‘‘(ii) may, if the plan sponsor deems
appropriate, prepare and provide the bar-
gaining parties with additional information
relating to contribution rates or benefit re-
ductions, alternative schedules, or other in-
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formation relevant to achieving the require-
ments under paragraph (3) in accordance
with the funding improvement plan.
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS BE-
GINS.—Paragraph (1) shall not apply to a plan year
if such year is in a funding plan adoption period or
funding improvement period by reason of the plan
being in endangered status for a preceding plan year.
For purposes of this section, such preceding plan year
shall be the initial determination year with respect to
the funding improvement plan to which it relates.
‘‘(3) FUNDING IMPROVEMENT PLAN.—For pur-
poses of this section—
‘‘(A) IN
GENERAL.—A funding improve-
ment plan is a plan which consists of the ac-
tions, including options or a range of options to
be proposed to the bargaining parties, which,
under reasonable actuarial assumptions, will re-
sult in the plan meeting the requirements of this
paragraph.
‘‘(B) PLANS OTHER THAN SERIOUSLY EN-
DANGERED PLANS.—In the case of plan not in
seriously endangered status, the requirements of
this paragraph are met if the plan’s funded per-
centage as of the close of the funding improve-
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ment period exceeds the lesser of 80 percent or a
percentage equal to the sum of—
‘‘(i) such percentage as of the begin-
ning of such period, plus
‘‘(ii) 10 percent of the percentage deter-
mined under clause (i).
‘‘(C) SERIOUSLY ENDANGERED PLANS.—In
the case of a plan in seriously endangered status,
the requirements of this paragraph are met if—
‘‘(i) the plan’s funded percentage as of
the close of the funding improvement period
equals or exceeds the percentage which is
equal to the sum of—
‘‘(I) such percentage as of the be-
ginning of such period, plus
‘‘(II) 33 percent of the difference
between 100 percent and the percentage
under subclause (I), and
‘‘(ii) there is no accumulated funding
deficiency for any plan year during the
funding improvement period (taking into
account any extension of amortization peri-
ods under section 431(d)).
‘‘(4) FUNDING IMPROVEMENT PERIOD.—For pur-
poses of this section—
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‘‘(A) IN GENERAL.—The funding improve-
ment period for any funding improvement plan
adopted pursuant to this subsection is the 10-
year period beginning on the first day of the
first plan year of the multiemployer plan begin-
ning after the earlier of—
‘‘(i) the second anniversary of the date
of the adoption of the funding improvement
plan, or
‘‘(ii) the expiration of the collective
bargaining agreements in effect on the due
date for the actuarial certification of endan-
gered status for the initial determination
year under subsection (b)(3)(A) and cov-
ering, as of such due date, at least 75 per-
cent of the active participants in such mul-
tiemployer plan.
‘‘(B) COORDINATION WITH CHANGES IN STA-
TUS.—
‘‘(i) PLANS
NO
LONGER
IN
ENDAN-
GERED STATUS.—If the plan’s actuary cer-
tifies under subsection (b)(3)(A) for a plan
year in any funding plan adoption period
or funding improvement period that the
plan is no longer in endangered status and
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is not in critical status, the funding plan
adoption period or funding improvement
period, whichever is applicable, shall end as
of the close of the preceding plan year.
‘‘(ii) PLANS IN CRITICAL STATUS.—If
the plan’s actuary certifies under subsection
(b)(3)(A) for a plan year in any funding
plan adoption period or funding improve-
ment period that the plan is in critical sta-
tus, the funding plan adoption period or
funding improvement period, whichever is
applicable, shall end as of the close of the
plan year preceding the first plan year in
the rehabilitation period with respect to
such status.
‘‘(5) SPECIAL
RULES
FOR
CERTAIN
UNDER-
FUNDED PLANS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), if the funded percentage of a
plan in seriously endangered status was 70 per-
cent or less as of the beginning of the initial de-
termination year, the following rules shall apply
in determining whether the requirements of
paragraph (3)(C)(i) are met:
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‘‘(i) The plan’s funded percentage as of
the close of the funding improvement period
must equal or exceed a percentage which is
equal to the sum of—
‘‘(I) such percentage as of the be-
ginning of such period, plus
‘‘(II) 20 percent of the difference
between 100 percent and the percentage
under subclause (I).
‘‘(ii) The funding improvement period
under paragraph (4)(A) shall be 15 years
rather than 10 years.
‘‘(B) SPECIAL
RULES
FOR
PLANS
WITH
FUNDED PERCENTAGE OVER 70 PERCENT.—If the
funded percentage described in subparagraph (A)
was more than 70 percent but less than 80 per-
cent as of the beginning of the initial determina-
tion year—
‘‘(i) subparagraph (A) shall apply if
the plan’s actuary certifies, within 30 days
after the certification under subsection
(b)(3)(A) for the initial determination year,
that, based on the terms of the plan and the
collective bargaining agreements in effect at
the time of such certification, the plan is
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not projected to meet the requirements of
paragraph (3)(C)(i) without regard to this
paragraph, and
‘‘(ii) if there is a certification under
clause (i), the plan may, in formulating its
funding improvement plan, only take into
account the rules of subparagraph (A) for
plan years in the funding improvement pe-
riod beginning on or before the date on
which the last of the collective bargaining
agreements 
described 
in 
paragraph
(4)(A)(ii) expires.
Notwithstanding clause (ii), if for any plan year
ending after the date described in clause (ii) the
plan actuary certifies (at the time of the annual
certification under subsection (b)(3)(A) for such
plan year) that, based on the terms of the plan
and collective bargaining agreements in effect at
the time of that annual certification, the plan is
not projected to be able to meet the requirements
of paragraph (3)(C)(i) without regard to this
paragraph, the plan may continue to assume for
such year that the funding improvement period
is 15 years rather than 10 years.
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‘‘(6) UPDATES TO FUNDING IMPROVEMENT PLAN
AND SCHEDULES.—
‘‘(A) FUNDING
IMPROVEMENT
PLAN.—The
plan sponsor shall annually update the funding
improvement plan and shall file the update with
the plan’s annual report under section 104 of the
Employee Retirement Income Security Act of
1974.
‘‘(B) SCHEDULES.—The plan sponsor may
periodically update any schedule of contribution
rates provided under this subsection to reflect the
experience of the plan, except that the schedule or
schedules described in paragraph (1)(B)(i) shall
be updated at least once every 3 years.
‘‘(C) DURATION OF SCHEDULE.—A schedule
of contribution rates provided by the plan spon-
sor and relied upon by bargaining parties in ne-
gotiating a collective bargaining agreement shall
remain in effect for the duration of that collec-
tive bargaining agreement.
‘‘(7) PENALTY
IF
NO
FUNDING
IMPROVEMENT
PLAN ADOPTED.—A failure of the plan sponsor to
adopt a funding improvement plan by the date speci-
fied in paragraph (1)(A) shall be treated for purposes
of section 502(c)(2) of such Act as a failure or refusal
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by the plan administrator to file the annual report
required to be filed with the Secretary of Labor under
section 101(b)(4) of such Act.
‘‘(8) FUNDING
PLAN
ADOPTION
PERIOD.—For
purposes of this section, the term ‘funding plan adop-
tion period’ means the period beginning on the date
of the certification under subsection (b)(3)(A) for the
initial determination year and ending on the day be-
fore the first day of the funding improvement period.
‘‘(d) RULES FOR OPERATION OF PLAN DURING ADOP-
TION AND IMPROVEMENT PERIODS; FAILURE TO MEET RE-
QUIREMENTS.—
‘‘(1) SPECIAL RULES FOR PLAN ADOPTION PE-
RIOD.—During the plan adoption period—
‘‘(A) the plan sponsor may not accept a col-
lective bargaining agreement or participation
agreement with respect to the multiemployer
plan that provides for—
‘‘(i) a reduction in the level of con-
tributions for any participants,
‘‘(ii) a suspension of contributions
with respect to any period of service, or
‘‘(iii) any new direct or indirect exclu-
sion of younger or newly hired employees
from plan participation,
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‘‘(B) no amendment of the plan which in-
creases the liabilities of the plan by reason of
any increase in benefits, any change in the ac-
crual of benefits, or any change in the rate at
which benefits become nonforfeitable under the
plan may be adopted unless the amendment is
required as a condition of qualification under
part I of subchapter D of chapter 1 or to comply
with other applicable law, and
‘‘(C) in the case of a plan in seriously en-
dangered status, the plan sponsor shall take all
reasonable actions which are consistent with the
terms of the plan and applicable law and which
are expected, based on reasonable assumptions, to
achieve—
‘‘(i) an increase in the plan’s funded
percentage, and
‘‘(ii) postponement of an accumulated
funding deficiency for at least 1 additional
plan year.
Actions under subparagraph (C) include applications
for extensions of amortization periods under section
431(d), use of the shortfall funding method in making
funding standard account computations, amendments
to the plan’s benefit structure, reductions in future
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benefit accruals, and other reasonable actions con-
sistent with the terms of the plan and applicable law.
‘‘(2) COMPLIANCE WITH FUNDING IMPROVEMENT
PLAN.—
‘‘(A) IN
GENERAL.—A plan may not be
amended after the date of the adoption of a fund-
ing improvement plan under subsection (c) so as
to be inconsistent with the funding improvement
plan.
‘‘(B) NO REDUCTION IN CONTRIBUTIONS.—
A plan sponsor may not during any funding im-
provement period accept a collective bargaining
agreement or participation agreement with re-
spect to the multiemployer plan that provides
for—
‘‘(i) a reduction in the level of con-
tributions for any participants,
‘‘(ii) a suspension of contributions
with respect to any period of service, or
‘‘(iii) any new direct or indirect exclu-
sion of younger or newly hired employees
from plan participation.
‘‘(C) SPECIAL
RULES
FOR
BENEFIT
IN-
CREASES.—A plan may not be amended after the
date of the adoption of a funding improvement
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plan under subsection (c) so as to increase bene-
fits, including future benefit accruals, unless—
‘‘(i) in the case of a plan in seriously
endangered status, the plan actuary certifies
that, after taking into account the benefit
increase, the plan is still reasonably ex-
pected to meet the requirements under sub-
section (c)(3) in accordance with the sched-
ule contemplated in the funding improve-
ment plan, and
‘‘(ii) in the case of a plan not in seri-
ously endangered status, the actuary cer-
tifies that such increase is paid for out of
contributions not required by the funding
improvement plan to meet the requirements
under subsection (c)(3) in accordance with
the schedule contemplated in the funding
improvement plan.
‘‘(3) FAILURE TO MEET REQUIREMENTS.—
‘‘(A) IN
GENERAL.—Notwithstanding sec-
tion 4971(g), if a plan fails to meet the require-
ments of subsection (c)(3) by the end of the fund-
ing improvement period, the plan shall be treat-
ed as having an accumulated funding deficiency
for purposes of section 4971 for the last plan
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year in such period (and each succeeding plan
year until such requirements are met) in an
amount equal to the greater of the amount of the
contributions necessary to meet such require-
ments or the amount of such accumulated fund-
ing deficiency without regard to this paragraph.
‘‘(B) WAIVER.—In the case of a failure de-
scribed in subparagraph (A) which is due to rea-
sonable cause and not to willful neglect, the Sec-
retary of the Treasury may waive part or all of
the tax imposed by section 4971 of such Code to
the extent that the payment of such tax would be
excessive or otherwise inequitable relative to the
failure involved.
‘‘(e) REHABILITATION PLAN MUST BE ADOPTED FOR
MULTIEMPLOYER PLANS IN CRITICAL STATUS.—
‘‘(1) IN GENERAL.—In any case in which a mul-
tiemployer plan is in critical status for a plan year,
the 
plan 
sponsor, 
in 
accordance 
with 
this
subsection—
‘‘(A) shall adopt a rehabilitation plan not
later than 240 days following the required date
for the actuarial certification of critical status
under subsection (b)(3)(A), and
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‘‘(B) within 30 days after the adoption of
the rehabilitation plan—
‘‘(i) shall provide to the bargaining
parties 1 or more schedules showing revised
benefit 
structures, 
revised 
contribution
structures, or both, which, if adopted, may
reasonably be expected to enable the multi-
employer plan to emerge from critical status
in accordance with the rehabilitation plan,
and
‘‘(ii) may, if the plan sponsor deems
appropriate, prepare and provide the bar-
gaining parties with additional information
relating to contribution rates or benefit re-
ductions, alternative schedules, or other in-
formation relevant to emerging from critical
status in accordance with the rehabilitation
plan.
The schedule or schedules described in subparagraph
(B)(i) shall reflect reductions in future benefit accru-
als and increases in contributions that the plan spon-
sor determines are reasonably necessary to emerge
from critical status. One schedule shall be designated
as the default schedule and such schedule shall assume
that there are no increases in contributions under the
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plan other than the increases necessary to emerge
from critical status after future benefit accruals and
other benefits (other than benefits the reduction or
elimination of which are not permitted under section
411(d)(6)) have been reduced to the maximum extent
permitted by law.
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS BE-
GINS.—Paragraph (1) shall not apply to a plan year
if such year is in a rehabilitation plan adoption pe-
riod or rehabilitation period by reason of the plan
being in critical status for a preceding plan year. For
purposes of this section, such preceding plan year
shall be the initial critical year with respect to the re-
habilitation plan to which it relates.
‘‘(3) REHABILITATION
PLAN.—For purposes of
this section—
‘‘(A) IN GENERAL.—A rehabilitation plan is
a plan which consists of—
‘‘(i) actions which will enable, under
reasonable actuarial assumptions, the plan
to cease to be in critical status by the end
of the rehabilitation period and may in-
clude reductions in plan expenditures (in-
cluding plan mergers and consolidations),
reductions in future benefit accruals or in-
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creases in contributions, if agreed to by the
bargaining parties, or any combination of
such actions, or
‘‘(ii) if the plan sponsor determines
that, based on reasonable actuarial assump-
tions and upon exhaustion of all reasonable
measures, the plan can not reasonably be
expected to emerge from critical status by
the end of the rehabilitation period, reason-
able measures to emerge from critical status
at a later time or to forestall possible insol-
vency (within the meaning of section 4245
of the Employee Retirement Income Secu-
rity Act of 1974).
Such plan shall include the schedules required to
be provided under paragraph (1)(B)(i). If clause
(ii) applies, such plan shall set forth the alter-
natives considered, explain why the plan is not
reasonably expected to emerge from critical sta-
tus by the end of the rehabilitation period, and
specify when, if ever, the plan is expected to
emerge from critical status in accordance with
the rehabilitation plan.
‘‘(B) UPDATES
TO
REHABILITATION
PLAN
AND SCHEDULES.—
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‘‘(i) REHABILITATION PLAN.—The plan
sponsor shall annually update the rehabili-
tation plan and shall file the update with
the plan’s annual report under section 104
of the Employee Retirement Income Secu-
rity Act of 1974.
‘‘(ii) SCHEDULES.—The plan sponsor
may periodically update any schedule of
contribution rates provided under this sub-
section to reflect the experience of the plan,
except that the schedule or schedules de-
scribed in paragraph (1)(B)(i) shall be up-
dated at least once every 3 years.
‘‘(iii) DURATION
OF
SCHEDULE.—A
schedule of contribution rates provided by
the plan sponsor and relied upon by bar-
gaining parties in negotiating a collective
bargaining agreement shall remain in effect
for the duration of that collective bar-
gaining agreement.
‘‘(C) DEFAULT SCHEDULE.—If the collective
bargaining agreement providing for contribu-
tions under a multiemployer plan that was in
effect at the time the plan entered critical status
expires and, after receiving a schedule from the
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plan sponsor under paragraph (1)(B)(i), the bar-
gaining parties have not adopted a collective
bargaining agreement with terms consistent with
such a schedule, the default schedule described in
the last sentence of paragraph (1) shall go into
effect with respect to those bargaining parties.
‘‘(4) REHABILITATION PERIOD.—For purposes of
this section—
‘‘(A) IN GENERAL.—The rehabilitation pe-
riod for a plan in critical status is the 10-year
period beginning on the first day of the first
plan year of the multiemployer plan following
the earlier of—
‘‘(i) the second anniversary of the date
of the adoption of the rehabilitation plan, or
‘‘(ii) the expiration of the collective
bargaining agreements in effect on the date
of the due date for the actuarial certifi-
cation of critical status for the initial crit-
ical year under subsection (a)(1) and cov-
ering, as of such date at least 75 percent of
the active participants in such multiem-
ployer plan.
If a plan emerges from critical status as pro-
vided under subparagraph (B) before the end of
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such 10-year period, the rehabilitation period
shall end with the plan year preceding the plan
year for which the determination under subpara-
graph (B) is made.
‘‘(B) EMERGENCE.—A plan in critical sta-
tus shall remain in such status until a plan year
for which the plan actuary certifies, in accord-
ance with subsection (b)(3)(A), that the plan is
not projected to have an accumulated funding
deficiency for the plan year or any of the 9 suc-
ceeding plan years, without regard to use of the
shortfall method or any extension of amortiza-
tion periods under section 431(d).
‘‘(5) PENALTY
IF
NO
REHABILITATION
PLAN
ADOPTED.—A failure of a plan sponsor to adopt a re-
habilitation plan by the date specified in paragraph
(1)(A) shall be treated for purposes of section
502(c)(2) of the Employee Retirement Income Secu-
rity Act of 1974 as a failure or refusal by the plan
administrator to file the annual report required to be
filed with the Secretary of Labor under section
101(b)(4) of such Act.
‘‘(6) REHABILITATION
PLAN
ADOPTION
PE-
RIOD.—For purposes of this section, the term ‘reha-
bilitation plan adoption period’ means the period be-
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ginning on the date of the certification under sub-
section (b)(3)(A) for the initial critical year and end-
ing on the day before the first day of the rehabilita-
tion period.
‘‘(7) LIMITATION ON REDUCTION IN RATES OF
FUTURE ACCRUALS.—Any reduction in the rate of fu-
ture accruals under any schedule described in para-
graph (1)(B)(i) shall not reduce the rate of future ac-
cruals below—
‘‘(A) a monthly benefit (payable as a single
life annuity commencing at the participant’s
normal retirement age) equal to 1 percent of the
contributions required to be made with respect to
a participant, or the equivalent standard accrual
rate for a participant or group of participants
under the collective bargaining agreements in ef-
fect as of the first day of the initial critical year,
or
‘‘(B) if lower, the accrual rate under the
plan on such first day.
The equivalent standard accrual rate shall be deter-
mined by the plan sponsor based on the standard or
average contribution base units which the plan spon-
sor determines to be representative for active partici-
pants and such other factors as the plan sponsor de-
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termines to be relevant. Nothing in this paragraph
shall be construed as limiting the ability of the plan
sponsor to prepare and provide the bargaining par-
ties with alternative schedules to the default schedule
that established lower or higher accrual and contribu-
tion rates than the rates otherwise described in this
paragraph.
‘‘(8) EMPLOYER IMPACT.—For the purposes of
this section, the plan sponsor shall consider the im-
pact of the rehabilitation plan and contribution
schedules authorized by this section on bargaining
parties with fewer than 500 employees and shall im-
plement the plan in a manner that encourages their
continued participation in the plan and minimizes
financial harm to employers and their workers.
‘‘(f) RULES FOR OPERATION OF PLAN DURING ADOP-
TION AND REHABILITATION PERIOD.—
‘‘(1) 
COMPLIANCE
WITH
REHABILITATION
PLAN.—
‘‘(A) IN
GENERAL.—A plan may not be
amended after the date of the adoption of a reha-
bilitation plan under subsection (e) so as to be
inconsistent with the rehabilitation plan.
‘‘(B) SPECIAL
RULES
FOR
BENEFIT
IN-
CREASES.—A plan may not be amended after the
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date of the adoption of a rehabilitation plan
under subsection (e) so as to increase benefits,
including future benefit accruals, unless the plan
actuary certifies that such increase is paid for
out of additional contributions not contemplated
by the rehabilitation plan, and, after taking into
account the benefit increase, the multiemployer
plan still is reasonably expected to emerge from
critical status by the end of the rehabilitation pe-
riod on the schedule contemplated in the reha-
bilitation plan.
‘‘(2) RESTRICTION ON LUMP SUMS AND SIMILAR
BENEFITS.—
‘‘(A) IN GENERAL.—Effective on the date
the notice of certification of the plan’s critical
status for the initial critical year under sub-
section (b)(3)(D) is sent, and notwithstanding
section 411(d)(6), the plan shall not pay—
‘‘(i) any payment, in excess of the
monthly amount paid under a single life
annuity (plus any social security supple-
ments described in the last sentence of sec-
tion 411(b)(1)(A)),
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‘‘(ii) any payment for the purchase of
an irrevocable commitment from an insurer
to pay benefits, and
‘‘(iii) any other payment specified by
the Secretary by regulations.
‘‘(B) EXCEPTION.—Subparagraph (A) shall
not apply to a benefit which under section
411(a)(11) may be immediately distributed with-
out the consent of the participant or to any
makeup payment in the case of a retroactive an-
nuity starting date or any similar payment of
benefits owed with respect to a prior period.
‘‘(3) ADJUSTMENTS
DISREGARDED
IN
WITH-
DRAWAL LIABILITY DETERMINATION.—Any benefit re-
ductions under this subsection shall be disregarded in
determining a plan’s unfunded vested benefits for
purposes of determining an employer’s withdrawal li-
ability under section 4201 of the Employee Retire-
ment Income Security Act of 1974.
‘‘(4) SPECIAL RULES FOR PLAN ADOPTION PE-
RIOD.—During the rehabilitation plan adoption
period—
‘‘(A) the plan sponsor may not accept a col-
lective bargaining agreement or participation
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agreement with respect to the multiemployer
plan that provides for—
‘‘(i) a reduction in the level of con-
tributions for any participants,
‘‘(ii) a suspension of contributions
with respect to any period of service, or
‘‘(iii) any new direct or indirect exclu-
sion of younger or newly hired employees
from plan participation, and
‘‘(B) no amendment of the plan which in-
creases the liabilities of the plan by reason of
any increase in benefits, any change in the ac-
crual of benefits, or any change in the rate at
which benefits become nonforfeitable under the
plan may be adopted unless the amendment is
required as a condition of qualification under
part I of subchapter D of chapter 1 or to comply
with other applicable law.
‘‘(5) FAILURE TO MEET REQUIREMENTS.—
‘‘(A) IN
GENERAL.—Notwithstanding sec-
tion 4971(g), if a plan—
‘‘(i) fails to meet the requirements of
subsection (e) by the end of the rehabilita-
tion period, or
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‘‘(ii) has received a certification under
subsection (b)(3)(A)(ii) for 3 consecutive
plan years that the plan is not making the
scheduled progress in meeting its require-
ments under the rehabilitation plan,
the plan shall be treated as having an accumu-
lated funding deficiency for purposes of section
4971 for the last plan year in such period (and
each succeeding plan year until such require-
ments are met) in an amount equal to the great-
er of the amount of the contributions necessary
to meet such requirements or the amount of such
accumulated funding deficiency without regard
to this paragraph.
‘‘(B) WAIVER.—In the case of a failure de-
scribed in subparagraph (A) which is due to rea-
sonable cause and not to willful neglect, the Sec-
retary may waive part or all of the tax imposed
by section 4971 to the extent that the payment
of such tax would be excessive or otherwise in-
equitable relative to the failure involved.
‘‘(g) EXPEDITED RESOLUTION OF PLAN SPONSOR DE-
CISIONS.—If, within 60 days of the due date for adoption
of a funding improvement plan under subsection (c) or a
rehabilitation plan under subsection (e), the plan sponsor
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of a plan in endangered status or a plan in critical status
has not agreed on a funding improvement plan or rehabili-
tation plan, then any member of the board or group that
constitutes the plan sponsor may require that the plan
sponsor enter into an expedited dispute resolution procedure
for the development and adoption of a funding improvement
plan or rehabilitation plan.
‘‘(h) NONBARGAINED PARTICIPATION.—
‘‘(1) BOTH BARGAINED AND NONBARGAINED EM-
PLOYEE-PARTICIPANTS.—In the case of an employer
that contributes to a multiemployer plan with respect
to both employees who are covered by one or more col-
lective bargaining agreements and to employees who
are not so covered, if the plan is in endangered status
or in critical status, benefits of and contributions for
the nonbargained employees, including surcharges on
those contributions, shall be determined as if those
nonbargained employees were covered under the first
to expire of the employer’s collective bargaining agree-
ments in effect when the plan entered endangered or
critical status.
‘‘(2) NONBARGAINED EMPLOYEES ONLY.—In the
case of an employer that contributes to a multiem-
ployer plan only with respect to employees who are
not covered by a collective bargaining agreement, this
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section shall be applied as if the employer were the
bargaining parties, and its participation agreement
with the plan was a collective bargaining agreement
with a term ending on the first day of the plan year
beginning after the employer is provided the schedule
or schedules described in subsections (c) and (e).
‘‘(3) EMPLOYEES
COVERED
BY
A
COLLECTIVE
BARGAINING AGREEMENT.—The determination as to
whether an employee covered by a collective bar-
gaining agreement for purposes of this section shall be
made without regard to the special rule in Treasury
Regulation section 1.410(b)–6(d)(ii)(D).
‘‘(i) DEFINITIONS; ACTUARIAL METHOD.—For pur-
poses of this section—
‘‘(1) BARGAINING PARTY.—The term ‘bargaining
party’ means—
‘‘(A)(i) except as provided in clause (ii), an
employer who has an obligation to contribute
under the plan; or
‘‘(ii) in the case of a plan described under
section 404(c), or a continuation of such a plan,
the association of employers that is the employee
settlor of the plan; and
‘‘(B) an employee organization which, for
purposes of collective bargaining, represents plan
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participants employed by an employer who has
an obligation to contribute under the plan.
‘‘(2) FUNDED PERCENTAGE.—The term ‘funded
percentage’ 
means 
the 
percentage 
equal 
to 
a
fraction—
‘‘(A) the numerator of which is the value of
the plan’s assets, as determined under section
431(c)(2), and
‘‘(B) the denominator of which is the ac-
crued liability of the plan, determined using ac-
tuarial 
assumptions 
described 
in 
section
431(c)(3).
‘‘(3) ACCUMULATED FUNDING DEFICIENCY.—The
term ‘accumulated funding deficiency’ has the mean-
ing given such term in section 412(a).
‘‘(4) ACTIVE
PARTICIPANT.—The term ‘active
participant’ means, in connection with a multiem-
ployer plan, a participant who is in covered service
under the plan.
‘‘(5) INACTIVE PARTICIPANT.—The term ‘inactive
participant’ means, in connection with a multiem-
ployer plan, a participant, or the beneficiary or alter-
nate payee of a participant, who—
‘‘(A) is not in covered service under the
plan, and
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‘‘(B) is in pay status under the plan or has
a nonforfeitable right to benefits under the plan.
‘‘(6) PAY STATUS.—A person is in pay status
under a multiemployer plan if—
‘‘(A) at any time during the current plan
year, such person is a participant or beneficiary
under the plan and is paid an early, late, nor-
mal, or disability retirement benefit under the
plan (or a death benefit under the plan related
to a retirement benefit), or
‘‘(B) to the extent provided in regulations of
the Secretary, such person is entitled to such a
benefit under the plan.
‘‘(7) OBLIGATION
TO
CONTRIBUTE.—The term
‘obligation to contribute’ has the meaning given such
term under section 4212(a) of the Employee Retire-
ment Income Security Act of 1974.
‘‘(8) 
ACTUARIAL
METHOD.—Notwithstanding
any other provision of this section, the actuary’s de-
terminations with respect to a plan’s normal cost, ac-
tuarial accrued liability, and improvements in a
plan’s funded percentage under this section shall be
based upon the unit credit funding method (whether
or not that method is used for the plan’s actuarial
valuation).
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‘‘(9) PLAN SPONSOR.—In the case of a plan de-
scribed under section 404(c), or a continuation of
such a plan, the term ‘plan sponsor’ means the bar-
gaining parties described under paragraph (1).’’
(b) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendment made by this
section shall apply with respect to plan years begin-
ning after 2006.
(2) SPECIAL RULE FOR CERTAIN RESTORED BEN-
EFITS.—In the case of a multiemployer plan—
(A) with respect to which benefits were re-
duced pursuant to a plan amendment adopted
on or after January 1, 2002, and before June 30,
2005, and
(B) which, pursuant to the plan document,
the trust agreement, or a formal written commu-
nication from the plan sponsor to participants
provided before June 30, 2005, provided for the
restoration of such benefits,
the amendments made by this section shall not apply
to such benefit restorations to the extent that any re-
striction on the providing or accrual of such benefits
would otherwise apply by reason of such amendments.
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PART III—SUNSET OF FUNDING RULES
SEC. 216. SUNSET OF FUNDING RULES.
(a) REPORT.—Not later than December 31, 2011, the
Secretary of Labor, the Secretary of the Treasury, and the
Executive Director of the Pension Benefit Guaranty Cor-
poration shall conduct a study of the effect of the amend-
ments made by this subtitle on the operation and funding
status of multiemployer plans and shall report the results
of such study, including any recommendations for legisla-
tion, to the Congress.
(b) MATTERS INCLUDED IN STUDY.—The study re-
quired under subsection (a) shall include—
(1) the effect of funding difficulties, funding rules
in effect before the date of the enactment of this Act,
and the amendments made by this subtitle on small
businesses participating in multiemployer plans,
(2) the effect on the financial status of small em-
ployers of—
(A) funding targets set in funding improve-
ment and rehabilitation plans and associated
contribution increases,
(B) funding deficiencies,
(C) excise taxes,
(D) withdrawal liability,
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(E) the possibility of alternatives schedules
and procedures for financially-troubled employ-
ers, and
(F) other aspects of the multiemployer sys-
tem, and
(3) the role of the multiemployer pension plan
system in helping small employers to offer pension
benefits.
(c) SUNSET.—
(1) IN GENERAL.—Except as provided in this
subsection, notwithstanding any other provision of
this Act, the provisions of, and the amendments made
by, this subtitle shall not apply to plan years begin-
ning after December 31, 2014, and the Employee Re-
tirement Income Security Act of 1974 and the Inter-
nal Revenue Code of 1986 shall be applied to such
plan years under the provisions of sections 302
through 308 of such Act and 412 of such Code (as in
effect before the amendments made by this Act).
(2) FUNDING
IMPROVEMENT
AND
REHABILITA-
TION PLANS.—If a plan is operating under a funding
improvement or rehabilitation plan under section 305
of such Act or 432 of such Code for its last year be-
ginning before January 1, 2015, such plan shall con-
tinue to operate under such funding improvement or
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rehabilitation plan during any period after December
31, 2014, such funding improvement or rehabilitation
plan is in effect and all provisions of such Act or
Code relating to the operation of such funding im-
provement or rehabilitation plan shall continue in ef-
fect during such period.
(3) AMORTIZATION SCHEDULES.—In the case of
any amount amortized under section 304(b) of such
Act or 431 of such Code (as in effect after the amend-
ments made by this subtitle) over any period begin-
ning with a plan year beginning before January 1,
2015, such amount shall, in lieu of the amortization
which would apply after the application of this sub-
section, continue to be amortized under such section
304 or 431 (as so in effect).
Subtitle B—Deduction and Related
Provisions
SEC. 221. DEDUCTION LIMITS FOR MULTIEMPLOYER PLANS.
(a) INCREASE IN DEDUCTION.—Section 404(a)(1)(D)
of the Internal Revenue Code of 1986, as amended by this
Act, is amended to read as follows:
‘‘(D) AMOUNT DETERMINED ON BASIS OF
UNFUNDED CURRENT LIABILITY.—
‘‘(i) IN GENERAL.—In the case of a de-
fined benefit plan which is a multiemployer
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plan, except as provided in regulations, the
maximum amount deductible under the lim-
itations of this paragraph shall not be less
than the unfunded current liability of the
plan.
‘‘(ii) UNFUNDED
CURRENT
LIABIL-
ITY.—For purposes of clause (i), the term
‘unfunded current liability’ means the ex-
cess (if any) of—
‘‘(I) 140 percent of the current li-
ability of the plan determined under
section 431(c)(6)(C), over
‘‘(II) the value of the plan’s assets
determined under section 431(c)(2).’’.
(b) EXCEPTION FROM LIMITATION
ON DEDUCTION
WHERE COMBINATION OF DEFINED CONTRIBUTION AND
DEFINED BENEFIT PLANS.—
(1) IN GENERAL.—Section 404(a)(7)(C) of such
Code, as amended by this Act, is amended by adding
at the end the following new clause:
‘‘(v) MULTIEMPLOYER PLANS.—In ap-
plying this paragraph, any multiemployer
plan shall not be taken into account.’’.
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(2) 
CONFORMING
AMENDMENT.—Section
404(a)(7)(A) of such Code is amended by striking the
last sentence.
(c) EFFECTIVE DATES.—
(1) DEDUCTION LIMIT.—The amendment made
by subsection (a) shall apply to years beginning after
December 31, 2006.
(2) EXCEPTION.—The amendments made by sub-
section (b) shall apply to years beginning after De-
cember 31, 2005.
SEC. 222. TRANSFER OF EXCESS PENSION ASSETS TO MUL-
TIEMPLOYER HEALTH PLAN.
(a) IN GENERAL.—Section 420(e) of the Internal Rev-
enue Code of 1986 (relating to definitions and special rules)
is amended by adding at the end the following new para-
graph:
‘‘(5) APPLICATION TO MULTIEMPLOYER PLAN.—
In the case of any plan to which section 404(c) ap-
plies (or any successor plan primarily covering em-
ployees in the building and construction industry)—
‘‘(A) the prohibition under subsection (a) on
the application of this section to a multiem-
ployer plan shall not apply, and
‘‘(B) this section shall be applied to any
such plan—