324 
relevant information provided by a person to 
whom notice was given under paragraph (1).’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to plan years beginning after 
2007. 
(2) SPECIAL RULE FOR CERTAIN AMORTIZATION 
EXTENSIONS.—If the Secretary of the Treasury 
grants an extension under section 304 of the Em-
ployee Retirement Income Security Act of 1974 and 
section 412(e) of the Internal Revenue Code of 1986 
with respect to any application filed with the Sec-
retary of the Treasury on or before June 30, 2005, 
the extension (and any modification thereof) shall be 
applied and administered under the rules of such 
sections as in effect before the enactment of this 
Act, including the use of the rate of interest deter-
mined under section 6621(b) of such Code. 
SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEM-
PLOYER PLANS IN ENDANGERED OR CRIT-
ICAL STATUS. 
(a) IN GENERAL.—Subpart A of part III of sub-
chapter D of chapter 1 of the Internal Revenue Code of 
1986 (as amended by this Act) is amended by inserting 
after section 431 the following new section: 
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325 
‘‘SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEM-
PLOYER PLANS IN ENDANGERED STATUS OR 
CRITICAL STATUS. 
‘‘(a) GENERAL RULE.—For purposes of this part, in 
the case of a multiemployer plan in effect on July 16, 
2006 — 
‘‘(1) if the plan is in endangered status— 
‘‘(A) the plan sponsor shall adopt and im-
plement a funding improvement plan in accord-
ance with the requirements of subsection (c), 
and 
‘‘(B) the requirements of subsection (d) 
shall apply during the funding plan adoption 
period and the funding improvement period, 
and 
‘‘(2) if the plan is in critical status— 
‘‘(A) the plan sponsor shall adopt and im-
plement a rehabilitation plan in accordance with 
the requirements of subsection (e), and 
‘‘(B) the requirements of subsection (f) 
shall apply during the rehabilitation plan adop-
tion period and the rehabilitation period. 
‘‘(b) DETERMINATION OF ENDANGERED AND CRIT-
ICAL STATUS.—For purposes of this section— 
‘‘(1) ENDANGERED STATUS.—A multiemployer 
plan is in endangered status for a plan year if, as 
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326 
determined by the plan actuary under paragraph 
(3), the plan is not in critical status for the plan 
year and, as of the beginning of the plan year, ei-
ther— 
‘‘(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, 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 peri-
ods under section 431(d). 
For purposes of this section, a plan shall be treated 
as in seriously endangered status for a plan year if 
the plan is described in both subparagraphs (A) and 
(B). 
‘‘(2) CRITICAL STATUS.—A multiemployer plan 
is in critical status for a plan year if, as determined 
by the plan actuary under paragraph (3), the plan 
is described in 1 or more of the following subpara-
graphs as of the beginning of the plan year: 
‘‘(A) A plan is described in this subpara-
graph if— 
‘‘(i) the funded percentage of the plan 
is less than 65 percent, and 
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327 
‘‘(ii) the sum of— 
‘‘(I) the fair market value of plan 
assets, plus 
‘‘(II) the present value of the 
reasonably anticipated employer con-
tributions for the current plan year 
and each of the 6 succeeding 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 non-
forfeitable benefits projected to be payable 
under the plan during the current plan 
year and each of the 6 succeeding plan 
years (plus administrative 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 
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‘‘(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 (deter-
mined at the rate used for determining 
costs under the plan) for the current plan 
year on the amount of unfunded benefit li-
abilities under the plan as of the last date 
of the preceding plan year, exceeds 
‘‘(II) the present value of the reason-
ably anticipated employer and employee 
contributions for the current plan year, 
‘‘(ii) the present value, as of the be-
ginning of the current plan year, of non-
forfeitable benefits of inactive participants 
is greater than the present value of non-
forfeitable benefits of active participants, 
and 
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329 
‘‘(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 fair market value of plan as-
sets, plus 
‘‘(ii) the present value of the reason-
ably anticipated employer contributions for 
the current plan year and each of the 4 
succeeding plan years, assuming that the 
terms of all collective bargaining agree-
ments pursuant to which the plan is main-
tained 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). 
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‘‘(3) ANNUAL CERTIFICATION BY PLAN ACTU-
ARY.— 
‘‘(A) IN
GENERAL.—Not later than the 
90th day of each plan year of a multiemployer 
plan, the plan actuary shall certify to the Sec-
retary and to the plan sponsor— 
‘‘(i) whether or not the plan is in en-
dangered status for such plan year and 
whether or not the plan is or will be 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-
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 
projections required for the current and 
succeeding plan years of the current value 
of the assets of the plan and the present 
value of all liabilities to participants and 
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331 
beneficiaries under the plan for the current 
plan year as of the beginning of such year. 
The actuary’s projections shall be based on 
reasonable actuarial estimates, assump-
tions, and methods that, except as pro-
vided in clause (iii), offer the actuary’s 
best estimate of anticipated experience 
under the plan. The projected present 
value of liabilities as of the beginning of 
such year shall be determined based on the 
most recent of either— 
‘‘(I) the actuarial statement re-
quired under section 103(d) of the 
Employee Retirement Income Security 
Act of 1974 with respect to the most 
recently filed annual report, or 
‘‘(II) the actuarial valuation for 
the preceding plan year. 
‘‘(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-
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332 
lective bargaining agreements pursu-
ant 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. 
‘‘(iii) PROJECTED
INDUSTRY
ACTIV-
ITY.—Any projection of activity in the in-
dustry or industries covered by the plan, 
including future covered employment and 
contribution levels, shall be based on infor-
mation provided by the plan sponsor, 
which shall act reasonably and in good 
faith. 
‘‘(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 speci-
fied in subparagraph (A) shall be treated for 
purposes of section 502(c)(2) of the Employee 
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333 
Retirement Income Security Act of 1974 as a 
failure or refusal by the plan administrator to 
file the annual report required to be filed with 
the Secretary under section 101(b)(4) of such 
Act. 
‘‘(D) NOTICE.— 
‘‘(i) IN
GENERAL.—In any case in 
which it is certified under subparagraph 
(A) that a multiemployer plan is or will be 
in endangered or critical status for a plan 
year, the plan sponsor shall, not later than 
30 days after the date of the certification, 
provide notification of the endangered or 
critical status to the participants and bene-
ficiaries, the bargaining parties, the Pen-
sion Benefit Guaranty Corporation, and 
the Secretary of Labor. 
‘‘(ii) PLANS IN CRITICAL STATUS.—If 
it is certified under subparagraph (A) that 
a multiemployer plan is or will be in crit-
ical status, the plan sponsor shall include 
in the notice under clause (i) an expla-
nation of the possibility that— 
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334 
‘‘(I) adjustable benefits (as de-
fined in subsection (e)(8)) may be re-
duced, and 
‘‘(II) such reductions may apply 
to 
participants 
and 
beneficiaries 
whose benefit commencement date is 
on or after the date such notice is 
provided for the first plan year in 
which the plan is in critical status. 
‘‘(iii) MODEL NOTICE.—The Secretary 
of Labor shall prescribe a model notice 
that a multiemployer plan may use to sat-
isfy the requirements under clause (ii). 
‘‘(c) FUNDING
IMPROVEMENT
PLAN
MUST
BE 
ADOPTED 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, 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 
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335 
‘‘(B) within 30 days after the adoption of 
the funding improvement plan— 
‘‘(i) shall provide to the bargaining 
parties 1 or more schedules showing re-
vised benefit structures, revised contribu-
tion structures, or both, which, if adopted, 
may reasonably be expected to enable the 
multiemployer plan to meet the applicable 
benchmarks in accordance with the fund-
ing improvement plan, including— 
‘‘(I) one proposal for reductions 
in the amount of future benefit accru-
als necessary to achieve the applicable 
benchmarks, assuming no amend-
ments increasing contributions under 
the plan (other than amendments in-
creasing contributions necessary to 
achieve the applicable benchmarks 
after amendments have reduced fu-
ture benefit accruals to the maximum 
extent permitted by law), and 
‘‘(II) one proposal for increases 
in contributions under the plan nec-
essary to achieve the applicable bench-
marks, assuming no amendments re-
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336 
ducing future benefit accruals under 
the 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 achieving the appli-
cable benchmarks in accordance with the 
funding improvement plan. 
For purposes of this section, the term ‘applica-
ble benchmarks’ means the requirements appli-
cable to the multiemployer plan under para-
graph (3) (as modified by paragraph (5)). 
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS 
BEGINS.—Paragraph (1) shall not apply to a plan 
year if such year is in a funding plan adoption pe-
riod 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— 
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337 
‘‘(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, formu-
lated to provide, based on reasonably antici-
pated experience and reasonable actuarial as-
sumptions, for the attainment by the plan dur-
ing the funding improvement period of the fol-
lowing requirements: 
‘‘(i) INCREASE
IN
PLAN’S
FUNDING 
PERCENTAGE.—The plan’s funded percent-
age as of the close of the funding improve-
ment period equals or exceeds a percentage 
equal to the sum of— 
‘‘(I) such percentage as of the 
beginning of such period, plus 
‘‘(II) 33 percent of the difference 
between 100 percent and the percent-
age under subclause (I). 
‘‘(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)). 
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338 
‘‘(B) SERIOUSLY ENDANGERED PLANS.— 
In the case of a plan in seriously endangered 
status, except as provided in paragraph (5), 
subparagraph (A)(i)(II) shall be applied by sub-
stituting ‘20 percent’ for ‘33 percent’. 
‘‘(4) FUNDING
IMPROVEMENT
PERIOD.—For 
purposes of this section— 
‘‘(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 im-
provement plan, or 
‘‘(ii) the expiration of the collective 
bargaining agreements in effect on the due 
date for the actuarial certification of en-
dangered status for the initial determina-
tion year under subsection (b)(3)(A) and 
covering, as of such due date, at least 75 
percent of the active participants in such 
multiemployer plan. 
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339 
‘‘(B) SERIOUSLY ENDANGERED PLANS.— 
In the case of a plan in seriously endangered 
status, except as provided in paragraph (5), 
subparagraph (A) shall be applied by sub-
stituting ‘15-year period’ for ‘10-year period’. 
‘‘(C) COORDINATION
WITH
CHANGES
IN 
STATUS.— 
‘‘(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 
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 sub-
section (b)(3)(A) for a plan year in any 
funding plan adoption period or funding 
improvement period that the plan is in 
critical status, the funding plan adoption 
period or funding improvement period, 
whichever is applicable, shall end as of the 
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340 
close of the plan year preceding the first 
plan year in the rehabilitation period with 
respect to such status. 
‘‘(D) PLANS IN ENDANGERED STATUS AT 
END OF PERIOD.—If the plan’s actuary certifies 
under subsection (b)(3)(A) for the first plan 
year following the close of the period described 
in subparagraph (A) that the plan is in endan-
gered status, the provisions of this subsection 
and subsection (d) shall be applied as if such 
first plan year were an initial determination 
year, except that the plan may not be amended 
in a manner inconsistent with the funding im-
provement plan in effect for the preceding plan 
year until a new funding improvement plan is 
adopted. 
‘‘(5) SPECIAL RULES FOR SERIOUSLY ENDAN-
GERED PLANS MORE THAN 70 PERCENT FUNDED.— 
‘‘(A) IN GENERAL.—If the funded percent-
age of a plan in seriously endangered status 
was more than 70 percent as of the beginning 
of the initial determination year— 
‘‘(i) paragraphs (3)(B) and (4)(B) 
shall apply only if the plan’s actuary cer-
tifies, within 30 days after the certification 
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341 
under subsection (b)(3)(A) for the initial 
determination year, that, based on the 
terms of the plan and the collective bar-
gaining agreements in effect at the time of 
such certification, the plan is not projected 
to meet the requirements of paragraph 
(3)(A) (without regard to paragraphs 
(3)(B) and (4)(B)), 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 paragraph (3)(B) and 
(4)(B) for plan years in the funding im-
provement period beginning on or before 
the date on which the last of the collective 
bargaining agreements described in para-
graph (4)(A)(ii) expires. 
‘‘(B) SPECIAL
RULE
AFTER
EXPIRATION 
OF
AGREEMENTS.—Notwithstanding subpara-
graph (A)(ii), if, for any plan year ending after 
the date described in subparagraph (A)(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 
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342 
at the time of that annual certification, the plan 
is not projected to be able to meet the require-
ments of paragraph (3)(A) (without regard to 
paragraphs (3)(B) and (4)(B)), paragraphs 
(3)(B) and (4)(B) shall continue to apply for 
such year. 
‘‘(6) UPDATES
TO
FUNDING
IMPROVEMENT 
PLANS 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 shall 
annually update any schedule of contribution 
rates provided under this subsection to reflect 
the experience of the plan. 
‘‘(C) DURATION OF SCHEDULE.—A sched-
ule of contribution rates provided by the plan 
sponsor and relied upon by bargaining parties 
in negotiating a collective bargaining agreement 
shall remain in effect for the duration of that 
collective bargaining agreement. 
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343 
‘‘(7) IMPOSITION
OF
DEFAULT
SCHEDULE 
WHERE FAILURE TO ADOPT FUNDING IMPROVEMENT 
PLAN.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) a collective bargaining agreement 
providing for contributions under a multi-
employer plan that was in effect at the 
time the plan entered endangered status 
expires, and 
‘‘(ii) after receiving one or more 
schedules from the plan sponsor under 
paragraph (1)(B), the bargaining parties 
with respect to such agreement fail to 
agree on changes to contribution or benefit 
schedules necessary to meet the applicable 
benchmarks in accordance with the fund-
ing improvement plan, 
the plan sponsor shall implement the schedule 
described in paragraph (1)(B)(i)(I) beginning 
on the date specified in subparagraph (B). 
‘‘(B) DATE
OF
IMPLEMENTATION.—The 
date specified in this subparagraph is the ear-
lier of the date— 
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‘‘(i) on which the Secretary of Labor 
certifies that the parties are at an impasse, 
or 
‘‘(ii) which is 180 days after the date 
on which the collective bargaining agree-
ment described in subparagraph (A) ex-
pires. 
‘‘(8) FUNDING PLAN ADOPTION PERIOD.—For 
purposes of this section, the term ‘funding plan 
adoption 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 before the first day of the funding improvement 
period. 
‘‘(d) RULES
FOR OPERATION
OF PLAN DURING 
ADOPTION AND IMPROVEMENT PERIODS.— 
‘‘(1) SPECIAL RULES FOR PLAN ADOPTION PE-
RIOD.—During the funding plan adoption period— 
‘‘(A) the plan sponsor may not accept a 
collective 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, 
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345 
‘‘(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, 
‘‘(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 com-
ply 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. 
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346 
Actions under subparagraph (C) include applications 
for extensions of amortization periods under section 
431(d), use of the shortfall funding method in mak-
ing funding standard account computations, amend-
ments to the plan’s benefit structure, reductions in 
future benefit accruals, and other reasonable actions 
consistent with the terms of the plan and applicable 
law. 
‘‘(2) COMPLIANCE
WITH
FUNDING
IMPROVE-
MENT PLAN.— 
‘‘(A) IN GENERAL.—A plan may not be 
amended after the date of the adoption of a 
funding improvement plan so as to be incon-
sistent with the funding improvement plan. 
‘‘(B) 
NO
REDUCTION
IN
CONTRIBU-
TIONS.—A plan sponsor may not during any 
funding improvement period accept a collective 
bargaining agreement or participation agree-
ment 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 
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‘‘(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 improve-
ment plan so as to increase benefits, including 
future benefit accruals, unless the plan actuary 
certifies that the benefit increase is consistent 
with the funding improvement plan and is paid 
for out of contributions not required by the 
funding improvement plan to meet the applica-
ble benchmark in accordance with the schedule 
contemplated in the funding improvement plan. 
‘‘(e) REHABILITATION PLAN MUST BE ADOPTED 
FOR MULTIEMPLOYER PLANS IN CRITICAL STATUS.— 
‘‘(1) IN
GENERAL.—In any case in which a 
multiemployer plan is in critical status for a plan 
year, the plan sponsor, in accordance with this sub-
section— 
‘‘(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 re-
vised benefit structures, revised contribu-
tion structures, or both, which, if adopted, 
may reasonably be expected to enable the 
multiemployer 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 crit-
ical status in accordance with the rehabili-
tation plan. 
The schedule or schedules described in subparagraph 
(B)(i) shall reflect reductions in future benefit ac-
cruals and adjustable benefits, and increases in con-
tributions, that the plan sponsor determines are rea-
sonably necessary to emerge from critical status. 
One schedule shall be designated as the default 
schedule and such schedule shall assume that there 
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349 
are no increases in contributions under the plan 
other than the increases necessary to emerge from 
critical status after future benefit accruals and other 
benefits (other than benefits the reduction or elimi-
nation of which are not permitted under section 
411(d)(6)) have been reduced to the maximum ex-
tent permitted by law. 
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS 
BEGINS.—Paragraph (1) shall not apply to a plan 
year if such year is in a rehabilitation plan adoption 
period 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 rehabilitation 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, including options or a 
range of options to be proposed to the bar-
gaining parties, formulated, based on rea-
sonably anticipated experience and reason-
able actuarial assumptions, to enable the 
plan to cease to be in critical status by the 
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end of the rehabilitation period and may 
include reductions in plan expenditures (in-
cluding plan mergers and consolidations), 
reductions in future benefit accruals or in-
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 as-
sumptions and upon exhaustion of all rea-
sonable measures, the plan can not reason-
ably be expected to emerge from critical 
status by the end of the rehabilitation pe-
riod, reasonable measures to emerge from 
critical status at a later time or to forestall 
possible insolvency (within the meaning of 
section 4245 of the Employee Retirement 
Income Security Act of 1974). 
A rehabilitation plan must provide annual 
standards for meeting the requirements of such 
rehabilitation plan. Such plan shall also include 
the schedules required to be provided under 
paragraph (1)(B)(i) and if clause (ii) applies, 
shall set forth the alternatives considered, ex-
plain why the plan is not reasonably expected to 
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351 
emerge from critical status by the end of the re-
habilitation period, and specify when, if ever, 
the plan is expected to emerge from critical sta-
tus in accordance with the rehabilitation plan. 
‘‘(B) UPDATES TO REHABILITATION PLAN 
AND SCHEDULES.— 
‘‘(i) 
REHABILITATION
PLAN.—The 
plan sponsor shall annually update the re-
habilitation plan and shall file the update 
with the plan’s annual report under section 
104 of the Employee Retirement Income 
Security Act of 1974. 
‘‘(ii) SCHEDULES.—The plan sponsor 
shall annually update any schedule of con-
tribution rates provided under this sub-
section to reflect the experience of the 
plan. 
‘‘(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 ef-
fect for the duration of that collective bar-
gaining agreement. 
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‘‘(C) IMPOSITION OF DEFAULT SCHEDULE 
WHERE
FAILURE
TO
ADOPT
REHABILITATION 
PLAN.— 
‘‘(i) IN GENERAL.—If— 
‘‘(I) a collective bargaining agree-
ment 
providing 
for 
contributions 
under a multiemployer plan that was 
in effect at the time the plan entered 
critical status expires, and 
‘‘(II) after receiving one or more 
schedules from the plan sponsor under 
paragraph (1)(B), the bargaining par-
ties with respect to such agreement 
fail to adopt a contribution or benefit 
schedules with terms consistent with 
the rehabilitation plan and the sched-
ule from the plan sponsor under para-
graph (1)(B)(i), 
the plan sponsor shall implement the de-
fault schedule described in the last sen-
tence of paragraph (1) beginning on the 
date specified in clause (ii). 
‘‘(ii) DATE
OF
IMPLEMENTATION.— 
The date specified in this clause is the ear-
lier of the date— 
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‘‘(I) on which the Secretary of 
Labor certifies that the parties are at 
an impasse, or 
‘‘(II) which is 180 days after the 
date on which the collective bar-
gaining agreement described in clause 
(i) expires. 
‘‘(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 cer-
tification of critical status for the initial 
critical year under subsection (a)(1) and 
covering, as of such date at least 75 per-
cent of the active participants in such mul-
tiemployer plan. 
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354 
If a plan emerges from critical status as pro-
vided under subparagraph (B) before the end of 
such 10-year period, the rehabilitation period 
shall end with the plan year preceding the plan 
year for which the determination under sub-
paragraph (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 ac-
cordance 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 succeeding plan years, without regard to 
the use of the shortfall method and taking into 
account any extension of amortization periods 
under section 431(d). 
‘‘(5) REHABILITATION
PLAN
ADOPTION
PE-
RIOD.—For purposes of this section, the term ‘reha-
bilitation plan adoption period’ means the period be-
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. 
‘‘(6) LIMITATION ON REDUCTION IN RATES OF 
FUTURE ACCRUALS.—Any reduction in the rate of 
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355 
future accruals under the default schedule described 
in paragraph (1)(B)(i) shall not reduce the rate of 
future accruals 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 re-
spect to a participant, or the equivalent stand-
ard accrual rate for a participant or group of 
participants under the collective bargaining 
agreements in effect 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-
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 sched-
ule that established lower or higher accrual and con-
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356 
tribution rates than the rates otherwise described in 
this paragraph. 
‘‘(7) AUTOMATIC EMPLOYER SURCHARGE.— 
‘‘(A) IMPOSITION OF SURCHARGE.—Each 
employer otherwise obligated to make a con-
tribution for the initial critical year shall be ob-
ligated to pay to the plan for such year a sur-
charge equal to 5 percent of the contribution 
otherwise required under the applicable collec-
tive bargaining agreement (or other agreement 
pursuant to which the employer contributes). 
For each succeeding plan year in which the 
plan is in critical status for a consecutive period 
of years beginning with the initial critical year, 
the surcharge shall be 10 percent of the con-
tribution otherwise so required. 
‘‘(B) ENFORCEMENT
OF
SURCHARGE.— 
The surcharges under subparagraph (A) shall 
be due and payable on the same schedule as the 
contributions on which the surcharges are 
based. Any failure to make a surcharge pay-
ment shall be treated as a delinquent contribu-
tion under section 515 of the Employee Retire-
ment Income Security Act of 1974 and shall be 
enforceable as such. 
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357 
‘‘(C) SURCHARGE
TO
TERMINATE
UPON 
COLLECTIVE BARGAINING AGREEMENT RENEGO-
TIATION.—The surcharge under this paragraph 
shall cease to be effective with respect to em-
ployees covered by a collective bargaining agree-
ment (or other agreement pursuant to which 
the employer contributes), beginning on the ef-
fective date of a collective bargaining agreement 
(or other such agreement) that includes terms 
consistent with a schedule presented by the 
plan sponsor under paragraph (1)(B)(i), as 
modified under subparagraph (B) of paragraph 
(3). 
‘‘(D) SURCHARGE NOT TO APPLY UNTIL 
EMPLOYER RECEIVES NOTICE.—The surcharge 
under this paragraph shall not apply to an em-
ployer until 30 days after the employer has 
been notified by the plan sponsor that the plan 
is in critical status and that the surcharge is in 
effect. 
‘‘(E) SURCHARGE NOT TO GENERATE IN-
CREASED
BENEFIT
ACCRUALS.—Notwith-
standing any provision of a plan to the con-
trary, the amount of any surcharge under this 
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358 
paragraph shall not be the basis for any benefit 
accrual under the plan. 
‘‘(8) BENEFIT ADJUSTMENTS.— 
‘‘(A) ADJUSTABLE BENEFITS.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
section 204(g), the plan sponsor shall, sub-
ject to the notice requirement under sub-
paragraph (C), make any reductions to ad-
justable benefits which the plan sponsor 
deems appropriate, based upon the out-
come of collective bargaining over the 
schedule or schedules provided under para-
graph (1)(B)(i). 
‘‘(ii) EXCEPTION
FOR
RETIREES.— 
Except in the case of adjustable benefits 
described in clause (iv)(III), the plan spon-
sor of a plan in critical status shall not re-
duce adjustable benefits of any participant 
or beneficiary whose benefit commence-
ment date is before the date on which the 
plan provides notice to the participant or 
beneficiary under subsection (b)(3)(D) for 
the initial critical year . 
‘‘(iii) PLAN SPONSOR FLEXIBILITY.— 
The plan sponsor shall include in the 
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359 
schedules provided to the bargaining par-
ties an allowance for funding the benefits 
of participants with respect to whom con-
tributions are not currently required to be 
made, and shall reduce their benefits to 
the extent permitted under this title and 
considered appropriate by the plan sponsor 
based on the plan’s then current overall 
funding status. 
‘‘(iv) 
ADJUSTABLE
BENEFIT
DE-
FINED.—For purposes of this paragraph, 
the term ‘adjustable benefit’ means— 
‘‘(I) benefits, rights, and features 
under the plan, including post-retire-
ment death benefits, 60-month guar-
antees, disability benefits not yet in 
pay status, and similar benefits, 
‘‘(II) any early retirement benefit 
or retirement-type subsidy (within the 
meaning of section 411(d)(6)(B)(i)) 
and any benefit payment option (other 
than the qualified joint-and survivor 
annuity), and 
‘‘(III) 
benefit 
increases 
that 
would not be eligible for a guarantee 
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ccoleman on PROD1PC71 with BILLS
360 
under section 4022A of the Employee 
Retirement Income Security Act of 
1974 on the first day of initial critical 
year 
because 
the 
increases 
were 
adopted (or, if later, took effect) less 
than 60 months before such first day. 
‘‘(B) NORMAL
RETIREMENT
BENEFITS 
PROTECTED.—Except as provided in subpara-
graph (A)(iv)(III), nothing in this paragraph 
shall be construed to permit a plan to reduce 
the level of a participant’s accrued benefit pay-
able at normal retirement age. 
‘‘(C) NOTICE REQUIREMENTS.— 
‘‘(i) IN GENERAL.—No reduction may 
be made to adjustable benefits under sub-
paragraph (A) unless notice of such reduc-
tion has been given at least 30 days before 
the general effective date of such reduction 
for all participants and beneficiaries to— 
‘‘(I) plan participants and bene-
ficiaries, 
‘‘(II) each employer who has an 
obligation to contribute (within the 
meaning of section 4212(a)) under the 
plan, and 
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361 
‘‘(III) each employee organization 
which, for purposes of collective bar-
gaining, represents plan participants 
employed by such an employer. 
‘‘(ii) CONTENT OF NOTICE.—The no-
tice under clause (i) shall contain— 
‘‘(I) sufficient information to en-
able participants and beneficiaries to 
understand the effect of any reduction 
on their benefits, including an esti-
mate (on an annual or monthly basis) 
of any affected adjustable benefit that 
a participant or beneficiary would oth-
erwise have been eligible for as of the 
general effective date described in 
clause (i), and 
‘‘(II) information as to the rights 
and remedies of plan participants and 
beneficiaries as well as how to contact 
the Department of Labor for further 
information and assistance where ap-
propriate. 
‘‘(iii) FORM AND MANNER.—Any no-
tice under clause (i)— 
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362 
‘‘(I) shall be provided in a form 
and manner prescribed in regulations 
of the Secretary of Labor, 
‘‘(II) shall be written in a man-
ner so as to be understood by the av-
erage plan participant, and 
‘‘(III) may be provided in writ-
ten, electronic, or other appropriate 
form to the extent such form is rea-
sonably accessible to persons to whom 
the notice is required to be provided. 
The Secretary of Labor shall in the regula-
tions prescribed under subclause (I) estab-
lish a model notice that a plan sponsor 
may use to meet the requirements of this 
subparagraph. 
‘‘(9) ADJUSTMENTS
DISREGARDED
IN
WITH-
DRAWAL LIABILITY DETERMINATION.— 
‘‘(A) BENEFIT REDUCTIONS.—Any benefit 
reductions under this subsection shall be dis-
regarded in determining a plan’s unfunded vest-
ed benefits for purposes of determining an em-
ployer’s withdrawal liability under section 4201 
of the Employee Retirement Income Security 
Act of 1974. 
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363 
‘‘(B) 
SURCHARGES.—Any 
surcharges 
under paragraph (7) shall be disregarded in de-
termining an employer’s withdrawal liability 
under section 4211 of such Act, except for pur-
poses of determining the unfunded vested bene-
fits attributable to an employer under section 
4211(c)(4) of such Act or a comparable method 
approved under section 4211(c)(5) of such Act. 
‘‘(C) 
SIMPLIFIED
CALCULATIONS.—The 
Pension Benefit Guaranty Corporation shall 
prescribe simplified methods for the application 
of this paragraph in determining withdrawal li-
ability. 
‘‘(f) RULES
FOR OPERATION
OF PLAN DURING 
ADOPTION 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 re-
habilitation 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 date of the adoption of a rehabilitation plan 
under subsection (e) so as to increase benefits, 
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364 
including future benefit accruals, unless the 
plan actuary certifies that such increase is paid 
for out of additional contributions not con-
templated 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 period on the schedule con-
templated in the rehabilitation plan. 
‘‘(2) RESTRICTION ON LUMP SUMS AND SIMI-
LAR 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)), 
‘‘(ii) any payment for the purchase of 
an irrevocable commitment from an insurer 
to pay benefits, and 
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365 
‘‘(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 
without the consent of the participant or to any 
makeup payment in the case of a retroactive 
annuity 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 
reductions 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 pe-
riod— 
‘‘(A) the plan sponsor may not accept a 
collective 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, 
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366 
‘‘(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 com-
ply with other applicable law. 
‘‘(g) EXPEDITED RESOLUTION OF PLAN SPONSOR 
DECISIONS.—If, within 60 days of the due date for adop-
tion of a funding improvement plan or a rehabilitation 
plan under subsection (e), the plan sponsor of a plan in 
endangered status or a plan in critical status has not 
agreed on a funding improvement plan or rehabilitation 
plan, then any member of the board or group that con-
stitutes the plan sponsor may require that the plan spon-
sor enter into an expedited dispute resolution procedure 
for the development and adoption of a funding improve-
ment plan or rehabilitation plan. 
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367 
‘‘(h) NONBARGAINED PARTICIPATION.— 
‘‘(1) BOTH
BARGAINED
AND
NONBARGAINED 
EMPLOYEE-PARTICIPANTS.—In the case of an em-
ployer that contributes to a multiemployer plan with 
respect to both employees who are covered by one or 
more collective bargaining agreements and employ-
ees who are not so covered, if the plan is in endan-
gered status or in critical status, benefits of and 
contributions for the nonbargained employees, in-
cluding 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 agreements in effect when the 
plan entered endangered or critical status. 
‘‘(2) NONBARGAINED
EMPLOYEES
ONLY.—In 
the case of an employer that contributes to a multi-
employer plan only with respect to employees who 
are not covered by a collective bargaining agreement, 
this section shall be applied as if the employer were 
the bargaining party, and its participation agree-
ment with the plan were 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). 
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368 
‘‘(i) DEFINITIONS; ACTUARIAL METHOD.—For pur-
poses of this section— 
‘‘(1) BARGAINING
PARTY.—The term ‘bar-
gaining 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 em-
ployer settlor of the plan; and 
‘‘(B) an employee organization which, for 
purposes of collective bargaining, represents 
plan participants employed by an employer who 
has an obligation to contribute under the plan. 
‘‘(2) FUNDED PERCENTAGE.—The term ‘fund-
ed percentage’ means the percentage equal to a frac-
tion— 
‘‘(A) the numerator of which is the value 
of the plan’s assets, as determined under sec-
tion 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). 
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369 
‘‘(3) ACCUMULATED
FUNDING
DEFICIENCY.— 
The term ‘accumulated funding deficiency’ has the 
meaning 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 ‘inac-
tive participant’ means, in connection with a multi-
employer plan, a participant, or the beneficiary or 
alternate payee of a participant, who— 
‘‘(A) is not in covered service under the 
plan, and 
‘‘(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 
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370 
‘‘(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, 
actuarial 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). 
‘‘(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). 
‘‘(10) BENEFIT
COMMENCEMENT
DATE.—The 
term ‘benefit commencement date’ means the annu-
ity starting date (or in the case of a retroactive an-
nuity starting date, the date on which benefit pay-
ments begin).’’ 
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371 
(b) EXCISE TAXES ON FAILURES RELATING TO MUL-
TIEMPLOYER PLANS IN ENDANGERED OR CRITICAL STA-
TUS.— 
(1) IN GENERAL.—Section 4971 of the Internal 
Revenue Code of 1986 is amended by redesignating 
subsection (g) as subsection (h) and by inserting 
after subsection (f) the following: 
‘‘(g) MULTIEMPLOYER PLANS IN ENDANGERED OR 
CRITICAL STATUS.— 
‘‘(1) IN GENERAL.—Except as provided in this 
subsection— 
‘‘(A) no tax shall be imposed under this 
section for a taxable year with respect to a mul-
tiemployer plan if, for the plan years ending 
with or within the taxable year, the plan is in 
critical status pursuant to section 432, and 
‘‘(B) any tax imposed under this sub-
section for a taxable year with respect to a mul-
tiemployer plan if, for the plan years ending 
with or within the taxable year, the plan is in 
endangered status pursuant to section 432 shall 
be in addition to any other tax imposed by this 
section. 
‘‘(2) FAILURE TO COMPLY WITH FUNDING IM-
PROVEMENT OR REHABILITATION PLAN.— 
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372 
‘‘(A) IN
GENERAL.—If any funding im-
provement plan or rehabilitation plan in effect 
under section 432 with respect to a multiem-
ployer plan requires an employer to make a 
contribution to the plan, there is hereby im-
posed a tax on each failure of the employer to 
make the required contribution within the time 
required under such plan. 
‘‘(B) AMOUNT OF TAX.—The amount of 
the tax imposed by subparagraph (A) shall be 
equal to the amount of the required contribu-
tion the employer failed to make in a timely 
manner. 
‘‘(C) LIABILITY
FOR
TAX.—The tax im-
posed by subparagraph (A) shall be paid by the 
employer responsible for contributing to or 
under the rehabilitation plan which fails to 
make the contribution. 
‘‘(3) FAILURE TO MEET REQUIREMENTS FOR 
PLANS IN ENDANGERED OR CRITICAL STATUS.—If— 
‘‘(A) a plan which is in seriously endan-
gered status fails to meet the applicable bench-
marks by the end of the funding improvement 
period, or 
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373 
‘‘(B) a plan which is in critical status ei-
ther— 
‘‘(i) fails to meet the requirements of 
section 432(e) by the end of the rehabilita-
tion period, or 
‘‘(ii) has received a certification under 
section 432(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 this 
section for the last plan year in such funding 
improvement, rehabilitation, or 3-consecutive 
year period (and each succeeding plan year 
until such benchmarks or requirements are 
met) in an amount equal to the greater of the 
amount of the contributions necessary to meet 
such benchmarks or requirements or the 
amount of such accumulated funding deficiency 
without regard to this paragraph. 
‘‘(4) FAILURE
TO
ADOPT
REHABILITATION 
PLAN.— 
‘‘(A) IN GENERAL.—In the case of a multi-
employer plan which is in critical status, there 
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374 
is hereby imposed a tax on the failure of such 
plan to adopt a rehabilitation plan within the 
time prescribed under section 432. 
‘‘(B) AMOUNT OF TAX.—The amount of 
the tax imposed under subparagraph (A) with 
respect to any plan sponsor for any taxable year 
shall be the greater of— 
‘‘(i) the amount of tax imposed under 
subsection (a) for the taxable year (deter-
mined without regard to this subsection), 
or 
‘‘(ii) the amount equal to $1,100 mul-
tiplied by the number of days during the 
taxable year which are included in the pe-
riod beginning on the first day of the 240- 
day 
period 
described 
in 
section 
432(e)(1)(A) and ending on the day on 
which the rehabilitation plan is adopted. 
‘‘(C) LIABILITY FOR TAX.— 
‘‘(i) IN GENERAL.—The tax imposed 
by subparagraph (A) shall be paid by each 
plan sponsor. 
‘‘(ii) PLAN SPONSOR.—For purposes 
of clause (i), the term ‘plan sponsor’ in the 
case of a multiemployer plan means the as-
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375 
sociation, committee, joint board of trust-
ees, or other similar group of representa-
tives of the parties who establish or main-
tain the plan. 
‘‘(5) WAIVER.—In the case of a failure de-
scribed in paragraph (2) or (3) 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 
this subsection. For purposes of this paragraph, rea-
sonable cause includes unanticipated and material 
market fluctuations, the loss of a significant contrib-
uting employer, or other factors to the extent that 
the payment of tax under this subsection with re-
spect to the failure would be excessive or otherwise 
inequitable relative to the failure involved. 
‘‘(6) TERMS USED IN SECTION 432.—For pur-
poses of this subsection, any term used in this sub-
section which is also used in section 432 shall have 
the meaning given such term by section 432.’’. 
(2) CONTROLLED GROUPS.—Section 4971(c)(2) 
of such Code is amended— 
(A) by striking ‘‘In the case of a plan 
other than a multiemployer plan, if the’’ and in-
serting ‘‘If an’’, and 
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376 
(B) by striking ‘‘or (f)’’ and inserting ‘‘(f), 
or (g)’’. 
(c) NO ADDITIONAL CONTRIBUTION REQUIRED.— 
Section 412(b) of the Internal Revenue Code of 1986, as 
amended by this Act, is amended by adding at the end 
the following new paragraph: 
‘‘(3) MULTIEMPLOYER PLANS IN CRITICAL STA-
TUS.—Paragraph (1) shall not apply in the case of 
a multiemployer plan for any plan year in which the 
plan is in critical status pursuant to section 432. 
This paragraph shall only apply if the plan adopts 
a rehabilitation plan in accordance with section 
432(e) and complies with such rehabilitation plan 
(and any modifications of the plan).’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part III of subchapter D of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 432. Additional funding rules for multiemployer plans in endangered sta-
tus or critical status.’’. 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply with respect to plan years be-
ginning after 2007. 
(2) SPECIAL RULE FOR CERTAIN NOTICES.—In 
any case in which a plan’s actuary certifies that it 
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377 
is reasonably expected that a multiemployer plan will 
be in critical status under section 305(b)(3) of the 
Employee Retirement Income Security Act of 1974, 
as added by this section, with respect to the first 
plan year beginning after 2007, the notice required 
under subparagraph (D) of such section may be pro-
vided at any time after the date of enactment, so 
long as it is provided on or before the last date for 
providing the notice under such subparagraph. 
(3) SPECIAL
RULE
FOR
CERTAIN
RESTORED 
BENEFITS.—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 com-
munication from the plan sponsor to partici-
pants 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 
restriction on the providing or accrual of such bene-
fits would otherwise apply by reason of such amend-
ments. 
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378 
SEC. 213. MEASURES TO FORESTALL INSOLVENCY OF MUL-
TIEMPLOYER PLANS. 
(a) ADVANCE DETERMINATION OF IMPENDING IN-
SOLVENCY OVER 5 YEARS.—Section 418E(d)(1) of the 
Internal Revenue Code of 1986 is amended— 
(1) by striking ‘‘3 plan years’’ the second place 
it appears and inserting ‘‘5 plan years’’; and 
(2) by adding at the end the following new sen-
tence: ‘‘If the plan sponsor makes such a determina-
tion that the plan will be insolvent in any of the next 
5 plan years, the plan sponsor shall make the com-
parison under this paragraph at least annually until 
the plan sponsor makes a determination that the 
plan will not be insolvent in any of the next 5 plan 
years.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to the determinations 
made in plan years beginning after 2007. 
SEC. 214. EXEMPTION FROM EXCISE TAXES FOR CERTAIN 
MULTIEMPLOYER PENSION PLANS. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, no tax shall be imposed under subsection (a) 
or (b) of section 4971 of the Internal Revenue Code of 
1986 with respect to any accumulated funding deficiency 
of a plan described in subsection (b) of this section for 
any taxable year beginning before the earlier of— 
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379 
(1) the taxable year in which the plan sponsor 
adopts a rehabilitation plan under section 305(e) of 
the Employee Retirement Income Security Act of 
1974 and section 432(e) of such Code (as added by 
this Act); or 
(2) the taxable year that contains January 1, 
2009. 
(b) PLAN DESCRIBED.—A plan described under this 
subsection is a multiemployer pension plan— 
(1) with less than 100 participants; 
(2) with respect to which the contributing em-
ployers participated in a Federal fishery capacity re-
duction program; 
(3) with respect to which employers under the 
plan participated in the Northeast Fisheries Assist-
ance Program; and 
(4) with respect to which the annual normal 
cost is less than $100,000 and the plan is experi-
encing a funding deficiency on the date of enactment 
of this Act. 
Subtitle C—Sunset of Additional 
Funding Rules 
SEC. 221. SUNSET OF ADDITIONAL FUNDING RULES. 
(a) REPORT.—Not later than December 31, 2011, 
the Secretary of Labor, the Secretary of the Treasury, and 
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380 
the Executive Director of the Pension Benefit Guaranty 
Corporation shall conduct a study of the effect of the 
amendments 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 
legislation, 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 
employers of— 
(A) funding targets set in funding im-
provement and rehabilitation plans and associ-
ated contribution increases, 
(B) funding deficiencies, 
(C) excise taxes, 
(D) withdrawal liability, 
(E) the possibility of alternatives schedules 
and procedures for financially-troubled employ-
ers, and 
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381 
(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, sections 201(b), 202, and 212 shall not 
apply to plan years beginning after December 31, 
2014. 
(2) FUNDING IMPROVEMENT AND REHABILITA-
TION PLANS.—If a plan is operating under a fund-
ing improvement or rehabilitation plan under section 
305 of such Act or 432 of such Code for its last 
year beginning before January 1, 2015, such plan 
shall continue to operate under such funding im-
provement or 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 improvement or rehabilitation plan shall 
continue in effect during such period. 
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382 
TITLE III—INTEREST RATE 
ASSUMPTIONS 
SEC. 301. EXTENSION OF REPLACEMENT OF 30-YEAR 
TREASURY RATES. 
(a) AMENDMENTS OF ERISA.— 
(1) DETERMINATION
OF
RANGE.—Subclause 
(II) of section 302(b)(5)(B)(ii) of the Employee Re-
tirement Income Security Act of 1974 is amended— 
(A) by striking ‘‘2006’’ and inserting 
‘‘2008’’, and 
(B) by striking ‘‘AND 2005’’ in the heading 
and inserting ‘‘, 2005, 2006, AND 2007’’. 
(2) DETERMINATION OF CURRENT LIABILITY.— 
Subclause (IV) of section 302(d)(7)(C)(i) of such 
Act is amended— 
(A) by striking ‘‘or 2005’’ and inserting ‘‘, 
2005, 2006, or 2007’’, and 
(B) by striking ‘‘AND 2005’’ in the heading 
and inserting ‘‘, 2005, 2006, AND 2007’’. 
(3) PBGC PREMIUM RATE.—Subclause (V) of 
section 4006(a)(3)(E)(iii) of such Act is amended by 
striking ‘‘2006’’ and inserting ‘‘2008’’. 
(b) AMENDMENTS OF INTERNAL REVENUE CODE.— 
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383 
(1) DETERMINATION
OF
RANGE.—Subclause 
(II) of section 412(b)(5)(B)(ii) of the Internal Rev-
enue Code of 1986 is amended— 
(A) by striking ‘‘2006’’ and inserting 
‘‘2008’’, and 
(B) by striking ‘‘AND 2005’’ in the heading 
and inserting ‘‘, 2005, 2006, AND 2007’’. 
(2) DETERMINATION OF CURRENT LIABILITY.— 
Subclause (IV) of section 412(l)(7)(C)(i) of such 
Code is amended— 
(A) by striking ‘‘or 2005’’ and inserting ‘‘, 
2005, 2006, or 2007’’, and 
(B) by striking ‘‘AND 2005’’ in the heading 
and inserting ‘‘, 2005, 2006, AND 2007’’. 
(c) PLAN AMENDMENTS.—Clause (ii) of section 
101(c)(2)(A) of the Pension Funding Equity Act of 2004 
is amended by striking ‘‘2006’’ and inserting ‘‘2008’’. 
SEC. 302. INTEREST RATE ASSUMPTION FOR DETERMINA-
TION OF LUMP SUM DISTRIBUTIONS. 
(a) AMENDMENT TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.—Paragraph (3) of section 
205(g) of the Employee Retirement Income Security Act 
of 1974 (29 U.S.C. 1055(g)(3)) is amended to read as 
follows: 
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