586 
Age Discrimination in Employment Act of 1967 (as 
added by this Act), shall apply to plan amendments 
adopted after, and taking effect after, June 29, 
2005, except that the plan sponsor may elect to have 
such amendments apply to plan amendments adopt-
ed before, and taking effect after, such date. 
SEC. 702. REGULATIONS RELATING TO MERGERS AND AC-
QUISITIONS. 
The Secretary of the Treasury or his delegate shall, 
not later than 12 months after the date of the enactment 
of this Act, prescribe regulations for the application of the 
amendments made by, and the provisions of, this title in 
cases where the conversion of a plan to an applicable de-
fined benefit plan is made with respect to a group of em-
ployees who become employees by reason of a merger, ac-
quisition, or similar transaction. 
TITLE VIII—PENSION RELATED 
REVENUE PROVISIONS 
Subtitle A—Deduction Limitations 
SEC. 801. INCREASE IN DEDUCTION LIMIT FOR SINGLE-EM-
PLOYER PLANS. 
(a) IN GENERAL.—Section 404 of the Internal Rev-
enue Code of 1986 (relating to deduction for contributions 
of an employer to an employees’ trust or annuity plan and 
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compensation under a deferred payment plan) is amend-
ed— 
(1) in subsection (a)(1)(A), by inserting ‘‘in the 
case of a defined benefit plan other than a multiem-
ployer plan, in an amount determined under sub-
section (o), and in the case of any other plan’’ after 
‘‘section 501(a),’’, and 
(2) by inserting at the end the following new 
subsection: 
‘‘(o) DEDUCTION LIMIT
FOR SINGLE-EMPLOYER 
PLANS.—For purposes of subsection (a)(1)(A)— 
‘‘(1) IN GENERAL.—In the case of a defined 
benefit plan to which subsection (a)(1)(A) applies 
(other than a multiemployer plan), the amount de-
termined under this subsection for any taxable year 
shall be equal to the greater of— 
‘‘(A) the sum of the amounts determined 
under paragraph (2) with respect to each plan 
year ending with or within the taxable year, or 
‘‘(B) the sum of the minimum required 
contributions under section 430 for such plan 
years. 
‘‘(2) DETERMINATION OF AMOUNT.— 
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‘‘(A) IN
GENERAL.—The amount deter-
mined under this paragraph for any plan year 
shall be equal to the excess (if any) of— 
‘‘(i) the sum of— 
‘‘(I) the funding target for the 
plan year, 
‘‘(II) the target normal cost for 
the plan year, and 
‘‘(III) the cushion amount for the 
plan year, over 
‘‘(ii) the value (determined under sec-
tion 430(g)(2)) of the assets of the plan 
which are held by the plan as of the valu-
ation date for the plan year. 
‘‘(B) SPECIAL
RULE
FOR
CERTAIN
EM-
PLOYERS.—If section 430(i) does not apply to 
a plan for a plan year, the amount determined 
under subparagraph (A)(i) for the plan year 
shall in no event be less than the sum of— 
‘‘(i) the funding target for the plan 
year (determined as if section 430(i) ap-
plied to the plan), plus 
‘‘(ii) the target normal cost for the 
plan year (as so determined). 
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‘‘(3) CUSHION AMOUNT.—For purposes of para-
graph (2)(A)(i)(III)— 
‘‘(A) IN GENERAL.—The cushion amount 
for any plan year is the sum of— 
‘‘(i) 50 percent of the funding target 
for the plan year, and 
‘‘(ii) the amount by which the funding 
target for the plan year would increase if 
the plan were to take into account— 
‘‘(I) increases in compensation 
which are expected to occur in suc-
ceeding plan years, or 
‘‘(II) if the plan does not base 
benefits for service to date on com-
pensation, increases in benefits which 
are expected to occur in succeeding 
plan years (determined on the basis of 
the average annual increase in bene-
fits over the 6 immediately preceding 
plan years). 
‘‘(B) LIMITATIONS.— 
‘‘(i) IN
GENERAL.—In making the 
computation under subparagraph (A)(ii), 
the plan’s actuary shall assume that the 
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590 
limitations under subsection (l) and section 
415(b) shall apply. 
‘‘(ii) EXPECTED INCREASES.—In the 
case of a plan year during which a plan is 
covered under section 4021 of the Em-
ployee Retirement Income Security Act of 
1974, the plan’s actuary may, notwith-
standing subsection (l), take into account 
increases in the limitations which are ex-
pected to occur in succeeding plan years. 
‘‘(4) SPECIAL RULES FOR PLANS WITH 100 OR 
FEWER PARTICIPANTS.— 
‘‘(A) IN GENERAL.—For purposes of deter-
mining the amount under paragraph (3) for any 
plan year, in the case of a plan which has 100 
or fewer participants for the plan year, the li-
ability of the plan attributable to benefit in-
creases for highly compensated employees (as 
defined in section 414(q)) resulting from a plan 
amendment which is made or becomes effective, 
whichever is later, within the last 2 years shall 
not be taken into account in determining the 
target liability. 
‘‘(B) RULE
FOR
DETERMINING
NUMBER 
OF
PARTICIPANTS.—For purposes of deter-
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591 
mining the number of plan participants, all de-
fined benefit plans maintained by the same em-
ployer (or any member of such employer’s con-
trolled group (within the meaning of section 
412(f)(4))) shall be treated as one plan, but 
only participants of such member or employer 
shall be taken into account. 
‘‘(5) 
SPECIAL
RULE
FOR
TERMINATING 
PLANS.—In the case of a plan which, subject to sec-
tion 4041 of the Employee Retirement Income Secu-
rity Act of 1974, terminates during the plan year, 
the amount determined under paragraph (2) shall in 
no event be less than the amount required to make 
the plan sufficient for benefit liabilities (within the 
meaning of section 4041(d) of such Act). 
‘‘(6) ACTUARIAL ASSUMPTIONS.—Any computa-
tion under this subsection for any plan year shall 
use the same actuarial assumptions which are used 
for the plan year under section 430. 
‘‘(7) DEFINITIONS.—Any term used in this sub-
section which is also used in section 430 shall have 
the same meaning given such term by section 430.’’. 
(b) EXCEPTION FROM LIMITATION ON DEDUCTION 
WHERE COMBINATION OF DEFINED CONTRIBUTION AND 
DEFINED BENEFIT PLANS.—Section 404(a)(7)(C) of 
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592 
such Code, as amended by this Act, is amended by adding 
at the end the following new clause: 
‘‘(iv) GUARANTEED PLANS.—In apply-
ing this paragraph, any single-employer 
plan covered under section 4021 of the 
Employee Retirement Income Security Act 
of 1974 shall not be taken into account.’’. 
(c) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) The last sentence of section 404(a)(1)(A) of 
such Code is amended by striking ‘‘section 412’’ 
each place it appears and inserting ‘‘section 431’’. 
(2) Section 404(a)(1)(B) of such Code is 
amended— 
(A) by striking ‘‘In the case of a plan’’ and 
inserting ‘‘In the case of a multiemployer plan’’, 
(B) by striking ‘‘section 412(c)(7)’’ each 
place 
it 
appears 
and 
inserting 
‘‘section 
431(c)(6)’’, 
(C) by striking ‘‘section 412(c)(7)(B)’’ and 
inserting ‘‘section 431(c)(6)(A)(ii)’’, 
(D) by striking ‘‘section 412(c)(7)(A)’’ and 
inserting ‘‘section 431(c)(6)(A)(i)’’, and 
(E) by striking ‘‘section 412’’ and insert-
ing ‘‘section 431’’. 
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ccoleman on PROD1PC71 with BILLS
593 
(3) Section 404(a)(7) of such Code, as amended 
by this Act, is amended— 
(A) by adding at the end of subparagraph 
(A) the following new sentence: ‘‘In the case of 
a defined benefit plan which is a single em-
ployer plan, the amount necessary to satisfy the 
minimum funding standard provided by section 
412 shall not be less than the plan’s funding 
shortfall determined under section 430.’’, and 
(B) by striking subparagraph (D) and in-
serting: 
‘‘(D) INSURANCE CONTRACT PLANS.—For 
purposes of this paragraph, a plan described in 
section 412(e)(3) shall be treated as a defined 
benefit plan.’’. 
(4) Section 404A(g)(3)(A) of such Code is 
amended by striking ‘‘paragraphs (3) and (7) of sec-
tion 412(c)’’ and inserting ‘‘paragraphs (3) and (6) 
of section 431(c)’’. 
(d) SPECIAL RULE FOR 2006 AND 2007.— 
(1) 
IN
GENERAL.—Clause 
(i) 
of 
section 
404(a)(1)(D) of the Internal Revenue Code of 1986 
(relating to special rule in case of certain plans) is 
amended by striking ‘‘section 412(l)’’ and inserting 
‘‘section 
412(l)(8)(A), 
except 
that 
section 
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594 
412(l)(8)(A) shall be applied for purposes of this 
clause by substituting ‘150 percent (140 percent in 
the case of a multiemployer plan) of current liability’ 
for ‘the current liability’ in clause (i).’’ 
(2) 
CONFORMING
AMENDMENT.—Section 
404(a)(1) of the Internal Revenue Code of 1986 is 
amended by striking subparagraph (F). 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to years beginning after December 31, 
2007. 
(2) SPECIAL RULES.—The amendments made 
by subsection (d) shall apply to years beginning 
after December 31, 2005. 
SEC. 
802. 
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.—In the case 
of a defined benefit plan which is a multiem-
ployer plan, except as provided in regulations, 
the maximum amount deductible under the lim-
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itations of this paragraph shall not be less than 
the excess (if any) of— 
‘‘(i) 140 percent of the current liabil-
ity of the plan determined under section 
431(c)(6)(C), over 
‘‘(ii) the value of the plan’s assets de-
termined under section 431(c)(2).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to years beginning after Decem-
ber 31, 2007. 
SEC. 803. UPDATING DEDUCTION RULES FOR COMBINA-
TION OF PLANS. 
(a) IN GENERAL.—Subparagraph (C) of section 
404(a)(7) of the Internal Revenue Code of 1986 (relating 
to limitation on deductions where combination of defined 
contribution plan and defined benefit plan) is amended by 
adding after clause (ii) the following new clause: 
‘‘(iii) LIMITATION.—In the case of 
employer contributions to 1 or more de-
fined contribution plans, this paragraph 
shall only apply to the extent that such 
contributions exceed 6 percent of the com-
pensation otherwise paid or accrued during 
the taxable year to the beneficiaries under 
such plans. For purposes of this clause, 
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596 
amounts carried over from preceding tax-
able years under subparagraph (B) shall 
be treated as employer contributions to 1 
or more defined contributions to the extent 
attributable to employer contributions to 
such plans in such preceding taxable 
years.’’. 
(b) EXCEPTION FROM LIMITATION ON DEDUCTION 
WHERE COMBINATION OF DEFINED CONTRIBUTION AND 
DEFINED BENEFIT PLANS.—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.’’. 
(c) CONFORMING AMENDMENT.—Subparagraph (A) 
of section 4972(c)(6) of such Code (relating to nondeduct-
ible contributions) is amended to read as follows: 
‘‘(A) so much of the contributions to 1 or 
more defined contribution plans which are not 
deductible when contributed solely because of 
section 404(a)(7) as does not exceed the 
amount of contributions described in section 
401(m)(4)(A), or’’. 
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597 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions for taxable years 
beginning after December 31, 2005. 
Subtitle B—Certain Pension 
Provisions Made Permanent 
SEC. 811. PENSIONS AND INDIVIDUAL RETIREMENT AR-
RANGEMENT 
PROVISIONS 
OF 
ECONOMIC 
GROWTH AND TAX RELIEF RECONCILIATION 
ACT OF 2001 MADE PERMANENT. 
Title IX of the Economic Growth and Tax Relief Rec-
onciliation Act of 2001 shall not apply to the provisions 
of, and amendments made by, subtitles A through F of 
title VI of such Act (relating to pension and individual 
retirement arrangement provisions). 
SEC. 812. SAVER’S CREDIT. 
Section 25B of the Internal Revenue Code of 1986 
(relating to elective deferrals and IRA contributions by 
certain individuals) is amended by striking subsection (h). 
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598 
Subtitle C—Improvements in Port-
ability, Distribution, and Con-
tribution Rules 
SEC. 821. CLARIFICATIONS REGARDING PURCHASE OF PER-
MISSIVE SERVICE CREDIT. 
(a) IN GENERAL.—Section 415(n) of the Internal 
Revenue Code of 1986 (relating to special rules for the 
purchase of permissive service credit) is amended— 
(1) by striking ‘‘an employee’’ in paragraph (1) 
and inserting ‘‘a participant’’, and 
(2) by adding at the end of paragraph (3)(A) 
the following new flush sentence: 
‘‘Such term may include service credit for peri-
ods for which there is no performance of serv-
ice, and, notwithstanding clause (ii), may in-
clude service credited in order to provide an in-
creased benefit for service credit which a partic-
ipant is receiving under the plan.’’. 
(b) SPECIAL
RULES
FOR
TRUSTEE-TO-TRUSTEE 
TRANSFERS.—Section 415(n)(3) of such Code is amended 
by adding at the end the following new subparagraph: 
‘‘(D) SPECIAL
RULES
FOR
TRUSTEE-TO- 
TRUSTEE TRANSFERS.—In the case of a trust-
ee-to-trustee 
transfer 
to 
which 
section 
403(b)(13)(A) or 457(e)(17)(A) applies (with-
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599 
out regard to whether the transfer is made be-
tween plans maintained by the same em-
ployer)— 
‘‘(i) the limitations of subparagraph 
(B) shall not apply in determining whether 
the transfer is for the purchase of permis-
sive service credit, and 
‘‘(ii) the distribution rules applicable 
under this title to the defined benefit gov-
ernmental plan to which any amounts are 
so transferred shall apply to such amounts 
and any benefits attributable to such 
amounts.’’. 
(c) NONQUALIFIED SERVICE.—Section 415(n)(3) of 
such Code is amended— 
(1) by striking ‘‘permissive service credit attrib-
utable to nonqualified service’’ each place it appears 
in subparagraph (B) and inserting ‘‘nonqualified 
service credit’’, 
(2) by striking so much of subparagraph (C) as 
precedes clause (i) and inserting: 
‘‘(C) NONQUALIFIED
SERVICE
CREDIT.— 
For purposes of subparagraph (B), the term 
‘nonqualified service credit’ means permissive 
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service credit other than that allowed with re-
spect to—’’, and 
(3) by striking ‘‘elementary or secondary edu-
cation (through grade 12), as determined under 
State law’’ in subparagraph (C)(ii) and inserting 
‘‘elementary or secondary education (through grade 
12), or a comparable level of education, as deter-
mined under the applicable law of the jurisdiction in 
which the service was performed’’. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
subsections (a) and (c) shall take effect as if in-
cluded in the amendments made by section 1526 of 
the Taxpayer Relief Act of 1997. 
(2) SUBSECTION (b).—The amendments made 
by subsection (b) shall take effect as if included in 
the amendments made by section 647 of the Eco-
nomic Growth and Tax Relief Reconciliation Act of 
2001. 
SEC. 822. ALLOW ROLLOVER OF AFTER-TAX AMOUNTS IN 
ANNUITY CONTRACTS. 
(a) IN GENERAL.—Subparagraph (A) of section 
402(c)(2) (relating to the maximum amount which may 
be rolled over) is amended— 
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601 
(1) by striking ‘‘which is part of a plan which 
is a defined contribution plan and which agrees to 
separately account’’ and inserting ‘‘or to an annuity 
contract described in section 403(b) and such trust 
or contract provides for separate accounting’’; and 
(2) by inserting ‘‘(and earnings thereon)’’ after 
‘‘so transferred’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 823. CLARIFICATION OF MINIMUM DISTRIBUTION 
RULES FOR GOVERNMENTAL PLANS. 
The Secretary of the Treasury shall issue regulations 
under which a governmental plan (as defined in section 
414(d) of the Internal Revenue Code of 1986) shall, for 
all years to which section 401(a)(9) of such Code applies 
to such plan, be treated as having complied with such sec-
tion 401(a)(9) if such plan complies with a reasonable 
good faith interpretation of such section 401(a)(9). 
SEC. 824. ALLOW DIRECT ROLLOVERS FROM RETIREMENT 
PLANS TO ROTH IRAS. 
(a) IN GENERAL.—Subsection (e) of section 408A of 
the Internal Revenue Code of 1986 (defining qualified roll-
over contribution) is amended to read as follows: 
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‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.—For 
purposes of this section, the term ‘qualified rollover con-
tribution’ means a rollover contribution— 
‘‘(1) to a Roth IRA from another such account, 
‘‘(2) from an eligible retirement plan, but only 
if— 
‘‘(A) in the case of an individual retire-
ment plan, such rollover contribution meets the 
requirements of section 408(d)(3), and 
‘‘(B) in the case of any eligible retirement 
plan (as defined in section 402(c)(8)(B) other 
than clauses (i) and (ii) thereof), such rollover 
contribution meets the requirements of section 
402(c), 403(b)(8), or 457(e)(16), as applicable. 
For purposes of section 408(d)(3)(B), there shall be dis-
regarded any qualified rollover contribution from an indi-
vidual retirement plan (other than a Roth IRA) to a Roth 
IRA.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 408A(c)(3)(B) of such Code, as in 
effect before the Tax Increase Prevention and Rec-
onciliation Act of 2005, is amended— 
(A) in the text by striking ‘‘individual re-
tirement plan’’ and inserting ‘‘an eligible retire-
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