I 
109TH CONGRESS 
1ST SESSION H. R. 2106 
To amend the Internal Revenue Code of 1986 to provide transition funding 
rules for certain plans electing to cease future benefit accruals, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 4, 2005 
Mr. PRICE of Georgia (for himself, Mr. LINDER, Mr. BAKER, Mr. CHABOT, 
Mr. DAVIS of Kentucky, Mr. DEAL of Georgia, Mr. GINGREY, Mr. KING-
STON, Mr. NORWOOD, Mr. WESTMORELAND, Mr. LEWIS of Georgia, and 
Mr. SCOTT of Georgia) introduced the following bill; which was referred 
to the Committee on Ways and Means, and in addition to the Committee 
on Education and the Workforce, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
transition funding rules for certain plans electing to 
cease future benefit accruals, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Employee Pension 
Preservation and Taxpayer Protection Act of 2005’’.
SEC. 2. TRANSITION FUNDING RULES FOR CERTAIN PLANS 
THAT ARE AMENDED TO CEASE FUTURE BEN-
EFIT ACCRUALS. 
(a) AMENDMENT OF 1986 CODE.—Section 412 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new subsection: 
‘‘(o) TRANSITION FUNDING STANDARDS FOR CER-
TAIN PLANS THAT ARE AMENDED TO PERMANENTLY 
CEASE FUTURE BENEFIT ACCRUALS.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this section, if an eligible plan elects to 
have this subsection apply— 
‘‘(A) the plan shall maintain a transition 
funding standard account for each applicable 
plan year, 
‘‘(B) the accumulated funding deficiency of 
the plan for any applicable plan year for pur-
poses of this section and section 4971 shall be 
determined by using the transition funding 
standard account rather than the funding 
standard account used without regard to this 
subsection, and 
‘‘(C) except as provided in paragraph (6), 
the transition funding standard account shall be 
credited and charged solely as provided in this
subsection and without regard to the require-
ments of subsection (b), (d), (e), (f), (g), or (l). 
‘‘(2) ELIGIBLE
PLAN.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The term ‘eligible 
plan’ means a plan (other than multiemployer 
plan) to which this section applies— 
‘‘(i) which is sponsored by an applica-
ble employer (as defined in subsection 
(l)(12)(C)(i)), and 
‘‘(ii) with respect to which the re-
quirements of subparagraphs (B) and (C) 
are met. 
‘‘(B) ACCRUAL
RESTRICTIONS.—The re-
quirements of this subparagraph are met if, ef-
fective as of the first day of the first applicable 
plan year and at all times thereafter, the plan 
provides that, except to the extent required 
under section 401(a) or as provided in para-
graph (4)(C), a participant will not receive any 
credit for any purpose under the plan for serv-
ice with, or for compensation earned from, the 
employer (or any member of the employer’s 
controlled group (within the meaning of sub-
section (l)(8)(C))) on or after such first day.
‘‘(C) RESTRICTION ON AMENDMENTS IN-
CREASING
LIABILITIES.—The requirements of 
this subparagraph are met if, at any time dur-
ing the period beginning on the date of the en-
actment of this subsection and ending on the 
day before the first day of the first applicable 
plan year, no amendment to the plan has been 
adopted which increases the liabilities of the 
plan by reason of any increase in benefits, any 
change in the accrual of benefits, or any change 
in the rate at which benefits become nonforfeit-
able under the plan. This subparagraph shall 
not apply to any plan amendment described in 
clause (i) or (ii) of subsection (l)(12)(B). 
‘‘(3) ELECTIONS AND RELATED TERMS.— 
‘‘(A) IN GENERAL.—A plan sponsor shall 
make the election under paragraph (1) at such 
time and in such manner as the Secretary may 
prescribe. Such election, once made, is irrev-
ocable without the consent of the Secretary. 
‘‘(B) 
YEARS
FOR
WHICH
ELECTION 
MADE.— 
‘‘(i) IN GENERAL.—The plan sponsor 
may select the first plan year to which the 
election under paragraph (1) applies from
among plan years ending after the date of 
the election. The election shall apply to 
such plan year and all subsequent years. 
‘‘(ii) 
ELECTION
OF
NEW
PLAN 
YEAR.—The plan sponsor may specify a 
new plan year in the election under para-
graph (1) and the plan year of the plan 
may be changed to such new plan year 
without the approval of the Secretary. 
‘‘(C) APPLICABLE PLAN YEAR.—The term 
‘applicable plan year’ means each plan year to 
which the election under paragraph (1) applies 
under subparagraph (A). 
‘‘(4) CHARGES TO THE ACCOUNT.— 
‘‘(A) IN GENERAL.—In the case of any ap-
plicable plan year during the amortization pe-
riod, the transition funding standard account 
shall be charged with the amount necessary to 
amortize the unfunded liability of the plan, de-
termined as of the first day of the plan year, 
in equal annual installments (until fully amor-
tized) over the remainder of the amortization 
period. Such charge shall be separately deter-
mined for each applicable plan year.
‘‘(B) YEARS
AFTER
AMORTIZATION
PE-
RIOD.—In the case of an applicable plan year 
beginning after the amortization period, the 
transition funding standard account shall be 
charged with the unfunded liability determined 
as of the first day of the plan year. 
‘‘(C) CURRENT FUNDING OF OTHERWISE 
PROHIBITED CREDITS.—Notwithstanding para-
graph (2)(C), a plan may provide credit for any 
applicable plan year which is otherwise prohib-
ited under such paragraph, but the transition 
funding standard account for the plan year 
shall be charged with the entire amount of the 
expected increase in unfunded accrued liability 
(determined under the unit credit funding 
method) due to benefits accruing during the 
plan year which are attributable to such credit. 
‘‘(D) DEFINITIONS.—For purposes of this 
subsection— 
‘‘(i) 
UNFUNDED
LIABILITY.—The 
term ‘unfunded liability’ means the un-
funded accrued liability under the plan, de-
termined under the unit credit funding 
method.
‘‘(ii) AMORTIZATION
PERIOD.—The 
term ‘amortization period’ means the 25- 
plan year period beginning with the first 
applicable plan year. 
‘‘(5) CREDIT
TO
ACCOUNT.—The transition 
funding standard account for any applicable plan 
year shall be credited with the amount considered 
contributed by the employer to or under the plan for 
the plan year. 
‘‘(6) OTHER RULES RELATING TO TRANSITION 
FUNDING STANDARD ACCOUNT.—In the case of any 
transition funding standard account— 
‘‘(A) the provisions of subsection (c) (other 
than paragraph (7)) shall apply, 
‘‘(B) interest on underpayments, if any, 
shall be charged at the rate determined under 
subsection (b), 
‘‘(C) in determining credits and charges to 
the transition funding standard account for the 
first applicable plan year, all existing amortiza-
tion bases and any credit balances shall be re-
duced to zero, and 
‘‘(D) in determining credits and charges to 
the transition funding standard account for any
applicable plan year, the value of plan assets 
shall be equal to their fair market value.’’ 
(b) AMENDMENT OF EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.—Section 302 of the Em-
ployee Retirement Income Security Act of 1974 is amend-
ed by adding at the end the following new subsection: 
‘‘(i) TRANSITION FUNDING STANDARDS FOR CER-
TAIN PLANS THAT ARE AMENDED TO PERMANENTLY 
CEASE FUTURE BENEFIT ACCRUALS.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this section, if an eligible plan elects to 
have this subsection apply— 
‘‘(A) the plan shall maintain a transition 
funding standard account for each applicable 
plan year, 
‘‘(B) the accumulated funding deficiency of 
the plan for any applicable plan year for pur-
poses of this section and section 4971 of the In-
ternal Revenue Code of 1986 shall be deter-
mined by using the transition funding standard 
account rather than the funding standard ac-
count used without regard to this subsection, 
and 
‘‘(C) except as provided in paragraph (6), 
the transition funding standard account shall be
credited and charged solely as provided in this 
subsection and without regard to the require-
ments of subsection (b) or (d) of this section or 
section 303, 304, 305, 306, or 307. 
‘‘(2) ELIGIBLE
PLAN.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The term ‘eligible 
plan’ means a plan (other than multiemployer 
plan) to which this section applies— 
‘‘(i) which is sponsored by an applica-
ble employer (as defined in subsection 
(d)(12)(C)(i)), and 
‘‘(ii) with respect to which the re-
quirements of subparagraphs (B) and (C) 
are met. 
‘‘(B) ACCRUAL
RESTRICTIONS.—The re-
quirements of this subparagraph are met if, ef-
fective as of the first day of the first applicable 
plan year and at all times thereafter, the plan 
provides that, except to the extent required 
under part 2 or as provided in paragraph 
(4)(C), a participant will not receive any credit 
for any purpose under the plan for service with, 
or for compensation earned from, the employer 
(or any member of the employer’s controlled
group (within the meaning of subsection 
(d)(8)(C))) on or after such first day. 
‘‘(C) RESTRICTION ON AMENDMENTS IN-
CREASING
LIABILITIES.—The requirements of 
this subparagraph are met if, at any time dur-
ing the period beginning on the date of the en-
actment of this subsection and ending on the 
day before the first day of the first applicable 
plan year, no amendment to the plan has been 
adopted which increases the liabilities of the 
plan by reason of any increase in benefits, any 
change in the accrual of benefits, or any change 
in the rate at which benefits become nonforfeit-
able under the plan. This subparagraph shall 
not apply to any plan amendment described in 
clause (i) or (ii) of subsection (d)(12)(B). 
‘‘(3) ELECTIONS AND RELATED TERMS.— 
‘‘(A) IN GENERAL.—A plan sponsor shall 
make the election under paragraph (1) at such 
time and in such manner as the Secretary may 
prescribe. Such election, once made, is irrev-
ocable without the consent of the Secretary of 
the Treasury. 
‘‘(B) 
YEARS
FOR
WHICH
ELECTION 
MADE.—
‘‘(i) IN GENERAL.—The plan sponsor 
may select the first plan year to which the 
election under paragraph (1) applies from 
among plan years ending after the date of 
the election. The election shall apply to 
such plan year and all subsequent years. 
‘‘(ii) 
ELECTION
OF
NEW
PLAN 
YEAR.—The plan sponsor may specify a 
new plan year in the election under para-
graph (1) and the plan year of the plan 
may be changed to such new plan year 
without the approval of the Secretary of 
the Treasury. 
‘‘(C) APPLICABLE PLAN YEAR.—For pur-
poses of this subsection, the term ‘applicable 
plan year’ means each plan year to which the 
election under paragraph (1) applies under sub-
paragraph (A). 
‘‘(4) CHARGES TO THE ACCOUNT.— 
‘‘(A) IN GENERAL.—In the case of any ap-
plicable plan year during the amortization pe-
riod, the transition funding standard account 
shall be charged with the amount necessary to 
amortize the unfunded liability of the plan, de-
termined as of the first day of the plan year,
in equal annual installments (until fully amor-
tized) over the remainder of the amortization 
period. Such charge shall be separately deter-
mined for each applicable plan year. 
‘‘(B) YEARS
AFTER
AMORTIZATION
PE-
RIOD.—In the case of an applicable plan year 
beginning after the amortization period, the 
transition funding standard account shall be 
charged with the unfunded liability determined 
as of the first day of the plan year. 
‘‘(C) CURRENT FUNDING OF OTHERWISE 
PROHIBITED CREDITS.—Notwithstanding para-
graph (2)(C), a plan may provide credit for any 
applicable plan year which is otherwise prohib-
ited under such paragraph, but the transition 
funding standard account for the plan year 
shall be charged with the entire amount of the 
expected increase in unfunded accrued liability 
(determined under the unit credit funding 
method) due to benefits accruing during the 
plan year which are attributable to such credit. 
‘‘(D) DEFINITIONS.—For purposes of this 
subsection— 
‘‘(i) 
UNFUNDED
LIABILITY.—The 
term ‘unfunded liability’ means the un-
funded accrued liability under the plan, de-
termined under the unit credit funding 
method. 
‘‘(ii) AMORTIZATION
PERIOD.—The 
term ‘amortization period’ means the 25- 
plan year period beginning with the first 
applicable plan year. 
‘‘(5) CREDIT
TO
ACCOUNT.—The transition 
funding standard account for any applicable plan 
year shall be credited with the amount considered 
contributed by the employer to or under the plan for 
the plan year. 
‘‘(6) OTHER RULES RELATING TO TRANSITION 
FUNDING STANDARD ACCOUNT.—In the case of any 
transition funding standard account— 
‘‘(A) the provisions of subsection (c) (other 
than paragraph (7)) shall apply, 
‘‘(B) interest on underpayments, if any, 
shall be charged at the rate determined under 
subsection (b), 
‘‘(C) in determining credits and charges to 
the transition funding standard account for the 
first applicable plan year, all existing amortiza-
tion bases and any credit balances shall be re-
duced to zero, and
‘‘(D) in determining credits and charges to 
the transition funding standard account for any 
applicable plan year, the value of plan assets 
shall be equal to their fair market value.’’. 
(c) AMENDMENT TO QUALIFICATION RULES.—Sec-
tion 401(a) of the Internal Revenue Code of 1986 is 
amended by inserting after paragraph (34) the following 
new paragraph: 
‘‘(35) SUCCESSOR PLANS TO CERTAIN PLANS.— 
If a plan to which section 412(o) applies is main-
tained by an employer that establishes or maintains 
1 or more other defined benefit plans, and such 
other plans in combination provide benefit accruals 
to any substantial number of successor employees, 
the Secretary may, in the Secretary’s discretion, de-
termine that any trust of which any other such plan 
is a part does not constitute a qualified trust under 
this subsection unless all benefit obligations of the 
plan to which section 412(o) applies have been satis-
fied. For purposes of this paragraph, the term ‘suc-
cessor employee’ means any employee who is or was 
covered by the plan to which section 412(o) applies 
and any employee who performs substantially the 
same type of work with respect to the same business 
operations as an employee covered by such plan.’’
(d) PBGC LIABILITY LIMITED.—Section 4022(b) of 
the Employee Retirement Income Security Act of 1974 is 
amended by adding at the end the following new para-
graph: 
‘‘(8) For any plan that terminates at a time 
when the special funding requirements under section 
302(i) and section 412(o) of the Internal Revenue 
Code of 1986 apply to such plan, paragraphs (1), 
(3), and (7) shall be applied as if the plan had ter-
minated on the first day of the first applicable plan 
year described in such sections.’’ 
(e) LIMITATION ON DEDUCTIONS UNDER CERTAIN 
PLANS.— 
(1) SPECIAL RULES.—Section 404(a)(1)(D) of 
the Internal Revenue Code of 1986 is amended by 
adding at the end the following new clause: 
‘‘(v) PLANS TO WHICH SECTION 412(o) 
APPLIES.—In the case of a plan to which 
section 412(o) applies, the maximum 
amount deductible under the limitations of 
this paragraph shall be the amount paid 
into such plan for such plan year.’’ 
(2) COMBINED
PLANS.—Section 404(a)(7)(C) 
of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new clause:
‘‘(iii) PLANS
TO
WHICH
SECTION 
412(o) APPLIES.—Contributions to a plan 
to which section 412(o) applies shall be 
disregarded in applying this paragraph.’’ 
(f) NOTICE.—In the case of a plan amendment adopt-
ed in order to comply with section 412(o)(2)(B) of the 
Internal Revenue Code of 1986 and with section 
302(i)(2)(B) of the Employee Retirement Income Security 
Act of 1974, any notice required under section 4980F(e) 
of such Code or section 204(h) of such Act shall be subject 
to the timing rules applicable to multiemployer plans 
under Treasury Regulation section 54.4980F–1 Q/A–9 (or 
any successor provision). This subsection shall not apply 
to any plan unless such plan is— 
(1) described in section 412(o) of such Code 
and section 302(i) of such Act, and 
(2) maintained pursuant to one or more collec-
tive bargaining agreements between employee rep-
resentatives and one or more employers. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years ending after the date 
of the enactment of this Act. 
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