173
‘‘(A) IN GENERAL.—A plan to which this 
paragraph applies shall be treated as failing to 
pay the full amount of any required installment 
under paragraph (3) to the extent that the 
value of the liquid assets paid in such install-
ment is less than the liquidity shortfall (wheth-
er or not such liquidity shortfall exceeds the 
amount of such installment required to be paid 
but for this paragraph). 
‘‘(B) PLANS
TO
WHICH
PARAGRAPH
AP-
PLIES.—This paragraph shall apply to a plan 
(other than a plan described in subsection 
(g)(2)(B)) which—
‘‘(i) is required to pay installments 
under paragraph (3) for a plan year, and 
‘‘(ii) has a liquidity shortfall for any 
quarter during such plan year. 
‘‘(C) PERIOD
OF
UNDERPAYMENT.—For 
purposes of paragraph (3)(A), any portion of an 
installment that is treated as not paid under 
subparagraph (A) shall continue to be treated 
as unpaid until the close of the quarter in 
which the due date for such installment occurs. 
‘‘(D) LIMITATION
ON
INCREASE.—If the 
amount of any required installment is increased
174
by reason of subparagraph (A), in no event 
shall such increase exceed the amount which, 
when added to prior installments for the plan 
year, is necessary to increase the funding target 
attainment percentage of the plan for the plan 
year (taking into account the expected increase 
in funding target due to benefits accruing or 
earned during the plan year) to 100 percent. 
‘‘(E) DEFINITIONS.—For purposes of this 
paragraph—
‘‘(i) 
LIQUIDITY
SHORTFALL.—The 
term ‘liquidity shortfall’ means, with re-
spect to any required installment, an 
amount equal to the excess (as of the last 
day of the quarter for which such install-
ment is made) of—
‘‘(I) the base amount with re-
spect to such quarter, over 
‘‘(II) the value (as of such last 
day) of the plan’s liquid assets. 
‘‘(ii) BASE AMOUNT.—
‘‘(I) IN
GENERAL.—The term 
‘base amount’ means, with respect to 
any quarter, an amount equal to 3 
times the sum of the adjusted dis-
175
bursements from the plan for the 12 
months ending on the last day of such 
quarter. 
‘‘(II) SPECIAL
RULE.—If the 
amount determined under subclause 
(I) exceeds an amount equal to 2 
times the sum of the adjusted dis-
bursements from the plan for the 36 
months ending on the last day of the 
quarter and an enrolled actuary cer-
tifies to the satisfaction of the Sec-
retary that such excess is the result of 
nonrecurring circumstances, the base 
amount with respect to such quarter 
shall be determined without regard to 
amounts related to those nonrecurring 
circumstances. 
‘‘(iii) DISBURSEMENTS
FROM
THE 
PLAN.—The term ‘disbursements from the 
plan’ means all disbursements from the 
trust, including purchases of annuities, 
payments of single sums and other bene-
fits, and administrative expenses. 
‘‘(iv) ADJUSTED
DISBURSEMENTS.—
The term ‘adjusted disbursements’ means
176
disbursements from the plan reduced by 
the product of—
‘‘(I) the plan’s funding target at-
tainment percentage for the plan year, 
and 
‘‘(II) the sum of the purchases of 
annuities, payments of single sums, 
and such other disbursements as the 
Secretary shall provide in regulations. 
‘‘(v) LIQUID ASSETS.—The term ‘liq-
uid assets’ means cash, marketable securi-
ties, and such other assets as specified by 
the Secretary in regulations. 
‘‘(vi) QUARTER.—The term ‘quarter’ 
means, with respect to any required install-
ment, the 3-month period preceding the 
month in which the due date for such in-
stallment occurs. 
‘‘(F) REGULATIONS.—The Secretary may 
prescribe such regulations as are necessary to 
carry out this paragraph. 
‘‘(k) IMPOSITION
OF LIEN WHERE FAILURE
TO 
MAKE REQUIRED CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—In the case of a plan to 
which this subsection applies, if—
177
‘‘(A) any person fails to make a contribu-
tion payment required by section 412 and this 
section before the due date for such payment, 
and 
‘‘(B) the unpaid balance of such payment 
(including interest), when added to the aggre-
gate unpaid balance of all preceding such pay-
ments for which payment was not made before 
the due date (including interest), exceeds 
$1,000,000, 
then there shall be a lien in favor of the plan in the 
amount determined under paragraph (3) upon all 
property and rights to property, whether real or per-
sonal, belonging to such person and any other per-
son who is a member of the same controlled group 
of which such person is a member. 
‘‘(2) PLANS TO WHICH SUBSECTION APPLIES.—
This subsection shall apply to a defined benefit plan 
(other than a multiemployer plan) covered under 
section 4021 of the Employee Retirement Income 
Security Act of 1974 for any plan year for which the 
funding target attainment percentage (as defined in 
subsection (d)(2)) of such plan is less than 100 per-
cent.
178
‘‘(3) AMOUNT OF LIEN.—For purposes of para-
graph (1), the amount of the lien shall be equal to 
the aggregate unpaid balance of contribution pay-
ments required under this section and section 412 
for which payment has not been made before the due 
date. 
‘‘(4) NOTICE OF FAILURE; LIEN.—
‘‘(A) NOTICE
OF
FAILURE.—A person 
committing a failure described in paragraph (1) 
shall notify the Pension Benefit Guaranty Cor-
poration of such failure within 10 days of the 
due date for the required contribution payment. 
‘‘(B) PERIOD OF LIEN.—The lien imposed 
by paragraph (1) shall arise on the due date for 
the required contribution payment and shall 
continue until the last day of the first plan year 
in which the plan ceases to be described in 
paragraph (1)(B). Such lien shall continue to 
run without regard to whether such plan con-
tinues to be described in paragraph (2) during 
the period referred to in the preceding sentence. 
‘‘(C) CERTAIN
RULES
TO
APPLY.—Any 
amount with respect to which a lien is imposed 
under paragraph (1) shall be treated as taxes 
due and owing the United States and rules
179
similar to the rules of subsections (c), (d), and 
(e) of section 4068 of the Employee Retirement 
Income Security Act of 1974 shall apply with 
respect to a lien imposed by subsection (a) and 
the amount with respect to such lien. 
‘‘(5) ENFORCEMENT.—Any lien created under 
paragraph (1) may be perfected and enforced only 
by the Pension Benefit Guaranty Corporation, or at 
the direction of the Pension Benefit Guaranty Cor-
poration, by the contributing sponsor (or any mem-
ber of the controlled group of the contributing spon-
sor). 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) CONTRIBUTION PAYMENT.—The term 
‘contribution payment’ means, in connection 
with a plan, a contribution payment required to 
be made to the plan, including any required in-
stallment under paragraphs (3) and (4) of sub-
section (j). 
‘‘(B) DUE
DATE; 
REQUIRED
INSTALL-
MENT.—The terms ‘due date’ and ‘required in-
stallment’ have the meanings given such terms 
by subsection (j), except that in the case of a 
payment other than a required installment, the
180
due date shall be the date such payment is re-
quired to be made under section 430. 
‘‘(C) CONTROLLED
GROUP.—The term 
‘controlled group’ means any group treated as 
a single employer under subsections (b), (c), 
(m), and (o) of section 414. 
‘‘(l) QUALIFIED TRANSFERS TO HEALTH BENEFIT 
ACCOUNTS.—In the case of a qualified transfer (as de-
fined in section 420), any assets so transferred shall not, 
for purposes of this section, be treated as assets in the 
plan.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan years begin-
ning after December 31, 2007. 
SEC. 
113. 
BENEFIT 
LIMITATIONS 
UNDER 
SINGLE-EM-
PLOYER PLANS. 
(a) PROHIBITION
OF SHUTDOWN BENEFITS
AND 
OTHER UNPREDICTABLE CONTINGENT EVENT BENEFITS 
UNDER SINGLE-EMPLOYER PLANS.—
(1) IN GENERAL.—Part III of subchapter D of 
chapter 1 of the Internal Revenue Code of 1986 (re-
lating to deferred compensation, etc.) is amended—
(A) by striking the heading and inserting 
the following:
181
‘‘PART III—RULES RELATING TO MINIMUM FUND-
ING STANDARDS AND BENEFIT LIMITATIONS
‘‘SUBPART A. MINIMUM FUNDING STANDARDS FOR PENSION PLANS. 
‘‘SUBPART B. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.
‘‘Subpart A—Minimum Funding Standards for 
Pension Plans
‘‘Sec. 430. Minimum funding standards for single-employer defined benefit pen-
sion plans.’’, and
(B) by adding at the end the following new 
subpart: 
‘‘Subpart B—Benefit Limitations Under Single-
Employer Plans
‘‘Sec. 436. Funding-based limitation on shutdown benefits and other unpredict-
able contingent event benefits under single-employer plans.
‘‘SEC. 436. FUNDING-BASED LIMITS ON BENEFITS AND BEN-
EFIT ACCRUALS UNDER SINGLE-EMPLOYER 
PLANS. 
‘‘(a) GENERAL RULE.—For purposes of section 
401(a)(29), a defined benefit plan which is a single-em-
ployer plan shall be treated as meeting the requirements 
of this section if the plan meets the requirements of sub-
sections (b), (c), (d), and (e). 
‘‘(b) FUNDING-BASED LIMITATION ON SHUTDOWN 
BENEFITS
AND OTHER UNPREDICTABLE CONTINGENT 
EVENT BENEFITS UNDER SINGLE-EMPLOYER PLANS.—
‘‘(1) IN GENERAL.—If a participant of a de-
fined benefit plan which is a single-employer plan is
182
entitled to an unpredictable contingent event benefit 
payable with respect to any event occurring during 
any plan year, the plan shall provide that such ben-
efit may not be provided if the adjusted funding tar-
get attainment percentage for such plan year—
‘‘(A) is less than 60 percent, or 
‘‘(B) would be less than 60 percent taking 
into account such occurrence. 
‘‘(2) EXEMPTION.—Paragraph (1) shall cease 
to apply with respect to any plan year, effective as 
of the first day of the plan year, upon payment by 
the plan sponsor of a contribution (in addition to 
any minimum required contribution under section 
303) equal to—
‘‘(A) in the case of paragraph (1)(A), the 
amount of the increase in the funding target of 
the plan (under section 430) for the plan year 
attributable to the occurrence referred to in 
paragraph (1), and 
‘‘(B) in the case of paragraph (1)(B), the 
amount sufficient to result in a funding target 
attainment percentage of 60 percent. 
‘‘(3) UNPREDICTABLE CONTINGENT EVENT.—
For purposes of this subsection, the term ‘unpredict-
183
able contingent event benefit’ means any benefit 
payable solely by reason of—
‘‘(A) a plant shutdown (or similar event, as 
determined by the Secretary), or 
‘‘(B) any event other than the attainment 
of any age, performance of any service, receipt 
or derivation of any compensation, or occur-
rence of death or disability. 
‘‘(c) LIMITATIONS ON PLAN AMENDMENTS INCREAS-
ING LIABILITY FOR BENEFITS.—
‘‘(1) IN GENERAL.—No amendment to a de-
fined benefit plan which is a single-employer plan 
which has the effect of increasing liabilities of the 
plan by reason of increases in benefits, establish-
ment of new benefits, changing the rate of benefit 
accrual, or changing the rate at which benefits be-
come nonforfeitable may take effect during any plan 
year if the adjusted funding target attainment per-
centage for such plan year is—
‘‘(A) less than 80 percent, or 
‘‘(B) would be less than 80 percent taking 
into account such amendment. 
‘‘(2) EXEMPTION.—Paragraph (1) shall cease 
to apply with respect to any plan year, effective as 
of the first day of the plan year (or if later, the ef-
184
fective date of the amendment), upon payment by 
the plan sponsor of a contribution (in addition to 
any minimum required contribution under section 
430) equal to—
‘‘(A) in the case of paragraph (1)(A), the 
amount of the increase in the funding target of 
the plan (under section 430) for the plan year 
attributable to the amendment, and 
‘‘(B) in the case of paragraph (1)(B), the 
amount sufficient to result in an adjusted fund-
ing target attainment percentage of 80 percent. 
‘‘(3) EXCEPTION
FOR
CERTAIN
BENEFIT
IN-
CREASES.—Paragraph (1) shall not apply to any 
amendment which provides for an increase in bene-
fits under a formula which is not based on a partici-
pant’s compensation, but only if the rate of such in-
crease is not in excess of the contemporaneous rate 
of increase in average wages of participants covered 
by the amendment. 
‘‘(d) LIMITATIONS ON ACCELERATED BENEFIT DIS-
TRIBUTIONS.—
‘‘(1) FUNDING
PERCENTAGE
LESS
THAN
PERCENT.—A defined benefit plan which is a single-
employer plan shall provide that, in any case in 
which the plan’s adjusted funding target attainment
185
percentage for a plan year is less than 60 percent, 
the plan may not pay any prohibited payment after 
the valuation date for the plan year. 
‘‘(2) BANKRUPTCY.—A defined benefit plan 
which is a single-employer plan shall provide that, 
during any period in which the plan sponsor is a 
debtor in a case under title 11, United States Code, 
or similar Federal or State law, the plan may not 
pay any prohibited payment. The preceding sentence 
shall not apply on or after the date on which the en-
rolled actuary of the plan certifies that the adjusted 
funding target attainment percentage of such plan is 
not less than 100 percent. 
‘‘(3) LIMITED
PAYMENT
IF
PERCENTAGE
AT 
LEAST 60 PERCENT BUT LESS THAN 80 PERCENT.—
‘‘(A) IN GENERAL.—A defined benefit plan 
which is a single-employer plan shall provide 
that, in any case in which the plan’s adjusted 
funding target attainment percentage for a plan 
year is 60 percent or greater but less than 80 
percent, the plan may not pay any prohibited 
payment after the valuation date for the plan 
year to the extent the amount of the payment 
exceeds the lesser of—
186
‘‘(i) 50 percent of the amount of the 
payment which could be made without re-
gard to this section, or 
‘‘(ii) the present value (determined 
under guidance prescribed by the Pension 
Benefit Guaranty Corporation, using the 
interest and mortality assumptions under 
section 417(e)) of the maximum guarantee 
with respect to the participant under sec-
tion 4022 of the Employee Retirement In-
come Security Act of 1974. 
‘‘(B) ONE-TIME APPLICATION.—
‘‘(i) IN
GENERAL.—The plan shall 
also provide that only 1 prohibited pay-
ment meeting the requirements of subpara-
graph (A) may be made with respect to 
any participant during any period of con-
secutive plan years to which the limitations 
under either paragraph (1) or (2) or this 
paragraph applies. 
‘‘(ii) 
TREATMENT
OF
BENE-
FICIARIES.—For purposes of this subpara-
graph, a participant and any beneficiary 
on his behalf (including an alternate payee, 
as defined in section 414(p)(8)) shall be
187
treated as 1 participant. If the accrued 
benefit of a participant is allocated to such 
an alternate payee and 1 or more other 
persons, the amount under subparagraph 
(A) shall be allocated among such persons 
in the same manner as the accrued benefit 
is allocated unless the qualified domestic 
relations order (as defined in section 
414(p)(1)(A)) provides otherwise. 
‘‘(4) EXCEPTION.—This subsection shall not 
apply to any plan for any plan year if the terms of 
such plan (as in effect for the period beginning on 
September 1, 2005, and ending with such plan year) 
provide for no benefit accruals with respect to any 
participant during such period. 
‘‘(5) PROHIBITED PAYMENT.—For purpose of 
this subsection, the term ‘prohibited payment’ 
means—
‘‘(A) any payment, in excess of the month-
ly amount paid under a single life annuity (plus 
any social security supplements described in the 
last sentence of section 411(a)(9)), to a partici-
pant or beneficiary whose annuity starting date 
(as defined in section 417(f)(2)) occurs during
188
any period a limitation under paragraph (1) or 
(2) is in effect, 
‘‘(B) any payment for the purchase of an 
irrevocable commitment from an insurer to pay 
benefits, and 
‘‘(C) any other payment specified by the 
Secretary by regulations. 
‘‘(e) LIMITATION ON BENEFIT ACCRUALS FOR PLANS 
WITH SEVERE FUNDING SHORTFALLS.—
‘‘(1) IN
GENERAL.—A defined benefit plan 
which is a single-employer plan shall provide that, in 
any case in which the plan’s adjusted funding target 
attainment percentage for a plan year is less than 
60 percent, benefit accruals under the plan shall 
cease as of the valuation date for the plan year. 
‘‘(2) EXEMPTION.—Paragraph (1) shall cease 
to apply with respect to any plan year, effective as 
of the first day of the plan year, upon payment by 
the plan sponsor of a contribution (in addition to 
any minimum required contribution under section 
430) equal to the amount sufficient to result in an 
adjusted funding target attainment percentage of 60 
percent. 
‘‘(f) RULES RELATING
TO CONTRIBUTIONS RE-
QUIRED TO AVOID BENEFIT LIMITATIONS.—
189
‘‘(1) SECURITY MAY BE PROVIDED.—
‘‘(A) IN GENERAL.—For purposes of this 
section, the adjusted funding target attainment 
percentage shall be determined by treating as 
an asset of the plan any security provided by a 
plan sponsor in a form meeting the require-
ments of subparagraph (B). 
‘‘(B) FORM OF SECURITY.—The security 
required under subparagraph (A) shall consist 
of—
‘‘(i) a bond issued by a corporate sur-
ety company that is an acceptable surety 
for purposes of section 412 of the Em-
ployee Retirement Income Security Act of 
1974, 
‘‘(ii) cash, or United States obliga-
tions which mature in 3 years or less, held 
in escrow by a bank or similar financial in-
stitution, or 
‘‘(iii) such other form of security as is 
satisfactory to the Secretary and the par-
ties involved. 
‘‘(C) ENFORCEMENT.—Any security pro-
vided under subparagraph (A) may be perfected 
and enforced at any time after the earlier of—
190
‘‘(i) the date on which the plan termi-
nates, 
‘‘(ii) if there is a failure to make a 
payment of the minimum required con-
tribution for any plan year beginning after 
the security is provided, the due date for 
the payment under section 430(j), or 
‘‘(iii) if the adjusted funding target 
attainment percentage is less than 60 per-
cent for a consecutive period of 7 years, 
the valuation date for the last year in the 
period. 
‘‘(D) RELEASE OF SECURITY.—The secu-
rity shall be released (and any amounts there-
under shall be refunded together with any inter-
est accrued thereon) at such time as the Sec-
retary may prescribe in regulations, including 
regulations for partial releases of the security 
by reason of increases in the funding target at-
tainment percentage. 
‘‘(2) PREFUNDING
BALANCE
OR
FUNDING 
STANDARD
CARRYOVER
BALANCE
MAY
NOT
BE 
USED.—No prefunding balance under section 430(f) 
or funding standard carryover balance may be used 
under subsection (b), (c), or (e) to satisfy any pay-
191
ment an employer may make under any such sub-
section to avoid or terminate the application of any 
limitation under such subsection. 
‘‘(3) DEEMED REDUCTION OF FUNDING BAL-
ANCES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), in any case in which a benefit limita-
tion under subsection (b), (c), (d), or (e) would 
(but for this subparagraph and determined 
without regard to subsection (b)(2), (c)(2), or 
(e)(2)) apply to such plan for the plan year, the 
plan sponsor of such plan shall be treated for 
purposes of this title as having made an elec-
tion under section 430(f) to reduce the 
prefunding balance or funding standard carry-
over balance by such amount as is necessary for 
such benefit limitation to not apply to the plan 
for such plan year. 
‘‘(B) 
EXCEPTION
FOR
INSUFFICIENT 
FUNDING BALANCES.—Subparagraph (A) shall 
not apply with respect to a benefit limitation 
for any plan year if the application of subpara-
graph (A) would not result in the benefit limita-
tion not applying for such plan year.
192
‘‘(C) RESTRICTIONS
OF
CERTAIN
RULES 
TO
COLLECTIVELY
BARGAINED
PLANS.—With 
respect to any benefit limitation under sub-
section (b), (c), or (e), subparagraph (A) shall 
only apply in the case of a plan maintained pur-
suant to 1 or more collective bargaining agree-
ments between employee representatives and 1 
or more employers. 
‘‘(g) NEW PLANS.—Subsections (b), (c), and (e) shall 
not apply to a plan for the first 5 plan years of the plan. 
For purposes of this subsection, the reference in this sub-
section to a plan shall include a reference to any prede-
cessor plan. 
‘‘(h) PRESUMED UNDERFUNDING FOR PURPOSES OF 
BENEFIT LIMITATIONS.—
‘‘(1) PRESUMPTION
OF
CONTINUED
UNDER-
FUNDING.—In any case in which a benefit limitation 
under subsection (b), (c), (d), or (e) has been ap-
plied to a plan with respect to the plan year pre-
ceding the current plan year, the adjusted funding 
target attainment percentage of the plan for the cur-
rent plan year shall be presumed to be equal to the 
adjusted funding target attainment percentage of 
the plan for the preceding plan year until the en-
rolled actuary of the plan certifies the actual ad-
193
justed funding target attainment percentage of the 
plan for the current plan year. 
‘‘(2) PRESUMPTION OF UNDERFUNDING AFTER 
10TH MONTH.—In any case in which no certification 
of the adjusted funding target attainment percent-
age for the current plan year is made with respect 
to the plan before the first day of the 10th month 
of such year, for purposes of subsections (b), (c), 
(d), and (e), such first day shall be deemed, for pur-
poses of such subsection, to be the valuation date of 
the plan for the current plan year and the plan’s ad-
justed funding target attainment percentage shall be 
conclusively presumed to be less than 60 percent as 
of such first day. 
‘‘(3) PRESUMPTION OF UNDERFUNDING AFTER 
4TH MONTH FOR NEARLY UNDERFUNDED PLANS.—
In any case in which—
‘‘(A) a benefit limitation under subsection 
(b), (c), (d), or (e) did not apply to a plan with 
respect to the plan year preceding the current 
plan year, but the adjusted funding target at-
tainment percentage of the plan for such pre-
ceding plan year was not more than 10 percent-
age points greater than the percentage which 
would have caused such subsection to apply to
194
the plan with respect to such preceding plan 
year, and 
‘‘(B) as of the first day of the 4th month 
of the current plan year, the enrolled actuary of 
the plan has not certified the actual adjusted 
funding target attainment percentage of the 
plan for the current plan year, 
until the enrolled actuary so certifies, such first day 
shall be deemed, for purposes of such subsection, to 
be the valuation date of the plan for the current 
plan year and the adjusted funding target attain-
ment percentage of the plan as of such first day 
shall, for purposes of such subsection, be presumed 
to be equal to 10 percentage points less than the ad-
justed funding target attainment percentage of the 
plan for such preceding plan year. 
‘‘(i) TREATMENT OF PLAN AS OF CLOSE OF PROHIB-
ITED OR CESSATION PERIOD.—For purposes of applying 
this title—
‘‘(1) OPERATION OF PLAN AFTER PERIOD.—
Unless the plan provides otherwise, payments and 
accruals will resume effective as of the day following 
the close of the period for which any limitation of 
payment or accrual of benefits under subsection (d) 
or (e) applies.