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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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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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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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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‘‘(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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‘‘(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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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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347 
‘‘(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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ccoleman on PROD1PC71 with BILLS
348 
‘‘(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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ccoleman on PROD1PC71 with BILLS
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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352 
‘‘(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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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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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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‘‘(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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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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ccoleman on PROD1PC71 with BILLS
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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ccoleman on PROD1PC71 with BILLS
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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ccoleman on PROD1PC71 with BILLS
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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ccoleman on PROD1PC71 with BILLS
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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‘‘(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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