280 
Revenue Code of 1986 (relating to de-
ferred compensation, etc.) is amended— 
(A) by striking the heading and 
inserting the following: 
‘‘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 de-
fined benefit pension plans.’’, and 
(B) by adding at the end the fol-
lowing new subpart: 
‘‘Subpart B—Benefit Limitations Under Single- 
employer Plans 
‘‘Sec. 436. Prohibition of shutdown benefits and other unpre-
dictable contingent event benefits under single- 
employer plans. 
‘‘SEC. 436. PROHIBITION OF SHUTDOWN BENEFITS AND 
OTHER 
UNPREDICTABLE 
CONTINGENT 
EVENT BENEFITS UNDER SINGLE-EMPLOYER 
PLANS. 
‘‘(a) IN GENERAL.—No pension plan which 
is defined benefit plan (other than a multiem-
ployer plan) may provide benefits to which
281 
participants are entitled solely by reason of 
the occurrence of— 
‘‘(1) a plant shutdown, or 
‘‘(2) any other unpredictable contin-
gent event. 
‘‘(b) UNPREDICTABLE CONTINGENT EVENT.— 
For purposes of this subsection, the term ‘un-
predictable contingent event’ means an event 
other than— 
‘‘(1) attainment of any age, perform-
ance of any service, receipt or derivation 
of any compensation, or the occurrence 
of death or disability, or 
‘‘(2) an event which is reasonably and 
reliably predictable (as determined by 
the Secretary).’’. 
(2) CLERICAL
AMENDMENT.—The table 
of parts for suchapter D of chapter 1 of 
the Internal Revenue Code of 1986 is 
amended by adding at the end the fol-
lowing new item: 
‘‘PART IIIlRULES RELATING TO MINIMUM FUNDING STANDARDS 
AND BENEFIT LIMITATIONS’’. 
(b) OTHER LIMITS ON BENEFITS AND BENEFIT 
ACCRUALS.—
282 
(1) IN GENERAL.—Subpart B of part III 
of subchapter D of chapter 1 of such 
Code is amended by adding at the end 
the following: 
‘‘SEC. 437. FUNDING-BASED LIMITS ON BENEFITS AND BEN-
EFIT ACCRUALS UNDER SINGLE-EMPLOYER 
PLANS. 
‘‘(a) LIMITATIONS ON PLAN AMENDMENTS IN-
CREASING LIABILITY FOR BENEFITS.— 
‘‘(1) IN GENERAL.—No amendment to a 
defined benefit plan (other than a multi-
employer plan) which has the effect of in-
creasing liabilities of the plan by reason 
of increases in benefits, establishment of 
new benefits, changing the rate of benefit 
accrual, or changing the rate at which 
benefits become nonforfeitable to the 
plan may take effect during any plan 
year if the funding target attainment per-
centage as of the valuation date of the 
plan for such plan year is— 
‘‘(A) less than 80 percent, or 
‘‘(B) would be less than 80 percent 
taking into account such amendment.
283 
For purposes of this subparagraph, any 
increase in benefits under the plan by 
reason of an increase in the benefit rate 
provided under the plan or on the basis 
of an increase in compensation shall be 
treated as effected by plan amendment. 
‘‘(2) EXEMPTION.—Paragraph (1) shall 
cease to apply with respect to any plan 
year, effective as of the first date of the 
plan year (or if later, the effective date of 
the amendment), upon payment by the 
plan sponsor of a contribution (in addi-
tion to any minimum required contribu-
tion 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 attrib-
utable to the amendment, and 
‘‘(B) in the case of paragraph 
(1)(B), the amount sufficient to result 
in a funding target attainment per-
centage of 80 percent. 
‘‘(b) FUNDING-BASED LIMITATION
ON CER-
TAIN FORMS OF DISTRIBUTION.—
284 
‘‘(1) IN
GENERAL.—A defined benefit 
plan (other than a multiemployer plan) 
shall provide that, in any case in which 
the plan’s funding target attainment per-
centage as of the valuation date of the 
plan for a plan year is less than 80 per-
cent, the plan may not after such date 
pay any payment described in section 
401(a)(32)(B). 
‘‘(2) EXCEPTION.—Paragraph (1) shall 
not apply to any plan for any plan year if 
the terms of such plan (as in effect for 
the period beginning on June 29, 2005, 
and ending with such plan year) provide 
for no benefit accruals with respect to 
any participant during such period. 
‘‘(c) LIMITATIONS ON BENEFIT ACCRUALS FOR 
PLANS WITH SEVERE FUNDING SHORTFALLS.—A 
defined benefit plan (other than a multiem-
ployer plan) shall provide that, in any case in 
which the plan’s funding target attainment 
percentage as of the valuation date of the 
plan for a plan year is less than 60 percent, 
all future benefit accruals under the plan 
shall cease as of such date.
285 
‘‘(d) NEW PLANS.—Subsections (a) and (c) 
shall not apply to a plan for the first 5 plan 
years of the plan. For purposes of this sub-
section, the reference in this subsection to a 
plan shall include a reference to any prede-
cessor plan. 
‘‘(e) PRESUMED UNDERFUNDING
FOR PUR-
POSES OF BENEFIT LIMITATIONS BASED ON PRIOR 
YEAR’S FUNDING STATUS.— 
‘‘(1) 
PRESUMPTION
OF
CONTINUED 
UNDERFUNDING.—In any case in which a 
benefit limitation under subsection (a), 
(b), or (c) has been applied to a plan with 
respect to the plan year preceding the 
current plan year, the funding target at-
tainment percentage of the plan as of the 
valuation date of the plan for the current 
plan year shall be presumed to be equal 
to the funding target attainment percent-
age of the plan as of the valuation date of 
the plan for the preceding plan year until 
the enrolled actuary of the plan certifies 
the actual funding target attainment per-
centage of the plan as of the valuation 
date of the plan for the current plan year.
286 
‘‘(2) PRESUMPTION
OF
UNDERFUNDING 
AFTER 10TH MONTH.—In any case in which 
no such certification is made with re-
spect to the plan before the first day of 
the 10th month of the current plan year, 
for purposes of subsections (a), (b), and 
(c), the plan’s funding target attainment 
percentage shall be conclusively pre-
sumed to be less than 60 percent as of the 
first day of such 10th month, and such 
day shall be deemed, for purposes of such 
subsections, to be the valuation date of 
the plan for the current plan year. 
‘‘(3) PRESUMPTION
OF
UNDERFUNDING 
AFTER
4TH
MONTH
FOR
NEARLY
UNDER-
FUNDED PLANS.—In any case in which— 
‘‘(A) a benefit limitation under 
subsection (a), (b), or (c) did not 
apply to a plan with respect to the 
plan year preceding the current plan 
year, but the funding target attain-
ment percentage of the plan for such 
preceding plan year was not more 
than 10 percentage points greater 
than the percentage which would
287 
have caused such subsection to apply 
to the plan with respect to such pre-
ceding 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 funding target at-
tainment percentage of the plan as of 
the valuation date of the plan for the 
current plan year, 
until the enrolled actuary so certifies, 
such first day shall be deemed, for pur-
poses of such subsection, to be the valu-
ation date of the plan for the current 
plan year and the funding target attain-
ment percentage of the plan as of such 
first day shall, for purposes of such sub-
section, be presumed to be equal to 10 
percentage points less than the funding 
target attainment percentage of the plan 
as of the valuation date of the plan for 
such preceding plan year. 
‘‘(f) RESTORATION BY PLAN AMENDMENT OF 
BENEFITS OR BENEFIT ACCRUAL.—In any case in 
which a prohibition under subsection (b) of
288 
the payment of lump sum distributions or 
benefits in any other accelerated form or a 
cessation of benefit accruals under subsection 
(c) is applied to a plan with respect to any 
plan year and such prohibition or cessation, 
as the case may be, ceases to apply to any sub-
sequent plan year, the plan may provide for 
the resumption of such benefit payment or 
such benefit accrual only by means of the 
adoption of a plan amendment after the valu-
ation date of the plan for such subsequent 
plan year. The preceding sentence shall not 
apply to a prohibition or cessation required 
by reason of subsection (e). 
‘‘(g) FUNDING
TARGET
ATTAINMENT
PER-
CENTAGE.— 
‘‘(1) IN GENERAL.—For purposes of this 
section, the term ‘funding target attain-
ment percentage’ means, with respect to 
any plan for any plan year, the ratio (ex-
pressed as a percentage) which— 
‘‘(A) the value of plan assets for 
the plan year (as determined under 
section 430(g)) reduced by the pre- 
funding balance and the funding
289 
standard carryover balance (within 
the meaning of section 430(f)), bears 
to 
‘‘(B) the funding target of the plan 
for the plan year (as determined 
under section 430(d)(1), but without 
regard to section 430(i)(1)). 
‘‘(2) APPLICATION TO PLANS WHICH ARE 
FULLY FUNDED WITHOUT REGARD TO REDUC-
TIONS FOR FUNDING BALANCES.—In the case 
of a plan for any plan year, if the funding 
target attainment percentage is 100 per-
cent or more (determined without regard 
to this paragraph and without regard to 
the reduction under paragraph (1)(A) for 
the pre-funding balance and the funding 
standard carryover balance), paragraph 
(1) shall be applied without regard to 
such reduction.’’. 
(2) CLERICAL
AMENDMENT.—The table 
of sections for such subpart is amended 
by adding at the end the following new 
item: 
‘‘Sec. 437. Funding-based limits on benefits and benefit accru-
als under single-employer plans.’’.
290 
(c) SPECIAL RULE FOR PLAN AMENDMENTS.— 
A plan shall not fail to meet the requirements 
of section 411(d)(6) of the Internal Revenue 
Code of 1986 or section 204(g) of the Employee 
Retirement Income Security Act of 1974 solely 
by reason of the adoption by the plan of an 
amendment necessary to meet the require-
ments of the amendments made by this sec-
tion. 
(d) EFFECTIVE DATE.— 
(1) SHUTDOWN
BENEFITS.—Except as 
provided in paragraph (3), the amend-
ments made by subsection (a) shall apply 
with respect to plant shutdowns, or other 
unpredictable contingent events, occur-
ring after December 31, 2006. 
(2) OTHER
BENEFITS.—Except as pro-
vided in paragraph (3), the amendments 
made by subsection (b) shall apply with 
respect to plan years beginning after De-
cember 31, 2006. 
(3) 
COLLECTIVE
BARGAINING
EXCEP-
TION.—In the case of a plan maintained 
pursuant to 1 or more collective bar-
gaining agreements between employee
291 
representatives and 1 or more employers 
ratified before the date of the enactment 
of this Act, the amendments made by this 
subsection shall not apply to plan years 
beginning before the earlier of— 
(A) the later of— 
(i) the date on which the last 
collective bargaining agreement 
relating to the plan terminates 
(determined without regard to 
any extension thereof agreed to 
after the date of the enactment of 
this Act), or 
(ii) the first day of the first 
plan year to which the amend-
ments made by this subsection 
would (but for this subparagraph) 
apply, or 
(B) January 1, 2009. 
For purposes of clause (i), any plan 
amendment made pursuant to a collec-
tive bargaining agreement relating to the 
plan which amends the plan solely to 
conform to any requirement added by 
this subsection shall not be treated as a
292 
termination of such collective bargaining 
agreement. 
(e) SPECIAL RULE FOR 2007.—For purposes 
of applying subsection (e) of section 437 of 
such Code (as added by this section) to cur-
rent plan years (within the meaning of such 
subsection) beginning in 2007, the modified 
funded current liability percentage of the 
plan for the preceding year shall be sub-
stituted for the funding target attainment 
percentage of the plan for the preceding year. 
For purposes of the preceding sentence, the 
term ‘‘modified funded current liability per-
centage’’ means the funded current liability 
percentage (as defined in section 412(l)(8) of 
such Code), reduced as described in subpara-
graph (E) thereof in the case of a plan with 
a funded current liability percentage (as so 
defined and before such reduction) which is 
less than 100 percent. 
SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) AMENDMENTS RELATED
TO QUALIFICA-
TION REQUIREMENTS.—
293 
(1) Section 401(a)(29) of the Internal 
Revenue Code of 1986 is amended to read 
as follows: 
‘‘(29) BENEFIT LIMITATIONS ON PLANS IN 
AT-RISK STATUS.—In the case of a defined 
benefit plan (other than a multiemployer 
plan) to which the requirements of sec-
tion 412 apply, the trust of which the 
plan is a part shall not constitute a quali-
fied trust under this subsection unless 
the plan meets the requirements of sec-
tions 436 and 437.’’. 
(2) Section 401(a)(32) of such Code is 
amended— 
(A) in subparagraph (A), by strik-
ing ‘‘412(m)(5)’’ each place it appears 
and inserting ‘‘430(j)(4)’’, and 
(B) in subparagraph (C), by strik-
ing ‘‘section 412(m) by reason of para-
graph (5)(A) thereof’’ and inserting 
‘‘section 430(j)(3) by reason of section 
430(j)(4)(A)’’. 
(3) Section 401(a)(33) of such Code is 
amended—