373 
‘‘(B) a plan which is in critical status ei-
ther— 
‘‘(i) fails to meet the requirements of 
section 432(e) by the end of the rehabilita-
tion period, or 
‘‘(ii) has received a certification under 
section 432(b)(3)(A)(ii) for 3 consecutive 
plan years that the plan is not making the 
scheduled progress in meeting its require-
ments under the rehabilitation plan, 
the plan shall be treated as having an accumu-
lated funding deficiency for purposes of this 
section for the last plan year in such funding 
improvement, rehabilitation, or 3-consecutive 
year period (and each succeeding plan year 
until such benchmarks or requirements are 
met) in an amount equal to the greater of the 
amount of the contributions necessary to meet 
such benchmarks or requirements or the 
amount of such accumulated funding deficiency 
without regard to this paragraph. 
‘‘(4) FAILURE
TO
ADOPT
REHABILITATION 
PLAN.— 
‘‘(A) IN GENERAL.—In the case of a multi-
employer plan which is in critical status, there 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00373
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
374 
is hereby imposed a tax on the failure of such 
plan to adopt a rehabilitation plan within the 
time prescribed under section 432. 
‘‘(B) AMOUNT OF TAX.—The amount of 
the tax imposed under subparagraph (A) with 
respect to any plan sponsor for any taxable year 
shall be the greater of— 
‘‘(i) the amount of tax imposed under 
subsection (a) for the taxable year (deter-
mined without regard to this subsection), 
or 
‘‘(ii) the amount equal to $1,100 mul-
tiplied by the number of days during the 
taxable year which are included in the pe-
riod beginning on the first day of the 240- 
day 
period 
described 
in 
section 
432(e)(1)(A) and ending on the day on 
which the rehabilitation plan is adopted. 
‘‘(C) LIABILITY FOR TAX.— 
‘‘(i) IN GENERAL.—The tax imposed 
by subparagraph (A) shall be paid by each 
plan sponsor. 
‘‘(ii) PLAN SPONSOR.—For purposes 
of clause (i), the term ‘plan sponsor’ in the 
case of a multiemployer plan means the as-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00374
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
375 
sociation, committee, joint board of trust-
ees, or other similar group of representa-
tives of the parties who establish or main-
tain the plan. 
‘‘(5) WAIVER.—In the case of a failure de-
scribed in paragraph (2) or (3) which is due to rea-
sonable cause and not to willful neglect, the Sec-
retary may waive part or all of the tax imposed by 
this subsection. For purposes of this paragraph, rea-
sonable cause includes unanticipated and material 
market fluctuations, the loss of a significant contrib-
uting employer, or other factors to the extent that 
the payment of tax under this subsection with re-
spect to the failure would be excessive or otherwise 
inequitable relative to the failure involved. 
‘‘(6) TERMS USED IN SECTION 432.—For pur-
poses of this subsection, any term used in this sub-
section which is also used in section 432 shall have 
the meaning given such term by section 432.’’. 
(2) CONTROLLED GROUPS.—Section 4971(c)(2) 
of such Code is amended— 
(A) by striking ‘‘In the case of a plan 
other than a multiemployer plan, if the’’ and in-
serting ‘‘If an’’, and 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00375
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
376 
(B) by striking ‘‘or (f)’’ and inserting ‘‘(f), 
or (g)’’. 
(c) NO ADDITIONAL CONTRIBUTION REQUIRED.— 
Section 412(b) of the Internal Revenue Code of 1986, as 
amended by this Act, is amended by adding at the end 
the following new paragraph: 
‘‘(3) MULTIEMPLOYER PLANS IN CRITICAL STA-
TUS.—Paragraph (1) shall not apply in the case of 
a multiemployer plan for any plan year in which the 
plan is in critical status pursuant to section 432. 
This paragraph shall only apply if the plan adopts 
a rehabilitation plan in accordance with section 
432(e) and complies with such rehabilitation plan 
(and any modifications of the plan).’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part III of subchapter D of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 432. Additional funding rules for multiemployer plans in endangered sta-
tus or critical status.’’. 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply with respect to plan years be-
ginning after 2007. 
(2) SPECIAL RULE FOR CERTAIN NOTICES.—In 
any case in which a plan’s actuary certifies that it 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00376
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
377 
is reasonably expected that a multiemployer plan will 
be in critical status under section 305(b)(3) of the 
Employee Retirement Income Security Act of 1974, 
as added by this section, with respect to the first 
plan year beginning after 2007, the notice required 
under subparagraph (D) of such section may be pro-
vided at any time after the date of enactment, so 
long as it is provided on or before the last date for 
providing the notice under such subparagraph. 
(3) SPECIAL
RULE
FOR
CERTAIN
RESTORED 
BENEFITS.—In the case of a multiemployer plan— 
(A) with respect to which benefits were re-
duced pursuant to a plan amendment adopted 
on or after January 1, 2002, and before June 
30, 2005, and 
(B) which, pursuant to the plan document, 
the trust agreement, or a formal written com-
munication from the plan sponsor to partici-
pants provided before June 30, 2005, provided 
for the restoration of such benefits, 
the amendments made by this section shall not apply 
to such benefit restorations to the extent that any 
restriction on the providing or accrual of such bene-
fits would otherwise apply by reason of such amend-
ments. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00377
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS