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‘‘(B) the funding target of the plan for the
plan year (determined without regard to sub-
section (i)(1)).
‘‘(e) WAIVER AMORTIZATION CHARGE.—
‘‘(1) DETERMINATION OF WAIVER AMORTIZATION
CHARGE.—The waiver amortization charge (if any)
for a plan for any plan year is the aggregate total
of the waiver amortization installments for such plan
year with respect to the waiver amortization bases for
each of the 5 preceding plan years.
‘‘(2) WAIVER AMORTIZATION INSTALLMENT.—For
purposes of paragraph (1)—
‘‘(A) DETERMINATION.—The waiver amorti-
zation installments are the amounts necessary to
amortize the waiver amortization base of the
plan for any plan year in level annual install-
ments over a period of 5 plan years beginning
with the succeeding plan year.
‘‘(B) WAIVER
INSTALLMENT.—The waiver
amortization installment for any plan year in
the 5-year period under subparagraph (A) with
respect to any waiver amortization base is the
annual installment determined under subpara-
graph (A) for that year for that base.
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‘‘(3) INTEREST
RATE.—In determining any
waiver amortization installment under this sub-
section, the plan sponsor shall use the segment rates
determined under subparagraph (C) of subsection
(h)(2), applied under rules similar to the rules of sub-
paragraph (B) of subsection (h)(2).
‘‘(4) WAIVER AMORTIZATION BASE.—The waiver
amortization base of a plan for a plan year is the
amount of the waived funding deficiency (if any) for
such plan year under section 302(c).
‘‘(5) EARLY DEEMED AMORTIZATION UPON AT-
TAINMENT
OF
FUNDING
TARGET.—In any case in
which the funding shortfall of a plan for a plan year
is zero, for purposes of determining the waiver amor-
tization charge for such plan year and succeeding
plan years, the waiver amortization bases for all pre-
ceding plan years (and all waiver amortization in-
stallments with respect to such bases) shall be reduced
to zero.
‘‘(f) USE
OF PREFUNDING BALANCES TO SATISFY
MINIMUM REQUIRED CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—A plan sponsor may credit
any amount of a plan’s prefunding balance for a
plan year against the minimum required contribution
for the plan year and the amount of the contributions
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an employer is required to make under section 302(b)
for the plan year shall be reduced by the amount so
credited. Any such amount shall be credited on the
first day of the plan year.
‘‘(2) PREFUNDING BALANCE.—
‘‘(A) BEGINNING BALANCE.—The beginning
balance of a prefunding balance maintained by
a plan shall be zero, except that if a plan was
in effect for a plan year beginning in 2006 and
had a positive balance in the funding standard
account under section 302(b) (as in effect for
such plan year) as of the end of such plan year,
the beginning balance for the plan for its first
plan year beginning after 2006 shall be such
positive balance.
‘‘(B) INCREASES.—
‘‘(i) IN GENERAL.—As of the first day
of each plan year beginning after 2007, the
prefunding balance of a plan shall be in-
creased by the excess (if any) of—
‘‘(I) the aggregate amount of em-
ployer contributions to the plan for the
preceding plan year, over
‘‘(II) the minimum required con-
tribution for the preceding plan year.
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‘‘(ii) ADJUSTMENTS FOR INTEREST.—
Any excess contributions under clause (i)
shall be properly adjusted for interest accru-
ing for the periods between the first day of
the current plan year and the dates on
which the excess contributions were made,
determined by using the effective interest
rate for the preceding plan year and by
treating contributions as being first used to
satisfy the minimum required contribution.
‘‘(iii) CERTAIN
CONTRIBUTIONS
DIS-
REGARDED.—Any contribution which is re-
quired to be made under section 206(g) in
addition to any contribution required under
this section shall not be taken into account
for purposes of clause (i).
‘‘(C) DECREASES.—As of the first day of
each plan year after 2007, the prefunding bal-
ance of a plan shall be decreased (but not below
zero) by the amount of the balance credited
under paragraph (1) against the minimum re-
quired contribution of the plan for the preceding
plan year.
‘‘(D) ADJUSTMENTS FOR INVESTMENT EX-
PERIENCE.—In determining the prefunding bal-
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ance of a plan as of the first day of the plan
year, the plan sponsor shall, in accordance with
regulations prescribed by the Secretary of the
Treasury, adjust such balance to reflect the rate
of return on plan assets for the preceding plan
year. Notwithstanding subsection (g)(3), such
rate of return shall be determined on the basis of
fair market value and shall properly take into
account, in accordance with such regulations, all
contributions, distributions, and other plan pay-
ments made during such period.
‘‘(3) LIMITATION FOR UNDERFUNDED PLANS.—
‘‘(A) IN GENERAL.—If the ratio (expressed
as a percentage) for any plan year which—
‘‘(i) the value of plan assets for the
preceding plan year, bears to
‘‘(ii) the funding target of the plan for
the preceding plan year (determined with-
out regard to subsection (i)(1)),
is less than 80 percent, the preceding provisions
of this subsection shall not apply unless employ-
ers liable for contributions to the plan under sec-
tion 302(b) make contributions to the plan for
the plan year in an aggregate amount not less
than the amount determined under subpara-
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graph (B). Any contribution required by this
subparagraph may not be reduced by any credit
otherwise allowable under paragraph (1).
‘‘(B) APPLICABLE
AMOUNT.—The amount
determined under this subparagraph for any
plan year is the greater of—
‘‘(i) the target normal cost of the plan
for the plan year, or
‘‘(ii) 25 percent of the minimum re-
quired contribution under subsection (a) for
the plan year without regard to this sub-
section.
‘‘(4) REDUCTION IN VALUE OF ASSETS.—Solely
for purposes of applying subsections (a) and
(c)(4)(A)(ii) in determining the minimum required
contribution under this section, the value of the plan
assets otherwise determined without regard to this
paragraph shall be reduced by the amount of the
prefunding balance under this subsection.
‘‘(g) VALUATION OF PLAN ASSETS AND LIABILITIES.—
‘‘(1) TIMING OF DETERMINATIONS.—Except as
otherwise provided under this subsection, all deter-
minations under this section for a plan year shall be
made as of the valuation date of the plan for such
plan year.
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‘‘(2) VALUATION
DATE.—For purposes of this
section—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the valuation date of a plan
for any plan year shall be the first day of the
plan year.
‘‘(B) EXCEPTION FOR SMALL PLANS.—If, on
each day during the preceding plan year, a plan
had 100 or fewer participants, the plan may des-
ignate any day during the plan year as its valu-
ation date for such plan year and succeeding
plan years. For purposes of this subparagraph,
all defined benefit plans (other than multiem-
ployer plans) maintained by the same employer
(or any member of such employer’s controlled
group) shall be treated as 1 plan, but only em-
ployees of such employer or member shall be
taken into account.
‘‘(C) APPLICATION OF CERTAIN RULES IN
DETERMINATION OF PLAN SIZE.—For purposes of
this paragraph—
‘‘(i) PLANS NOT IN EXISTENCE IN PRE-
CEDING YEAR.—In the case of the first plan
year of any plan, subparagraph (B) shall
apply to such plan by taking into account
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the number of participants that the plan is
reasonably expected to have on days during
such first plan year.
‘‘(ii) PREDECESSORS.—Any reference
in subparagraph (B) to an employer shall
include a reference to any predecessor of
such employer.
‘‘(3) DETERMINATION OF VALUE OF PLAN AS-
SETS.—For purposes of this section—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the value of plan assets shall
be the fair market value of the assets.
‘‘(B) AVERAGING ALLOWED.—A plan may
determine the value of plan assets on the basis
of any reasonable actuarial method of valuation
providing for the averaging of fair market val-
ues, but only if such method—
‘‘(i) is permitted under regulations
prescribed by the Secretary of the Treasury,
and
‘‘(ii) does not provide for averaging of
such values over more than the period be-
ginning on the last day of the 12th month
preceding the valuation date and ending on
the valuation date (or a similar period in
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the case of a valuation date which is not the
1st day of a month).
‘‘(4) 
ACCOUNTING
FOR
CONTRIBUTION
RE-
CEIPTS.—For purposes of determining the value of as-
sets under paragraph (3)—
‘‘(A) PRIOR YEAR CONTRIBUTIONS.—If—
‘‘(i) an employer makes any contribu-
tion to the plan after the valuation date for
the plan year in which the contribution is
made, and
‘‘(ii) the contribution is for a pre-
ceding plan year,
the contribution shall be taken into account as
an asset of the plan as of the valuation date, ex-
cept that in the case of any plan year beginning
after 2007, only the present value (determined as
of the valuation date) of such contribution may
be taken into account. For purposes of the pre-
ceding sentence, present value shall be deter-
mined using the effective interest rate for the
preceding plan year to which the contribution is
properly allocable.
‘‘(B) SPECIAL
RULE
FOR
CURRENT
YEAR
CONTRIBUTIONS
MADE
BEFORE
VALUATION
DATE.—If any contributions for any plan year