subsection, the minimum required contribution with 
respect to a plan for a plan year is the target nor-
mal cost of the plan for the plan year. 
‘‘(2) SHORTFALL AMORTIZATION CHARGE.—In 
any case in which the value of plan assets (deter-
mined without regard to subsection (e)(1)) of the 
plan for the plan year which are held by the plan 
immediately before the valuation date is less than 
the funding target of the plan for the plan year, the 
minimum required contribution with respect to the 
plan for the plan year is the sum of the amount de-
termined under paragraph (1) plus a shortfall amor-
tization charge for such plan year determined under 
subsection (c). 
‘‘(3) CREDIT
FOR
EXCESS
ASSETS.—In any 
case in which the value of plan assets of the plan for 
the plan year which are held by the plan imme-
diately before the valuation date exceed the funding 
target of the plan for the plan year, the minimum 
required contribution with respect to the plan for the 
plan year is the amount determined under para-
graph (1), reduced by such excess. 
‘‘(4) PRE-FUNDING BALANCE.—In the case of 
any plan year in which—
‘‘(A) the ratio (expressed as a percentage) 
which—
‘‘(i) the value of plan assets (deter-
mined 
without 
regard 
to 
subsection 
(e)(1)(B)) 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 (g)(1)), 
is at least 80 percent, and 
‘‘(B) the plan sponsor elects (in such form 
and manner as shall be prescribed in regula-
tions of the Secretary) to credit against the 
minimum required contribution for the current 
plan year all or a portion of the funding stand-
ard carryover balance and the pre-funding bal-
ance (to the extent provided in subsection (h)) 
for the preceding plan year (not in excess of 
such minimum required contribution), 
the minimum required contribution for the plan year 
shall be reduced by the amount so credited by the 
plan sponsor. 
‘‘(b) TARGET NORMAL COST.—For purposes of this 
section, subject to subsection (g)(2), the term ‘target nor-
mal cost’ means, for any plan year, the present value of
all benefits which are expected to accrue or to be earned 
under the plan during the plan year. If any benefit attrib-
utable to services performed in a preceding plan year is 
increased by reason of any increase in compensation dur-
ing the current plan year, the increase shall be treated 
as having accrued during the current plan year. 
‘‘(c) SHORTFALL AMORTIZATION CHARGE.—
‘‘(1) IN GENERAL.—The shortfall amortization 
charge for a plan for any plan year is the aggregate 
total of the shortfall amortization installments for 
such plan year with respect to the shortfall amorti-
zation bases for such plan year and each of the 6 
preceding plan years. 
‘‘(2) 
SHORTFALL
AMORTIZATION
INSTALL-
MENT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the plan sponsor shall determine, 
with respect to the shortfall amortization base 
of the plan for any plan year, the amounts nec-
essary to amortize such shortfall amortization 
base, in level annual installments over a period 
of 7 plan years beginning with such plan year. 
The annual installment of such amortization for 
each plan year in such 7-plan-year period is the 
shortfall amortization installment for such plan
year with respect to such shortfall amortization 
base. 
‘‘(B) COMPUTATION
ASSUMPTIONS.—The 
determination of any annual installment under 
subparagraph (A) for any plan year shall be 
made as of the valuation date for such plan 
year, using the effective rate of interest for the 
plan for such plan year. 
‘‘(3) SHORTFALL
AMORTIZATION
BASE.—The 
shortfall amortization base of a plan for a plan year 
is the excess (if any) of—
‘‘(A) the funding shortfall of such plan for 
such plan year, over 
‘‘(B) the present value (determined using 
the effective interest rate of the plan for the 
plan year) of the aggregate total of the shortfall 
amortization installments, for such plan year 
and the 5 succeeding plan years, which have 
been determined with respect to the shortfall 
amortization bases of the plan for each of the 
6 plan years preceding such plan year. 
‘‘(4) FUNDING SHORTFALL.—For purposes of 
this section, the funding shortfall of a plan for any 
plan year is the excess (if any) of—