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‘‘(j) PAYMENT
OF MINIMUM REQUIRED CONTRIBU-
TIONS.—
‘‘(1) IN GENERAL.—For purposes of this section,
the due date for any payment of any minimum re-
quired contribution for any plan year shall be 81⁄2
months after the close of the plan year.
‘‘(2) INTEREST.—Any payment required under
paragraph (1) for a plan year made after the valu-
ation date for such plan year shall be increased by in-
terest for the period from the valuation date to the
payment date, determined by using the effective rate
of interest for the plan for such plan year.
‘‘(3) ACCELERATED QUARTERLY CONTRIBUTION
SCHEDULE FOR UNDERFUNDED PLANS.—
‘‘(A) FAILURE TO TIMELY MAKE REQUIRED
INSTALLMENT.—
‘‘(i) IN GENERAL.—In the case of a
plan to which this paragraph applies, the
employer maintaining the plan shall make
the required installments under this para-
graph and if the employer fails to pay the
full amount of a required installment for
the plan year, then the amount of interest
charged under paragraph (2) on the under-
payment for the period of underpayment
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shall be determined by using a rate of inter-
est equal to the rate otherwise used under
paragraph (2) plus 5 percentage points.
‘‘(ii) PLANS TO WHICH PARAGRAPH AP-
PLIES.—This paragraph applies to any de-
fined benefit plan to which this section ap-
plies other than a plan which—
‘‘(I) is a plan described in sub-
section (g)(2)(B)), or
‘‘(II) had a funding shortfall of
$1,000,000 or less for the preceding
plan year.
‘‘(B) AMOUNT OF UNDERPAYMENT, PERIOD
OF UNDERPAYMENT.—For purposes of subpara-
graph (A)—
‘‘(i) AMOUNT.—The amount of the un-
derpayment shall be the excess of—
‘‘(I) the required installment, over
‘‘(II) the amount (if any) of the
installment contributed to or under the
plan on or before the due date for the
installment.
‘‘(ii) PERIOD
OF
UNDERPAYMENT.—
The period for which any interest is charged
under this paragraph with respect to any
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portion of the underpayment shall run from
the due date for the installment to the date
on which such portion is contributed to or
under the plan.
‘‘(iii) ORDER
OF
CREDITING
CON-
TRIBUTIONS.—For 
purposes 
of 
clause
(i)(II), contributions shall be credited
against unpaid required installments in the
order in which such installments are re-
quired to be paid.
‘‘(C) NUMBER
OF
REQUIRED
INSTALL-
MENTS; 
DUE
DATES.—For purposes of this
paragraph—
‘‘(i) PAYABLE IN 4 INSTALLMENTS.—
There shall be 4 required installments for
each plan year.
‘‘(ii) TIME FOR PAYMENT OF INSTALL-
MENTS.—The due dates for required install-
ments are set forth in the following table:
In the case of the following required install-
ment:
The due date is:
1st .................................................................................
April 15
2nd ...............................................................................
July 15
3rd ................................................................................
October 15
4th ................................................................................
January 15 of the fol-
lowing year.
‘‘(D) AMOUNT
OF
REQUIRED
INSTALL-
MENT.—For purposes of this paragraph—
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‘‘(i) IN GENERAL.—The amount of any
required installment shall be 25 percent of
the required annual payment.
‘‘(ii) REQUIRED ANNUAL PAYMENT.—
For purposes of clause (i), the term ‘re-
quired annual payment’ means the lesser
of—
‘‘(I) 90 percent of the minimum
required contribution (without regard
to any waiver under section 302(c)) to
the plan for the plan year under this
section, or
‘‘(II) in the case of a plan year
beginning after 2007, 100 percent of
the minimum required contribution
(without regard to any waiver under
section 302(c)) to the plan for the pre-
ceding plan year.
Subclause (II) shall not apply if the pre-
ceding plan year referred to in such clause
was not a year of 12 months.
‘‘(E) FISCAL YEARS AND SHORT YEARS.—
‘‘(i) FISCAL YEARS.—In applying this
paragraph to a plan year beginning on any
date other than January 1, there shall be
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substituted for the months specified in this
paragraph, the months which correspond
thereto.
‘‘(ii) SHORT
PLAN
YEAR.—This sub-
paragraph shall be applied to plan years of
less than 12 months in accordance with reg-
ulations prescribed by the Secretary of the
Treasury.
‘‘(4) LIQUIDITY REQUIREMENT IN CONNECTION
WITH QUARTERLY CONTRIBUTIONS.—
‘‘(A) IN GENERAL.—A plan to which this
paragraph applies shall be treated as failing to
pay the full amount of any required installment
under paragraph (3) to the extent that the value
of the liquid assets paid in such installment is
less than the liquidity shortfall (whether or not
such liquidity shortfall exceeds the amount of
such installment required to be paid but for this
paragraph).
‘‘(B) PLANS
TO
WHICH
PARAGRAPH
AP-
PLIES.—This paragraph shall apply to a plan
which—
‘‘(i) is required to pay installments
under paragraph (3) for a plan year, and
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‘‘(ii) has a liquidity shortfall for any
quarter during such plan year.
‘‘(C) PERIOD
OF
UNDERPAYMENT.—For
purposes of paragraph (3)(A), any portion of an
installment that is treated as not paid under
subparagraph (A) shall continue to be treated as
unpaid until the close of the quarter in which the
due date for such installment occurs.
‘‘(D) LIMITATION
ON
INCREASE.—If the
amount of any required installment is increased
by reason of subparagraph (A), in no event shall
such increase exceed the amount which, when
added to prior installments for the plan year, is
necessary to increase the funding target attain-
ment percentage of the plan for the plan year
(taking into account the expected increase in
funding target due to benefits accruing or earned
during the plan year) to 100 percent.
‘‘(E) DEFINITIONS.—For purposes of this
subparagraph:
‘‘(i) LIQUIDITY SHORTFALL.—The term
‘liquidity shortfall’ means, with respect to
any required installment, an amount equal
to the excess (as of the last day of the quar-
ter for which such installment is made) of—
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‘‘(I) the base amount with respect
to such quarter, over
‘‘(II) the value (as of such last
day) of the plan’s liquid assets.
‘‘(ii) BASE AMOUNT.—
‘‘(I) IN GENERAL.—The term ‘base
amount’ means, with respect to any
quarter, an amount equal to 3 times
the sum of the adjusted disbursements
from the plan for the 12 months ending
on the last day of such quarter.
‘‘(II) 
SPECIAL
RULE.—If 
the
amount determined under subclause (I)
exceeds an amount equal to 2 times the
sum of the adjusted disbursements from
the plan for the 36 months ending on
the last day of the quarter and an en-
rolled actuary certifies to the satisfac-
tion of the Secretary of the Treasury
that such excess is the result of non-
recurring 
circumstances, 
the 
base
amount with respect to such quarter
shall be determined without regard to
amounts related to those nonrecurring
circumstances.
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‘‘(iii) 
DISBURSEMENTS
FROM
THE
PLAN.—The term ‘disbursements from the
plan’ means all disbursements from the
trust, including purchases of annuities,
payments of single sums and other benefits,
and administrative expenses.
‘‘(iv) ADJUSTED
DISBURSEMENTS.—
The term ‘adjusted disbursements’ means
disbursements from the plan reduced by the
product of—
‘‘(I) the plan’s funding target at-
tainment percentage for the plan year,
and
‘‘(II) the sum of the purchases of
annuities, payments of single sums,
and such other disbursements as the
Secretary of the Treasury shall provide
in regulations.
‘‘(v) LIQUID ASSETS.—The term ‘liq-
uid assets’ means cash, marketable securi-
ties, and such other assets as specified by
the Secretary of the Treasury in regula-
tions.
‘‘(vi) QUARTER.—The term ‘quarter’
means, with respect to any required install-
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ment, the 3-month period preceding the
month in which the due date for such in-
stallment occurs.
‘‘(F) REGULATIONS.—The Secretary of the
Treasury may prescribe such regulations as are
necessary to carry out this paragraph.
‘‘(k) IMPOSITION OF LIEN WHERE FAILURE TO MAKE
REQUIRED CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—In the case of a plan to
which this subsection applies, if—
‘‘(A) any person fails to make a contribu-
tion payment required by section 302 and this
section before the due date for such payment, and
‘‘(B) the unpaid balance of such payment
(including interest), when added to the aggregate
unpaid balance of all preceding such payments
for which payment was not made before the due
date (including interest), exceeds $1,000,000,
then there shall be a lien in favor of the plan in the
amount determined under paragraph (3) upon all
property and rights to property, whether real or per-
sonal, belonging to such person and any other person
who is a member of the same controlled group of
which such person is a member.
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‘‘(2) PLANS TO WHICH SUBSECTION APPLIES.—
This subsection shall apply to a defined benefit plan
which is a single-employer plan covered under section
4021 for any plan year for which the funding target
attainment percentage (as defined in subsection
(d)(2)) of such plan is less than 100 percent.
‘‘(3) AMOUNT OF LIEN.—For purposes of para-
graph (1), the amount of the lien shall be equal to the
aggregate unpaid balance of contribution payments
required under this section and section 302 for which
payment has not been made before the due date.
‘‘(4) NOTICE OF FAILURE; LIEN.—
‘‘(A) NOTICE OF FAILURE.—A person com-
mitting a failure described in paragraph (1)
shall notify the Pension Benefit Guaranty Cor-
poration of such failure within 10 days of the
due date for the required contribution payment.
‘‘(B) PERIOD OF LIEN.—The lien imposed
by paragraph (1) shall arise on the due date for
the required contribution payment and shall con-
tinue until the last day of the first plan year in
which the plan ceases to be described in para-
graph (1)(B). Such lien shall continue to run
without regard to whether such plan continues to
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be described in paragraph (2) during the period
referred to in the preceding sentence.
‘‘(C) CERTAIN
RULES
TO
APPLY.—Any
amount with respect to which a lien is imposed
under paragraph (1) shall be treated as taxes
due and owing the United States and rules simi-
lar to the rules of subsections (c), (d), and (e) of
section 4068 shall apply with respect to a lien
imposed by subsection (a) and the amount with
respect to such lien.
‘‘(5) ENFORCEMENT.—Any lien created under
paragraph (1) may be perfected and enforced only by
the Pension Benefit Guaranty Corporation, or at the
direction of the Pension Benefit Guaranty Corpora-
tion, by the contributing sponsor (or any member of
the controlled group of the contributing sponsor).
‘‘(6) 
DEFINITIONS.—For 
purposes 
of 
this
subsection—
‘‘(A) CONTRIBUTION
PAYMENT.—The term
‘contribution payment’ means, in connection
with a plan, a contribution payment required to
be made to the plan, including any required in-
stallment under paragraphs (3) and (4) of sub-
section (j).
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‘‘(B) 
DUE
DATE; 
REQUIRED
INSTALL-
MENT.—The terms ‘due date’ and ‘required in-
stallment’ have the meanings given such terms
by subsection (j), except that in the case of a
payment other than a required installment, the
due date shall be the date such payment is re-
quired to be made under section 303.
‘‘(C) CONTROLLED GROUP.—The term ‘con-
trolled group’ means any group treated as a sin-
gle employer under subsections (b), (c), (m), and
(o) of section 414 of the Internal Revenue Code
of 1986.
‘‘(l) QUALIFIED TRANSFERS TO HEALTH BENEFIT AC-
COUNTS.—In the case of a qualified transfer (as defined in
section 420 of the Internal Revenue Code of 1986), any as-
sets so transferred shall not, for purposes of this section,
be treated as assets in the plan.’’.
(b) CLERICAL AMENDMENT.—The table of sections in
section 1 of such Act (as amended by section 101) is amend-
ed by inserting after the item relating to section 302 the
following new item:
‘‘Sec. 303. Minimum funding standards for single-employer defined benefit
pension plans.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply with respect to plan years beginning
after 2006.
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SEC. 103. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER
PLANS.
(a) LIMITS ON BENEFITS AND BENEFIT ACCRUALS.—
(1) IN GENERAL.—Section 206 of such Act is
amended by adding at the end the following new sub-
section:
‘‘(g) FUNDING-BASED LIMITS ON BENEFITS AND BEN-
EFIT ACCRUALS UNDER SINGLE-EMPLOYER PLANS.—
‘‘(1) LIMITATIONS
ON
PLAN
AMENDMENTS
IN-
CREASING LIABILITY FOR BENEFITS.—
‘‘(A) IN GENERAL.—Except as provided in
paragraph (4), no amendment to a single-em-
ployer plan which has the effect of increasing li-
abilities 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 may take
effect during any plan year if the adjusted fund-
ing target attainment percentage as of the valu-
ation date of the plan for such plan year is—
‘‘(i) less than 80 percent, or
‘‘(ii) would be less than 80 percent tak-
ing into account such amendment.
‘‘(B) EXEMPTION.—Subparagraph (A) shall
cease to apply with respect to any plan year, ef-
fective as of the first date of the plan year (or
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if later, the effective date of the amendment),
upon payment by the plan sponsor of a contribu-
tion (in addition to any minimum required con-
tribution under section 303) equal to—
‘‘(i) in the case of subparagraph (A)(i),
the amount of the increase in the funding
target of the plan (under section 303) for
the plan year attributable to the amend-
ment, and
‘‘(ii) in the case of subparagraph
(A)(ii), the amount sufficient to result in an
adjusted funding target attainment percent-
age of 80 percent.
‘‘(C) EXCEPTION FOR CERTAIN BENEFIT IN-
CREASES.—Subparagraph (A) shall not apply to
any amendment which provides for an increase
in benefits under a formula which is not based
on a participant’s compensation, but only if the
rate of such increase is not in excess of the con-
temporaneous rate of increase in average wages
of participants covered by the amendment.
‘‘(2) LIMITATIONS
ON
ACCELERATED
BENEFIT
DISTRIBUTIONS.—
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‘‘(A) IN GENERAL.—A defined benefit plan
which is a single-employer plan shall provide
that, with respect to any plan year—
‘‘(i) if the plan’s adjusted funded tar-
get liability percentage as of the valuation
date for the preceding plan year was less
than 60 percent and the preceding plan
year is not otherwise in a prohibited period,
the plan sponsor shall, in addition to any
other contribution required under section
303, contribute for the current plan year
and each succeeding plan year in the pro-
hibited period with respect to the current
plan year the amount (if any) which, when
added to the portion of the minimum re-
quired contribution for the plan year de-
scribed in subparagraphs (B) and (C) of
section 303(a)(1), is sufficient to result in
an adjusted funded target liability percent-
age for the plan year of 60 percent, and
‘‘(ii) no prohibited payments will be
made during a prohibited period.
‘‘(B) PROHIBITED PAYMENT.—For purpose
of this subsection—
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‘‘(i) IN GENERAL.—The term ‘prohib-
ited payment’ means—
‘‘(I) any payment, in excess of the
monthly amount paid under a single
life annuity (plus any social security
supplements described in the last sen-
tence of section 204(b)(1)(G)), to a
participant or beneficiary whose annu-
ity starting date (as defined in section
205(h)(2)) occurs during a prohibited
period,
‘‘(II) any payment for the pur-
chase of an irrevocable commitment
from an insurer to pay benefits, and
‘‘(III) any other payment speci-
fied by the Secretary of the Treasury
by regulations.
‘‘(ii) EXCEPTION
FOR
CERTAIN
PAY-
MENTS.—In the case of any prohibited pe-
riod described in subparagraph (C)(i), the
term ‘prohibited payment’ shall not include
any payment if the amount of the payment
does not exceed the lesser of—
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‘‘(I) 50 percent of the amount of
the payment which could be made
without regard to this subsection, or
‘‘(II) the present value (deter-
mined under guidance prescribed by
the Pension Benefit Guaranty Cor-
poration, using the interest and mor-
tality 
assumptions 
under 
section
205(g)) of the maximum guarantee
with respect to the participant under
section 4022.
The exception under this clause shall only
apply once with respect to any participant,
except that, for purposes of this sentence, a
participant and any beneficiary on his be-
half (including an alternate payee, as de-
fined in section 206(d)(3)(K)) shall be treat-
ed as 1 participant. If the accrued benefit
of a participant is allocated to such an al-
ternate payee and 1 or more other persons,
the amount under subclause (II) shall be al-
located among such persons in the same
manner as the accrued benefit is allocated
unless the qualified domestic relations order
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(as defined in section 206(d)(3)(B)(i)) pro-
vides otherwise.
‘‘(C) PROHIBITED
PERIOD.—For purposes
of subparagraph (A), the term ‘prohibited period’
means—
‘‘(i) except as provided in subpara-
graph (D), if a plan sponsor is required to
make the contribution for the current plan
year under subparagraph (A), the period
beginning on the 1st day of the plan year
and ending on the last day of the 1st period
of 2 consecutive plan years (beginning on or
after such 1st day) for which the plan’s ad-
justed funded target liability percentage was
at least 60 percent,
‘‘(ii) any period the plan sponsor is in
bankruptcy, or
‘‘(iii) any period during which the
plan has a liquidity shortfall (as defined in
section 303(j)(4)(E)(i)).
The prohibited period for purposes of clause (ii)
shall not include any portion of a plan year
(even if the plan sponsor is in bankruptcy dur-
ing such period) which occurs on or after the
date the plan’s enrolled actuary certifies that, as
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of the valuation date for the plan year, the
plan’s adjusted funded target liability percentage
is at least 100 percent.
‘‘(D) SATISFACTION OF REQUIREMENT BE-
FORE CLOSE OF PLAN YEAR.—If, before the close
of the current plan year—
‘‘(i) the plan sponsor makes the con-
tribution required to be made under sub-
paragraph (A), or
‘‘(ii) the plan’s enrolled actuary cer-
tifies that, as of the valuation date for the
plan year, the adjusted funded target liabil-
ity percentage of the plan is at least 60 per-
cent,
this paragraph shall be applied as if no prohib-
ited period had begun as of the beginning of such
year and the plan shall, under rules described by
the Secretary of the Treasury, restore any pay-
ments not made during the prohibited period in
effect before the application of this paragraph.
‘‘(3) LIMITATION
ON
BENEFIT
ACCRUALS
FOR
PLANS WITH SEVERE FUNDING SHORTFALLS.—
‘‘(A) IN GENERAL.—Except as provided in
paragraph (4), a single-employer plan shall pro-
vide that all future benefit accruals under the
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plan shall cease during a severe funding shortfall
period, but only to the extent the cessation of
such accruals would have been permitted under
section 204(g) if the cessation had been imple-
mented by a plan amendment adopted imme-
diately before the severe funding shortfall period.
‘‘(B) SEVERE
FUNDING
SHORTFALL
PE-
RIOD.—For purposes of subparagraph (A), the
term ‘severe funding shortfall period’ means in
the case of a plan the adjusted funding target at-
tainment percentage of which as of the valuation
date of the plan for any plan year is less than
60 percent, the period—
‘‘(i) beginning on the 1st day of the
succeeding plan year, and
‘‘(ii) ending on the date the plan’s en-
rolled actuary certifies that the plan’s ad-
justed funding target attainment percentage
is at least 60 percent, and
‘‘(C) OPPORTUNITY FOR INCREASED FUND-
ING.—For purposes of subparagraph (B), a plan
shall not be treated as described in such subpara-
graph for a plan year if the plan’s enrolled actu-
ary certifies that the plan sponsor has before the
end of the plan year contributed (in addition to
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any minimum required contribution under sec-
tion 303) the amount sufficient to result in an
adjusted funding target attainment percentage as
of the valuation date for the plan year of 60 per-
cent.
‘‘(4) EXCEPTION
FOR
CERTAIN
COLLECTIVELY
BARGAINED BENEFITS.—In the case of a plan main-
tained pursuant to a collective bargaining agreement
between employee representatives and the plan spon-
sor and in effect before the beginning of the first day
on which a limitation would otherwise apply under
paragraph (1), (2), or (3)—
‘‘(A) such limitations shall not apply to
any amendment, prohibited payment, or accrual
with respect to such plan, but
‘‘(B) the plan sponsor shall contribute (in
addition to any minimum required contribution
under section 303) the amount sufficient to re-
sult in an adjusted funding target attainment
percentage (as of the valuation date for the plan
year in which any such limitation would other-
wise apply) equal to the percentage necessary to
prevent the limitation from applying.
‘‘(5) RULES RELATING TO REQUIRED CONTRIBU-
TIONS.—
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‘‘(A) SECURITY MAY BE PROVIDED.—
‘‘(i) IN
GENERAL.—For purposes of
this subsection, the adjusted funding target
attainment percentage shall be determined
by treating as an asset of the plan any se-
curity provided by a plan sponsor in a
form meeting the requirements of clause (ii).
‘‘(ii) FORM OF SECURITY.—The secu-
rity required under clause (i) shall consist
of—
‘‘(I) a bond issued by a corporate
surety company that is an acceptable
surety for purposes of section 412 of
this Act,
‘‘(II) cash, or United States obli-
gations which mature in 3 years or
less, held in escrow by a bank or simi-
lar financial institution, or
‘‘(III) such other form of security
as is satisfactory to the Secretary of
the Treasury and the parties involved.
‘‘(iii) ENFORCEMENT.—Any security
provided under clause (i) may be perfected
and enforced at any time after the earlier
of—
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‘‘(I) the date on which the plan
terminates,
‘‘(II) if there is a failure to make
a payment of the minimum required
contribution for any plan year begin-
ning after the security is provided, the
due date for the payment under section
303(j), or
‘‘(III) if the adjusted funding tar-
get attainment percentage is less than
60 percent for a consecutive period of
7 years, the valuation date for the last
year in the period.
‘‘(iv) RELEASE OF SECURITY.—The se-
curity shall be released (and any amounts
thereunder shall be refunded together with
any interest accrued thereon) at such time
as the Secretary of the Treasury may pre-
scribe in regulations, including regulations
for partial releases of the security by reason
of increases in the funding target attain-
ment percentage.
‘‘(B) PREFUNDING BALANCE MAY NOT BE
USED.—No prefunding balance under section
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303(f) may be used to satisfy any required con-
tribution under this subsection.
‘‘(C) TREATMENT AS UNPAID MINIMUM RE-
QUIRED CONTRIBUTION.—The amount of any re-
quired contribution which a plan sponsor fails to
make under paragraph (1) or (3) for any plan
year shall be treated as an unpaid minimum re-
quired contribution for purposes of subsection (j)
and (k) of section 303 and for purposes of section
4971 of the Internal Revenue Code of 1986.
‘‘(6) NEW PLANS.—Paragraphs (1) and (3) shall
not apply to a plan for the first 5 plan years of the
plan. For purposes of this paragraph, the reference in
this paragraph to a plan shall include a reference to
any predecessor plan.
‘‘(7) PRESUMED UNDERFUNDING FOR PURPOSES
OF BENEFIT LIMITATIONS BASED ON PRIOR YEAR’S
FUNDING STATUS.—
‘‘(A) PRESUMPTION OF CONTINUED UNDER-
FUNDING.—In any case in which a benefit limi-
tation under paragraph (1), (2), or (3) has been
applied to a plan with respect to the plan year
preceding the current plan year, the adjusted
funding target attainment percentage of the plan
as of the valuation date of the plan for the cur-
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rent plan year shall be presumed to be equal to
the adjusted funding target attainment percent-
age of the plan as of the valuation date of the
plan for the preceding plan year until the en-
rolled actuary of the plan certifies the actual ad-
justed funding target attainment percentage of
the plan as of the valuation date of the plan for
the current plan year.
‘‘(B) PRESUMPTION
OF
UNDERFUNDING
AFTER 10TH MONTH.—In any case in which no
such certification is made with respect to the
plan before the first day of the 10th month of the
current plan year, for purposes of paragraphs
(1), (2), and (3), the plan’s adjusted funding tar-
get attainment percentage shall be conclusively
presumed to be less than 60 percent as of the
first day of such 10th month.
‘‘(8) TREATMENT OF PLAN AS OF CLOSE OF PRO-
HIBITED
OR
CESSATION
PERIOD.—For purposes of
applying this part—
‘‘(A) OPERATION OF PLAN AFTER PERIOD.—
Unless the plan provides otherwise, payments
and accruals will resume effective as of the day
following the close of a period of limitation of
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payment or accrual of benefits under paragraph
(2) or (3).
‘‘(B) TREATMENT
OF
AFFECTED
BENE-
FITS.—Nothing in this paragraph shall be con-
strued as affecting the plan’s treatment of bene-
fits which would have been paid or accrued but
for this subsection.
‘‘(9) FUNDING
TARGET
ATTAINMENT
PERCENT-
AGE.—For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘funding tar-
get attainment percentage’ has the same meaning
given such term by section 303(d)(2).
‘‘(B) ADJUSTED FUNDED TARGET LIABILITY
PERCENTAGE.—The term ‘adjusted funded target
liability percentage’ means the funded target li-
ability percentage which is determined under
subparagraph (A) by increasing each of the
amounts under subparagraphs (A) and (B) of
section 303(d)(2) by the aggregate amount of
purchases of annuities, payments of single sums,
and such other disbursements as the Secretary of
the Treasury shall prescribe in regulations,
which were made by the plan during the pre-
ceding 2 plan years.
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‘‘(10) YEARS
BEFORE
EFFECTIVE
DATE.—No
plan year beginning before 2007 shall be taken into
account in determining whether this subsection ap-
plies to any plan year beginning after 2006.’’.
(2) NOTICE REQUIREMENT.—
(A) IN GENERAL.—Section 101 of such Act
(29 U.S.C. 1021) is amended—
(i) by redesignating subsection (j) as
subsection (k); and
(ii) by inserting after subsection (i) the
following new subsection:
‘‘(j) NOTICE OF FUNDING-BASED LIMITATION ON CER-
TAIN FORMS OF DISTRIBUTION.—The plan administrator
of a single-employer plan shall provide a written notice to
plan participants and beneficiaries within 30 days—
‘‘(1) after the plan has become subject to the re-
striction described in section 206(g)(2),
‘‘(2) in the case of a plan to which section
206(g)(3) applies, after—
‘‘(A) the date in the plan year described in
section 206(g)(3)(B) on which the plan’s enrolled
actuary certifies that the plan’s adjusted funding
target attainment percentage for the plan year is
less than 60 percent (or, if earlier, the date such
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percentage is deemed to be less than 60 percent
under section 206(g)(7)), and
‘‘(B) the first day of the severe funding
shortfall period, and
‘‘(3) at such other time as may be determined by
the Secretary of the Treasury.
The notice required to be provided under this subsection
shall be in writing, except that such notice may be in elec-
tronic or other form to the extent that such form is reason-
ably accessible to the recipient.’’.
(B) ENFORCEMENT.—Section 502(c)(4) of
such Act (29 U.S.C. 1132(c)(4)) is amended by
striking ‘‘section 302(b)(7)(F)(iv)’’ and inserting
‘‘sections 101(j) and 302(b)(7)(F)(iv)’’.
(b) EFFECTIVE DATES.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to plan years beginning after
December 31, 2006.
(2) COLLECTIVE
BARGAINING
EXCEPTION.—In
the case of a plan maintained pursuant to 1 or more
collective bargaining agreements between employee
representatives and 1 or more employers ratified be-
fore January 1, 2007, the amendments made by this
section shall not apply to plan years beginning before
the earlier of—
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(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 amendments made by this sub-
section would (but for this subparagraph)
apply, or
(B) January 1, 2010.
For purposes of subparagraph (A)(i), any plan
amendment made pursuant to a collective bargaining
agreement relating to the plan which amends the plan
solely to conform to any requirement added by this
section shall not be treated as a termination of such
collective bargaining agreement.
SEC. 104. TECHNICAL AND CONFORMING AMENDMENTS.
(a) MISCELLANEOUS AMENDMENTS TO TITLE I.—Sub-
title B of title I of such Act (29 U.S.C. 1021 et seq.) is
amended—
(1) in section 101(d)(3), by striking ‘‘section
302(e)’’ and inserting ‘‘section 303(j)’’;
(2) in section 103(d)(8)(B), by striking ‘‘the re-
quirements of section 302(c)(3)’’ and inserting ‘‘the
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applicable requirements of sections 303(h) and
304(c)(3)’’;
(3) in section 103(d), by striking paragraph (11)
and inserting the following:
‘‘(11) If the current value of the assets of the
plan is less than 70 percent of—
‘‘(A) in the case of a single-employer plan,
the funding target (as defined in section
303(d)(1)) of the plan, or
‘‘(B) in the case of a multiemployer plan,
the current liability (as defined in section
304(c)(6)(D)) under the plan,
the percentage which such value is of the amount de-
scribed in subparagraph (A) or (B).’’;
(4) in section 203(a)(3)(C), by striking ‘‘section
302(c)(8)’’ and inserting ‘‘section 302(d)(2)’’;
(5) in section 204(g)(1), by striking ‘‘section
302(c)(8)’’ and inserting ‘‘section 302(d)(2)’’;
(6) in section 204(i)(2)(B), by striking ‘‘section
302(c)(8)’’ and inserting ‘‘section 302(d)(2)’’;
(7) in section 204(i)(3), by striking ‘‘funded cur-
rent liability percentage (within the meaning of sec-
tion 302(d)(8) of this Act)’’ and inserting ‘‘funding
target attainment percentage (as defined in section
303(d)(2))’’;
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(8) in section 204(i)(4), by striking ‘‘section
302(c)(11)(A), 
without 
regard 
to 
section
302(c)(11)(B)’’ and inserting ‘‘section 302(b)(1),
without regard to section 302(b)(2)’’;
(9) in section 206(e)(1), by striking ‘‘section
302(d)’’ and inserting ‘‘section 303(j)(4)’’, and by
striking ‘‘section 302(e)(5)’’ and inserting ‘‘section
303(j)(4)(E)(i)’’;
(10) in section 206(e)(3), by striking ‘‘section
302(e) by reason of paragraph (5)(A) thereof’’ and in-
serting ‘‘section 303(j)(3) by reason of section
303(j)(4)(A)’’; and
(11) in sections 101(e)(3), 403(c)(1), and
408(b)(13), by striking ‘‘American Jobs Creation Act
of 2004’’ and inserting ‘‘Pension Security and Trans-
parency Act of 2005’’.
(b) MISCELLANEOUS AMENDMENTS TO TITLE IV.—
Title IV of such Act is amended—
(1) 
in 
section 
4001(a)(13) 
(29 
U.S.C.
1301(a)(13)), by striking ‘‘302(c)(11)(A)’’ and insert-
ing ‘‘302(b)(1)’’, by striking ‘‘412(c)(11)(A)’’ and in-
serting ‘‘412(c)(1)’’, by striking ‘‘302(c)(11)(B)’’ and
inserting 
‘‘302(b)(2)’’, 
and 
by 
striking
‘‘412(c)(11)(B)’’ and inserting ‘‘412(c)(2)’’;
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(2) in section 4003(e)(1) (29 U.S.C. 1303(e)(1)),
by striking ‘‘302(f)(1)(A) and (B)’’ and inserting
‘‘303(k)(1)(A) 
and 
(B)’’, 
and 
by 
striking
‘‘412(n)(1)(A) and (B)’’ and inserting ‘‘430(k)(1)(A)
and (B)’’;
(3) in section 4010(b)(2) (29 U.S.C. 1310(b)(2)),
by striking ‘‘302(f)(1)(A) and (B)’’ and inserting
‘‘303(k)(1)(A) 
and 
(B)’’, 
and 
by 
striking
‘‘412(n)(1)(A) and (B)’’ and inserting ‘‘430(k)(1)(A)
and (B)’’;
(4) in section 4062(c)(1) (29 U.S.C. 1362(c)(1)),
by striking paragraphs (1), (2), and (3) and inserting
the following:
‘‘(1)(A) in the case of a single-employer plan, the
sum of the shortfall amortization charge (within the
meaning of section 303(c)(1) of this Act and
430(d)(1) of the Internal Revenue Code of 1986) with
respect to the plan (if any) for the plan year in which
the termination date occurs, plus the aggregate total
of shortfall amortization installments (if any) deter-
mined for succeeding plan years under section
303(c)(2) of this Act and section 430(d)(2) of such
Code (which, for purposes of this subparagraph, shall
include any increase in such sum which would result
if all applications for waivers of the minimum fund-
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ing standard under section 302(c) of this Act and sec-
tion 412(d) of such Code which are pending with re-
spect to such plan were denied and if no additional
contributions (other than those already made by the
termination date) were made for the plan year in
which the termination date occurs or for any previous
plan year), or
‘‘(B) in the case of a multiemployer plan, the
outstanding balance of the accumulated funding defi-
ciencies (within the meaning of section 304(a)(2) of
this Act and section 431(a) of the Internal Revenue
Code of 1986) of the plan (if any) (which, for pur-
poses of this subparagraph, shall include the amount
of any increase in such accumulated funding defi-
ciencies of the plan which would result if all pending
applications for waivers of the minimum funding
standard under section 302(c) of this Act or section
412(d) of such Code and for extensions of the amorti-
zation period under section 304(d) of this Act or sec-
tion 431(d) of such Code with respect to such plan
were denied and if no additional contributions (other
than those already made by the termination date)
were made for the plan year in which the termination
date occurs or for any previous plan year),
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‘‘(2)(A) in the case of a single-employer plan, the
sum of the waiver amortization charge (within the
meaning of section 303(e)(1) of this Act and 430(e)(2)
of the Internal Revenue Code of 1986) with respect to
the plan (if any) for the plan year in which the ter-
mination date occurs, plus the aggregate total of
waiver amortization installments (if any) determined
for succeeding plan years under section 303(e)(3) of
this Act and section 430(e)(3) of such Code, or
‘‘(B) in the case of a multiemployer plan, the
outstanding balance of the amount of waived funding
deficiencies of the plan waived before such date under
section 302(c) of this Act or section 412(d) of such
Code (if any), and
‘‘(3) in the case of a multiemployer plan, the
outstanding balance of the amount of decreases in the
minimum funding standard allowed before such date
under section 304(d) of this Act or section 431(d) of
such Code (if any);’’;
(5) in section 4071 (29 U.S.C. 1371), by striking
‘‘302(f)(4)’’ and inserting ‘‘303(k)(4)’’;
(6) 
in 
section 
4243(a)(1)(B) 
(29 
U.S.C.
1423(a)(1)(B)), by striking ‘‘302(a)’’ and inserting
‘‘304(a)’’, and, in clause (i), by striking ‘‘302(a)’’ and
inserting ‘‘304(a)’’;
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(7) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)),
by striking ‘‘303(a)’’ and inserting ‘‘302(c)’’;
(8) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)),
by striking ‘‘303(c)’’ and inserting ‘‘302(c)(3)’’; and
(9) in section 4243(g) (29 U.S.C. 1423(g)), by
striking ‘‘302(c)(3)’’ and inserting ‘‘304(c)(3)’’.
(c) AMENDMENTS TO REORGANIZATION PLAN NO. 4 OF
1978.—Section 106(b)(ii) of Reorganization Plan No. 4 of
1978 (ratified and affirmed as law by Public Law 98–532
(98 Stat. 2705)) is amended by striking ‘‘302(c)(8)’’ and
inserting ‘‘302(d)(2)’’, by striking ‘‘304(a) and (b)(2)(A)’’
and inserting ‘‘304(d)(1), (d)(2), and (e)(2)(A)’’, and by
striking ‘‘412(c)(8), (e), and (f)(2)(A)’’ and inserting
‘‘412(d)(2) and 431(d)(1), (d)(2), and (e)(2)(A)’’.
(d) REPEAL OF EXPIRED AUTHORITY FOR TEMPORARY
VARIANCES.—Section 207 of such Act (29 U.S.C. 1057) is
repealed.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to plan years beginning after 2006.
SEC. 105. SPECIAL RULES FOR MULTIPLE EMPLOYER PLANS
OF CERTAIN COOPERATIVES.
(a) GENERAL RULE.—Except as provided in this sec-
tion, if a plan in existence on July 26, 2005, was an eligible
cooperative plan for its plan year which includes such date,
the amendments made by section 401 of this Act, this sub-
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title, and subtitle B shall not apply to plan years beginning
before the earlier of—
(1) the first plan year for which the plan ceases
to be an eligible cooperative plan, or
(2) January 1, 2017.
(b) 
INTEREST
RATE.—In 
applying 
section
302(b)(5)(B) of the Employee Retirement Income Security
Act of 1974 and section 412(b)(5)(B) of the Internal Rev-
enue Code of 1986 (as in effect before the amendments made
by this subtitle and subtitle B) and in applying section
4006(a)(3)(E)(iii) of such Act (as in effect before the
amendments made by section 401) to an eligible cooperative
plan for plan years beginning after December 31, 2006, and
before the first plan year to which such amendments apply,
the 
third 
segment 
rate 
determined 
under 
section
303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii)
of such Code (as added by such amendments) shall be used
in lieu of the interest rate otherwise used.
(c) ELIGIBLE COOPERATIVE PLAN DEFINED.—For
purposes of this section, a plan shall be treated as an eligi-
ble cooperative plan for a plan year if the plan is main-
tained by more than 1 employer and at least 85 percent
of the employers are—
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(1) rural cooperatives (as defined in section
401(k)(7)(B) of such Code without regard to clause
(iv) thereof), or
(2) organizations which are—
(A) cooperative organizations described in
section 1381(a) of such Code which are more
than 50-percent owned by agricultural producers
or by cooperatives owned by agricultural pro-
ducers, or
(B) more than 50-percent owned, or con-
trolled by, one or more cooperative organizations
described in subparagraph (A).
A plan shall also be treated as an eligible cooperative plan
for any plan year for which it is described in section 210(a)
of the Employee Retirement Income Security Act of 1974
and is maintained by a rural telephone cooperative associa-
tion described in section 3(40)(B)(v) of such Act.
SEC. 106. TEMPORARY RELIEF FOR CERTAIN RESCUED
PLANS.
(a) GENERAL RULE.—Except as provided in this sec-
tion, if a plan in existence on July 26, 2005, was a rescued
plan as of such date, the amendments made by section 401
of this Act, this subtitle, and subtitle B shall not apply to
plan years beginning before January 1, 2014.
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(b) 
INTEREST
RATE.—In 
applying 
section
302(b)(5)(B) of the Employee Retirement Income Security
Act of 1974 and section 412(b)(5)(B) of the Internal Rev-
enue Code of 1986 (as in effect before the amendments made
by this subtitle and subtitle B), and in applying section
4006(a)(3)(E)(iii) of such Act (as in effect before the
amendments made by section 401), to a rescued plan for
plan years beginning after December 31, 2006, and before
January 1, 2014, the third segment rate determined under
section 
303(h)(2)(C)(iii) 
of 
such 
Act 
and 
section
430(h)(2)(C)(iii) of such Code (as added by such amend-
ments) shall be used in lieu of the interest rate otherwise
used.
(c) RESCUED PLAN.—For purposes of this section, the
term ‘‘rescued plan’’ means a defined benefit plan (other
than a multiemployer plan) to which section 302 of such
Act and section 412 of such Code apply and—
(1) which was sponsored by an employer which
was in bankruptcy, giving rise to a claim by the Pen-
sion Benefit Guaranty Corporation of at least
$100,000,000, but not greater than $150,000,000, and
(2) the sponsorship of which was assumed by an-
other employer that was not a member of the same
controlled group as the bankrupt sponsor and the
claim of the Pension Benefit Guaranty Corporation
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was settled or withdrawn in connection with the as-
sumption of the sponsorship.
Subtitle B—Amendments to
Internal Revenue Code of 1986
SEC. 111. MODIFICATIONS OF THE MINIMUM FUNDING
STANDARDS.
(a) IN GENERAL.—Section 412 of the Internal Revenue
Code of 1986 (relating to minimum funding standards) is
amended to read as follows:
‘‘SEC. 412. MINIMUM FUNDING STANDARDS.
‘‘(a) REQUIREMENT TO MEET MINIMUM FUNDING
STANDARD.—
‘‘(1) IN GENERAL.—A plan to which this section
applies shall satisfy the minimum funding standard
applicable to the plan for any plan year.
‘‘(2) MINIMUM FUNDING STANDARD.—For pur-
poses of paragraph (1), a plan shall be treated as sat-
isfying the minimum funding standard for a plan
year if—
‘‘(A) in the case of a defined benefit plan
which is a single-employer plan, the employer
makes contributions to or under the plan for the
plan year which, in the aggregate, are not less
than the minimum required contribution deter-
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mined under section 430 for the plan for the
plan year,
‘‘(B) in the case of a money purchase pen-
sion plan which is a single-employer plan, the
employer makes contributions to or under the
plan for the plan year which are required under
the terms of the plan, and
‘‘(C) in the case of a multiemployer plan,
the employers make contributions to or under the
plan for the plan year which, in the aggregate,
are sufficient to ensure that the plan does not
have an accumulated funding deficiency under
section 431 as of the end of the plan year.
‘‘(b) PLANS TO WHICH SECTION APPLIES.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), this section applies to a plan if,
for any plan year beginning on or after the effective
date of this section for such plan under the Employee
Retirement Income Security Act of 1974—
‘‘(A) the plan included a trust which quali-
fied (or was determined by the Secretary to have
qualified) under section 401(a), or
‘‘(B) the plan satisfied (or was determined
by the Secretary to have satisfied) the require-
ments of section 403(a).
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‘‘(2) EXCEPTIONS.—This section shall not apply
to—
‘‘(A) any profit-sharing or stock bonus plan,
‘‘(B) any insurance contract plan described
in subsection (g)(3),
‘‘(C) any governmental plan (within the
meaning of section 414(d)),
‘‘(D) any church plan (within the meaning
of section 414(e)) with respect to which the elec-
tion provided by section 410(d) has not been
made,
‘‘(E) any plan which has not, at any time
after September 2, 1974, provided for employer
contributions, or
‘‘(F) any plan established and maintained
by a society, order, or association described in
section 501(c)(8) or (9), if no part of the con-
tributions to or under such plan are made by
employers of participants in such plan.
No plan described in subparagraph (C), (D), or (F)
shall be treated as a qualified plan for purposes of
section 401(a) unless such plan meets the require-
ments of section 401(a)(7) as in effect on September
1, 1974.
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‘‘(3) CERTAIN
TERMINATED
MULTIEMPLOYER
PLANS.—This section applies with respect to a termi-
nated multiemployer plan to which section 4021 of
the Employee Retirement Income Security Act of
1974 applies until the last day of the plan year in
which the plan terminates (within the meaning of sec-
tion 4041A(a)(2) of such Act).
‘‘(c) LIABILITY FOR CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the amount of any contribution required
by this section and any required installments under
section 430(j) shall be paid by any employer respon-
sible for making the contribution to or under the
plan.
‘‘(2) JOINT AND SEVERAL LIABILITY WHERE EM-
PLOYER
MEMBER
OF
CONTROLLED
GROUP.—If the
employer referred to in paragraph (1) is a member of
a controlled group, each member of such group shall
be jointly and severally liable for payment of such
contribution or required installment.
‘‘(d) VARIANCE FROM MINIMUM FUNDING STAND-
ARDS.—
‘‘(1) WAIVER
IN
CASE
OF
BUSINESS
HARD-
SHIP.—
‘‘(A) IN GENERAL.—If—
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‘‘(i) an employer is (or in the case of
a multiemployer plan, 10 percent or more
of the number of employers contributing to
or under the plan are) unable to satisfy the
minimum funding standard for a plan year
without temporary substantial business
hardship (substantial business hardship in
the case of a multiemployer plan), and
‘‘(ii) application of the standard would
be adverse to the interests of plan partici-
pants in the aggregate,
the Secretary may, subject to subparagraph (C),
waive the requirements of subsection (a) for such
year with respect to all or any portion of the
minimum funding standard. The Secretary of
the Treasury shall not waive the minimum fund-
ing standard with respect to a plan for more
than 3 of any 15 (5 of any 15 in the case of a
multiemployer plan) consecutive plan years.
‘‘(B) EFFECTS OF WAIVER.—If a waiver is
granted under subparagraph (A) for any plan
year—
‘‘(i) in the case of a single-employer
plan, the minimum required contribution
under section 430 for the plan year shall be
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reduced by the amount of the waived fund-
ing deficiency and such amount shall be
amortized as required under section 430(e),
and
‘‘(ii) in the case of a multiemployer
plan, the funding standard account shall be
credited under section 431(b)(3)(C) with the
amount of the waived funding deficiency
and such amount shall be amortized as re-
quired under section 431(b)(2)(C).
‘‘(C) WAIVER OF AMORTIZED PORTION NOT
ALLOWED.—The Secretary may not waive under
subparagraph (A) any portion of the minimum
funding standard under subsection (a) for a plan
year which is attributable to any waived funding
deficiency for any preceding plan year.
‘‘(2) DETERMINATION
OF
BUSINESS
HARD-
SHIP.—For purposes of this subsection, the factors
taken into account in determining temporary sub-
stantial business hardship (substantial business hard-
ship in the case of a multiemployer plan) shall in-
clude (but shall not be limited to) whether or not—
‘‘(A) the employer is operating at an eco-
nomic loss,
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‘‘(B) there is substantial unemployment or
underemployment in the trade or business and
in the industry concerned,
‘‘(C) the sales and profits of the industry
concerned are depressed or declining, and
‘‘(D) it is reasonable to expect that the plan
will be continued only if the waiver is granted.
‘‘(3) WAIVED FUNDING DEFICIENCY.—For pur-
poses of this part, the term ‘waived funding defi-
ciency’ means the portion of the minimum funding
standard under subsection (a) (determined without
regard to the waiver) for a plan year waived by the
Secretary and not satisfied by employer contributions.
‘‘(4) SECURITY FOR WAIVERS FOR SINGLE-EM-
PLOYER PLANS, CONSULTATIONS.—
‘‘(A) SECURITY MAY BE REQUIRED.—
‘‘(i) IN GENERAL.—Except as provided
in subparagraph (C), the Secretary may re-
quire an employer maintaining a defined
benefit plan which is a single-employer plan
(within the meaning of section 4001(a)(15)
of the Employee Retirement Income Secu-
rity Act of 1974) to provide security to such
plan as a condition for granting or modi-
fying a waiver under paragraph (1).
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‘‘(ii) SPECIAL
RULES.—Any security
provided under clause (i) may be perfected
and enforced only by the Pension Benefit
Guaranty Corporation, or, at the direction
of the Corporation, by a contributing spon-
sor 
(within 
the 
meaning 
of 
section
4001(a)(13) of such Act) or a member of
such sponsor’s controlled group (within the
meaning of section 4001(a)(14) of such Act).
‘‘(B) CONSULTATION
WITH
THE
PENSION
BENEFIT
GUARANTY
CORPORATION.—Except as
provided in subparagraph (C), the Secretary
shall, before granting or modifying a waiver
under this subsection with respect to a plan de-
scribed in subparagraph (A)(i)—
‘‘(i) provide the Pension Benefit Guar-
anty Corporation with—
‘‘(I) notice of the completed appli-
cation for any waiver or modification,
and
‘‘(II) an opportunity to comment
on such application within 30 days
after receipt of such notice, and
‘‘(ii) consider—
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‘‘(I) any comments of the Cor-
poration under clause (i)(II), and
‘‘(II) any views of any employee
organization (within the meaning of
section 3(4) of such Act) representing
participants in the plan which are
submitted in writing to the Secretary
of the Treasury in connection with
such application.
Information provided to the Corporation under
this subparagraph shall be considered tax return
information and subject to the safeguarding and
reporting requirements of section 6103(p).
‘‘(C) EXCEPTION FOR CERTAIN WAIVERS.—
‘‘(i) IN GENERAL.—The preceding pro-
visions of this paragraph shall not apply to
any plan with respect to which the sum
of—
‘‘(I) the aggregate unpaid min-
imum required contributions for the
plan year and all preceding plan
years, and
‘‘(II) the present value of all
waiver amortization installments de-
termined for the plan year and suc-
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ceeding plan years under section
430(e)(2),
is less than $1,000,000.
‘‘(ii) TREATMENT
OF
WAIVERS
FOR
WHICH APPLICATIONS ARE PENDING.—The
amount described in clause (i)(I) shall in-
clude any increase in such amount which
would result if all applications for waivers
of the minimum funding standard under
this subsection which are pending with re-
spect to such plan were denied.
‘‘(iii) UNPAID
MINIMUM
REQUIRED
CONTRIBUTION.—For 
purposes 
of 
this
subparagraph—
‘‘(I) IN GENERAL.—The term ‘un-
paid minimum required contribution’
means, with respect to any plan year,
any minimum required contribution
under section 430 for the plan year
which is not paid on or before the due
date (as determined under section
430(j)(1)) for the plan year.
‘‘(II) ORDERING RULE.—For pur-
poses of subclause (I), any payment to
or under a plan for any plan year
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shall be allocated first to unpaid min-
imum required contributions for all
preceding plan years on a first-in,
first-out basis and then to the min-
imum required contribution under sec-
tion 430 for the plan year.
‘‘(5) SPECIAL
RULES
FOR
SINGLE-EMPLOYER
PLANS.—
‘‘(A) APPLICATION
MUST
BE
SUBMITTED
BEFORE
DATE
21⁄2
MONTHS
AFTER
CLOSE
OF
YEAR.—In the case of a single-employer plan, no
waiver may be granted under this subsection
with respect to any plan for any plan year un-
less an application therefor is submitted to the
Secretary not later than the 15th day of the 3rd
month beginning after the close of such plan
year.
‘‘(B) SPECIAL RULE IF EMPLOYER IS MEM-
BER OF CONTROLLED GROUP.—In the case of a
single-employer plan, if an employer is a mem-
ber of a controlled group, the temporary substan-
tial business hardship requirements of paragraph
(1) shall be treated as met only if such require-
ments are met—
‘‘(i) with respect to such employer, and
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‘‘(ii) with respect to the controlled
group of which such employer is a member
(determined by treating all members of such
group as a single employer).
The Secretary may provide that an analysis of
a trade or business or industry of a member need
not be conducted if the Secretary determines such
analysis is not necessary because the taking into
account of such member would not significantly
affect the determination under this paragraph.
‘‘(6) ADVANCE NOTICE.—
‘‘(A) IN GENERAL.—The Secretary shall, be-
fore granting a waiver under this subsection, re-
quire each applicant to provide evidence satisfac-
tory to such Secretary that the applicant has
provided notice of the filing of the application
for such waiver to each affected party (as defined
in section 4001(a)(21) of the Employee Retire-
ment Income Security Act of 1974) other than
the Pension Benefit Guaranty Corporation and
in the case of a multiemployer plan, to each em-
ployer required to contribute to the plan under
subsection (b)(1). Such notice shall include a de-
scription of the extent to which the plan is fund-
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ed for benefits which are guaranteed under title
IV of such Act and for benefit liabilities.
‘‘(B) CONSIDERATION OF RELEVANT INFOR-
MATION.—The Secretary shall consider any rel-
evant information provided by a person to whom
notice was given under subparagraph (A).
‘‘(7) RESTRICTION ON PLAN AMENDMENTS.—
‘‘(A) IN
GENERAL.—No amendment of a
plan which increases the liabilities of the plan by
reason of any increase in benefits, any change in
the accrual of benefits, or any change in the rate
at which benefits become nonforfeitable under the
plan shall be adopted if a waiver under this sub-
section or an extension of time under section
431(d) is in effect with respect to the plan, or if
a plan amendment described in subsection (e)(2)
has been made at any time in the preceding 24
months. If a plan is amended in violation of the
preceding sentence, any such waiver, or extension
of time, shall not apply to any plan year ending
on or after the date on which such amendment
is adopted.
‘‘(B) EXCEPTION.—Subparagraph (A) shall
not apply to any plan amendment which—
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‘‘(i) the Secretary determines to be rea-
sonable and which provides for only de
minimis increases in the liabilities of the
plan,
‘‘(ii) only repeals an amendment de-
scribed in subsection (e)(2), or
‘‘(iii) is required as a condition of
qualification under part I of subchapter D,
of chapter 1 of the Internal Revenue Code of
1986.
‘‘(e) MISCELLANEOUS RULES.—For purposes of this
section—
‘‘(1) CHANGE IN METHOD OR YEAR.—If the fund-
ing method, the valuation date, or a plan year for a
plan is changed, the change shall take effect only if
approved by the Secretary.
‘‘(2) 
CERTAIN
RETROACTIVE
PLAN
AMEND-
MENTS.—For purposes of this section, any amend-
ment applying to a plan year which—
‘‘(A) is adopted after the close of such plan
year but no later than 21⁄2 months after the close
of the plan year (or, in the case of a multiem-
ployer plan, no later than 2 years after the close
of such plan year),
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‘‘(B) does not reduce the accrued benefit of
any participant determined as of the beginning
of the first plan year to which the amendment
applies, and
‘‘(C) does not reduce the accrued benefit of
any participant determined as of the time of
adoption except to the extent required by the cir-
cumstances,
shall, at the election of the plan administrator, be
deemed to have been made on the first day of such
plan year. No amendment described in this para-
graph which reduces the accrued benefits of any par-
ticipant shall take effect unless the plan adminis-
trator files a notice with the Secretary notifying him
of such amendment and the Secretary has approved
such amendment, or within 90 days after the date on
which such notice was filed, failed to disapprove such
amendment. No amendment described in this sub-
section shall be approved by the Secretary unless the
Secretary determines that such amendment is nec-
essary because of a temporary substantial business
hardship (as determined under subsection (d)(2)) or
a substantial business hardship (as so determined) in
the case of a multiemployer plan and that a waiver
under subsection (d)(1) (or in the case of a multiem-
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ployer plan, any extension of the amortization period
under section 431(d)) is unavailable or inadequate.
‘‘(3) CERTAIN INSURANCE CONTRACT PLANS.—A
plan is described in this paragraph if—
‘‘(A) the plan is funded exclusively by the
purchase of individual insurance contracts,
‘‘(B) such contracts provide for level annual
premium payments to be paid extending not
later than the retirement age for each individual
participating in the plan, and commencing with
the date the individual became a participant in
the plan (or, in the case of an increase in bene-
fits, commencing at the time such increase be-
comes effective),
‘‘(C) benefits provided by the plan are equal
to the benefits provided under each contract at
normal retirement age under the plan and are
guaranteed by an insurance carrier (licensed
under the laws of a State to do business with the
plan) to the extent premiums have been paid,
‘‘(D) premiums payable for the plan year,
and all prior plan years, under such contracts
have been paid before lapse or there is reinstate-
ment of the policy,
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‘‘(E) no rights under such contracts have
been subject to a security interest at any time
during the plan year, and
‘‘(F) no policy loans are outstanding at any
time during the plan year.
A plan funded exclusively by the purchase of group
insurance contracts which are determined under regu-
lations prescribed by the Secretary to have the same
characteristics as contracts described in the preceding
sentence shall be treated as a plan described in this
paragraph.
‘‘(4) CONTROLLED GROUP.—For purposes of this
section and section 430, the term ‘controlled group’
means any group treated as a single employer under
subsection (b), (c), (m), or (o) of section 414.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to plan years beginning after December
31, 2006.
SEC. 112. FUNDING RULES APPLICABLE TO SINGLE-EM-
PLOYER PENSION PLANS.
Subchapter D of chapter 1 of the Internal Revenue
Code of 1986 (relating to deferred compensation, etc.) is
amended by adding at the end the following new part:
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‘‘PART III—RULES RELATING TO MINIMUM
FUNDING STANDARDS AND BENEFIT LIMITATION
‘‘430. Minimum funding standards for single-employer defined benefit plans.
‘‘431. Minimum funding standards for multiemployer plans.
‘‘SEC. 430. MINIMUM FUNDING STANDARDS FOR SINGLE-EM-
PLOYER DEFINED BENEFIT PLANS.
‘‘(a) MINIMUM REQUIRED CONTRIBUTION.—For pur-
poses of this section and section 412(a)(2)(A), except as pro-
vided in subsection (f), the term ‘minimum required con-
tribution’ means, with respect to any plan year of a defined
benefit plan which is a single employer plan—
‘‘(1) in any case in which the value of plan as-
sets of the plan (as reduced under subsection (f)(4))
is less than the funding target of the plan for the plan
year, the sum of—
‘‘(A) the target normal cost of the plan for
the plan year,
‘‘(B) the shortfall amortization charge (if
any) for the plan for the plan year determined
under subsection (c), and
‘‘(C) the waiver amortization charge (if
any) for the plan for the plan year as deter-
mined under subsection (e); or
‘‘(2) in any case in which the value of plan as-
sets of the plan (as reduced under subsection (f)(4))
equals or exceeds the funding target of the plan for the
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plan year, the target normal cost of the plan for the
plan year reduced (but not below zero) by any such
excess.
‘‘(b) TARGET NORMAL COST.—For purposes of this
section, except as provided in subsection (i)(2) with respect
to plans in at-risk status, the term ‘target normal 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. For purposes of this subsection, if
any benefit attributable to services performed in a preceding
plan year is increased by reason of any increase in com-
pensation during the current plan year, the increase in such
benefit shall be treated as having accrued during the current
plan year.
‘‘(c) SHORTFALL AMORTIZATION CHARGE.—
‘‘(1) IN GENERAL.—For purposes of this section,
the shortfall amortization charge for a plan for any
plan year is the aggregate total of the shortfall amor-
tization installments for such plan year with respect
to the shortfall amortization bases for such plan year
and each of the 6 preceding plan years.
‘‘(2) 
SHORTFALL
AMORTIZATION
INSTALL-
MENT.—For purposes of paragraph (1)—
‘‘(A) DETERMINATION.—The shortfall amor-
tization installments are the amounts necessary
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to amortize the shortfall amortization base of the
plan for any plan year in level annual install-
ments over the 7-plan-year period beginning
with such plan year.
‘‘(B) 
SHORTFALL
INSTALLMENT.—The
shortfall amortization installment for any plan
year in the 7-plan-year period under subpara-
graph (A) with respect to any shortfall amortiza-
tion base is the annual installment determined
under subparagraph (A) for that year for that
base.
‘‘(C) SEGMENT
RATES.—In determining
any shortfall amortization installment under
this paragraph, the plan sponsor shall use the
segment rates determined under subparagraph
(C) of subsection (h)(2), applied under rules
similar to the rules of subparagraph (B) of sub-
section (h)(2).
‘‘(3) SHORTFALL
AMORTIZATION
BASE.—For
purposes of this section, 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
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‘‘(B) the present value (determined using
the segment rates determined under subpara-
graph (C) of subsection (h)(2), applied under
rules similar to the rules of subparagraph (B) of
subsection (h)(2)) of the aggregate total of the
shortfall amortization installments and waiver
amortization installments which have been deter-
mined for such plan year and any succeeding
plan year with respect to the shortfall amortiza-
tion bases and waiver amortization bases of the
plan for any plan year preceding such plan
year.
‘‘(4) FUNDING SHORTFALL.—
‘‘(A) IN
GENERAL.—For purposes of this
section, except as provided in subparagraph (B),
the funding shortfall of a plan for any plan year
is the excess (if any) of—
‘‘(i) the funding target of the plan for
the plan year, over
‘‘(ii) the value of plan assets of the
plan (as reduced under subsection (f)(4)) for
the plan year which are held by the plan on
the valuation date.
‘‘(B) TRANSITION RULE FOR AMORTIZATION
OF FUNDING SHORTFALL.—