387 
or under any similar law of a State or a 
political subdivision of a State (or a case 
described in section 4041(c)(2)(B)(i) filed 
by or against such person has been con-
verted, as of such date, to such a case in 
which reorganization is sought), subpara-
graph (A) shall not apply to such plan 
until the date of the discharge of such 
person in such case. 
‘‘(C) APPLICABLE
12-MONTH
PERIOD.— 
For purposes of subparagraph (A)— 
‘‘(i) IN GENERAL.—The term ‘appli-
cable 12-month period’ means— 
‘‘(I) the 12-month period be-
ginning with the first month fol-
lowing the month in which the 
termination date occurs, and 
‘‘(II) each of the first two 12- 
month periods immediately fol-
lowing the period described in 
subclause (I). 
‘‘(ii) PLANS
TERMINATED
IN
BANK-
RUPTCY REORGANIZATION.—In any case 
in which the requirements of sub-
paragraph (B) are met in connection
388 
with the termination of the plan with 
respect to 1 or more persons de-
scribed in such subparagraph, the 12- 
month period described in clause 
(i)(I) shall be the 12-month period be-
ginning with the first month fol-
lowing the month which includes the 
earliest date as of which each such 
person is discharged in the case de-
scribed in such clause in connection 
with such person. 
‘‘(D) 
COORDINATION
WITH
SECTION 
4007.— 
‘‘(i) 
Notwithstanding 
section 
4007— 
‘‘(I) 
premiums 
under 
this 
paragraph shall be due within 30 
days after the beginning of any 
applicable 12-month period, and 
‘‘(II) 
the 
designated 
payor 
shall be the person who is the 
contributing sponsor as of imme-
diately before the termination 
date.
389 
‘‘(ii) The fifth sentence of section 
4007(a) shall not apply in connection 
with premiums determined under 
this paragraph.’’. 
(c) RISK-BASED PREMIUMS.— 
(1) EXTENSION THROUGH 2006.—Section 
4006(a)(3)(E)(iii)(V) of such Act is amend-
ed by striking ‘‘January 1, 2006’’ and in-
serting ‘‘January 1, 2007’’. 
(2) CONFORMING AMENDMENTS RELATED 
TO
FUNDING
RULES
FOR
SINGLE-EMPLOYER 
PLANS.—Section 4006(a)(3)(E) of such Act 
is amended by striking clauses (iii) and 
(iv) and inserting the following: 
‘‘(iii)(I) For purposes of clause (ii), except 
as provided in subclause (II), the term ‘un-
funded vested benefits’ means, for a plan year, 
the amount which would be the plan’s fund-
ing shortfall (as defined in section 303(c)(4)), 
if the value of plan assets of the plan were 
equal to the fair market value of such assets 
and only vested benefits were taken into ac-
count. 
‘‘(II) The interest rate used in valuing 
vested benefits for purposes of subclause (I)
390 
shall be equal to the first, second, or third seg-
ment rate which would be determined under 
section 303(h)(2)(C) if section 303(h)(2)(D)(i) 
were applied by substituting ‘the yields’ for 
‘the 3-year weighted average of yields’, as ap-
plicable under rules similar to the rules under 
section 303(h)(2)(B).’’. 
(d) EFFECTIVE DATES.— 
(1) IN
GENERAL.—The amendments 
made by subsection (a) and (c)(1) shall 
apply to plan years beginning after De-
cember 31, 2005. 
(2) PREMIUM RATE FOR CERTAIN TERMI-
NATED
SINGLE-EMPLOYER
PLANS.—The 
amendment made by subsection (b) shall 
apply with respect to cases commenced 
under title 11, United States Code, or 
under any similar law of a State or polit-
ical subdivision of a State after October 
26, 2005. 
(3) CONFORMING AMENDMENTS RELATED 
TO
FUNDING
RULES
FOR
SINGLE-EMPLOYER 
PLANS.—The amendments made by sub-
section (c)(2) shall take effect on Decem-
391 
ber 31, 2006, and shall apply to plan years 
beginning after such date. 
TITLE V—DISCLOSURE 
SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICES. 
[See section 501 of the bill as reported by 
the Committee on Education and the Work-
force.] 
SEC. 502. ADDITIONAL DISCLOSURE REQUIREMENTS. 
[See section 502 of the bill as reported by 
the Committee on Education and the Work-
force.] 
SEC. 503. SECTION 4010 FILINGS WITH THE PBGC. 
(a) CHANGE IN CRITERIA FOR PERSONS RE-
QUIRED TO PROVIDE INFORMATION TO PBGC.— 
Section 4010(b) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1310(b)) 
is amended by striking paragraph (1), by re-
designating paragraphs (2) and (3) as para-
graphs (3) and (4), respectively, and by insert-
ing before paragraph (3) (as so redesignated) 
the following new paragraphs: 
‘‘(1) the aggregate funding target at-
tainment percentage of the plan (as de-
fined in subsection (d)(2)) is less than 60 
percent;
392 
‘‘(2)(A) the aggregate funding target 
attainment percentage of the plan (as de-
fined in subsection (d)(2)) is less than 75 
percent, and 
‘‘(B) the plan sponsor is in an indus-
try with respect to which the corporation 
determines that there is substantial un-
employment or underemployment and 
the sales and profits are depressed or de-
clining;’’. 
(b) NOTICE
TO PARTICIPANTS
AND BENE-
FICIARIES.—Section 4010 of the Employee Re-
tirement Income Security Act of 1974 (29 
U.S.C. 1310) is amended by adding at the end 
the following new subsection: 
‘‘(d) NOTICE
TO PARTICIPANTS
AND BENE-
FICIARIES.— 
‘‘(1) IN
GENERAL.—Not later than 90 
days after the submission by any person 
to the corporation of information or doc-
umentary material with respect to any 
plan pursuant to subsection (a), such per-
son shall provide notice of such submis-
sion to each participant and beneficiary 
under the plan (and under all plans
393 
maintained by members of the controlled 
group of each contributing sponsor of the 
plan). Such notice shall also set forth— 
‘‘(A) the number of single-em-
ployer plans covered by this title 
which are in at-risk status and are 
maintained by contributing sponsors 
of such plan (and by members of their 
controlled groups) with respect to 
which the funding target attainment 
percentage for the preceding plan 
year of each plan is less than 60 per-
cent; 
‘‘(B) the value of the assets of 
each of the plans described in sub-
paragraph (A) for the plan year, the 
funding target for each of such plans 
for the plan year, and the funding 
target attainment percentage of each 
of such plans for the plan year; and 
‘‘(C) taking into account all sin-
gle-employer plans maintained by the 
contributing sponsor and the mem-
bers of its controlled group as of the 
end of such plan year—
394 
‘‘(i) the aggregate total of the 
values of plan assets of such plans 
as of the end of such plan year, 
‘‘(ii) the aggregate total of the 
funding targets of such plans, as 
of the end of such plan year, tak-
ing into account only benefits to 
which 
participants 
and 
bene-
ficiaries have a nonforfeitable 
right, and 
‘‘(iii) the aggregate funding 
targets 
attainment 
percentage 
with respect to the contributing 
sponsor for the preceding plan 
year. 
‘‘(2) DEFINITIONS.—For purposes of 
this subsection— 
‘‘(A) VALUE OF PLAN ASSETS.—The 
term ‘value of plan assets’ means the 
value of plan assets, as determined 
under section 303(g)(3). 
‘‘(B) FUNDING
TARGET.—The term 
‘funding target’ has the meaning pro-
vided under section 303(d)(1).
395 
‘‘(C) FUNDING TARGET ATTAINMENT 
PERCENTAGE.—The term ‘funding tar-
get attainment percentage’ has the 
meaning 
provided 
in 
section 
303(d)(2). 
‘‘(D) AGGREGATE FUNDING TARGETS 
ATTAINMENT
PERCENTAGE.—The term 
‘aggregate funding targets attainment 
percentage’ with respect to a contrib-
uting sponsor for a plan year is the 
percentage, taking into account all 
plans maintained by the contributing 
sponsor and the members of its con-
trolled group as of the end of such 
plan year, which 
‘‘(i) the aggregate total of the 
values of plan assets, as of the 
end of such plan year, of such 
plans, is of 
‘‘(ii) the aggregate total of the 
funding targets of such plans, as 
of the end of such plan year, tak-
ing into account only benefits to 
which 
participants 
and 
bene-
396 
ficiaries have a nonforfeitable 
right. 
‘‘(E) AT-RISK
STATUS.—The term 
‘at-risk status’ has the meaning pro-
vided in section 303(i)(3). 
‘‘(3) COMPLIANCE.— 
‘‘(A) IN GENERAL.—Any notice re-
quired to be provided under para-
graph (1) may be provided in written, 
electronic, or other appropriate form 
to the extent such form is reasonably 
accessible to individuals to whom the 
information is required to be pro-
vided. 
‘‘(B) LIMITATIONS.—In no case shall 
a participant or beneficiary be enti-
tled under this subsection to receive 
more than one notice described in 
paragraph (1) during any one 12- 
month period. The person required to 
provide such notice may make a rea-
sonable charge to cover copying, 
mailing, and other costs of furnishing 
such notice pursuant to paragraph 
(1). The corporation may by regula-
397 
tions prescribe the maximum amount 
which will constitute a reasonable 
charge under the preceding sentence. 
‘‘(4) NOTICE TO CONGRESS.—Concurrent 
with the provision of any notice under 
paragraph (1), such person shall provide 
such notice to the Committee on Edu-
cation and the Workforce and the Com-
mittee on Ways and Means of the House 
of Representatives and the Committee on 
Health, Education, Labor, and Pensions 
and the Committee on Finance of the 
Senate, which shall be treated as mate-
rials provided in executive session.’’. 
(c) 
EFFECTIVE
DATE.—The 
amendment 
made by this section shall apply with respect 
to plan years beginning after December 31, 
2006.
398 
TITLE VI—INVESTMENT ADVICE 
SEC. 601. AMENDMENTS TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974 PROVIDING 
PROHIBITED TRANSACTION EXEMPTION FOR 
PROVISION OF INVESTMENT ADVICE. 
[See section 601 of the bill as reported by 
the Committee on Education and the Work-
force.] 
SEC. 602. AMENDMENTS TO INTERNAL REVENUE CODE OF 
1986 PROVIDING PROHIBITED TRANSACTION 
EXEMPTION FOR PROVISION OF INVESTMENT 
ADVICE. 
(a) EXEMPTION FROM PROHIBITED TRANS-
ACTIONS.—Subsection (d) of section 4975 of the 
Internal Revenue Code of 1986 (relating to ex-
emptions from tax on prohibited trans-
actions) is amended— 
(1) in paragraph (15), by striking ‘‘or’’ 
at the end; 
(2) in paragraph (16), by striking the 
period at the end and inserting ‘‘; or’’; 
and 
(3) by adding at the end the following 
new paragraph:
399 
‘‘(17) any transaction described in 
subsection (f)(8)(A) in connection with 
the provision of investment advice de-
scribed in subsection (e)(3)(B)(i), in any 
case in which— 
‘‘(A) the investment of assets of 
the plan is subject to the direction of 
plan participants or beneficiaries, 
‘‘(B) the advice is provided to the 
plan or a participant or beneficiary of 
the plan by a fiduciary adviser in 
connection with any sale, acquisition, 
or holding of a security or other 
property for purposes of investment 
of plan assets, and 
‘‘(C) the requirements of sub-
section (f)(8)(B) are met in connection 
with the provision of the advice.’’. 
(b) ALLOWED TRANSACTIONS AND REQUIRE-
MENTS.—Subsection (f) of such section 4975 
(relating to other definitions and special 
rules) is amended by adding at the end the fol-
lowing new paragraph:
400 
‘‘(8) PROVISIONS
RELATING
TO
INVEST-
MENT ADVICE PROVIDED BY FIDUCIARY ADVIS-
ERS.— 
‘‘(A) TRANSACTIONS
ALLOWABLE
IN 
CONNECTION
WITH
INVESTMENT
ADVICE 
PROVIDED BY FIDUCIARY ADVISERS.—The 
transactions referred to in subsection 
(d)(17), in connection with the provi-
sion of investment advice by a fidu-
ciary adviser, are the following: 
‘‘(i) the provision of the advice 
to the plan, participant, or bene-
ficiary; 
‘‘(ii) the sale, acquisition, or 
holding of a security or other 
property (including any lending 
of money or other extension of 
credit associated with the sale, 
acquisition, or holding of a secu-
rity or other property) pursuant 
to the advice; and 
‘‘(iii) the direct or indirect re-
ceipt of fees or other compensa-
tion by the fiduciary adviser or 
an affiliate thereof (or any em-
401 
ployee, agent, or registered rep-
resentative of the fiduciary ad-
viser or affiliate) in connection 
with the provision of the advice 
or in connection with a sale, ac-
quisition, or holding of a security 
or other property pursuant to the 
advice. 
‘‘(B) REQUIREMENTS
RELATING
TO 
PROVISION OF INVESTMENT ADVICE BY FI-
DUCIARY ADVISERS.—The requirements 
of this subparagraph (referred to in 
subsection (d)(17)(C)) are met in con-
nection with the provision of invest-
ment advice referred to in subsection 
(e)(3)(B), provided to a plan or a par-
ticipant or beneficiary of a plan by a 
fiduciary adviser with respect to the 
plan in connection with any sale, ac-
quisition, or holding of a security or 
other property for purposes of invest-
ment of amounts held by the plan, 
if— 
‘‘(i) in the case of the initial 
provision of the advice with re-
402 
gard to the security or other 
property by the fiduciary adviser 
to the plan, participant, or bene-
ficiary, the fiduciary adviser pro-
vides to the recipient of the ad-
vice, at a time reasonably contem-
poraneous with the initial provi-
sion of the advice, a written noti-
fication (which may consist of no-
tification by means of electronic 
communication)— 
‘‘(I) of all fees or other 
compensation relating to the 
advice that the fiduciary ad-
viser or any affiliate thereof is 
to 
receive 
(including 
com-
pensation provided by any 
third 
party) 
in 
connection 
with the provision of the ad-
vice or in connection with the 
sale, acquisition, or holding of 
the security or other prop-
erty, 
‘‘(II) of any material affili-
ation or contractual relation-
403 
ship of the fiduciary adviser 
or affiliates thereof in the se-
curity or other property, 
‘‘(III) 
of 
any 
limitation 
placed on the scope of the in-
vestment advice to be pro-
vided by the fiduciary adviser 
with respect to any such sale, 
acquisition, or holding of a se-
curity or other property, 
‘‘(IV) of the types of serv-
ices provided by the fiduciary 
adviser in connection with 
the provision of investment 
advice by the fiduciary ad-
viser, 
‘‘(V) that the adviser is 
acting as a fiduciary of the 
plan in connection with the 
provision of the advice, and 
‘‘(VI) that a recipient of 
the advice may separately ar-
range for the provision of ad-
vice by another adviser, that 
could have no material affili-
404 
ation with and receive no fees 
or other compensation in con-
nection with the security or 
other property, 
‘‘(ii) the fiduciary adviser pro-
vides appropriate disclosure, in 
connection with the sale, acquisi-
tion, or holding of the security or 
other 
property, 
in 
accordance 
with 
all 
applicable 
securities 
laws, 
‘‘(iii) the sale, acquisition, or 
holding occurs solely at the direc-
tion of the recipient of the advice, 
‘‘(iv) 
the 
compensation 
re-
ceived by the fiduciary adviser 
and affiliates thereof in connec-
tion with the sale, acquisition, or 
holding of the security or other 
property is reasonable, and 
‘‘(v) the terms of the sale, ac-
quisition, or holding of the secu-
rity or other property are at least 
as favorable to the plan as an
405 
arm’s length transaction would 
be. 
‘‘(C) STANDARDS FOR PRESENTATION 
OF INFORMATION.—The notification re-
quired to be provided to participants 
and 
beneficiaries 
under 
subpara-
graph (B)(i) shall be written in a clear 
and conspicuous manner and in a 
manner calculated to be understood 
by the average plan participant and 
shall be sufficiently accurate and 
comprehensive to reasonably apprise 
such participants and beneficiaries of 
the information required to be pro-
vided in the notification. 
‘‘(D) EXEMPTION
CONDITIONED
ON 
MAKING REQUIRED INFORMATION AVAIL-
ABLE
ANNUALLY, ON
REQUEST, AND
IN 
THE EVENT OF MATERIAL CHANGE.—The 
requirements of subparagraph (B)(i) 
shall be deemed not to have been met 
in connection with the initial or any 
subsequent provision of advice de-
scribed in subparagraph (B) to the 
plan, participant, or beneficiary if, at
406 
any time during the provision of advi-
sory services to the plan, participant, 
or beneficiary, the fiduciary adviser 
fails to maintain the information de-
scribed in subclauses (I) through (IV) 
of subparagraph (B)(i) in currently 
accurate form and in the manner re-
quired by subparagraph (C), or fails— 
‘‘(i) 
to 
provide, 
without 
charge, such currently accurate 
information to the recipient of 
the advice no less than annually, 
‘‘(ii) to make such currently 
accurate 
information 
available, 
upon request and without charge, 
to the recipient of the advice, or 
‘‘(iii) in the event of a material 
change to the information de-
scribed in subclauses (I) through 
(IV) of subparagraph (B)(i), to 
provide, 
without 
charge, 
such 
currently accurate information to 
the recipient of the advice at a 
time reasonably contemporaneous
407 
to the material change in infor-
mation. 
‘‘(E) MAINTENANCE FOR 6 YEARS OF 
EVIDENCE OF COMPLIANCE.—A fiduciary 
adviser referred to in subparagraph 
(B) who has provided advice referred 
to in such subparagraph shall, for a 
period of not less than 6 years after 
the provision of the advice, maintain 
any 
records 
necessary 
for 
deter-
mining whether the requirements of 
the preceding provisions of this para-
graph and of subsection (d)(17) have 
been met. A transaction prohibited 
under subsection (c)(1) shall not be 
considered to have occurred solely 
because the records are lost or de-
stroyed prior to the end of the 6-year 
period due to circumstances beyond 
the control of the fiduciary adviser. 
‘‘(F) EXEMPTION FOR PLAN SPONSOR 
AND
CERTAIN
OTHER
FIDUCIARIES.—A 
plan sponsor or other person who is a 
fiduciary (other than a fiduciary ad-
viser) shall not be treated as failing
408 
to meet the requirements of this sec-
tion solely by reason of the provision 
of investment advice referred to in 
subsection (e)(3)(B) (or solely by rea-
son of contracting for or otherwise 
arranging for the provision of the ad-
vice), if— 
‘‘(i) the advice is provided by 
a fiduciary adviser pursuant to an 
arrangement between the plan 
sponsor or other fiduciary and 
the fiduciary adviser for the pro-
vision by the fiduciary adviser of 
investment advice referred to in 
such section, 
‘‘(ii) the terms of the arrange-
ment require compliance by the 
fiduciary adviser with the re-
quirements of this paragraph, 
‘‘(iii) the terms of the arrange-
ment include a written acknowl-
edgment by the fiduciary adviser 
that the fiduciary adviser is a fi-
duciary of the plan with respect 
to the provision of the advice, and
409 
‘‘(iv) the requirements of part 
4 of subtitle B of title I of the Em-
ployee Retirement Income Secu-
rity Act of 1974 are met in connec-
tion with the provision of such 
advice. 
‘‘(G) DEFINITIONS.—For purposes 
of this paragraph and subsection 
(d)(17)— 
‘‘(i) FIDUCIARY
ADVISER.—The 
term ‘fiduciary adviser’ means, 
with respect to a plan, a person 
who is a fiduciary of the plan by 
reason of the provision of invest-
ment advice by the person to the 
plan or to a participant or bene-
ficiary and who is— 
‘‘(I) registered as an in-
vestment adviser under the 
Investment Advisers Act of 
1940 (15 U.S.C. 80b–1 et seq.) 
or under the laws of the State 
in which the fiduciary main-
tains its principal office and 
place of business,
410 
‘‘(II) a bank or similar fi-
nancial institution referred to 
in subsection (d)(4) or a sav-
ings association (as defined in 
section 3(b)(1) of the Federal 
Deposit 
Insurance 
Act 
(12 
U.S.C. 1813(b)(1))), but only if 
the 
advice 
is 
provided 
through a trust department of 
the bank or similar financial 
institution or savings associa-
tion which is subject to peri-
odic examination and review 
by Federal or State banking 
authorities, 
‘‘(III) an insurance com-
pany qualified to do business 
under the laws of a State, 
‘‘(IV) a person registered 
as a broker or dealer under 
the Securities Exchange Act 
of 1934 (15 U.S.C. 78a et seq.), 
‘‘(V) an affiliate of a per-
son described in any of sub-
clauses (I) through (IV), or
411 
‘‘(VI) an employee, agent, 
or registered representative 
of a person described in any 
of subclauses (I) through (V) 
who 
satisfies 
the 
require-
ments 
of 
applicable 
insur-
ance, banking, and securities 
laws relating to the provision 
of the advice. 
‘‘(ii) AFFILIATE.—The term ‘af-
filiate’ of another entity means an 
affiliated person of the entity (as 
defined in section 2(a)(3) of the 
Investment Company Act of 1940 
(15 U.S.C. 80a–2(a)(3))). 
‘‘(iii) REGISTERED REPRESENTA-
TIVE.—The term ‘registered rep-
resentative’ 
of 
another 
entity 
means a person described in sec-
tion 3(a)(18) of the Securities Ex-
change Act of 1934 (15 U.S.C. 
78c(a)(18)) (substituting the entity 
for the broker or dealer referred 
to in such section) or a person de-
scribed in section 202(a)(17) of the
412 
Investment Advisers Act of 1940 
(15 
U.S.C. 
80b–2(a)(17)) 
(sub-
stituting the entity for the invest-
ment adviser referred to in such 
section).’’. 
(c) EFFECTIVE
DATE.—The amendments 
made by this section shall apply with respect 
to advice referred to in section 4975(c)(3)(B) 
of the Internal Revenue Code of 1986 pro-
vided on or after January 1, 2006. 
TITLE VII—BENEFIT ACCRUAL 
STANDARDS 
SEC. 701. IMPROVEMENTS IN BENEFIT ACCRUAL STAND-
ARDS. 
(a) AMENDMENTS TO THE EMPLOYEE RETIRE-
MENT INCOME SECURITY ACT OF 1974.—[See sec-
tion 701(a) of the bill as reported by the Com-
mittee on Education and the Workforce.] 
(b) AMENDMENTS TO THE INTERNAL REVENUE 
CODE OF 1986.— 
(1) RULES RELATING TO REDUCTION IN 
ACCRUED BENEFITS BECAUSE OF ATTAINMENT 
OF ANY AGE.—Subparagraph (H) of section 
411(b)(1) of the Internal Revenue Code of
413 
1986 is amended by adding at the end the 
following new clauses: 
‘‘(vi) COMPARISON TO SIMILARLY 
SITUATED YOUNGER INDIVIDUAL.— 
‘‘(I) IN
GENERAL.—A plan 
shall not be treated as failing 
to meet the requirements of 
clause (i) if a participant’s en-
tire accrued benefit, as deter-
mined as of any date under 
the formula for determining 
benefits as set forth in the 
text of the plan documents, 
would be equal to or greater 
than that of any similarly sit-
uated, younger individual. 
‘‘(II) SIMILARLY SITUATED.— 
For purposes of this clause, 
an individual is similarly situ-
ated to a participant if such 
individual is identical to such 
participant in every respect 
(including period of service, 
compensation, position, date
414 
of hire, work history, and any 
other respect) except for age. 
‘‘(III) DISREGARD
OF
SUB-
SIDIZED
EARLY
RETIREMENT 
BENEFITS.—In determining the 
entire 
accrued 
benefit 
for 
purposes of this clause, the 
subsidized 
portion 
of 
any 
early retirement benefit (in-
cluding any early retirement 
subsidy that is fully or par-
tially included or reflected in 
an employee’s opening bal-
ance or other transition bene-
fits) shall be disregarded. 
‘‘(vii) 
INTEREST
ON
HYPO-
THETICAL
ACCOUNTS.—A 
plan 
under which the accrued benefit 
payable under the plan upon dis-
tribution (or any portion thereof) 
is expressed as the balance of a 
hypothetical account maintained 
for the participant shall not be 
treated as failing to meet the re-
quirements of clause (i) solely be-
415 
cause interest accruing on such 
balance is taken into account. 
‘‘(viii) CERTAIN
OFFSETS
PER-
MITTED.—A plan shall not be treat-
ed as failing to meet the require-
ments of this subparagraph solely 
because the plan provides allow-
able offsets against those benefits 
under the plan which are attrib-
utable to employer contributions, 
based on benefits which are pro-
vided under title II of the Social 
Security Act, the Railroad Retire-
ment Act of 1974, another plan de-
scribed in section 401(a) main-
tained by the same employer, or 
under any retirement program 
for officers or employees of the 
Federal Government or of the 
government of any State or polit-
ical subdivision thereof. For pur-
poses of this clause, allowable off-
sets based on such benefits con-
sist of offsets equal to all or part 
of the actual benefit payment
416 
amounts, reasonable projections 
or estimations of such benefit 
payment amounts, or actuarial 
equivalents of such actual benefit 
payment amounts, projections, or 
estimations (determined on the 
basis of reasonable actuarial as-
sumptions). 
‘‘(ix) PERMITTED DISPARITIES IN 
PLAN
CONTRIBUTIONS
OR
BENE-
FITS.—A plan shall not be treated 
as failing to meet the require-
ments of this subparagraph solely 
because the plan provides a dis-
parity in contributions or benefits 
with respect to which the require-
ments of section 401(l) are met. 
‘‘(x) PRE-RETIREMENT INDEXING 
PERMITTED.— 
‘‘(I) IN
GENERAL.—A plan 
shall not be treated as failing 
to meet the requirements of 
this subparagraph solely be-
cause the plan provides for
417 
pre-retirement indexing of ac-
crued benefits under the plan. 
‘‘(II) PRE-RETIREMENT
IN-
DEXING.—For purposes of this 
clause, the term ‘pre-retire-
ment indexing’ means, in con-
nection with an accrued ben-
efit, the periodic adjustment 
of the accrued benefit by 
means of the application of a 
recognized index or method-
ology so as to protect the eco-
nomic value of the benefit 
against inflation prior to dis-
tribution.’’. 
(2) DETERMINATIONS OF ACCRUED BEN-
EFIT
AS
BALANCE
OF
BENEFIT
ACCOUNT.— 
Subsection (a) of section 411 of such Code 
is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(13) 
DETERMINATIONS
OF
ACCRUED 
BENEFIT
AS
BALANCE
OF
BENEFIT
AC-
COUNT.— 
‘‘(A) IN GENERAL.—A defined ben-
efit plan under which the accrued
418 
benefit payable under the plan upon 
distribution (or any portion thereof) 
is expressed as the balance of a hypo-
thetical account maintained for the 
participant shall not be treated as 
failing to meet the requirements of 
subsection (a)(2) and section 417(e) 
solely because of the amount actually 
made available for such distribution 
under the terms of the plan, in any 
case in which the applicable interest 
rate that would be used under the 
terms of the plan to project the 
amount of the participant’s account 
balance to normal retirement age is 
not greater than a market rate of re-
turn. 
‘‘(B) REGULATIONS.—The Secretary 
may provide by regulation for rules 
governing the calculation of a market 
rate of return for purposes of sub-
paragraph (A) and for permissible 
methods of crediting interest to the 
account (including variable interest 
rates) resulting in effective rates of
419 
return meeting the requirements of 
subparagraph (A).’’. 
(c) EFFECTIVE
DATE.—The amendments 
made by this section shall apply to periods be-
ginning on or after June 29, 2005. 
TITLE VIII—DEDUCTION 
LIMITATIONS 
SEC. 801. INCREASE IN DEDUCTION LIMITS. 
(a) INCREASE IN DEDUCTION LIMIT FOR SIN-
GLE-EMPLOYER PLANS.—Section 404 of the In-
ternal Revenue Code of 1986 (relating to de-
duction for contributions of an employer to 
an employees’ trust or annuity plan and com-
pensation under a deferred payment plan) is 
amended— 
(1) in subsection (a)(1)(A), by insert-
ing ‘‘in the case of a defined benefit plan 
other than a multiemployer plan, in an 
amount determined under subsection (o), 
and in the case of any other plan’’ after 
‘‘section 501(a),’’, and 
(2) by inserting at the end the fol-
lowing new subsection:
420 
‘‘(o) DEDUCTION
LIMIT
FOR
SINGLE-EM-
PLOYER PLANS.—For purposes of subsection 
(a)(1)(A)— 
‘‘(1) IN GENERAL.—In the case of a de-
fined benefit plan to which subsection 
(a)(1)(A) applies (other than a multiem-
ployer plan), the amount determined 
under this subsection for any taxable 
year shall be equal to the amount deter-
mined under paragraph (2) with respect 
to each plan year ending with or within 
the taxable year. 
‘‘(2) DETERMINATION OF AMOUNT.—The 
amount determined under this paragraph 
for any plan year shall be equal to the ex-
cess (if any) of— 
‘‘(A) the greater of— 
‘‘(i) the sum of— 
‘‘(I) 150 percent of the 
funding target applicable to 
the plan for such plan year, 
determined under section 430, 
plus 
‘‘(II) 
the 
target 
normal 
cost applicable to the plan for
421 
such plan year, determined 
under section 430(b), or 
‘‘(ii) in the case of a plan that 
is not in an at-risk status (as de-
termined under 430(i)), the sum 
of— 
‘‘(I) 
the 
funding 
target 
which would be applicable to 
the plan for such plan year if 
such plan were in an at-risk 
status, determined under sec-
tion 430(d) (with regard to 
section 430(i)), plus 
‘‘(II) 
the 
target 
normal 
cost which would be applica-
ble to the plan for such plan 
year if such plan were in an 
at-risk 
status, 
determined 
under section 430(d) (with re-
gard to section 430(i)), over 
‘‘(B) the value of the plan assets 
(determined under section 430(g)). 
‘‘(3) SPECIAL
RULE
FOR
TERMINATING 
PLANS.—In the case of a plan which, sub-
ject to section 4041 of the Employee Re-
422 
tirement Income Security Act of 1974, ter-
minates during the plan year, the amount 
determined under paragraph (2) shall not 
be less than the amount required to make 
the plan sufficient for benefit liabilities 
(within the meaning of section 4041(d) of 
such Act). 
‘‘(4) DEFINITIONS.—Any term used in 
this subsection which is also used in sec-
tion 430 shall have the same meaning 
given such term by section 430.’’. 
(b) INCREASE IN DEDUCTION LIMIT FOR MUL-
TIEMPLOYER
PLANS.—Section 404(a)(1)(D) of 
such Code is amended to read as follows: 
‘‘(D) MINIMUM DEDUCTION FOR MUL-
TIEMPLOYER PLANS.—In the case of a 
defined benefit plan which is a multi-
employer plan, except as provided in 
regulations, the maximum amount de-
ductible under the limitations of this 
paragraph shall not be less than the 
excess (if any) of— 
‘‘(i) 140 percent of the current 
liability of the plan determined 
under section 431(c)(6)(D), over
423 
‘‘(ii) the value of the plan’s as-
sets determined under section 
431(c)(2).’’. 
(c) TECHNICAL
AND CONFORMING AMEND-
MENTS.— 
(1) 
The 
last 
sentence 
of 
section 
404(a)(1)(A) of such Code is amended by 
striking ‘‘section 412’’ each place it ap-
pears and inserting ‘‘section 431’’. 
(2) Section 404(a)(1)(B) of such Code 
is amended— 
(A) by striking ‘‘In the case of a 
plan’’ and inserting ‘‘In the case of a 
multiemployer plan’’, 
(B) by striking ‘‘section 412(c)(7)’’ 
each place it appears and inserting 
‘‘section 431(c)(6)’’, 
(C) 
by 
striking 
‘‘section 
412(c)(7)(B)’’ and inserting ‘‘section 
431(c)(6)(D)’’, 
(D) 
by 
striking 
‘‘section 
412(c)(7)(A)’’ and inserting ‘‘section 
431(c)(6)(A)’’, and 
(E) by striking ‘‘section 412’’ and 
inserting ‘‘section 431’’.
424 
(3) Section 404(a)(1) of such Code is 
amended by striking subparagraph (F). 
(4) Section 404(a)(7) of such Code is 
amended— 
(A) in subparagraph (A)(ii), by 
striking ‘‘for the plan year’’ and all 
that follows and inserting ‘‘which are 
multiemployer plans for the plan year 
which ends with or within such tax-
able year (or for any prior plan year) 
and the maximum amount of em-
ployer contributions allowable under 
subsection (o) with respect to any 
such defined benefit plans which are 
not multiemployer plans for the plan 
year.’’, 
(B) by striking ‘‘section 412(l)’’ in 
the last sentence of subparagraph (A) 
and inserting ‘‘paragraph (1)(D)(ii)’’, 
and 
(C) by striking subparagraph (D) 
and inserting: 
‘‘(D) INSURANCE CONTRACT PLANS.— 
For purposes of this paragraph, a 
plan described in section 412(e)(3)
425 
shall be treated as a defined benefit 
plan.’’. 
(5) Section 404A(g)(3)(A) of such Code 
is amended by striking ‘‘paragraphs (3) 
and (7) of section 412(c)’’ and inserting 
‘‘sections 430(h)(1) and 431(c)(3) and (6)’’. 
(d) EFFECTIVE
DATE.—The amendments 
made by this section shall apply to contribu-
tions for taxable years beginning after Decem-
ber 31, 2006. 
SEC. 802. UPDATING DEDUCTION RULES FOR COMBINA-
TION OF PLANS. 
(a) IN GENERAL.—Subparagraph (C) of sec-
tion 404(a)(7) of the Internal Revenue Code of 
1986 (relating to limitation on deductions 
where combination of defined contribution 
plan and defined benefit plan) is amended by 
adding after clause (ii) the following new 
clause: 
‘‘(iii) LIMITATION.—In the case 
of employer contributions to 1 or 
more defined contribution plans, 
this paragraph shall only apply to 
the extent that such contributions 
exceed 6 percent of the compensa-
426 
tion otherwise paid or accrued 
during the taxable year to the 
beneficiaries under such plans. 
For 
purposes 
of 
this 
clause, 
amounts carried over from pre-
ceding taxable years under sub-
paragraph (B) shall be treated as 
employer contributions to 1 or 
more defined contributions to the 
extent attributable to employer 
contributions to such plans in 
such preceding taxable years.’’. 
(b) CONFORMING AMENDMENTS.—Subpara-
graph (A) of section 4972(c)(6) of such Code 
(relating to nondeductible contributions) is 
amended to read as follows: 
‘‘(A) so much of the contributions 
to 1 or more defined contribution 
plans which are not deductible when 
contributed solely because of section 
404(a)(7) as does not exceed the 
amount of contributions described in 
section 401(m)(4)(A), or’’. 
(c) EFFECTIVE
DATE.—The amendments 
made by this section shall apply to contribu-
427 
tions for taxable years beginning after Decem-
ber 31, 2006. 
TITLE IX—ENHANCED RETIRE-
MENTS 
SAVINGS 
AND 
DE-
FINED CONTRIBUTION PLANS 
SEC. 901. PENSIONS AND INDIVIDUAL RETIREMENT AR-
RANGEMENT 
PROVISIONS 
OF 
ECONOMIC 
GROWTH AND TAX RELIEF RECONCILIATION 
ACT OF 2001 MADE PERMANENT. 
Title IX of the Economic Growth and Tax 
Relief Reconciliation Act of 2001 shall not 
apply to the provisions of, and amendments 
made by, subtitles (A) through (F) of title VI 
of such Act (relating to pension and indi-
vidual retirement arrangement provisions). 
SEC. 902. SAVER’S CREDIT. 
(a) PERMANENCY.—Section 25B of the In-
ternal Revenue Code of 1986 (relating to elec-
tive deferrals and IRA contributions by cer-
tain individuals) is amended by striking sub-
section (h). 
(b) VOLUNTARY DEPOSIT INTO QUALIFIED 
ACCOUNT.— 
(1) Section 25B of such Code, as 
amended by subsection (a), is further
428 
amended by adding at the end the fol-
lowing new subsection: 
‘‘(h) VOLUNTARY DEPOSIT INTO QUALIFIED 
ACCOUNT.— 
‘‘(1) IN
GENERAL.—So much of any 
overpayment under section 6401(b) as 
does not exceed the amount allowed as a 
tax credit under subsection (a) shall, at 
the election of the taxpayer, be paid on 
behalf of the individual taxpayer to an 
applicable retirement plan designated by 
the individual, except that in the case of 
a joint return, each spouse shall be enti-
tled to designate an applicable retire-
ment plan with respect to payments at-
tributable to such spouse. 
‘‘(2) APPLICABLE
RETIREMENT
PLAN.— 
For purposes of this subsection, the term 
‘applicable retirement plan’ means any el-
igible retirement plan (as defined in sec-
tion 402(c)(8)(B)) that elects to accept de-
posits under this subsection.’’. 
(2) EFFECTIVE DATE.—The amendment 
made by paragraph (1) shall apply to tax-
429 
able years beginning after December 31, 
2006. 
SEC. 903. INCREASING PARTICIPATION THROUGH AUTO-
MATIC CONTRIBUTION ARRANGEMENTS. 
(a) IN GENERAL.—Section 401(k) of the In-
ternal Revenue Code of 1986 (relating to cash 
or deferred arrangement) is amended by add-
ing at the end the following new paragraph: 
‘‘(13) ALTERNATIVE METHOD FOR AUTO-
MATIC
CONTRIBUTION
ARRANGEMENTS
TO 
MEET NONDISCRIMINATION REQUIREMENTS.— 
‘‘(A) 
IN
GENERAL.—A 
qualified 
automatic contribution arrangement 
shall be treated as meeting the re-
quirements of paragraph (3)(A)(ii). 
‘‘(B) QUALIFIED
AUTOMATIC
CON-
TRIBUTION
ARRANGEMENT.—For 
pur-
poses of this paragraph, the term 
‘qualified automatic contribution ar-
rangement’ means any cash or de-
ferred arrangement which meets the 
requirements of subparagraphs (C) 
through (F). 
‘‘(C) AUTOMATIC DEFERRAL.—