‘‘(B) the funding standard carryover bal-
ance of the plan maintained under subsection 
(h)(2). 
‘‘(2) TIMING OF DETERMINATIONS.—Except as 
otherwise provided under this subsection, all deter-
minations under this section for a plan year shall be 
made as of the valuation date of the plan for such 
plan year. 
‘‘(3) VALUATION DATE.—For purposes of this 
section—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the valuation date of a plan 
for any plan year shall be the first day of the 
plan year. 
‘‘(B) EXCEPTION FOR SMALL PLANS.—If, 
on each day during the preceding plan year, a 
plan had 500 or fewer participants, the plan 
may designate any day during the plan year as 
its valuation date for such plan year. For pur-
poses of this subparagraph, all defined benefit 
plans (other than multiemployer plans) main-
tained by the same employer (or any member of 
such employer’s controlled group) shall be treat-
ed as 1 plan, but only employees of such em-
ployer or member shall be taken into account.
‘‘(C) APPLICATION OF CERTAIN RULES IN 
DETERMINATION OF PLAN SIZE.—For purposes 
of this paragraph—
‘‘(i) PLANS
NOT
IN
EXISTENCE
IN 
PRECEDING YEAR.—In the case of the first 
plan year of any plan, subparagraph (B) 
shall apply to such plan by taking into ac-
count the number of participants that the 
plan is reasonably expected to have on 
days during such first plan year. 
‘‘(ii) PREDECESSORS.—Any reference 
in subparagraph (B) to an employer shall 
include a reference to any predecessor of 
such employer. 
‘‘(4) AUTHORIZATION OF USE OF ACTUARIAL 
VALUE.—For purposes of this section, the value of 
plan assets (determined without regard to paragraph 
(1)) shall be determined on the basis of any reason-
able actuarial method of valuation which takes into 
account fair market value and which is permitted 
under regulations prescribed by the Secretary of the 
Treasury, except that—
‘‘(A) any such method providing for aver-
aging of fair market values may not provide for 
averaging of such values over more than the
current plan year and the 2 preceding plan 
years, and 
‘‘(B) any such method may not result in a 
determination of the value of plan assets which, 
at any time, is lower than 90 percent or greater 
than 110 percent of the fair market value of 
such assets at such time. 
‘‘(5) ACCOUNTING
FOR
CONTRIBUTION
RE-
CEIPTS.—For purposes of this section—
‘‘(A) CONTRIBUTIONS
FOR
PRIOR
PLAN 
YEARS TAKEN INTO ACCOUNT.—For purposes 
of determining the value of plan assets for any 
current plan year, in any case in which a con-
tribution properly allocable to amounts owed for 
a preceding plan year is made on or after the 
valuation date of the plan for such current plan 
year, such contribution shall be taken into ac-
count, except that any such contribution made 
during any such current plan year beginning 
after 2006 shall be taken into account only in 
an amount equal to its present value (deter-
mined using the effective rate of interest for the 
plan for the preceding plan year) as of the valu-
ation date of the plan for such current plan 
year.
‘‘(B) CONTRIBUTIONS FOR CURRENT PLAN 
YEAR DISREGARDED.—For purposes of deter-
mining the value of plan assets for any current 
plan year, contributions which are properly allo-
cable to amounts owed for such plan year shall 
not be taken into account, and, in the case of 
any such contribution made before the valuation 
date of the plan for such plan year, such value 
of plan assets shall be reduced for interest on 
such amount determined using the effective rate 
of interest of the plan for the preceding plan 
year for the period beginning when such pay-
ment was made and ending on the valuation 
date of the plan. 
‘‘(6) ACCOUNTING
FOR
PLAN
LIABILITIES.—
For purposes of this section—
‘‘(A) LIABILITIES TAKEN INTO ACCOUNT 
FOR CURRENT PLAN YEAR.—In determining the 
value of liabilities under a plan for a plan year, 
liabilities shall be taken into account to the ex-
tent attributable to benefits (including any early 
retirement or similar benefit) accrued as of the 
beginning of the plan year. 
‘‘(B) ACCRUALS DURING CURRENT PLAN 
YEAR
DISREGARDED.—For purposes of sub-
paragraph (A), benefits accrued during such 
plan year (after those taken into account under 
subparagraph (A)) shall not be taken into ac-
count, irrespective of whether the valuation date 
of the plan for such plan year is later than the 
first day of such plan year. 
‘‘(f) ACTUARIAL ASSUMPTIONS AND METHODS.—
‘‘(1) IN GENERAL.—Subject to this subsection, 
the determination of any present value or other com-
putation under this section shall be made on the 
basis of actuarial assumptions and methods—
‘‘(A) each of which is reasonable (taking 
into account the experience of the plan and rea-
sonable expectations), and 
‘‘(B) which, in combination, offer the actu-
ary’s best estimate of anticipated experience 
under the plan. 
‘‘(2) INTEREST RATES.—
‘‘(A) EFFECTIVE
INTEREST
RATE.—For 
purposes of this section, the term ‘effective in-
terest rate’ means, with respect to any plan for 
any plan year, the single rate of interest which, 
if used to determine the present value of the 
plan’s liabilities referred to in subsection (d)(1)
would result in an amount equal to the funding 
target of the plan for such plan year. 
‘‘(B) APPLICATION
TO
FUNDING
TAR-
GET.—For purposes of determining the funding 
target of a plan for any plan year, the interest 
rate used in determining the present value of 
the liabilities of the plan shall be—
‘‘(i) in the case of liabilities reason-
ably determined to be payable during the 
5-year period beginning on the first day of 
the plan year, the first segment rate with 
respect to the applicable month, 
‘‘(ii) in the case of liabilities reason-
ably determined to be payable during the 
15-year period beginning at the end of the 
period described in clause (i), the second 
segment rate with respect to the applicable 
month, and 
‘‘(iii) in the case of liabilities reason-
ably determined to be payable after the pe-
riod described in clause (ii), the third seg-
ment rate with respect to the applicable 
month. 
‘‘(C) SEGMENT RATES.—For purposes of 
this paragraph—
‘‘(i) FIRST
SEGMENT
RATE.—The 
term ‘first segment rate’ means, with re-
spect to any month, the single rate of in-
terest which shall be determined by the 
Secretary of the Treasury for such month 
on the basis of the corporate bond yield 
curve for such month, taking into account 
only that portion of such yield curve which 
is based on bonds maturing during the 5-
year period commencing with such month. 
‘‘(ii) SECOND
SEGMENT
RATE.—The 
term ‘second segment rate’ means, with re-
spect to any month, the single rate of in-
terest which shall be determined by the 
Secretary of the Treasury for such month 
on the basis of the corporate bond yield 
curve for such month, taking into account 
only that portion of such yield curve which 
is based on bonds maturing during the 15-
year period beginning at the end of the pe-
riod described in clause (i). 
‘‘(iii) THIRD
SEGMENT
RATE.—The 
term ‘third segment rate’ means, with re-
spect to any month, the single rate of in-
terest which shall be determined by the
Secretary of the Treasury for such month 
on the basis of the corporate bond yield 
curve for such month, taking into account 
only that portion of such yield curve which 
is based on bonds maturing during periods 
beginning after the period described in 
clause (ii). 
‘‘(D) CORPORATE BOND YIELD CURVE.—
For purposes of this paragraph—
‘‘(i) IN
GENERAL.—The term ‘cor-
porate bond yield curve’ means, with re-
spect to any month, a yield curve which is 
prescribed by the Secretary of the Treas-
ury for such month and which reflects a 3-
year weighted average of yields on invest-
ment grade corporate bonds with varying 
maturities. 
‘‘(ii) 3-YEAR WEIGHTED AVERAGE.—
The term ‘3-year weighted average’ means 
an averaging methodology under which the 
most recent year is weighted 50 percent, 
the year preceding such year is weighted 
35 percent, and the second year preceding 
such year is weighted 15 percent.
‘‘(E) APPLICABLE MONTH.—For purposes 
of this paragraph, the term ‘applicable month’ 
means, with respect to any plan for any plan 
year, the month which includes the valuation 
date of such plan for such plan year or, at the 
election of the plan administrator, any of the 4 
months which precede such month. Any election 
made under this subparagraph shall apply to 
the plan year for which made and all succeeding 
plan years unless revoked with the consent of 
the Secretary of the Treasury. 
‘‘(F) PUBLICATION REQUIREMENTS.—The 
Secretary of the Treasury shall publish for each 
month the corporate bond yield curve (and the 
corporate bond yield curve reflecting the modi-
fication 
described 
in 
section 
205(g)(3)(B)(iii)(I)) for such month and each 
of the rates determined under subparagraph 
(B) for such month. The Secretary of the 
Treasury shall also publish a description of the 
methodology used to determine such yield curve 
and such rates which is sufficiently detailed to 
enable plans to make reasonable projections re-
garding the yield curve and such rates for fu-
ture months based on the plan’s projection of 
future interest rates. 
‘‘(G) TRANSITION RULE.—
‘‘(i) IN
GENERAL.—Notwithstanding 
the preceding provisions of this paragraph, 
for plan years beginning in 2006 or 2007, 
the first, second, and third segment rates 
for a plan with respect to any month shall 
be equal to the sum of—
‘‘(I) the product of such rate for 
such month determined without re-
gard to this subparagraph, multiplied 
by the applicable percentage, and 
‘‘(II) the product of the rate de-
termined under the rules of section 
302(b)(5)(B)(ii)(II) (as in effect for 
plan years beginning in 2005), multi-
plied by a percentage equal to 100 
percent minus the applicable percent-
age. 
‘‘(ii) APPLICABLE PERCENTAGE.—For 
purposes of clause (i), the applicable per-
centage is 331⁄3 percent for plan years be-
ginning in 2006 and 662⁄3 percent for plan 
years beginning in 2007.
‘‘(3) MORTALITY TABLE.—
‘‘(A) IN GENERAL.—The mortality tables 
used in determining any present value or mak-
ing any computation under this section shall be 
the RP–2000 Combined Mortality Table, as 
published by the Society of American Actuaries, 
as in effect on the date of the enactment of the 
Pension Protection Act of 2005 and as revised 
from time to time under subparagraph (B). 
‘‘(B) PERIODIC REVISION.—The Secretary 
of the Treasury shall (at least every 10 years) 
make revisions in any tables in effect under this 
paragraph to reflect the actual experience of 
pension plans and projected trends in such ex-
perience. 
‘‘(C) TRANSITION
RULE.—Under regula-
tions of the Secretary of the Treasury, any dif-
ference in assumptions as set forth in the mor-
tality table specified in subparagraph (A) and 
assumptions as set forth in the mortality table 
described in section 302(d)(7)(C)(ii) (as in ef-
fect for plan years beginning in 2005) shall be 
phased in ratably over the first period of 5 plan 
years beginning in or after 2006 so as to be 
fully effective for the fifth plan year.
‘‘(4) PROBABILITY OF BENEFIT PAYMENTS IN 
THE FORM OF LUMP SUMS OR OTHER OPTIONAL 
FORMS.—For purposes of determining any present 
value or making any computation under this section, 
there shall be taken into account—
‘‘(A) the probability that future benefit 
payments under the plan will be made in the 
form of optional forms of benefits provided 
under the plan (including lump sum distribu-
tions, determined on the basis of the plan’s ex-
perience and other related assumptions), and 
‘‘(B) any difference in the present value of 
such future benefit payments resulting from the 
use of actuarial assumptions, in determining 
benefit payments in any such optional form of 
benefits, which are different from those speci-
fied in this subsection. 
‘‘(5) APPROVAL OF LARGE CHANGES IN ACTU-
ARIAL ASSUMPTIONS.—
‘‘(A) IN GENERAL.—No actuarial assump-
tion used to determine the funding target for a 
single-employer plan to which this paragraph 
applies may be changed without the approval of 
the Secretary of the Treasury.
‘‘(B) PLANS
TO
WHICH
PARAGRAPH
AP-
PLIES.—This paragraph shall apply to a plan 
only if—
‘‘(i) the aggregate unfunded vested 
benefits as of the close of the preceding 
plan year (as determined under section 
4006(a)(3)(E)(iii)) of such plan and all 
other plans maintained by the contributing 
sponsors 
(as 
defined 
in 
section 
4001(a)(13)) and members of such spon-
sors’ controlled groups (as defined in sec-
tion 4001(a)(14)) which are covered by 
title IV (disregarding plans with no un-
funded 
vested 
benefits) 
exceed 
$50,000,000; and 
‘‘(ii) the change in assumptions (de-
termined after taking into account any 
changes in interest rate and mortality 
table) results in a decrease in the funding 
shortfall of the plan for the current plan 
year that exceeds $50,000,000, or that ex-
ceeds $5,000,000 and that is 5 percent or 
more of the funding target of the plan be-
fore such change. 
‘‘(g) SPECIAL RULES FOR AT-RISK PLANS.—
‘‘(1) FUNDING TARGET FOR PLANS IN AT-RISK 
STATUS.—
‘‘(A) IN GENERAL.—In any case in which 
a plan is in at-risk status for a plan year, the 
funding target of the plan for the plan year is 
the sum of—
‘‘(i) the present value of all liabilities 
to participants and their beneficiaries 
under the plan for the plan year, as deter-
mined by using, in addition to the actu-
arial assumptions described in subsection 
(f), the supplemental actuarial assumptions 
described in subparagraph (B), plus 
‘‘(ii) a loading factor determined 
under subparagraph (C). 
‘‘(B) SUPPLEMENTAL ACTUARIAL ASSUMP-
TIONS.—The actuarial assumptions used in de-
termining the valuation of the funding target 
shall include, in addition to the actuarial as-
sumptions described in subsection (f), an as-
sumption that all participants will elect benefits 
at such times and in such forms as will result 
in the highest present value of liabilities under 
subparagraph (A)(i).
‘‘(C) LOADING FACTOR.—The loading fac-
tor applied with respect to a plan under this 
paragraph for any plan year is the sum of—
‘‘(i) $700, times the number of par-
ticipants in the plan, plus 
‘‘(ii) 4 percent of the funding target 
(determined without regard to this para-
graph) of the plan for the plan year. 
‘‘(2) TARGET
NORMAL
COST
OF
AT-RISK 
PLANS.—
‘‘(A) IN GENERAL.—In any case in which 
a plan is in at-risk status for a plan year, the 
target normal cost of the plan for such plan 
year shall be the sum of—
‘‘(i) the present value of all benefits 
which are expected to accrue under the 
plan during the plan year, determined 
under the actuarial assumptions used 
under paragraph (1), plus 
‘‘(ii) the loading factor under para-
graph (1)(C), excluding the portion of the 
loading factor described in paragraph 
(1)(C)(i). 
‘‘(B) MINIMUM
AMOUNT.—In no event 
shall the target normal cost of a plan deter-
mined under this paragraph be less than the 
target normal cost of such plan as determined 
without regard to this paragraph. 
‘‘(3) DETERMINATION OF AT-RISK STATUS.—
For purposes of this subsection, a plan is in ‘at-risk 
status’ for a plan year if the funding target attain-
ment percentage of the plan for the preceding plan 
year was less than 60 percent. 
‘‘(4) TRANSITION BETWEEN APPLICABLE FUND-
ING TARGETS AND BETWEEN APPLICABLE TARGET 
NORMAL COST.—
‘‘(A) IN GENERAL.—In any case in which 
a plan which is in at-risk status for a plan year 
has been in such status for a consecutive period 
of fewer than 5 plan years, the applicable 
amount of the funding target and of the target 
normal cost shall be, in lieu of the amount de-
termined without regard to this paragraph, the 
sum of—
‘‘(i) the amount determined under this 
section without regard to this subsection, 
plus 
‘‘(ii) the transition percentage for 
such plan year of the excess of the amount 
determined under this subsection (without
regard to this paragraph) over the amount 
determined under this section without re-
gard to this subsection. 
‘‘(B) 
TRANSITION
PERCENTAGE.—For 
purposes of this paragraph, the ‘transition per-
centage’ for a plan year is the product derived 
by multiplying—
‘‘(i) 20 percent, by 
‘‘(ii) the number of plan years during 
the period described in subparagraph (A). 
‘‘(h) PRE-FUNDING AND FUNDING STANDARD CAR-
RYOVER BALANCES.—
‘‘(1) PRE-FUNDING BALANCE.—
‘‘(A) IN GENERAL.—The plan sponsor of a 
pension plan which is a single-employer plan 
shall maintain a pre-funding balance for pur-
poses of this subsection. Such balance shall con-
sist of a beginning balance of zero, increased 
and decreased to the extent provided in sub-
paragraphs (B) and (C), and adjusted further 
as provided in paragraph (3). 
‘‘(B) INCREASES.—As of the valuation 
date for each plan year beginning after 2006, 
the pre-funding balance of a plan shall be in-
creased by the amount elected by the plan spon-
sor for the plan year. Such amount shall not ex-
ceed the excess (if any) of—
‘‘(i) the aggregate total of employer 
contributions to the plan for the preceding 
plan year, over 
‘‘(ii) the minimum required contribu-
tion for such preceding plan year (in-
creased by interest on any portion of such 
minimum required contribution remaining 
unpaid, at the effective interest rate for 
the plan for the preceding plan year, for 
the period beginning with the first day of 
such preceding plan year and ending on 
the date that payment of such portion is 
made). 
‘‘(C) DECREASES.—As of the valuation 
date for each plan year after 2006, the pre-
funding balance of a plan shall be decreased 
(but not below zero) by the sum of—
‘‘(i) the amount credited under sub-
section (a)(4) (if any) in reducing the min-
imum required contribution of the plan for 
the preceding plan year, and 
‘‘(ii) the amount elected by the plan 
sponsor as a reduction in the pre-funding
balance (for purposes of the determination 
under subsection (e)(1) and any other pur-
pose under this section). 
‘‘(D) 
COORDINATION
WITH
FUNDING 
STANDARD CARRYOVER BALANCE.—To the ex-
tent that any plan has a funding standard car-
ryover balance greater than zero—
‘‘(i) no amount of the pre-funding bal-
ance of such plan may be credited under 
subsection (a)(4) in reducing the minimum 
required contribution, and 
‘‘(ii) no election may be made under 
subparagraph (C)(ii). 
‘‘(E) NO
USE
OF
BALANCE
TO
REDUCE 
MINIMUM
REQUIRED
CONTRIBUTION
IF
USED 
TO
AVOID
SHORTFALL
AMORTIZATION.—The 
amount of the pre-funding balance of such plan 
may be credited under subsection (a)(4) in re-
ducing the minimum required contribution only 
if the plan sponsor has elected to apply sub-
section (a)(2) to the plan for such plan year by 
substituting ‘subsection (e)(1)(B)’ for ‘sub-
section (e)(1)’. 
‘‘(2) FUNDING
STANDARD
CARRYOVER
BAL-
ANCE.—