184 
amendment which provides for an increase in bene-
fits under a formula which is not based on a partici-
pant’s compensation, but only if the rate of such in-
crease is not in excess of the contemporaneous rate 
of increase in average wages of participants covered 
by the amendment. 
‘‘(d) LIMITATIONS ON ACCELERATED BENEFIT DIS-
TRIBUTIONS.— 
‘‘(1) FUNDING
PERCENTAGE
LESS
THAN
PERCENT.—A defined benefit plan which is a single- 
employer plan shall provide that, in any case in 
which the plan’s adjusted funding target attainment 
percentage for a plan year is less than 60 percent, 
the plan may not pay any prohibited payment after 
the valuation date for the plan year. 
‘‘(2) BANKRUPTCY.—A defined benefit plan 
which is a single-employer plan shall provide that, 
during any period in which the plan sponsor is a 
debtor in a case under title 11, United States Code, 
or similar Federal or State law, the plan may not 
pay any prohibited payment. The preceding sentence 
shall not apply on or after the date on which the en-
rolled actuary of the plan certifies that the adjusted 
funding target attainment percentage of such plan is 
not less than 100 percent. 
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ccoleman on PROD1PC71 with BILLS
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‘‘(3) LIMITED
PAYMENT
IF
PERCENTAGE
AT 
LEAST 60 PERCENT BUT LESS THAN 80 PERCENT.— 
‘‘(A) IN GENERAL.—A defined benefit plan 
which is a single-employer plan shall provide 
that, in any case in which the plan’s adjusted 
funding target attainment percentage for a plan 
year is 60 percent or greater but less than 80 
percent, the plan may not pay any prohibited 
payment after the valuation date for the plan 
year to the extent the amount of the payment 
exceeds the lesser of— 
‘‘(i) 50 percent of the amount of the 
payment which could be made without re-
gard to this section, or 
‘‘(ii) the present value (determined 
under guidance prescribed by the Pension 
Benefit Guaranty Corporation, using the 
interest and mortality assumptions under 
section 417(e)) of the maximum guarantee 
with respect to the participant under sec-
tion 4022 of the Employee Retirement In-
come Security Act of 1974. 
‘‘(B) ONE-TIME APPLICATION.— 
‘‘(i) IN
GENERAL.—The plan shall 
also provide that only 1 prohibited pay-
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ccoleman on PROD1PC71 with BILLS
186 
ment meeting the requirements of subpara-
graph (A) may be made with respect to 
any participant during any period of con-
secutive plan years to which the limitations 
under either paragraph (1) or (2) or this 
paragraph applies. 
‘‘(ii) 
TREATMENT
OF
BENE-
FICIARIES.—For purposes of this subpara-
graph, a participant and any beneficiary 
on his behalf (including an alternate payee, 
as defined in section 414(p)(8)) shall be 
treated as 1 participant. If the accrued 
benefit of a participant is allocated to such 
an alternate payee and 1 or more other 
persons, the amount under subparagraph 
(A) shall be allocated among such persons 
in the same manner as the accrued benefit 
is allocated unless the qualified domestic 
relations order (as defined in section 
414(p)(1)(A)) provides otherwise. 
‘‘(4) EXCEPTION.—This subsection shall not 
apply to any plan for any plan year if the terms of 
such plan (as in effect for the period beginning on 
September 1, 2005, and ending with such plan year) 
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ccoleman on PROD1PC71 with BILLS
187 
provide for no benefit accruals with respect to any 
participant during such period. 
‘‘(5) PROHIBITED PAYMENT.—For purpose of 
this subsection, the term ‘prohibited payment’ 
means— 
‘‘(A) any payment, in excess of the month-
ly amount paid under a single life annuity (plus 
any social security supplements described in the 
last sentence of section 411(a)(9)), to a partici-
pant or beneficiary whose annuity starting date 
(as defined in section 417(f)(2)) occurs during 
any period a limitation under paragraph (1) or 
(2) is in effect, 
‘‘(B) any payment for the purchase of an 
irrevocable commitment from an insurer to pay 
benefits, and 
‘‘(C) any other payment specified by the 
Secretary by regulations. 
‘‘(e) LIMITATION ON BENEFIT ACCRUALS FOR PLANS 
WITH SEVERE FUNDING SHORTFALLS.— 
‘‘(1) IN
GENERAL.—A defined benefit plan 
which is a single-employer plan shall provide that, in 
any case in which the plan’s adjusted funding target 
attainment percentage for a plan year is less than 
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ccoleman on PROD1PC71 with BILLS
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60 percent, benefit accruals under the plan shall 
cease as of the valuation date for the plan year. 
‘‘(2) EXEMPTION.—Paragraph (1) shall cease 
to apply with respect to any plan year, effective as 
of the first day of the plan year, upon payment by 
the plan sponsor of a contribution (in addition to 
any minimum required contribution under section 
430) equal to the amount sufficient to result in an 
adjusted funding target attainment percentage of 60 
percent. 
‘‘(f) RULES RELATING
TO CONTRIBUTIONS RE-
QUIRED TO AVOID BENEFIT LIMITATIONS.— 
‘‘(1) SECURITY MAY BE PROVIDED.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the adjusted funding target attainment 
percentage shall be determined by treating as 
an asset of the plan any security provided by a 
plan sponsor in a form meeting the require-
ments of subparagraph (B). 
‘‘(B) FORM OF SECURITY.—The security 
required under subparagraph (A) shall consist 
of— 
‘‘(i) a bond issued by a corporate sur-
ety company that is an acceptable surety 
for purposes of section 412 of the Em-
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ccoleman on PROD1PC71 with BILLS
189 
ployee Retirement Income Security Act of 
1974, 
‘‘(ii) cash, or United States obliga-
tions which mature in 3 years or less, held 
in escrow by a bank or similar financial in-
stitution, or 
‘‘(iii) such other form of security as is 
satisfactory to the Secretary and the par-
ties involved. 
‘‘(C) ENFORCEMENT.—Any security pro-
vided under subparagraph (A) may be perfected 
and enforced at any time after the earlier of— 
‘‘(i) the date on which the plan termi-
nates, 
‘‘(ii) if there is a failure to make a 
payment of the minimum required con-
tribution for any plan year beginning after 
the security is provided, the due date for 
the payment under section 430(j), or 
‘‘(iii) if the adjusted funding target 
attainment percentage is less than 60 per-
cent for a consecutive period of 7 years, 
the valuation date for the last year in the 
period. 
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ccoleman on PROD1PC71 with BILLS
190 
‘‘(D) RELEASE OF SECURITY.—The secu-
rity shall be released (and any amounts there-
under shall be refunded together with any inter-
est accrued thereon) at such time as the Sec-
retary may prescribe in regulations, including 
regulations for partial releases of the security 
by reason of increases in the funding target at-
tainment percentage. 
‘‘(2) PREFUNDING
BALANCE
OR
FUNDING 
STANDARD
CARRYOVER
BALANCE
MAY
NOT
BE 
USED.—No prefunding balance under section 430(f) 
or funding standard carryover balance may be used 
under subsection (b), (c), or (e) to satisfy any pay-
ment an employer may make under any such sub-
section to avoid or terminate the application of any 
limitation under such subsection. 
‘‘(3) DEEMED REDUCTION OF FUNDING BAL-
ANCES.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), in any case in which a benefit limita-
tion under subsection (b), (c), (d), or (e) would 
(but for this subparagraph and determined 
without regard to subsection (b)(2), (c)(2), or 
(e)(2)) apply to such plan for the plan year, the 
plan sponsor of such plan shall be treated for 
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ccoleman on PROD1PC71 with BILLS
191 
purposes of this title as having made an elec-
tion under section 430(f) to reduce the 
prefunding balance or funding standard carry-
over balance by such amount as is necessary for 
such benefit limitation to not apply to the plan 
for such plan year. 
‘‘(B) 
EXCEPTION
FOR
INSUFFICIENT 
FUNDING BALANCES.—Subparagraph (A) shall 
not apply with respect to a benefit limitation 
for any plan year if the application of subpara-
graph (A) would not result in the benefit limita-
tion not applying for such plan year. 
‘‘(C) RESTRICTIONS
OF
CERTAIN
RULES 
TO
COLLECTIVELY
BARGAINED
PLANS.—With 
respect to any benefit limitation under sub-
section (b), (c), or (e), subparagraph (A) shall 
only apply in the case of a plan maintained pur-
suant to 1 or more collective bargaining agree-
ments between employee representatives and 1 
or more employers. 
‘‘(g) NEW PLANS.—Subsections (b), (c), and (e) shall 
not apply to a plan for the first 5 plan years of the plan. 
For purposes of this subsection, the reference in this sub-
section to a plan shall include a reference to any prede-
cessor plan. 
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ccoleman on PROD1PC71 with BILLS
192 
‘‘(h) PRESUMED UNDERFUNDING FOR PURPOSES OF 
BENEFIT LIMITATIONS.— 
‘‘(1) PRESUMPTION
OF
CONTINUED
UNDER-
FUNDING.—In any case in which a benefit limitation 
under subsection (b), (c), (d), or (e) has been ap-
plied to a plan with respect to the plan year pre-
ceding the current plan year, the adjusted funding 
target attainment percentage of the plan for the cur-
rent plan year shall be presumed to be equal to the 
adjusted funding target attainment percentage 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 for the current plan year. 
‘‘(2) PRESUMPTION OF UNDERFUNDING AFTER 
10TH MONTH.—In any case in which no certification 
of the adjusted funding target attainment percent-
age for the current plan year is made with respect 
to the plan before the first day of the 10th month 
of such year, for purposes of subsections (b), (c), 
(d), and (e), such first day shall be deemed, for pur-
poses of such subsection, to be the valuation date of 
the plan for the current plan year and the plan’s ad-
justed funding target attainment percentage shall be 
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ccoleman on PROD1PC71 with BILLS
193 
conclusively presumed to be less than 60 percent as 
of such first day. 
‘‘(3) PRESUMPTION OF UNDERFUNDING AFTER 
4TH MONTH FOR NEARLY UNDERFUNDED PLANS.— 
In any case in which— 
‘‘(A) a benefit limitation under subsection 
(b), (c), (d), or (e) did not apply to a plan with 
respect to the plan year preceding the current 
plan year, but the adjusted funding target at-
tainment percentage of the plan for such pre-
ceding plan year was not more than 10 percent-
age points greater than the percentage which 
would have caused such subsection to apply to 
the plan with respect to such preceding plan 
year, and 
‘‘(B) as of the first day of the 4th month 
of the current plan year, the enrolled actuary of 
the plan has not certified the actual adjusted 
funding target attainment percentage of the 
plan for the current plan year, 
until the enrolled actuary so certifies, such first day 
shall be deemed, for purposes of such subsection, to 
be the valuation date of the plan for the current 
plan year and the adjusted funding target attain-
ment percentage of the plan as of such first day 
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ccoleman on PROD1PC71 with BILLS
194 
shall, for purposes of such subsection, be presumed 
to be equal to 10 percentage points less than the ad-
justed funding target attainment percentage of the 
plan for such preceding plan year. 
‘‘(i) TREATMENT OF PLAN AS OF CLOSE OF PROHIB-
ITED OR CESSATION PERIOD.—For purposes of applying 
this title— 
‘‘(1) OPERATION OF PLAN AFTER PERIOD.— 
Unless the plan provides otherwise, payments and 
accruals will resume effective as of the day following 
the close of the period for which any limitation of 
payment or accrual of benefits under subsection (d) 
or (e) applies. 
‘‘(2) TREATMENT OF AFFECTED BENEFITS.— 
Nothing in this subsection shall be construed as af-
fecting the plan’s treatment of benefits which would 
have been paid or accrued but for this section. 
‘‘(j) TERMS RELATING TO FUNDING TARGET AT-
TAINMENT PERCENTAGE.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘funding target 
attainment percentage’ has the same meaning given 
such term by section 430(d)(2). 
‘‘(2) ADJUSTED FUNDING TARGET ATTAINMENT 
PERCENTAGE.—The term ‘adjusted funding target 
attainment percentage’ means the funding target at-
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ccoleman on PROD1PC71 with BILLS
195 
tainment percentage which is determined under 
paragraph (1) by increasing each of the amounts 
under subparagraphs (A) and (B) of section 
430(d)(2) by the aggregate amount of purchases of 
annuities for employees other than highly com-
pensated employees (as defined in section 414(q)) 
which were made by the plan during the preceding 
2 plan years. 
‘‘(3) APPLICATION
TO
PLANS
WHICH
ARE 
FULLY FUNDED WITHOUT REGARD TO REDUCTIONS 
FOR FUNDING BALANCES.— 
‘‘(A) IN GENERAL.—In the case of a plan 
for any plan year, if the funding target attain-
ment percentage is 100 percent or more (deter-
mined without regard to this paragraph and 
without regard to the reduction in the value of 
assets under section 430(f)(4)(A)), the funding 
target attainment percentage for purposes of 
paragraph (1) shall be determined without re-
gard to such reduction. 
‘‘(B) TRANSITION
RULE.—Subparagraph 
(A) shall be applied to plan years beginning 
after 2007 and before 2011 by substituting for 
‘100 percent’ the applicable percentage deter-
mined in accordance with the following table: 
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ccoleman on PROD1PC71 with BILLS
196 
‘‘In the case of a plan year 
The applicable 
beginning in calendar year: 
percentage is 
2008 ...................................................................................................
2009 ...................................................................................................
2010 ...................................................................................................
96. 
‘‘(C) 
LIMITATION.—Subparagraph 
(B) 
shall not apply with respect to any plan year 
after 2008 unless the funding target attainment 
percentage (determined without regard to this 
paragraph) of the plan for each preceding plan 
year after 2007 was not less than the applicable 
percentage with respect to such preceding plan 
year determined under subparagraph (B). 
‘‘(k) SPECIAL RULE FOR 2008.—For purposes of this 
section, in the case of plan years beginning in 2008, the 
funding target attainment percentage for the preceding 
plan year may be determined using such methods of esti-
mation as the Secretary may provide.’’. 
(2) CLERICAL
AMENDMENT.—The table of 
parts for subchapter D of chapter 1 of the Internal 
Revenue Code of 1986 is amended by adding at the 
end the following new item: 
‘‘PART III—RULES RELATING TO MINIMUM FUNDING STANDARDS AND 
BENEFIT LIMITATIONS’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to plan years beginning after 
December 31, 2007. 
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ccoleman on PROD1PC71 with BILLS
197 
(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, 2008, the amendments made by this 
section shall not apply to plan years beginning be-
fore the earlier of— 
(A) the later of— 
(i) the date on which the last collec-
tive bargaining agreement relating to the 
plan terminates (determined without re-
gard 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 
subsection would (but for this subpara-
graph) 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. 
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ccoleman on PROD1PC71 with BILLS
198 
SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) AMENDMENTS RELATED TO QUALIFICATION RE-
QUIREMENTS.— 
(1) Section 401(a)(29) of the Internal Revenue 
Code of 1986 is amended to read as follows: 
‘‘(29) BENEFIT LIMITATIONS ON PLANS IN AT- 
RISK STATUS.—In the case of a defined benefit plan 
(other than a multiemployer plan) to which the re-
quirements of section 412 apply, the trust of which 
the plan is a part shall not constitute a qualified 
trust under this subsection unless the plan meets the 
requirements of section 436.’’. 
(2) Section 401(a)(32) of such Code is amend-
ed— 
(A) in subparagraph (A), by striking 
‘‘412(m)(5)’’ each place it appears and insert-
ing ‘‘section 430(j)(4)’’, and 
(B) in subparagraph (C), by striking ‘‘sec-
tion 412(m)’’ and inserting ‘‘section 430(j)’’. 
(3) Section 401(a)(33) of such Code is amend-
ed— 
(A) in subparagraph (B)(i), by striking 
‘‘funded current liability percentage (within the 
meaning of section 412(l)(8))’’ and inserting 
‘‘funding target attainment percentage (as de-
fined in section 430(d)(2))’’, 
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ccoleman on PROD1PC71 with BILLS
199 
(B) in subparagraph (B)(iii), by striking 
‘‘subsection 412(c)(8)’’ and inserting ‘‘section 
412(c)(2)’’, and 
(C) in subparagraph (D), by striking ‘‘sec-
tion 412(c)(11) (without regard to subpara-
graph (B) thereof)’’ and inserting ‘‘section 
412(b)(2) (without regard to subparagraph (B) 
thereof)’’. 
(b) VESTING RULES.—Section 411 of such Code is 
amended— 
(1) by striking ‘‘section 412(c)(8)’’ in sub-
section (a)(3)(C) and inserting ‘‘section 412(c)(2)’’, 
(2) in subsection (b)(1)(F)— 
(A) by striking ‘‘paragraphs (2) and (3) of 
section 412(i)’’ in clause (ii) and inserting 
‘‘subparagraphs 
(B) 
and 
(C) 
of 
section 
412(e)(3)’’, and 
(B) by striking ‘‘paragraphs (4), (5), and 
(6) of section 412(i)’’ and inserting ‘‘subpara-
graphs (D), (E), and (F) of section 412(e)(3)’’, 
and 
(3) by striking ‘‘section 412(c)(8)’’ in sub-
section (d)(6)(A) and inserting ‘‘section 412(e)(2)’’. 
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200 
(c) MERGERS AND CONSOLIDATIONS OF PLANS.— 
Subclause (I) of section 414(l)(2)(B)(i) of such Code is 
amended to read as follows: 
‘‘(I) 
the 
amount 
determined 
under section 431(c)(6)(A)(i) in the 
case of a multiemployer plan (and the 
sum of the funding shortfall and tar-
get normal cost determined under sec-
tion 430 in the case of any other 
plan), over’’. 
(d) TRANSFER OF EXCESS PENSION ASSETS TO RE-
TIREE HEALTH ACCOUNTS.— 
(1) Section 420(e)(2) of such Code is amended 
to read as follows: 
‘‘(2) EXCESS PENSION ASSETS.—The term ‘ex-
cess pension assets’ means the excess (if any) of— 
‘‘(A) the lesser of— 
‘‘(i) the fair market value of the 
plan’s assets (reduced by the prefunding 
balance and funding standard carryover 
balance determined under section 430(f)), 
or 
‘‘(ii) the value of plan assets as deter-
mined under section 430(g)(3) after reduc-
tion under section 430(f), over 
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ccoleman on PROD1PC71 with BILLS
201 
‘‘(B) 125 percent of the sum of the fund-
ing shortfall and the target normal cost deter-
mined under section 430 for such plan year.’’. 
(2) Section 420(e)(4) of such Code is amended 
to read as follows: 
‘‘(4) COORDINATION
WITH
SECTION 430.—In 
the case of a qualified transfer, any assets so trans-
ferred shall not, for purposes of this section and sec-
tion 430, be treated as assets in the plan.’’. 
(e) EXCISE TAXES.— 
(1) IN GENERAL.—Subsections (a) and (b) of 
section 4971 of such Code are amended to read as 
follows: 
‘‘(a) INITIAL TAX.—If at any time during any taxable 
year an employer maintains a plan to which section 412 
applies, there is hereby imposed for the taxable year a tax 
equal to— 
‘‘(1) in the case of a single-employer plan, 10 
percent of the aggregate unpaid minimum required 
contributions for all plan years remaining unpaid as 
of the end of any plan year ending with or within 
the taxable year, and 
‘‘(2) in the case of a multiemployer plan, 5 per-
cent of the accumulated funding deficiency deter-
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ccoleman on PROD1PC71 with BILLS
202 
mined under section 431 as of the end of any plan 
year ending with or within the taxable year. 
‘‘(b) ADDITIONAL TAX.—If— 
‘‘(1) a tax is imposed under subsection (a)(1) 
on any unpaid required minimum contribution and 
such amount remains unpaid as of the close of the 
taxable period, or 
‘‘(2) a tax is imposed under subsection (a)(2) 
on any accumulated funding deficiency and the accu-
mulated funding deficiency is not corrected within 
the taxable period, 
there is hereby imposed a tax equal to 100 percent of the 
unpaid minimum required contribution or accumulated 
funding deficiency, whichever is applicable, to the extent 
not so paid or corrected.’’. 
(2) Section 4971(c) of such Code is amended— 
(A) by striking ‘‘the last two sentences of 
section 412(a)’’ in paragraph (1) and inserting 
‘‘section 431’’, and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) UNPAID MINIMUM REQUIRED CONTRIBU-
TION.— 
‘‘(A) IN
GENERAL.—The term ‘unpaid 
minimum required contribution’ means, with re-
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203 
spect 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. 
‘‘(B) ORDERING RULE.—Any payment to 
or under a plan for any plan year shall be allo-
cated first to unpaid minimum required con-
tributions for all preceding plan years on a 
first-in, first-out basis and then to the min-
imum required contribution under section 430 
for the plan year.’’. 
(3) Section 4971(e)(1) of such Code is amended 
by striking ‘‘section 412(b)(3)(A)’’ and inserting 
‘‘section 412(a)(1)(A)’’. 
(4) Section 4971(f)(1) of such Code is amend-
ed— 
(A) by striking ‘‘section 412(m)(5)’’ and 
inserting ‘‘section 430(j)(4)’’, and 
(B) by striking ‘‘section 412(m)’’ and in-
serting ‘‘section 430(j)’’. 
(5) Section 4972(c)(7) of such Code is amended 
by striking ‘‘except to the extent that such contribu-
tions exceed the full-funding limitation (as defined in 
section 412(c)(7), determined without regard to sub-
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ccoleman on PROD1PC71 with BILLS
204 
paragraph (A)(i)(I) thereof)’’ and inserting ‘‘except, 
in the case of a multiemployer plan, to the extent 
that such contributions exceed the full-funding limi-
tation (as defined in section 431(c)(6))’’. 
(f) REPORTING REQUIREMENTS.—Section 6059(b) of 
such Code is amended— 
(1) by striking ‘‘the accumulated funding defi-
ciency (as defined in section 412(a))’’ in paragraph 
(2) and inserting ‘‘the minimum required contribu-
tion determined under section 430, or the accumu-
lated funding deficiency determined under section 
431,’’, and 
(2) by striking paragraph (3)(B) and inserting: 
‘‘(B) the requirements for reasonable actu-
arial assumptions under section 430(h)(1) or 
431(c)(3), whichever are applicable, have been 
complied with.’’. 
SEC. 115. MODIFICATION OF TRANSITION RULE TO PEN-
SION FUNDING REQUIREMENTS. 
(a) IN GENERAL.—In the case of a plan that— 
(1) was not required to pay a variable rate pre-
mium for the plan year beginning in 1996, 
(2) has not, in any plan year beginning after 
1995, merged with another plan (other than a plan 
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ccoleman on PROD1PC71 with BILLS
205 
sponsored by an employer that was in 1996 within 
the controlled group of the plan sponsor); and 
(3) is sponsored by a company that is engaged 
primarily in the interurban or interstate passenger 
bus service, 
the rules described in subsection (b) shall apply for any 
plan year beginning after December 31, 2007. 
(b) MODIFIED RULES.—The rules described in this 
subsection are as follows: 
(1) For purposes of section 430(j)(3) of the In-
ternal Revenue Code of 1986 and section 303(j)(3) 
of the Employee Retirement Income Security Act of 
1974, the plan shall be treated as not having a fund-
ing shortfall for any plan year. 
(2) For purposes of— 
(A) determining unfunded vested benefits 
under section 4006(a)(3)(E)(iii) of such Act, 
and 
(B) determining any present value or mak-
ing any computation under section 412 of such 
Code or section 302 of such Act, 
the mortality table shall be the mortality table used 
by the plan. 
(3) Section 430(c)(5)(B) of such Code and sec-
tion 303(c)(5)(B) of such Act (relating to phase-in 
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206 
of funding target for exemption from new shortfall 
amortization base) shall each be applied by sub-
stituting ‘‘2012’’ for ‘‘2011’’ therein and by sub-
stituting for the table therein the following: 
In the case of a plan year beginning in calendar 
year: 
The appli-
cable per-
centage is: 
2008 ..............................................................................................
90 percent
2009 ..............................................................................................
92 percent
2010 ..............................................................................................
94 percent
2011 ..............................................................................................
96 percent. 
(c) DEFINITIONS.—Any term used in this section 
which is also used in section 430 of such Code or section 
303 of such Act shall have the meaning provided such 
term in such section. If the same term has a different 
meaning in such Code and such Act, such term shall, for 
purposes of this section, have the meaning provided by 
such Code when applied with respect to such Code and 
the meaning provided by such Act when applied with re-
spect to such Act. 
(d) SPECIAL RULE FOR 2006 AND 2007.— 
(1) IN GENERAL.—Section 769(c)(3) of the Re-
tirement Protection Act of 1994, as added by section 
201 of the Pension Funding Equity Act of 2004, is 
amended by striking ‘‘and 2005’’ and inserting ‘‘, 
2005, 2006, and 2007’’. 
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207 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to plan years beginning 
after December 31, 2005. 
(e) CONFORMING AMENDMENT.— 
(1) Section 769 of the Retirement Protection 
Act of 1994 is amended by striking subsection (c). 
(2) The amendment made by paragraph (1) 
shall take effect on December 31, 2007, and shall 
apply to plan years beginning after such date. 
SEC. 116. RESTRICTIONS ON FUNDING OF NONQUALIFIED 
DEFERRED COMPENSATION PLANS BY EM-
PLOYERS MAINTAINING UNDERFUNDED OR 
TERMINATED SINGLE-EMPLOYER PLANS. 
(a) AMENDMENTS OF INTERNAL REVENUE CODE.— 
Subsection (b) of section 409A of the Internal Revenue 
Code of 1986 (providing rules relating to funding) is 
amended by redesignating paragraphs (3) and (4) as para-
graphs (4) and (5), respectively, and by inserting after 
paragraph (2) the following new paragraph: 
‘‘(3) TREATMENT
OF
EMPLOYER’S
DEFINED 
BENEFIT PLAN DURING RESTRICTED PERIOD.— 
‘‘(A) IN GENERAL.—If– 
‘‘(i) during any restricted period with 
respect to a single-employer defined benefit 
plan, assets are set aside or reserved (di-
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