243
for the current plan year continue in 
effect for succeeding plan years, 
is less than the present value of all non-
forfeitable benefits projected to be payable 
under the plan during the current plan 
year and each of the 6 succeeding plan 
years (plus administrative expenses for 
such plan years). 
‘‘(B) A plan is described in this subpara-
graph if—
‘‘(i) the plan has an accumulated 
funding deficiency for the current plan 
year, not taking into account any extension 
of amortization periods under section 
304(d), or 
‘‘(ii) the plan is projected to have an 
accumulated funding deficiency for any of 
the 3 succeeding plan years (4 succeeding 
plan years if the funded percentage of the 
plan is 65 percent or less), not taking into 
account any extension of amortization peri-
ods under section 304(d). 
‘‘(C) A plan is described in this subpara-
graph if—
244
‘‘(i)(I) the plan’s normal cost for the 
current plan year, plus interest (deter-
mined at the rate used for determining 
costs under the plan) for the current plan 
year on the amount of unfunded benefit li-
abilities under the plan as of the last date 
of the preceding plan year, exceeds 
‘‘(II) the present value of the reason-
ably anticipated employer and employee 
contributions for the current plan year, 
‘‘(ii) the present value, as of the be-
ginning of the current plan year, of non-
forfeitable benefits of inactive participants 
is greater than the present value of non-
forfeitable benefits of active participants, 
and 
‘‘(iii) the plan has an accumulated 
funding deficiency for the current plan 
year, or is projected to have such a defi-
ciency for any of the 4 succeeding plan 
years, not taking into account any exten-
sion of amortization periods under section 
304(d). 
‘‘(D) A plan is described in this subpara-
graph if the sum of—
245
‘‘(i) the fair market value of plan as-
sets, plus 
‘‘(ii) the present value of the reason-
ably anticipated employer contributions for 
the current plan year and each of the 4 
succeeding plan years, assuming that the 
terms of all collective bargaining agree-
ments pursuant to which the plan is main-
tained for the current plan year continue 
in effect for succeeding plan years, 
is less than the present value of all benefits pro-
jected to be payable under the plan during the 
current plan year and each of the 4 succeeding 
plan years (plus administrative expenses for 
such plan years). 
‘‘(3) ANNUAL CERTIFICATION BY PLAN ACTU-
ARY.—
‘‘(A) IN
GENERAL.—Not later than the 
90th day of each plan year of a multiemployer 
plan, the plan actuary shall certify to the Sec-
retary of the Treasury and to the plan spon-
sor—
‘‘(i) whether or not the plan is in en-
dangered status for such plan year and
246
whether or not the plan is or will be in 
critical status for such plan year, and 
‘‘(ii) in the case of a plan which is in 
a funding improvement or rehabilitation 
period, whether or not the plan is making 
the scheduled progress in meeting the re-
quirements of its funding improvement or 
rehabilitation plan. 
‘‘(B) ACTUARIAL PROJECTIONS OF ASSETS 
AND LIABILITIES.—
‘‘(i) IN GENERAL.—In making the de-
terminations and projections under this 
subsection, the plan actuary shall make 
projections required for the current and 
succeeding plan years of the current value 
of the assets of the plan and the present 
value of all liabilities to participants and 
beneficiaries under the plan for the current 
plan year as of the beginning of such year. 
The actuary’s projections shall be based on 
reasonable actuarial estimates, assump-
tions, and methods that, except as pro-
vided in clause (iii), offer the actuary’s 
best estimate of anticipated experience 
under the plan. The projected present
247
value of liabilities as of the beginning of 
such year shall be determined based on the 
most recent of either—
‘‘(I) the actuarial statement re-
quired under section 103(d) with re-
spect to the most recently filed annual 
report, or 
‘‘(II) the actuarial valuation for 
the preceding plan year. 
‘‘(ii) DETERMINATIONS
OF
FUTURE 
CONTRIBUTIONS.—Any actuarial projection 
of plan assets shall assume—
‘‘(I) reasonably anticipated em-
ployer contributions for the current 
and succeeding plan years, assuming 
that the terms of the one or more col-
lective bargaining agreements pursu-
ant to which the plan is maintained 
for the current plan year continue in 
effect for succeeding plan years, or 
‘‘(II) that employer contributions 
for the most recent plan year will con-
tinue indefinitely, but only if the plan 
actuary determines there have been no 
significant demographic changes that
248
would make such assumption unrea-
sonable. 
‘‘(iii) PROJECTED
INDUSTRY
ACTIV-
ITY.—Any projection of activity in the in-
dustry or industries covered by the plan, 
including future covered employment and 
contribution levels, shall be based on infor-
mation provided by the plan sponsor, 
which shall act reasonably and in good 
faith. 
‘‘(C) PENALTY FOR FAILURE TO SECURE 
TIMELY ACTUARIAL CERTIFICATION.—Any fail-
ure of the plan’s actuary to certify the plan’s 
status under this subsection by the date speci-
fied in subparagraph (A) shall be treated for 
purposes of section 502(c)(2) as a failure or re-
fusal by the plan administrator to file the an-
nual report required to be filed with the Sec-
retary under section 101(b)(4). 
‘‘(D) NOTICE.—
‘‘(i) IN
GENERAL.—In any case in 
which it is certified under subparagraph 
(A) that a multiemployer plan is or will be 
in endangered or critical status for a plan 
year, the plan sponsor shall, not later than
249
30 days after the date of the certification, 
provide notification of the endangered or 
critical status to the participants and bene-
ficiaries, the bargaining parties, the Pen-
sion Benefit Guaranty Corporation, and 
the Secretary. 
‘‘(ii) PLANS IN CRITICAL STATUS.—If 
it is certified under subparagraph (A) that 
a multiemployer plan is or will be in crit-
ical status, the plan sponsor shall include 
in the notice under clause (i) an expla-
nation of the possibility that—
‘‘(I) adjustable benefits (as de-
fined in subsection (e)(8)) may be re-
duced, and 
‘‘(II) such reductions may apply 
to 
participants 
and 
beneficiaries 
whose benefit commencement date is 
on or after the date such notice is 
provided for the first plan year in 
which the plan is in critical status. 
‘‘(iii) MODEL NOTICE.—The Secretary 
shall prescribe a model notice that a multi-
employer plan may use to satisfy the re-
quirements under clause (ii).
250
‘‘(c) FUNDING
IMPROVEMENT
PLAN
MUST
BE 
ADOPTED FOR MULTIEMPLOYER PLANS IN ENDANGERED 
STATUS.—
‘‘(1) IN
GENERAL.—In any case in which a 
multiemployer plan is in endangered status for a 
plan year, the plan sponsor, in accordance with this 
subsection—
‘‘(A) shall adopt a funding improvement 
plan not later than 240 days following the re-
quired date for the actuarial certification of en-
dangered status under subsection (b)(3)(A), 
and 
‘‘(B) within 30 days after the adoption of 
the funding improvement plan—
‘‘(i) shall provide to the bargaining 
parties 1 or more schedules showing re-
vised benefit structures, revised contribu-
tion structures, or both, which, if adopted, 
may reasonably be expected to enable the 
multiemployer plan to meet the applicable 
benchmarks in accordance with the fund-
ing improvement plan, including—
‘‘(I) one proposal for reductions 
in the amount of future benefit accru-
als necessary to achieve the applicable
251
benchmarks, assuming no amend-
ments increasing contributions under 
the plan (other than amendments in-
creasing contributions necessary to 
achieve the applicable benchmarks 
after amendments have reduced fu-
ture benefit accruals to the maximum 
extent permitted by law), and 
‘‘(II) one proposal for increases 
in contributions under the plan nec-
essary to achieve the applicable bench-
marks, assuming no amendments re-
ducing future benefit accruals under 
the plan, and 
‘‘(ii) may, if the plan sponsor deems 
appropriate, prepare and provide the bar-
gaining parties with additional information 
relating to contribution rates or benefit re-
ductions, alternative schedules, or other in-
formation relevant to achieving the appli-
cable benchmarks in accordance with the 
funding improvement plan. 
For purposes of this section, the term ‘applica-
ble benchmarks’ means the requirements appli-
252
cable to the multiemployer plan under para-
graph (3) (as modified by paragraph (5)). 
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS 
BEGINS.—Paragraph (1) shall not apply to a plan 
year if such year is in a funding plan adoption pe-
riod or funding improvement period by reason of the 
plan being in endangered status for a preceding plan 
year. For purposes of this section, such preceding 
plan year shall be the initial determination year with 
respect to the funding improvement plan to which it 
relates. 
‘‘(3) FUNDING IMPROVEMENT PLAN.—For pur-
poses of this section—
‘‘(A) IN
GENERAL.—A funding improve-
ment plan is a plan which consists of the ac-
tions, including options or a range of options to 
be proposed to the bargaining parties, formu-
lated to provide, based on reasonably antici-
pated experience and reasonable actuarial as-
sumptions, for the attainment by the plan dur-
ing the funding improvement period of the fol-
lowing requirements: 
‘‘(i) INCREASE
IN
PLAN’S
FUNDING 
PERCENTAGE.—The plan’s funded percent-
age as of the close of the funding improve-
253
ment period equals or exceeds a percentage 
equal to the sum of—
‘‘(I) such percentage as of the 
beginning of such period, plus 
‘‘(II) 33 percent of the difference 
between 100 percent and the percent-
age under subclause (I). 
‘‘(ii) AVOIDANCE
OF
ACCUMULATED 
FUNDING DEFICIENCIES.—No accumulated 
funding deficiency for any plan year during 
the funding improvement period (taking 
into account any extension of amortization 
periods under section 304(d)). 
‘‘(B) SERIOUSLY ENDANGERED PLANS.—
In the case of a plan in seriously endangered 
status, except as provided in paragraph (5), 
subparagraph (A)(i)(II) shall be applied by sub-
stituting ‘20 percent’ for ‘33 percent’. 
‘‘(4) FUNDING
IMPROVEMENT
PERIOD.—For 
purposes of this section—
‘‘(A) IN GENERAL.—The funding improve-
ment period for any funding improvement plan 
adopted pursuant to this subsection is the 10-
year period beginning on the first day of the
254
first plan year of the multiemployer plan begin-
ning after the earlier of—
‘‘(i) the second anniversary of the 
date of the adoption of the funding im-
provement plan, or 
‘‘(ii) the expiration of the collective 
bargaining agreements in effect on the due 
date for the actuarial certification of en-
dangered status for the initial determina-
tion year under subsection (b)(3)(A) and 
covering, as of such due date, at least 75 
percent of the active participants in such 
multiemployer plan. 
‘‘(B) SERIOUSLY ENDANGERED PLANS.—
In the case of a plan in seriously endangered 
status, except as provided in paragraph (5), 
subparagraph (A) shall be applied by sub-
stituting ‘15-year period’ for ‘10-year period’. 
‘‘(C) COORDINATION
WITH
CHANGES
IN 
STATUS.—
‘‘(i) PLANS
NO
LONGER
IN
ENDAN-
GERED STATUS.—If the plan’s actuary cer-
tifies under subsection (b)(3)(A) for a plan 
year in any funding plan adoption period 
or funding improvement period that the
255
plan is no longer in endangered status and 
is not in critical status, the funding plan 
adoption period or funding improvement 
period, whichever is applicable, shall end as 
of the close of the preceding plan year. 
‘‘(ii) PLANS IN CRITICAL STATUS.—If 
the plan’s actuary certifies under sub-
section (b)(3)(A) for a plan year in any 
funding plan adoption period or funding 
improvement period that the plan is in 
critical status, the funding plan adoption 
period or funding improvement period, 
whichever is applicable, shall end as of the 
close of the plan year preceding the first 
plan year in the rehabilitation period with 
respect to such status. 
‘‘(D) PLANS IN ENDANGERED STATUS AT 
END OF PERIOD.—If the plan’s actuary certifies 
under subsection (b)(3)(A) for the first plan 
year following the close of the period described 
in subparagraph (A) that the plan is in endan-
gered status, the provisions of this subsection 
and subsection (d) shall be applied as if such 
first plan year were an initial determination 
year, except that the plan may not be amended
256
in a manner inconsistent with the funding im-
provement plan in effect for the preceding plan 
year until a new funding improvement plan is 
adopted. 
‘‘(5) SPECIAL RULES FOR SERIOUSLY ENDAN-
GERED PLANS MORE THAN 70 PERCENT FUNDED.—
‘‘(A) IN GENERAL.—If the funded percent-
age of a plan in seriously endangered status 
was more than 70 percent as of the beginning 
of the initial determination year—
‘‘(i) paragraphs (3)(B) and (4)(B) 
shall apply only if the plan’s actuary cer-
tifies, within 30 days after the certification 
under subsection (b)(3)(A) for the initial 
determination year, that, based on the 
terms of the plan and the collective bar-
gaining agreements in effect at the time of 
such certification, the plan is not projected 
to meet the requirements of paragraph 
(3)(A) (without regard to paragraphs 
(3)(B) and (4)(B)), and 
‘‘(ii) if there is a certification under 
clause (i), the plan may, in formulating its 
funding improvement plan, only take into 
account the rules of paragraph (3)(B) and
257
(4)(B) for plan years in the funding im-
provement period beginning on or before 
the date on which the last of the collective 
bargaining agreements described in para-
graph (4)(A)(ii) expires. 
‘‘(B) SPECIAL
RULE
AFTER
EXPIRATION 
OF
AGREEMENTS.—Notwithstanding subpara-
graph (A)(ii), if, for any plan year ending after 
the date described in subparagraph (A)(ii), the 
plan actuary certifies (at the time of the annual 
certification under subsection (b)(3)(A) for such 
plan year) that, based on the terms of the plan 
and collective bargaining agreements in effect 
at the time of that annual certification, the plan 
is not projected to be able to meet the require-
ments of paragraph (3)(A) (without regard to 
paragraphs (3)(B) and (4)(B)), paragraphs 
(3)(B) and (4)(B) shall continue to apply for 
such year. 
‘‘(6) UPDATES
TO
FUNDING
IMPROVEMENT 
PLAN AND SCHEDULES.—
‘‘(A) FUNDING IMPROVEMENT PLAN.—The 
plan sponsor shall annually update the funding 
improvement plan and shall file the update with 
the plan’s annual report under section 104.
258
‘‘(B) SCHEDULES.—The plan sponsor shall 
annually update any schedule of contribution 
rates provided under this subsection to reflect 
the experience of the plan. 
‘‘(C) DURATION OF SCHEDULE.—A sched-
ule of contribution rates provided by the plan 
sponsor and relied upon by bargaining parties 
in negotiating a collective bargaining agreement 
shall remain in effect for the duration of that 
collective bargaining agreement. 
‘‘(7) IMPOSITION
OF
DEFAULT
SCHEDULE 
WHERE FAILURE TO ADOPT FUNDING IMPROVEMENT 
PLAN.—
‘‘(A) IN GENERAL.—If—
‘‘(i) a collective bargaining agreement 
providing for contributions under a multi-
employer plan that was in effect at the 
time the plan entered endangered status 
expires, and 
‘‘(ii) after receiving one or more 
schedules from the plan sponsor under 
paragraph (1)(B), the bargaining parties 
with respect to such agreement fail to 
agree on changes to contribution or benefit 
schedules necessary to meet the applicable
259
benchmarks in accordance with the fund-
ing improvement plan, 
the plan sponsor shall implement the schedule 
described in paragraph (1)(B)(i)(I) beginning 
on the date specified in subparagraph (B). 
‘‘(B) DATE
OF
IMPLEMENTATION.—The 
date specified in this subparagraph is the ear-
lier of the date—
‘‘(i) on which the Secretary certifies 
that the parties are at an impasse, or 
‘‘(ii) which is 180 days after the date 
on which the collective bargaining agree-
ment described in subparagraph (A) ex-
pires. 
‘‘(8) FUNDING PLAN ADOPTION PERIOD.—For 
purposes of this section, the term ‘funding plan 
adoption period’ means the period beginning on the 
date of the certification under subsection (b)(3)(A) 
for the initial determination year and ending on the 
day before the first day of the funding improvement 
period. 
‘‘(d) RULES
FOR OPERATION
OF PLAN DURING 
ADOPTION AND IMPROVEMENT PERIODS.—
‘‘(1) SPECIAL RULES FOR PLAN ADOPTION PE-
RIOD.—During the funding plan adoption period—
260
‘‘(A) the plan sponsor may not accept a 
collective bargaining agreement or participation 
agreement with respect to the multiemployer 
plan that provides for—
‘‘(i) a reduction in the level of con-
tributions for any participants, 
‘‘(ii) a suspension of contributions 
with respect to any period of service, or 
‘‘(iii) any new direct or indirect exclu-
sion of younger or newly hired employees 
from plan participation, 
‘‘(B) no amendment of the plan which in-
creases the liabilities of the plan by reason of 
any increase in benefits, any change in the ac-
crual of benefits, or any change in the rate at 
which benefits become nonforfeitable under the 
plan may be adopted unless the amendment is 
required as a condition of qualification under 
part I of subchapter D of chapter 1 of the In-
ternal Revenue Code of 1986 or to comply with 
other applicable law, and 
‘‘(C) in the case of a plan in seriously en-
dangered status, the plan sponsor shall take all 
reasonable actions which are consistent with the 
terms of the plan and applicable law and which
261
are expected, based on reasonable assumptions, 
to achieve—
‘‘(i) an increase in the plan’s funded 
percentage, and 
‘‘(ii) postponement of an accumulated 
funding deficiency for at least 1 additional 
plan year. 
Actions under subparagraph (C) include applications 
for extensions of amortization periods under section 
304(d), use of the shortfall funding method in mak-
ing funding standard account computations, amend-
ments to the plan’s benefit structure, reductions in 
future benefit accruals, and other reasonable actions 
consistent with the terms of the plan and applicable 
law. 
‘‘(2) COMPLIANCE
WITH
FUNDING
IMPROVE-
MENT PLAN.—
‘‘(A) IN GENERAL.—A plan may not be 
amended after the date of the adoption of a 
funding improvement plan so as to be incon-
sistent with the funding improvement plan. 
‘‘(B) 
NO
REDUCTION
IN
CONTRIBU-
TIONS.—A plan sponsor may not during any 
funding improvement period accept a collective 
bargaining agreement or participation agree-
262
ment with respect to the multiemployer plan 
that provides for—
‘‘(i) a reduction in the level of con-
tributions for any participants, 
‘‘(ii) a suspension of contributions 
with respect to any period of service, or 
‘‘(iii) any new direct or indirect exclu-
sion of younger or newly hired employees 
from plan participation. 
‘‘(C) SPECIAL
RULES
FOR
BENEFIT
IN-
CREASES.—A plan may not be amended after 
the date of the adoption of a funding improve-
ment plan so as to increase benefits, including 
future benefit accruals, unless the plan actuary 
certifies that the benefit increase is consistent 
with the funding improvement plan and is paid 
for out of contributions not required by the 
funding improvement plan to meet the applica-
ble benchmark in accordance with the schedule 
contemplated in the funding improvement plan. 
‘‘(e) REHABILITATION PLAN MUST BE ADOPTED 
FOR MULTIEMPLOYER PLANS IN CRITICAL STATUS.—
‘‘(1) IN
GENERAL.—In any case in which a 
multiemployer plan is in critical status for a plan
263
year, the plan sponsor, in accordance with this sub-
section—
‘‘(A) shall adopt a rehabilitation plan not 
later than 240 days following the required date 
for the actuarial certification of critical status 
under subsection (b)(3)(A), and 
‘‘(B) within 30 days after the adoption of 
the rehabilitation plan—
‘‘(i) shall provide to the bargaining 
parties 1 or more schedules showing re-
vised benefit structures, revised contribu-
tion structures, or both, which, if adopted, 
may reasonably be expected to enable the 
multiemployer plan to emerge from critical 
status in accordance with the rehabilitation 
plan, and 
‘‘(ii) may, if the plan sponsor deems 
appropriate, prepare and provide the bar-
gaining parties with additional information 
relating to contribution rates or benefit re-
ductions, alternative schedules, or other in-
formation relevant to emerging from crit-
ical status in accordance with the rehabili-
tation plan.