plan’s liabilities for the plan year by not more than 
3 percent; and 
‘‘(4) expected contributions for the current plan 
year are at least 120 percent of normal cost for the 
plan year, determined using the unit credit funding 
method and treating the benefit increase or new ben-
efits as in effect for the entire plan year. 
‘‘(b) ADDITIONAL REQUIREMENTS WHERE CORE 
BENEFITS REDUCED.—If a plan has been amended to re-
duce core benefits pursuant to a realignment program 
under section 803(a)(2)(D), such plan may not be subse-
quently amended to increase core benefits unless the 
amendment— 
‘‘(1) increases the level of future benefit pay-
ments only; and 
‘‘(2) provides for an equitable distribution of 
benefit increases across the participant and bene-
ficiary population, taking into account the extent to 
which the benefits of participants were previously re-
duced pursuant to such realignment program. 
‘‘(c) EXCEPTION TO COMPLY WITH APPLICABLE 
LAW.—Subsection (a) shall not apply in connection with 
a plan amendment if the amendment is required as a con-
dition of qualification under part I of subchapter D of 
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chapter 1 of the Internal Revenue Code of 1986 or to com-
ply with other applicable law. 
‘‘(d) EXCEPTION WHERE MAXIMUM DEDUCTIBLE 
LIMIT APPLIES.—Subsection (a) shall not apply in con-
nection with a plan amendment if and to the extent that 
contributions to the composite plan would not be deduct-
ible for the plan year under section 404(a)(1)(E) of the 
Internal Revenue Code of 1986 if the plan amendment is 
not adopted. 
‘‘(e) EXCEPTION FOR CERTAIN BENEFIT MODIFICA-
TIONS.—Subsection (a) shall not apply in connection with 
a plan amendment under section 803(a)(5)(C), regarding 
conditional benefit modifications. 
‘‘(f) TREATMENT OF PLAN AMENDMENTS.—For pur-
poses of this section— 
‘‘(1) if two or more plan amendments increas-
ing benefits or establishing new benefits are adopted 
in a plan year, such amendments shall be treated as 
a single amendment adopted on the last day of the 
plan year; 
‘‘(2) all benefit increases and new benefits 
adopted in a single amendment are treated as a sin-
gle benefit increase, irrespective of whether the in-
creases and new benefits take effect in more than 
one plan year; and 
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‘‘(3) increases in contributions or decreases in 
plan liabilities which are scheduled to take effect in 
future plan years may be taken into account in con-
nection with a plan amendment if they have been 
agreed to in writing or otherwise formalized by the 
date the plan amendment is adopted. 
‘‘SEC. 805. COMPOSITE PLAN RESTRICTIONS TO PRESERVE 
LEGACY PLAN FUNDING. 
‘‘(a) TREATMENT AS A LEGACY PLAN.— 
‘‘(1) IN GENERAL.—For purposes of this part 
and parts 2 and 3, a defined benefit plan shall be 
treated as a legacy plan with respect to the com-
posite plan under which the employees who were eli-
gible to accrue a benefit under the defined benefit 
plan become eligible to accrue a benefit under such 
composite plan. 
‘‘(2) COMPONENT
PLANS.—In any case in 
which a defined benefit plan is amended to add a 
composite plan component pursuant to section 
801(b), paragraph (1) shall be applied by sub-
stituting ‘defined benefit component’ for ‘defined 
benefit plan’ and ‘composite plan component’ for 
‘composite plan’. 
‘‘(3) ELIGIBLE TO ACCRUE A BENEFIT.—For 
purposes of paragraph (1), an employee is consid-
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ered eligible to accrue a benefit under a composite 
plan as of the first day in which the employee com-
pletes an hour of service under a collective bar-
gaining agreement that provides for contributions to 
and accruals under the composite plan in lieu of ac-
cruals under the legacy plan. 
‘‘(4) COLLECTIVE BARGAINING AGREEMENT.— 
As used in this part, the term ‘collective bargaining 
agreement’ includes any agreement under which an 
employer has an obligation to contribute to a plan. 
‘‘(5) OTHER TERMS.—Any term used in this 
part which is not defined in this part and which is 
also used in section 305 shall have the same mean-
ing provided such term in such section. 
‘‘(b) RESTRICTIONS ON ACCEPTANCE BY COMPOSITE 
PLAN OF AGREEMENTS AND CONTRIBUTIONS.— 
‘‘(1) IN GENERAL.—The plan sponsor of a com-
posite plan shall not accept or recognize a collective 
bargaining agreement (or any modification to such 
agreement), and no contributions may be accepted 
and no benefits may be accrued or otherwise earned 
under the agreement— 
‘‘(A) in any case in which the plan actuary 
of any defined benefit plan that would be treat-
ed as a legacy plan with respect to such com-
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posite 
plan 
has 
certified 
under 
section 
305(b)(3) that such defined benefit plan is or 
will be in critical status for the plan year in 
which such agreement would take effect or for 
any of the succeeding 5 plan years; and 
‘‘(B) unless the agreement requires each 
employer who is a party to such agreement, in-
cluding employers whose employees are not par-
ticipants in the legacy plan, to provide contribu-
tions to the legacy plan with respect to such 
composite plan in a manner that satisfies the 
transition contribution requirements of sub-
section (d). 
‘‘(2) NOTICE.—Not later than 30 days after a 
determination by a plan sponsor of a composite plan 
that an agreement fails to satisfy the requirements 
described in paragraph (1), the plan sponsor shall 
provide notification of such failure and the reasons 
for such determination— 
‘‘(A) to the parties to the agreement; 
‘‘(B) to active participants of the com-
posite plan who have ceased to accrue or other-
wise earn benefits with respect to service with 
an employer pursuant to paragraph (1); and 
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‘‘(C) to the Secretary, the Secretary of the 
Treasury, and the Pension Benefit Guaranty 
Corporation. 
‘‘(3) LIMITATION ON RETROACTIVE EFFECT.— 
This subsection shall not apply to benefits accrued 
before the date on which notice is provided under 
paragraph (2). 
‘‘(c) RESTRICTION
ON
ACCRUAL
OF
BENEFITS 
UNDER A COMPOSITE PLAN.— 
‘‘(1) IN GENERAL.—In any case in which an 
employer, under a collective bargaining agreement 
entered into after February 5, 2018, ceases to have 
an obligation to contribute to a multiemployer de-
fined benefit plan, no employees employed by the 
employer may accrue or otherwise earn benefits 
under any composite plan, with respect to service 
with that employer, for a 60-month period beginning 
on the date on which the employer entered into such 
collective bargaining agreement. 
‘‘(2) NOTICE OF CESSATION OF OBLIGATION.— 
Within 30 days of determining that an employer has 
ceased to have an obligation to contribute to a leg-
acy plan with respect to employees employed by an 
employer that is or will be contributing to a com-
posite plan with respect to service of such employees, 
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the plan sponsor of the legacy plan shall notify the 
plan sponsor of the composite plan of that cessation. 
‘‘(3) NOTICE OF CESSATION OF ACCRUALS.— 
Not later than 30 days after determining that an 
employer has ceased to have an obligation to con-
tribute to a legacy plan, the plan sponsor of the 
composite plan shall notify the bargaining parties, 
the active participants affected by the cessation of 
accruals, the Secretary, the Secretary of the Treas-
ury, and the Pension Benefit Guaranty Corporation 
of the cessation of accruals, the period during which 
such cessation is in effect, and the reasons therefor. 
‘‘(4) LIMITATION ON RETROACTIVE EFFECT.— 
This subsection shall not apply to benefits accrued 
before the date on which notice is provided under 
paragraph (3). 
‘‘(d) TRANSITION CONTRIBUTION REQUIREMENTS.— 
‘‘(1) IN
GENERAL.—A collective bargaining 
agreement satisfies the transition contribution re-
quirements of this subsection if the agreement— 
‘‘(A) authorizes payment of contributions 
to a legacy plan at a rate or rates equal to or 
greater than the transition contribution rate es-
tablished by the legacy plan under paragraph 
(2); and 
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‘‘(B) does not provide for— 
‘‘(i) a suspension of contributions to 
the legacy plan with respect to any period 
of service; or 
‘‘(ii) any new direct or indirect exclu-
sion of younger or newly hired employees 
of the employer from being taken into ac-
count in determining contributions owed to 
the legacy plan. 
‘‘(2) TRANSITION CONTRIBUTION RATE.— 
‘‘(A) IN
GENERAL.—The transition con-
tribution rate for a plan year is the contribution 
rate that, as certified by the actuary of the leg-
acy plan in accordance with the principles in 
section 305(b)(3)(B), is reasonably expected to 
be adequate— 
‘‘(i) to fund the normal cost for the 
plan year; 
‘‘(ii) to amortize the plan’s unfunded 
liabilities in level annual installments over 
25 years, beginning with the plan year in 
which the transition contribution rate is 
first established; and 
‘‘(iii) to amortize any subsequent 
changes in the legacy plan’s unfunded li-
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ability due to experience gains or losses 
(including investment gains or losses, gains 
or losses due to contributions greater or 
less than the contributions made under the 
prior transition contribution rate, and 
other actuarial gains or losses), changes in 
actuarial assumptions, changes to the leg-
acy plan’s benefits, or changes in funding 
method over a period of 15 plan years be-
ginning with the plan year in which such 
change in unfunded liability is incurred. 
The transition contribution rate for any plan 
year may not be less than the transition con-
tribution rate for the plan year in which such 
rate is first established. 
‘‘(B) MULTIPLE RATES.—If different rates 
of contribution are payable to the legacy plan 
by different employers or for different classes of 
employees, the certification shall specify a tran-
sition contribution rate for each such employer. 
‘‘(C) RATE APPLICABLE TO EMPLOYER.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided by clause (ii), the transition con-
tribution rate applicable to an employer for 
a plan year is the rate in effect for the 
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plan year of the legacy plan that com-
mences on or after 180 days before the 
earlier of— 
‘‘(I) the effective date of the col-
lective bargaining agreement pursuant 
to which the employer contributes to 
the legacy plan; or 
‘‘(II) 5 years after the last plan 
year for which the transition contribu-
tion rate applicable to the employer 
was established or updated. 
‘‘(ii) 
EXCEPTION.—The 
transition 
contribution rate applicable to an employer 
for the first plan year beginning on or 
after the commencement of the employer’s 
obligation to contribute to the composite 
plan is the rate in effect for the plan year 
of the legacy plan that commences on or 
after 180 days before such first plan year. 
‘‘(D) EFFECT OF LEGACY PLAN FINANCIAL 
CIRCUMSTANCES.—If the plan actuary of the 
legacy plan has certified under section 305 that 
the plan is in endangered or critical status for 
a plan year, the transition contribution rate for 
the following plan year is the rate determined 
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with respect to the employer under the legacy 
plan’s funding improvement or rehabilitation 
plan under section 305, if greater than the rate 
otherwise determined, but in no event greater 
than 75 percent of the sum of the contribution 
rates applicable to the legacy plan and the com-
posite plan for the plan year. 
‘‘(E) OTHER
ACTUARIAL
ASSUMPTIONS 
AND
METHODS.—Except as provided in sub-
paragraph (A), the determination of the transi-
tion contribution rate for a plan year shall be 
based on actuarial assumptions and methods 
consistent with the minimum funding deter-
minations made under section 304 (or, if appli-
cable, section 305) with respect to the legacy 
plan for the plan year. 
‘‘(F) ADJUSTMENTS IN RATE.—The plan 
sponsor of a legacy plan from time to time may 
adjust the transition contribution rate or rates 
applicable to an employer under this paragraph 
by increasing some rates and decreasing others 
if the actuary certifies that such adjusted rates 
in combination will produce projected contribu-
tion income for the plan year beginning on or 
after the date of certification that is not less 
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than would be produced by the transition con-
tribution rates in effect at the time of the cer-
tification. 
‘‘(G) NOTICE OF TRANSITION CONTRIBU-
TION RATE.—The plan sponsor of a legacy plan 
shall provide notice to the parties to collective 
bargaining agreements pursuant to which con-
tributions are made to the legacy plan of 
changes to the transition contribution rate re-
quirements at least 30 days before the begin-
ning of the plan year for which the rate is effec-
tive. 
‘‘(H) NOTICE TO COMPOSITE PLAN SPON-
SOR.—Not later than 30 days after a deter-
mination by the plan sponsor of a legacy plan 
that a collective bargaining agreement provides 
for a rate of contributions that is below the 
transition contribution rate applicable to one or 
more employers that are parties to the collective 
bargaining agreement, the plan sponsor of the 
legacy plan shall notify the plan sponsor of any 
composite plan under which employees of such 
employer would otherwise be eligible to accrue 
a benefit. 
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‘‘(3) CORRECTION PROCEDURES.—Pursuant to 
standards prescribed by the Secretary, the plan 
sponsor of a composite plan shall adopt rules and 
procedures that give the parties to the collective bar-
gaining agreement notice of the failure of such 
agreement to satisfy the transition contribution re-
quirements of this subsection, and a reasonable op-
portunity to correct such failure, not to exceed 180 
days from the date of notice given under subsection 
(b)(2). 
‘‘(4) SUPPLEMENTAL CONTRIBUTIONS.—A col-
lective bargaining agreement may provide for supple-
mental contributions to the legacy plan for a plan 
year in excess of the transition contribution rate de-
termined under paragraph (2), regardless of whether 
the legacy plan is in endangered or critical status for 
such plan year. 
‘‘(e) NONAPPLICATION
OF COMPOSITE PLAN RE-
STRICTIONS.— 
‘‘(1) IN
GENERAL.—The provisions of sub-
sections (a), (b), and (c) shall not apply with respect 
to a collective bargaining agreement, to the extent 
the agreement, or a predecessor agreement, provides 
or provided for contributions to a defined benefit 
plan that is a legacy plan, as of the first day of the 
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first plan year following a plan year for which the 
plan actuary certifies that the plan is fully funded, 
has been fully funded for at least three out of the 
immediately preceding 5 plan years, and is projected 
to remain fully funded for at least the following 4 
plan years. 
‘‘(2) DETERMINATION OF FULLY FUNDED.—A 
plan is fully funded for purposes of paragraph (1) 
if, as of the valuation date of the plan for a plan 
year, the value of the plan’s assets equals or exceeds 
the present value of the plan’s liabilities, determined 
in accordance with the rules prescribed by the Pen-
sion Benefit Guaranty Corporation under sections 
4219(c)(1)(D) and 4281 for multiemployer plans 
terminating by mass withdrawal, as in effect for the 
date of the determination, except the plan’s reason-
able assumption regarding the starting date of bene-
fits may be used. 
‘‘(3) OTHER
APPLICABLE
RULES.—Except as 
provided in paragraph (2), actuarial determinations 
and projections under this section shall be based on 
the rules in section 305(b)(3) and section 802(b). 
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‘‘SEC. 806. MERGERS AND ASSET TRANSFERS OF COM-
POSITE PLANS. 
‘‘(a) IN GENERAL.—Assets and liabilities of a com-
posite plan may only be merged with, or transferred to, 
another plan if— 
‘‘(1) the other plan is a composite plan; 
‘‘(2) the plan or plans resulting from the merg-
er or transfer is a composite plan; 
‘‘(3) no participant’s accrued benefit or adjust-
able benefit is lower immediately after the trans-
action than it was immediately before the trans-
action; and 
‘‘(4) the value of the assets transferred in the 
case of a transfer reasonably reflects the value of the 
amounts contributed with respect to the participants 
whose benefits are being transferred, adjusted for al-
locable distributions, investment gains and losses, 
and administrative expenses. 
‘‘(b) LEGACY PLAN.— 
‘‘(1) IN GENERAL.—After a merger or transfer 
involving a composite plan, the legacy plan with re-
spect to an employer that is obligated to contribute 
to the resulting composite plan is the legacy plan 
that applied to that employer immediately before the 
merger or transfer. 
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‘‘(2) MULTIPLE
LEGACY
PLANS.—If an em-
ployer is obligated to contribute to more than one 
legacy plan with respect to employees eligible to ac-
crue benefits under more than one composite plan 
and there is a merger or transfer of such legacy 
plans, the transition contribution rate applicable to 
the legacy plan resulting from the merger or trans-
fer with respect to that employer shall be determined 
in accordance with the provisions of section 
805(d)(2)(B).’’. 
(2) PENALTIES.— 
(A) CIVIL ENFORCEMENT OF FAILURE TO 
COMPLY WITH REALIGNMENT PROGRAM.—Sec-
tion 502(a) of such Act (29 U.S.C. 1132(a)) is 
amended— 
(i) in paragraph (10), by striking ‘‘or’’ 
at the end; 
(ii) in paragraph (11), by striking the 
period at the end and inserting ‘‘; or’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(12) in the case of a composite plan required 
to adopt a realignment program under section 803, 
if the plan sponsor— 
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‘‘(A) has not adopted a realignment pro-
gram under that section by the deadline estab-
lished in such section; or 
‘‘(B) fails to update or comply with the 
terms of the realignment program in accordance 
with the requirements of such section, 
by the Secretary, by an employer that has an obliga-
tion to contribute with respect to the composite plan, 
or by an employee organization that represents ac-
tive participants in the composite plan, for an order 
compelling the plan sponsor to adopt a realignment 
program, or to update or comply with the terms of 
the realignment program, in accordance with the re-
quirements of such section and the realignment pro-
gram.’’. 
(B) CIVIL PENALTIES.—Section 502(c) of 
such Act (29 U.S.C. 1132(c)) is amended— 
(i) by moving paragraphs (8), (10), 
and (12) each 2 ems to the left; 
(ii) by redesignating paragraphs (9) 
through (12) as paragraphs (12) through 
(15), respectively; and 
(iii) by inserting after paragraph (8) 
the following: 
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‘‘(9) The Secretary may assess against any plan 
sponsor of a composite plan a civil penalty of not 
more than $1,100 per day for each violation by such 
sponsor— 
‘‘(A) of the requirement under section 
802(a) on the plan actuary to certify the plan’s 
current or projected funded ratio by the date 
specified in such subsection; or 
‘‘(B) of the requirement under section 803 
to adopt a realignment program by the deadline 
established in that section and to comply with 
its terms. 
‘‘(10)(A) The Secretary may assess against any 
plan sponsor of a composite plan a civil penalty of 
not more than $100 per day for each violation by 
such sponsor of the requirement under section 
803(b) to provide notice as described in such section, 
except that no penalty may be assessed in any case 
in which the plan sponsor exercised reasonable dili-
gence to meet the requirements of such section 
and— 
‘‘(i) the plan sponsor did not know that the 
violation existed; or 
‘‘(ii) the plan sponsor provided such notice 
during the 30-day period beginning on the first 
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date on which the plan sponsor knew, or in ex-
ercising reasonable due diligence should have 
known, that such violation existed. 
‘‘(B) In any case in which the plan sponsor ex-
ercised reasonable diligence to meet the require-
ments of section 803(b)— 
‘‘(i) the total penalty assessed under this 
paragraph against such sponsor for a plan year 
may not exceed $500,000; and 
‘‘(ii) the Secretary may waive part or all of 
such penalty to the extent that the payment of 
such penalty would be excessive or otherwise in-
equitable relative to the violation involved. 
‘‘(11) The Secretary may assess against any 
plan sponsor of a composite plan a civil penalty of 
not more than $100 per day for each violation by 
such sponsor of the notice requirements under sec-
tions 801(b)(5) and 805(b)(2).’’. 
(3) CONFORMING AMENDMENT.—The table of 
contents in section 1 of such Act (29 U.S.C. 1001 
note) is amended by inserting after the item relating 
to section 734 the following: 
‘‘PART 8—COMPOSITE PLANS AND LEGACY PLANS 
‘‘Sec. 801. Composite plan defined. 
‘‘Sec. 802. Funded ratios; actuarial assumptions. 
‘‘Sec. 803. Realignment program. 
‘‘Sec. 804. Limitation on increasing benefits. 
‘‘Sec. 805. Composite plan restrictions to preserve legacy plan funding. 
‘‘Sec. 806. Mergers and asset transfers of composite plans.’’. 
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(b) AMENDMENT TO THE INTERNAL REVENUE CODE 
OF 1986.— 
(1) IN GENERAL.—Part III of subchapter D of 
chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following: 
‘‘Subpart C—Composite Plans and Legacy Plans 
‘‘Sec. 437. Composite plan defined. 
‘‘Sec. 438. Funded ratios; actuarial assumptions. 
‘‘Sec. 439. Realignment program. 
‘‘Sec. 440. Limitation on increasing benefits. 
‘‘Sec. 440A. Composite plan restrictions to preserve legacy plan funding. 
‘‘Sec. 440B. Mergers and asset transfers of composite plans. 
‘‘SEC. 437. COMPOSITE PLAN DEFINED. 
‘‘(a) IN GENERAL.—For purposes of this title, the 
term ‘composite plan’ means a pension plan— 
‘‘(1) which is a multiemployer plan that is nei-
ther a defined benefit plan nor a defined contribu-
tion plan, 
‘‘(2) the terms of which provide that the plan 
is a composite plan for purposes of this title with re-
spect to which not more than one multiemployer de-
fined benefit plan is treated as a legacy plan within 
the meaning of section 440A, unless there is more 
than one legacy plan following a merger of composite 
plans under section 440B, 
‘‘(3) which provides systematically for the pay-
ment of benefits— 
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‘‘(A) objectively calculated pursuant to a 
formula enumerated in the plan document with 
respect to plan participants after retirement, 
for life, and 
‘‘(B) in the form of life annuities, except 
for benefits which under section 411(a)(11) 
may be immediately distributed without the 
consent of the participant, 
‘‘(4) for which the plan contributions for the 
first plan year are at least 120 percent of the nor-
mal cost for the plan year, 
‘‘(5) which requires— 
‘‘(A) an annual valuation of the liability of 
the plan as of a date within the plan year to 
which the valuation refers or within one month 
prior to the beginning of such year, 
‘‘(B) an annual actuarial determination of 
the plan’s current funded ratio and projected 
funded ratio under section 438(a), 
‘‘(C) corrective action through a realign-
ment program pursuant to section 439 when-
ever the plan’s projected funded ratio is below 
120 percent for the plan year, and 
‘‘(D) an annual notification to each partici-
pant describing the participant’s benefits under 
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the plan and explaining that such benefits may 
be subject to reduction under a realignment 
program pursuant to section 439 based on the 
plan’s funded status in future plan years, and 
‘‘(6) the board of trustees of which includes at 
least one retiree or beneficiary in pay status during 
each plan year following the first plan year in which 
at least 5 percent of the participants in the plan are 
retirees or beneficiaries in pay status. 
‘‘(b) TRANSITION FROM
A MULTIEMPLOYER DE-
FINED BENEFIT PLAN.— 
‘‘(1) IN GENERAL.—The plan sponsor of a de-
fined benefit plan that is a multiemployer plan may, 
subject to paragraph (2), amend the plan to incor-
porate the features of a composite plan as a compo-
nent of the multiemployer plan separate from the 
defined benefit plan component, except in the case of 
a defined benefit plan for which the plan actuary has 
certified under section 432(b)(3) that the plan is or 
will be in critical status for the plan year in which 
such amendment would become effective or for any 
of the succeeding 5 plan years. 
‘‘(2) REQUIREMENTS.—Any amendment pursu-
ant to paragraph (1) to incorporate the features of 
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a composite plan as a component of a multiemployer 
plan shall— 
‘‘(A) apply with respect to all collective 
bargaining agreements providing for contribu-
tions to the multiemployer plan on or after the 
effective date of the amendment, 
‘‘(B) apply with respect to all participants 
in the multiemployer plan for whom contribu-
tions are made to the multiemployer plan on or 
after the effective date of the amendment, 
‘‘(C) specify that the effective date of the 
amendment is— 
‘‘(i) the first day of a specified plan 
year following the date of the adoption of 
the amendment, except that the plan spon-
sor may alternatively provide for a sepa-
rate effective date with respect to each col-
lective bargaining agreement under which 
contributions to the multiemployer plan 
are required, which shall occur on the first 
day of the first plan year beginning after 
the termination, or if earlier, the re-open-
ing, of each such agreement, or such ear-
lier date as the parties to the agreement 
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and the plan sponsor of the multiemployer 
plan shall agree to, and 
‘‘(ii) not later than the first day of the 
fifth plan year beginning on or after the 
date of the adoption of the amendment, 
‘‘(D) specify that, as of the amendment’s 
effective date, no further benefits shall accrue 
under the defined benefit component of the 
multiemployer plan, and 
‘‘(E) specify that, as of the amendment’s 
effective date, the plan sponsor of the multiem-
ployer plan shall be the plan sponsor of both 
the composite plan component and the defined 
benefit plan component of the plan. 
‘‘(3) SPECIAL RULES.—If a multiemployer plan 
is amended pursuant to paragraph (1)— 
‘‘(A) the requirements of this title shall be 
applied to the composite plan component and 
the defined benefit plan component of the mul-
tiemployer plan as if each such component were 
maintained as a separate plan, and 
‘‘(B) the assets of the composite plan com-
ponent and the defined benefit plan component 
of the plan shall be held in a single trust form-
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ing part of the plan under which the trust in-
strument expressly provides— 
‘‘(i) for separate accounts (and appro-
priate records) to be maintained to reflect 
the interest which each of the plan compo-
nents has in the trust, including separate 
accounting for additions to the trust for 
the benefit of each plan component, dis-
bursements made from each plan compo-
nent’s account in the trust, investment ex-
perience of the trust allocable to that ac-
count, and administrative expenses (wheth-
er direct expenses or shared expenses allo-
cated proportionally), and permits, but 
does not require, the pooling of some or all 
of the assets of the two plan components 
for investment purposes, and 
‘‘(ii) that the assets of each of the two 
plan components shall be held, invested, 
reinvested, managed, administered and dis-
tributed for the exclusive benefit of the 
participants and beneficiaries of each such 
plan component, and in no event shall the 
assets of one of the plan components be 
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available to pay benefits due under the 
other plan component. 
‘‘(4) NOT
A
TERMINATION
EVENT.—Notwith-
standing section 4041A of the Employee Retirement 
Income Security Act of 1974, an amendment pursu-
ant to paragraph (1) to incorporate the features of 
a composite plan as a component of a multiemployer 
plan does not constitute termination of the multiem-
ployer plan. 
‘‘(5) NOTICE TO THE SECRETARY.— 
‘‘(A) NOTICE.—The plan sponsor of a 
composite plan shall provide notice to the Sec-
retary of the intent to establish the composite 
plan (or, in the case of a composite plan incor-
porated as a component of a multiemployer 
plan as described in paragraph (1), the intent 
to amend the multiemployer plan to incorporate 
such composite plan) at least 30 days prior to 
the effective date of such establishment or 
amendment. 
‘‘(B) CERTIFICATION.—In the case of a 
composite plan incorporated as a component of 
a multiemployer plan as described in paragraph 
(1), such notice shall include a certification by 
the plan actuary under section 432(b)(3) that 
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the effective date of the amendment occurs in 
a plan year for which the multiemployer plan is 
not in critical status for that plan year and any 
of the succeeding 5 plan years. 
‘‘(6) REFERENCES TO COMPOSITE PLAN COM-
PONENT.—As used in this subpart, the term ‘com-
posite plan’ includes a composite plan component 
added to a defined benefit plan pursuant to para-
graph (1). 
‘‘(7) RULE
OF
CONSTRUCTION.—Paragraph 
(2)(A) shall not be construed as preventing the plan 
sponsor of a multiemployer plan from adopting an 
amendment pursuant to paragraph (1) because some 
collective bargaining agreements are amended to 
cease any covered employer’s obligation to contribute 
to the multiemployer plan before or after the plan 
amendment is effective. Paragraph (2)(B) shall not 
be construed as preventing the plan sponsor of a 
multiemployer plan from adopting an amendment 
pursuant to paragraph (1) because some partici-
pants cease to have contributions made to the multi-
employer plan on their behalf before or after the 
plan amendment is effective. 
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‘‘(c) COORDINATION WITH FUNDING RULES.—Ex-
cept as otherwise provided in this title, sections 412, 431, 
and 432 shall not apply to a composite plan. 
‘‘(d) TREATMENT OF A COMPOSITE PLAN.—For pur-
poses of this title (other than sections 412 and 418E), 
a composite plan shall be treated as if it were a defined 
benefit plan unless a different treatment is provided for 
under applicable law. 
‘‘SEC. 438. FUNDED RATIOS; ACTUARIAL ASSUMPTIONS. 
‘‘(a) CERTIFICATION OF FUNDED RATIOS.— 
‘‘(1) IN
GENERAL.—Not later than the one- 
hundred twentieth day of each plan year of a com-
posite plan, the plan actuary of the composite plan 
shall certify to the Secretary, the Secretary of 
Labor, and the plan sponsor the plan’s current fund-
ed ratio and projected funded ratio for the plan 
year. 
‘‘(2) DETERMINATION
OF
CURRENT
FUNDED 
RATIO AND PROJECTED FUNDED RATIO.—For pur-
poses of this section— 
‘‘(A) CURRENT FUNDED RATIO.—The cur-
rent funded ratio is the ratio (expressed as a 
percentage) of— 
‘‘(i) the value of the plan’s assets as 
of the first day of the plan year, to 
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‘‘(ii) the plan actuary’s best estimate 
of the present value of the plan liabilities 
as of the first day of the plan year. 
‘‘(B) PROJECTED
FUNDED
RATIO.—The 
projected funded ratio is the current funded 
ratio projected to the first day of the fifteenth 
plan year following the plan year for which the 
determination is being made. 
‘‘(3) CONSIDERATION OF CONTRIBUTION RATE 
INCREASES.—For purposes of projections under this 
subsection, the plan sponsor may anticipate con-
tribution rate increases beyond the term of the cur-
rent collective bargaining agreement and any agreed- 
to supplements, up to a maximum of 2.5 percent per 
year, compounded annually, unless it would be un-
reasonable under the circumstances to assume that 
contributions would increase by that amount. 
‘‘(b) ACTUARIAL ASSUMPTIONS
AND METHODS.— 
For purposes of this part— 
‘‘(1) IN GENERAL.—All costs, liabilities, rates 
of interest, and other factors under the plan shall be 
determined for a plan year on the basis of actuarial 
assumptions and methods— 
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‘‘(A) each of which is reasonable (taking 
into account the experience of the plan and rea-
sonable expectations), 
‘‘(B) which, in combination, offer the actu-
ary’s best estimate of anticipated experience 
under the plan, and 
‘‘(C) with respect to which any change 
from the actuarial assumptions and methods 
used in the previous plan year shall be certified 
by the plan actuary and the actuarial rationale 
for such change provided in the annual report 
required by section 6058. 
‘‘(2) FAIR MARKET VALUE OF ASSETS.—The 
value of the plan’s assets shall be taken into account 
on the basis of their fair market value. 
‘‘(3) DETERMINATION OF NORMAL COST AND 
PLAN LIABILITIES.—A plan’s normal cost and liabil-
ities shall be based on the most recent actuarial 
valuation required under section 437(a)(5)(A) and 
the unit credit funding method. 
‘‘(4) TIME
WHEN
CERTAIN
CONTRIBUTIONS 
DEEMED MADE.—Any contributions for a plan year 
made by an employer after the last day of such plan 
year, but not later than two and one-half months 
after such day, shall be deemed to have been made 
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on such last day. For purposes of this paragraph, 
such two and one-half month period may be ex-
tended for not more than six months under regula-
tions prescribed by the Secretary. 
‘‘(5) ADDITIONAL ACTUARIAL ASSUMPTIONS.— 
Except where otherwise provided in this subpart, the 
provisions of section 432(b)(3)(B) shall apply to any 
determination or projection under this subpart. 
‘‘SEC. 439. REALIGNMENT PROGRAM. 
‘‘(a) REALIGNMENT PROGRAM.— 
‘‘(1) ADOPTION.—In any case in which the plan 
actuary certifies under section 438(a) that the plan’s 
projected funded ratio is below 120 percent for the 
plan year, the plan sponsor shall adopt a realign-
ment program under paragraph (2) not later than 
210 days after the due date of the certification re-
quired under section 438(a). The plan sponsor shall 
adopt an updated realignment program for each suc-
ceeding plan year for which a certification described 
in the preceding sentence is made. 
‘‘(2) CONTENT OF REALIGNMENT PROGRAM.— 
‘‘(A) IN
GENERAL.—A realignment pro-
gram adopted under this paragraph is a written 
program which consists of all reasonable meas-
ures, including options or a range of options to 
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be undertaken by the plan sponsor or proposed 
to the bargaining parties, formulated, based on 
reasonably anticipated experience and reason-
able actuarial assumptions, to enable the plan 
to achieve a projected funded ratio of at least 
120 percent for the following plan year. 
‘‘(B) INITIAL PROGRAM ELEMENTS.—Rea-
sonable measures under a realignment program 
described in subparagraph (A) may include any 
of the following: 
‘‘(i) Proposed contribution increases. 
‘‘(ii) A reduction in the rate of future 
benefit accruals, so long as the resulting 
rate shall not be less than 1 percent of the 
contributions on which benefits are based 
as of the start of the plan year (or the 
equivalent standard accrual rate as de-
scribed in section 432(e)(6)). 
‘‘(iii) A modification or elimination of 
adjustable benefits of participants that are 
not in pay status before the date of the no-
tice required under subsection (b)(1). 
‘‘(iv) Any other legally available meas-
ures not specifically described in this sub-
paragraph or subparagraph (C) or (D) 
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that the plan sponsor determines are rea-
sonable. 
‘‘(C) ADDITIONAL PROGRAM ELEMENTS.— 
If the plan sponsor has determined that all rea-
sonable measures available under subparagraph 
(B) will not enable the plan to achieve a pro-
jected funded ratio of at least 120 percent the 
following plan year, such reasonable measures 
may also include— 
‘‘(i) a reduction of accrued benefits 
that are not in pay status by the date of 
the 
notice 
required 
under 
subsection 
(b)(1), or 
‘‘(ii) a reduction of any benefits of 
participants that are in pay status before 
the date of the notice required under sub-
section (b)(1) other than core benefits as 
defined in paragraph (4). 
‘‘(D) ADDITIONAL
REDUCTIONS.—In the 
case of a composite plan for which the plan 
sponsor has determined that all reasonable 
measures available under subparagraphs (B) 
and (C) will not enable the plan to achieve a 
projected funded ratio of at least 120 percent 
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for the following plan year, such reasonable 
measures may also include— 
‘‘(i) a further reduction in the rate of 
future benefit accruals without regard to 
the limitation applicable under subpara-
graph (B)(ii), or 
‘‘(ii) a reduction of core benefits, 
provided that such reductions shall be equitably 
distributed across the participant and bene-
ficiary population, taking into account factors, 
with respect to participants and beneficiaries 
and their benefits, that may include one or 
more of the factors listed in subclauses (I) 
through (X) of section 432(e)(9)(D)(vi), to the 
extent necessary to enable the plan to achieve 
a projected funded ratio of at least 120 percent 
for the following plan year, or at the election of 
the plan sponsor, a projected funded ratio of at 
least 100 percent for the following plan year 
and a current funded ratio of at least 90 per-
cent. 
‘‘(3) ADJUSTABLE
BENEFIT
DEFINED.—For 
purposes of this subpart, the term ‘adjustable ben-
efit’ means— 
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‘‘(A) benefits, rights, and features under 
the plan, including post-retirement death bene-
fits, 60-month guarantees, disability benefits 
not yet in pay status, and similar benefits, 
‘‘(B) any early retirement benefit or retire-
ment-type subsidy (within the meaning of sec-
tion 411(d)(6)(B)(i)) and any benefit payment 
option (other than the qualified joint and sur-
vivor annuity), and 
‘‘(C) benefit increases that were adopted 
(or, if later, took effect) less than 60 months 
before the first day such realignment program 
took effect. 
‘‘(4) CORE BENEFIT DEFINED.—For purposes 
of this subpart, the term ‘core benefit’ means a par-
ticipant’s accrued benefit payable in the normal form 
of an annuity commencing at normal retirement age, 
determined without regard to— 
‘‘(A) any early retirement benefits, retire-
ment-type subsidies, or other benefits, rights, or 
features that may be associated with that ben-
efit, and 
‘‘(B) any cost-of-living adjustments or ben-
efit increases effective after the date of retire-
ment. 
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‘‘(5) COORDINATION WITH CONTRIBUTION IN-
CREASES.— 
‘‘(A) IN
GENERAL.—A realignment pro-
gram may provide that some or all of the ben-
efit modifications described in the program will 
only take effect if the bargaining parties fail to 
agree to specified levels of increases in contribu-
tions to the plan, effective as of specified dates. 
‘‘(B) INDEPENDENT
BENEFIT
MODIFICA-
TIONS.—If a realignment program adopts any 
changes to the benefit formula that are inde-
pendent of potential contribution increases, 
such changes shall take effect not later than 
180 days following the first day of the first 
plan year that begins following the adoption of 
the realignment program. 
‘‘(C) CONDITIONAL
BENEFIT
MODIFICA-
TIONS.—If a realignment program adopts any 
changes to the benefit formula that take effect 
only if the bargaining parties fail to agree to 
contribution increases, such changes shall take 
effect not later than the first day of the first 
plan year beginning after the third anniversary 
of the date of adoption of the realignment pro-
gram. 
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‘‘(D) REVOCATION OF CERTAIN BENEFIT 
MODIFICATIONS.—Benefit 
modifications 
de-
scribed in paragraph (3) may be revoked, in 
whole or in part, and retroactively or prospec-
tively, when contributions to the plan are in-
creased, as specified in the realignment pro-
gram, including any amendments thereto. The 
preceding sentence shall not apply unless the 
contribution increases are to be effective not 
later than the fifth anniversary of the first day 
of the first plan year that begins after the 
adoption of the realignment program. 
‘‘(b) NOTICE.— 
‘‘(1) IN GENERAL.—In any case in which it is 
certified under section 438(a) that the projected 
funded ratio is less than 120 percent, the plan spon-
sor shall, not later than 30 days after the date of 
the certification, provide notification of the current 
and projected funded ratios to the participants and 
beneficiaries, the bargaining parties, and the Sec-
retary. Such notice shall include— 
‘‘(A) an explanation that contribution rate 
increases or benefit reductions may be nec-
essary, 
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‘‘(B) a description of the types of benefits 
that might be reduced, and 
‘‘(C) an estimate of the contribution in-
creases and benefit reductions that may be nec-
essary to achieve a projected funded ratio of 
120 percent. 
‘‘(2) NOTICE OF BENEFIT MODIFICATIONS.— 
‘‘(A) IN GENERAL.—No modifications may 
be made that reduce the rate of future benefit 
accrual or that reduce core benefits or adjust-
able benefits unless notice of such reduction has 
been given at least 180 days before the general 
effective date of such reduction for all partici-
pants and beneficiaries to— 
‘‘(i) plan participants and bene-
ficiaries, 
‘‘(ii) each employer who has an obliga-
tion to contribute to the composite plan, 
and 
‘‘(iii) 
each 
employee 
organization 
which, for purposes of collective bar-
gaining, represents plan participants em-
ployed by such employers. 
‘‘(B) CONTENT
OF
NOTICE.—The notice 
under subparagraph (A) shall contain— 
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‘‘(i) sufficient information to enable 
participants and beneficiaries to under-
stand the effect of any reduction on their 
benefits, including an illustration of any 
affected benefit or subsidy, on an annual 
or monthly basis that a participant or ben-
eficiary would otherwise have been eligible 
for as of the general effective date de-
scribed in subparagraph (A), and 
‘‘(ii) information as to the rights and 
remedies of plan participants and bene-
ficiaries as well as how to contact the De-
partment of Labor for further information 
and assistance, where appropriate. 
‘‘(C) FORM
AND
MANNER.—Any notice 
under subparagraph (A)— 
‘‘(i) shall be provided in a form and 
manner prescribed in regulations of the 
Secretary of Labor, 
‘‘(ii) shall be written in a manner so 
as to be understood by the average plan 
participant. 
‘‘(3) MODEL NOTICES.—The Secretary shall— 
‘‘(A) prescribe model notices that the plan 
sponsor of a composite plan may use to satisfy 
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the notice requirements under this subsection, 
and 
‘‘(B) by regulation enumerate any details 
related to the elements listed in paragraph (1) 
that any notice under this subsection must in-
clude. 
‘‘(4) DELIVERY
METHOD.—Any notice under 
this part shall be provided in writing and may also 
be provided in electronic form to the extent that the 
form is reasonably accessible to persons to whom the 
notice is provided. 
‘‘SEC. 440. LIMITATION ON INCREASING BENEFITS. 
‘‘(a) LEVEL OF CURRENT FUNDED RATIOS.—Except 
as provided in subsections (c), (d), and (e), no plan 
amendment increasing benefits or establishing new bene-
fits under a composite plan may be adopted for a plan 
year unless— 
‘‘(1) the plan’s current funded ratio is at least 
110 percent (without regard to the benefit increase 
or new benefits), 
‘‘(2) taking the benefit increase or new benefits 
into account, the current funded ratio is at least 100 
percent and the projected funded ratio for the cur-
rent plan year is at least 120 percent, 
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‘‘(3) in any case in which, after taking the ben-
efit increase or new benefits into account, the cur-
rent funded ratio is less than 140 percent or the 
projected funded ratio is less than 140 percent, the 
benefit increase or new benefits are projected by the 
plan actuary to increase the present value of the 
plan’s liabilities for the plan year by not more than 
3 percent, and 
‘‘(4) expected contributions for the current plan 
year are at least 120 percent of normal cost for the 
plan year, determined using the unit credit funding 
method and treating the benefit increase or new ben-
efits as in effect for the entire plan year. 
‘‘(b) ADDITIONAL REQUIREMENTS WHERE CORE 
BENEFITS REDUCED.—If a plan has been amended to re-
duce core benefits pursuant to a realignment program 
under section 439(a)(2)(D), such plan may not be subse-
quently amended to increase core benefits unless the 
amendment— 
‘‘(1) increases the level of future benefit pay-
ments only, and 
‘‘(2) provides for an equitable distribution of 
benefit increases across the participant and bene-
ficiary population, taking into account the extent to 
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which the benefits of participants were previously re-
duced pursuant to such realignment program. 
‘‘(c) EXCEPTION TO COMPLY WITH APPLICABLE 
LAW.—Subsection (a) shall not apply in connection with 
a plan amendment if the amendment is required as a con-
dition of qualification under part I of subchapter D of 
chapter 1 or to comply with other applicable law. 
‘‘(d) EXCEPTION WHERE MAXIMUM DEDUCTIBLE 
LIMIT APPLIES.—Subsection (a) shall not apply in con-
nection with a plan amendment if and to the extent that 
contributions to the composite plan would not be deduct-
ible for the plan year under section 404(a)(1)(E) if the 
plan amendment is not adopted. The Secretary of the 
Treasury shall issue regulations to implement this para-
graph. 
‘‘(e) EXCEPTION FOR CERTAIN BENEFIT MODIFICA-
TIONS.—Subsection (a) shall not apply in connection with 
a plan amendment under section 439(a)(5)(C), regarding 
conditional benefit modifications. 
‘‘(f) TREATMENT OF PLAN AMENDMENTS.—For pur-
poses of this section— 
‘‘(1) if two or more plan amendments increas-
ing benefits or establishing new benefits are adopted 
in a plan year, such amendments shall be treated as 
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a single amendment adopted on the last day of the 
plan year, 
‘‘(2) all benefit increases and new benefits 
adopted in a single amendment are treated as a sin-
gle benefit increase, irrespective of whether the in-
creases and new benefits take effect in more than 
one plan year, and 
‘‘(3) increases in contributions or decreases in 
plan liabilities which are scheduled to take effect in 
future plan years may be taken into account in con-
nection with a plan amendment if they have been 
agreed to in writing or otherwise formalized by the 
date the plan amendment is adopted. 
‘‘SEC. 440A. COMPOSITE PLAN RESTRICTIONS TO PRE-
SERVE LEGACY PLAN FUNDING. 
‘‘(a) TREATMENT AS A LEGACY PLAN.— 
‘‘(1) IN GENERAL.—For purposes of this sub-
chapter, a defined benefit plan shall be treated as a 
legacy plan with respect to the composite plan under 
which the employees who were eligible to accrue a 
benefit under the defined benefit plan become eligi-
ble to accrue a benefit under such composite plan. 
‘‘(2) COMPONENT
PLANS.—In any case in 
which a defined benefit plan is amended to add a 
composite plan component pursuant to section 
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437(b), paragraph (1) shall be applied by sub-
stituting ‘defined benefit component’ for ‘defined 
benefit plan’ and ‘composite plan component’ for 
‘composite plan’. 
‘‘(3) ELIGIBLE TO ACCRUE A BENEFIT.—For 
purposes of paragraph (1), an employee is consid-
ered eligible to accrue a benefit under a composite 
plan as of the first day in which the employee com-
pletes an hour of service under a collective bar-
gaining agreement that provides for contributions to 
and accruals under the composite plan in lieu of ac-
cruals under the legacy plan. 
‘‘(4) COLLECTIVE BARGAINING AGREEMENT.— 
As used in this subpart, the term ‘collective bar-
gaining agreement’ includes any agreement under 
which an employer has an obligation to contribute to 
a plan. 
‘‘(5) OTHER TERMS.—Any term used in this 
subpart which is not defined in this part and which 
is also used in section 432 shall have the same 
meaning provided such term in such section. 
‘‘(b) RESTRICTIONS ON ACCEPTANCE BY COMPOSITE 
PLAN OF AGREEMENTS AND CONTRIBUTIONS.— 
‘‘(1) IN GENERAL.—The plan sponsor of a com-
posite plan shall not accept or recognize a collective 
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bargaining agreement (or any modification to such 
agreement), and no contributions may be accepted 
and no benefits may be accrued or otherwise earned 
under the agreement— 
‘‘(A) in any case in which the plan actuary 
of any defined benefit plan that would be treat-
ed as a legacy plan with respect to such com-
posite 
plan 
has 
certified 
under 
section 
432(b)(3) that such defined benefit plan is or 
will be in critical status for the plan year in 
which such agreement would take effect or for 
any of the succeeding 5 plan years, and 
‘‘(B) unless the agreement requires each 
employer who is a party to such agreement, in-
cluding employers whose employees are not par-
ticipants in the legacy plan, to provide contribu-
tions to the legacy plan with respect to such 
composite plan in a manner that satisfies the 
transition contribution requirements of sub-
section (d). 
‘‘(2) NOTICE.—Not later than 30 days after a 
determination by a plan sponsor of a composite plan 
that an agreement fails to satisfy the requirements 
described in paragraph (1), the plan sponsor shall 
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provide notification of such failure and the reasons 
for such determination to— 
‘‘(A) the parties to the agreement, 
‘‘(B) active participants of the composite 
plan who have ceased to accrue or otherwise 
earn benefits with respect to service with an 
employer pursuant to paragraph (1), and 
‘‘(C) the Secretary of Labor, the Secretary 
of the Treasury, and the Pension Benefit Guar-
anty Corporation. 
‘‘(3) LIMITATION ON RETROACTIVE EFFECT.— 
This subsection shall not apply to benefits accrued 
before the date on which notice is provided under 
paragraph (2). 
‘‘(c) RESTRICTION
ON
ACCRUAL
OF
BENEFITS 
UNDER A COMPOSITE PLAN.— 
‘‘(1) IN GENERAL.—In any case in which an 
employer, under a collective bargaining agreement 
entered into after February 5, 2018, ceases to have 
an obligation to contribute to a multiemployer de-
fined benefit plan, no employees employed by the 
employer may accrue or otherwise earn benefits 
under any composite plan, with respect to service 
with that employer, for a 60-month period beginning 
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on the date on which the employer entered into such 
collective bargaining agreement. 
‘‘(2) NOTICE OF CESSATION OF OBLIGATION.— 
Within 30 days of determining that an employer has 
ceased to have an obligation to contribute to a leg-
acy plan with respect to employees employed by an 
employer that is or will be contributing to a com-
posite plan with respect to service of such employees, 
the plan sponsor of the legacy plan shall notify the 
plan sponsor of the composite plan of that cessation. 
‘‘(3) NOTICE OF CESSATION OF ACCRUALS.— 
Not later than 30 days after determining that an 
employer has ceased to have an obligation to con-
tribute to a legacy plan, the plan sponsor of the 
composite plan shall notify the bargaining parties, 
the active participants affected by the cessation of 
accruals, the Secretary, the Secretary of Labor, and 
the Pension Benefit Guaranty Corporation of the 
cessation of accruals, the period during which such 
cessation is in effect, and the reasons therefor. 
‘‘(4) LIMITATION ON RETROACTIVE EFFECT.— 
This subsection shall not apply to benefits accrued 
before the date on which notice is provided under 
paragraph (3). 
‘‘(d) TRANSITION CONTRIBUTION REQUIREMENTS.— 
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‘‘(1) IN
GENERAL.—A collective bargaining 
agreement satisfies the transition contribution re-
quirements of this subsection if the agreement— 
‘‘(A) authorizes for payment of contribu-
tions to a legacy plan at a rate or rates equal 
to or greater than the transition contribution 
rate established under paragraph (2), and 
‘‘(B) does not provide for— 
‘‘(i) a suspension of contributions to 
the legacy plan with respect to any period 
of service, or 
‘‘(ii) any new direct or indirect exclu-
sion of younger or newly hired employees 
of the employer from being taken into ac-
count in determining contributions owed to 
the legacy plan. 
‘‘(2) TRANSITION CONTRIBUTION RATE.— 
‘‘(A) IN
GENERAL.—The transition con-
tribution rate for a plan year is the contribution 
rate that, as certified by the actuary of the leg-
acy plan in accordance with the principles in 
section 432(b)(3)(B), is reasonably expected to 
be adequate— 
‘‘(i) to fund the normal cost for the 
plan year, 
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‘‘(ii) to amortize the plan’s unfunded 
liabilities in level annual installments over 
25 years, beginning with the plan year in 
which the transition contribution rate is 
first established, and 
‘‘(iii) to amortize any subsequent 
changes in the legacy plan’s unfunded li-
ability due to experience gains or losses 
(including investment gains or losses, gains 
or losses due to contributions greater or 
less than the contributions made under the 
prior transition contribution rate, and 
other actuarial gains or losses), changes in 
actuarial assumptions, changes to the leg-
acy plan’s benefits, or changes in funding 
method over a period of 15 plan years be-
ginning with the plan year in which such 
change in unfunded liability is incurred. 
The transition contribution rate for any plan 
year may not be less than the transition con-
tribution rate for the plan year in which such 
rate is first established. 
‘‘(B) MULTIPLE RATES.—If different rates 
of contribution are payable to the legacy plan 
by different employers or for different classes of 
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employees, the certification shall specify a tran-
sition contribution rate for each such employer. 
‘‘(C) RATE APPLICABLE TO EMPLOYER.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided by clause (ii), the transition con-
tribution rate applicable to an employer for 
a plan year is the rate in effect for the 
plan year of the legacy plan that com-
mences on or after 180 days before the 
earlier of— 
‘‘(I) the effective date of the col-
lective bargaining agreement pursuant 
to which the employer contributes to 
the legacy plan, or 
‘‘(II) 5 years after the last plan 
year for which the transition contribu-
tion rate applicable to the employer 
was established or updated. 
‘‘(ii) 
EXCEPTION.—The 
transition 
contribution rate applicable to an employer 
for the first plan year beginning on or 
after the commencement of the employer’s 
obligation to contribute to the composite 
plan is the rate in effect for the plan year 
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of the legacy plan that commences on or 
after 180 days before such first plan year. 
‘‘(D) EFFECT OF LEGACY PLAN FINANCIAL 
CIRCUMSTANCES.—If the plan actuary of the 
legacy plan has certified under section 432 that 
the plan is in endangered or critical status for 
a plan year, the transition contribution rate for 
the following plan year is the rate determined 
with respect to the employer under the legacy 
plan’s funding improvement or rehabilitation 
plan under section 432, if greater than the rate 
otherwise determined, but in no event greater 
than 75 percent of the sum of the contribution 
rates applicable to the legacy plan and the com-
posite plan for the plan year. 
‘‘(E) OTHER
ACTUARIAL
ASSUMPTIONS 
AND
METHODS.—Except as provided in sub-
paragraph (A), the determination of the transi-
tion contribution rate for a plan year shall be 
based on actuarial assumptions and methods 
consistent with the minimum funding deter-
minations made under section 431 (or, if appli-
cable, section 432) with respect to the legacy 
plan for the plan year. 
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‘‘(F) ADJUSTMENTS IN RATE.—The plan 
sponsor of a legacy plan from time to time may 
adjust the transition contribution rate or rates 
applicable to an employer under this paragraph 
by increasing some rates and decreasing others 
if the actuary certifies that such adjusted rates 
in combination will produce projected contribu-
tion income for the plan year beginning on or 
after the date of certification that is not less 
than would be produced by the transition con-
tribution rates in effect at the time of the cer-
tification. 
‘‘(G) NOTICE OF TRANSITION CONTRIBU-
TION RATE.—The plan sponsor of a legacy plan 
shall provide notice to the parties to collective 
bargaining agreements pursuant to which con-
tributions are made to the legacy plan of 
changes to the transition contribution rate re-
quirements at least 30 days before the begin-
ning of the plan year for which the rate is effec-
tive. 
‘‘(H) NOTICE TO COMPOSITE PLAN SPON-
SOR.—Not later than 30 days after a deter-
mination by the plan sponsor of a legacy plan 
that a collective bargaining agreement provides 
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for a rate of contributions that is below the 
transition contribution rate applicable to one or 
more employers that are parties to the collective 
bargaining agreement, the plan sponsor of the 
legacy plan shall notify the plan sponsor of any 
composite plan under which employees of such 
employer would otherwise be eligible to accrue 
a benefit. 
‘‘(3) CORRECTION PROCEDURES.—Pursuant to 
standards prescribed by the Secretary of Labor, the 
plan sponsor of a composite plan shall adopt rules 
and procedures that give the parties to the collective 
bargaining agreement notice of the failure of such 
agreement to satisfy the transition contribution re-
quirements of this subsection, and a reasonable op-
portunity to correct such failure, not to exceed 180 
days from the date of notice given under subsection 
(b)(2). 
‘‘(4) SUPPLEMENTAL CONTRIBUTIONS.—A col-
lective bargaining agreement may provide for supple-
mental contributions to the legacy plan for a plan 
year in excess of the transition contribution rate de-
termined under paragraph (2), regardless of whether 
the legacy plan is in endangered or critical status for 
such plan year. 
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‘‘(e) NONAPPLICATION
OF COMPOSITE PLAN RE-
STRICTIONS.— 
‘‘(1) IN
GENERAL.—The provisions of sub-
sections (a), (b), and (c) shall not apply with respect 
to a collective bargaining agreement, to the extent 
the agreement, or a predecessor agreement, provides 
or provided for contributions to a defined benefit 
plan that is a legacy plan, as of the first day of the 
first plan year following a plan year for which the 
plan actuary certifies that the plan is fully funded, 
has been fully funded for at least three out of the 
immediately preceding 5 plan years, and is projected 
to remain fully funded for at least the following 4 
plan years. 
‘‘(2) DETERMINATION OF FULLY FUNDED.—A 
plan is fully funded for purposes of paragraph (1) 
if, as of the valuation date of the plan for a plan 
year, the value of the plan’s assets equals or exceeds 
the present value of the plan’s liabilities, determined 
in accordance with the rules prescribed by the Pen-
sion Benefit Guaranty Corporation under sections 
4219(c)(1)(D) and 4281 of Employee Retirement 
Income and Security Act for multiemployer plans 
terminating by mass withdrawal, as in effect for the 
date of the determination, except the plan’s reason-
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able assumption regarding the starting date of bene-
fits may be used. 
‘‘(3) OTHER
APPLICABLE
RULES.—Except as 
provided in paragraph (2), actuarial determinations 
and projections under this section shall be based on 
the rules in section 432(b)(3) and section 438(b). 
‘‘SEC. 440B. MERGERS AND ASSET TRANSFERS OF COM-
POSITE PLANS. 
‘‘(a) IN GENERAL.—Assets and liabilities of a com-
posite plan may only be merged with, or transferred to, 
another plan if— 
‘‘(1) the other plan is a composite plan, 
‘‘(2) the plan or plans resulting from the merg-
er or transfer is a composite plan, 
‘‘(3) no participant’s accrued benefit or adjust-
able benefit is lower immediately after the trans-
action than it was immediately before the trans-
action, and 
‘‘(4) the value of the assets transferred in the 
case of a transfer reasonably reflects the value of the 
amounts contributed with respect to the participants 
whose benefits are being transferred, adjusted for al-
locable distributions, investment gains and losses, 
and administrative expenses. 
‘‘(b) LEGACY PLAN.— 
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‘‘(1) IN GENERAL.—After a merger or transfer 
involving a composite plan, the legacy plan with re-
spect to an employer that is obligated to contribute 
to the resulting composite plan is the legacy plan 
that applied to that employer immediately before the 
merger or transfer. 
‘‘(2) MULTIPLE
LEGACY
PLANS.—If an em-
ployer is obligated to contribute to more than one 
legacy plan with respect to employees eligible to ac-
crue benefits under more than one composite plan 
and there is a merger or transfer of such legacy 
plans, the transition contribution rate applicable to 
the legacy plan resulting from the merger or trans-
fer with respect to that employer shall be determined 
in accordance with the provisions of section 
440A(d)(2)(B).’’. 
(2) CLERICAL AMENDMENT.—The table of sub-
parts for part III of subchapter D of chapter 1 of 
the Internal Revenue Code of 1986 is amended by 
adding at the end the following new item: 
‘‘SUBPART C. COMPOSITE PLANS AND LEGACY PLANS’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after the 
date of the enactment of this Act. 
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SEC. 3. APPLICATION OF CERTAIN REQUIREMENTS TO 
COMPOSITE PLANS. 
(a) AMENDMENTS TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.— 
(1) TREATMENT FOR PURPOSES OF FUNDING 
NOTICES.—Section 101(f) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1021(f)) is amended— 
(A) in paragraph (1) by striking ‘‘title IV 
applies’’ and inserting ‘‘title IV applies or which 
is a composite plan’’; and 
(B) by adding at the end the following: 
‘‘(5) APPLICATION TO COMPOSITE PLANS.—The 
provisions of this subsection shall apply to a com-
posite plan only to the extent prescribed by the Sec-
retary in regulations that take into account the dif-
ferences between a composite plan and a defined 
benefit plan that is a multiemployer plan.’’. 
(2) TREATMENT
FOR
PURPOSES
OF
ANNUAL 
REPORT.—Section 103 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1023) is 
amended— 
(A) in subsection (d) by adding at the end 
the following sentence: ‘‘The provisions of this 
subsection shall apply to a composite plan only 
to the extent prescribed by the Secretary in reg-
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ulations that take into account the differences 
between a composite plan and a defined benefit 
plan that is a multiemployer plan.’’; 
(B) in subsection (f) by adding at the end 
the following: 
‘‘(3) ADDITIONAL
INFORMATION
FOR
COM-
POSITE
PLANS.—With respect to any composite 
plan— 
‘‘(A) the provisions of paragraph (1)(A) 
shall apply by substituting ‘current funded ratio 
and projected funded ratio (as such terms are 
defined in section 802(a)(2))’ for ‘funded per-
centage’ each place it appears; and 
‘‘(B) the provisions of paragraph (2) shall 
apply only to the extent prescribed by the Sec-
retary in regulations that take into account the 
differences between a composite plan and a de-
fined benefit plan that is a multiemployer 
plan.’’; and 
(C) by adding at the end the following: 
‘‘(h) COMPOSITE PLANS.—A multiemployer plan that 
incorporates the features of a composite plan as provided 
in section 801(b) shall be treated as a single plan for pur-
poses of the report required by this section, except that 
separate financial statements and actuarial statements 
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shall be provided under paragraphs (3) and (4) of sub-
section (a) for the defined benefit plan component and for 
the composite plan component of the multiemployer 
plan.’’. 
(3) TREATMENT FOR PURPOSES OF PENSION 
BENEFIT STATEMENTS.—Section 105(a) of the Em-
ployee Retirement Income Security Act of 1974 (29 
U.S.C. 1025(a)) is amended by adding at the end 
the following: 
‘‘(4) COMPOSITE PLANS.—For purposes of this 
subsection, a composite plan shall be treated as a 
defined benefit plan to the extent prescribed by the 
Secretary in regulations that take into account the 
differences between a composite plan and a defined 
benefit plan that is a multiemployer plan.’’. 
(b) AMENDMENTS
TO
THE INTERNAL REVENUE 
CODE OF 1986.—Section 6058 of the Internal Revenue 
Code of 1986 is amended by redesignating subsection (f) 
as subsection (g) and by inserting after subsection (e) the 
following: 
‘‘(f) COMPOSITE PLANS.—A multiemployer plan that 
incorporates the features of a composite plan as provided 
in section 437(b) shall be treated as a single plan for pur-
poses of the return required by this section, except that 
separate financial statements shall be provided for the de-
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fined benefit plan component and for the composite plan 
component of the multiemployer plan.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after the 
date of the enactment of this Act. 
SEC. 4. TREATMENT OF COMPOSITE PLANS UNDER TITLE 
IV. 
(a) DEFINITION.—Section 4001(a) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1301(a)) is amended by striking the period at the end of 
paragraph (21) and inserting a semicolon and by adding 
at the end the following: 
‘‘(22) COMPOSITE PLAN.—The term ‘composite 
plan’ has the meaning set forth in section 801.’’. 
(b) COMPOSITE PLANS DISREGARDED FOR CALCU-
LATING PREMIUMS.—Section 4006(a) of such Act (29 
U.S.C. 1306(a)) is amended by adding at the end the fol-
lowing: 
‘‘(9) The composite plan component of a multi-
employer plan shall be disregarded in determining 
the premiums due under this section from the multi-
employer plan.’’. 
(c) COMPOSITE
PLANS
NOT
COVERED.—Section 
4021(b)(1) of such Act (29 U.S.C. 1321(b)(1)) is amend-
ed by striking ‘‘Act’’ and inserting ‘‘Act, or a composite 
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plan, as defined in paragraph (43) of section 3 of this 
Act’’. 
(d) NO WITHDRAWAL LIABILITY.—Section 4201 of 
such Act (29 U.S.C. 1381) is amended by adding at the 
end the following: 
‘‘(c) Contributions by an employer to the composite 
plan component of a multiemployer plan shall not be taken 
into account for any purpose under this title.’’. 
(e) NO
WITHDRAWAL
LIABILITY
FOR
CERTAIN 
PLANS.—Section 4201 of such Act (29 U.S.C. 1381) is 
further amended by adding at the end the following: 
‘‘(d) Contributions by an employer to a multiem-
ployer plan described in the except clause of section 3(35) 
of this Act pursuant to a collective bargaining agreement 
that specifically designates that such contributions shall 
be allocated to the separate defined contribution accounts 
of participants under the plan shall not be taken into ac-
count with respect to the defined benefit portion of the 
plan for any purpose under this title (including the deter-
mination of the employer’s highest contribution rate under 
section 4219), even if, under the terms of the plan, partici-
pants have the option to transfer assets in their separate 
defined contribution accounts to the defined benefit por-
tion of the plan in return for service credit under the de-
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fined benefit portion, at rates established by the plan 
sponsor. 
‘‘(e) A legacy plan created under section 805 shall 
be deemed to have no unfunded vested benefits for pur-
poses of this part, for each plan year following a period 
of 5 consecutive plan years for which— 
‘‘(1) the plan was fully funded within the mean-
ing of section 805 for at least 3 of the plan years 
during that period, ending with a plan year for 
which the plan is fully funded; 
‘‘(2) the plan had no unfunded vested benefits 
for at least 3 of the plan years during that period, 
ending with a plan year for which the plan is fully 
funded; and 
‘‘(3) the plan is projected to be fully funded 
and to have no unfunded vested benefits for the fol-
lowing four plan years.’’. 
(f) NO WITHDRAWAL LIABILITY FOR EMPLOYERS 
CONTRIBUTING TO CERTAIN FULLY FUNDED LEGACY 
PLANS.—Section 4211 of such Act (29 U.S.C. 1382) is 
amended by adding at the end the following: 
‘‘(g) No amount of unfunded vested benefits shall be 
allocated to an employer that has an obligation to con-
tribute to a legacy plan described in subsection (e) of sec-
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tion 4201 for each plan year for which such subsection 
applies.’’. 
(g) NO
OBLIGATION
TO
CONTRIBUTE.—Section 
4212 of such Act (29 U.S.C. 1392) is amended by adding 
at the end the following: 
‘‘(d) NO OBLIGATION TO CONTRIBUTE.—An em-
ployer shall not be treated as having an obligation to con-
tribute to a multiemployer defined benefit plan within the 
meaning of subsection (a) solely because— 
‘‘(1) in the case of a multiemployer plan that 
includes a composite plan component, the employer 
has an obligation to contribute to the composite plan 
component of the plan; 
‘‘(2) the employer has an obligation to con-
tribute to a composite plan that is maintained pur-
suant to one or more collective bargaining agree-
ments under which the multiemployer defined ben-
efit plan is or previously was maintained; or 
‘‘(3) the employer contributes or has contrib-
uted under section 805(d) to a legacy plan associ-
ated with a composite plan pursuant to a collective 
bargaining agreement but employees of that em-
ployer were not eligible to accrue benefits under the 
legacy plan with respect to service with that em-
ployer.’’. 
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(h) NO INFERENCE.—Nothing in the amendment 
made by subsection (e) shall be construed to create an in-
ference with respect to the treatment under title IV of the 
Employee Retirement Income Security Act of 1974, as in 
effect before such amendment, of contributions by an em-
ployer to a multiemployer plan described in the except 
clause of section 3(35) of such Act that are made before 
the effective date of subsection (e) specified in subsection 
(h)(2). 
(i) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in sub-
paragraph (2), the amendments made by this section 
shall apply to plan years beginning after the date of 
the enactment of this Act. 
(2) SPECIAL RULE FOR SECTION 414(k) MULTI-
EMPLOYER PLANS.—The amendment made by sub-
section (e) shall apply only to required contributions 
payable for plan years beginning after the date of 
the enactment of this Act. 
SEC. 5. CONFORMING CHANGES. 
(a) DEFINITIONS.—Section 3 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1002) 
is amended— 
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(1) in paragraph (35), by inserting ‘‘or a com-
posite plan’’ after ‘‘other than an individual account 
plan’’; and 
(2) by adding at the end the following: 
‘‘(43) The term ‘composite plan’ has the mean-
ing given the term in section 801(a).’’. 
(b) SPECIAL FUNDING RULE FOR CERTAIN LEGACY 
PLANS.— 
(1) AMENDMENT TO EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.—Section 304(b) of 
the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1084(b)) is amended by adding at 
the end the following: 
‘‘(9) SPECIAL
FUNDING
RULE
FOR
CERTAIN 
LEGACY PLANS.—In the case of a multiemployer de-
fined benefit plan that has adopted an amendment 
under section 801(b), in accordance with which no 
further benefits shall accrue under the multiem-
ployer defined benefit plan, the plan sponsor may 
combine the outstanding balance of all charge and 
credit bases and amortize that combined base in 
level annual installments (until fully amortized) over 
a period of 25 plan years beginning with the plan 
year following the date all benefit accruals ceased.’’. 
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(2) AMENDMENT TO INTERNAL REVENUE CODE 
OF 1986.—Section 431(b) of the Internal Revenue 
Code of 1986 is amended by adding at the end the 
following: 
‘‘(9) SPECIAL
FUNDING
RULE
FOR
CERTAIN 
LEGACY PLANS.—In the case of a multiemployer de-
fined benefit plan that has adopted an amendment 
under section 437(b), in accordance with which no 
further benefits shall accrue under the multiem-
ployer defined benefit plan, the plan sponsor may 
combine the outstanding balance of all charge and 
credit bases and amortize that combined base in 
level annual installments (until fully amortized) over 
a period of 25 plan years beginning with the plan 
year following the date on which all benefit accruals 
ceased.’’. 
(c) BENEFITS AFTER MERGER, CONSOLIDATION, OR 
TRANSFER OF ASSETS.— 
(1) AMENDMENT TO EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.—Section 208 of the 
Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1058) is amended— 
(A) by striking so much of the first sen-
tence as precedes ‘‘may not merge’’ and insert-
ing the following: 
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‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), a pension plan may not merge, and’’; and 
(B) by striking the second sentence and 
adding at the end the following: 
‘‘(2) SPECIAL REQUIREMENTS FOR MULTIEM-
PLOYER PLANS.—Paragraph (1) shall not apply to 
any transaction to the extent that participants either 
before or after the transaction are covered under a 
multiemployer plan to which title IV of this Act ap-
plies or a composite plan.’’. 
(2) AMENDMENTS
TO
INTERNAL
REVENUE 
CODE OF 1986.— 
(A) QUALIFICATION REQUIREMENT.—Sec-
tion 401(a)(12) of the Internal Revenue Code 
of 1986 is amended— 
(i) by striking ‘‘(12) A trust’’ and in-
serting the following: 
‘‘(12) BENEFITS AFTER MERGER, CONSOLIDA-
TION, OR TRANSFER OF ASSETS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), a trust’’; 
(ii) by striking the second sentence; 
and 
(iii) by adding at the end the fol-
lowing: 
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‘‘(B) SPECIAL REQUIREMENTS FOR MULTI-
EMPLOYER
PLANS.—Subparagraph (A) shall 
not apply to any multiemployer plan with re-
spect to any transaction to the extent that par-
ticipants either before or after the transaction 
are covered under a multiemployer plan to 
which title IV of the Employee Retirement In-
come Security Act of 1974 applies or a com-
posite plan.’’. 
(B) ADDITIONAL QUALIFICATION REQUIRE-
MENT.—Paragraph (1) of section 414(l) of such 
Code is amended— 
(i) by striking ‘‘(1) IN GENERAL’’ and 
all that follows through ‘‘shall not con-
stitute’’ and inserting the following: 
‘‘(1) BENEFIT
PROTECTIONS: MERGER, CON-
SOLIDATION, TRANSFER.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), a trust which forms a part 
of a plan shall not constitute’’; and 
(ii) by striking the second sentence; 
and 
(iii) by adding at the end the fol-
lowing: 
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‘‘(B) SPECIAL REQUIREMENTS FOR MULTI-
EMPLOYER PLANS.—Subparagraph (A) does not 
apply to any multiemployer plan with respect to 
any transaction to the extent that participants 
either before or after the transaction are cov-
ered under a multiemployer plan to which title 
IV of the Employee Retirement Income Secu-
rity Act of 1974 applies or a composite plan.’’. 
(d) REQUIREMENTS FOR STATUS AS A QUALIFIED 
PLAN.— 
(1) REQUIREMENT THAT ACTUARIAL ASSUMP-
TIONS BE SPECIFIED.—Section 401(a)(25) of the In-
ternal Revenue Code of 1986 is amended by insert-
ing ‘‘(in the case of a composite plan, benefits objec-
tively calculated pursuant to a formula)’’ after ‘‘defi-
nitely determinable benefits’’. 
(2) MISSING
PARTICIPANTS
IN
TERMINATING 
COMPOSITE PLAN.—Section 401(a)(34) of the Inter-
nal Revenue Code of 1986 is amended by striking ‘‘, 
a trust’’ and inserting ‘‘or a composite plan, a 
trust’’. 
(e) DEDUCTION FOR CONTRIBUTIONS TO A QUALI-
FIED PLAN.—Section 404(a)(1) of the Internal Revenue 
Code of 1986 is amended by redesignating subparagraph 
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(E) as subparagraph (F) and by inserting after subpara-
graph (D) the following: 
‘‘(E) COMPOSITE PLANS.— 
‘‘(i) IN GENERAL.—In the case of a 
composite plan, subparagraph (D) shall 
not apply and the maximum amount de-
ductible for a plan year shall be the excess 
(if any) of— 
‘‘(I) 160 percent of the greater 
of— 
‘‘(aa) the current liability of 
the plan determined in accord-
ance with the principles of sec-
tion 431(c)(6)(D), or 
‘‘(bb) the present value of 
plan liabilities as determined 
under section 438, over 
‘‘(II) the fair market value of the 
plan’s assets, projected to the end of 
the plan year. 
‘‘(ii) SPECIAL
RULES
FOR
PREDE-
CESSOR
MULTIEMPLOYER
PLAN
TO
COM-
POSITE PLAN.— 
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), if an em-
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ployer contributes to a composite plan 
with respect to its employees, con-
tributions by that employer to a mul-
tiemployer defined benefit plan with 
respect to some or all of the same 
group of employees shall be deductible 
under sections 162 and this section, 
subject to the limits in subparagraph 
(D). 
‘‘(II) 
TRANSITION
CONTRIBU-
TION.—The full amount of a contribu-
tion to satisfy the transition contribu-
tion requirement (as defined in sec-
tion 440A(d)) and allocated to the 
legacy defined benefit plan for the 
plan year shall be deductible for the 
employer’s taxable year ending with or 
within the plan year.’’. 
(f) MINIMUM VESTING STANDARDS.— 
(1) YEARS
OF
SERVICE
UNDER
COMPOSITE 
PLANS.— 
(A) EMPLOYEE RETIREMENT INCOME SE-
CURITY ACT OF 1974.—Section 203 of the Em-
ployee Retirement Income Security Act of 1974 
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(29 U.S.C. 1053) is amended by inserting after 
subsection (f) the following: 
‘‘(g) SPECIAL RULES FOR COMPUTING YEARS OF 
SERVICE UNDER COMPOSITE PLANS.— 
‘‘(1) IN GENERAL.—In determining a qualified 
employee’s years of service under a composite plan 
for purposes of this section, the employee’s years of 
service under a legacy plan shall be treated as years 
of service earned under the composite plan. For pur-
poses of such determination, a composite plan shall 
not be treated as a defined benefit plan pursuant to 
section 801(d). 
‘‘(2) QUALIFIED EMPLOYEE.—For purposes of 
this subsection, an employee is a qualified employee 
if the employee first completes an hour of service 
under the composite plan (determined without re-
gard to the provisions of this subsection) within the 
12-month period immediately preceding or the 24- 
month period immediately following the date the em-
ployee ceased to accrue benefits under the legacy 
plan. 
‘‘(3) CERTIFICATION OF YEARS OF SERVICE.— 
For purposes of paragraph (1), the plan sponsor of 
the composite plan shall rely on a written certifi-
cation by the plan sponsor of the legacy plan of the 
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years of service the qualified employee completed 
under the defined benefit plan as of the date the em-
ployee satisfies the requirements of paragraph (2), 
disregarding any years of service that had been for-
feited under the rules of the defined benefit plan be-
fore that date. 
‘‘(h) SPECIAL RULES FOR COMPUTING YEARS OF 
SERVICE UNDER LEGACY PLANS.— 
‘‘(1) IN GENERAL.—In determining a qualified 
employee’s years of service under a legacy plan for 
purposes of this section, and in addition to any serv-
ice under applicable regulations, the employee’s 
years of service under a composite plan shall be 
treated as years of service earned under the legacy 
plan. For purposes of such determination, a com-
posite plan shall not be treated as a defined benefit 
plan pursuant to section 801(d). 
‘‘(2) QUALIFIED EMPLOYEE.—For purposes of 
this subsection, an employee is a qualified employee 
if the employee first completes an hour of service 
under the composite plan (determined without re-
gard to the provisions of this subsection) within the 
12-month period immediately preceding or the 24- 
month period immediately following the date the em-
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ployee ceased to accrue benefits under the legacy 
plan. 
‘‘(3) CERTIFICATION OF YEARS OF SERVICE.— 
For purposes of paragraph (1), the plan sponsor of 
the legacy plan shall rely on a written certification 
by the plan sponsor of the composite plan of the 
years of service the qualified employee completed 
under the composite plan after the employee satisfies 
the requirements of paragraph (2), disregarding any 
years of service that has been forfeited under the 
rules of the composite plan.’’. 
(B) INTERNAL REVENUE CODE OF 1986.— 
Section 411(a) of the Internal Revenue Code of 
1986 is amended by adding at the end the fol-
lowing: 
‘‘(14) SPECIAL
RULES
FOR
DETERMINING 
YEARS OF SERVICE UNDER COMPOSITE PLANS.— 
‘‘(A) IN
GENERAL.—In determining a 
qualified employee’s years of service under a 
composite plan for purposes of this subsection, 
the employee’s years of service under a legacy 
plan shall be treated as years of service earned 
under the composite plan. For purposes of such 
determination, a composite plan shall not be 
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treated as a defined benefit plan pursuant to 
section 437(d). 
‘‘(B) QUALIFIED
EMPLOYEE.—For pur-
poses of this paragraph, an employee is a quali-
fied employee if the employee first completes an 
hour of service under the composite plan (deter-
mined without regard to the provisions of this 
paragraph) within the 12-month period imme-
diately preceding or the 24-month period imme-
diately following the date the employee ceased 
to accrue benefits under the legacy plan. 
‘‘(C) CERTIFICATION OF YEARS OF SERV-
ICE.—For purposes of subparagraph (A), the 
plan sponsor of the composite plan shall rely on 
a written certification by the plan sponsor of 
the legacy plan of the years of service the quali-
fied employee completed under the legacy plan 
as of the date the employee satisfies the re-
quirements of subparagraph (B), disregarding 
any years of service that had been forfeited 
under the rules of the defined benefit plan be-
fore that date. 
‘‘(15) SPECIAL RULES FOR COMPUTING YEARS 
OF SERVICE UNDER LEGACY PLANS.— 
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‘‘(A) IN
GENERAL.—In determining a 
qualified employee’s years of service under a 
legacy plan for purposes of this section, and in 
addition to any service under applicable regula-
tions, the employee’s years of service under a 
composite plan shall be treated as years of serv-
ice earned under the legacy plan. For purposes 
of such determination, a composite plan shall 
not be treated as a defined benefit plan pursu-
ant to section 437(d). 
‘‘(B) QUALIFIED
EMPLOYEE.—For pur-
poses of this paragraph, an employee is a quali-
fied employee if the employee first completes an 
hour of service under the composite plan (deter-
mined without regard to the provisions of this 
paragraph) within the 12-month period imme-
diately preceding or the 24-month period imme-
diately following the date the employee ceased 
to accrue benefits under the legacy plan. 
‘‘(C) CERTIFICATION OF YEARS OF SERV-
ICE.—For purposes of subparagraph (A), the 
plan sponsor of the legacy plan shall rely on a 
written certification by the plan sponsor of the 
composite plan of the years of service the quali-
fied employee completed under the composite 
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plan after the employee satisfies the require-
ments of subparagraph (B), disregarding any 
years of service that has been forfeited under 
the rules of the composite plan.’’. 
(2) REDUCTION OF BENEFITS.— 
(A) EMPLOYEE RETIREMENT INCOME SE-
CURITY ACT OF 1974.—Section 203(a)(3)(E)(ii) 
of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1053(a)(3)(E)(ii)) is 
amended— 
(i) in subclause (I) by striking 
‘‘4244A’’ and inserting ‘‘305(e), 803,’’; 
and 
(ii) in subclause (II) by striking 
‘‘4245’’ and inserting ‘‘305(e), 4245,’’. 
(B) INTERNAL REVENUE CODE OF 1986.— 
Section 411(a)(3)(F) of the Internal Revenue 
Code of 1986 is amended— 
(i) in clause (i) by striking ‘‘section 
418D or under section 4281 of the Em-
ployee Retirement Income Security Act of 
1974’’ and inserting ‘‘section 432(e) or 
439 or under section 4281 of the Em-
ployee Retirement Income Security Act of 
1974’’; and 
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100 
(ii) in clause (ii) by inserting ‘‘or 
432(e)’’ after ‘‘section 418E’’. 
(3) ACCRUED BENEFIT REQUIREMENTS.— 
(A) EMPLOYEE RETIREMENT INCOME SE-
CURITY ACT OF 1974.—Section 204(b)(1)(B)(i) 
of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1054(b)(1)(B)(i)) is 
amended by inserting ‘‘, including an amend-
ment reducing or suspending benefits under 
section 305(e), 803, 4245 or 4281,’’ after ‘‘any 
amendment to the plan’’. 
(B) INTERNAL REVENUE CODE OF 1986.— 
Section 411(b)(1)(B)(i) of the Internal Revenue 
Code of 1986 is amended by inserting ‘‘, includ-
ing an amendment reducing or suspending ben-
efits under section 418E, 432(e) or 439, or 
under section 4281 of the Employee Retirement 
Income Security Act of 1974,’’ after ‘‘any 
amendment to the plan’’. 
(4) ADDITIONAL ACCRUED BENEFIT REQUIRE-
MENTS.— 
(A) EMPLOYEE RETIREMENT INCOME SE-
CURITY ACT OF 1974.—Section 204(b)(1)(H)(v) 
of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1053(b)(1)(H)(v)) is 
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