302 
(b) MODIFIED RULES.—The rules described 
in this subsection are as follows: 
(1) For purposes of section 430(j)(3) of 
the Internal Revenue Code of 1986 and 
section 303(j)(3) of the Employee Retire-
ment Income Security Act of 1974, the 
plan shall be treated as not having a 
funding shortfall for any plan year. 
(2) For purposes of— 
(A) determining unfunded vested 
benefits 
under 
section 
4006(a)(3)(E)(iii) of such Act, and 
(B) 
determining 
any 
present 
value or making any computation 
under section 412 of such Code or 
section 302 of such Act, 
the mortality table shall be the mortality 
table used by the plan. 
(3) 
Notwithstanding 
section 
430(f)(4)(B) of such Code and section 
303(f)(4)(B) of such Act, for purposes of 
section 430(c)(4)(A)(ii) of such Code and 
section 303(c)(4)(A)(ii) of such Act, the 
value of plan assets is deemed to be such 
amount, reduced by the amount of the
303 
pre-funding balance if, pursuant to a 
binding written agreement with the Pen-
sion Benefit Guaranty Corporation en-
tered into before January 1, 2007, the 
funding standard carryover balance is 
not available to reduce the minimum re-
quired contribution for the plan year. 
(4) Section 430(c)(4)(B) of such Code 
and section 303(c)(4)(B) of such Act (relat-
ing to phase-in of funding target for de-
termination of funding shortfall) shall 
each be applied by substituting ‘‘2012’’ for 
‘‘2011’’ therein and by substituting for the 
table therein the following: 
In the case of a plan year beginning in calendar 
year: 
The appli-
cable per-
centage is: 
2007 ....................................................................................
90 percent
2008 ....................................................................................
92 percent
2009 ....................................................................................
94 percent
2010 ....................................................................................
96 percent
2011 ....................................................................................
98 percent. 
(c) DEFINITIONS.—Any term used in this 
section which is also used in section 430 of 
such Code or section 303 of such Act shall 
have the meaning provided such term in such 
section. If the same term has a different 
meaning in such Code and such Act, such 
term shall, for purposes of this section, have
304 
the meaning provided by such Code when ap-
plied with respect to such Code and the mean-
ing provided by such Act when applied with 
respect to such Act. 
(d) SPECIAL RULE FOR 2006.— 
(1) IN
GENERAL.—Section 769(c)(3) of 
the Retirement Protection Act of 1994, as 
added by section 201 of the Pension 
Funding Equity Act of 2004, is amended 
by striking ‘‘and 2005’’ and inserting ‘‘, 
2005, and 2006’’. 
(2) EFFECTIVE DATE.—The amendment 
made by paragraph (1) shall apply to plan 
years beginning after December 31, 2005. 
(e) CONFORMING AMENDMENT.— 
(1) Section 769 of the Retirement Pro-
tection Act of 1994 is amended by strik-
ing subsection (c). 
(2) The amendment made by para-
graph (1) shall take effect on December 
31, 2006, and shall apply to plan years be-
ginning after such date.
305 
SEC. 122. TREATMENT OF NONQUALIFIED DEFERRED COM-
PENSATION PLANS WHEN EMPLOYER DE-
FINED BENEFIT PLAN IN AT-RISK STATUS. 
(a) IN GENERAL.—Subsection (b) of section 
409A of the Internal Revenue Code of 1986 
(providing rules relating to funding) is 
amended by redesignating paragraphs (3) and 
(4) as paragraphs (4) and (5), respectively, and 
by inserting after paragraph (2) the following 
new paragraph: 
‘‘(3) EMPLOYER’S DEFINED BENEFIT PLAN 
IN AT-RISK STATUS.—If— 
‘‘(A) during any period in which a 
defined benefit plan to which section 
412 applies is in an at-risk status (as 
defined in section 430(i)(3)), assets 
are set aside (directly or indirectly) 
in a trust (or other arrangement de-
termined by the Secretary), or trans-
ferred to such a trust or other ar-
rangement, for purposes of paying de-
ferred compensation under a non-
qualified deferred compensation plan 
of the employer maintaining the de-
fined benefit plan, or
306 
‘‘(B) a nonqualified deferred com-
pensation plan of the employer pro-
vides that assets will become re-
stricted to the provision of benefits 
under the plan in connection with 
such at-risk status (or other similar 
financial measure determined by the 
Secretary) of the defined benefit plan, 
or assets are so restricted, 
such assets shall for purposes of section 
83 be treated as property transferred in 
connection with the performance of serv-
ices whether or not such assets are avail-
able to satisfy claims of general creditors. 
Subparagraph (A) shall not apply with re-
spect to any assets which are so set aside 
before the defined benefit plan is in at- 
risk status.’’. 
(b) 
CONFORMING
AMENDMENTS.—Para-
graphs (4) and (5) of section 409A(b) of such 
Code, as redesignated by subsection (a) of this 
subsection, are each amended by striking 
‘‘paragraph (1) or (2)’’ each place it appears 
and inserting ‘‘paragraph (1), (2), or (3)’’.