‘‘(5) EARLY DEEMED AMORTIZATION UPON AT-
TAINMENT
OF
FUNDING
TARGET.—In any case in 
which the funding shortfall of a plan for a plan year 
is zero, for purposes of determining the waiver amor-
tization charge for such plan year and succeeding 
plan years, the waiver amortization base for all pre-
ceding plan years shall be reduced to zero. 
‘‘(f) REDUCTION OF MINIMUM REQUIRED CONTRIBU-
TION BY PRE-FUNDING BALANCE AND FUNDING STANDARD 
CARRYOVER BALANCE.— 
‘‘(1) ELECTION TO MAINTAIN BALANCES.— 
‘‘(A) PRE-FUNDING
BALANCE.—The plan 
sponsor of a single-employer plan may elect to 
maintain a pre-funding balance. 
‘‘(B) FUNDING STANDARD CARRYOVER BAL-
ANCE.— 
‘‘(i) IN GENERAL.—In the case of a 
single-employer plan described in clause 
(ii), the plan sponsor may elect to maintain 
a funding standard carryover balance, until 
such balance is reduced to zero. 
‘‘(ii) PLANS
MAINTAINING
FUNDING 
STANDARD ACCOUNT IN 2005.—A plan is de-
scribed in this clause if the plan—
‘‘(I) was in effect for a plan year 
beginning in 2005, and 
‘‘(II) had a positive balance in the 
funding standard account under sec-
tion 302(b) as in effect for such plan 
year and determined as of the end of 
such plan year. 
‘‘(2) APPLICATION OF BALANCES.—A pre-funding 
balance and a funding standard carryover balance 
maintained pursuant to this paragraph— 
‘‘(A) shall be available for crediting against 
the minimum required contribution, pursuant to 
an election under paragraph (3), 
‘‘(B) shall be applied as a reduction in the 
amount treated as the value of plan assets for 
purposes of this section, to the extent provided in 
paragraph (4), and 
‘‘(C) may be reduced at any time, pursuant 
to an election under paragraph (5). 
‘‘(3) ELECTION
TO
APPLY
BALANCES
AGAINST 
MINIMUM REQUIRED CONTRIBUTION.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraphs (B) and (C), in the case of any 
plan year in which the plan sponsor elects to 
credit against the minimum required contribu-
tion for the current plan year all or a portion 
of the pre-funding balance or the funding stand-
ard carryover balance for the current plan year 
(not in excess of such minimum required con-
tribution), the minimum required contribution 
for the plan year shall be reduced by the amount 
so credited by the plan sponsor. For purposes of 
the preceding sentence, the minimum required 
contribution shall be determined after taking 
into account any waiver under section 302(c). 
‘‘(B) COORDINATION WITH FUNDING STAND-
ARD CARRYOVER BALANCE.—To the extent that 
any plan has a funding standard carryover bal-
ance greater than zero, no amount of the pre- 
funding balance of such plan may be credited 
under this paragraph in reducing the minimum 
required contribution. 
‘‘(C) 
LIMITATION
FOR
UNDERFUNDED 
PLANS.—The preceding provisions of this para-
graph shall not apply for any plan year if the 
ratio (expressed as a percentage) which— 
‘‘(i) the value of plan assets for the 
preceding plan year (as reduced under 
paragraph (4)), bears to
‘‘(ii) the funding target of the plan for 
the preceding plan year (determined with-
out regard to subsection (i)(1)), 
is less than 80 percent. 
‘‘(4) EFFECT OF BALANCES ON AMOUNTS TREAT-
ED AS VALUE OF PLAN ASSETS.—In the case of any 
plan maintaining a pre-funding balance or a funding 
standard carryover balance pursuant to this sub-
section, the amount treated as the value of plan assets 
shall be deemed to be such amount, reduced as pro-
vided in the following subparagraphs: 
‘‘(A) APPLICABILITY OF SHORTFALL AMOR-
TIZATION CHARGE AND WAIVER AMORTIZATION 
CHARGE.—For purposes of subsection (c)(3), the 
value of plan assets is deemed to be such amount, 
reduced by the amount of the pre-funding bal-
ance, but only if an election under paragraph 
(2) applying any portion of the pre-funding bal-
ance in reducing the minimum required con-
tribution is in effect for the plan year. 
‘‘(B) DETERMINATION OF EXCESS ASSETS, 
FUNDING SHORTFALL, AND FUNDING TARGET AT-
TAINMENT PERCENTAGE.—For purposes of sub-
sections (a), (c)(4)(A)(ii), and (d)(2)(A), the 
value of plan assets is deemed to be such amount,
reduced by the amount of the pre-funding bal-
ance and the funding standard carryover bal-
ance. 
‘‘(C) AVAILABILITY OF BALANCES IN PLAN 
YEAR
FOR
CREDITING
AGAINST
MINIMUM
RE-
QUIRED CONTRIBUTION.—For purposes of para-
graph (3)(C)(i) of this subsection, the value of 
plan assets is deemed to be such amount, reduced 
by the amount of the pre-funding balance. 
‘‘(5) ELECTION TO REDUCE BALANCE PRIOR TO 
DETERMINATIONS OF VALUE OF PLAN ASSETS AND 
CREDITING AGAINST MINIMUM REQUIRED CONTRIBU-
TION.— 
‘‘(A) IN GENERAL.—The plan sponsor may 
elect to reduce by any amount the balance of the 
pre-funding balance and the funding standard 
carryover balance for any plan year (but not 
below zero). Such reduction shall be effective 
prior to any determination of the value of plan 
assets for such plan year under this section and 
application of the balance in reducing the min-
imum required contribution for such plan for 
such plan year pursuant to an election under 
paragraph (2).
‘‘(B) COORDINATION BETWEEN PRE-FUND-
ING BALANCE AND FUNDING STANDARD CARRY-
OVER BALANCE.—To the extent that any plan 
has a funding standard carryover balance great-
er than zero, no election may be made under sub-
paragraph (A) with respect to the pre-funding 
balance. 
‘‘(6) PRE-FUNDING BALANCE.— 
‘‘(A) IN GENERAL.—A pre-funding balance 
maintained by a plan shall consist of a begin-
ning balance of zero, increased and decreased to 
the extent provided in subparagraphs (B) and 
(C), and adjusted further as provided in para-
graph (8). 
‘‘(B) INCREASES.—As of the valuation date 
for each plan year beginning after 2006, the pre- 
funding balance of a plan shall be increased by 
the amount elected by the plan sponsor for the 
plan year. Such amount shall not exceed the ex-
cess (if any) of— 
‘‘(i) the aggregate total of employer 
contributions to the plan for the preceding 
plan year, over 
‘‘(ii) the minimum required contribu-
tion for such preceding plan year (increased
by interest on any portion of such min-
imum required contribution remaining un-
paid as of the valuation date for the current 
plan year, at the effective interest rate for 
the plan for the preceding plan year, for the 
period beginning with the first day of such 
preceding plan year and ending on the date 
that payment of such portion is made). 
‘‘(C) DECREASES.—As of the valuation date 
for each plan year after 2006, the pre-funding 
balance of a plan shall be decreased (but not 
below zero) by the sum of— 
‘‘(i) the amount of such balance cred-
ited under paragraph (2) (if any) in reduc-
ing the minimum required contribution of 
the plan for the preceding plan year, and 
‘‘(ii) any reduction in such balance 
elected under paragraph (5). 
‘‘(7) FUNDING
STANDARD
CARRYOVER
BAL-
ANCE.— 
‘‘(A) IN
GENERAL.—A funding standard 
carryover balance maintained by a plan shall 
consist of a beginning balance determined under 
subparagraph (B), decreased to the extent pro-
vided in subparagraph (C), and adjusted further 
as provided in paragraph (8). 
‘‘(B) BEGINNING BALANCE.—The beginning 
balance of the funding standard carryover bal-
ance shall be the positive balance described in 
paragraph (1)(B)(ii)(II). 
‘‘(C) DECREASES.—As of the valuation date 
for each plan year after 2006, the funding stand-
ard carryover balance of a plan shall be de-
creased (but not below zero) by the sum of— 
‘‘(i) the amount of such balance cred-
ited under paragraph (2) (if any) in reduc-
ing the minimum required contribution of 
the plan for the preceding plan year, and 
‘‘(ii) any reduction in such balance 
elected under paragraph (5). 
‘‘(8) ADJUSTMENTS
TO
BALANCES.—In deter-
mining the pre-funding balance or the funding stand-
ard carryover balance of a plan as of the valuation 
date (before applying any increase or decrease under 
paragraph (6) or (7)), the plan sponsor shall, in ac-
cordance with regulations which shall be prescribed 
by the Secretary of the Treasury, adjust such balance 
so as to reflect the rate of net gain or loss (deter-
mined, notwithstanding subsection (g)(3), on the basis
of fair market value) experienced by all plan assets 
for the period beginning with the valuation date for 
the preceding plan year and ending with the date 
preceding the valuation date for the current plan 
year, properly taking into account, in accordance 
with such regulations, all contributions, distributions, 
and other plan payments made during such period. 
‘‘(9) ELECTIONS.—Elections under this sub-
section shall be made at such times, and in such form 
and manner, as shall be prescribed in regulations of 
the Secretary of the Treasury. 
‘‘(g) VALUATION OF PLAN ASSETS AND LIABILITIES.— 
‘‘(1) TIMING OF DETERMINATIONS.—Except as 
otherwise provided under this subsection, all deter-
minations under this section for a plan year shall be 
made as of the valuation date of the plan for such 
plan year. 
‘‘(2) VALUATION
DATE.—For purposes of this 
section— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the valuation date of a plan 
for any plan year shall be the first day of the 
plan year. 
‘‘(B) EXCEPTION FOR SMALL PLANS.—If, on 
each day during the preceding plan year, a plan
had 500 or fewer participants, the plan may des-
ignate any day during the plan year as its valu-
ation date for such plan year and succeeding 
plan years. For purposes of this subparagraph, 
all defined benefit plans (other than multiem-
ployer plans) maintained by the same employer 
(or any member of such employer’s controlled 
group) shall be treated as 1 plan, but only em-
ployees of such employer or member shall be 
taken into account. 
‘‘(C) APPLICATION OF CERTAIN RULES IN 
DETERMINATION OF PLAN SIZE.—For purposes of 
this paragraph— 
‘‘(i) PLANS NOT IN EXISTENCE IN PRE-
CEDING YEAR.—In the case of the first plan 
year of any plan, subparagraph (B) shall 
apply to such plan by taking into account 
the number of participants that the plan is 
reasonably expected to have on days during 
such first plan year. 
‘‘(ii) PREDECESSORS.—Any reference 
in subparagraph (B) to an employer shall 
include a reference to any predecessor of 
such employer.