H. R. 4—55
valuation date occurs and ending on the valuation 
date (or a similar period in the case of a valuation 
date which is not the 1st day of a month), and 
‘‘(iii) does not result in a determination of the 
value of plan assets which, at any time, is lower than 
90 percent or greater than 110 percent of the fair 
market value of such assets at such time. 
Any such averaging shall be adjusted for contributions 
and distributions (as provided by the Secretary). 
‘‘(4) ACCOUNTING FOR CONTRIBUTION RECEIPTS.—For pur-
poses of determining the value of assets under paragraph (3)—
‘‘(A) PRIOR YEAR CONTRIBUTIONS.—If—
‘‘(i) an employer makes any contribution to the 
plan after the valuation date for the plan year in 
which the contribution is made, and 
‘‘(ii) the contribution is for a preceding plan year, 
the contribution shall be taken into account as an asset 
of the plan as of the valuation date, except that in the 
case of any plan year beginning after 2008, only the present 
value (determined as of the valuation date) of such con-
tribution may be taken into account. For purposes of the 
preceding sentence, present value shall be determined 
using the effective interest rate for the preceding plan 
year to which the contribution is properly allocable. 
‘‘(B) SPECIAL RULE FOR CURRENT YEAR CONTRIBUTIONS 
MADE BEFORE VALUATION DATE.—If any contributions for 
any plan year are made to or under the plan during the 
plan year but before the valuation date for the plan year, 
the assets of the plan as of the valuation date shall not 
include—
‘‘(i) such contributions, and 
‘‘(ii) interest on such contributions for the period 
between the date of the contributions and the valuation 
date, determined by using the effective interest rate 
for the plan year. 
‘‘(h) ACTUARIAL ASSUMPTIONS AND METHODS.—
‘‘(1) IN GENERAL.—Subject to this subsection, the deter-
mination of any present value or other computation under 
this section shall be made on the basis of actuarial assumptions 
and methods—
‘‘(A) each of which is reasonable (taking into account 
the experience of the plan and reasonable expectations), 
and 
‘‘(B) which, in combination, offer the actuary’s best 
estimate of anticipated experience under the plan. 
‘‘(2) INTEREST RATES.—
‘‘(A) EFFECTIVE INTEREST RATE.—For purposes of this 
section, the term ‘effective interest rate’ means, with 
respect to any plan for any plan year, the single rate 
of interest which, if used to determine the present value 
of the plan’s accrued or earned benefits referred to in 
subsection (d)(1), would result in an amount equal to the 
funding target of the plan for such plan year. 
‘‘(B) INTEREST RATES FOR DETERMINING FUNDING TAR-
GET.—For purposes of determining the funding target of
H. R. 4—56
a plan for any plan year, the interest rate used in deter-
mining the present value of the liabilities of the plan shall 
be—
‘‘(i) in the case of benefits reasonably determined 
to be payable during the 5-year period beginning on 
the first day of the plan year, the first segment rate 
with respect to the applicable month, 
‘‘(ii) in the case of benefits reasonably determined 
to be payable during the 15-year period beginning at 
the end of the period described in clause (i), the second 
segment rate with respect to the applicable month, 
and 
‘‘(iii) in the case of benefits reasonably determined 
to be payable after the period described in clause (ii), 
the third segment rate with respect to the applicable 
month. 
‘‘(C) SEGMENT
RATES.—For purposes of this para-
graph—
‘‘(i) FIRST SEGMENT RATE.—The term ‘first segment 
rate’ means, with respect to any month, the single 
rate of interest which shall be determined by the Sec-
retary for such month on the basis of the corporate 
bond yield curve for such month, taking into account 
only that portion of such yield curve which is based 
on bonds maturing during the 5-year period com-
mencing with such month. 
‘‘(ii) SECOND
SEGMENT
RATE.—The term ‘second 
segment rate’ means, with respect to any month, the 
single rate of interest which shall be determined by 
the Secretary for such month on the basis of the cor-
porate bond yield curve for such month, taking into 
account only that portion of such yield curve which 
is based on bonds maturing during the 15-year period 
beginning at the end of the period described in clause 
(i). 
‘‘(iii) THIRD SEGMENT RATE.—The term ‘third seg-
ment rate’ means, with respect to any month, the 
single rate of interest which shall be determined by 
the Secretary for such month on the basis of the cor-
porate bond yield curve for such month, taking into 
account only that portion of such yield curve which 
is based on bonds maturing during periods beginning 
after the period described in clause (ii). 
‘‘(D) CORPORATE BOND YIELD CURVE.—For purposes of 
this paragraph—
‘‘(i) IN GENERAL.—The term ‘corporate bond yield 
curve’ means, with respect to any month, a yield curve 
which is prescribed by the Secretary for such month 
and which reflects the average, for the 24-month period 
ending with the month preceding such month, of 
monthly yields on investment grade corporate bonds 
with varying maturities and that are in the top 3 
quality levels available. 
‘‘(ii) ELECTION TO USE YIELD CURVE.—Solely for 
purposes of determining the minimum required con-
tribution under this section, the plan sponsor may,
H. R. 4—57
in lieu of the segment rates determined under subpara-
graph (C), elect to use interest rates under the cor-
porate bond yield curve. For purposes of the preceding 
sentence such curve shall be determined without 
regard to the 24-month averaging described in clause 
(i). Such election, once made, may be revoked only 
with the consent of the Secretary. 
‘‘(E) APPLICABLE MONTH.—For purposes of this para-
graph, the term ‘applicable month’ means, with respect 
to any plan for any plan year, the month which includes 
the valuation date of such plan for such plan year or, 
at the election of the plan sponsor, any of the 4 months 
which precede such month. Any election made under this 
subparagraph shall apply to the plan year for which the 
election is made and all succeeding plan years, unless 
the election is revoked with the consent of the Secretary. 
‘‘(F) PUBLICATION REQUIREMENTS.—The Secretary shall 
publish for each month the corporate bond yield curve 
(and the corporate bond yield curve reflecting the modifica-
tion described in section 417(e)(3)(D)(i)) for such month 
and each of the rates determined under subparagraph (B) 
for such month. The Secretary shall also publish a descrip-
tion of the methodology used to determine such yield curve 
and such rates which is sufficiently detailed to enable 
plans to make reasonable projections regarding the yield 
curve and such rates for future months based on the plan’s 
projection of future interest rates. 
‘‘(G) TRANSITION RULE.—
‘‘(i) IN GENERAL.—Notwithstanding the preceding 
provisions of this paragraph, for plan years beginning 
in 2008 or 2009, the first, second, or third segment 
rate for a plan with respect to any month shall be 
equal to the sum of—
‘‘(I) the product of such rate for such month 
determined without regard to this subparagraph, 
multiplied by the applicable percentage, and 
‘‘(II) the product of the rate determined under 
the rules of section 412(b)(5)(B)(ii)(II) (as in effect 
for plan years beginning in 2007), multiplied by 
a percentage equal to 100 percent minus the 
applicable percentage. 
‘‘(ii) APPLICABLE
PERCENTAGE.—For purposes of 
clause (i), the applicable percentage is 331⁄3 percent 
for plan years beginning in 2008 and 662⁄3 percent 
for plan years beginning in 2009. 
‘‘(iii) NEW PLANS INELIGIBLE.—Clause (i) shall not 
apply to any plan if the first plan year of the plan 
begins after December 31, 2007. 
‘‘(iv) ELECTION.—The plan sponsor may elect not 
to have this subparagraph apply. Such election, once 
made, may be revoked only with the consent of the 
Secretary. 
‘‘(3) MORTALITY TABLES.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph 
(C) or (D), the Secretary shall by regulation prescribe mor-
tality tables to be used in determining any present value 
or making any computation under this section. Such tables
H. R. 4—58
shall be based on the actual experience of pension plans 
and projected trends in such experience. In prescribing 
such tables, the Secretary shall take into account results 
of available independent studies of mortality of individuals 
covered by pension plans. 
‘‘(B) PERIODIC REVISION.—The Secretary shall (at least 
every 10 years) make revisions in any table in effect under 
subparagraph (A) to reflect the actual experience of pension 
plans and projected trends in such experience. 
‘‘(C) SUBSTITUTE MORTALITY TABLE.—
‘‘(i) IN
GENERAL.—Upon request by the plan 
sponsor and approval by the Secretary, a mortality 
table which meets the requirements of clause (iii) shall 
be used in determining any present value or making 
any computation under this section during the period 
of consecutive plan years (not to exceed 10) specified 
in the request. 
‘‘(ii) EARLY
TERMINATION
OF
PERIOD.—Notwith-
standing clause (i), a mortality table described in clause 
(i) shall cease to be in effect as of the earliest of—
‘‘(I) the date on which there is a significant 
change in the participants in the plan by reason 
of a plan spinoff or merger or otherwise, or 
‘‘(II) the date on which the plan actuary deter-
mines that such table does not meet the require-
ments of clause (iii). 
‘‘(iii) REQUIREMENTS.—A mortality table meets the 
requirements of this clause if—
‘‘(I) there is a sufficient number of plan partici-
pants, and the pension plans have been main-
tained for a sufficient period of time, to have cred-
ible information necessary for purposes of sub-
clause (II), and 
‘‘(II) such table reflects the actual experience 
of the pension plans maintained by the sponsor 
and projected trends in general mortality experi-
ence. 
‘‘(iv) ALL PLANS IN CONTROLLED GROUP MUST USE 
SEPARATE TABLE.—Except as provided by the Secretary, 
a plan sponsor may not use a mortality table under 
this subparagraph for any plan maintained by the 
plan sponsor unless—
‘‘(I) a separate mortality table is established 
and used under this subparagraph for each other 
plan maintained by the plan sponsor and if the 
plan sponsor is a member of a controlled group, 
each member of the controlled group, and 
‘‘(II) the requirements of clause (iii) are met 
separately with respect to the table so established 
for each such plan, determined by only taking 
into account the participants of such plan, the 
time such plan has been in existence, and the 
actual experience of such plan. 
‘‘(v) DEADLINE FOR SUBMISSION AND DISPOSITION 
OF APPLICATION.—
‘‘(I) SUBMISSION.—The plan sponsor shall 
submit a mortality table to the Secretary for
H. R. 4—59
approval under this subparagraph at least 7 
months before the 1st day of the period described 
in clause (i). 
‘‘(II) DISPOSITION.—Any mortality table sub-
mitted to the Secretary for approval under this 
subparagraph shall be treated as in effect as of 
the 1st day of the period described in clause (i) 
unless the Secretary, during the 180-day period 
beginning on the date of such submission, dis-
approves of such table and provides the reasons 
that such table fails to meet the requirements 
of clause (iii). The 180-day period shall be extended 
upon mutual agreement of the Secretary and the 
plan sponsor. 
‘‘(D) SEPARATE MORTALITY TABLES FOR THE DISABLED.—
Notwithstanding subparagraph (A)—
‘‘(i) IN
GENERAL.—The Secretary shall establish 
mortality tables which may be used (in lieu of the 
tables under subparagraph (A)) under this subsection 
for individuals who are entitled to benefits under the 
plan on account of disability. The Secretary shall estab-
lish separate tables for individuals whose disabilities 
occur in plan years beginning before January 1, 1995, 
and for individuals whose disabilities occur in plan 
years beginning on or after such date. 
‘‘(ii) SPECIAL
RULE
FOR
DISABILITIES
OCCURRING 
AFTER 1994.—In the case of disabilities occurring in 
plan years beginning after December 31, 1994, the 
tables under clause (i) shall apply only with respect 
to individuals described in such subclause who are 
disabled within the meaning of title II of the Social 
Security Act and the regulations thereunder. 
‘‘(iii) PERIODIC REVISION.—The Secretary shall (at 
least every 10 years) make revisions in any table in 
effect under clause (i) to reflect the actual experience 
of pension plans and projected trends in such experi-
ence. 
‘‘(4) PROBABILITY OF BENEFIT PAYMENTS IN THE FORM OF 
LUMP SUMS OR OTHER OPTIONAL FORMS.—For purposes of deter-
mining any present value or making any computation under 
this section, there shall be taken into account—
‘‘(A) the probability that future benefit payments under 
the plan will be made in the form of optional forms of 
benefits provided under the plan (including lump sum dis-
tributions, determined on the basis of the plan’s experience 
and other related assumptions), and 
‘‘(B) any difference in the present value of such future 
benefit payments resulting from the use of actuarial 
assumptions, in determining benefit payments in any such 
optional form of benefits, which are different from those 
specified in this subsection. 
‘‘(5) APPROVAL OF LARGE CHANGES IN ACTUARIAL ASSUMP-
TIONS.—
‘‘(A) IN GENERAL.—No actuarial assumption used to 
determine the funding target for a plan to which this 
paragraph applies may be changed without the approval 
of the Secretary.
H. R. 4—60
‘‘(B) PLANS TO WHICH PARAGRAPH APPLIES.—This para-
graph shall apply to a plan only if—
‘‘(i) the plan is a defined benefit plan (other than 
a multiemployer plan) to which title IV of the Employee 
Retirement Income Security Act of 1974 applies, 
‘‘(ii) the aggregate unfunded vested benefits as of 
the close of the preceding plan year (as determined 
under section 4006(a)(3)(E)(iii) of the Employee Retire-
ment Income Security Act of 1974) of such plan and 
all other plans maintained by the contributing sponsors 
(as defined in section 4001(a)(13) of such Act) and 
members of such sponsors’ controlled groups (as 
defined in section 4001(a)(14) of such Act) which are 
covered by title IV (disregarding plans with no 
unfunded vested benefits) exceed $50,000,000, and 
‘‘(iii) the change in assumptions (determined after 
taking into account any changes in interest rate and 
mortality table) results in a decrease in the funding 
shortfall of the plan for the current plan year that 
exceeds $50,000,000, or that exceeds $5,000,000 and 
that is 5 percent or more of the funding target of 
the plan before such change. 
‘‘(i) SPECIAL RULES FOR AT-RISK PLANS.—
‘‘(1) FUNDING TARGET FOR PLANS IN AT-RISK STATUS.—
‘‘(A) IN GENERAL.—In the case of a plan which is in 
at-risk status for a plan year, the funding target of the 
plan for the plan year shall be equal to the sum of—
‘‘(i) the present value of all benefits accrued or 
earned under the plan as of the beginning of the plan 
year, as determined by using the additional actuarial 
assumptions described in subparagraph (B), and 
‘‘(ii) in the case of a plan which also has been 
in at-risk status for at least 2 of the 4 preceding 
plan years, a loading factor determined under subpara-
graph (C). 
‘‘(B) ADDITIONAL ACTUARIAL ASSUMPTIONS.—The actu-
arial assumptions described in this subparagraph are as 
follows: 
‘‘(i) All employees who are not otherwise assumed 
to retire as of the valuation date but who will be 
eligible to elect benefits during the plan year and the 
10 succeeding plan years shall be assumed to retire 
at the earliest retirement date under the plan but 
not before the end of the plan year for which the 
at-risk funding target and at-risk target normal cost 
are being determined. 
‘‘(ii) All employees shall be assumed to elect the 
retirement benefit available under the plan at the 
assumed retirement age (determined after application 
of clause (i)) which would result in the highest present 
value of benefits. 
‘‘(C) LOADING FACTOR.—The loading factor applied with 
respect to a plan under this paragraph for any plan year 
is the sum of—
‘‘(i) $700, times the number of participants in the 
plan, plus
H. R. 4—61
‘‘(ii) 4 percent of the funding target (determined 
without regard to this paragraph) of the plan for the 
plan year. 
‘‘(2) TARGET NORMAL COST OF AT-RISK PLANS.—In the case 
of a plan which is in at-risk status for a plan year, the target 
normal cost of the plan for such plan year shall be equal 
to the sum of—
‘‘(A) the present value of all benefits which are expected 
to accrue or be earned under the plan during the plan 
year, determined using the additional actuarial assump-
tions described in paragraph (1)(B), plus 
‘‘(B) in the case of a plan which also has been in 
at-risk status for at least 2 of the 4 preceding plan years, 
a loading factor equal to 4 percent of the target normal 
cost (determined without regard to this paragraph) of the 
plan for the plan year. 
‘‘(3) MINIMUM AMOUNT.—In no event shall—
‘‘(A) the at-risk funding target be less than the funding 
target, as determined without regard to this subsection, 
or 
‘‘(B) the at-risk target normal cost be less than the 
target normal cost, as determined without regard to this 
subsection. 
‘‘(4) DETERMINATION OF AT-RISK STATUS.—For purposes of 
this subsection—
‘‘(A) IN GENERAL.—A plan is in at-risk status for a 
plan year if—
‘‘(i) the funding target attainment percentage for 
the preceding plan year (determined under this section 
without regard to this subsection) is less than 80 per-
cent, and 
‘‘(ii) the funding target attainment percentage for 
the preceding plan year (determined under this section 
by 
using 
the 
additional 
actuarial 
assumptions 
described in paragraph (1)(B) in computing the funding 
target) is less than 70 percent. 
‘‘(B) TRANSITION RULE.—In the case of plan years begin-
ning in 2008, 2009, and 2010, subparagraph (A)(i) shall 
be applied by substituting the following percentages for 
‘80 percent’: 
‘‘(i) 65 percent in the case of 2008. 
‘‘(ii) 70 percent in the case of 2009. 
‘‘(iii) 75 percent in the case of 2010. 
In the case of plan years beginning in 2008, the funding 
target attainment percentage for the preceding plan year 
under subparagraph (A)(ii) may be determined using such 
methods of estimation as the Secretary may provide. 
‘‘(C) SPECIAL
RULE
FOR
EMPLOYEES
OFFERED
EARLY 
RETIREMENT IN 2006.—
‘‘(i) IN GENERAL.—For purposes of subparagraph 
(A)(ii), the additional actuarial assumptions described 
in paragraph (1)(B) shall not be taken into account 
with respect to any employee if—
‘‘(I) such employee is employed by a specified 
automobile manufacturer,
H. R. 4—62
‘‘(II) such employee is offered a substantial 
amount of additional cash compensation, substan-
tially enhanced retirement benefits under the plan, 
or materially reduced employment duties on the 
condition that by a specified date (not later than 
December 31, 2010) the employee retires (as 
defined under the terms of the plan), 
‘‘(III) such offer is made during 2006 and 
pursuant to a bona fide retirement incentive pro-
gram and requires, by the terms of the offer, that 
such offer can be accepted not later than a specified 
date (not later than December 31, 2006), and 
‘‘(IV) such employee does not elect to accept 
such offer before the specified date on which the 
offer expires. 
‘‘(ii) SPECIFIED AUTOMOBILE MANUFACTURER.—For 
purposes of clause (i), the term ‘specified automobile 
manufacturer’ means—
‘‘(I) any manufacturer of automobiles, and 
‘‘(II) any manufacturer of automobile parts 
which supplies such parts directly to a manufac-
turer of automobiles and which, after a transaction 
or series of transactions ending in 1999, ceased 
to be a member of a controlled group which 
included such manufacturer of automobiles. 
‘‘(5) TRANSITION BETWEEN APPLICABLE FUNDING TARGETS 
AND BETWEEN APPLICABLE TARGET NORMAL COSTS.—
‘‘(A) IN GENERAL.—In any case in which a plan which 
is in at-risk status for a plan year has been in such status 
for a consecutive period of fewer than 5 plan years, the 
applicable amount of the funding target and of the target 
normal cost shall be, in lieu of the amount determined 
without regard to this paragraph, the sum of—
‘‘(i) the amount determined under this section 
without regard to this subsection, plus 
‘‘(ii) the transition percentage for such plan year 
of the excess of the amount determined under this 
subsection (without regard to this paragraph) over the 
amount determined under this section without regard 
to this subsection. 
‘‘(B) 
TRANSITION
PERCENTAGE.—For 
purposes 
of 
subparagraph (A), the transition percentage shall be deter-
mined in accordance with the following table:
‘‘If the consecutive number of 
years (including the plan year) 
The 
transition 
the plan is in at-risk status is—
percentage 
is—
1 ..............................................................................................
2 ..............................................................................................
3 ..............................................................................................
4 ..............................................................................................
80.
‘‘(C) YEARS BEFORE EFFECTIVE DATE.—For purposes of 
this paragraph, plan years beginning before 2008 shall 
not be taken into account. 
‘‘(6) SMALL PLAN EXCEPTION.—If, on each day during the 
preceding plan year, a plan had 500 or fewer participants, 
the plan shall not be treated as in at-risk status for the plan
H. R. 4—63
year. For purposes of this paragraph, all defined benefit plans 
(other than multiemployer plans) maintained by the same 
employer (or any member of such employer’s controlled group) 
shall be treated as 1 plan, but only participants with respect 
to such employer or member shall be taken into account and 
the rules of subsection (g)(2)(C) shall apply. 
‘‘(j) PAYMENT OF MINIMUM REQUIRED CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—For purposes of this section, the due 
date for any payment of any minimum required contribution 
for any plan year shall be 81⁄2 months after the close of the 
plan year. 
‘‘(2) INTEREST.—Any payment required under paragraph 
(1) for a plan year that is made on a date other than the 
valuation date for such plan year shall be adjusted for interest 
accruing for the period between the valuation date and the 
payment date, at the effective rate of interest for the plan 
for such plan year. 
‘‘(3) ACCELERATED QUARTERLY CONTRIBUTION SCHEDULE FOR 
UNDERFUNDED PLANS.—
‘‘(A) FAILURE
TO
TIMELY
MAKE
REQUIRED
INSTALL-
MENT.—In any case in which the plan has a funding short-
fall for the preceding plan year, the employer maintaining 
the plan shall make the required installments under this 
paragraph and if the employer fails to pay the full amount 
of a required installment for the plan year, then the amount 
of interest charged under paragraph (2) on the under-
payment for the period of underpayment shall be deter-
mined by using a rate of interest equal to the rate otherwise 
used under paragraph (2) plus 5 percentage points. 
‘‘(B) AMOUNT OF UNDERPAYMENT, PERIOD OF UNDER-
PAYMENT.—For purposes of subparagraph (A)—
‘‘(i) AMOUNT.—The amount of the underpayment 
shall be the excess of—
‘‘(I) the required installment, over 
‘‘(II) the amount (if any) of the installment 
contributed to or under the plan on or before the 
due date for the installment. 
‘‘(ii) PERIOD OF UNDERPAYMENT.—The period for 
which any interest is charged under this paragraph 
with respect to any portion of the underpayment shall 
run from the due date for the installment to the date 
on which such portion is contributed to or under the 
plan. 
‘‘(iii) ORDER
OF
CREDITING
CONTRIBUTIONS.—For 
purposes of clause (i)(II), contributions shall be credited 
against unpaid required installments in the order in 
which such installments are required to be paid. 
‘‘(C) 
NUMBER
OF
REQUIRED
INSTALLMENTS; 
DUE 
DATES.—For purposes of this paragraph—
‘‘(i) PAYABLE IN 4 INSTALLMENTS.—There shall be 
4 required installments for each plan year. 
‘‘(ii) TIME FOR PAYMENT OF INSTALLMENTS.—The 
due dates for required installments are set forth in 
the following table:
H. R. 4—64
‘‘In the case of the following
required installment: 
The due date is:
1st ......................................................................
April 15
2nd ....................................................................
July 15
3rd .....................................................................
October 15
4th .....................................................................
January 15 of the
following year. 
‘‘(D) AMOUNT
OF
REQUIRED
INSTALLMENT.—For pur-
poses of this paragraph—
‘‘(i) IN
GENERAL.—The amount of any required 
installment shall be 25 percent of the required annual 
payment. 
‘‘(ii) REQUIRED
ANNUAL
PAYMENT.—For purposes 
of clause (i), the term ‘required annual payment’ means 
the lesser of—
‘‘(I) 90 percent of the minimum required con-
tribution (determined without regard to this sub-
section) to the plan for the plan year under this 
section, or 
‘‘(II) 100 percent of the minimum required con-
tribution (determined without regard to this sub-
section or to any waiver under section 302(c)) to 
the plan for the preceding plan year. 
Subclause (II) shall not apply if the preceding plan 
year referred to in such clause was not a year of 
12 months. 
‘‘(E) FISCAL YEARS AND SHORT YEARS.—
‘‘(i) FISCAL YEARS.—In applying this paragraph to 
a plan year beginning on any date other than January 
1, there shall be substituted for the months specified 
in this paragraph, the months which correspond 
thereto. 
‘‘(ii) SHORT PLAN YEAR.—This subparagraph shall 
be applied to plan years of less than 12 months in 
accordance with regulations prescribed by the Sec-
retary. 
‘‘(4) LIQUIDITY REQUIREMENT IN CONNECTION WITH QUAR-
TERLY CONTRIBUTIONS.—
‘‘(A) IN
GENERAL.—A plan to which this paragraph 
applies shall be treated as failing to pay the full amount 
of any required installment under paragraph (3) to the 
extent that the value of the liquid assets paid in such 
installment is less than the liquidity shortfall (whether 
or not such liquidity shortfall exceeds the amount of such 
installment required to be paid but for this paragraph). 
‘‘(B) PLANS TO WHICH PARAGRAPH APPLIES.—This para-
graph shall apply to a plan (other than a plan described 
in subsection (g)(2)(B)) which—
‘‘(i) is required to pay installments under para-
graph (3) for a plan year, and 
‘‘(ii) has a liquidity shortfall for any quarter during 
such plan year. 
‘‘(C) PERIOD OF UNDERPAYMENT.—For purposes of para-
graph (3)(A), any portion of an installment that is treated 
as not paid under subparagraph (A) shall continue to be
H. R. 4—65
treated as unpaid until the close of the quarter in which 
the due date for such installment occurs. 
‘‘(D) LIMITATION ON INCREASE.—If the amount of any 
required installment is increased by reason of subpara-
graph (A), in no event shall such increase exceed the 
amount which, when added to prior installments for the 
plan year, is necessary to increase the funding target 
attainment percentage of the plan for the plan year (taking 
into account the expected increase in funding target due 
to benefits accruing or earned during the plan year) to 
100 percent. 
‘‘(E) DEFINITIONS.—For purposes of this paragraph—
‘‘(i) LIQUIDITY
SHORTFALL.—The term ‘liquidity 
shortfall’ means, with respect to any required install-
ment, an amount equal to the excess (as of the last 
day of the quarter for which such installment is made) 
of—
‘‘(I) the base amount with respect to such 
quarter, over 
‘‘(II) the value (as of such last day) of the 
plan’s liquid assets. 
‘‘(ii) BASE AMOUNT.—
‘‘(I) IN
GENERAL.—The term ‘base amount’ 
means, with respect to any quarter, an amount 
equal to 3 times the sum of the adjusted disburse-
ments from the plan for the 12 months ending 
on the last day of such quarter. 
‘‘(II) SPECIAL RULE.—If the amount determined 
under subclause (I) exceeds an amount equal to 
2 times the sum of the adjusted disbursements 
from the plan for the 36 months ending on the 
last day of the quarter and an enrolled actuary 
certifies to the satisfaction of the Secretary that 
such excess is the result of nonrecurring cir-
cumstances, the base amount with respect to such 
quarter shall be determined without regard to 
amounts 
related 
to 
those 
nonrecurring 
cir-
cumstances. 
‘‘(iii) DISBURSEMENTS FROM THE PLAN.—The term 
‘disbursements from the plan’ means all disbursements 
from the trust, including purchases of annuities, pay-
ments of single sums and other benefits, and adminis-
trative expenses. 
‘‘(iv) 
ADJUSTED
DISBURSEMENTS.—The 
term 
‘adjusted disbursements’ means disbursements from 
the plan reduced by the product of—
‘‘(I) the plan’s funding target attainment 
percentage for the plan year, and 
‘‘(II) the sum of the purchases of annuities, 
payments of single sums, and such other disburse-
ments as the Secretary shall provide in regula-
tions. 
‘‘(v) LIQUID
ASSETS.—The term ‘liquid assets’ 
means cash, marketable securities, and such other 
assets as specified by the Secretary in regulations. 
‘‘(vi) QUARTER.—The term ‘quarter’ means, with 
respect to any required installment, the 3-month period
H. R. 4—66
preceding the month in which the due date for such 
installment occurs. 
‘‘(F) REGULATIONS.—The Secretary may prescribe such 
regulations as are necessary to carry out this paragraph. 
‘‘(k) IMPOSITION OF LIEN WHERE FAILURE TO MAKE REQUIRED 
CONTRIBUTIONS.—
‘‘(1) IN
GENERAL.—In the case of a plan to which this 
subsection applies, if—
‘‘(A) any person fails to make a contribution payment 
required by section 412 and this section before the due 
date for such payment, and 
‘‘(B) the unpaid balance of such payment (including 
interest), when added to the aggregate unpaid balance 
of all preceding such payments for which payment was 
not made before the due date (including interest), exceeds 
$1,000,000, 
then there shall be a lien in favor of the plan in the amount 
determined under paragraph (3) upon all property and rights 
to property, whether real or personal, belonging to such person 
and any other person who is a member of the same controlled 
group of which such person is a member. 
‘‘(2) PLANS TO WHICH SUBSECTION APPLIES.—This subsection 
shall apply to a defined benefit plan (other than a multiem-
ployer plan) covered under section 4021 of the Employee Retire-
ment Income Security Act of 1974 for any plan year for which 
the funding target attainment percentage (as defined in sub-
section (d)(2)) of such plan is less than 100 percent. 
‘‘(3) AMOUNT OF LIEN.—For purposes of paragraph (1), the 
amount of the lien shall be equal to the aggregate unpaid 
balance of contribution payments required under this section 
and section 412 for which payment has not been made before 
the due date. 
‘‘(4) NOTICE OF FAILURE; LIEN.—
‘‘(A) NOTICE
OF
FAILURE.—A person committing a 
failure described in paragraph (1) shall notify the Pension 
Benefit Guaranty Corporation of such failure within 10 
days of the due date for the required contribution payment. 
‘‘(B) PERIOD OF LIEN.—The lien imposed by paragraph 
(1) shall arise on the due date for the required contribution 
payment and shall continue until the last day of the first 
plan year in which the plan ceases to be described in 
paragraph (1)(B). Such lien shall continue to run without 
regard to whether such plan continues to be described 
in paragraph (2) during the period referred to in the pre-
ceding sentence. 
‘‘(C) CERTAIN
RULES
TO
APPLY.—Any amount with 
respect to which a lien is imposed under paragraph (1) 
shall be treated as taxes due and owing the United States 
and rules similar to the rules of subsections (c), (d), and 
(e) of section 4068 of the Employee Retirement Income 
Security Act of 1974 shall apply with respect to a lien 
imposed by subsection (a) and the amount with respect 
to such lien. 
‘‘(5) ENFORCEMENT.—Any lien created under paragraph (1) 
may be perfected and enforced only by the Pension Benefit 
Guaranty Corporation, or at the direction of the Pension Benefit
H. R. 4—67
Guaranty Corporation, by the contributing sponsor (or any 
member of the controlled group of the contributing sponsor). 
‘‘(6) DEFINITIONS.—For purposes of this subsection—
‘‘(A) CONTRIBUTION PAYMENT.—The term ‘contribution 
payment’ means, in connection with a plan, a contribution 
payment required to be made to the plan, including any 
required installment under paragraphs (3) and (4) of sub-
section (j). 
‘‘(B) DUE DATE; REQUIRED INSTALLMENT.—The terms 
‘due date’ and ‘required installment’ have the meanings 
given such terms by subsection (j), except that in the case 
of a payment other than a required installment, the due 
date shall be the date such payment is required to be 
made under section 430. 
‘‘(C) CONTROLLED GROUP.—The term ‘controlled group’ 
means any group treated as a single employer under sub-
sections (b), (c), (m), and (o) of section 414. 
‘‘(l) QUALIFIED TRANSFERS TO HEALTH BENEFIT ACCOUNTS.—
In the case of a qualified transfer (as defined in section 420), 
any assets so transferred shall not, for purposes of this section, 
be treated as assets in the plan.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply with respect to plan years beginning after December 
31, 2007. 
SEC. 113. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS. 
(a) 
PROHIBITION
OF
SHUTDOWN
BENEFITS
AND
OTHER 
UNPREDICTABLE
CONTINGENT
EVENT
BENEFITS
UNDER
SINGLE-
EMPLOYER PLANS.—
(1) IN GENERAL.—Part III of subchapter D of chapter 1 
of the Internal Revenue Code of 1986 (relating to deferred 
compensation, etc.) is amended—
(A) by striking the heading and inserting the following: 
‘‘PART III—RULES RELATING TO MINIMUM 
FUNDING STANDARDS AND BENEFIT LIMITA-
TIONS
‘‘SUBPART A. MINIMUM FUNDING STANDARDS FOR PENSION PLANS. 
‘‘SUBPART B. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.
‘‘Subpart A—Minimum Funding Standards for 
Pension Plans
‘‘Sec. 430. Minimum funding standards for single-employer defined benefit pension 
plans.’’,
and 
(B) by adding at the end the following new subpart:
H. R. 4—68
‘‘Subpart B—Benefit Limitations Under Single-
Employer Plans
‘‘Sec. 436. Funding-based limitation on shutdown benefits and other unpredictable 
contingent event benefits under single-employer plans.
‘‘SEC. 436. FUNDING-BASED LIMITS ON BENEFITS AND BENEFIT 
ACCRUALS UNDER SINGLE-EMPLOYER PLANS. 
‘‘(a) GENERAL RULE.—For purposes of section 401(a)(29), a 
defined benefit plan which is a single-employer plan shall be treated 
as meeting the requirements of this section if the plan meets 
the requirements of subsections (b), (c), (d), and (e). 
‘‘(b) FUNDING-BASED LIMITATION ON SHUTDOWN BENEFITS AND 
OTHER
UNPREDICTABLE
CONTINGENT
EVENT
BENEFITS
UNDER 
SINGLE-EMPLOYER PLANS.—
‘‘(1) IN
GENERAL.—If a participant of a defined benefit 
plan which is a single-employer plan is entitled to an unpredict-
able contingent event benefit payable with respect to any event 
occurring during any plan year, the plan shall provide that 
such benefit may not be provided if the adjusted funding target 
attainment percentage for such plan year—
‘‘(A) is less than 60 percent, or 
‘‘(B) would be less than 60 percent taking into account 
such occurrence. 
‘‘(2) EXEMPTION.—Paragraph (1) shall cease to apply with 
respect to any plan year, effective as of the first day of the 
plan year, upon payment by the plan sponsor of a contribution 
(in addition to any minimum required contribution under sec-
tion 303) equal to—
‘‘(A) in the case of paragraph (1)(A), the amount of 
the increase in the funding target of the plan (under section 
430) for the plan year attributable to the occurrence 
referred to in paragraph (1), and 
‘‘(B) in the case of paragraph (1)(B), the amount suffi-
cient to result in a funding target attainment percentage 
of 60 percent. 
‘‘(3) UNPREDICTABLE CONTINGENT EVENT.—For purposes of 
this subsection, the term ‘unpredictable contingent event ben-
efit’ means any benefit payable solely by reason of—
‘‘(A) a plant shutdown (or similar event, as determined 
by the Secretary), or 
‘‘(B) any event other than the attainment of any age, 
performance of any service, receipt or derivation of any 
compensation, or occurrence of death or disability. 
‘‘(c) LIMITATIONS ON PLAN AMENDMENTS INCREASING LIABILITY 
FOR BENEFITS.—
‘‘(1) IN GENERAL.—No amendment to a defined benefit plan 
which is a single-employer plan which has the effect of 
increasing liabilities of the plan by reason of increases in bene-
fits, establishment of new benefits, changing the rate of benefit 
accrual, or changing the rate at which benefits become non-
forfeitable may take effect during any plan year if the adjusted 
funding target attainment percentage for such plan year is—
‘‘(A) less than 80 percent, or 
‘‘(B) would be less than 80 percent taking into account 
such amendment.
H. R. 4—69
‘‘(2) EXEMPTION.—Paragraph (1) shall cease to apply with 
respect to any plan year, effective as of the first day of the 
plan year (or if later, the effective date of the amendment), 
upon payment by the plan sponsor of a contribution (in addition 
to any minimum required contribution under section 430) equal 
to—
‘‘(A) in the case of paragraph (1)(A), the amount of 
the increase in the funding target of the plan (under section 
430) for the plan year attributable to the amendment, 
and 
‘‘(B) in the case of paragraph (1)(B), the amount suffi-
cient to result in an adjusted funding target attainment 
percentage of 80 percent. 
‘‘(3) EXCEPTION FOR CERTAIN BENEFIT INCREASES.—Para-
graph (1) shall not apply to any amendment which provides 
for an increase in benefits under a formula which is not based 
on a participant’s compensation, but only if the rate of such 
increase is not in excess of the contemporaneous rate of increase 
in average wages of participants covered by the amendment. 
‘‘(d) LIMITATIONS ON ACCELERATED BENEFIT DISTRIBUTIONS.—
‘‘(1) FUNDING
PERCENTAGE
LESS
THAN
PERCENT.—A 
defined benefit plan which is a single-employer plan shall pro-
vide that, in any case in which the plan’s adjusted funding 
target attainment percentage for a plan year is less than 60 
percent, the plan may not pay any prohibited payment after 
the valuation date for the plan year. 
‘‘(2) BANKRUPTCY.—A defined benefit plan which is a single-
employer plan shall provide that, during any period in which 
the plan sponsor is a debtor in a case under title 11, United 
States Code, or similar Federal or State law, the plan may 
not pay any prohibited payment. The preceding sentence shall 
not apply on or after the date on which the enrolled actuary 
of the plan certifies that the adjusted funding target attainment 
percentage of such plan is not less than 100 percent. 
‘‘(3) LIMITED PAYMENT IF PERCENTAGE AT LEAST 60 PERCENT 
BUT LESS THAN 80 PERCENT.—
‘‘(A) IN GENERAL.—A defined benefit plan which is a 
single-employer plan shall provide that, in any case in 
which the plan’s adjusted funding target attainment 
percentage for a plan year is 60 percent or greater but 
less than 80 percent, the plan may not pay any prohibited 
payment after the valuation date for the plan year to 
the extent the amount of the payment exceeds the lesser 
of—
‘‘(i) 50 percent of the amount of the payment which 
could be made without regard to this section, or 
‘‘(ii) the present value (determined under guidance 
prescribed by the Pension Benefit Guaranty Corpora-
tion, using the interest and mortality assumptions 
under section 417(e)) of the maximum guarantee with 
respect to the participant under section 4022 of the 
Employee Retirement Income Security Act of 1974. 
‘‘(B) ONE-TIME APPLICATION.—
‘‘(i) IN GENERAL.—The plan shall also provide that 
only 1 prohibited payment meeting the requirements 
of subparagraph (A) may be made with respect to 
any participant during any period of consecutive plan
H. R. 4—70
years to which the limitations under either paragraph 
(1) or (2) or this paragraph applies. 
‘‘(ii) TREATMENT OF BENEFICIARIES.—For purposes 
of this subparagraph, a participant and any beneficiary 
on his behalf (including an alternate payee, as defined 
in section 414(p)(8)) shall be treated as 1 participant. 
If the accrued benefit of a participant is allocated to 
such an alternate payee and 1 or more other persons, 
the amount under subparagraph (A) shall be allocated 
among such persons in the same manner as the accrued 
benefit is allocated unless the qualified domestic rela-
tions order (as defined in section 414(p)(1)(A)) provides 
otherwise. 
‘‘(4) EXCEPTION.—This subsection shall not apply to any 
plan for any plan year if the terms of such plan (as in effect 
for the period beginning on September 1, 2005, and ending 
with such plan year) provide for no benefit accruals with respect 
to any participant during such period. 
‘‘(5) PROHIBITED PAYMENT.—For purpose of this subsection, 
the term ‘prohibited payment’ means—
‘‘(A) any payment, in excess of the monthly amount 
paid under a single life annuity (plus any social security 
supplements described in the last sentence of section 
411(a)(9)), to a participant or beneficiary whose annuity 
starting date (as defined in section 417(f)(2)) occurs during 
any period a limitation under paragraph (1) or (2) is in 
effect, 
‘‘(B) any payment for the purchase of an irrevocable 
commitment from an insurer to pay benefits, and 
‘‘(C) any other payment specified by the Secretary by 
regulations. 
‘‘(e) LIMITATION ON BENEFIT ACCRUALS FOR PLANS WITH SEVERE 
FUNDING SHORTFALLS.—
‘‘(1) IN GENERAL.—A defined benefit plan which is a single-
employer plan shall provide that, in any case in which the 
plan’s adjusted funding target attainment percentage for a 
plan year is less than 60 percent, benefit accruals under the 
plan shall cease as of the valuation date for the plan year. 
‘‘(2) EXEMPTION.—Paragraph (1) shall cease to apply with 
respect to any plan year, effective as of the first day of the 
plan year, upon payment by the plan sponsor of a contribution 
(in addition to any minimum required contribution under sec-
tion 430) equal to the amount sufficient to result in an adjusted 
funding target attainment percentage of 60 percent. 
‘‘(f) RULES RELATING TO CONTRIBUTIONS REQUIRED TO AVOID 
BENEFIT LIMITATIONS.—
‘‘(1) SECURITY MAY BE PROVIDED.—
‘‘(A) IN GENERAL.—For purposes of this section, the 
adjusted funding target attainment percentage shall be 
determined by treating as an asset of the plan any security 
provided by a plan sponsor in a form meeting the require-
ments of subparagraph (B). 
‘‘(B) FORM OF SECURITY.—The security required under 
subparagraph (A) shall consist of—
‘‘(i) a bond issued by a corporate surety company 
that is an acceptable surety for purposes of section
H. R. 4—71
412 of the Employee Retirement Income Security Act 
of 1974, 
‘‘(ii) cash, or United States obligations which 
mature in 3 years or less, held in escrow by a bank 
or similar financial institution, or 
‘‘(iii) such other form of security as is satisfactory 
to the Secretary and the parties involved. 
‘‘(C) ENFORCEMENT.—Any security provided under 
subparagraph (A) may be perfected and enforced at any 
time after the earlier of—
‘‘(i) the date on which the plan terminates, 
‘‘(ii) if there is a failure to make a payment of 
the minimum required contribution for any plan year 
beginning after the security is provided, the due date 
for the payment under section 430(j), or 
‘‘(iii) if the adjusted funding target attainment 
percentage is less than 60 percent for a consecutive 
period of 7 years, the valuation date for the last year 
in the period. 
‘‘(D) RELEASE
OF
SECURITY.—The security shall be 
released (and any amounts thereunder shall be refunded 
together with any interest accrued thereon) at such time 
as the Secretary may prescribe in regulations, including 
regulations for partial releases of the security by reason 
of increases in the funding target attainment percentage. 
‘‘(2) PREFUNDING BALANCE OR FUNDING STANDARD CARRY-
OVER
BALANCE
MAY
NOT
BE
USED.—No prefunding balance 
under section 430(f) or funding standard carryover balance 
may be used under subsection (b), (c), or (e) to satisfy any 
payment an employer may make under any such subsection 
to avoid or terminate the application of any limitation under 
such subsection. 
‘‘(3) DEEMED REDUCTION OF FUNDING BALANCES.—
‘‘(A) IN GENERAL.—Subject to subparagraph (C), in any 
case in which a benefit limitation under subsection (b), 
(c), (d), or (e) would (but for this subparagraph and deter-
mined without regard to subsection (b)(2), (c)(2), or (e)(2)) 
apply to such plan for the plan year, the plan sponsor 
of such plan shall be treated for purposes of this title 
as having made an election under section 430(f) to reduce 
the prefunding balance or funding standard carryover bal-
ance by such amount as is necessary for such benefit limita-
tion to not apply to the plan for such plan year. 
‘‘(B) EXCEPTION
FOR
INSUFFICIENT
FUNDING
BAL-
ANCES.—Subparagraph (A) shall not apply with respect 
to a benefit limitation for any plan year if the application 
of subparagraph (A) would not result in the benefit limita-
tion not applying for such plan year. 
‘‘(C) RESTRICTIONS OF CERTAIN RULES TO COLLECTIVELY 
BARGAINED PLANS.—With respect to any benefit limitation 
under subsection (b), (c), or (e), subparagraph (A) shall 
only apply in the case of a plan maintained pursuant 
to 1 or more collective bargaining agreements between 
employee representatives and 1 or more employers. 
‘‘(g) NEW PLANS.—Subsections (b), (c), and (e) shall not apply 
to a plan for the first 5 plan years of the plan. For purposes
H. R. 4—72
of this subsection, the reference in this subsection to a plan shall 
include a reference to any predecessor plan. 
‘‘(h) PRESUMED UNDERFUNDING
FOR PURPOSES
OF BENEFIT 
LIMITATIONS.—
‘‘(1) PRESUMPTION OF CONTINUED UNDERFUNDING.—In any 
case in which a benefit limitation under subsection (b), (c), 
(d), or (e) has been applied to a plan with respect to the 
plan year preceding the current plan year, the adjusted funding 
target attainment percentage of the plan for the current plan 
year shall be presumed to be equal to the adjusted funding 
target attainment percentage of the plan for the preceding 
plan year until the enrolled actuary of the plan certifies the 
actual adjusted funding target attainment percentage of the 
plan for the current plan year. 
‘‘(2) PRESUMPTION OF UNDERFUNDING AFTER 10TH MONTH.—
In any case in which no certification of the adjusted funding 
target attainment percentage for the current plan year is made 
with respect to the plan before the first day of the 10th month 
of such year, for purposes of subsections (b), (c), (d), and (e), 
such first day shall be deemed, for purposes of such subsection, 
to be the valuation date of the plan for the current plan year 
and the plan’s adjusted funding target attainment percentage 
shall be conclusively presumed to be less than 60 percent 
as of such first day. 
‘‘(3) PRESUMPTION
OF
UNDERFUNDING
AFTER
4TH
MONTH 
FOR
NEARLY
UNDERFUNDED
PLANS.—In any case in which—
‘‘(A) a benefit limitation under subsection (b), (c), (d), 
or (e) did not apply to a plan with respect to the plan 
year preceding the current plan year, but the adjusted 
funding target attainment percentage of the plan for such 
preceding plan year was not more than 10 percentage 
points greater than the percentage which would have 
caused such subsection to apply to the plan with respect 
to such preceding plan year, and 
‘‘(B) as of the first day of the 4th month of the current 
plan year, the enrolled actuary of the plan has not certified 
the actual adjusted funding target attainment percentage 
of the plan for the current plan year, 
until the enrolled actuary so certifies, such first day shall 
be deemed, for purposes of such subsection, to be the valuation 
date of the plan for the current plan year and the adjusted 
funding target attainment percentage of the plan as of such 
first day shall, for purposes of such subsection, be presumed 
to be equal to 10 percentage points less than the adjusted 
funding target attainment percentage of the plan for such pre-
ceding plan year. 
‘‘(i) TREATMENT OF PLAN AS OF CLOSE OF PROHIBITED OR CES-
SATION PERIOD.—For purposes of applying this title—
‘‘(1) OPERATION OF PLAN AFTER PERIOD.—Unless the plan 
provides otherwise, payments and accruals will resume effective 
as of the day following the close of the period for which any 
limitation of payment or accrual of benefits under subsection 
(d) or (e) applies. 
‘‘(2) TREATMENT OF AFFECTED BENEFITS.—Nothing in this 
subsection shall be construed as affecting the plan’s treatment 
of benefits which would have been paid or accrued but for 
this section.
H. R. 4—73
‘‘(j) TERMS
RELATING
TO
FUNDING
TARGET
ATTAINMENT 
PERCENTAGE.—For purposes of this section—
‘‘(1) IN
GENERAL.—The term ‘funding target attainment 
percentage’ has the same meaning given such term by section 
430(d)(2). 
‘‘(2) ADJUSTED
FUNDING
TARGET
ATTAINMENT
PERCENT-
AGE.—The term ‘adjusted funding target attainment percentage’ 
means the funding target attainment percentage which is deter-
mined under paragraph (1) by increasing each of the amounts 
under subparagraphs (A) and (B) of section 430(d)(2) by the 
aggregate amount of purchases of annuities for employees other 
than highly compensated employees (as defined in section 
414(q)) which were made by the plan during the preceding 
2 plan years. 
‘‘(3) APPLICATION TO PLANS WHICH ARE FULLY FUNDED WITH-
OUT REGARD TO REDUCTIONS FOR FUNDING BALANCES.—
‘‘(A) IN GENERAL.—In the case of a plan for any plan 
year, if the funding target attainment percentage is 100 
percent or more (determined without regard to this para-
graph and without regard to the reduction in the value 
of assets under section 430(f)(4)(A)), the funding target 
attainment percentage for purposes of paragraph (1) shall 
be determined without regard to such reduction. 
‘‘(B) TRANSITION
RULE.—Subparagraph (A) shall be 
applied to plan years beginning after 2007 and before 2011 
by substituting for ‘100 percent’ the applicable percentage 
determined in accordance with the following table:
‘‘In the case of a plan year 
The 
applicable 
beginning in calendar year: 
percentage is 
2008 ............................................................................................
2009 ............................................................................................
2010 ............................................................................................
96.
‘‘(C) LIMITATION.—Subparagraph (B) shall not apply 
with respect to any plan year after 2008 unless the funding 
target attainment percentage (determined without regard 
to this paragraph) of the plan for each preceding plan 
year after 2007 was not less than the applicable percentage 
with respect to such preceding plan year determined under 
subparagraph (B). 
‘‘(k) SPECIAL RULE FOR 2008.—For purposes of this section, 
in the case of plan years beginning in 2008, the funding target 
attainment percentage for the preceding plan year may be deter-
mined using such methods of estimation as the Secretary may 
provide.’’. 
(2) CLERICAL
AMENDMENT.—The table of parts for sub-
chapter D of chapter 1 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new item:
‘‘PART III—RULES RELATING TO MINIMUM FUNDING STANDARDS AND BENEFIT 
LIMITATIONS’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section 
shall apply to plan years beginning after December 31, 2007. 
(2) COLLECTIVE
BARGAINING
EXCEPTION.—In the case of 
a plan maintained pursuant to 1 or more collective bargaining 
agreements between employee representatives and 1 or more 
employers ratified before January 1, 2008, the amendments
H. R. 4—74
made by this section shall not apply to plan years beginning 
before the earlier of—
(A) the later of—
(i) the date on which the last collective bargaining 
agreement relating to the plan terminates (determined 
without regard to any extension thereof agreed to after 
the date of the enactment of this Act), or 
(ii) the first day of the first plan year to which 
the amendments made by this subsection would (but 
for this subparagraph) apply, or 
(B) January 1, 2010. 
For purposes of subparagraph (A)(i), any plan amendment made 
pursuant to a collective bargaining agreement relating to the 
plan which amends the plan solely to conform to any require-
ment added by this section shall not be treated as a termination 
of such collective bargaining agreement. 
SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) AMENDMENTS RELATED TO QUALIFICATION REQUIREMENTS.—
(1) Section 401(a)(29) of the Internal Revenue Code of 
1986 is amended to read as follows: 
‘‘(29) BENEFIT LIMITATIONS ON PLANS IN AT-RISK STATUS.—
In the case of a defined benefit plan (other than a multiem-
ployer plan) to which the requirements of section 412 apply, 
the trust of which the plan is a part shall not constitute 
a qualified trust under this subsection unless the plan meets 
the requirements of section 436.’’. 
(2) Section 401(a)(32) of such Code is amended—
(A) in subparagraph (A), by striking ‘‘412(m)(5)’’ each 
place it appears and inserting ‘‘section 430(j)(4)’’, and 
(B) in subparagraph (C), by striking ‘‘section 412(m)’’ 
and inserting ‘‘section 430(j)’’. 
(3) Section 401(a)(33) of such Code is amended—
(A) in subparagraph (B)(i), by striking ‘‘funded current 
liability percentage (within the meaning of section 
412(l)(8))’’ and inserting ‘‘funding target attainment 
percentage (as defined in section 430(d)(2))’’, 
(B) in subparagraph (B)(iii), by striking ‘‘subsection 
412(c)(8)’’ and inserting ‘‘section 412(c)(2)’’, and 
(C) in subparagraph (D), by striking ‘‘section 412(c)(11) 
(without regard to subparagraph (B) thereof)’’ and inserting 
‘‘section 412(b)(2) (without regard to subparagraph (B) 
thereof)’’. 
(b) VESTING RULES.—Section 411 of such Code is amended—
(1) by striking ‘‘section 412(c)(8)’’ in subsection (a)(3)(C) 
and inserting ‘‘section 412(c)(2)’’, 
(2) in subsection (b)(1)(F)—
(A) by striking ‘‘paragraphs (2) and (3) of section 412(i)’’ 
in clause (ii) and inserting ‘‘subparagraphs (B) and (C) 
of section 412(e)(3)’’, and 
(B) by striking ‘‘paragraphs (4), (5), and (6) of section 
412(i)’’ and inserting ‘‘subparagraphs (D), (E), and (F) of 
section 412(e)(3)’’, and 
(3) by striking ‘‘section 412(c)(8)’’ in subsection (d)(6)(A) 
and inserting ‘‘section 412(e)(2)’’. 
(c) MERGERS AND CONSOLIDATIONS OF PLANS.—Subclause (I) 
of section 414(l)(2)(B)(i) of such Code is amended to read as follows:
H. R. 4—75
‘‘(I) the amount determined under section 
431(c)(6)(A)(i) in the case of a multiemployer plan 
(and the sum of the funding shortfall and target 
normal cost determined under section 430 in the 
case of any other plan), over’’. 
(d) TRANSFER OF EXCESS PENSION ASSETS TO RETIREE HEALTH 
ACCOUNTS.—
(1) Section 420(e)(2) of such Code is amended to read 
as follows: 
‘‘(2) EXCESS PENSION ASSETS.—The term ‘excess pension 
assets’ means the excess (if any) of—
‘‘(A) the lesser of—
‘‘(i) the fair market value of the plan’s assets 
(reduced by the prefunding balance and funding 
standard carryover balance determined under section 
430(f)), or 
‘‘(ii) the value of plan assets as determined under 
section 430(g)(3) after reduction under section 430(f), 
over 
‘‘(B) 125 percent of the sum of the funding shortfall 
and the target normal cost determined under section 430 
for such plan year.’’. 
(2) Section 420(e)(4) of such Code is amended to read 
as follows: 
‘‘(4) COORDINATION WITH SECTION 430.—In the case of a 
qualified transfer, any assets so transferred shall not, for pur-
poses of this section and section 430, be treated as assets 
in the plan.’’. 
(e) EXCISE TAXES.—
(1) IN GENERAL.—Subsections (a) and (b) of section 4971 
of such Code are amended to read as follows: 
‘‘(a) INITIAL TAX.—If at any time during any taxable year an 
employer maintains a plan to which section 412 applies, there 
is hereby imposed for the taxable year a tax equal to—
‘‘(1) in the case of a single-employer plan, 10 percent of 
the aggregate unpaid minimum required contributions for all 
plan years remaining unpaid as of the end of any plan year 
ending with or within the taxable year, and 
‘‘(2) in the case of a multiemployer plan, 5 percent of 
the accumulated funding deficiency determined under section 
431 as of the end of any plan year ending with or within 
the taxable year. 
‘‘(b) ADDITIONAL TAX.—If—
‘‘(1) a tax is imposed under subsection (a)(1) on any unpaid 
required minimum contribution and such amount remains 
unpaid as of the close of the taxable period, or 
‘‘(2) a tax is imposed under subsection (a)(2) on any accumu-
lated funding deficiency and the accumulated funding deficiency 
is not corrected within the taxable period, 
there is hereby imposed a tax equal to 100 percent of the unpaid 
minimum required contribution or accumulated funding deficiency, 
whichever is applicable, to the extent not so paid or corrected.’’. 
(2) Section 4971(c) of such Code is amended—
(A) by striking ‘‘the last two sentences of section 412(a)’’ 
in paragraph (1) and inserting ‘‘section 431’’, and 
(B) by adding at the end the following new paragraph: 
‘‘(4) UNPAID MINIMUM REQUIRED CONTRIBUTION.—
H. R. 4—76
‘‘(A) 
IN
GENERAL.—The 
term 
‘unpaid 
minimum 
required contribution’ means, with respect to any plan 
year, any minimum required contribution under section 
430 for the plan year which is not paid on or before the 
due date (as determined under section 430(j)(1)) for the 
plan year. 
‘‘(B) ORDERING
RULE.—Any payment to or under a 
plan for any plan year shall be allocated first to unpaid 
minimum required contributions for all preceding plan 
years on a first-in, first-out basis and then to the minimum 
required contribution under section 430 for the plan year.’’. 
(3) Section 4971(e)(1) of such Code is amended by striking 
‘‘section 412(b)(3)(A)’’ and inserting ‘‘section 412(a)(1)(A)’’. 
(4) Section 4971(f)(1) of such Code is amended—
(A) by striking ‘‘section 412(m)(5)’’ and inserting ‘‘sec-
tion 430(j)(4)’’, and 
(B) by striking ‘‘section 412(m)’’ and inserting ‘‘section 
430(j)’’. 
(5) Section 4972(c)(7) of such Code is amended by striking 
‘‘except to the extent that such contributions exceed the full-
funding limitation (as defined in section 412(c)(7), determined 
without regard to subparagraph (A)(i)(I) thereof)’’ and inserting 
‘‘except, in the case of a multiemployer plan, to the extent 
that such contributions exceed the full-funding limitation (as 
defined in section 431(c)(6))’’. 
(f) REPORTING REQUIREMENTS.—Section 6059(b) of such Code 
is amended—
(1) by striking ‘‘the accumulated funding deficiency (as 
defined in section 412(a))’’ in paragraph (2) and inserting ‘‘the 
minimum required contribution determined under section 430, 
or the accumulated funding deficiency determined under section 
431,’’, and 
(2) by striking paragraph (3)(B) and inserting: 
‘‘(B) the requirements for reasonable actuarial assump-
tions under section 430(h)(1) or 431(c)(3), whichever are 
applicable, have been complied with.’’. 
SEC. 115. MODIFICATION OF TRANSITION RULE TO PENSION FUNDING 
REQUIREMENTS. 
(a) IN GENERAL.—In the case of a plan that—
(1) was not required to pay a variable rate premium for 
the plan year beginning in 1996, 
(2) has not, in any plan year beginning after 1995, merged 
with another plan (other than a plan sponsored by an employer 
that was in 1996 within the controlled group of the plan 
sponsor), and 
(3) is sponsored by a company that is engaged primarily 
in the interurban or interstate passenger bus service, 
the rules described in subsection (b) shall apply for any plan year 
beginning after December 31, 2007. 
(b) MODIFIED RULES.—The rules described in this subsection 
are as follows: 
(1) For purposes of section 430(j)(3) of the Internal Revenue 
Code of 1986 and section 303(j)(3) of the Employee Retirement 
Income Security Act of 1974, the plan shall be treated as 
not having a funding shortfall for any plan year. 
(2) For purposes of—
H. R. 4—77
(A) determining unfunded vested benefits under section 
4006(a)(3)(E)(iii) of such Act, and 
(B) determining any present value or making any com-
putation under section 412 of such Code or section 302 
of such Act, 
the mortality table shall be the mortality table used by the 
plan. 
(3) Section 430(c)(5)(B) of such Code and section 303(c)(5)(B) 
of such Act (relating to phase-in of funding target for exemption 
from new shortfall amortization base) 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: 
2008 ...........................................................................................................
90 percent
2009 ...........................................................................................................
92 percent
2010 ...........................................................................................................
94 percent
2011 ...........................................................................................................
96 percent. 
(c) DEFINITIONS.—Any term used in this section which is also 
used in section 430 of such Code or section 303 of such Act shall 
have the meaning provided such term in such section. If the same 
term has a different meaning in such Code and such Act, such 
term shall, for purposes of this section, have the meaning provided 
by such Code when applied with respect to such Code and the 
meaning provided by such Act when applied with respect to such 
Act. 
(d) SPECIAL RULE FOR 2006 AND 2007.—
(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, 2006, and 2007’’. 
(2) EFFECTIVE DATE.—The amendment made by paragraph 
(1) shall apply to plan years beginning after December 31, 
2005. 
(e) CONFORMING AMENDMENT.—
(1) Section 769 of the Retirement Protection Act of 1994 
is amended by striking subsection (c). 
(2) The amendment made by paragraph (1) shall take effect 
on December 31, 2007, and shall apply to plan years beginning 
after such date. 
SEC. 116. RESTRICTIONS ON FUNDING OF NONQUALIFIED DEFERRED 
COMPENSATION PLANS BY EMPLOYERS MAINTAINING 
UNDERFUNDED 
OR 
TERMINATED 
SINGLE-EMPLOYER 
PLANS. 
(a) AMENDMENTS OF INTERNAL REVENUE CODE.—Subsection (b) 
of section 409A of the Internal Revenue Code of 1986 (providing 
rules relating to funding) is amended by redesignating paragraphs 
(3) and (4) as paragraphs (4) and (5), respectively, and by inserting 
after paragraph (2) the following new paragraph: 
‘‘(3) TREATMENT
OF
EMPLOYER’S
DEFINED
BENEFIT
PLAN 
DURING RESTRICTED PERIOD.—
‘‘(A) IN GENERAL.—If—
‘‘(i) during any restricted period with respect to 
a single-employer defined benefit plan, assets are set
H. R. 4—78
aside or reserved (directly or indirectly) in a trust 
(or other arrangement as determined by the Secretary) 
or transferred to such a trust or other arrangement 
for purposes of paying deferred compensation of an 
applicable covered employee under a nonqualified 
deferred compensation plan of the plan sponsor or 
member of a controlled group which includes the plan 
sponsor, or 
‘‘(ii) a nonqualified deferred compensation plan of 
the plan sponsor or member of a controlled group which 
includes the plan sponsor provides that assets will 
become restricted to the provision of benefits under 
the plan in connection with such restricted period (or 
other similar financial measure determined by the Sec-
retary) with respect to 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 services whether or not such assets are available to 
satisfy claims of general creditors. Clause (i) shall not 
apply with respect to any assets which are so set aside 
before the restricted period with respect to the defined 
benefit plan. 
‘‘(B) RESTRICTED PERIOD.—For purposes of this section, 
the term ‘restricted period’ means, with respect to any 
plan described in subparagraph (A)—
‘‘(i) any period during which the plan is in at-
risk status (as defined in section 430(i)); 
‘‘(ii) any period the plan sponsor is a debtor in 
a case under title 11, United States Code, or similar 
Federal or State law, and 
‘‘(iii) the 12-month period beginning on the date 
which is 6 months before the termination date of the 
plan if, as of the termination date, the plan is not 
sufficient for benefit liabilities (within the meaning 
of section 4041 of the Employee Retirement Income 
Security Act of 1974). 
‘‘(C) SPECIAL
RULE
FOR
PAYMENT
OF
TAXES
ON 
DEFERRED
COMPENSATION
INCLUDED
IN
INCOME.—If an 
employer provides directly or indirectly for the payment 
of any Federal, State, or local income taxes with respect 
to any compensation required to be included in gross 
income by reason of this paragraph—
‘‘(i) interest shall be imposed under subsection 
(a)(1)(B)(i)(I) on the amount of such payment in the 
same manner as if such payment was part of the 
deferred compensation to which it relates, 
‘‘(ii) such payment shall be taken into account 
in determining the amount of the additional tax under 
subsection (a)(1)(B)(i)(II) in the same manner as if 
such payment was part of the deferred compensation 
to which it relates, and 
‘‘(iii) no deduction shall be allowed under this title 
with respect to such payment. 
‘‘(D) OTHER
DEFINITIONS.—For purposes of this sec-
tion—
H. R. 4—79
‘‘(i) APPLICABLE
COVERED
EMPLOYEE.—The term 
‘applicable covered employee’ means any—
‘‘(I) covered employee of a plan sponsor, 
‘‘(II) covered employee of a member of a con-
trolled group which includes the plan sponsor, and 
‘‘(III) former employee who was a covered 
employee at the time of termination of employment 
with the plan sponsor or a member of a controlled 
group which includes the plan sponsor. 
‘‘(ii) COVERED
EMPLOYEE.—The term ‘covered 
employee’ means an individual described in section 
162(m)(3) or an individual subject to the requirements 
of section 16(a) of the Securities Exchange Act of 
1934.’’. 
(b) CONFORMING AMENDMENTS.—Paragraphs (4) and (5) of sec-
tion 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)’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to transfers or other reservation of assets after the 
date of the enactment of this Act. 
TITLE II—FUNDING RULES FOR MULTI-
EMPLOYER DEFINED BENEFIT PLANS 
AND RELATED PROVISIONS 
Subtitle A—Amendments to Employee 
Retirement Income Security Act of 1974
SEC. 201. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT 
PLANS. 
(a) IN GENERAL.—Part 3 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (as amended by this Act) 
is amended by inserting after section 303 the following new section: 
‘‘MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER PLANS 
‘‘SEC. 304. (a) IN GENERAL.—For purposes of section 302, the 
accumulated funding deficiency of a multiemployer plan for any 
plan year is—
‘‘(1) except as provided in paragraph (2), the amount, deter-
mined as of the end of the plan year, equal to the excess 
(if any) of the total charges to the funding standard account 
of the plan for all plan years (beginning with the first plan 
year for which this part applies to the plan) over the total 
credits to such account for such years, and 
‘‘(2) if the multiemployer plan is in reorganization for any 
plan year, the accumulated funding deficiency of the plan deter-
mined under section 4243. 
‘‘(b) FUNDING STANDARD ACCOUNT.—
‘‘(1) ACCOUNT
REQUIRED.—Each multiemployer plan to 
which this part applies shall establish and maintain a funding
H. R. 4—80
standard account. Such account shall be credited and charged 
solely as provided in this section. 
‘‘(2) CHARGES TO ACCOUNT.—For a plan year, the funding 
standard account shall be charged with the sum of—
‘‘(A) the normal cost of the plan for the plan year, 
‘‘(B) the amounts necessary to amortize in equal annual 
installments (until fully amortized)—
‘‘(i) in the case of a plan which comes into existence 
on or after January 1, 2008, the unfunded past service 
liability under the plan on the first day of the first 
plan year to which this section applies, over a period 
of 15 plan years, 
‘‘(ii) separately, with respect to each plan year, 
the net increase (if any) in unfunded past service 
liability under the plan arising from plan amendments 
adopted in such year, over a period of 15 plan years, 
‘‘(iii) separately, with respect to each plan year, 
the net experience loss (if any) under the plan, over 
a period of 15 plan years, and 
‘‘(iv) separately, with respect to each plan year, 
the net loss (if any) resulting from changes in actuarial 
assumptions used under the plan, over a period of 
15 plan years, 
‘‘(C) the amount necessary to amortize each waived 
funding deficiency (within the meaning of section 302(c)(3)) 
for each prior plan year in equal annual installments (until 
fully amortized) over a period of 15 plan years, 
‘‘(D) the amount necessary to amortize in equal annual 
installments (until fully amortized) over a period of 5 plan 
years any amount credited to the funding standard account 
under section 302(b)(3)(D) (as in effect on the day before 
the date of the enactment of the Pension Protection Act 
of 2006), and 
‘‘(E) the amount necessary to amortize in equal annual 
installments (until fully amortized) over a period of 20 
years the contributions which would be required to be 
made under the plan but for the provisions of section 
302(c)(7)(A)(i)(I) (as in effect on the day before the date 
of the enactment of the Pension Protection Act of 2006). 
‘‘(3) CREDITS TO ACCOUNT.—For a plan year, the funding 
standard account shall be credited with the sum of—
‘‘(A) the amount considered contributed by the 
employer to or under the plan for the plan year, 
‘‘(B) the amount necessary to amortize in equal annual 
installments (until fully amortized)—
‘‘(i) separately, with respect to each plan year, 
the net decrease (if any) in unfunded past service 
liability under the plan arising from plan amendments 
adopted in such year, over a period of 15 plan years, 
‘‘(ii) separately, with respect to each plan year, 
the net experience gain (if any) under the plan, over 
a period of 15 plan years, and 
‘‘(iii) separately, with respect to each plan year, 
the net gain (if any) resulting from changes in actuarial 
assumptions used under the plan, over a period of 
15 plan years,
H. R. 4—81
‘‘(C) the amount of the waived funding deficiency 
(within the meaning of section 302(c)(3)) for the plan year, 
and 
‘‘(D) in the case of a plan year for which the accumu-
lated funding deficiency is determined under the funding 
standard account if such plan year follows a plan year 
for which such deficiency was determined under the alter-
native minimum funding standard under section 305 (as 
in effect on the day before the date of the enactment 
of the Pension Protection Act of 2006), the excess (if any) 
of any debit balance in the funding standard account (deter-
mined without regard to this subparagraph) over any debit 
balance in the alternative minimum funding standard 
account. 
‘‘(4) SPECIAL RULE FOR AMOUNTS FIRST AMORTIZED IN PLAN 
YEARS
BEFORE
2008.—In the case of any amount amortized 
under section 302(b) (as in effect on the day before the date 
of the enactment of the Pension Protection Act of 2006) over 
any period beginning with a plan year beginning before 2008, 
in lieu of the amortization described in paragraphs (2)(B) and 
(3)(B), such amount shall continue to be amortized under such 
section as so in effect. 
‘‘(5) COMBINING AND OFFSETTING AMOUNTS TO BE AMOR-
TIZED.—Under regulations prescribed by the Secretary of the 
Treasury, amounts required to be amortized under paragraph 
(2) or paragraph (3), as the case may be—
‘‘(A) may be combined into one amount under such 
paragraph to be amortized over a period determined on 
the basis of the remaining amortization period for all items 
entering into such combined amount, and 
‘‘(B) may be offset against amounts required to be 
amortized under the other such paragraph, with the 
resulting amount to be amortized over a period determined 
on the basis of the remaining amortization periods for 
all items entering into whichever of the two amounts being 
offset is the greater. 
‘‘(6) INTEREST.—The funding standard account (and items 
therein) shall be charged or credited (as determined under 
regulations prescribed by the Secretary of the Treasury) with 
interest at the appropriate rate consistent with the rate or 
rates of interest used under the plan to determine costs. 
‘‘(7) SPECIAL RULES RELATING TO CHARGES AND CREDITS 
TO FUNDING STANDARD ACCOUNT.—For purposes of this part—
‘‘(A) WITHDRAWAL LIABILITY.—Any amount received by 
a multiemployer plan in payment of all or part of an 
employer’s withdrawal liability under part 1 of subtitle 
E of title IV shall be considered an amount contributed 
by the employer to or under the plan. The Secretary of 
the Treasury may prescribe by regulation additional 
charges and credits to a multiemployer plan’s funding 
standard account to the extent necessary to prevent with-
drawal liability payments from being unduly reflected as 
advance funding for plan liabilities. 
‘‘(B) ADJUSTMENTS
WHEN
A
MULTIEMPLOYER
PLAN 
LEAVES REORGANIZATION.—If a multiemployer plan is not 
in reorganization in the plan year but was in reorganization 
in the immediately preceding plan year, any balance in
H. R. 4—82
the funding standard account at the close of such imme-
diately preceding plan year—
‘‘(i) shall be eliminated by an offsetting credit or 
charge (as the case may be), but 
‘‘(ii) shall be taken into account in subsequent 
plan years by being amortized in equal annual install-
ments (until fully amortized) over 30 plan years. 
The preceding sentence shall not apply to the extent of 
any accumulated funding deficiency under section 4243(a) 
as of the end of the last plan year that the plan was 
in reorganization. 
‘‘(C) PLAN PAYMENTS TO SUPPLEMENTAL PROGRAM OR 
WITHDRAWAL LIABILITY PAYMENT FUND.—Any amount paid 
by a plan during a plan year to the Pension Benefit Guar-
anty Corporation pursuant to section 4222 of this Act or 
to a fund exempt under section 501(c)(22) of the Internal 
Revenue Code of 1986 pursuant to section 4223 of this 
Act shall reduce the amount of contributions considered 
received by the plan for the plan year. 
‘‘(D) INTERIM WITHDRAWAL LIABILITY PAYMENTS.—Any 
amount paid by an employer pending a final determination 
of the employer’s withdrawal liability under part 1 of sub-
title E of title IV and subsequently refunded to the 
employer by the plan shall be charged to the funding 
standard account in accordance with regulations prescribed 
by the Secretary of the Treasury. 
‘‘(E) ELECTION FOR DEFERRAL OF CHARGE FOR PORTION 
OF NET EXPERIENCE LOSS.—If an election is in effect under 
section 302(b)(7)(F) (as in effect on the day before the 
date of the enactment of the Pension Protection Act of 
2006) for any plan year, the funding standard account 
shall be charged in the plan year to which the portion 
of the net experience loss deferred by such election was 
deferred with the amount so deferred (and paragraph 
(2)(B)(iii) shall not apply to the amount so charged). 
‘‘(F) FINANCIAL ASSISTANCE.—Any amount of any finan-
cial assistance from the Pension Benefit Guaranty Corpora-
tion to any plan, and any repayment of such amount, 
shall be taken into account under this section and section 
302 in such manner as is determined by the Secretary 
of the Treasury. 
‘‘(G) SHORT-TERM BENEFITS.—To the extent that any 
plan amendment increases the unfunded past service 
liability under the plan by reason of an increase in benefits 
which are not payable as a life annuity but are payable 
under the terms of the plan for a period that does not 
exceed 14 years from the effective date of the amendment, 
paragraph (2)(B)(ii) shall be applied separately with respect 
to such increase in unfunded past service liability by sub-
stituting the number of years of the period during which 
such benefits are payable for ‘15’. 
‘‘(c) ADDITIONAL RULES.—
‘‘(1) DETERMINATIONS
TO
BE
MADE
UNDER
FUNDING 
METHOD.—For purposes of this part, normal costs, accrued 
liability, past service liabilities, and experience gains and losses 
shall be determined under the funding method used to deter-
mine costs under the plan.
H. R. 4—83
‘‘(2) VALUATION OF ASSETS.—
‘‘(A) IN GENERAL.—For purposes of this part, the value 
of the plan’s assets shall be determined on the basis of 
any reasonable actuarial method of valuation which takes 
into account fair market value and which is permitted 
under regulations prescribed by the Secretary of the 
Treasury. 
‘‘(B) ELECTION WITH RESPECT TO BONDS.—The value 
of a bond or other evidence of indebtedness which is not 
in default as to principal or interest may, at the election 
of the plan administrator, be determined on an amortized 
basis running from initial cost at purchase to par value 
at maturity or earliest call date. Any election under this 
subparagraph shall be made at such time and in such 
manner as the Secretary of the Treasury shall by regula-
tions provide, shall apply to all such evidences of indebted-
ness, and may be revoked only with the consent of such 
Secretary. 
‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REASONABLE.—For 
purposes of this section, all costs, liabilities, rates of interest, 
and other factors under the plan shall be determined on the 
basis of actuarial assumptions and methods—
‘‘(A) each of which is reasonable (taking into account 
the experience of the plan and reasonable expectations), 
and 
‘‘(B) which, in combination, offer the actuary’s best 
estimate of anticipated experience under the plan. 
‘‘(4) TREATMENT OF CERTAIN CHANGES AS EXPERIENCE GAIN 
OR LOSS.—For purposes of this section, if—
‘‘(A) a change in benefits under the Social Security 
Act or in other retirement benefits created under Federal 
or State law, or 
‘‘(B) a change in the definition of the term ‘wages’ 
under section 3121 of the Internal Revenue Code of 1986, 
or a change in the amount of such wages taken into account 
under regulations prescribed for purposes of section 
401(a)(5) of such Code, 
results in an increase or decrease in accrued liability under 
a plan, such increase or decrease shall be treated as an experi-
ence loss or gain. 
‘‘(5) FULL FUNDING.—If, as of the close of a plan year, 
a plan would (without regard to this paragraph) have an 
accumulated funding deficiency in excess of the full funding 
limitation—
‘‘(A) the funding standard account shall be credited 
with the amount of such excess, and 
‘‘(B) all amounts described in subparagraphs (B), (C), 
and (D) of subsection (b) (2) and subparagraph (B) of sub-
section (b)(3) which are required to be amortized shall 
be considered fully amortized for purposes of such subpara-
graphs. 
‘‘(6) FULL-FUNDING LIMITATION.—
‘‘(A) IN GENERAL.—For purposes of paragraph (5), the 
term ‘full-funding limitation’ means the excess (if any) of—
‘‘(i) the accrued liability (including normal cost) 
under the plan (determined under the entry age normal 
funding method if such accrued liability cannot be
H. R. 4—84
directly calculated under the funding method used for 
the plan), over 
‘‘(ii) the lesser of—
‘‘(I) the fair market value of the plan’s assets, 
or 
‘‘(II) the value of such assets determined under 
paragraph (2). 
‘‘(B) MINIMUM AMOUNT.—
‘‘(i) IN GENERAL.—In no event shall the full-funding 
limitation determined under subparagraph (A) be less 
than the excess (if any) of—
‘‘(I) 90 percent of the current liability of the 
plan (including the expected increase in current 
liability due to benefits accruing during the plan 
year), over 
‘‘(II) the value of the plan’s assets determined 
under paragraph (2). 
‘‘(ii) ASSETS.—For purposes of clause (i), assets 
shall not be reduced by any credit balance in the 
funding standard account. 
‘‘(C) FULL FUNDING LIMITATION.—For purposes of this 
paragraph, unless otherwise provided by the plan, the 
accrued liability under a multiemployer plan shall not 
include benefits which are not nonforfeitable under the 
plan after the termination of the plan (taking into consider-
ation section 411(d)(3) of the Internal Revenue Code of 
1986). 
‘‘(D) CURRENT LIABILITY.—For purposes of this para-
graph—
‘‘(i) IN
GENERAL.—The term ‘current liability’ 
means all liabilities to employees and their bene-
ficiaries under the plan. 
‘‘(ii) TREATMENT OF UNPREDICTABLE CONTINGENT 
EVENT BENEFITS.—For purposes of clause (i), any ben-
efit contingent on an event other than—
‘‘(I) age, service, compensation, death, or dis-
ability, or 
‘‘(II) an event which is reasonably and reliably 
predictable (as determined by the Secretary of the 
Treasury), 
shall not be taken into account until the event on 
which the benefit is contingent occurs. 
‘‘(iii) INTEREST RATE USED.—The rate of interest 
used to determine current liability under this para-
graph shall be the rate of interest determined under 
subparagraph (E). 
‘‘(iv) MORTALITY TABLES.—
‘‘(I) COMMISSIONERS’ STANDARD TABLE.—In the 
case of plan years beginning before the first plan 
year to which the first tables prescribed under 
subclause (II) apply, the mortality table used in 
determining current liability under this paragraph 
shall be the table prescribed by the Secretary of 
the Treasury which is based on the prevailing 
commissioners’ standard table (described in section 
807(d)(5)(A) of the Internal Revenue Code of 1986)
H. R. 4—85
used to determine reserves for group annuity con-
tracts issued on January 1, 1993. 
‘‘(II) SECRETARIAL AUTHORITY.—The Secretary 
of the Treasury may by regulation prescribe for 
plan years beginning after December 31, 1999, 
mortality tables to be used in determining current 
liability under this subsection. Such tables shall 
be based upon the actual experience of pension 
plans and projected trends in such experience. In 
prescribing such tables, such Secretary shall take 
into account results of available independent 
studies of mortality of individuals covered by pen-
sion plans. 
‘‘(v) SEPARATE
MORTALITY
TABLES
FOR
THE
DIS-
ABLED.—Notwithstanding clause (iv)—
‘‘(I) IN
GENERAL.—The Secretary of the 
Treasury shall establish mortality tables which 
may be used (in lieu of the tables under clause 
(iv)) to determine current liability under this sub-
section for individuals who are entitled to benefits 
under the plan on account of disability. Such Sec-
retary shall establish separate tables for individ-
uals whose disabilities occur in plan years begin-
ning before January 1, 1995, and for individuals 
whose disabilities occur in plan years beginning 
on or after such date. 
‘‘(II) SPECIAL RULE FOR DISABILITIES OCCUR-
RING AFTER 1994.—In the case of disabilities occur-
ring in plan years beginning after December 31, 
1994, the tables under subclause (I) shall apply 
only with respect to individuals described in such 
subclause who are disabled within the meaning 
of title II of the Social Security Act and the regula-
tions thereunder. 
‘‘(vi) PERIODIC
REVIEW.—The Secretary of the 
Treasury shall periodically (at least every 5 years) 
review any tables in effect under this subparagraph 
and shall, to the extent such Secretary determines 
necessary, by regulation update the tables to reflect 
the actual experience of pension plans and projected 
trends in such experience. 
‘‘(E) REQUIRED CHANGE OF INTEREST RATE.—For pur-
poses of determining a plan’s current liability for purposes 
of this paragraph—
‘‘(i) IN GENERAL.—If any rate of interest used under 
the plan under subsection (b)(6) to determine cost is 
not within the permissible range, the plan shall estab-
lish a new rate of interest within the permissible range. 
‘‘(ii) PERMISSIBLE
RANGE.—For purposes of this 
subparagraph—
‘‘(I) IN GENERAL.—Except as provided in sub-
clause (II), the term ‘permissible range’ means a 
rate of interest which is not more than 5 percent 
above, and not more than 10 percent below, the 
weighted average of the rates of interest on 30-
year Treasury securities during the 4-year period
H. R. 4—86
ending on the last day before the beginning of 
the plan year. 
‘‘(II) SECRETARIAL
AUTHORITY.—If the Sec-
retary of the Treasury finds that the lowest rate 
of interest permissible under subclause (I) is 
unreasonably high, such Secretary may prescribe 
a lower rate of interest, except that such rate 
may not be less than 80 percent of the average 
rate determined under such subclause. 
‘‘(iii) ASSUMPTIONS.—Notwithstanding paragraph 
(3)(A), the interest rate used under the plan shall 
be—
‘‘(I) determined without taking into account 
the experience of the plan and reasonable expecta-
tions, but 
‘‘(II) consistent with the assumptions which 
reflect the purchase rates which would be used 
by insurance companies to satisfy the liabilities 
under the plan. 
‘‘(7) ANNUAL VALUATION.—
‘‘(A) IN GENERAL.—For purposes of this section, a deter-
mination of experience gains and losses and a valuation 
of the plan’s liability shall be made not less frequently 
than once every year, except that such determination shall 
be made more frequently to the extent required in par-
ticular cases under regulations prescribed by the Secretary 
of the Treasury. 
‘‘(B) VALUATION DATE.—
‘‘(i) CURRENT YEAR.—Except as provided in clause 
(ii), the valuation referred to in subparagraph (A) shall 
be made as of a date within the plan year to which 
the valuation refers or within one month prior to the 
beginning of such year. 
‘‘(ii) USE OF PRIOR YEAR VALUATION.—The valu-
ation referred to in subparagraph (A) may be made 
as of a date within the plan year prior to the year 
to which the valuation refers if, as of such date, the 
value of the assets of the plan are not less than 100 
percent of the plan’s current liability (as defined in 
paragraph (6)(D) without regard to clause (iv) thereof). 
‘‘(iii) ADJUSTMENTS.—Information under clause (ii) 
shall, in accordance with regulations, be actuarially 
adjusted to reflect significant differences in partici-
pants. 
‘‘(iv) LIMITATION.—A change in funding method to 
use a prior year valuation, as provided in clause (ii), 
may not be made unless as of the valuation date within 
the prior plan year, the value of the assets of the 
plan are not less than 125 percent of the plan’s current 
liability (as defined in paragraph (6)(D) without regard 
to clause (iv) thereof). 
‘‘(8) TIME WHEN CERTAIN CONTRIBUTIONS DEEMED MADE.—
For purposes of this section, 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 on such last day. For 
purposes of this subparagraph, such two and one-half month
H. R. 4—87
period may be extended for not more than six months under 
regulations prescribed by the Secretary of the Treasury. 
‘‘(d) EXTENSION OF AMORTIZATION PERIODS FOR MULTIEMPLOYER 
PLANS.—
‘‘(1) AUTOMATIC EXTENSION UPON APPLICATION BY CERTAIN 
PLANS.—
‘‘(A) IN GENERAL.—If the plan sponsor of a multiem-
ployer plan—
‘‘(i) submits to the Secretary of the Treasury an 
application for an extension of the period of years 
required to amortize any unfunded liability described 
in any clause of subsection (b)(2)(B) or described in 
subsection (b)(4), and 
‘‘(ii) includes with the application a certification 
by the plan’s actuary described in subparagraph (B), 
the Secretary of the Treasury shall extend the amortization 
period for the period of time (not in excess of 5 years) 
specified in the application. Such extension shall be in 
addition to any extension under paragraph (2). 
‘‘(B) CRITERIA.—A certification with respect to a multi-
employer plan is described in this subparagraph if the 
plan’s actuary certifies that, based on reasonable assump-
tions—
‘‘(i) absent the extension under subparagraph (A), 
the plan would have an accumulated funding deficiency 
in the current plan year or any of the 9 succeeding 
plan years, 
‘‘(ii) the plan sponsor has adopted a plan to 
improve the plan’s funding status, 
‘‘(iii) the plan is projected to have sufficient assets 
to timely pay expected benefits and anticipated 
expenditures over the amortization period as extended, 
and 
‘‘(iv) the notice required under paragraph (3)(A) 
has been provided. 
‘‘(C) TERMINATION.—The preceding provisions of this 
paragraph shall not apply with respect to any application 
submitted after December 31, 2014. 
‘‘(2) ALTERNATIVE EXTENSION.—
‘‘(A) IN GENERAL.—If the plan sponsor of a multiem-
ployer plan submits to the Secretary of the Treasury an 
application for an extension of the period of years required 
to amortize any unfunded liability described in any clause 
of subsection (b)(2)(B) or described in subsection (b)(4), 
the Secretary of the Treasury may extend the amortization 
period for a period of time (not in excess of 10 years 
reduced by the number of years of any extension under 
paragraph (1) with respect to such unfunded liability) if 
the Secretary of the Treasury makes the determination 
described in subparagraph (B). Such extension shall be 
in addition to any extension under paragraph (1). 
‘‘(B) DETERMINATION.—The Secretary of the Treasury 
may grant an extension under subparagraph (A) if such 
Secretary determines that—
‘‘(i) such extension would carry out the purposes 
of this Act and would provide adequate protection for
H. R. 4—88
participants under the plan and their beneficiaries, 
and 
‘‘(ii) the failure to permit such extension would—
‘‘(I) result in a substantial risk to the vol-
untary continuation of the plan, or a substantial 
curtailment of pension benefit levels or employee 
compensation, and 
‘‘(II) be adverse to the interests of plan partici-
pants in the aggregate. 
‘‘(C) ACTION
BY
SECRETARY
OF
THE
TREASURY.—The 
Secretary of the Treasury shall act upon any application 
for an extension under this paragraph within 180 days 
of the submission of such application. If such Secretary 
rejects the application for an extension under this para-
graph, such Secretary shall provide notice to the plan 
detailing the specific reasons for the rejection, including 
references to the criteria set forth above. 
‘‘(3) ADVANCE NOTICE.—
‘‘(A) IN GENERAL.—The Secretary of the Treasury shall, 
before granting an extension under this subsection, require 
each applicant to provide evidence satisfactory to such Sec-
retary that the applicant has provided notice of the filing 
of the application for such extension to each affected party 
(as defined in section 4001(a)(21)) with respect to the 
affected plan. Such notice shall include a description of 
the extent to which the plan is funded for benefits which 
are guaranteed under title IV and for benefit liabilities. 
‘‘(B) CONSIDERATION OF RELEVANT INFORMATION.—The 
Secretary of the Treasury shall consider any relevant 
information provided by a person to whom notice was given 
under paragraph (1).’’. 
(b) SHORTFALL FUNDING METHOD.—
(1) IN GENERAL.—A multiemployer plan meeting the criteria 
of paragraph (2) may adopt, use, or cease using, the shortfall 
funding method and such adoption, use, or cessation of use 
of such method, shall be deemed approved by the Secretary 
of the Treasury under section 302(d)(1) of the Employee Retire-
ment Income Security Act of 1974 and section 412(d)(1) of 
the Internal Revenue Code of 1986. 
(2) CRITERIA.—A multiemployer pension plan meets the 
criteria of this clause if—
(A) the plan has not used the shortfall funding method 
during the 5-year period ending on the day before the 
date the plan is to use the method under paragraph (1); 
and 
(B) the plan is not operating under an amortization 
period extension under section 304(d) of such Act and did 
not operate under such an extension during such 5-year 
period. 
(3) SHORTFALL FUNDING METHOD DEFINED.—For purposes 
of this subsection, the term ‘‘shortfall funding method’’ means 
the shortfall funding method described in Treasury Regulations 
section 1.412(c)(1)–2 (26 CFR 1.412(c)(1)–2). 
(4) BENEFIT RESTRICTIONS TO APPLY.—The benefit restric-
tions under section 302(c)(7) of such Act and section 412(c)(7) 
of such Code shall apply during any period a multiemployer
H. R. 4—89
plan is on the shortfall funding method pursuant to this sub-
section. 
(5) USE OF SHORTFALL METHOD NOT TO PRECLUDE OTHER 
OPTIONS.—Nothing in this subsection shall be construed to 
affect a multiemployer plan’s ability to adopt the shortfall 
funding method with the Secretary’s permission under other-
wise applicable regulations or to affect a multiemployer plan’s 
right to change funding methods, with or without the Sec-
retary’s consent, as provided in applicable rules and regulations. 
(c) CONFORMING AMENDMENTS.—
(1) Section 301 of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1081) is amended by striking sub-
section (d). 
(2) The table of contents in section 1 of such Act (as 
amended by this Act) is amended by inserting after the item 
relating to section 303 the following new item:
‘‘Sec. 304. Minimum funding standards for multiemployer plans.’’.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section 
shall apply to plan years beginning after 2007. 
(2) SPECIAL
RULE
FOR
CERTAIN
AMORTIZATION
EXTEN-
SIONS.—If the Secretary of the Treasury grants an extension 
under section 304 of the Employee Retirement Income Security 
Act of 1974 and section 412(e) of the Internal Revenue Code 
of 1986 with respect to any application filed with the Secretary 
of the Treasury on or before June 30, 2005, the extension 
(and any modification thereof) shall be applied and adminis-
tered under the rules of such sections as in effect before the 
enactment of this Act, including the use of the rate of interest 
determined under section 6621(b) of such Code. 
SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS 
IN ENDANGERED OR CRITICAL STATUS. 
(a) IN GENERAL.—Part 3 of subtitle B of title I of the Employee 
Retirement Income Security Act of 1974 (as amended by the pre-
ceding provisions of this Act) is amended by inserting after section 
304 the following new section: 
‘‘ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
ENDANGERED STATUS OR CRITICAL STATUS 
‘‘SEC. 305. (a) GENERAL RULE.—For purposes of this part, in 
the case of a multiemployer plan in effect on July 16, 2006—
‘‘(1) if the plan is in endangered status—
‘‘(A) the plan sponsor shall adopt and implement a 
funding improvement plan in accordance with the require-
ments of subsection (c), and 
‘‘(B) the requirements of subsection (d) shall apply 
during the funding plan adoption period and the funding 
improvement period, and 
‘‘(2) if the plan is in critical status—
‘‘(A) the plan sponsor shall adopt and implement a 
rehabilitation plan in accordance with the requirements 
of subsection (e), and 
‘‘(B) the requirements of subsection (f) shall apply 
during the rehabilitation plan adoption period and the 
rehabilitation period.
H. R. 4—90
‘‘(b) DETERMINATION OF ENDANGERED AND CRITICAL STATUS.—
For purposes of this section—
‘‘(1) ENDANGERED
STATUS.—A multiemployer plan is in 
endangered status for a plan year if, as determined by the 
plan actuary under paragraph (3), the plan is not in critical 
status for the plan year and, as of the beginning of the plan 
year, either—
‘‘(A) the plan’s funded percentage for such plan year 
is less than 80 percent, or 
‘‘(B) the plan has an accumulated funding deficiency 
for such plan year, or is projected to have such an accumu-
lated funding deficiency for any of the 6 succeeding plan 
years, taking into account any extension of amortization 
periods under section 304(d). 
For purposes of this section, a plan shall be treated as in 
seriously endangered status for a plan year if the plan is 
described in both subparagraphs (A) and (B). 
‘‘(2) CRITICAL STATUS.—A multiemployer plan is in critical 
status for a plan year if, as determined by the plan actuary 
under paragraph (3), the plan is described in 1 or more of 
the following subparagraphs as of the beginning of the plan 
year: 
‘‘(A) A plan is described in this subparagraph if—
‘‘(i) the funded percentage of the plan is less than 
65 percent, and 
‘‘(ii) the sum of—
‘‘(I) the fair market value of plan assets, plus 
‘‘(II) the present value of the reasonably antici-
pated employer contributions for the current plan 
year and each of the 6 succeeding plan years, 
assuming that the terms of all collective bar-
gaining agreements pursuant to which the plan 
is maintained for the current plan year continue 
in effect for succeeding plan years, 
is less than the present value of all nonforfeitable 
benefits projected to be payable under the plan during 
the current plan year and each of the 6 succeeding 
plan years (plus administrative expenses for such plan 
years). 
‘‘(B) A plan is described in this subparagraph if—
‘‘(i) the plan has an accumulated funding deficiency 
for the current plan year, not taking into account any 
extension of amortization periods under section 304(d), 
or 
‘‘(ii) the plan is projected to have an accumulated 
funding deficiency for any of the 3 succeeding plan 
years (4 succeeding plan years if the funded percentage 
of the plan is 65 percent or less), not taking into 
account any extension of amortization periods under 
section 304(d). 
‘‘(C) A plan is described in this subparagraph if—
‘‘(i)(I) the plan’s normal cost for the current plan 
year, plus interest (determined at the rate used for 
determining costs under the plan) for the current plan 
year on the amount of unfunded benefit liabilities 
under the plan as of the last date of the preceding 
plan year, exceeds
H. R. 4—91
‘‘(II) the present value of the reasonably antici-
pated employer and employee contributions for the cur-
rent plan year, 
‘‘(ii) the present value, as of the beginning of the 
current plan year, of nonforfeitable benefits of inactive 
participants is greater than the present value of non-
forfeitable benefits of active participants, and 
‘‘(iii) the plan has an accumulated funding defi-
ciency for the current plan year, or is projected to 
have such a deficiency for any of the 4 succeeding 
plan years, not taking into account any extension of 
amortization periods under section 304(d). 
‘‘(D) A plan is described in this subparagraph if the 
sum of—
‘‘(i) the fair market value of plan assets, plus 
‘‘(ii) the present value of the reasonably anticipated 
employer contributions for the current plan year and 
each of the 4 succeeding plan years, assuming that 
the terms of all collective bargaining agreements 
pursuant to which the plan is maintained for the cur-
rent plan year continue in effect for succeeding plan 
years, 
is less than the present value of all benefits projected 
to be payable under the plan during the current plan 
year and each of the 4 succeeding plan years (plus adminis-
trative expenses for such plan years). 
‘‘(3) ANNUAL CERTIFICATION BY PLAN ACTUARY.—
‘‘(A) IN GENERAL.—Not later than the 90th day of each 
plan year of a multiemployer plan, the plan actuary shall 
certify to the Secretary of the Treasury and to the plan 
sponsor—
‘‘(i) whether or not the plan is in endangered status 
for such plan year and whether or not the plan is 
or will be in critical status for such plan year, and 
‘‘(ii) in the case of a plan which is in a funding 
improvement or rehabilitation period, whether or not 
the plan is making the scheduled progress in meeting 
the requirements of its funding improvement or 
rehabilitation plan. 
‘‘(B) ACTUARIAL PROJECTIONS OF ASSETS AND LIABIL-
ITIES.—
‘‘(i) IN GENERAL.—In making the determinations 
and projections under this subsection, the plan actuary 
shall make projections required for the current and 
succeeding plan years of the current value of the assets 
of the plan and the present value of all liabilities 
to participants and beneficiaries under the plan for 
the current plan year as of the beginning of such 
year. The actuary’s projections shall be based on 
reasonable actuarial estimates, assumptions, and 
methods that, except as provided in clause (iii), offer 
the actuary’s best estimate of anticipated experience 
under the plan. The projected present value of liabil-
ities as of the beginning of such year shall be deter-
mined based on the most recent of either—
H. R. 4—92
‘‘(I) the actuarial statement required under 
section 103(d) with respect to the most recently 
filed annual report, or 
‘‘(II) the actuarial valuation for the preceding 
plan year. 
‘‘(ii) 
DETERMINATIONS
OF
FUTURE
CONTRIBU-
TIONS.—Any actuarial projection of plan assets shall 
assume—
‘‘(I) reasonably anticipated employer contribu-
tions for the current and succeeding plan years, 
assuming that the terms of the one or more collec-
tive bargaining agreements pursuant to which the 
plan is maintained for the current plan year con-
tinue in effect for succeeding plan years, or 
‘‘(II) that employer contributions for the most 
recent plan year will continue indefinitely, but only 
if the plan actuary determines there have been 
no significant demographic changes that would 
make such assumption unreasonable. 
‘‘(iii) PROJECTED INDUSTRY ACTIVITY.—Any projec-
tion of activity in the industry or industries covered 
by the plan, including future covered employment and 
contribution levels, shall be based on information pro-
vided by the plan sponsor, which shall act reasonably 
and in good faith. 
‘‘(C) PENALTY FOR FAILURE TO SECURE TIMELY ACTU-
ARIAL CERTIFICATION.—Any failure of the plan’s actuary 
to certify the plan’s status under this subsection by the 
date specified in subparagraph (A) shall be treated for 
purposes of section 502(c)(2) as a failure or refusal by 
the plan administrator to file the annual report required 
to be filed with the Secretary under section 101(b)(4). 
‘‘(D) NOTICE.—
‘‘(i) IN GENERAL.—In any case in which it is cer-
tified under subparagraph (A) that a multiemployer 
plan is or will be in endangered or critical status 
for a plan year, the plan sponsor shall, not later than 
30 days after the date of the certification, provide 
notification of the endangered or critical status to the 
participants and beneficiaries, the bargaining parties, 
the Pension Benefit Guaranty Corporation, and the 
Secretary. 
‘‘(ii) PLANS IN CRITICAL STATUS.—If it is certified 
under subparagraph (A) that a multiemployer plan 
is or will be in critical status, the plan sponsor shall 
include in the notice under clause (i) an explanation 
of the possibility that—
‘‘(I) adjustable benefits (as defined in sub-
section (e)(8)) may be reduced, and 
‘‘(II) such reductions may apply to participants 
and beneficiaries whose benefit commencement 
date is on or after the date such notice is provided 
for the first plan year in which the plan is in 
critical status. 
‘‘(iii) MODEL
NOTICE.—The Secretary shall pre-
scribe a model notice that a multiemployer plan may 
use to satisfy the requirements under clause (ii).
H. R. 4—93
‘‘(c) FUNDING IMPROVEMENT PLAN MUST BE ADOPTED
FOR 
MULTIEMPLOYER PLANS IN ENDANGERED STATUS.—
‘‘(1) IN GENERAL.—In any case in which a multiemployer 
plan is in endangered status for a plan year, the plan sponsor, 
in accordance with this subsection—
‘‘(A) shall adopt a funding improvement plan not later 
than 240 days following the required date for the actuarial 
certification 
of 
endangered 
status 
under 
subsection 
(b)(3)(A), and 
‘‘(B) within 30 days after the adoption of the funding 
improvement plan—
‘‘(i) shall provide to the bargaining parties 1 or 
more schedules showing revised benefit structures, 
revised contribution structures, or both, which, if 
adopted, may reasonably be expected to enable the 
multiemployer plan to meet the applicable benchmarks 
in accordance with the funding improvement plan, 
including—
‘‘(I) one proposal for reductions in the amount 
of future benefit accruals necessary to achieve the 
applicable benchmarks, assuming no amendments 
increasing contributions under the plan (other 
than amendments increasing contributions nec-
essary to achieve the applicable benchmarks after 
amendments have reduced future benefit accruals 
to the maximum extent permitted by law), and 
‘‘(II) one proposal for increases in contributions 
under the plan necessary to achieve the applicable 
benchmarks, assuming no amendments reducing 
future benefit accruals under the plan, and 
‘‘(ii) may, if the plan sponsor deems appropriate, 
prepare and provide the bargaining parties with addi-
tional information relating to contribution rates or ben-
efit reductions, alternative schedules, or other informa-
tion relevant to achieving the applicable benchmarks 
in accordance with the funding improvement plan. 
For purposes of this section, the term ‘applicable bench-
marks’ means the requirements applicable to the multiem-
ployer plan under paragraph (3) (as modified by paragraph 
(5)). 
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS BEGINS.—Para-
graph (1) shall not apply to a plan year if such year is in 
a funding plan adoption period or funding improvement period 
by reason of the plan being in endangered status for a preceding 
plan year. For purposes of this section, such preceding plan 
year shall be the initial determination year with respect to 
the funding improvement plan to which it relates. 
‘‘(3) FUNDING IMPROVEMENT PLAN.—For purposes of this 
section—
‘‘(A) IN GENERAL.—A funding improvement plan is a 
plan which consists of the actions, including options or 
a range of options to be proposed to the bargaining parties, 
formulated to provide, based on reasonably anticipated 
experience and reasonable actuarial assumptions, for the 
attainment by the plan during the funding improvement 
period of the following requirements:
H. R. 4—94
‘‘(i) INCREASE IN PLAN’S FUNDING PERCENTAGE.—
The plan’s funded percentage as of the close of the 
funding improvement period equals or exceeds a 
percentage equal to the sum of—
‘‘(I) such percentage as of the beginning of 
such period, plus 
‘‘(II) 33 percent of the difference between 100 
percent and the percentage under subclause (I). 
‘‘(ii) AVOIDANCE OF ACCUMULATED FUNDING DEFI-
CIENCIES.—No accumulated funding deficiency for any 
plan year during the funding improvement period 
(taking into account any extension of amortization 
periods under section 304(d)). 
‘‘(B) SERIOUSLY ENDANGERED PLANS.—In the case of 
a plan in seriously endangered status, except as provided 
in paragraph (5), subparagraph (A)(i)(II) shall be applied 
by substituting ‘20 percent’ for ‘33 percent’. 
‘‘(4) FUNDING IMPROVEMENT PERIOD.—For purposes of this 
section—
‘‘(A) IN GENERAL.—The funding improvement period 
for any funding improvement plan adopted pursuant to 
this subsection is the 10-year period beginning on the first 
day of the first plan year of the multiemployer plan begin-
ning after the earlier of—
‘‘(i) the second anniversary of the date of the adop-
tion of the funding improvement plan, or 
‘‘(ii) the expiration of the collective bargaining 
agreements in effect on the due date for the actuarial 
certification of endangered status for the initial deter-
mination year under subsection (b)(3)(A) and covering, 
as of such due date, at least 75 percent of the active 
participants in such multiemployer plan. 
‘‘(B) SERIOUSLY ENDANGERED PLANS.—In the case of 
a plan in seriously endangered status, except as provided 
in paragraph (5), subparagraph (A) shall be applied by 
substituting ‘15-year period’ for ‘10-year period’. 
‘‘(C) COORDINATION WITH CHANGES IN STATUS.—
‘‘(i) PLANS NO LONGER IN ENDANGERED STATUS.—
If the plan’s actuary certifies under subsection (b)(3)(A) 
for a plan year in any funding plan adoption period 
or funding improvement period that the plan is no 
longer in endangered status and is not in critical 
status, the funding plan adoption period or funding 
improvement period, whichever is applicable, shall end 
as of the close of the preceding plan year. 
‘‘(ii) PLANS
IN
CRITICAL
STATUS.—If the plan’s 
actuary certifies under subsection (b)(3)(A) for a plan 
year in any funding plan adoption period or funding 
improvement period that the plan is in critical status, 
the funding plan adoption period or funding improve-
ment period, whichever is applicable, shall end as of 
the close of the plan year preceding the first plan 
year in the rehabilitation period with respect to such 
status. 
‘‘(D) PLANS
IN
ENDANGERED
STATUS
AT
END
OF 
PERIOD.—If the plan’s actuary certifies under subsection 
(b)(3)(A) for the first plan year following the close of the
H. R. 4—95
period described in subparagraph (A) that the plan is in 
endangered status, the provisions of this subsection and 
subsection (d) shall be applied as if such first plan year 
were an initial determination year, except that the plan 
may not be amended in a manner inconsistent with the 
funding improvement plan in effect for the preceding plan 
year until a new funding improvement plan is adopted. 
‘‘(5) SPECIAL
RULES
FOR
SERIOUSLY
ENDANGERED
PLANS 
MORE THAN 70 PERCENT FUNDED.—
‘‘(A) IN GENERAL.—If the funded percentage of a plan 
in seriously endangered status was more than 70 percent 
as of the beginning of the initial determination year—
‘‘(i) paragraphs (3)(B) and (4)(B) shall apply only 
if the plan’s actuary certifies, within 30 days after 
the certification under subsection (b)(3)(A) for the ini-
tial determination year, that, based on the terms of 
the plan and the collective bargaining agreements in 
effect at the time of such certification, the plan is 
not projected to meet the requirements of paragraph 
(3)(A) (without regard to paragraphs (3)(B) and (4)(B)), 
and 
‘‘(ii) if there is a certification under clause (i), 
the plan may, in formulating its funding improvement 
plan, only take into account the rules of paragraph 
(3)(B) and (4)(B) for plan years in the funding improve-
ment period beginning on or before the date on which 
the last of the collective bargaining agreements 
described in paragraph (4)(A)(ii) expires. 
‘‘(B) SPECIAL
RULE
AFTER
EXPIRATION
OF
AGREE-
MENTS.—Notwithstanding subparagraph (A)(ii), if, for any 
plan year ending after the date described in subparagraph 
(A)(ii), the plan actuary certifies (at the time of the annual 
certification under subsection (b)(3)(A) for such plan year) 
that, based on the terms of the plan and collective bar-
gaining agreements in effect at the time of that annual 
certification, the plan is not projected to be able to meet 
the requirements of paragraph (3)(A) (without regard to 
paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and (4)(B) 
shall continue to apply for such year. 
‘‘(6) UPDATES TO FUNDING IMPROVEMENT PLAN AND SCHED-
ULES.—
‘‘(A) FUNDING IMPROVEMENT PLAN.—The plan sponsor 
shall annually update the funding improvement plan and 
shall file the update with the plan’s annual report under 
section 104. 
‘‘(B) SCHEDULES.—The plan sponsor shall annually 
update any schedule of contribution rates provided under 
this subsection to reflect the experience of the plan. 
‘‘(C) DURATION OF SCHEDULE.—A schedule of contribu-
tion rates provided by the plan sponsor and relied upon 
by bargaining parties in negotiating a collective bargaining 
agreement shall remain in effect for the duration of that 
collective bargaining agreement. 
‘‘(7) IMPOSITION OF DEFAULT SCHEDULE WHERE FAILURE TO 
ADOPT FUNDING IMPROVEMENT PLAN.—
‘‘(A) IN GENERAL.—If—
H. R. 4—96
‘‘(i) a collective bargaining agreement providing 
for contributions under a multiemployer plan that was 
in effect at the time the plan entered endangered status 
expires, and 
‘‘(ii) after receiving one or more schedules from 
the plan sponsor under paragraph (1)(B), the bar-
gaining parties with respect to such agreement fail 
to agree on changes to contribution or benefit schedules 
necessary to meet the applicable benchmarks in accord-
ance with the funding improvement plan, 
the plan sponsor shall implement the schedule described 
in paragraph (1)(B)(i)(I) beginning on the date specified 
in subparagraph (B). 
‘‘(B) DATE OF IMPLEMENTATION.—The date specified in 
this subparagraph is the earlier of the date—
‘‘(i) on which the Secretary certifies that the parties 
are at an impasse, or 
‘‘(ii) which is 180 days after the date on which 
the collective bargaining agreement described in 
subparagraph (A) expires. 
‘‘(8) FUNDING PLAN ADOPTION PERIOD.—For purposes of this 
section, the term ‘funding plan adoption period’ means the 
period beginning on the date of the certification under sub-
section (b)(3)(A) for the initial determination year and ending 
on the day before the first day of the funding improvement 
period. 
‘‘(d) RULES FOR OPERATION OF PLAN DURING ADOPTION AND 
IMPROVEMENT PERIODS.—
‘‘(1) SPECIAL RULES FOR PLAN ADOPTION PERIOD.—During 
the funding plan adoption period—
‘‘(A) the plan sponsor may not accept a collective bar-
gaining agreement or participation agreement with respect 
to the multiemployer plan that provides for—
‘‘(i) a reduction in the level of contributions for 
any participants, 
‘‘(ii) a suspension of contributions with respect to 
any period of service, or 
‘‘(iii) any new direct or indirect exclusion of 
younger or newly hired employees from plan participa-
tion, 
‘‘(B) no amendment of the plan which increases the 
liabilities of the plan by reason of any increase in benefits, 
any change in the accrual of benefits, or any change in 
the rate at which benefits become nonforfeitable under 
the plan may be adopted unless the amendment is required 
as a condition of qualification under part I of subchapter 
D of chapter 1 of the Internal Revenue Code of 1986 or 
to comply with other applicable law, and 
‘‘(C) in the case of a plan in seriously endangered 
status, the plan sponsor shall take all reasonable actions 
which are consistent with the terms of the plan and 
applicable law and which are expected, based on reasonable 
assumptions, to achieve—
‘‘(i) an increase in the plan’s funded percentage, 
and 
‘‘(ii) postponement of an accumulated funding defi-
ciency for at least 1 additional plan year.
H. R. 4—97
Actions under subparagraph (C) include applications for exten-
sions of amortization periods under section 304(d), use of the 
shortfall funding method in making funding standard account 
computations, amendments to the plan’s benefit structure, 
reductions in future benefit accruals, and other reasonable 
actions consistent with the terms of the plan and applicable 
law. 
‘‘(2) COMPLIANCE WITH FUNDING IMPROVEMENT PLAN.—
‘‘(A) IN GENERAL.—A plan may not be amended after 
the date of the adoption of a funding improvement plan 
so as to be inconsistent with the funding improvement 
plan. 
‘‘(B) NO REDUCTION IN CONTRIBUTIONS.—A plan sponsor 
may not during any funding improvement period accept 
a collective bargaining agreement or participation agree-
ment with respect to the multiemployer plan that provides 
for—
‘‘(i) a reduction in the level of contributions for 
any participants, 
‘‘(ii) a suspension of contributions with respect to 
any period of service, or 
‘‘(iii) any new direct or indirect exclusion of 
younger or newly hired employees from plan participa-
tion. 
‘‘(C) SPECIAL RULES FOR BENEFIT INCREASES.—A plan 
may not be amended after the date of the adoption of 
a funding improvement plan so as to increase benefits, 
including future benefit accruals, unless the plan actuary 
certifies that the benefit increase is consistent with the 
funding improvement plan and is paid for out of contribu-
tions not required by the funding improvement plan to 
meet the applicable benchmark in accordance with the 
schedule contemplated in the funding improvement plan. 
‘‘(e) REHABILITATION PLAN MUST BE ADOPTED FOR MULTIEM-
PLOYER PLANS IN CRITICAL STATUS.—
‘‘(1) IN GENERAL.—In any case in which a multiemployer 
plan is in critical status for a plan year, the plan sponsor, 
in accordance with this subsection—
‘‘(A) shall adopt a rehabilitation plan not later than 
240 days following the required date for the actuarial cer-
tification of critical status under subsection (b)(3)(A), and 
‘‘(B) within 30 days after the adoption of the rehabilita-
tion plan—
‘‘(i) shall provide to the bargaining parties 1 or 
more schedules showing revised benefit structures, 
revised contribution structures, or both, which, if 
adopted, may reasonably be expected to enable the 
multiemployer plan to emerge from critical status in 
accordance with the rehabilitation plan, and 
‘‘(ii) may, if the plan sponsor deems appropriate, 
prepare and provide the bargaining parties with addi-
tional information relating to contribution rates or ben-
efit reductions, alternative schedules, or other informa-
tion relevant to emerging from critical status in accord-
ance with the rehabilitation plan. 
The schedule or schedules described in subparagraph (B)(i) 
shall reflect reductions in future benefit accruals and adjustable
H. R. 4—98
benefits, and increases in contributions, that the plan sponsor 
determines are reasonably necessary to emerge from critical 
status. One schedule shall be designated as the default schedule 
and such schedule shall assume that there are no increases 
in contributions under the plan other than the increases nec-
essary to emerge from critical status after future benefit 
accruals and other benefits (other than benefits the reduction 
or elimination of which are not permitted under section 204(g)) 
have been reduced to the maximum extent permitted by law. 
‘‘(2) EXCEPTION FOR YEARS AFTER PROCESS BEGINS.—Para-
graph (1) shall not apply to a plan year if such year is in 
a rehabilitation plan adoption period or rehabilitation period 
by reason of the plan being in critical status for a preceding 
plan year. For purposes of this section, such preceding plan 
year shall be the initial critical year with respect to the 
rehabilitation plan to which it relates. 
‘‘(3) REHABILITATION PLAN.—For purposes of this section—
‘‘(A) IN GENERAL.—A rehabilitation plan is a plan which 
consists of—
‘‘(i) actions, including options or a range of options 
to be proposed to the bargaining parties, formulated, 
based on reasonably anticipated experience and reason-
able actuarial assumptions, to enable the plan to cease 
to be in critical status by the end of the rehabilitation 
period and may include reductions in plan expenditures 
(including plan mergers and consolidations), reductions 
in future benefit accruals or increases in contributions, 
if agreed to by the bargaining parties, or any combina-
tion of such actions, or 
‘‘(ii) if the plan sponsor determines that, based 
on reasonable actuarial assumptions and upon exhaus-
tion of all reasonable measures, the plan can not 
reasonably be expected to emerge from critical status 
by the end of the rehabilitation period, reasonable 
measures to emerge from critical status at a later 
time or to forestall possible insolvency (within the 
meaning of section 4245). 
A rehabilitation plan must provide annual standards for 
meeting the requirements of such rehabilitation plan. Such 
plan shall also include the schedules required to be pro-
vided under paragraph (1)(B)(i) and if clause (ii) applies, 
shall set forth the alternatives considered, explain why 
the plan is not reasonably expected to emerge from critical 
status by the end of the rehabilitation period, and specify 
when, if ever, the plan is expected to emerge from critical 
status in accordance with the rehabilitation plan. 
‘‘(B) UPDATES
TO
REHABILITATION
PLAN
AND
SCHED-
ULES.—
‘‘(i) REHABILITATION PLAN.—The plan sponsor shall 
annually update the rehabilitation plan and shall file 
the update with the plan’s annual report under section 
104. 
‘‘(ii) SCHEDULES.—The plan sponsor shall annually 
update any schedule of contribution rates provided 
under this subsection to reflect the experience of the 
plan.
H. R. 4—99
‘‘(iii) DURATION OF SCHEDULE.—A schedule of con-
tribution rates provided by the plan sponsor and relied 
upon by bargaining parties in negotiating a collective 
bargaining agreement shall remain in effect for the 
duration of that collective bargaining agreement. 
‘‘(C) IMPOSITION OF DEFAULT SCHEDULE WHERE FAILURE 
TO ADOPT REHABILITATION PLAN.—
‘‘(i) IN GENERAL.—If—
‘‘(I) a collective bargaining agreement pro-
viding for contributions under a multiemployer 
plan that was in effect at the time the plan entered 
critical status expires, and 
‘‘(II) after receiving one or more schedules from 
the plan sponsor under paragraph (1)(B), the bar-
gaining parties with respect to such agreement 
fail to adopt a contribution or benefit schedules 
with terms consistent with the rehabilitation plan 
and the schedule from the plan sponsor under 
paragraph (1)(B)(i), 
the plan sponsor shall implement the default schedule 
described in the last sentence of paragraph (1) begin-
ning on the date specified in clause (ii). 
‘‘(ii) DATE OF IMPLEMENTATION.—The date specified 
in this clause is the earlier of the date—
‘‘(I) on which the Secretary certifies that the 
parties are at an impasse, or 
‘‘(II) which is 180 days after the date on which 
the collective bargaining agreement described in 
clause (i) expires. 
‘‘(4) REHABILITATION
PERIOD.—For purposes of this sec-
tion—
‘‘(A) IN GENERAL.—The rehabilitation period for a plan 
in critical status is the 10-year period beginning on the 
first day of the first plan year of the multiemployer plan 
following the earlier of—
‘‘(i) the second anniversary of the date of the adop-
tion of the rehabilitation plan, or 
‘‘(ii) the expiration of the collective bargaining 
agreements in effect on the date of the due date for 
the actuarial certification of critical status for the ini-
tial critical year under subsection (a)(1) and covering, 
as of such date at least 75 percent of the active partici-
pants in such multiemployer plan. 
If a plan emerges from critical status as provided under 
subparagraph (B) before the end of such 10-year period, 
the rehabilitation period shall end with the plan year pre-
ceding the plan year for which the determination under 
subparagraph (B) is made. 
‘‘(B) EMERGENCE.—A plan in critical status shall 
remain in such status until a plan year for which the 
plan actuary certifies, in accordance with subsection 
(b)(3)(A), that the plan is not projected to have an accumu-
lated funding deficiency for the plan year or any of the 
9 succeeding plan years, without regard to the use of the 
shortfall method and taking into account any extension 
of amortization periods under section 304(d).
H. R. 4—100
‘‘(5) REHABILITATION PLAN ADOPTION PERIOD.—For purposes 
of this section, the term ‘rehabilitation plan adoption period’ 
means the period beginning on the date of the certification 
under subsection (b)(3)(A) for the initial critical year and ending 
on the day before the first day of the rehabilitation period. 
‘‘(6) LIMITATION
ON
REDUCTION
IN
RATES
OF
FUTURE 
ACCRUALS.—Any reduction in the rate of future accruals under 
the default schedule described in paragraph (1)(B)(i) shall not 
reduce the rate of future accruals below—
‘‘(A) a monthly benefit (payable as a single life annuity 
commencing at the participant’s normal retirement age) 
equal to 1 percent of the contributions required to be made 
with respect to a participant, or the equivalent standard 
accrual rate for a participant or group of participants under 
the collective bargaining agreements in effect as of the 
first day of the initial critical year, or 
‘‘(B) if lower, the accrual rate under the plan on such 
first day. 
The equivalent standard accrual rate shall be determined by 
the plan sponsor based on the standard or average contribution 
base units which the plan sponsor determines to be representa-
tive for active participants and such other factors as the plan 
sponsor determines to be relevant. Nothing in this paragraph 
shall be construed as limiting the ability of the plan sponsor 
to prepare and provide the bargaining parties with alternative 
schedules to the default schedule that established lower or 
higher accrual and contribution rates than the rates otherwise 
described in this paragraph. 
‘‘(7) AUTOMATIC EMPLOYER SURCHARGE.—
‘‘(A) IMPOSITION OF SURCHARGE.—Each employer other-
wise obligated to make contributions for the initial critical 
year shall be obligated to pay to the plan for such year 
a surcharge equal to 5 percent of the contributions other-
wise required under the applicable collective bargaining 
agreement (or other agreement pursuant to which the 
employer contributes). For each succeeding plan year in 
which the plan is in critical status for a consecutive period 
of years beginning with the initial critical year, the sur-
charge shall be 10 percent of the contributions otherwise 
so required. 
‘‘(B) ENFORCEMENT
OF
SURCHARGE.—The surcharges 
under subparagraph (A) shall be due and payable on the 
same schedule as the contributions on which the surcharges 
are based. Any failure to make a surcharge payment shall 
be treated as a delinquent contribution under section 515 
and shall be enforceable as such. 
‘‘(C) SURCHARGE TO TERMINATE UPON COLLECTIVE BAR-
GAINING
AGREEMENT
RENEGOTIATION.—The 
surcharge 
under this paragraph shall cease to be effective with respect 
to employees covered by a collective bargaining agreement 
(or other agreement pursuant to which the employer 
contributes), beginning on the effective date of a collective 
bargaining agreement (or other such agreement) that 
includes terms consistent with a schedule presented by 
the plan sponsor under paragraph (1)(B)(i), as modified 
under subparagraph (B) of paragraph (3).
H. R. 4—101
‘‘(D) SURCHARGE
NOT
TO
APPLY
UNTIL
EMPLOYER 
RECEIVES
NOTICE.—The surcharge under this paragraph 
shall not apply to an employer until 30 days after the 
employer has been notified by the plan sponsor that the 
plan is in critical status and that the surcharge is in 
effect. 
‘‘(E) SURCHARGE NOT TO GENERATE INCREASED BENEFIT 
ACCRUALS.—Notwithstanding any provision of a plan to 
the contrary, the amount of any surcharge under this para-
graph shall not be the basis for any benefit accrual under 
the plan. 
‘‘(8) BENEFIT ADJUSTMENTS.—
‘‘(A) ADJUSTABLE BENEFITS.—
‘‘(i) IN GENERAL.—Notwithstanding section 204(g), 
the plan sponsor shall, subject to the notice require-
ments in subparagraph (C), make any reductions to 
adjustable benefits which the plan sponsor deems 
appropriate, based upon the outcome of collective bar-
gaining over the schedule or schedules provided under 
paragraph (1)(B)(i). 
‘‘(ii) EXCEPTION FOR RETIREES.—Except in the case 
of adjustable benefits described in clause (iv)(III), the 
plan sponsor of a plan in critical status shall not reduce 
adjustable benefits of any participant or beneficiary 
whose benefit commencement date is before the date 
on which the plan provides notice to the participant 
or beneficiary under subsection (b)(3)(D) for the initial 
critical year. 
‘‘(iii) 
PLAN
SPONSOR
FLEXIBILITY.—The 
plan 
sponsor shall include in the schedules provided to the 
bargaining parties an allowance for funding the bene-
fits of participants with respect to whom contributions 
are not currently required to be made, and shall reduce 
their benefits to the extent permitted under this title 
and considered appropriate by the plan sponsor based 
on the plan’s then current overall funding status. 
‘‘(iv) ADJUSTABLE BENEFIT DEFINED.—For purposes 
of this paragraph, the term ‘adjustable benefit’ 
means—
‘‘(I) benefits, rights, and features under the 
plan, including post-retirement death benefits, 60-
month guarantees, disability benefits not yet in 
pay status, and similar benefits, 
‘‘(II) any early retirement benefit or retire-
ment-type subsidy (within the meaning of section 
204(g)(2)(A)) and any benefit payment option 
(other than the qualified joint and survivor 
annuity), and 
‘‘(III) benefit increases that would not be 
eligible for a guarantee under section 4022A on 
the first day of initial critical year because the 
increases were adopted (or, if later, took effect) 
less than 60 months before such first day. 
‘‘(B) NORMAL
RETIREMENT
BENEFITS
PROTECTED.—
Except as provided in subparagraph (A)(iv)(III), nothing 
in this paragraph shall be construed to permit a plan
H. R. 4—102
to reduce the level of a participant’s accrued benefit payable 
at normal retirement age. 
‘‘(C) NOTICE REQUIREMENTS.—
‘‘(i) IN GENERAL.—No reduction may be made to 
adjustable benefits under subparagraph (A) unless 
notice of such reduction has been given at least 30 
days before the general effective date of such reduction 
for all participants and beneficiaries to—
‘‘(I) plan participants and beneficiaries, 
‘‘(II) each employer who has an obligation to 
contribute (within the meaning of section 4212(a)) 
under the plan, and 
‘‘(III) each employee organization which, for 
purposes of collective bargaining, represents plan 
participants employed by such an employer. 
‘‘(ii) CONTENT OF NOTICE.—The notice under clause 
(i) shall contain—
‘‘(I) sufficient information to enable partici-
pants and beneficiaries to understand the effect 
of any reduction on their benefits, including an 
estimate (on an annual or monthly basis) of any 
affected adjustable benefit that a participant or 
beneficiary would otherwise have been eligible for 
as of the general effective date described in clause 
(i), and 
‘‘(II) information as to the rights and remedies 
of plan participants and beneficiaries as well as 
how to contact the Department of Labor for further 
information and assistance where appropriate. 
‘‘(iii) FORM AND MANNER.—Any notice under clause 
(i)—
‘‘(I) shall be provided in a form and manner 
prescribed in regulations of the Secretary, 
‘‘(II) shall be written in a manner so as to 
be understood by the average plan participant, 
and 
‘‘(III) may be provided in written, electronic, 
or other appropriate form to the extent such form 
is reasonably accessible to persons to whom the 
notice is required to be provided. 
The Secretary shall in the regulations prescribed under 
subclause (I) establish a model notice that a plan 
sponsor may use to meet the requirements of this 
subparagraph. 
‘‘(9) ADJUSTMENTS DISREGARDED IN WITHDRAWAL LIABILITY 
DETERMINATION.—
‘‘(A) BENEFIT
REDUCTIONS.—Any benefit reductions 
under this subsection shall be disregarded in determining 
a plan’s unfunded vested benefits for purposes of deter-
mining an employer’s withdrawal liability under section 
4201. 
‘‘(B) SURCHARGES.—Any surcharges under paragraph 
(7) shall be disregarded in determining an employer’s with-
drawal liability under section 4211, except for purposes 
of determining the unfunded vested benefits attributable 
to an employer under section 4211(c)(4) or a comparable 
method approved under section 4211(c)(5).
H. R. 4—103
‘‘(C) SIMPLIFIED CALCULATIONS.—The Pension Benefit 
Guaranty Corporation shall prescribe simplified methods 
for the application of this paragraph in determining with-
drawal liability. 
‘‘(f) RULES FOR OPERATION OF PLAN DURING ADOPTION AND 
REHABILITATION PERIOD.—
‘‘(1) COMPLIANCE WITH REHABILITATION PLAN.—
‘‘(A) IN GENERAL.—A plan may not be amended after 
the date of the adoption of a rehabilitation plan under 
subsection (e) so as to be inconsistent with the rehabilita-
tion plan. 
‘‘(B) SPECIAL RULES FOR BENEFIT INCREASES.—A plan 
may not be amended after the date of the adoption of 
a rehabilitation plan under subsection (e) so as to increase 
benefits, including future benefit accruals, unless the plan 
actuary certifies that such increase is paid for out of addi-
tional contributions not contemplated by the rehabilitation 
plan, and, after taking into account the benefit increase, 
the multiemployer plan still is reasonably expected to 
emerge from critical status by the end of the rehabilitation 
period on the schedule contemplated in the rehabilitation 
plan. 
‘‘(2) RESTRICTION ON LUMP SUMS AND SIMILAR BENEFITS.—
‘‘(A) IN
GENERAL.—Effective on the date the notice 
of certification of the plan’s critical status for the initial 
critical year under subsection (b)(3)(D) is sent, and notwith-
standing section 204(g), the plan shall not pay—
‘‘(i) any payment, in excess of the monthly amount 
paid under a single life annuity (plus any social secu-
rity supplements described in the last sentence of sec-
tion 204(b)(1)(G)), 
‘‘(ii) any payment for the purchase of an irrevocable 
commitment from an insurer to pay benefits, and 
‘‘(iii) any other payment specified by the Secretary 
of the Treasury by regulations. 
‘‘(B) EXCEPTION.—Subparagraph (A) shall not apply 
to a benefit which under section 203(e) may be immediately 
distributed without the consent of the participant or to 
any makeup payment in the case of a retroactive annuity 
starting date or any similar payment of benefits owed 
with respect to a prior period. 
‘‘(3) ADJUSTMENTS DISREGARDED IN WITHDRAWAL LIABILITY 
DETERMINATION.—Any benefit reductions under this subsection 
shall be disregarded in determining a plan’s unfunded vested 
benefits for purposes of determining an employer’s withdrawal 
liability under section 4201. 
‘‘(4) SPECIAL RULES FOR PLAN ADOPTION PERIOD.—During 
the rehabilitation plan adoption period—
‘‘(A) the plan sponsor may not accept a collective bar-
gaining agreement or participation agreement with respect 
to the multiemployer plan that provides for—
‘‘(i) a reduction in the level of contributions for 
any participants, 
‘‘(ii) a suspension of contributions with respect to 
any period of service, or