year, for purposes of section 412(l) of such Code 
and section 302(l) of such Act, shall be the amount 
necessary to amortize the unfunded old liability 
under the plan as described in paragraph (1). 
(4) CESSATION
OF
MODIFICATIONS.—If the 
funded current liability percentage of the plan, de-
termined without regard to this section, is 90 per-
cent or greater for any plan year after December 27, 
2002, this subsection shall cease to apply to the plan 
for plan years beginning with or after such plan 
year. 
(d) RECOGNITION OF WAIVER IN DEFICIT REDUC-
TION CONTRIBUTION.—For any plan described in sub-
section (a)(1), the amount referred to in clause (ii) of sec-
tion 412(l)(8)(A) of such Code and section 302(d)(8)(A) 
of such Act shall be deemed to be an amount equal to 
the sum of—
(1) the value of the plan’s assets determined 
under section 412(c)(2) of such Code and section 
302(c)(2) of such Act, and 
(2) the unamortized portion of any waived 
funding deficiency.
SEC. 3. RESTORATION OF CERTAIN PLANS TERMINATING 
IN 2003. 
(a) IN GENERAL.—Notwithstanding any provision of 
the Internal Revenue Code of 1986 or the Employee Re-
tirement Income Security Act of 1974, the provisions of 
subsection (b) shall apply to any defined benefit plan—
(1) that is maintained by a commercial pas-
senger air carrier, 
(2) that is maintained for the benefit of such 
carrier’s employees pursuant to a collective bar-
gaining agreement, and 
(3) that terminated during the calendar year 
2003. 
(b) RESTORATION OF PLAN.—Not later than Decem-
ber 31, 2003, the Pension Benefit Guaranty Corporation 
shall restore any plan described in paragraph (1) to the 
plan’s pre-termination status and the control of the plan’s 
assets and liabilities shall be transferred to the employer, 
unless the collective bargaining agreement provides that 
the plan should not be restored. 
(c) EXCLUSION OF EXPECTED INCREASE IN CUR-
RENT LIABILITY.—In applying section 412(l)(1)(A)(i) of 
such Code and section 302(d)(1)(A)(i) of such Act with 
respect to a plan restored under subsection (b), any ex-
pected increase in current liability due to benefits accruing 
during each plan year as described in section 412(1)(2)(C)
of such Code and section 302(d)(2)(C) of such Act shall 
be excluded. 
(d) AMORTIZATION OF UNFUNDED AMOUNTS UNDER 
RESTORATION PAYMENT SCHEDULE.—
(1) 2004 UNFUNDED ACCRUED LIABILITY.—
(A) IN GENERAL.—In the case of a plan 
restored under subsection (b)—
(i) the initial post-restoration valu-
ation date for a plan described in sub-
section (a) shall be January 1, 2004, 
(ii) the initial restoration amortization 
base for a plan described in subsection (a) 
shall be an amount equal to the excess 
of—
(I) the accrued benefit liabilities 
returned by the Corporation, over 
(II) the market value of plan as-
sets returned by the Corporation, and 
(iii) the initial restoration amortiza-
tion base shall be amortized in level annual 
installments over a period of 30 years after 
the initial post-restoration valuation date, 
and the funding standard account of the 
plan under section 412 of such Code and
section 302 of such Act shall be charged 
with such installments. 
(B) OTHER SPECIAL FUNDING RULES RE-
MAIN APPLICABLE.—At the election of the plan 
sponsor, the provisions of subsections (b), (c), 
and (d) of section 2 shall apply with respect to 
the plan. 
(2) RULES OF SPECIAL APPLICATION.—In ap-
plying the 30-year amortization described in para-
graph (1)(A)—
(A) the assumed interest rate shall be the 
valuation interest rate used to determine the 
accrued liability under section 412(c) of such 
Code and section 302(c) of such Act, 
(B) the actuarial value of assets as of the 
initial post-restoration valuation date shall be 
reset to the market value of assets with a 5-
year phase-in of unexpected investment gains or 
losses on a prospective basis, and 
(C) for plans using the frozen initial liabil-
ity (FIL) funding method in accordance with 
section 412(c) of such Code and section 302(c) 
of such Act, the initial unfunded liability used 
to determine normal cost shall be reset to the 
initial restoration amortization base.
(e) QUARTERLY
CONTRIBUTIONS.—The require-
ments of section 412(m) of such Code and section 302(e) 
of such Act shall not apply to a plan restored under sub-
section (b) until the plan year beginning on the initial 
post-restoration valuation date. The required annual pay-
ment for that year shall be the lesser of—
(1) the amount determined under section 
412(m)(4)(B)(i) 
of 
such 
Code 
and 
section 
302(e)(4)(B)(i) of such Act, or 
(2) 100 percent of the amount required to be 
contributed under the plan for the plan year begin-
ning January 1, 2003 and ending on the date of 
plan termination. 
(f) RESETTING OF FUNDING STANDARD ACCOUNT 
BALANCES.—In the case of a plan restored under sub-
section (b), any accumulated funding deficiency or credit 
balance in the funding standard account under section 412 
of such Code or section 302 of such Act shall be set equal 
to zero as of the initial post-restoration valuation date. 
SEC. 4. PBGC LIABILITY LIMITED. 
In the case of any plan—
(1) which is described in section 2(a)(1), and 
which terminates at a time when section 2(b)(1) ap-
plies to the plan, or at a time when the unfunded 
current liability of the plan for the first plan year
after December 27, 2007, is being amortized on an 
interest-only basis under section 2(c), or 
(2) which is described in section 3(a), which is 
restored pursuant to section 3(b), and which subse-
quently terminates with a date of plan termination 
prior to the end of the fifth plan year beginning 
after December 27, 2007, 
section 4022 of the Employee Retirement Income Security 
Act of 1974 shall be applied as if the plan had been 
amended to provide that participants would receive no 
credit for benefit accrual purposes under the plan for serv-
ice on and after the first day of the plan year beginning 
after the date of the enactment of this Act. 
SEC. 5. EFFECTIVE DATE. 
The provisions of this Act shall apply to plan years 
beginning after December 27, 2002.
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