282
for the development and adoption of a funding improve-
ment plan or rehabilitation plan. 
‘‘(h) NONBARGAINED PARTICIPATION.—
‘‘(1) BOTH
BARGAINED
AND
NONBARGAINED 
EMPLOYEE-PARTICIPANTS.—In the case of an em-
ployer that contributes to a multiemployer plan with 
respect to both employees who are covered by one or 
more collective bargaining agreements and employ-
ees who are not so covered, if the plan is in endan-
gered status or in critical status, benefits of and 
contributions for the nonbargained employees, in-
cluding surcharges on those contributions, shall be 
determined as if those nonbargained employees were 
covered under the first to expire of the employer’s 
collective bargaining agreements in effect when the 
plan entered endangered or critical status. 
‘‘(2) NONBARGAINED
EMPLOYEES
ONLY.—In 
the case of an employer that contributes to a multi-
employer plan only with respect to employees who 
are not covered by a collective bargaining agreement, 
this section shall be applied as if the employer were 
the bargaining party, and its participation agree-
ment with the plan were a collective bargaining 
agreement with a term ending on the first day of the 
plan year beginning after the employer is provided
283
the schedule or schedules described in subsections 
(c) and (e). 
‘‘(i) DEFINITIONS; ACTUARIAL METHOD.—For pur-
poses of this section—
‘‘(1) BARGAINING
PARTY.—The term ‘bar-
gaining party’ means—
‘‘(A)(i) except as provided in clause (ii), an 
employer who has an obligation to contribute 
under the plan; or 
‘‘(ii) in the case of a plan described under 
section 404(c) of the Internal Revenue Code of 
1986, or a continuation of such a plan, the as-
sociation of employers that is the employer set-
tlor of the plan; and 
‘‘(B) an employee organization which, for 
purposes of collective bargaining, represents 
plan participants employed by an employer who 
has an obligation to contribute under the plan. 
‘‘(2) FUNDED PERCENTAGE.—The term ‘fund-
ed percentage’ means the percentage equal to a frac-
tion—
‘‘(A) the numerator of which is the value 
of the plan’s assets, as determined under sec-
tion 304(c)(2), and
284
‘‘(B) the denominator of which is the ac-
crued liability of the plan, determined using ac-
tuarial 
assumptions 
described 
in 
section 
304(c)(3). 
‘‘(3) ACCUMULATED
FUNDING
DEFICIENCY.—
The term ‘accumulated funding deficiency’ has the 
meaning given such term in section 304(a). 
‘‘(4) ACTIVE PARTICIPANT.—The term ‘active 
participant’ means, in connection with a multiem-
ployer plan, a participant who is in covered service 
under the plan. 
‘‘(5) INACTIVE PARTICIPANT.—The term ‘inac-
tive participant’ means, in connection with a multi-
employer plan, a participant, or the beneficiary or 
alternate payee of a participant, who—
‘‘(A) is not in covered service under the 
plan, and 
‘‘(B) is in pay status under the plan or has 
a nonforfeitable right to benefits under the 
plan. 
‘‘(6) PAY STATUS.—A person is in pay status 
under a multiemployer plan if—
‘‘(A) at any time during the current plan 
year, such person is a participant or beneficiary 
under the plan and is paid an early, late, nor-
285
mal, or disability retirement benefit under the 
plan (or a death benefit under the plan related 
to a retirement benefit), or 
‘‘(B) to the extent provided in regulations 
of the Secretary of the Treasury, such person 
is entitled to such a benefit under the plan. 
‘‘(7) OBLIGATION TO CONTRIBUTE.—The term 
‘obligation to contribute’ has the meaning given such 
term under section 4212(a). 
‘‘(8) ACTUARIAL
METHOD.—Notwithstanding 
any other provision of this section, the actuary’s de-
terminations with respect to a plan’s normal cost, 
actuarial accrued liability, and improvements in a 
plan’s funded percentage under this section shall be 
based upon the unit credit funding method (whether 
or not that method is used for the plan’s actuarial 
valuation). 
‘‘(9) PLAN SPONSOR.—In the case of a plan de-
scribed under section 404(c) of the Internal Revenue 
Code of 1986, or a continuation of such a plan, the 
term ‘plan sponsor’ means the bargaining parties de-
scribed under paragraph (1). 
‘‘(10) BENEFIT
COMMENCEMENT
DATE.—The 
term ‘benefit commencement date’ means the annu-
ity starting date (or in the case of a retroactive an-
286
nuity starting date, the date on which benefit pay-
ments begin).’’. 
(b) ENFORCEMENT.—Section 502 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1132) 
is amended—
(1) in subsection (a)(6) by striking ‘‘(6), or 
(7)’’ and inserting ‘‘(6), (7), or (8)’’; 
(2) by redesignating subsection (c)(8) as sub-
section (c)(9); and 
(3) by inserting after subsection (c)(7) the fol-
lowing new paragraph: 
‘‘(8) The Secretary may assess against any plan 
sponsor of a multiemployer plan a civil penalty of 
not more than $1,100 per day—
‘‘(A) for each violation by such sponsor of 
the requirement under section 305 to adopt by 
the deadline established in that section a fund-
ing improvement plan or rehabilitation plan 
with respect to a multiemployer which is in en-
dangered or critical status, or 
‘‘(B) in the case of a plan in endangered 
status which is not in seriously endangered sta-
tus, for failure by the plan to meet the applica-
ble benchmarks under section 305 by the end of
287
the funding improvement period with respect to 
the plan.’’. 
(c) CAUSE OF ACTION TO COMPEL ADOPTION OR IM-
PLEMENTATION OF FUNDING IMPROVEMENT OR REHA-
BILITATION PLAN.—Section 502(a) of the Employee Re-
tirement Income Security Act of 1974 is amended by 
striking ‘‘or’’ at the end of paragraph (8), by striking the 
period at the end of paragraph (9) and inserting ‘‘; or’’ 
and by adding at the end the following: 
‘‘(10) in the case of a multiemployer plan that 
has been certified by the actuary to be in endan-
gered or critical status under section 305, if the plan 
sponsor—
‘‘(A) has not adopted a funding improve-
ment or rehabilitation plan under that section 
by the deadline established in such section, or 
‘‘(B) fails to update or comply with the 
terms of the funding improvement or rehabilita-
tion plan in accordance with the requirements 
of such section, 
by an employer that has an obligation to contribute 
with respect to the multiemployer plan or an em-
ployee organization that represents active partici-
pants in the multiemployer plan, for an order com-
pelling the plan sponsor to adopt a funding improve-
288
ment or rehabilitation plan or to update or comply 
with the terms of the funding improvement or reha-
bilitation plan in accordance with the requirements 
of such section and the funding improvement or re-
habilitation plan.’’. 
(d) NO ADDITIONAL CONTRIBUTIONS REQUIRED.—
Section 302(b) of the Employee Retirement Income Secu-
rity Act of 1974, as amended by this Act, is amended by 
adding at the end the following new paragraph: 
‘‘(3) MULTIEMPLOYER PLANS IN CRITICAL STA-
TUS.—Paragraph (1) shall not apply in the case of 
a multiemployer plan for any plan year in which the 
plan is in critical status pursuant to section 305. 
This paragraph shall only apply if the plan adopts 
a rehabilitation plan in accordance with section 
305(e) and complies with the terms of such rehabili-
tation plan (and any updates or modifications of the 
plan).’’. 
(e) CONFORMING AMENDMENT.—The table of con-
tents in section 1 of such Act (as amended by the pre-
ceding provisions of this Act) is amended by inserting 
after the item relating to section 304 the following new 
item:
‘‘Sec. 305. Additional funding rules for multiemployer plans in endangered sta-
tus or critical status.’’.
(f) EFFECTIVE DATES.—
289
(1) IN GENERAL.—The amendments made by 
this section shall apply with respect to plan years be-
ginning after 2007. 
(2) SPECIAL RULE FOR CERTAIN NOTICES.—In 
any case in which a plan’s actuary certifies that it 
is reasonably expected that a multiemployer plan will 
be in critical status under section 305(b)(3) of the 
Employee Retirement Income Security Act of 1974, 
as added by this section, with respect to the first 
plan year beginning after 2007, the notice required 
under subparagraph (D) of such section may be pro-
vided at any time after the date of enactment, so 
long as it is provided on or before the last date for 
providing the notice under such subparagraph. 
(3) SPECIAL
RULE
FOR
CERTAIN
RESTORED 
BENEFITS.—In the case of a multiemployer plan—
(A) with respect to which benefits were re-
duced pursuant to a plan amendment adopted 
on or after January 1, 2002, and before June 
30, 2005, and 
(B) which, pursuant to the plan document, 
the trust agreement, or a formal written com-
munication from the plan sponsor to partici-
pants provided before June 30, 2005, provided 
for the restoration of such benefits,
290
the amendments made by this section shall not apply 
to such benefit restorations to the extent that any 
restriction on the providing or accrual of such bene-
fits would otherwise apply by reason of such amend-
ments. 
SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MUL-
TIEMPLOYER PLANS. 
(a) ADVANCE DETERMINATION OF IMPENDING IN-
SOLVENCY OVER 5 YEARS.—Section 4245(d)(1) of the 
Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1426(d)(1)) is amended—
(1) by striking ‘‘3 plan years’’ the second place 
it appears and inserting ‘‘5 plan years’’; and 
(2) by adding at the end the following new sen-
tence: ‘‘If the plan sponsor makes such a determina-
tion that the plan will be insolvent in any of the next 
5 plan years, the plan sponsor shall make the com-
parison under this paragraph at least annually until 
the plan sponsor makes a determination that the 
plan will not be insolvent in any of the next 5 plan 
years.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to determinations 
made in plan years beginning after 2007.
291
SEC. 204. WITHDRAWAL LIABILITY REFORMS. 
(a) UPDATE OF RULES RELATING TO LIMITATIONS 
ON WITHDRAWAL LIABILITY.—
(1) INCREASE IN LIMITS.—Section 4225(a)(2) 
of such Act (29 U.S.C. 1405(a)(2)) is amended by 
striking the table contained therein and inserting the 
following new table:
‘‘If the liquidation or distribution value of the em-
ployer after the sale or exchange is—
The portion is—
Not more than $5,000,000 .......................................
30 percent of the amount. 
More than $5,000,000, but not more than 
$10,000,000.
$1,500,000, plus 35 per-
cent of the amount in 
excess of $5,000,000. 
More than $10,000,000, but not more than 
$15,000,000.
$3,250,000, plus 40 per-
cent of the amount in 
excess of $10,000,000. 
More than $15,000,000, but not more than 
$17,500,000.
$5,250,000, plus 45 per-
cent of the amount in 
excess of $15,000,000. 
More than $17,500,000, but not more than 
$20,000,000.
$6,375,000, plus 50 per-
cent of the amount in 
excess of $17,500,000. 
More than $20,000,000, but not more than 
$22,500,000.
$7,625,000, plus 60 per-
cent of the amount in 
excess of $20,000,000. 
More than $22,500,000, but not more than 
$25,000,000.
$9,125,000, plus 70 per-
cent of the amount in 
excess of $22,500,000.
More than $25,000,000 ............................................
$10,875,000, plus 80 per-
cent of the amount in 
excess of 
$25,000,000.’’. 
(2) PLANS USING ATTRIBUTABLE METHOD.—
Section 4225(a)(1)(B) of such Act (29 U.S.C. 
1405(a)(1)(B)) is amended to read as follows: 
‘‘(B) in the case of a plan using the attrib-
utable method of allocating withdrawal liability,
292
the unfunded vested benefits attributable to em-
ployees of the employer.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to sales occurring on 
or after January 1, 2007. 
(b) WITHDRAWAL LIABILITY CONTINUES IF WORK 
CONTRACTED OUT.—
(1) 
IN
GENERAL.—Clause 
(i) 
of 
section 
4205(b)(2)(A) 
of 
such 
Act 
(29 
U.S.C. 
1385(b)(2)(A)) is amended by inserting ‘‘or to an 
entity or entities owned or controlled by the em-
ployer’’ after ‘‘to another location’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply with respect to work 
transferred on or after the date of the enactment of 
this Act. 
(c) APPLICATION OF RULES TO PLANS PRIMARILY 
COVERING EMPLOYEES
IN
THE BUILDING
AND CON-
STRUCTION INDUSTRY.—
(1) IN GENERAL.—Section 4210(b) of such Act 
(29 U.S.C. 1390(b)) is amended—
(A) by striking paragraph (1); and 
(B) 
by 
redesignating 
paragraphs 
(2) 
through (4) as paragraphs (1) through (3), re-
spectively.
293
(2) FRESH START OPTION.—Section 4211(c)(5) 
of such Act (29 U.S.C. 1391(c)(5)) is amended by 
adding at the end the following new subparagraph: 
‘‘(E) FRESH
START
OPTION.—Notwith-
standing paragraph (1), a plan may be amend-
ed to provide that the withdrawal liability meth-
od described in subsection (b) shall be applied 
by substituting the plan year which is specified 
in the amendment and for which the plan has 
no unfunded vested benefits for the plan year 
ending before September 26, 1980.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply with respect to plan 
withdrawals occurring on or after January 1, 2007. 
(d) PROCEDURES APPLICABLE
TO DISPUTES IN-
VOLVING PENSION PLAN WITHDRAWAL LIABILITY.—
(1) IN GENERAL.—Section 4221 of Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1401) is amended by adding at the end the fol-
lowing: 
‘‘(g) PROCEDURES APPLICABLE TO CERTAIN DIS-
PUTES.—
‘‘(1) IN GENERAL.—If—
‘‘(A) a plan sponsor of a plan determines 
that—
294
‘‘(i) a complete or partial withdrawal 
of an employer has occurred, or 
‘‘(ii) an employer is liable for with-
drawal liability payments with respect to 
such complete or partial withdrawal, and 
‘‘(B) such determination is based in whole 
or in part on a finding by the plan sponsor 
under section 4212(c) that a principal purpose 
of any transaction which occurred after Decem-
ber 31, 1998, and at least 5 years (2 years in 
the case of a small employer) before the date of 
the complete or partial withdrawal was to evade 
or avoid withdrawal liability under this subtitle, 
then the person against which the withdrawal liabil-
ity is assessed based solely on the application of sec-
tion 4212(c) may elect to use the special rule under 
paragraph (2) in applying subsection (d) of this sec-
tion and section 4219(c) to such person. 
‘‘(2) SPECIAL
RULE.—Notwithstanding sub-
section (d) and section 4219(c), if an electing person 
contests the plan sponsor’s determination with re-
spect to withdrawal liability payments under para-
graph (1) through an arbitration proceeding pursu-
ant to subsection (a), through an action brought in 
a court of competent jurisdiction for review of such
295
an arbitration decision, or as otherwise permitted by 
law, the electing person shall not be obligated to 
make the withdrawal liability payments until a final 
decision in the arbitration proceeding, or in court, 
upholds the plan sponsor’s determination, but only if 
the electing person—
‘‘(A) provides notice to the plan sponsor of 
its election to apply the special rule in this 
paragraph within 90 days after the plan spon-
sor notifies the electing person of its liability by 
reason of the application of section 4212(c); 
and 
‘‘(B) if a final decision in the arbitration 
proceeding, or in court, of the withdrawal liabil-
ity dispute has not been rendered within 12 
months from the date of such notice, the elect-
ing person provides to the plan, effective as of 
the first day following the 12-month period, a 
bond issued by a corporate surety company that 
is an acceptable surety for purposes of section 
412 of this Act, or an amount held in escrow 
by a bank or similar financial institution satis-
factory to the plan, in an amount equal to the 
sum of the withdrawal liability payments that 
would otherwise be due under subsection (d)
296
and section 4219(c) for the 12-month period 
beginning with the first anniversary of such no-
tice. Such bond or escrow shall remain in effect 
until there is a final decision in the arbitration 
proceeding, or in court, of the withdrawal liabil-
ity dispute, at which time such bond or escrow 
shall be paid to the plan if such final decision 
upholds the plan sponsor’s determination. 
‘‘(3) DEFINITION OF SMALL EMPLOYER.—For 
purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘small em-
ployer’ means any employer which, for the cal-
endar year in which the transaction referred to 
in paragraph (1)(B) occurred and for each of 
the 3 preceding years, on average—
‘‘(i) employs not more than 500 em-
ployees, and 
‘‘(ii) is required to make contributions 
to the plan for not more than 250 employ-
ees. 
‘‘(B) CONTROLLED
GROUP.—Any group 
treated as a single employer under subsection 
(b)(1) of section 4001, without regard to any 
transaction that was a basis for the plan’s find-
ing under section 4212, shall be treated as a
297
single employer for purposes of this subpara-
graph. 
‘‘(4) ADDITIONAL SECURITY PENDING RESOLU-
TION OF DISPUTE.—If a withdrawal liability dispute 
to which this subsection applies is not concluded by 
12 months after the electing person posts the bond 
or escrow described in paragraph (2), the electing 
person shall, at the start of each succeeding 12-
month period, provide an additional bond or amount 
held in escrow equal to the sum of the withdrawal 
liability payments that would otherwise be payable to 
the plan during that period. 
‘‘(5) The liability of the party furnishing a bond 
or escrow under this subsection shall be reduced, 
upon the payment of the bond or escrow to the plan, 
by the amount thereof.’’
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to any person that re-
ceives a notification under section 4219(b)(1) of the 
Employee Retirement Income Security Act of 1974 
on or after the date of enactment of this Act with 
respect to a transaction that occurred after Decem-
ber 31, 1998.
298
SEC. 205. PROHIBITION ON RETALIATION AGAINST EM-
PLOYERS EXERCISING THEIR RIGHTS TO PE-
TITION THE FEDERAL GOVERNMENT. 
Section 510 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1140) is amended by insert-
ing before the last sentence thereof the following new sen-
tence:‘‘In the case of a multiemployer plan, it shall be un-
lawful for the plan sponsor or any other person to dis-
criminate against any contributing employer for exercising 
rights under this Act or for giving information or testi-
fying in any inquiry or proceeding relating to this Act be-
fore Congress.’’
SEC. 206. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED 
UNDER AN AGREEMENT APPROVED BY THE 
PENSION 
BENEFIT 
GUARANTY 
CORPORA-
TION. 
In the case of a multiemployer plan that is a party 
to an agreement that was approved by the Pension Benefit 
Guaranty Corporation prior to June 30, 2005, and that—
(1) increases benefits, and 
(2) provides for special withdrawal liability 
rules under section 4203(f) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1383), 
the amendments made by sections 201, 202, 211, and 212 
of this Act shall not apply to the benefit increases under
299
any plan amendment adopted prior to June 30, 2005, that 
are funded pursuant to such agreement if the plan is fund-
ed in compliance with such agreement (and any amend-
ments thereto). 
Subtitle B—Amendments to 
Internal Revenue Code of 1986
SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED 
BENEFIT PLANS. 
(a) IN GENERAL.—Subpart A of part III of sub-
chapter D of chapter 1 of the Internal Revenue Code of 
1986 (as added by this Act) is amended by inserting after 
section 430 the following new section: 
‘‘SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEM-
PLOYER PLANS. 
‘‘(a) IN GENERAL.—For purposes of section 412, the 
accumulated funding deficiency of a multiemployer plan 
for any plan year is—
‘‘(1) except as provided in paragraph (2), the 
amount, determined 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