of the number of employers contributing to 
or under the plan is) unable to satisfy the 
minimum funding standard for a plan year 
without temporary substantial business 
hardship (substantial business hardship in 
the case of a multiemployer), and 
‘‘(ii) application of the standard would 
be adverse to the interests of plan partici-
pants in the aggregate, 
the Secretary of the Treasury may, subject to 
subparagraphs (B) and (C), waive the require-
ments of subsection (a) for such year with re-
spect to all or any portion of the minimum 
funding standard. The Secretary of the Treas-
ury shall not waive the minimum funding 
standard with respect to a plan for more than 
3 of any 15 (5 of any 15 in the case of a multi-
employer plan) consecutive plan years. 
‘‘(B) EFFECTS OF WAIVER.—If a waiver is 
granted under subparagraph (A) for any plan 
year—
‘‘(i) in the case of a single-employer 
plan, the minimum required contribution 
under section 303 for the plan year shall 
be reduced by the amount of the waived
funding deficiency and such amount shall 
be amortized as required under section 
303(j), and 
‘‘(ii) in the case of a multiemployer 
plan, the funding standard account shall 
be credited under section 304(b)(3)(C) 
with the amount of the waived funding de-
ficiency and such amount shall be amor-
tized 
as 
required 
under 
section 
304(b)(2)(C). 
‘‘(C) WAIVER
OF
AMORTIZED
PORTION 
NOT ALLOWED.—The Secretary of the Treasury 
may not waive under subparagraph (A) any 
portion of the minimum funding standard 
under subsection (a) for a plan year which is 
attributable to any amortization payment re-
quired to be made for such plan year with re-
spect to any amortization described in subpara-
graph (B) of any waived portion of the min-
imum funding standard for any preceding plan 
year. 
‘‘(2) DETERMINATION
OF
BUSINESS
HARD-
SHIP.—For purposes of this subsection, the factors 
taken into account in determining temporary sub-
stantial business hardship (substantial business
hardship in the case of a multiemployer plan) shall 
include (but shall not be limited to) whether or 
not—
‘‘(A) the employer is operating at an eco-
nomic loss, 
‘‘(B) there is substantial unemployment or 
underemployment in the trade or business and 
in the industry concerned, 
‘‘(C) the sales and profits of the industry 
concerned are depressed or declining, and 
‘‘(D) it is reasonable to expect that the 
plan will be continued only if the waiver is 
granted. 
‘‘(3) WAIVED FUNDING DEFICIENCY.—For pur-
poses of this part, the term ‘waived funding defi-
ciency’ means the portion of the minimum funding 
standard under subsection (a) (determined without 
regard to the waiver) for a plan year waived by the 
Secretary of the Treasury and not satisfied by em-
ployer contributions. 
‘‘(4) SECURITY FOR WAIVERS FOR SINGLE-EM-
PLOYER PLANS, CONSULTATIONS.—
‘‘(A) SECURITY MAY BE REQUIRED.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in subparagraph (C), the Secretary
of the Treasury may require an employer 
maintaining a defined benefit plan which is 
a single-employer plan (within the meaning 
of section 4001(a)(15)) to provide security 
to such plan as a condition for granting or 
modifying a waiver under paragraph (1). 
‘‘(ii) SPECIAL
RULES.—Any security 
provided under clause (i) may be perfected 
and enforced only by the Pension Benefit 
Guaranty Corporation, or at the direction 
of the Corporation, by a contributing spon-
sor 
(within 
the 
meaning 
of 
section 
4001(a)(13)), or a member of such spon-
sor’s controlled group (within the meaning 
of section 4001(a)(14)). 
‘‘(B) CONSULTATION WITH THE PENSION 
BENEFIT GUARANTY CORPORATION.—Except as 
provided in subparagraph (C), the Secretary of 
the Treasury shall, before granting or modi-
fying a waiver under this subsection with re-
spect to a plan described in subparagraph 
(A)(i)—
‘‘(i) provide the Pension Benefit 
Guaranty Corporation with—
‘‘(I) notice of the completed ap-
plication for any waiver or modifica-
tion, and 
‘‘(II) an opportunity to comment 
on such application within 30 days 
after receipt of such notice, and 
‘‘(ii) consider—
‘‘(I) any comments of the Cor-
poration under clause (i)(II), and 
‘‘(II) any views of any employee 
organization (within the meaning of 
section 3(4)) representing participants 
in the plan which are submitted in 
writing to the Secretary of the Treas-
ury in connection with such applica-
tion. 
Information provided to the Corporation 
under this subparagraph shall be consid-
ered tax return information and subject to 
the safeguarding and reporting require-
ments of section 6103(p) of the Internal 
Revenue Code of 1986. 
‘‘(C) EXCEPTION
FOR
CERTAIN
WAIV-
ERS.—
‘‘(i) IN
GENERAL.—The preceding 
provisions of this paragraph shall not 
apply to any plan with respect to which the 
sum of—
‘‘(I) the shortfall amortization 
charge (within the meaning of section 
303(c)(1)) for the plan year, and 
‘‘(II) the aggregate total of 
shortfall amortization installments de-
termined for succeeding plan years 
under section 303(c)(2), 
is less than $1,000,000. 
‘‘(ii) TREATMENT
OF
WAIVERS
FOR 
WHICH APPLICATIONS ARE PENDING.—The 
amount described in clause (i)(I) shall in-
clude any increase in such amount which 
would result if all applications for waivers 
of the minimum funding standard under 
this subsection which are pending with re-
spect to such plan were denied. 
‘‘(5) SPECIAL
RULES
FOR
SINGLE-EMPLOYER 
PLANS.—
‘‘(A) APPLICATION MUST BE SUBMITTED 
BEFORE DATE 21⁄2 MONTHS AFTER CLOSE OF 
YEAR.—In the case of a single-employer plan,
no waiver may be granted under this subsection 
with respect to any plan for any plan year un-
less an application therefor is submitted to the 
Secretary of the Treasury not later than the 
15th day of the 3rd month beginning after the 
close of such plan year. 
‘‘(B) SPECIAL RULE IF EMPLOYER IS MEM-
BER OF CONTROLLED GROUP.—In the case of a 
single-employer plan, if an employer is a mem-
ber of a controlled group, the temporary sub-
stantial business hardship requirements of 
paragraph (1) shall be treated as met only if 
such requirements are met—
‘‘(i) with respect to such employer, 
and 
‘‘(ii) with respect to the controlled 
group of which such employer is a member 
(determined by treating all members of 
such group as a single employer). 
The Secretary of the Treasury may provide that 
an analysis of a trade or business or industry 
of a member need not be conducted if the Sec-
retary of the Treasury determines such analysis 
is not necessary because the taking into account
of such member would not significantly affect 
the determination under this paragraph. 
‘‘(6) NOTICE TO EMPLOYEE ORGANIZATIONS.—
‘‘(A) IN GENERAL.—The Secretary of the 
Treasury shall, before granting a waiver under 
this subsection, require each applicant to pro-
vide evidence satisfactory to such Secretary that 
the applicant has provided notice of the filing of 
the application for such waiver to each em-
ployee organization representing employees cov-
ered by the affected plan, and each affected 
party (as defined in section 4001(a)(21)). 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 li-
abilities. 
‘‘(B) CONSIDERATION
OF
RELEVANT
IN-
FORMATION.—The Secretary of the Treasury 
shall consider any relevant information provided 
by a person to whom notice was given under 
subparagraph (A). 
‘‘(7) CROSS
REFERENCE.—For corresponding 
duties of the Secretary of the Treasury with regard 
to implementation of the Internal Revenue Code of 
1986, see section 412(c) of such Code.
‘‘(d) MISCELLANEOUS RULES.—
‘‘(1) CHANGE
IN
METHOD
OR
YEAR.—If the 
funding method, the valuation date, or a plan year 
for a plan is changed, the change shall take effect 
only if approved by the Secretary of the Treasury. 
‘‘(2) CERTAIN
RETROACTIVE
PLAN
AMEND-
MENTS.—For purposes of this section, any amend-
ment applying to a plan year which—
‘‘(A) is adopted after the close of such plan 
year but no later than 21⁄2 months after the 
close of the plan year (or, in the case of a mul-
tiemployer plan, no later than 2 years after the 
close of such plan year), 
‘‘(B) does not reduce the accrued benefit 
of any participant determined as of the begin-
ning of the first plan year to which the amend-
ment applies, and 
‘‘(C) does not reduce the accrued benefit of 
any participant determined as of the time of 
adoption except to the extent required by the 
circumstances, 
shall, at the election of the plan administrator, be 
deemed to have been made on the first day of such 
plan year. No amendment described in this para-
graph which reduces the accrued benefits of any par-
ticipant shall take effect unless the plan adminis-
trator files a notice with the Secretary of the Treas-
ury notifying him of such amendment and such Sec-
retary has approved such amendment, or within 90 
days after the date on which such notice was filed, 
failed to disapprove such amendment. No amend-
ment described in this subsection shall be approved 
by the Secretary of the Treasury unless such Sec-
retary determines that such amendment is necessary 
because of a substantial business hardship (as deter-
mined under subsection (c)(2)) and that a waiver 
under subsection (c) (or, in the case of a multiem-
ployer plan, any extension of the amortization period 
under section 304(d)) is unavailable or inadequate. 
‘‘(3) CONTROLLED
GROUP.—For purposes of 
this section, the term ‘controlled group’ means any 
group treated as a single employer under subsection 
(b), (c), (m), or (o) of section 414 of the Internal 
Revenue Code of 1986.’’. 
(c) CLERICAL AMENDMENT.—The table of contents 
in section 1 of such Act is amended by striking the items 
relating to sections 302 through 306 and inserting the fol-
lowing new item:
‘‘Sec. 302. Minimum funding standards.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after 2005.
SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DE-
FINED BENEFIT PENSION PLANS. 
(a) IN GENERAL.—Part 3 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 (as 
amended by section 101 of this Act) is amended further 
by inserting after section 302 the following new section. 
‘‘MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER 
DEFINED BENEFIT PENSION PLANS 
‘‘SEC. 303. (a) MINIMUM REQUIRED CONTRIBU-
TION.—
‘‘(1) IN
GENERAL.—For purposes of section 
302(a)(2)(A), except as otherwise provided in this 
subsection, the minimum required contribution with 
respect to a plan for a plan year is the target nor-
mal cost of the plan for the plan year. 
‘‘(2) SHORTFALL AMORTIZATION CHARGE.—In 
any case in which the value of plan assets (deter-
mined without regard to subsection (e)(1)) of the 
plan for the plan year which are held by the plan 
immediately before the valuation date is less than 
the funding target of the plan for the plan year, the 
minimum required contribution with respect to the 
plan for the plan year is the sum of the amount de-
termined under paragraph (1) plus a shortfall amor-
tization charge for such plan year determined under 
subsection (c).
‘‘(3) CREDIT
FOR
EXCESS
ASSETS.—In any 
case in which the value of plan assets of the plan for 
the plan year which are held by the plan imme-
diately before the valuation date exceed the funding 
target of the plan for the plan year, the minimum 
required contribution with respect to the plan for the 
plan year is the amount determined under para-
graph (1), reduced by such excess. 
‘‘(4) PRE-FUNDING BALANCE.—In the case of 
any plan year in which—
‘‘(A) the ratio (expressed as a percentage) 
which—
‘‘(i) the value of plan assets (deter-
mined 
without 
regard 
to 
subsection 
(e)(1)(B)) for the preceding plan year, 
bears to 
‘‘(ii) the funding target of the plan for 
the preceding plan year (determined with-
out regard to subsection (g)(1)), 
is at least 80 percent, and 
‘‘(B) the plan sponsor elects (in such form 
and manner as shall be prescribed in regula-
tions of the Secretary of the Treasury) to credit 
against the minimum required contribution for 
the current plan year all or a portion of the
funding standard carryover balance and the 
pre-funding balance (to the extent provided in 
subsection (h)) for the preceding plan year (not 
in excess of such minimum required contribu-
tion), 
the minimum required contribution for the plan year 
shall be reduced by the amount so credited by the 
plan sponsor. 
‘‘(b) TARGET NORMAL COST.—For purposes of this 
section, subject to subsection (g)(2), the term ‘target nor-
mal cost’ means, for any plan year, the present value of 
all benefits which are expected to accrue or to be earned 
under the plan during the plan year. If any benefit attrib-
utable to services performed in a preceding plan year is 
increased by reason of any increase in compensation dur-
ing the current plan year, the increase shall be treated 
as having accrued during the current plan year. 
‘‘(c) SHORTFALL AMORTIZATION CHARGE.—
‘‘(1) IN GENERAL.—The shortfall amortization 
charge for a plan for any plan year is the aggregate 
total of the shortfall amortization installments for 
such plan year with respect to the shortfall amorti-
zation bases for such plan year and each of the 6 
preceding plan years.
‘‘(2) 
SHORTFALL
AMORTIZATION
INSTALL-
MENT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the plan sponsor shall determine, 
with respect to the shortfall amortization base 
of the plan for any plan year, the amounts nec-
essary to amortize such shortfall amortization 
base, in level annual installments over a period 
of 7 plan years beginning with such plan year. 
The annual installment of such amortization for 
each plan year in such 7-plan-year period is the 
shortfall amortization installment for such plan 
year with respect to such shortfall amortization 
base. 
‘‘(B) COMPUTATION
ASSUMPTIONS.—The 
determination of any annual installment under 
subparagraph (A) for any plan year shall be 
made as of the valuation date for such plan 
year, using the effective rate of interest for the 
plan for such plan year. 
‘‘(3) SHORTFALL
AMORTIZATION
BASE.—The 
shortfall amortization base of a plan for a plan year 
is the excess (if any) of—
‘‘(A) the funding shortfall of such plan for 
such plan year, over
‘‘(B) the present value (determined using 
the effective interest rate of the plan for the 
plan year) of the aggregate total of the shortfall 
amortization installments, for such plan year 
and the 5 succeeding plan years, which have 
been determined with respect to the shortfall 
amortization bases of the plan for each of the 
6 plan years preceding such plan year. 
‘‘(4) FUNDING SHORTFALL.—For purposes of 
this section, the funding shortfall of a plan for any 
plan year is the excess (if any) of—
‘‘(A) the funding target of the plan for the 
plan year, over 
‘‘(B) the value of plan assets of the plan 
for the plan year which are held by the plan im-
mediately before the valuation date. 
‘‘(5) EARLY DEEMED AMORTIZATION UPON AT-
TAINMENT OF FUNDING TARGET.—In any case in 
which the funding shortfall of a plan for a plan year 
is zero, for purposes of determining the shortfall am-
ortization charge for such plan year and succeeding 
plan years, the shortfall amortization base for all 
preceding plan years shall be reduced to zero. 
‘‘(d) RULES RELATING TO FUNDING TARGET.—For 
purposes of this section—
‘‘(1) FUNDING TARGET.—Except as provided in 
subsection (g)(1), the funding target of a plan for a 
plan year is the present value of all liabilities to par-
ticipants and their beneficiaries under the plan for 
the plan year. 
‘‘(2) FUNDING TARGET ATTAINMENT PERCENT-
AGE.—The ‘funding target attainment percentage’ of 
a plan for a plan year is the ratio (expressed as a 
percentage) which—
‘‘(A) the value of plan assets for the plan 
year, bears to 
‘‘(B) the funding target of the plan for the 
plan year (determined without regard to sub-
section (g)(1)). 
‘‘(e) VALUATION
OF PLAN ASSETS
AND LIABIL-
ITIES.—
‘‘(1) VALUE OF PLAN ASSETS.—For purposes 
of this section (other than paragraph (4) and sub-
sections (a)(2) and (h)(3)), the term ‘value of plan 
assets’ means the excess of the value of plan assets 
(determined without regard to this paragraph) over 
the sum of—
‘‘(A) the pre-funding balance of the plan 
maintained under subsection (h)(1), and