159
‘‘(II) the value of the plan’s as-
sets determined under paragraph (2). 
‘‘(ii) ASSETS.—For purposes of clause 
(i), assets shall not be reduced by any 
credit balance in the funding standard ac-
count. 
‘‘(C) CURRENT LIABILITY.—For purposes 
of this paragraph—
‘‘(i) IN GENERAL.—The term ‘current 
liability’ means all liabilities to employees 
and their beneficiaries under the plan. 
‘‘(ii) TREATMENT OF UNPREDICTABLE 
CONTINGENT EVENT BENEFITS.—For pur-
poses of clause (i), any benefit contingent 
on an event other than—
‘‘(I) age, service, compensation, 
death, or disability, or 
‘‘(II) an event which is reason-
ably and reliably predictable (as deter-
mined by the Secretary of the Treas-
ury), 
shall not be taken into account until the 
event on which the benefit is contingent oc-
curs.
160
‘‘(iii) INTEREST
RATE
USED.—The 
rate of interest used to determine current 
liability under this paragraph shall be the 
rate of interest determined under subpara-
graph (D). 
‘‘(iv) MORTALITY TABLES.—
‘‘(I) COMMISSIONERS’ STANDARD 
TABLE.—In the case of plan years be-
ginning before the first plan year to 
which the first tables prescribed under 
subclause (II) apply, the mortality 
table used in determining current li-
ability 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) used to determine re-
serves for group annuity contracts 
issued on January 1, 1993. 
‘‘(II) 
SECRETARIAL
AUTHOR-
ITY.—The Secretary of the Treasury 
may by regulation prescribe for plan 
years beginning after December 31,
161
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 inde-
pendent studies of mortality of indi-
viduals covered by pension plans. 
‘‘(v) SEPARATE
MORTALITY
TABLES 
FOR
THE
DISABLED.—Notwithstanding 
clause (iv)—
‘‘(I) IN GENERAL.—In the case 
of plan years beginning after Decem-
ber 31, 1995, the Secretary of the 
Treasury shall establish mortality ta-
bles which may be used (in lieu of the 
tables under clause (ii)) to determine 
current liability under this subsection 
for individuals who are entitled to 
benefits under the plan on account of 
disability. Such Secretary shall estab-
lish separate tables for individuals 
whose disabilities occur in plan years
162
beginning before January 1, 1995, 
and for individuals whose disabilities 
occur in plan years beginning on or 
after such date. 
‘‘(II) SPECIAL
RULE
FOR
DIS-
ABILITIES OCCURRING AFTER 1994.—
In the case of disabilities occurring in 
plan years beginning after December 
31, 1994, the tables under subclause 
(I) shall apply only with respect to in-
dividuals described in such subclause 
who are disabled within the meaning 
of title II of the Social Security Act 
and the regulations thereunder. 
‘‘(vi) PERIODIC
REVIEW.—The Sec-
retary of the Treasury shall periodically (at 
least every 5 years) review any tables in ef-
fect under this subparagraph and shall, to 
the extent such Secretary determines nec-
essary, by regulation update the tables to 
reflect the actual experience of pension 
plans and projected trends in such experi-
ence. 
‘‘(D) REQUIRED
CHANGE
OF
INTEREST 
RATE.—For purposes of determining a plan’s
163
current liability for purposes of this para-
graph—
‘‘(i) IN GENERAL.—If any rate of in-
terest used under the plan under sub-
section (b)(5) to determine cost is not 
within the permissible range, the plan shall 
establish a new rate of interest within the 
permissible range. 
‘‘(ii) PERMISSIBLE RANGE.—For pur-
poses of this subparagraph—
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), the term 
‘permissible range’ means a rate of in-
terest which is not more than 5 per-
cent above, and not more than 10 per-
cent below, the weighted average of 
the rates of interest on 30-year Treas-
ury securities during the 4-year period 
ending on the last day before the be-
ginning of the plan year. 
‘‘(II) 
SECRETARIAL
AUTHOR-
ITY.—If the Secretary of the Treasury 
finds that the lowest rate of interest 
permissible under subclause (I) is un-
reasonably high, such Secretary may
164
prescribe a lower rate of interest, ex-
cept that such rate may not be less 
than 80 percent of the average rate 
determined under such subclause. 
‘‘(iii) 
ASSUMPTIONS.—Notwith-
standing 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 expectations, but 
‘‘(II) consistent with the assump-
tions which reflect the purchase rates 
which would be used by insurance 
companies to satisfy the liabilities 
under the plan. 
‘‘(E) 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 
consideration section 411(d)(3) of the Internal 
Revenue Code of 1986). 
‘‘(7) ANNUAL VALUATION.—
165
‘‘(A) IN GENERAL.—For purposes of this 
section, a determination 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 particular cases under regulations prescribed 
by the Secretary of the Treasury. 
‘‘(B) VALUATION DATE.—
‘‘(i) CURRENT YEAR.—Except as pro-
vided 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
VALU-
ATION.—The valuation referred to in sub-
paragraph (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 cur-
rent liability (as defined in paragraph 
(6)(C) without regard to clause (iv) there-
of).
166
‘‘(iii) 
ADJUSTMENTS.—Information 
under clause (ii) shall, in accordance with 
regulations, be actuarially adjusted to re-
flect significant differences in participants. 
‘‘(iv) LIMITATION.—A change in fund-
ing 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)(C) 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 period may be extended for not more 
than six months under regulations prescribed by the 
Secretary of the Treasury.
167
‘‘(d) EXTENSION OF AMORTIZATION PERIODS FOR 
MULTIEMPLOYER PLANS.—In the case of a multiemployer 
plan—
‘‘(1) AUTOMATIC
EXTENSION.—The Secretary 
of the Treasury shall, upon application and subject 
to the requirements of paragraph (4), extend the pe-
riod of years required to amortize any unfunded li-
ability (described in any clause of subsection 
(b)(2)(B)) of the plan for a period of time not in ex-
cess of 5 years. 
‘‘(2) EXTENSION FOR CAUSE.—The period of 
years required to amortize any unfunded liability 
(described in any clause of subsection (b)(2)(B)) of 
any multiemployer plan may be extended (in addi-
tion to any extension under paragraph (1)) by the 
Secretary of the Treasury for a period of time (not 
in excess of 5 years) if he determines that such ex-
tension would carry out the purposes of this Act and 
would provide adequate protection for participants 
under the plan and their beneficiaries and if he de-
termines that the failure to permit such extension 
would—
‘‘(A) result in—
‘‘(i) a substantial risk to the voluntary 
continuation of the plan, or
168
‘‘(ii) a substantial curtailment of pen-
sion benefit levels or employee compensa-
tion, and 
‘‘(B) be adverse to the interests of plan 
participants in the aggregate. 
‘‘(3) INTEREST RATE.—The interest rate appli-
cable for any plan year under any arrangement en-
tered into by the Secretary of the Treasury in con-
nection with an extension granted under this sub-
section shall be the greater of—
‘‘(A) 150 percent of the Federal mid-term 
rate (as in effect under section 1274 of the In-
ternal Revenue Code of 1986 for the 1st month 
of such plan year), or 
‘‘(B) the rate of interest used under the 
plan for determining costs. 
‘‘(4) REQUIRED NOTICE.—
‘‘(A) IN GENERAL.—The Secretary of the 
Treasury shall, before granting an extension 
under this section, require each applicant to 
provide evidence satisfactory to such Secretary 
that the applicant has provided notice of the fil-
ing of the application for such extension to each 
employee organization representing employees
169
covered by the affected plan and to the Pension 
Benefit Guaranty Corporation. 
‘‘(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 
paragraph (1). 
‘‘(e) RESTRICTION ON PLAN AMENDMENTS.—
‘‘(1) IN GENERAL.—No amendment of a multi-
employer 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 shall be adopted if a waiver under 
section 302(c) or an extension of time under sub-
section (d) is in effect with respect to the plan, or 
if a plan amendment described in section 302(d)(2) 
has been made at any time in the preceding 24 
months. If a plan is amended in violation of the pre-
ceding sentence, any such waiver, or extension of 
time, shall not apply to any plan year ending on or 
after the date on which such amendment is adopted. 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply to any plan amendment which—
170
‘‘(A) the Secretary determines to be rea-
sonable and which provides for only de minimis 
increases in the liabilities of the plan, 
‘‘(B) only repeals an amendment described 
in section 302(d)(2), or 
‘‘(C) is required as a condition of qualifica-
tion under part I of subchapter D, of chapter 
1, of the Internal Revenue Code of 1986.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 301 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1081) is 
amended by striking subsection (d). 
(2) The table of contents in section 1 of such 
Act (as amended by section 102 of this Act) is 
amended further by inserting after the item relating 
to section 303 the following new item:
‘‘Sec. 304. Minimum funding standards for multiemployer plans.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after 2005. 
SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEM-
PLOYER PLANS IN ENDANGERED OR CRIT-
ICAL 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 preceding provisions of this Act) is
171
amended further by inserting after section 304 the fol-
lowing new section: 
‘‘ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER 
PLANS IN ENDANGERED STATUS OR CRITICAL STATUS 
‘‘SEC. 305. (a) ANNUAL CERTIFICATION BY PLAN 
ACTUARY.—
‘‘(1) IN GENERAL.—During the 90-day period 
beginning on first day of each plan year of a multi-
employer plan, the plan actuary of shall certify to 
the Secretary of the Treasury whether or not the 
plan is in endangered status for such plan year and 
whether or not the plan is in critical status for such 
plan year. 
‘‘(2) ACTUARIAL PROJECTIONS OF ASSETS AND 
LIABILITIES.—
‘‘(A) IN GENERAL.—In making the deter-
minations under paragraph (1), the plan actu-
ary shall make projections under subsections 
(b)(2) and (c)(2) for the current and succeeding 
plan years, using reasonable actuarial assump-
tions and methods, 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 be-
ginning of such year, as set forth in the actu-
172
arial statement prepared for the preceding plan 
year under section 103(d). 
‘‘(B) DETERMINATIONS OF FUTURE CON-
TRIBUTIONS.—Any such actuarial projection of 
plan assets shall assume—
‘‘(i) reasonably anticipated employer 
and employee contributions for the current 
and succeeding plan years, assuming that 
the terms of the one or more collective bar-
gaining agreements pursuant to which the 
plan is maintained for the current plan 
year continue in effect for succeeding plan 
years, or 
‘‘(ii) employer and employee contribu-
tions projected for the current and suc-
ceeding plan years under the terms of such 
collective bargaining agreements (assuming 
the continued application of such terms in-
definitely to such plan years), but only if 
the plan actuary determines there have 
been no significant demographic changes 
that would make continued application of 
such terms unreasonable. 
‘‘(3) PRESUMED STATUS IN ABSENCE OF TIME-
LY
ACTUARIAL
CERTIFICATION.—If certification
173
under this subsection is not made before the end of 
the 90-day period specified in paragraph (1), the 
plan shall be presumed to be in critical status for 
such plan year until such time as the actuary makes 
a contrary certification. 
‘‘(4) NOTICE.—In any case in which a multiem-
ployer plan is certified to be in endangered or crit-
ical status for a plan year under paragraph (1), is 
presumed to be in critical status under paragraph 
(3), or is deemed to be in critical status under sub-
section (b)(7), the plan sponsor shall, not later than 
30 days after the date of the certification, presump-
tion, or deeming, provide notification of the endan-
gered or critical status to the participants and bene-
ficiaries, the bargaining parties, the Pension Benefit 
Guaranty Corporation, the Secretary of the Treas-
ury, and the Secretary of Labor. 
‘‘(b) FUNDING RULES 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 shall, in accordance with 
this subsection, amend the plan to include a funding 
improvement plan upon approval thereof by the bar-
gaining parties under this subsection. The amend-
174
ment shall be adopted not later than 240 days after 
the date on which the plan is certified to be in en-
dangered status under subsection (a)(1). 
‘‘(2) ENDANGERED STATUS.—A multiemployer 
plan is in endangered status for a plan year if, as 
determined by the plan actuary under subsection 
(c)—
‘‘(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 under section 304 
or is projected to have such an accumulated 
funding deficiency for any of the 6 succeeding 
plan years, taking into account any extension of 
amortization periods under section 304(d). 
‘‘(3) FUNDING IMPROVEMENT PLAN.—
‘‘(A) BENCHMARKS.—A funding improve-
ment plan shall consist of amendments to the 
plan formulated to provide, under reasonable 
actuarial assumptions, for the attainment, dur-
ing the funding improvement period under the 
funding improvement plan, of the following 
benchmarks: 
‘‘(i) REDUCTION IN UNFUNDED CUR-
RENT
LIABILITY.—A percentage decrease
175
in the plan’s unfunded current liability 
from the amount for the first plan year of 
the funding improvement period to the 
amount for the last plan year of the fund-
ing improvement period, of at least 331⁄3 
percent. 
‘‘(ii) AVOIDANCE
OF
ACCUMULATED 
FUNDING DEFICIENCIES.—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) FUNDING IMPROVEMENT PERIOD.—
The funding improvement period for any fund-
ing improvement plan adopted pursuant to this 
subsection is the 10-year period beginning on 
the earlier of—
‘‘(i) the second anniversary of the 
date of the adoption of the funding im-
provement plan, or 
‘‘(ii) the first day of the first plan 
year of the multiemployer plan following 
the plan year in which occurs the first date 
after the day of the certification as of 
which collective bargaining agreements cov-