166 
‘‘(III) such offer is made during 
2006 and pursuant to a bona fide re-
tirement incentive program and re-
quires, 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 ex-
pires. 
‘‘(ii) SPECIFIED AUTOMOBILE MANU-
FACTURER.—For purposes of clause (i), 
the term ‘specified automobile manufac-
turer’ means— 
‘‘(I) any manufacturer of auto-
mobiles, and 
‘‘(II) any manufacturer of auto-
mobile parts which supplies such parts 
directly to a manufacturer of auto-
mobiles 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. 
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167 
‘‘(5) TRANSITION BETWEEN APPLICABLE FUND-
ING 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 de-
termined 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 re-
gard to this subsection. 
‘‘(B) 
TRANSITION
PERCENTAGE.—For 
purposes of subparagraph (A), the transition 
percentage shall be determined in accordance 
with the following table: 
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‘‘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 be-
ginning before 2008 shall not be taken into ac-
count. 
‘‘(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 year. For purposes of 
this paragraph, all defined benefit plans (other than 
multiemployer plans) maintained by the same em-
ployer (or any member of such employer’s controlled 
group) shall be treated as 1 plan, but only partici-
pants 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 CONTRIBU-
TIONS.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, 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. 
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169 
‘‘(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
RE-
QUIRED INSTALLMENT.—In any case in which 
the plan has a funding shortfall for the pre-
ceding 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 determined by using a rate of interest equal 
to the rate otherwise used under paragraph (2) 
plus 5 percentage points. 
‘‘(B) AMOUNT
OF
UNDERPAYMENT, PE-
RIOD
OF
UNDERPAYMENT.—For purposes of 
subparagraph (A)— 
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170 
‘‘(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 con-
tributed to or under the plan. 
‘‘(iii) ORDER
OF
CREDITING
CON-
TRIBUTIONS.—For 
purposes 
of 
clause 
(i)(II), contributions shall be credited 
against unpaid required installments in the 
order in which such installments are re-
quired to be paid. 
‘‘(C) NUMBER
OF
REQUIRED
INSTALL-
MENTS; DUE
DATES.—For purposes of this 
paragraph— 
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171 
‘‘(i) PAYABLE IN 4 INSTALLMENTS.— 
There shall be 4 required installments for 
each plan year. 
‘‘(ii) TIME
FOR
PAYMENT
OF
IN-
STALLMENTS.—The due dates for required 
installments are set forth in the following 
table: 
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 fol-
lowing year. 
‘‘(D) AMOUNT
OF
REQUIRED
INSTALL-
MENT.—For purposes of this paragraph— 
‘‘(i) IN
GENERAL.—The amount of 
any required installment shall be 25 per-
cent of the required annual payment. 
‘‘(ii) REQUIRED ANNUAL PAYMENT.— 
For purposes of clause (i), the term ‘re-
quired annual payment’ means the lesser 
of— 
‘‘(I) 90 percent of the minimum 
required 
contribution 
(determined 
without regard to this subsection) to 
the plan for the plan year under this 
section, or 
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172 
‘‘(II) 100 percent of the min-
imum required contribution (deter-
mined 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 pre-
ceding 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 sub-
paragraph shall be applied to plan years of 
less than 12 months in accordance with 
regulations prescribed by the Secretary. 
‘‘(4) LIQUIDITY REQUIREMENT IN CONNECTION 
WITH QUARTERLY 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 
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173 
under paragraph (3) to the extent that the 
value of the liquid assets paid in such install-
ment is less than the liquidity shortfall (wheth-
er or not such liquidity shortfall exceeds the 
amount of such installment required to be paid 
but for this paragraph). 
‘‘(B) PLANS
TO
WHICH
PARAGRAPH
AP-
PLIES.—This paragraph shall apply to a plan 
(other than a plan described in subsection 
(g)(2)(B)) which— 
‘‘(i) is required to pay installments 
under paragraph (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 paragraph (3)(A), any portion of an 
installment that is treated as not paid under 
subparagraph (A) shall continue to be 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 subparagraph (A), in no event 
shall such increase exceed the amount which, 
when added to prior installments for the plan 
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174 
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 re-
spect to any required installment, an 
amount equal to the excess (as of the last 
day of the quarter for which such install-
ment is made) of— 
‘‘(I) the base amount with re-
spect 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 dis-
bursements from the plan for the 12 
months ending on the last day of such 
quarter. 
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175 
‘‘(II) SPECIAL
RULE.—If the 
amount determined under subclause 
(I) exceeds an amount equal to 2 
times the sum of the adjusted dis-
bursements from the plan for the 36 
months ending on the last day of the 
quarter and an enrolled actuary cer-
tifies to the satisfaction of the Sec-
retary that such excess is the result of 
nonrecurring circumstances, the base 
amount with respect to such quarter 
shall be determined without regard to 
amounts related to those nonrecurring 
circumstances. 
‘‘(iii) DISBURSEMENTS
FROM
THE 
PLAN.—The term ‘disbursements from the 
plan’ means all disbursements from the 
trust, including purchases of annuities, 
payments of single sums and other bene-
fits, and administrative expenses. 
‘‘(iv) ADJUSTED
DISBURSEMENTS.— 
The term ‘adjusted disbursements’ means 
disbursements from the plan reduced by 
the product of— 
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176 
‘‘(I) the plan’s funding target at-
tainment percentage for the plan year, 
and 
‘‘(II) the sum of the purchases of 
annuities, payments of single sums, 
and such other disbursements as the 
Secretary shall provide in regulations. 
‘‘(v) LIQUID ASSETS.—The term ‘liq-
uid assets’ means cash, marketable securi-
ties, and such other assets as specified by 
the Secretary in regulations. 
‘‘(vi) QUARTER.—The term ‘quarter’ 
means, with respect to any required install-
ment, the 3-month period preceding the 
month in which the due date for such in-
stallment 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 contribu-
tion payment required by section 412 and this 
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ccoleman on PROD1PC71 with BILLS
177 
section before the due date for such payment, 
and 
‘‘(B) the unpaid balance of such payment 
(including interest), when added to the aggre-
gate unpaid balance of all preceding such pay-
ments 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 per-
sonal, belonging to such person and any other per-
son 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 multiemployer plan) covered under 
section 4021 of the Employee Retirement Income 
Security Act of 1974 for any plan year for which the 
funding target attainment percentage (as defined in 
subsection (d)(2)) of such plan is less than 100 per-
cent. 
‘‘(3) AMOUNT OF LIEN.—For purposes of para-
graph (1), the amount of the lien shall be equal to 
the aggregate unpaid balance of contribution pay-
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178 
ments 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 Cor-
poration 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 con-
tinues to be described in paragraph (2) during 
the period referred to in the preceding 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 
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179 
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 Guaranty Cor-
poration, by the contributing sponsor (or any mem-
ber of the controlled group of the contributing spon-
sor). 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(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 in-
stallment under paragraphs (3) and (4) of sub-
section (j). 
‘‘(B) DUE
DATE; 
REQUIRED
INSTALL-
MENT.—The terms ‘due date’ and ‘required in-
stallment’ 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 re-
quired to be made under section 430. 
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180 
‘‘(C) CONTROLLED
GROUP.—The term 
‘controlled group’ means any group treated as 
a single employer under subsections (b), (c), 
(m), and (o) of section 414. 
‘‘(l) QUALIFIED TRANSFERS TO HEALTH BENEFIT 
ACCOUNTS.—In the case of a qualified transfer (as de-
fined 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 begin-
ning after December 31, 2007. 
SEC. 
113. 
BENEFIT 
LIMITATIONS 
UNDER 
SINGLE-EM-
PLOYER 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 (re-
lating to deferred compensation, etc.) is amended— 
(A) by striking the heading and inserting 
the following: 
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181 
‘‘PART III—RULES RELATING TO MINIMUM FUND-
ING STANDARDS AND BENEFIT LIMITATIONS 
‘‘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 pen-
sion plans.’’, and 
(B) by adding at the end the following new 
subpart: 
‘‘Subpart B—Benefit Limitations Under Single- 
Employer Plans 
‘‘Sec. 436. Funding-based limitation on shutdown benefits and other unpredict-
able contingent event benefits under single-employer plans. 
‘‘SEC. 436. FUNDING-BASED LIMITS ON BENEFITS AND BEN-
EFIT ACCRUALS UNDER SINGLE-EMPLOYER 
PLANS. 
‘‘(a) GENERAL RULE.—For purposes of section 
401(a)(29), a defined benefit plan which is a single-em-
ployer plan shall be treated as meeting the requirements 
of this section if the plan meets the requirements of sub-
sections (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 de-
fined benefit plan which is a single-employer plan is 
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182 
entitled to an unpredictable contingent event benefit 
payable with respect to any event occurring during 
any plan year, the plan shall provide that such ben-
efit may not be provided if the adjusted funding tar-
get 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 section 
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 sufficient to result in a funding target 
attainment percentage of 60 percent. 
‘‘(3) UNPREDICTABLE CONTINGENT EVENT.— 
For purposes of this subsection, the term ‘unpredict-
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able contingent event benefit’ 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 occur-
rence of death or disability. 
‘‘(c) LIMITATIONS ON PLAN AMENDMENTS INCREAS-
ING LIABILITY FOR BENEFITS.— 
‘‘(1) IN GENERAL.—No amendment to a de-
fined benefit plan which is a single-employer plan 
which has the effect of increasing liabilities of the 
plan by reason of increases in benefits, establish-
ment of new benefits, changing the rate of benefit 
accrual, or changing the rate at which benefits be-
come nonforfeitable may take effect during any plan 
year if the adjusted funding target attainment per-
centage for such plan year is— 
‘‘(A) less than 80 percent, or 
‘‘(B) would be less than 80 percent taking 
into account such amendment. 
‘‘(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 ef-
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184 
fective 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 sufficient to result in an adjusted fund-
ing target attainment percentage of 80 percent. 
‘‘(3) EXCEPTION
FOR
CERTAIN
BENEFIT
IN-
CREASES.—Paragraph (1) shall not apply to any 
amendment which provides for an increase in bene-
fits under a formula which is not based on a partici-
pant’s compensation, but only if the rate of such in-
crease is not in excess of the contemporaneous rate 
of increase in average wages of participants covered 
by the amendment. 
‘‘(d) LIMITATIONS ON ACCELERATED BENEFIT DIS-
TRIBUTIONS.— 
‘‘(1) FUNDING
PERCENTAGE
LESS
THAN
PERCENT.—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 
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185 
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 en-
rolled 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— 
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186 
‘‘(i) 50 percent of the amount of the 
payment which could be made without re-
gard to this section, or 
‘‘(ii) the present value (determined 
under guidance prescribed by the Pension 
Benefit Guaranty Corporation, using the 
interest and mortality assumptions under 
section 417(e)) of the maximum guarantee 
with respect to the participant under sec-
tion 4022 of the Employee Retirement In-
come Security Act of 1974. 
‘‘(B) ONE-TIME APPLICATION.— 
‘‘(i) IN
GENERAL.—The plan shall 
also provide that only 1 prohibited pay-
ment meeting the requirements of subpara-
graph (A) may be made with respect to 
any participant during any period of con-
secutive plan years to which the limitations 
under either paragraph (1) or (2) or this 
paragraph applies. 
‘‘(ii) 
TREATMENT
OF
BENE-
FICIARIES.—For purposes of this subpara-
graph, a participant and any beneficiary 
on his behalf (including an alternate payee, 
as defined in section 414(p)(8)) shall be 
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187 
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 
relations 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 month-
ly amount paid under a single life annuity (plus 
any social security supplements described in the 
last sentence of section 411(a)(9)), to a partici-
pant or beneficiary whose annuity starting date 
(as defined in section 417(f)(2)) occurs during 
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ccoleman on PROD1PC71 with BILLS
188 
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 section 
430) equal to the amount sufficient to result in an 
adjusted funding target attainment percentage of 60 
percent. 
‘‘(f) RULES RELATING
TO CONTRIBUTIONS RE-
QUIRED TO AVOID BENEFIT LIMITATIONS.— 
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189 
‘‘(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 sur-
ety company that is an acceptable surety 
for purposes of section 412 of the Em-
ployee Retirement Income Security Act of 
1974, 
‘‘(ii) cash, or United States obliga-
tions which mature in 3 years or less, held 
in escrow by a bank or similar financial in-
stitution, or 
‘‘(iii) such other form of security as is 
satisfactory to the Secretary and the par-
ties involved. 
‘‘(C) ENFORCEMENT.—Any security pro-
vided under subparagraph (A) may be perfected 
and enforced at any time after the earlier of— 
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ccoleman on PROD1PC71 with BILLS
190 
‘‘(i) the date on which the plan termi-
nates, 
‘‘(ii) if there is a failure to make a 
payment of the minimum required con-
tribution 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 per-
cent for a consecutive period of 7 years, 
the valuation date for the last year in the 
period. 
‘‘(D) RELEASE OF SECURITY.—The secu-
rity shall be released (and any amounts there-
under shall be refunded together with any inter-
est accrued thereon) at such time as the Sec-
retary may prescribe in regulations, including 
regulations for partial releases of the security 
by reason of increases in the funding target at-
tainment percentage. 
‘‘(2) PREFUNDING
BALANCE
OR
FUNDING 
STANDARD
CARRYOVER
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 pay-
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ccoleman on PROD1PC71 with BILLS
191 
ment an employer may make under any such sub-
section to avoid or terminate the application of any 
limitation under such subsection. 
‘‘(3) DEEMED REDUCTION OF FUNDING BAL-
ANCES.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), in any case in which a benefit limita-
tion under subsection (b), (c), (d), or (e) would 
(but for this subparagraph and determined 
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 elec-
tion under section 430(f) to reduce the 
prefunding balance or funding standard carry-
over balance by such amount as is necessary for 
such benefit limitation to not apply to the plan 
for such plan year. 
‘‘(B) 
EXCEPTION
FOR
INSUFFICIENT 
FUNDING BALANCES.—Subparagraph (A) shall 
not apply with respect to a benefit limitation 
for any plan year if the application of subpara-
graph (A) would not result in the benefit limita-
tion not applying for such plan year. 
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ccoleman on PROD1PC71 with BILLS
192 
‘‘(C) RESTRICTIONS
OF
CERTAIN
RULES 
TO
COLLECTIVELY
BARGAINED
PLANS.—With 
respect to any benefit limitation under sub-
section (b), (c), or (e), subparagraph (A) shall 
only apply in the case of a plan maintained pur-
suant to 1 or more collective bargaining agree-
ments 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 of this subsection, the reference in this sub-
section to a plan shall include a reference to any prede-
cessor plan. 
‘‘(h) PRESUMED UNDERFUNDING FOR PURPOSES OF 
BENEFIT LIMITATIONS.— 
‘‘(1) PRESUMPTION
OF
CONTINUED
UNDER-
FUNDING.—In any case in which a benefit limitation 
under subsection (b), (c), (d), or (e) has been ap-
plied to a plan with respect to the plan year pre-
ceding the current plan year, the adjusted funding 
target attainment percentage of the plan for the cur-
rent 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 en-
rolled actuary of the plan certifies the actual ad-
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ccoleman on PROD1PC71 with BILLS
193 
justed 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 percent-
age 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 pur-
poses of such subsection, to be the valuation date of 
the plan for the current plan year and the plan’s ad-
justed 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 at-
tainment percentage of the plan for such pre-
ceding plan year was not more than 10 percent-
age points greater than the percentage which 
would have caused such subsection to apply to 
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ccoleman on PROD1PC71 with BILLS
194 
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 attain-
ment 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 ad-
justed funding target attainment percentage of the 
plan for such preceding plan year. 
‘‘(i) TREATMENT OF PLAN AS OF CLOSE OF PROHIB-
ITED OR CESSATION 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. 
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ccoleman on PROD1PC71 with BILLS
195 
‘‘(2) TREATMENT OF AFFECTED BENEFITS.— 
Nothing in this subsection shall be construed as af-
fecting the plan’s treatment of benefits which would 
have been paid or accrued but for this section. 
‘‘(j) TERMS RELATING TO FUNDING TARGET AT-
TAINMENT 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 
PERCENTAGE.—The term ‘adjusted funding target 
attainment percentage’ means the funding target at-
tainment percentage which is determined 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 com-
pensated 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 WITHOUT REGARD TO REDUCTIONS 
FOR FUNDING BALANCES.— 
‘‘(A) IN GENERAL.—In the case of a plan 
for any plan year, if the funding target attain-
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ccoleman on PROD1PC71 with BILLS
196 
ment percentage is 100 percent or more (deter-
mined without regard to this paragraph 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 re-
gard 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 deter-
mined 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 
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ccoleman on PROD1PC71 with BILLS
197 
plan year may be determined using such methods of esti-
mation as the Secretary may provide.’’. 
(2) CLERICAL
AMENDMENT.—The table of 
parts for subchapter 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 be-
fore January 1, 2008, the amendments made by this 
section shall not apply to plan years beginning be-
fore the earlier of— 
(A) the later of— 
(i) the date on which the last collec-
tive bargaining agreement relating to the 
plan terminates (determined without re-
gard to any extension thereof agreed to 
after the date of the enactment of this 
Act), or 
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ccoleman on PROD1PC71 with BILLS
198 
(ii) the first day of the first plan year 
to which the amendments made by this 
subsection would (but for this subpara-
graph) 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 requirement 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 RE-
QUIREMENTS.— 
(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 multiemployer plan) to which the re-
quirements 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 amend-
ed— 
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ccoleman on PROD1PC71 with BILLS
199 
(A) in subparagraph (A), by striking 
‘‘412(m)(5)’’ each place it appears and insert-
ing ‘‘section 430(j)(4)’’, and 
(B) in subparagraph (C), by striking ‘‘sec-
tion 412(m)’’ and inserting ‘‘section 430(j)’’. 
(3) Section 401(a)(33) of such Code is amend-
ed— 
(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 de-
fined 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 ‘‘sec-
tion 412(c)(11) (without regard to subpara-
graph (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 sub-
section (a)(3)(C) and inserting ‘‘section 412(c)(2)’’, 
(2) in subsection (b)(1)(F)— 
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ccoleman on PROD1PC71 with BILLS
200 
(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 ‘‘subpara-
graphs (D), (E), and (F) of section 412(e)(3)’’, 
and 
(3) by striking ‘‘section 412(c)(8)’’ in sub-
section (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: 
‘‘(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 tar-
get normal cost determined under sec-
tion 430 in the case of any other 
plan), over’’. 
(d) TRANSFER OF EXCESS PENSION ASSETS TO RE-
TIREE HEALTH ACCOUNTS.— 
(1) Section 420(e)(2) of such Code is amended 
to read as follows: 
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ccoleman on PROD1PC71 with BILLS
201 
‘‘(2) EXCESS PENSION ASSETS.—The term ‘ex-
cess 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 deter-
mined under section 430(g)(3) after reduc-
tion under section 430(f), over 
‘‘(B) 125 percent of the sum of the fund-
ing shortfall and the target normal cost deter-
mined 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 trans-
ferred shall not, for purposes of this section and sec-
tion 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: 
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202 
‘‘(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 per-
cent of the accumulated funding deficiency deter-
mined 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 accumulated funding deficiency and the accu-
mulated 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 
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ccoleman on PROD1PC71 with BILLS
203 
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 CONTRIBU-
TION.— 
‘‘(A) IN
GENERAL.—The term ‘unpaid 
minimum required contribution’ means, with re-
spect 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 allo-
cated first to unpaid minimum required con-
tributions for all preceding plan years on a 
first-in, first-out basis and then to the min-
imum required contribution under section 430 
for the plan year.’’. 
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ccoleman on PROD1PC71 with BILLS
204 
(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 amend-
ed— 
(A) by striking ‘‘section 412(m)(5)’’ and 
inserting ‘‘section 430(j)(4)’’, and 
(B) by striking ‘‘section 412(m)’’ and in-
serting ‘‘section 430(j)’’. 
(5) Section 4972(c)(7) of such Code is amended 
by striking ‘‘except to the extent that such contribu-
tions exceed the full-funding limitation (as defined in 
section 412(c)(7), determined without regard to sub-
paragraph (A)(i)(I) thereof)’’ and inserting ‘‘except, 
in the case of a multiemployer plan, to the extent 
that such contributions exceed the full-funding limi-
tation (as defined in section 431(c)(6))’’. 
(f) REPORTING REQUIREMENTS.—Section 6059(b) of 
such Code is amended— 
(1) by striking ‘‘the accumulated funding defi-
ciency (as defined in section 412(a))’’ in paragraph 
(2) and inserting ‘‘the minimum required contribu-
tion determined under section 430, or the accumu-
lated funding deficiency determined under section 
431,’’, and 
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ccoleman on PROD1PC71 with BILLS
205 
(2) by striking paragraph (3)(B) and inserting: 
‘‘(B) the requirements for reasonable actu-
arial assumptions under section 430(h)(1) or 
431(c)(3), whichever are applicable, have been 
complied with.’’. 
SEC. 115. MODIFICATION OF TRANSITION RULE TO PEN-
SION FUNDING REQUIREMENTS. 
(a) IN GENERAL.—In the case of a plan that— 
(1) was not required to pay a variable rate pre-
mium 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 In-
ternal Revenue Code of 1986 and section 303(j)(3) 
of the Employee Retirement Income Security Act of 
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ccoleman on PROD1PC71 with BILLS
206 
1974, the plan shall be treated as not having a fund-
ing shortfall for any plan year. 
(2) For purposes of— 
(A) determining unfunded vested benefits 
under section 4006(a)(3)(E)(iii) of such Act, 
and 
(B) determining any present value or mak-
ing any computation 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 sec-
tion 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 sub-
stituting ‘‘2012’’ for ‘‘2011’’ therein and by sub-
stituting 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 
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207 
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 re-
spect to such Act. 
(d) SPECIAL RULE FOR 2006 AND 2007.— 
(1) IN GENERAL.—Section 769(c)(3) of the Re-
tirement 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. 
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208 
SEC. 116. RESTRICTIONS ON FUNDING OF NONQUALIFIED 
DEFERRED COMPENSATION PLANS BY EM-
PLOYERS 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 para-
graphs (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 aside or reserved (di-
rectly or indirectly) in a trust (or other ar-
rangement as determined by the Secretary) 
or transferred to such a trust or other ar-
rangement for purposes of paying deferred 
compensation of an applicable covered em-
ployee under a nonqualified deferred com-
pensation plan of the plan sponsor or 
member of a controlled group which in-
cludes the plan sponsor, or 
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209 
‘‘(ii) a nonqualified deferred com-
pensation plan of the plan sponsor or 
member of a controlled group which in-
cludes the plan sponsor provides that as-
sets will become restricted to the provision 
of benefits under the plan in connection 
with such restricted period (or other simi-
lar financial measure determined by the 
Secretary) with respect to the defined ben-
efit 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 be-
fore the restricted period with respect to the de-
fined 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)); 
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210 
‘‘(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 Retire-
ment Income Security Act of 1974). 
‘‘(C) SPECIAL
RULE
FOR
PAYMENT
OF 
TAXES
ON
DEFERRED
COMPENSATION
IN-
CLUDED IN INCOME.—If an employer provides 
directly or indirectly for the payment of any 
Federal, State, or local income taxes with re-
spect to any compensation required to be in-
cluded in gross income by reason of this para-
graph— 
‘‘(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, 
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211 
‘‘(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 pay-
ment. 
‘‘(D) OTHER DEFINITIONS.—For purposes 
of this section— 
‘‘(i) 
APPLICABLE
COVERED
EM-
PLOYEE.—The term ‘applicable covered 
employee’ means any— 
‘‘(I) covered employee of a plan 
sponsor, 
‘‘(II) covered employee of a mem-
ber of a controlled group which in-
cludes the plan sponsor, and 
‘‘(III) former employee who was 
a covered employee at the time of ter-
mination of employment with the plan 
sponsor or a member of a controlled 
group which includes the plan spon-
sor. 
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212 
‘‘(ii) COVERED EMPLOYEE.—The term 
‘covered employee’ means an individual de-
scribed in section 162(m)(3) or an indi-
vidual subject to the requirements of sec-
tion 16(a) of the Securities Exchange Act 
of 1934.’’. 
(b) CONFORMING AMENDMENTS.—Paragraphs (4) 
and (5) of section 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 
MULTIEMPLOYER 
DEFINED 
BENEFIT 
PLANS 
AND 
RE-
LATED PROVISIONS 
Subtitle A—Amendments to Em-
ployee Retirement Income Secu-
rity 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 
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213 
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 sec-
tion 302, the accumulated funding deficiency of a multi-
employer 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 
‘‘(2) if the multiemployer plan is in reorganiza-
tion for any plan year, the accumulated funding de-
ficiency of the plan determined under section 4243. 
‘‘(b) FUNDING STANDARD ACCOUNT.— 
‘‘(1) ACCOUNT
REQUIRED.—Each multiem-
ployer plan to which this part applies shall establish 
and maintain a funding standard account. Such ac-
count shall be credited and charged solely as pro-
vided in this section. 
‘‘(2) CHARGES TO ACCOUNT.—For a plan year, 
the funding standard account shall be charged with 
the sum of— 
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214 
‘‘(A) the normal cost of the plan for the 
plan year, 
‘‘(B) the amounts necessary to amortize in 
equal annual installments (until fully amor-
tized)— 
‘‘(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 un-
funded 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, 
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215 
‘‘(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 amor-
tized) 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 amor-
tized) over a period of 20 years the contribu-
tions 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 be-
fore 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— 
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216 
‘‘(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 amor-
tized)— 
‘‘(i) separately, with respect to each 
plan year, the net decrease (if any) in un-
funded 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, 
‘‘(C) the amount of the waived funding de-
ficiency 
(within 
the 
meaning 
of 
section 
302(c)(3)) for the plan year, and 
‘‘(D) in the case of a plan year for which 
the accumulated funding deficiency is deter-
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