group) may not contribute to a covered deferred 
compensation plan maintained by the plan sponsor 
(or any such member), and 
‘‘(2) a disqualified individual may not accrue 
any amount of deferred compensation under the 
terms of any covered deferred compensation plan 
maintained by the plan sponsor of such defined ben-
efit plan (or by any member of the plan sponsor’s 
controlled group), irrespective of whether the accrual 
in deferred compensation is expressed in the form of 
a promise, a guarantee, or any other representation. 
‘‘(b) For purposes of this section— 
‘‘(1) The term ‘funded current liability percent-
age’ 
has 
the 
meaning 
provided 
in 
section 
302(d)(8)(B). 
‘‘(2) The term ‘covered deferred compensation 
plan’ 
has 
the 
meaning 
provided 
in 
section 
206(g)(3)(C). 
‘‘(3) The term ‘disqualifed individual’ has the 
meaning provided in section 206(g)(3)(D). 
‘‘(4) The term ‘controlled group’ has the mean-
ing provided in section 302(c)(11)(B)(ii). 
‘‘(c) To the extent that a waiver is granted by the 
Secretary of the Treasury under section 4980H(b)(2) of 
the Internal Revenue Code of 1986 with respect to any
contribution described in subsection (a)(1) or any accrual 
described in subsection (a)(2), the requirements of sub-
section (a) shall not apply with respect to such contribu-
tion or accrual.’’. 
(b) CLERICAL AMENDMENT.—The table of contents 
in section 1 of such Act is amended by striking the item 
relating to section 308 and inserting the following new 
items: 
‘‘Sec. 308. Funding requirements with respect to underfunded single-employer 
defined benefit plan violated by funding of covered deferred 
compensation plan. 
‘‘Sec. 309. Effective dates.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan years begin-
ning on or after January 1, 2006. 
SEC. 202. EXCISE TAX ON FUNDING NONQUALIFIED DE-
FERRED 
COMPENSATION 
PLANS 
WHILE 
MAINTAINING UNDERFUNDED DEFINED BEN-
EFIT PLANS. 
(a) IN GENERAL.—Section 4980H of the Internal 
Revenue Code of 1986 (as added by section 102 of this 
Act) is amended— 
(1) by redesignating subsections (b) through (g) 
as subsections (c) through (h), respectively; and 
(2) by inserting after subsection (a) the fol-
lowing new subsection:
‘‘(b) IMPOSITION OF TAX ON FUNDING OF COVERED 
DEFERRED COMPENSATION PLAN WHILE MAINTAINING 
UNDERFUNDED DEFINED BENEFIT PLAN.— 
‘‘(1) IN GENERAL.—In any case in which, as of 
the valuation date for any plan year of a defined 
benefit plan which is a single-employer plan, the 
funded current liability percentage of such plan is 
less than 75 percent, there is hereby imposed a tax 
on— 
‘‘(A) the contribution by the plan sponsor 
of such defined benefit plan (or any member of 
the plan sponsor’s controlled group), during the 
period beginning with such date and ending the 
the valuation date for the following plan year, 
of any amount to a covered deferred compensa-
tion plan maintained by the plan sponsor (or 
any such member), and 
‘‘(B) the accrual, during such period, of 
any amount of deferred compensation to a dis-
qualified individual under the terms of any cov-
ered deferred compensation plan maintained by 
the plan sponsor of such defined benefit plan, 
irrespective of whether the accrual in deferred 
compensation is expressed in the form of a