‘‘(B) 
EXEMPTION.—Subparagraph 
(A) 
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 re-
quired contribution under section 303) equal 
to— 
‘‘(i) in the case of subparagraph 
(A)(i), the amount of the increase in the 
funding target of the plan (under section 
303) for the plan year attributable to the 
occurrence referred to in subparagraph 
(A), and 
‘‘(ii) in the case of subparagraph 
(A)(ii), the amount sufficient to result in a 
funding target attainment percentage of 60 
percent. 
‘‘(C) 
UNPREDICTABLE
CONTINGENT 
EVENT.—For purposes of this paragraph, the 
term ‘unpredictable contingent event benefit’ 
means any benefit payable solely by reason of— 
‘‘(i) a plant shutdown (or similar 
event, as determined by the Secretary of 
the Treasury), or 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00079
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
‘‘(ii) an event other than the attain-
ment of any age, performance of any serv-
ice, receipt or derivation of any compensa-
tion, or occurrence of death or disability. 
‘‘(2) LIMITATIONS ON PLAN AMENDMENTS IN-
CREASING LIABILITY FOR BENEFITS.— 
‘‘(A) IN GENERAL.—No amendment to a 
defined benefit plan which is a single-employer 
plan which has the effect of increasing liabilities 
of the plan by reason of increases in benefits, 
establishment of new benefits, changing the 
rate of benefit accrual, or changing the rate at 
which benefits become nonforfeitable may take 
effect during any plan year if the adjusted 
funding target attainment percentage for such 
plan year is— 
‘‘(i) less than 80 percent, or 
‘‘(ii) would be less than 80 percent 
taking into account such amendment. 
‘‘(B) 
EXEMPTION.—Subparagraph 
(A) 
shall cease to apply with respect to any plan 
year, effective as of the first day of the plan 
year (or if later, the effective date of the 
amendment), upon payment by the plan sponsor 
of a contribution (in addition to any minimum 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00080
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
required contribution under section 303) equal 
to— 
‘‘(i) in the case of subparagraph 
(A)(i), the amount of the increase in the 
funding target of the plan (under section 
303) for the plan year attributable to the 
amendment, and 
‘‘(ii) in the case of subparagraph 
(A)(ii), the amount sufficient to result in 
an adjusted funding target attainment per-
centage of 80 percent. 
‘‘(C) EXCEPTION FOR CERTAIN BENEFIT 
INCREASES.—Subparagraph (A) shall not apply 
to any amendment which provides for an in-
crease in benefits under a formula which is not 
based on a participant’s compensation, but only 
if the rate of such increase is not in excess of 
the contemporaneous rate of increase in average 
wages of participants covered by the amend-
ment. 
‘‘(3) LIMITATIONS ON ACCELERATED BENEFIT 
DISTRIBUTIONS.— 
‘‘(A) FUNDING PERCENTAGE LESS THAN 
60 PERCENT.—A defined benefit plan which is 
a single-employer plan shall provide that, in any 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00081
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
case in which the plan’s adjusted funding target 
attainment percentage for a plan year is less 
than 60 percent, the plan may not pay any pro-
hibited payment after the valuation date for the 
plan year. 
‘‘(B) BANKRUPTCY.—A defined benefit 
plan which is a single-employer plan shall pro-
vide 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 pay-
ment. The preceding sentence shall not apply 
on or after the date on which the enrolled actu-
ary of the plan certifies that the adjusted fund-
ing target attainment percentage of such plan 
is not less than 100 percent. 
‘‘(C) LIMITED PAYMENT IF PERCENTAGE 
AT LEAST 60 PERCENT BUT LESS THAN 80 PER-
CENT.— 
‘‘(i) 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 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00082
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
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— 
‘‘(I) 50 percent of the amount of 
the payment which could be made 
without regard to this subsection, or 
‘‘(II) the present value (deter-
mined under guidance prescribed by 
the Pension Benefit Guaranty Cor-
poration, using the interest and mor-
tality 
assumptions 
under 
section 
205(g)) of the maximum guarantee 
with respect to the participant under 
section 4022. 
‘‘(ii) ONE-TIME APPLICATION.— 
‘‘(I) IN
GENERAL.—The plan 
shall also provide that only 1 prohib-
ited payment meeting the require-
ments of clause (i) may be made with 
respect to any participant during any 
period of consecutive plan years to 
which the limitations under either 
subparagraph (A) or (B) or this sub-
paragraph applies. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00083
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
‘‘(II) TREATMENT
OF
BENE-
FICIARIES.—For 
purposes 
of 
this 
clause, a participant and any bene-
ficiary on his behalf (including an al-
ternate payee, as defined in section 
206(d)(3)(K)) shall be treated as 1 
participant. If the accrued benefit of a 
participant is allocated to such an al-
ternate payee and 1 or more other 
persons, the amount under clause (i) 
shall be allocated among such persons 
in the same manner as the accrued 
benefit is allocated unless the quali-
fied domestic relations order (as de-
fined in section 206(d)(3)(B)(i)) pro-
vides otherwise. 
‘‘(D) EXCEPTION.—This paragraph 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 ac-
cruals with respect to any participant during 
such period. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00084
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
‘‘(E) PROHIBITED
PAYMENT.—For pur-
pose of this paragraph, the term ‘prohibited 
payment’ means— 
‘‘(i) any payment, in excess of the 
monthly amount paid under a single life 
annuity (plus any social security supple-
ments described in the last sentence of sec-
tion 204(b)(1)(G)), to a participant or ben-
eficiary whose annuity starting date (as de-
fined in section 205(h)(2)) occurs during 
any period a limitation under subpara-
graph (A) or (B) is in effect, 
‘‘(ii) any payment for the purchase of 
an irrevocable commitment from an insurer 
to pay benefits, and 
‘‘(iii) any other payment specified by 
the Secretary of the Treasury by regula-
tions. 
‘‘(4) LIMITATION ON BENEFIT ACCRUALS FOR 
PLANS WITH SEVERE FUNDING SHORTFALLS.— 
‘‘(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 less than 60 percent, benefit accruals 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00085
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
under the plan shall cease as of the valuation 
date for the plan year. 
‘‘(B) 
EXEMPTION.—Subparagraph 
(A) 
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 re-
quired contribution under section 303) equal to 
the amount sufficient to result in an adjusted 
funding target attainment percentage of 60 per-
cent. 
‘‘(5) RULES RELATING TO CONTRIBUTIONS RE-
QUIRED TO AVOID BENEFIT LIMITATIONS.— 
‘‘(A) SECURITY MAY BE PROVIDED.— 
‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the adjusted funding tar-
get attainment percentage shall be deter-
mined by treating as an asset of the plan 
any security provided by a plan sponsor in 
a form meeting the requirements of clause 
(ii). 
‘‘(ii) FORM OF SECURITY.—The secu-
rity required under clause (i) shall consist 
of— 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00086
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
‘‘(I) a bond issued by a corporate 
surety company that is an acceptable 
surety for purposes of section 412 of 
this Act, 
‘‘(II) cash, or United States obli-
gations which mature in 3 years or 
less, held in escrow by a bank or simi-
lar financial institution, or 
‘‘(III) such other form of security 
as is satisfactory to the Secretary of 
the Treasury and the parties involved. 
‘‘(iii) ENFORCEMENT.—Any security 
provided under clause (i) may be perfected 
and enforced at any time after the earlier 
of— 
‘‘(I) the date on which the plan 
terminates, 
‘‘(II) if there is a failure to make 
a payment of the minimum required 
contribution for any plan year begin-
ning after the security is provided, the 
due date for the payment under sec-
tion 303(j), or 
‘‘(III) if the adjusted funding 
target attainment percentage is less 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00087
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
than 60 percent for a consecutive pe-
riod of 7 years, the valuation date for 
the last year in the period. 
‘‘(iv) RELEASE
OF
SECURITY.—The 
security 
shall 
be 
released 
(and 
any 
amounts thereunder shall be refunded to-
gether with any interest accrued thereon) 
at such time as the Secretary of the Treas-
ury may prescribe in regulations, including 
regulations for partial releases of the secu-
rity by reason of increases in the funding 
target attainment percentage. 
‘‘(B) PREFUNDING BALANCE OR FUNDING 
STANDARD CARRYOVER BALANCE MAY NOT BE 
USED.—No prefunding balance or funding 
standard carryover balance under section 303(f) 
may be used under paragraph (1), (2), or (4) 
to satisfy any payment an employer may make 
under any such paragraph to avoid or terminate 
the application of any limitation under such 
paragraph. 
‘‘(C) DEEMED
REDUCTION
OF
FUNDING 
BALANCES.— 
‘‘(i) IN GENERAL.—Subject to clause 
(iii), in any case in which a benefit limita-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00088
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
tion under paragraph (1), (2), (3), or (4) 
would (but for this subparagraph and de-
termined without regard to paragraph 
(1)(B), (2)(B), or (4)(B)) apply to such 
plan for the plan year, the plan sponsor of 
such plan shall be treated for purposes of 
this Act as having made an election under 
section 303(f) to reduce the prefunding 
balance or funding standard carryover bal-
ance by such amount as is necessary for 
such benefit limitation to not apply to the 
plan for such plan year. 
‘‘(ii) EXCEPTION
FOR
INSUFFICIENT 
FUNDING BALANCES.—Clause (i) shall not 
apply with respect to a benefit limitation 
for any plan year if the application of 
clause (i) would not result in the benefit 
limitation not applying for such plan year. 
‘‘(iii) 
RESTRICTIONS
OF
CERTAIN 
RULES
TO
COLLECTIVELY
BARGAINED 
PLANS.—With respect to any benefit limi-
tation under paragraph (1), (2), or (4), 
clause (i) shall only apply in the case of a 
plan maintained pursuant to 1 or more col-
lective bargaining agreements between em-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00089
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
ployee representatives and 1 or more em-
ployers. 
‘‘(6) NEW PLANS.—Paragraphs (1), (2) and (4) 
shall not apply to a plan for the first 5 plan years 
of the plan. For purposes of this paragraph, the ref-
erence in this paragraph to a plan shall include a 
reference to any predecessor plan. 
‘‘(7) PRESUMED
UNDERFUNDING
FOR
PUR-
POSES OF BENEFIT LIMITATIONS.— 
‘‘(A) 
PRESUMPTION
OF
CONTINUED 
UNDERFUNDING.—In any case in which a ben-
efit limitation under paragraph (1), (2), (3), or 
(4) has been applied to a plan with respect to 
the plan year preceding the current plan year, 
the adjusted funding target attainment percent-
age of the plan for the current plan year shall 
be presumed to be equal to the adjusted fund-
ing target attainment percentage of the plan for 
the preceding plan year until the enrolled actu-
ary of the plan certifies the actual adjusted 
funding target attainment percentage of the 
plan for the current plan year. 
‘‘(B) PRESUMPTION
OF
UNDERFUNDING 
AFTER 10TH MONTH.—In any case in which no 
certification of the adjusted funding target at-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00090
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
tainment percentage for the current plan year 
is made with respect to the plan before the first 
day of the 10th month of such year, for pur-
poses of paragraphs (1), (2), (3), and (4), such 
first day shall be deemed, for purposes of such 
paragraph, 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. 
‘‘(C) PRESUMPTION
OF
UNDERFUNDING 
AFTER
4TH
MONTH
FOR
NEARLY
UNDER-
FUNDED PLANS.—In any case in which— 
‘‘(i) a benefit limitation under para-
graph (1), (2), (3), or (4) did not apply to 
a plan with respect to the plan year pre-
ceding the current plan year, but the ad-
justed funding target attainment percent-
age of the plan for such preceding plan 
year was not more than 10 percentage 
points greater than the percentage which 
would have caused such paragraph to 
apply to the plan with respect to such pre-
ceding plan year, and 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00091
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
‘‘(ii) as of the first day of the 4th 
month of the current plan year, the en-
rolled actuary of the plan has not certified 
the actual adjusted funding target attain-
ment percentage of the plan for the cur-
rent plan year, 
until the enrolled actuary so certifies, such first 
day shall be deemed, for purposes of such para-
graph, to be the valuation date of the plan for 
the current plan year and the adjusted funding 
target attainment percentage of the plan as of 
such first day shall, for purposes of such para-
graph, be presumed to be equal to 10 percent-
age points less than the adjusted funding target 
attainment percentage of the plan for such pre-
ceding plan year. 
‘‘(8) TREATMENT OF PLAN AS OF CLOSE OF 
PROHIBITED OR CESSATION PERIOD.—For purposes 
of applying this part— 
‘‘(A) OPERATION
OF
PLAN
AFTER
PE-
RIOD.—Unless the plan provides otherwise, pay-
ments 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 paragraph (3) or (4) applies. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00092
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
‘‘(B) TREATMENT
OF
AFFECTED
BENE-
FITS.—Nothing in this paragraph shall be con-
strued as affecting the plan’s treatment of ben-
efits which would have been paid or accrued but 
for this subsection. 
‘‘(9) TERMS RELATING TO FUNDING TARGET 
ATTAINMENT
PERCENTAGE.—For purposes of this 
subsection— 
‘‘(A) IN
GENERAL.—The term ‘funding 
target attainment percentage’ has the same 
meaning given such term by section 303(d)(2). 
‘‘(B) ADJUSTED
FUNDING
TARGET
AT-
TAINMENT PERCENTAGE.—The term ‘adjusted 
funding target attainment percentage’ means 
the funding target attainment percentage which 
is determined under subparagraph (A) by in-
creasing each of the amounts under subpara-
graphs (A) and (B) of section 303(d)(2) by the 
aggregate amount of purchases of annuities for 
employees other than highly compensated em-
ployees (as defined in section 414(q) of the In-
ternal Revenue Code of 1986) which were made 
by the plan during the preceding 2 plan years. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00093
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
‘‘(C) APPLICATION TO PLANS WHICH ARE 
FULLY FUNDED WITHOUT REGARD TO REDUC-
TIONS FOR FUNDING BALANCES.— 
‘‘(i) IN GENERAL.—In the case of a 
plan for any plan year, if the funding tar-
get attainment percentage is 100 percent 
or more (determined without regard to this 
subparagraph and without regard to the 
reduction in the value of assets under sec-
tion 303(f)(4)), the funding target attain-
ment percentage for purposes of subpara-
graphs (A) and (B) shall be determined 
without regard to such reduction. 
‘‘(ii) TRANSITION
RULE.—Clause (i) 
shall be applied to plan years beginning 
after 2007 and before 2011 by substituting 
for ‘100 percent’ the applicable percentage 
determined in accordance with the fol-
lowing table: 
‘‘In the case of a plan year 
The applicable 
beginning in calendar year: 
percentage is 
2008 ...................................................................................................
2009 ...................................................................................................
2010 ...................................................................................................
96. 
‘‘(iii) LIMITATION.—Clause (ii) shall 
not apply with respect to any plan year 
after 2008 unless the funding target at-
tainment percentage (determined without 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00094
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
regard to this subparagraph) 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 clause (ii). 
‘‘(10) SPECIAL RULE FOR 2008.—For purposes 
of this subsection, in the case of plan years begin-
ning in 2008, the funding target attainment percent-
age for the preceding plan year may be determined 
using such methods of estimation as the Secretary 
of the Treasury may provide.’’. 
(b) NOTICE REQUIREMENT.— 
(1) IN GENERAL.—Section 101 of such Act (29 
U.S.C. 1021) is amended— 
(A) by redesignating subsection (j) as sub-
section (k); and 
(B) by inserting after subsection (i) the 
following new subsection: 
‘‘(j) NOTICE OF FUNDING-BASED LIMITATION ON 
CERTAIN FORMS OF DISTRIBUTION.—The plan adminis-
trator of a single-employer plan shall provide a written no-
tice to plan participants and beneficiaries within 30 
days— 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00095
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
‘‘(1) after the plan has become subject to a re-
striction described in paragraph (1) or (3) of section 
206(g)), 
‘‘(2) in the case of a plan to which section 
206(g)(4) applies, after the valuation date for the 
plan year described in section 206(g)(4)(B) for 
which the plan’s adjusted funding target attainment 
percentage for the plan year is less than 60 percent 
(or, if earlier, the date such percentage is deemed to 
be less than 60 percent under section 206(g)(7)), 
and 
‘‘(3) at such other time as may be determined 
by the Secretary of the Treasury. 
The notice required to be provided under this subsection 
shall be in writing, except that such notice may be in elec-
tronic or other form to the extent that such form is rea-
sonably accessible to the recipient.’’. 
(2) ENFORCEMENT.—Section 502(c)(4) of such 
Act (29 U.S.C. 1132(c)(4)) is amended by striking 
‘‘section 302(b)(7)(F)(iv)’’ and inserting ‘‘section 
101(j) or 302(b)(7)(F)(iv)’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to plan years beginning after 
December 31, 2007. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00096
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
(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 
(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. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00097
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
SEC. 104. SPECIAL RULES FOR MULTIPLE EMPLOYER 
PLANS OF CERTAIN COOPERATIVES. 
(a) GENERAL RULE.—Except as provided in this sec-
tion, if a plan in existence on July 26, 2005, was an eligi-
ble cooperative plan for its plan year which includes such 
date, the amendments made by this subtitle and subtitle 
B shall not apply to plan years beginning before the earlier 
of— 
(1) the first plan year for which the plan ceases 
to be an eligible cooperative plan, or 
(2) January 1, 2017. 
(b) 
INTEREST
RATE.—In 
applying 
section 
302(b)(5)(B) of the Employee Retirement Income Secu-
rity Act of 1974 and section 412(b)(5)(B) of the Internal 
Revenue Code of 1986 (as in effect before the amendments 
made by this subtitle and subtitle B) to an eligible cooper-
ative plan for plan years beginning after December 31, 
2007, and before the first plan year to which such amend-
ments apply, the third segment rate determined under sec-
tion 
303(h)(2)(C)(iii) 
of 
such 
Act 
and 
section 
430(h)(2)(C)(iii) of such Code (as added by such amend-
ments) shall be used in lieu of the interest rate otherwise 
used. 
(c) ELIGIBLE COOPERATIVE PLAN DEFINED.—For 
purposes of this section, a plan shall be treated as an eligi-
ble cooperative plan for a plan year if the plan is main-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00098
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
tained by more than 1 employer and at least 85 percent 
of the employers are— 
(1) rural cooperatives (as defined in section 
401(k)(7)(B) of such Code without regard to clause 
(iv) thereof), or 
(2) organizations which are— 
(A) cooperative organizations described in 
section 1381(a) of such Code which are more 
than 50-percent owned by agricultural pro-
ducers or by cooperatives owned by agricultural 
producers, or 
(B) more than 50-percent owned, or con-
trolled by, one or more cooperative organiza-
tions described in subparagraph (A). 
A plan shall also be treated as an eligible cooperative plan 
for any plan year for which it is described in section 
210(a) of the Employee Retirement Income Security Act 
of 1974 and is maintained by a rural telephone cooperative 
association described in section 3(40)(B)(v) of such Act. 
SEC. 105. TEMPORARY RELIEF FOR CERTAIN PBGC SETTLE-
MENT PLANS. 
(a) GENERAL RULE.—Except as provided in this sec-
tion, if a plan in existence on July 26, 2005, was a PBGC 
settlement plan as of such date, the amendments made 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00099
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
100 
by this subtitle and subtitle B shall not apply to plan years 
beginning before January 1, 2014. 
(b) 
INTEREST
RATE.—In 
applying 
section 
302(b)(5)(B) of the Employee Retirement Income Secu-
rity Act of 1974 and section 412(b)(5)(B) of the Internal 
Revenue Code of 1986 (as in effect before the amendments 
made by this subtitle and subtitle B), to a PBGC settle-
ment plan for plan years beginning after December 31, 
2007, and before January 1, 2014, the third segment rate 
determined under section 303(h)(2)(C)(iii) of such Act 
and section 430(h)(2)(C)(iii) of such Code (as added by 
such amendments) shall be used in lieu of the interest rate 
otherwise used. 
(c) PBGC SETTLEMENT PLAN.—For purposes of 
this section, the term ‘‘PBGC settlement plan’’ means a 
defined benefit plan (other than a multiemployer plan) to 
which section 302 of such Act and section 412 of such 
Code apply and— 
(1) which was sponsored by an employer which 
was in bankruptcy, giving rise to a claim by the 
Pension Benefit Guaranty Corporation of not great-
er than $150,000,000, and the sponsorship of which 
was assumed by another employer that was not a 
member of the same controlled group as the bank-
rupt sponsor and the claim of the Pension Benefit 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00100
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
101 
Guaranty Corporation was settled or withdrawn in 
connection with the assumption of the sponsorship, 
or 
(2) which, by agreement with the Pension Ben-
efit Guaranty Corporation, was spun off from a plan 
subsequently terminated by such Corporation under 
section 4042 of the Employee Retirement Income 
Security Act of 1974. 
SEC. 106. SPECIAL RULES FOR PLANS OF CERTAIN GOV-
ERNMENT CONTRACTORS. 
(a) GENERAL RULE.—Except as provided in this sec-
tion, if a plan is an eligible government contractor plan, 
this subtitle and subtitle B shall not apply to plan years 
beginning before the earliest of— 
(1) the first plan year for which the plan ceases 
to be an eligible government contractor plan, 
(2) the effective date of the Cost Accounting 
Standards Pension Harmonization Rule, or 
(3) January 1, 2011. 
(b) 
INTEREST
RATE.—In 
applying 
section 
302(b)(5)(B) of the Employee Retirement Income Secu-
rity Act of 1974 and section 412(b)(5)(B) of the Internal 
Revenue Code of 1986 (as in effect before the amendments 
made by this subtitle and subtitle B) to an eligible govern-
ment contractor plan for plan years beginning after De-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00101
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
102 
cember 31, 2007, and before the first plan year to which 
such amendments apply, the third segment rate deter-
mined under section 303(h)(2)(C)(iii) of such Act and sec-
tion 430(h)(2)(C)(iii) of such Code (as added by such 
amendments) shall be used in lieu of the interest rate oth-
erwise used. 
(c) ELIGIBLE GOVERNMENT CONTRACTOR PLAN DE-
FINED.—For purposes of this section, a plan shall be 
treated as an eligible government contractor plan if it is 
maintained by a corporation or a member of the same af-
filiated group (as defined by section 1504(a) of the Inter-
nal Revenue Code of 1986), whose primary source of rev-
enue is derived from business performed under contracts 
with the United States that are subject to the Federal Ac-
quisition Regulations (Chapter 1 of Title 48, C.F.R.) and 
that are also subject to the Defense Federal Acquisition 
Regulation Supplement (Chapter 2 of Title 48, C.F.R.), 
and whose revenue derived from such business in the pre-
vious fiscal year exceeded $5,000,000,000, and whose pen-
sion plan costs that are assignable under those contracts 
are subject to sections 412 and 413 of the Cost Account-
ing Standards (48 C.F.R. 9904.412 and 9904.413). 
(d) COST ACCOUNTING STANDARDS PENSION HAR-
MONIZATION RULE.—The Cost Accounting Standards 
Board shall review and revise sections 412 and 413 of the 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00102
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
103 
Cost Accounting Standards (48 C.F.R. 9904.412 and 
9904.413) to harmonize the minimum required contribu-
tion under the Employee Retirement Income Security Act 
of 1974 of eligible government contractor plans and gov-
ernment reimbursable pension plan costs not later than 
January 1, 2010. Any final rule adopted by the Cost Ac-
counting Standards Board shall be deemed the Cost Ac-
counting Standards Pension Harmonization Rule. 
SEC. 107. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) MISCELLANEOUS AMENDMENTS TO TITLE I.— 
Subtitle B of title I of such Act (29 U.S.C. 1021 et seq.) 
is amended— 
(1) in section 101(d)(3), by striking ‘‘section 
302(e)’’ and inserting ‘‘section 303(j)’’; 
(2) in section 103(d)(8)(B), by striking ‘‘the re-
quirements of section 302(c)(3)’’ and inserting ‘‘the 
applicable requirements of sections 303(h) and 
304(c)(3)’’; 
(3) in section 103(d), by striking paragraph 
(11) and inserting the following: 
‘‘(11) If the current value of the assets of the 
plan is less than 70 percent of— 
‘‘(A) in the case of a single-employer plan, 
the funding target (as defined in section 
303(d)(1)) of the plan, or 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00103
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
104 
‘‘(B) in the case of a multiemployer plan, 
the current liability (as defined in section 
304(c)(6)(D)) under the plan, 
the percentage which such value is of the amount 
described in subparagraph (A) or (B).’’; 
(4) in section 203(a)(3)(C), by striking ‘‘section 
302(c)(8)’’ and inserting ‘‘section 302(d)(2)’’; 
(5) in section 204(g)(1), by striking ‘‘section 
302(c)(8)’’ and inserting ‘‘section 302(d)(2)’’; 
(6) in section 204(i)(2)(B), by striking ‘‘section 
302(c)(8)’’ and inserting ‘‘section 302(d)(2)’’; 
(7) in section 204(i)(3), by striking ‘‘funded 
current liability percentage (within the meaning of 
section 302(d)(8) of this Act)’’ and inserting ‘‘fund-
ing target attainment percentage (as defined in sec-
tion 303(d)(2))’’; 
(8) in section 204(i)(4), by striking ‘‘section 
302(c)(11)(A), 
without 
regard 
to 
section 
302(c)(11)(B)’’ and inserting ‘‘section 302(b)(1), 
without regard to section 302(b)(2)’’; 
(9) in section 206(e)(1), by striking ‘‘section 
302(d)’’ and inserting ‘‘section 303(j)(4)’’, and by 
striking ‘‘section 302(e)(5)’’ and inserting ‘‘section 
303(j)(4)(E)(i)’’; 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00104
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
105 
(10) in section 206(e)(3), by striking ‘‘section 
302(e) by reason of paragraph (5)(A) thereof’’ and 
inserting ‘‘section 303(j)(3) by reason of section 
303(j)(4)(A)’’; and 
(11) in sections 101(e)(3), 403(c)(1), and 
408(b)(13), by striking ‘‘American Jobs Creation 
Act of 2004’’ and inserting ‘‘Pension Protection Act 
of 2006’’. 
(b) MISCELLANEOUS AMENDMENTS TO TITLE IV.— 
Title IV of such Act is amended— 
(1) 
in 
section 
4001(a)(13) 
(29 
U.S.C. 
1301(a)(13)), by striking ‘‘302(c)(11)(A)’’ and in-
serting ‘‘302(b)(1)’’, by striking ‘‘412(c)(11)(A)’’ 
and 
inserting 
‘‘412(b)(1)’’, 
by 
striking 
‘‘302(c)(11)(B)’’ and inserting ‘‘302(b)(2)’’, and by 
striking ‘‘412(c)(11)(B)’’ and inserting ‘‘412(b)(2)’’; 
(2) 
in 
section 
4003(e)(1) 
(29 
U.S.C. 
1303(e)(1)), by striking ‘‘302(f)(1)(A) and (B)’’ and 
inserting ‘‘303(k)(1)(A) and (B)’’, and by striking 
‘‘412(n)(1)(A) 
and 
(B)’’ 
and 
inserting 
‘‘430(k)(1)(A) and (B)’’; 
(3) 
in 
section 
4010(b)(2) 
(29 
U.S.C. 
1310(b)(2)), by striking ‘‘302(f)(1)(A) and (B)’’ and 
inserting ‘‘303(k)(1)(A) and (B)’’, and by striking 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00105
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
106 
‘‘412(n)(1)(A) 
and 
(B)’’ 
and 
inserting 
‘‘430(k)(1)(A) and (B)’’; 
(4) in section 4062(c) (29 U.S.C. 1362(c)), by 
striking paragraphs (1), (2), and (3) and inserting 
the following: 
‘‘(1) the sum of the shortfall amortization 
charge (within the meaning of section 303(c)(1) of 
this Act and 430(d)(1) of the Internal Revenue Code 
of 1986) with respect to the plan (if any) for the 
plan year in which the termination date occurs, plus 
the aggregate total of shortfall amortization install-
ments (if any) determined for succeeding plan years 
under section 303(c)(2) of this Act and section 
430(d)(2) of such Code (which, for purposes of this 
subparagraph, shall include any increase in such 
sum which would result if all applications for waiv-
ers of the minimum funding standard under section 
302(c) of this Act and section 412(c) of such Code 
which are pending with respect to such plan were 
denied and if no additional contributions (other than 
those already made by the termination date) were 
made for the plan year in which the termination 
date occurs or for any previous plan year), and 
‘‘(2) the sum of the waiver amortization charge 
(within the meaning of section 303(e)(1) of this Act 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00106
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
107 
and 430(e)(1) of the Internal Revenue Code of 
1986) with respect to the plan (if any) for the plan 
year in which the termination date occurs, plus the 
aggregate total of waiver amortization installments 
(if any) determined for succeeding plan years under 
section 303(e)(2) of this Act and section 430(e)(2) 
of such Code,’’; 
(5) in section 4071 (29 U.S.C. 1371), by strik-
ing ‘‘302(f)(4)’’ and inserting ‘‘303(k)(4)’’; 
(6) in section 4243(a)(1)(B) (29 U.S.C. 
1423(a)(1)(B)), by striking ‘‘302(a)’’ and inserting 
‘‘304(a)’’, and, in clause (i), by striking ‘‘302(a)’’ 
and inserting ‘‘304(a)’’; 
(7) 
in 
section 
4243(f)(1) 
(29 
U.S.C. 
1423(f)(1)), by striking ‘‘303(a)’’ and inserting 
‘‘302(c)’’; 
(8) 
in 
section 
4243(f)(2) 
(29 
U.S.C. 
1423(f)(2)), by striking ‘‘303(c)’’ and inserting 
‘‘302(c)(3)’’; and 
(9) in section 4243(g) (29 U.S.C. 1423(g)), by 
striking ‘‘302(c)(3)’’ and inserting ‘‘304(c)(3)’’. 
(c) AMENDMENTS TO REORGANIZATION PLAN NO. 4 
OF 1978.—Section 106(b)(ii) of Reorganization Plan No. 
4 of 1978 (ratified and affirmed as law by Public Law 
98–532 (98 Stat. 2705)) is amended by striking 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00107
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
108 
‘‘302(c)(8)’’ and inserting ‘‘302(d)(2)’’, by striking 
‘‘304(a) and (b)(2)(A)’’ and inserting ‘‘304(d)(1), (d)(2), 
and (e)(2)(A)’’, and by striking ‘‘412(c)(8), (e), and 
(f)(2)(A)’’ and inserting ‘‘412(c)(2) and 431(d)(1), (d)(2), 
and (e)(2)(A)’’. 
(d) REPEAL
OF EXPIRED AUTHORITY
FOR TEM-
PORARY VARIANCES.—Section 207 of such Act (29 U.S.C. 
1057) is repealed. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after 2007. 
Subtitle B—Amendments to 
Internal Revenue Code of 1986 
SEC. 111. MINIMUM FUNDING STANDARDS. 
(a) NEW MINIMUM FUNDING STANDARDS.—Section 
412 of the Internal Revenue Code of 1986 (relating to 
minimum funding standards) is amended to read as fol-
lows: 
‘‘SEC. 412. MINIMUM FUNDING STANDARDS. 
‘‘(a) REQUIREMENT TO MEET MINIMUM FUNDING 
STANDARD.— 
‘‘(1) IN GENERAL.—A plan to which this sec-
tion applies shall satisfy the minimum funding 
standard applicable to the plan for any plan year. 
‘‘(2) MINIMUM FUNDING STANDARD.—For pur-
poses of paragraph (1), a plan shall be treated as 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00108
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
109 
satisfying the minimum funding standard for a plan 
year if— 
‘‘(A) in the case of a defined benefit plan 
which is not a multiemployer plan, the employer 
makes contributions to or under the plan for 
the plan year which, in the aggregate, are not 
less than the minimum required contribution 
determined under section 430 for the plan for 
the plan year, 
‘‘(B) in the case of a money purchase plan 
which is not a multiemployer plan, the employer 
makes contributions to or under the plan for 
the plan year which are required under the 
terms of the plan, and 
‘‘(C) in the case of a multiemployer plan, 
the employers make contributions to or under 
the plan for any plan year which, in the aggre-
gate, are sufficient to ensure that the plan does 
not have an accumulated funding deficiency 
under section 431 as of the end of the plan 
year. 
‘‘(b) LIABILITY FOR CONTRIBUTIONS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the amount of any contribution required 
by this section (including any required installments 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00109
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
110 
under paragraphs (3) and (4) of section 430(j)) 
shall be paid by the employer responsible for making 
contributions to or under the plan. 
‘‘(2) JOINT
AND
SEVERAL
LIABILITY
WHERE 
EMPLOYER
MEMBER
OF
CONTROLLED
GROUP.—If 
the employer referred to in paragraph (1) is a mem-
ber of a controlled group, each member of such 
group shall be jointly and severally liable for pay-
ment of such contributions. 
‘‘(c) VARIANCE FROM MINIMUM FUNDING STAND-
ARDS.— 
‘‘(1) WAIVER
IN
CASE
OF
BUSINESS
HARD-
SHIP.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) an employer is (or in the case of 
a multiemployer plan, 10 percent or more 
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 plan), and 
‘‘(ii) application of the standard would 
be adverse to the interests of plan partici-
pants in the aggregate, 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00110
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
111 
the Secretary may, subject to subparagraph 
(C), waive the requirements of subsection (a) 
for such year with respect to all or any portion 
of the minimum funding standard. The Sec-
retary 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 defined benefit 
plan which is not a multiemployer plan, 
the minimum required contribution under 
section 430 for the plan year shall be re-
duced by the amount of the waived funding 
deficiency and such amount shall be amor-
tized as required under section 430(e), and 
‘‘(ii) in the case of a multiemployer 
plan, the funding standard account shall 
be credited under section 431(b)(3)(C) 
with the amount of the waived funding de-
ficiency and such amount shall be amor-
tized 
as 
required 
under 
section 
431(b)(2)(C). 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00111
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
112 
‘‘(C) WAIVER
OF
AMORTIZED
PORTION 
NOT ALLOWED.—The Secretary 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 
waived funding deficiency 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. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00112
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
113 
‘‘(3) WAIVED FUNDING DEFICIENCY.—For pur-
poses of this section and part III of this subchapter, 
the term ‘waived funding deficiency’ means the por-
tion of the minimum funding standard under sub-
section (a) (determined without regard to the waiv-
er) for a plan year waived by the Secretary and not 
satisfied by employer 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 
may require an employer maintaining a de-
fined benefit plan which is a single-em-
ployer plan (within the meaning of section 
4001(a)(15) of the Employee Retirement 
Income Security Act of 1974) 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-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00113
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
114 
sor 
(within 
the 
meaning 
of 
section 
4001(a)(13) of the Employee Retirement 
Income Security Act of 1974), or a mem-
ber of such sponsor’s controlled group 
(within the meaning of section 4001(a)(14) 
of such Act). 
‘‘(B) CONSULTATION WITH THE PENSION 
BENEFIT GUARANTY CORPORATION.—Except as 
provided in subparagraph (C), the Secretary 
shall, before granting or modifying a waiver 
under this subsection with respect to a plan de-
scribed 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 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00114
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
115 
section 3(4) of the Employee Retire-
ment Income Security Act of 1974) 
representing participants in the plan 
which are submitted in writing to the 
Secretary in connection with such ap-
plication. 
Information provided to the Corporation under 
this subparagraph shall be considered tax re-
turn information and subject to the safe-
guarding and reporting requirements of section 
6103(p). 
‘‘(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 aggregate unpaid min-
imum required contributions (within 
the meaning of section 4971(c)(4)) for 
the plan year and all preceding plan 
years, and 
‘‘(II) the present value of all 
waiver amortization installments de-
termined for the plan year and suc-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00115
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
116 
ceeding plan years under section 
430(e)(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 defined benefit plan 
which is not a multiemployer plan, no waiver 
may be granted under this subsection with re-
spect to any plan for any plan year unless an 
application therefor is submitted to the Sec-
retary 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 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00116
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
117 
defined benefit plan which is not a multiem-
ployer plan, if an employer is a member of a 
controlled group, the temporary substantial 
business hardship requirements of paragraph 
(1) shall be treated as met only if such require-
ments 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 may provide that an analysis of 
a trade or business or industry of a member 
need not be conducted if the Secretary deter-
mines such analysis is not necessary because 
the taking into account of such member would 
not significantly affect the determination under 
this paragraph. 
‘‘(6) ADVANCE NOTICE.— 
‘‘(A) IN GENERAL.—The Secretary shall, 
before granting a waiver under this subsection, 
require each applicant to provide evidence satis-
factory to the Secretary that the applicant has 
provided notice of the filing of the application 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00117
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
118 
for such waiver to each affected party (as de-
fined in section 4001(a)(21) of the Employee 
Retirement Income Security Act of 1974). Such 
notice shall include a description of the extent 
to which the plan is funded for benefits which 
are guaranteed under title IV of the Employee 
Retirement Income Security Act of 1974 and 
for benefit liabilities. 
‘‘(B) CONSIDERATION
OF
RELEVANT
IN-
FORMATION.—The Secretary shall consider any 
relevant information provided by a person to 
whom notice was given under subparagraph 
(A). 
‘‘(7) RESTRICTION ON PLAN AMENDMENTS.— 
‘‘(A) IN GENERAL.—No amendment of a 
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 nonforfeit-
able under the plan shall be adopted if a waiver 
under this subsection or an extension of time 
under section 431(d) is in effect with respect to 
the plan, or if a plan amendment described in 
subsection (d)(2) has been made at any time in 
the preceding 12 months (24 months in the 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00118
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
119 
case of a multiemployer plan). If a plan is 
amended in violation of the preceding 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. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply to any plan amendment which— 
‘‘(i) the Secretary determines to be 
reasonable and which provides for only de 
minimis increases in the liabilities of the 
plan, 
‘‘(ii) only repeals an amendment de-
scribed in subsection (d)(2), or 
‘‘(iii) is required as a condition of 
qualification under part I of subchapter D, 
of chapter 1. 
‘‘(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. 
‘‘(2) CERTAIN
RETROACTIVE
PLAN
AMEND-
MENTS.—For purposes of this section, any amend-
ment applying to a plan year which— 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00119
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
120 
‘‘(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 notifying him 
of such amendment and the Secretary has approved 
such amendment, or within 90 days after the date 
on which such notice was filed, failed to disapprove 
such amendment. No amendment described in this 
subsection shall be approved by the Secretary unless 
the Secretary determines that such amendment is 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00120
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
121 
necessary because of a temporary substantial busi-
ness hardship (as determined under subsection 
(c)(2)) or a substantial business hardship (as so de-
termined) in the case of a multiemployer plan and 
that a waiver under subsection (c) (or, in the case 
of a multiemployer plan, any extension of the amor-
tization period under section 431(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. 
‘‘(e) PLANS TO WHICH SECTION APPLIES.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (4), this section applies to a plan if, 
for any plan year beginning on or after the effective 
date of this section for such plan under the Em-
ployee Retirement Income Security Act of 1974— 
‘‘(A) such plan included a trust which 
qualified (or was determined by the Secretary 
to have qualified) under section 401(a), or 
‘‘(B) such plan satisfied (or was deter-
mined by the Secretary to have satisfied) the 
requirements of section 403(a). 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00121
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
122 
‘‘(2) EXCEPTIONS.—This section shall not 
apply to— 
‘‘(A) any profit-sharing or stock bonus 
plan, 
‘‘(B) any insurance contract plan described 
in paragraph (3), 
‘‘(C) any governmental plan (within the 
meaning of section 414(d)), 
‘‘(D) any church plan (within the meaning 
of section 414(e)) with respect to which the 
election provided by section 410(d) has not been 
made, 
‘‘(E) any plan which has not, at any time 
after September 2, 1974, provided for employer 
contributions, or 
‘‘(F) any plan established and maintained 
by a society, order, or association described in 
section 501(c)(8) or (9), if no part of the con-
tributions to or under such plan are made by 
employers of participants in such plan. 
No plan described in subparagraph (C), (D), or (F) 
shall be treated as a qualified plan for purposes of 
section 401(a) unless such plan meets the require-
ments of section 401(a)(7) as in effect on September 
1, 1974. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00122
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
123 
‘‘(3) CERTAIN INSURANCE CONTRACT PLANS.— 
A plan is described in this paragraph if— 
‘‘(A) the plan is funded exclusively by the 
purchase of individual insurance contracts, 
‘‘(B) such contracts provide for level an-
nual premium payments to be paid extending 
not later than the retirement age for each indi-
vidual participating in the plan, and com-
mencing with the date the individual became a 
participant in the plan (or, in the case of an in-
crease in benefits, commencing at the time such 
increase becomes effective), 
‘‘(C) benefits provided by the plan are 
equal to the benefits provided under each con-
tract at normal retirement age under the plan 
and are guaranteed by an insurance carrier (li-
censed under the laws of a State to do business 
with the plan) to the extent premiums have 
been paid, 
‘‘(D) premiums payable for the plan year, 
and all prior plan years, under such contracts 
have been paid before lapse or there is rein-
statement of the policy, 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00123
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
124 
‘‘(E) no rights under such contracts have 
been subject to a security interest at any time 
during the plan year, and 
‘‘(F) no policy loans are outstanding at 
any time during the plan year. 
A plan funded exclusively by the purchase of group 
insurance contracts which is determined under regu-
lations prescribed by the Secretary to have the same 
characteristics as contracts described in the pre-
ceding sentence shall be treated as a plan described 
in this paragraph. 
‘‘(4) CERTAIN
TERMINATED
MULTIEMPLOYER 
PLANS.—This section applies with respect to a ter-
minated multiemployer plan to which section 4021 
of the Employee Retirement Income Security Act of 
1974 applies until the last day of the plan year in 
which the plan terminates (within the meaning of 
section 4041A(a)(2) of such Act).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after De-
cember 31, 2007. 
SEC. 112. FUNDING RULES FOR SINGLE-EMPLOYER DE-
FINED BENEFIT PENSION PLANS. 
(a) IN GENERAL.—Subchapter D of chapter 1 of the 
Internal Revenue Code of 1986 (relating to deferred com-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00124
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
125 
pensation, etc.) is amended by adding at the end the fol-
lowing new part: 
‘‘PART III—MINIMUM FUNDING STANDARDS FOR 
SINGLE-EMPLOYER DEFINED BENEFIT PEN-
SION PLANS 
‘‘SEC. 430. MINIMUM FUNDING STANDARDS FOR SINGLE- 
EMPLOYER 
DEFINED 
BENEFIT 
PENSION 
PLANS. 
‘‘(a) MINIMUM
REQUIRED
CONTRIBUTION.—For 
purposes of this section and section 412(a)(2)(A), except 
as provided in subsection (f), the term ‘minimum required 
contribution’ means, with respect to any plan year of a 
defined benefit plan which is not a multiemployer plan— 
‘‘(1) in any case in which the value of plan as-
sets of the plan (as reduced under subsection 
(f)(4)(B)) is less than the funding target of the plan 
for the plan year, the sum of— 
‘‘(A) the target normal cost of the plan for 
the plan year, 
‘‘(B) the shortfall amortization charge (if 
any) for the plan for the plan year determined 
under subsection (c), and 
‘‘(C) the waiver amortization charge (if 
any) for the plan for the plan year as deter-
mined under subsection (e); 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00125
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
126 
‘‘(2) in any case in which the value of plan as-
sets of the plan (as reduced under subsection 
(f)(4)(B)) equals or exceeds the funding target of 
the plan for the plan year, the target normal cost of 
the plan for the plan year reduced (but not below 
zero) by such excess. 
‘‘(b) TARGET NORMAL COST.—For purposes of this 
section, except as provided in subsection (i)(2) with re-
spect to plans in at-risk status, the term ‘target normal 
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. For purposes of this 
subsection, if any benefit attributable to services per-
formed in a preceding plan year is increased by reason 
of any increase in compensation during the current plan 
year, the increase in such benefit shall be treated as hav-
ing accrued during the current plan year. 
‘‘(c) SHORTFALL AMORTIZATION CHARGE.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the shortfall amortization charge for a plan for 
any plan year is the aggregate total (not less than 
zero) 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. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00126
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
127 
‘‘(2) 
SHORTFALL
AMORTIZATION
INSTALL-
MENT.—For purposes of paragraph (1)— 
‘‘(A) DETERMINATION.—The shortfall am-
ortization installments are the amounts nec-
essary to amortize the shortfall amortization 
base of the plan for any plan year in level an-
nual installments over the 7-plan-year period 
beginning with such plan year. 
‘‘(B) 
SHORTFALL
INSTALLMENT.—The 
shortfall amortization installment for any plan 
year in the 7-plan-year period under subpara-
graph (A) with respect to any shortfall amorti-
zation base is the annual installment deter-
mined under subparagraph (A) for that year for 
that base. 
‘‘(C) SEGMENT
RATES.—In determining 
any shortfall amortization installment under 
this paragraph, the plan sponsor shall use the 
segment rates determined under subparagraph 
(C) of subsection (h)(2), applied under rules 
similar to the rules of subparagraph (B) of sub-
section (h)(2). 
‘‘(3) SHORTFALL
AMORTIZATION
BASE.—For 
purposes of this section, the shortfall amortization 
base of a plan for a plan year is— 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00127
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
128 
‘‘(A) the funding shortfall of such plan for 
such plan year, minus 
‘‘(B) the present value (determined using 
the segment rates determined under subpara-
graph (C) of subsection (h)(2), applied under 
rules similar to the rules of subparagraph (B) 
of subsection (h)(2)) of the aggregate total of 
the shortfall amortization installments and 
waiver amortization installments which have 
been determined for such plan year and any 
succeeding plan year with respect to the short-
fall amortization bases and waiver amortization 
bases of the plan for any plan year 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 
(as reduced under subsection (f)(4)(B)) for the 
plan year which are held by the plan on the 
valuation date. 
‘‘(5) EXEMPTION FROM NEW SHORTFALL AM-
ORTIZATION BASE.— 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00128
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
129 
‘‘(A) IN GENERAL.—In any case in which 
the value of plan assets of the plan (as reduced 
under subsection (f)(4)(A)) is equal to or great-
er than the funding target of the plan for the 
plan year, the shortfall amortization base of the 
plan for such plan year shall be zero. 
‘‘(B) TRANSITION RULE.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clauses (iii) and (iv), in the case 
of plan years beginning after 2007 and be-
fore 2011, only the applicable percentage 
of the funding target shall be taken into 
account under paragraph (3)(A) in deter-
mining the funding shortfall for the plan 
year for purposes of subparagraph (A). 
‘‘(ii) APPLICABLE PERCENTAGE.—For 
purposes of subparagraph (A), the applica-
ble percentage shall be determined in ac-
cordance with the following table: 
‘‘In the case of a plan year 
The applicable 
beginning in calendar year: 
percentage is 
2008 ...................................................................................................
2009 ...................................................................................................
2010 ...................................................................................................
96. 
‘‘(iii) LIMITATION.—Clause (i) shall 
not apply with respect to any plan year 
after 2008 unless the shortfall amortiza-
tion base for each of the preceding years 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00129
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
130 
beginning after 2007 was zero (determined 
after application of this subparagraph). 
‘‘(iv) TRANSITION RELIEF NOT AVAIL-
ABLE FOR NEW OR DEFICIT REDUCTION 
PLANS.—Clause (i) shall not apply to a 
plan— 
‘‘(I) which was not in effect for a 
plan year beginning in 2007, or 
‘‘(II) which was in effect for a 
plan year beginning in 2007 and 
which was subject to section 412(l) 
(as in effect for plan years beginning 
in 2007), determined after the appli-
cation of paragraphs (6) and (9) 
thereof. 
‘‘(6) 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 bases for all 
preceding plan years (and all shortfall amortization 
installments determined with respect to such bases) 
shall be reduced to zero. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00130
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
131 
‘‘(d) RULES RELATING TO FUNDING TARGET.—For 
purposes of this section— 
‘‘(1) FUNDING TARGET.—Except as provided in 
subsection (i)(1) with respect to plans in at-risk sta-
tus, the funding target of a plan for a plan year is 
the present value of all benefits accrued or earned 
under the plan as of the beginning of 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 (as reduced under subsection (f)(4)(B)), 
bears to 
‘‘(B) the funding target of the plan for the 
plan year (determined without regard to sub-
section (i)(1)). 
‘‘(e) WAIVER AMORTIZATION CHARGE.— 
‘‘(1) DETERMINATION
OF
WAIVER
AMORTIZA-
TION CHARGE.—The waiver amortization charge (if 
any) for a plan for any plan year is the aggregate 
total of the waiver amortization installments for 
such plan year with respect to the waiver amortiza-
tion bases for each of the 5 preceding plan years. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00131
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
132 
‘‘(2) WAIVER AMORTIZATION INSTALLMENT.— 
For purposes of paragraph (1)— 
‘‘(A) DETERMINATION.—The waiver amor-
tization installments are the amounts necessary 
to amortize the waiver amortization base of the 
plan for any plan year in level annual install-
ments over a period of 5 plan years beginning 
with the succeeding plan year. 
‘‘(B) WAIVER INSTALLMENT.—The waiver 
amortization installment for any plan year in 
the 5-year period under subparagraph (A) with 
respect to any waiver amortization base is the 
annual installment determined under subpara-
graph (A) for that year for that base. 
‘‘(3) INTEREST
RATE.—In determining any 
waiver amortization installment under this sub-
section, the plan sponsor shall use the segment rates 
determined under subparagraph (C) of subsection 
(h)(2), applied under rules similar to the rules of 
subparagraph (B) of subsection (h)(2). 
‘‘(4) WAIVER AMORTIZATION BASE.—The waiv-
er amortization base of a plan for a plan year is the 
amount of the waived funding deficiency (if any) for 
such plan year under section 412(c). 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00132
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
133 
‘‘(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 waiver am-
ortization charge for such plan year and succeeding 
plan years, the waiver amortization bases for all pre-
ceding plan years (and all waiver amortization in-
stallments determined with respect to such bases) 
shall be reduced to zero. 
‘‘(f) REDUCTION OF MINIMUM REQUIRED CONTRIBU-
TION BY PREFUNDING BALANCE AND FUNDING STAND-
ARD CARRYOVER BALANCE.— 
‘‘(1) ELECTION TO MAINTAIN BALANCES.— 
‘‘(A) PREFUNDING
BALANCE.—The plan 
sponsor of a defined benefit plan which is not 
a multiemployer plan may elect to maintain a 
prefunding balance. 
‘‘(B) FUNDING
STANDARD
CARRYOVER 
BALANCE.— 
‘‘(i) IN GENERAL.—In the case of a 
defined benefit plan (other than a multiem-
ployer plan) described in clause (ii), the 
plan sponsor may elect to maintain a fund-
ing standard carryover balance, until such 
balance is reduced to zero. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00133
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS