593 
(3) Section 404(a)(7) of such Code, as amended 
by this Act, is amended— 
(A) by adding at the end of subparagraph 
(A) the following new sentence: ‘‘In the case of 
a defined benefit plan which is a single em-
ployer plan, the amount necessary to satisfy the 
minimum funding standard provided by section 
412 shall not be less than the plan’s funding 
shortfall determined under section 430.’’, and 
(B) by striking subparagraph (D) and in-
serting: 
‘‘(D) INSURANCE CONTRACT PLANS.—For 
purposes of this paragraph, a plan described in 
section 412(e)(3) shall be treated as a defined 
benefit plan.’’. 
(4) Section 404A(g)(3)(A) of such Code is 
amended by striking ‘‘paragraphs (3) and (7) of sec-
tion 412(c)’’ and inserting ‘‘paragraphs (3) and (6) 
of section 431(c)’’. 
(d) SPECIAL RULE FOR 2006 AND 2007.— 
(1) 
IN
GENERAL.—Clause 
(i) 
of 
section 
404(a)(1)(D) of the Internal Revenue Code of 1986 
(relating to special rule in case of certain plans) is 
amended by striking ‘‘section 412(l)’’ and inserting 
‘‘section 
412(l)(8)(A), 
except 
that 
section 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00593
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
594 
412(l)(8)(A) shall be applied for purposes of this 
clause by substituting ‘150 percent (140 percent in 
the case of a multiemployer plan) of current liability’ 
for ‘the current liability’ in clause (i).’’ 
(2) 
CONFORMING
AMENDMENT.—Section 
404(a)(1) of the Internal Revenue Code of 1986 is 
amended by striking subparagraph (F). 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to years beginning after December 31, 
2007. 
(2) SPECIAL RULES.—The amendments made 
by subsection (d) shall apply to years beginning 
after December 31, 2005. 
SEC. 
802. 
DEDUCTION 
LIMITS 
FOR 
MULTIEMPLOYER 
PLANS. 
(a) 
INCREASE
IN
DEDUCTION.—Section 
404(a)(1)(D) of the Internal Revenue Code of 1986, as 
amended by this Act, is amended to read as follows: 
‘‘(D) AMOUNT DETERMINED ON BASIS OF 
UNFUNDED CURRENT LIABILITY.—In the case 
of a defined benefit plan which is a multiem-
ployer plan, except as provided in regulations, 
the maximum amount deductible under the lim-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00594
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
595 
itations of this paragraph shall not be less than 
the excess (if any) of— 
‘‘(i) 140 percent of the current liabil-
ity of the plan determined under section 
431(c)(6)(C), over 
‘‘(ii) the value of the plan’s assets de-
termined under section 431(c)(2).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to years beginning after Decem-
ber 31, 2007. 
SEC. 803. UPDATING DEDUCTION RULES FOR COMBINA-
TION OF PLANS. 
(a) IN GENERAL.—Subparagraph (C) of section 
404(a)(7) of the Internal Revenue Code of 1986 (relating 
to limitation on deductions where combination of defined 
contribution plan and defined benefit plan) is amended by 
adding after clause (ii) the following new clause: 
‘‘(iii) LIMITATION.—In the case of 
employer contributions to 1 or more de-
fined contribution plans, this paragraph 
shall only apply to the extent that such 
contributions exceed 6 percent of the com-
pensation otherwise paid or accrued during 
the taxable year to the beneficiaries under 
such plans. For purposes of this clause, 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00595
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
596 
amounts carried over from preceding tax-
able years under subparagraph (B) shall 
be treated as employer contributions to 1 
or more defined contributions to the extent 
attributable to employer contributions to 
such plans in such preceding taxable 
years.’’. 
(b) EXCEPTION FROM LIMITATION ON DEDUCTION 
WHERE COMBINATION OF DEFINED CONTRIBUTION AND 
DEFINED BENEFIT PLANS.—Section 404(a)(7)(C) of 
such Code, as amended by this Act, is amended by adding 
at the end the following new clause: 
‘‘(v) MULTIEMPLOYER PLANS.—In ap-
plying this paragraph, any multiemployer 
plan shall not be taken into account.’’. 
(c) CONFORMING AMENDMENT.—Subparagraph (A) 
of section 4972(c)(6) of such Code (relating to nondeduct-
ible contributions) is amended to read as follows: 
‘‘(A) so much of the contributions to 1 or 
more defined contribution plans which are not 
deductible when contributed solely because of 
section 404(a)(7) as does not exceed the 
amount of contributions described in section 
401(m)(4)(A), or’’. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00596
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
597 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions for taxable years 
beginning after December 31, 2005. 
Subtitle B—Certain Pension 
Provisions Made Permanent 
SEC. 811. PENSIONS AND INDIVIDUAL RETIREMENT AR-
RANGEMENT 
PROVISIONS 
OF 
ECONOMIC 
GROWTH AND TAX RELIEF RECONCILIATION 
ACT OF 2001 MADE PERMANENT. 
Title IX of the Economic Growth and Tax Relief Rec-
onciliation Act of 2001 shall not apply to the provisions 
of, and amendments made by, subtitles A through F of 
title VI of such Act (relating to pension and individual 
retirement arrangement provisions). 
SEC. 812. SAVER’S CREDIT. 
Section 25B of the Internal Revenue Code of 1986 
(relating to elective deferrals and IRA contributions by 
certain individuals) is amended by striking subsection (h). 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00597
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
598 
Subtitle C—Improvements in Port-
ability, Distribution, and Con-
tribution Rules 
SEC. 821. CLARIFICATIONS REGARDING PURCHASE OF PER-
MISSIVE SERVICE CREDIT. 
(a) IN GENERAL.—Section 415(n) of the Internal 
Revenue Code of 1986 (relating to special rules for the 
purchase of permissive service credit) is amended— 
(1) by striking ‘‘an employee’’ in paragraph (1) 
and inserting ‘‘a participant’’, and 
(2) by adding at the end of paragraph (3)(A) 
the following new flush sentence: 
‘‘Such term may include service credit for peri-
ods for which there is no performance of serv-
ice, and, notwithstanding clause (ii), may in-
clude service credited in order to provide an in-
creased benefit for service credit which a partic-
ipant is receiving under the plan.’’. 
(b) SPECIAL
RULES
FOR
TRUSTEE-TO-TRUSTEE 
TRANSFERS.—Section 415(n)(3) of such Code is amended 
by adding at the end the following new subparagraph: 
‘‘(D) SPECIAL
RULES
FOR
TRUSTEE-TO- 
TRUSTEE TRANSFERS.—In the case of a trust-
ee-to-trustee 
transfer 
to 
which 
section 
403(b)(13)(A) or 457(e)(17)(A) applies (with-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00598
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
599 
out regard to whether the transfer is made be-
tween plans maintained by the same em-
ployer)— 
‘‘(i) the limitations of subparagraph 
(B) shall not apply in determining whether 
the transfer is for the purchase of permis-
sive service credit, and 
‘‘(ii) the distribution rules applicable 
under this title to the defined benefit gov-
ernmental plan to which any amounts are 
so transferred shall apply to such amounts 
and any benefits attributable to such 
amounts.’’. 
(c) NONQUALIFIED SERVICE.—Section 415(n)(3) of 
such Code is amended— 
(1) by striking ‘‘permissive service credit attrib-
utable to nonqualified service’’ each place it appears 
in subparagraph (B) and inserting ‘‘nonqualified 
service credit’’, 
(2) by striking so much of subparagraph (C) as 
precedes clause (i) and inserting: 
‘‘(C) NONQUALIFIED
SERVICE
CREDIT.— 
For purposes of subparagraph (B), the term 
‘nonqualified service credit’ means permissive 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00599
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
600 
service credit other than that allowed with re-
spect to—’’, and 
(3) by striking ‘‘elementary or secondary edu-
cation (through grade 12), as determined under 
State law’’ in subparagraph (C)(ii) and inserting 
‘‘elementary or secondary education (through grade 
12), or a comparable level of education, as deter-
mined under the applicable law of the jurisdiction in 
which the service was performed’’. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
subsections (a) and (c) shall take effect as if in-
cluded in the amendments made by section 1526 of 
the Taxpayer Relief Act of 1997. 
(2) SUBSECTION (b).—The amendments made 
by subsection (b) shall take effect as if included in 
the amendments made by section 647 of the Eco-
nomic Growth and Tax Relief Reconciliation Act of 
2001. 
SEC. 822. ALLOW ROLLOVER OF AFTER-TAX AMOUNTS IN 
ANNUITY CONTRACTS. 
(a) IN GENERAL.—Subparagraph (A) of section 
402(c)(2) (relating to the maximum amount which may 
be rolled over) is amended— 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00600
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
601 
(1) by striking ‘‘which is part of a plan which 
is a defined contribution plan and which agrees to 
separately account’’ and inserting ‘‘or to an annuity 
contract described in section 403(b) and such trust 
or contract provides for separate accounting’’; and 
(2) by inserting ‘‘(and earnings thereon)’’ after 
‘‘so transferred’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 823. CLARIFICATION OF MINIMUM DISTRIBUTION 
RULES FOR GOVERNMENTAL PLANS. 
The Secretary of the Treasury shall issue regulations 
under which a governmental plan (as defined in section 
414(d) of the Internal Revenue Code of 1986) shall, for 
all years to which section 401(a)(9) of such Code applies 
to such plan, be treated as having complied with such sec-
tion 401(a)(9) if such plan complies with a reasonable 
good faith interpretation of such section 401(a)(9). 
SEC. 824. ALLOW DIRECT ROLLOVERS FROM RETIREMENT 
PLANS TO ROTH IRAS. 
(a) IN GENERAL.—Subsection (e) of section 408A of 
the Internal Revenue Code of 1986 (defining qualified roll-
over contribution) is amended to read as follows: 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00601
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
602 
‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.—For 
purposes of this section, the term ‘qualified rollover con-
tribution’ means a rollover contribution— 
‘‘(1) to a Roth IRA from another such account, 
‘‘(2) from an eligible retirement plan, but only 
if— 
‘‘(A) in the case of an individual retire-
ment plan, such rollover contribution meets the 
requirements of section 408(d)(3), and 
‘‘(B) in the case of any eligible retirement 
plan (as defined in section 402(c)(8)(B) other 
than clauses (i) and (ii) thereof), such rollover 
contribution meets the requirements of section 
402(c), 403(b)(8), or 457(e)(16), as applicable. 
For purposes of section 408(d)(3)(B), there shall be dis-
regarded any qualified rollover contribution from an indi-
vidual retirement plan (other than a Roth IRA) to a Roth 
IRA.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 408A(c)(3)(B) of such Code, as in 
effect before the Tax Increase Prevention and Rec-
onciliation Act of 2005, is amended— 
(A) in the text by striking ‘‘individual re-
tirement plan’’ and inserting ‘‘an eligible retire-
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00602
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS
603 
ment 
plan 
(as 
defined 
by 
section 
402(c)(8)(B))’’, and 
(B) in the heading by striking ‘‘IRA’’ the 
first place it appears and inserting ‘‘ELIGIBLE 
RETIREMENT PLAN’’. 
(2) Section 408A(d)(3) of such Code is amend-
ed— 
(A) in subparagraph (A), by striking ‘‘sec-
tion 408(d)(3)’’ inserting ‘‘sections 402(c), 
403(b)(8), 408(d)(3), and 457(e)(16)’’, 
(B) in subparagraph (B), by striking ‘‘in-
dividual retirement plan’’ and inserting ‘‘eligible 
retirement 
plan 
(as 
defined 
by 
section 
402(c)(8)(B))’’, 
(C) in subparagraph (D), by inserting ‘‘or 
6047’’ after ‘‘408(i)’’, 
(D) in subparagraph (D), by striking ‘‘or 
both’’ and inserting ‘‘persons subject to section 
6047(d)(1), or all of the foregoing persons’’, 
and 
(E) in the heading, by striking ‘‘IRA’’ the 
first place it appears and inserting ‘‘ELIGIBLE 
RETIREMENT PLAN’’. 
VerDate Aug 31 2005 
00:22 Aug 01, 2006
Jkt 049200
PO 00000
Frm 00603
Fmt 6652
Sfmt 6201
E:\BILLS\H4.PCS
H4
ccoleman on PROD1PC71 with BILLS