143
become restricted to the provision of benefits 
under the plan in connection with such at-risk 
status (or other similar financial measure deter-
mined by the Secretary) of the defined benefit 
plan, or assets are so restricted, 
such assets shall for purposes of section 83 be treat-
ed as property transferred in connection with the 
performance of services whether or not such assets 
are available to satisfy claims of general creditors.’’. 
(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 take effect on January 1, 2006.
144
TITLE II—FUNDING RULES FOR 
MULTIEMPLOYER 
DEFINED 
BENEFIT PLANS 
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 
amended by section 102) is amended further 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
145
‘‘(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—
‘‘(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 in existence 
on January 1, 1974, the unfunded past 
service liability under the plan on the first 
day of the first plan year to which this sec-
tion applies, over a period of 40 plan 
years, 
‘‘(ii) in the case of a plan which comes 
into existence after January 1, 1974, the
146
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, 
‘‘(iii) 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, 
‘‘(iv) separately, with respect to each 
plan year, the net experience loss (if any) 
under the plan, over a period of 15 plan 
years, and 
‘‘(v) 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, 
‘‘(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-
147
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 this sec-
tion), 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 this section). 
‘‘(3) CREDITS TO ACCOUNT.—For a plan year, 
the funding standard account shall be credited with 
the sum of—
‘‘(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
148
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-
mined under the funding standard account if 
such plan year follows a plan year for which 
such deficiency was determined under the alter-
native minimum funding standard under section 
305 (as in effect on the day before the date of 
the enactment of this section), the excess (if 
any) of any debit balance in the funding stand-
ard account (determined without regard to this
149
subparagraph) over any debit balance in the al-
ternative minimum funding standard account. 
‘‘(4) SPECIAL RULE FOR AMOUNTS FIRST AM-
ORTIZED TO PLAN YEARS BEFORE 2006.—In the case 
of any amount amortized under section 302(b) (as 
in effect before the date of the enactment of Pension 
Protection Act of 2005) over any period beginning 
with a plan year beginning before 2006, in lieu of 
the amortization described in paragraphs (2)(B) and 
(3)(B), such amount shall continue to be amortized 
under such section as so in effect. 
‘‘(5) COMBINING
AND
OFFSETTING
AMOUNTS 
TO BE AMORTIZED.—Under regulations prescribed 
by the Secretary of the Treasury, amounts required 
to be amortized under paragraph (2) or paragraph 
(3), as the case may be—
‘‘(A) may be combined into one amount 
under such paragraph to be amortized over a 
period determined on the basis of the remaining 
amortization period for all items entering into 
such combined amount, and 
‘‘(B) may be offset against amounts re-
quired to be amortized under the other such 
paragraph, with the resulting amount to be am-
ortized over a period determined on the basis of
150
the remaining amortization periods for all items 
entering into whichever of the two amounts 
being offset is the greater. 
‘‘(6) INTEREST.—The funding standard ac-
count (and items therein) shall be charged or cred-
ited (as determined under regulations prescribed by 
the Secretary of the Treasury) with interest at the 
appropriate rate consistent with the rate or rates of 
interest used under the plan to determine costs. 
‘‘(7) CERTAIN
AMORTIZATION
CHARGES
AND 
CREDITS.—In the case of a plan which, immediately 
before the date of the enactment of the Multiem-
ployer Pension Plan Amendments Act of 1980, was 
a multiemployer plan (within the meaning of section 
3(37) as in effect immediately before such date)—
‘‘(A) any amount described in paragraph 
(2)(B)(ii), (2)(B)(iii), or (3)(B)(i) of this sub-
section which arose in a plan year beginning be-
fore such date shall be amortized in equal an-
nual installments (until fully amortized) over 40 
plan years, beginning with the plan year in 
which the amount arose; 
‘‘(B) any amount described in paragraph 
(2)(B)(iv) or (3)(B)(ii) of this subsection which 
arose in a plan year beginning before such date
151
shall be amortized in equal annual installments 
(until fully amortized) over 20 plan years, be-
ginning with the plan year in which the amount 
arose; 
‘‘(C) any change in past service liability 
which arises during the period of 3 plan years 
beginning on or after such date, and results 
from a plan amendment adopted before such 
date, shall be amortized in equal annual install-
ments (until fully amortized) over 40 plan 
years, beginning with the plan year in which the 
change arises; and 
‘‘(D) any change in past service liability 
which arises during the period of 2 plan years 
beginning on or after such date, and results 
from the changing of a group of participants 
from one benefit level to another benefit level 
under a schedule of plan benefits which—
‘‘(i) was adopted before such date, 
and 
‘‘(ii) was effective for any plan partici-
pant before the beginning of the first plan 
year beginning on or after such date, 
shall be amortized in equal annual installments 
(until fully amortized) over 40 plan years, be-
152
ginning with the plan year in which the change 
arises. 
‘‘(8) SPECIAL RULES RELATING TO CHARGES 
AND CREDITS TO FUNDING STANDARD ACCOUNT.—
For purposes of this part—
‘‘(A) 
WITHDRAWAL
LIABILITY.—Any 
amount received by a multiemployer plan in 
payment of all or part of an employer’s with-
drawal liability under part 1 of subtitle E of 
title IV shall be considered an amount contrib-
uted by the employer to or under the plan. The 
Secretary of the Treasury may prescribe by reg-
ulation additional charges and credits to a mul-
tiemployer plan’s funding standard account to 
the extent necessary to prevent withdrawal li-
ability payments from being unduly reflected as 
advance funding for plan liabilities. 
‘‘(B) ADJUSTMENTS
WHEN
A
MULTIEM-
PLOYER PLAN LEAVES REORGANIZATION.—If a 
multiemployer plan is not in reorganization in 
the plan year but was in reorganization in the 
immediately preceding plan year, any balance in 
the funding standard account at the close of 
such immediately preceding plan year—
153
‘‘(i) shall be eliminated by an offset-
ting credit or charge (as the case may be), 
but 
‘‘(ii) shall be taken into account in 
subsequent plan years by being amortized 
in equal annual installments (until fully 
amortized) over 30 plan years. 
The preceding sentence shall not apply to the 
extent of any accumulated funding deficiency 
under section 4243(a) as of the end of the last 
plan year that the plan was in reorganization. 
‘‘(C) PLAN PAYMENTS TO SUPPLEMENTAL 
PROGRAM OR WITHDRAWAL LIABILITY PAYMENT 
FUND.—Any amount paid by a plan during a 
plan year to the Pension Benefit Guaranty Cor-
poration pursuant to section 4222 of this Act or 
to a fund exempt under section 501(c)(22) of 
the Internal Revenue Code of 1986 pursuant to 
section 4223 of this Act shall reduce the 
amount of contributions considered received by 
the plan for the plan year. 
‘‘(D) INTERIM
WITHDRAWAL
LIABILITY 
PAYMENTS.—Any amount paid by an employer 
pending a final determination of the employer’s 
withdrawal liability under part 1 of subtitle E
154
of title IV and subsequently refunded to the 
employer by the plan shall be charged to the 
funding standard account in accordance with 
regulations prescribed by the Secretary of the 
Treasury. 
‘‘(E) 
ELECTION
FOR
DEFERRAL
OF 
CHARGE
FOR
PORTION
OF
NET
EXPERIENCE 
LOSS.—If an election is in effect under section 
302(b)(7)(F) (as in effect on the day before the 
date of the enactment of this section) for any 
plan year, the funding standard account shall 
be charged in the plan year to which the por-
tion of the net experience loss deferred by such 
election was deferred with the amount so de-
ferred (and paragraph (2)(B)(iv) shall not 
apply to the amount so charged). 
‘‘(F) 
FINANCIAL
ASSISTANCE.—Any 
amount of any financial assistance from the 
Pension Benefit Guaranty Corporation to any 
plan, and any repayment of such amount, shall 
be taken into account under this section and 
section 412 in such manner as is determined by 
the Secretary of the Treasury. 
‘‘(G) SHORT-TERM BENEFITS.—To the ex-
tent that any plan amendment increases the un-
155
funded past service liability under the plan by 
reason of an increase in benefits which are pay-
able under the plan during a period that does 
not exceed 14 years, paragraph (2)(B)(iii) shall 
be applied separately with respect to such in-
crease in unfunded past service liability by sub-
stituting the number of years of the period dur-
ing which such benefits are payable for ‘15’. 
‘‘(c) ADDITIONAL RULES.—
‘‘(1) DETERMINATIONS
TO
BE
MADE
UNDER 
FUNDING METHOD.—For purposes of this part, nor-
mal costs, accrued liability, past service liabilities, 
and experience gains and losses shall be determined 
under the funding method used to determine costs 
under the plan. 
‘‘(2) VALUATION OF ASSETS.—
‘‘(A) IN GENERAL.—For purposes of this 
part, the value of the plan’s assets shall be de-
termined on the basis of any reasonable actu-
arial method of valuation which takes into ac-
count fair market value and which is permitted 
under regulations prescribed by the Secretary of 
the Treasury. 
‘‘(B) 
ELECTION
WITH
RESPECT
TO 
BONDS.—The value of a bond or other evidence
156
of indebtedness which is not in default as to 
principal or interest may, at the election of the 
plan administrator, be determined on an amor-
tized basis running from initial cost at purchase 
to par value at maturity or earliest call date. 
Any election under this subparagraph shall be 
made at such time and in such manner as the 
Secretary of the Treasury shall by regulations 
provide, shall apply to all such evidences of in-
debtedness, and may be revoked only with the 
consent of such Secretary. 
‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA-
SONABLE.—For purposes of this section, all costs, li-
abilities, rates of interest, and other factors under 
the plan shall be determined on the basis of actu-
arial assumptions and methods—
‘‘(A) which, in the aggregate, are reason-
able (taking into account the experience of the 
plan and reasonable expectations), and 
‘‘(B) which, in combination, offer the actu-
ary’s best estimate of anticipated experience 
under the plan. 
‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX-
PERIENCE GAIN OR LOSS.—For purposes of this sec-
tion, if—
157
‘‘(A) a change in benefits under the Social 
Security Act or in other retirement benefits cre-
ated under Federal or State law, or 
‘‘(B) a change in the definition of the term 
‘wages’ under section 3121 of the Internal Rev-
enue Code of 1986, or a change in the amount 
of such wages taken into account under regula-
tions 
prescribed 
for 
purposes 
of 
section 
401(a)(5) of such Code, 
results in an increase or decrease in accrued liability 
under a plan, such increase or decrease shall be 
treated as an experience loss or gain. 
‘‘(5) FULL FUNDING.—If, as of the close of a 
plan year, a plan would (without regard to this para-
graph) have an accumulated funding deficiency in 
excess of the full funding limitation—
‘‘(A) the funding standard account shall be 
credited with the amount of such excess, and 
‘‘(B) all amounts described in subpara-
graphs (B), (C), and (D) of paragraph (2) and 
subparagraph (B) of subsection (b)(3) which 
are required to be amortized shall be considered 
fully amortized for purposes of such subpara-
graphs. 
‘‘(6) FULL-FUNDING LIMITATION.—
158
‘‘(A) IN GENERAL.—For purposes of para-
graph (5), the term ‘full-funding limitation’ 
means the excess (if any) of—
‘‘(i) the accrued liability (including 
normal cost) under the plan (determined 
under the entry age normal funding meth-
od if such accrued liability cannot be di-
rectly calculated under the funding method 
used for the plan), over 
‘‘(ii) the lesser of—
‘‘(I) the fair market value of the 
plan’s assets, or 
‘‘(II) the value of such assets de-
termined under paragraph (2). 
‘‘(B) MINIMUM AMOUNT.—
‘‘(i) IN GENERAL.—In no event shall 
the 
full-funding 
limitation 
determined 
under subparagraph (A) be less than the 
excess (if any) of—
‘‘(I) 90 percent of the current li-
ability of the plan (including the ex-
pected increase in current liability due 
to benefits accruing during the plan 
year), over