112 
‘‘(ii) that employer and employee con-
tributions for the most recent plan year will 
continue indefinitely, but only if the plan 
actuary determines there have been no sig-
nificant demographic changes that would 
make continued application of such terms 
unreasonable. 
‘‘(3) PRESUMED STATUS IN ABSENCE OF TIMELY 
ACTUARIAL
CERTIFICATION.—If certification under 
this subsection is not made before the end of the 90- 
day period specified in paragraph (1), the plan shall 
be presumed to be in critical status for such plan year 
until such time as the plan actuary makes a contrary 
certification. 
‘‘(4) NOTICE.—In any case in which a multiem-
ployer plan is certified to be in endangered status 
under paragraph (1) or enters into critical status, the 
plan sponsor shall, not later than 30 days after the 
date of the certification or entry, provide notification 
of the endangered or critical status to the participants 
and beneficiaries, the bargaining parties, the Pension 
Benefit Guaranty Corporation, the Secretary of the 
Treasury, and the Secretary of Labor. 
‘‘(b) FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
ENDANGERED STATUS.—
113 
‘‘(1) IN GENERAL.—In any case in which a mul-
tiemployer plan is in endangered status for a plan 
year and no funding improvement plan under this 
subsection with respect to such multiemployer plan is 
in effect for the plan year, the plan sponsor shall, in 
accordance with this subsection, amend the multiem-
ployer plan to include a funding improvement plan 
upon approval thereof by the bargaining parties 
under this subsection. The amendment shall be adopt-
ed not later than 240 days after the date on which 
the plan is certified to be in endangered status under 
subsection (a)(1). 
‘‘(2) ENDANGERED
STATUS.—A multiemployer 
plan is in endangered status for a plan year if, as 
determined by the plan actuary under subsection 
(a)— 
‘‘(A) the plan’s funded percentage for such 
plan year is less than 80 percent, or 
‘‘(B) the plan has an accumulated funding 
deficiency for such plan year under section 304 
or is projected to have such an accumulated 
funding deficiency for any of the 6 succeeding 
plan years, taking into account any extension of 
amortization periods under section 304(d). 
‘‘(3) FUNDING IMPROVEMENT PLAN.—
114 
‘‘(A) BENCHMARKS.—A funding improve-
ment plan shall consist of amendments to the 
plan formulated to provide, under reasonable ac-
tuarial assumptions, for the attainment, during 
the funding improvement period under the fund-
ing improvement plan, of the following bench-
marks: 
‘‘(i) INCREASE IN FUNDED PERCENT-
AGE.—An increase in the plan’s funded per-
centage such that— 
‘‘(I) the difference between 100 
percent and the plan’s funded percent-
age for the last year of the funding im-
provement period, is not more than 
‘‘(II) 2⁄3 of the difference between 
100 percent and the plan’s funded per-
centage for the first year of the funding 
improvement period. 
‘‘(ii) AVOIDANCE
OF
ACCUMULATED 
FUNDING
DEFICIENCIES.—No accumulated 
funding deficiency for any plan year during 
the funding improvement period (taking 
into account any extension of amortization 
periods under section 304(d)).
115 
‘‘(B) FUNDING IMPROVEMENT PERIOD.—The 
funding improvement period for any funding 
improvement plan adopted pursuant to this sub-
section is the 10-year period beginning on the 
earlier of— 
‘‘(i) the second anniversary of the date 
of the adoption of the funding improvement 
plan, or 
‘‘(ii) the first day of the first plan year 
of the multiemployer plan following the 
plan year in which occurs the first date 
after the day of the certification as of which 
collective bargaining agreements covering on 
the day of such certification at least 75 per-
cent of active participants in such multiem-
ployer plan have expired. 
‘‘(C) SPECIAL RULES FOR CERTAIN SERI-
OUSLY UNDERFUNDED PLANS.— 
‘‘(i) In the case of a plan in which the 
funded percentage of a plan for the plan 
year is 70 percent or less, subparagraph 
(A)(i)(II) shall be applied by substituting 
‘4⁄5’ for ‘2⁄3’ and subparagraph (B) shall be 
applied by substituting ‘the 15-year period’ 
for ‘the 10-year period’.
116 
‘‘(ii) In the case of a plan in which the 
funded percentage of a plan for the plan 
year is more than 70 percent but less than 
80 percent, and— 
‘‘(I) the plan actuary certifies 
within 30 days after certification 
under subsection (a)(1) that the plan is 
not able to attain the increase de-
scribed in subparagraph (A)(i) over the 
period described in subparagraph (B), 
and 
‘‘(II) the plan year is prior to the 
day described in subparagraph (B)(ii), 
subparagraph (A)(i)(II) shall be applied by 
substituting ‘4⁄5’ for ‘2⁄3’ and subparagraph 
(B) shall be applied by substituting ‘the 15- 
year period’ for ‘the 10-year period’. 
‘‘(iii) For any plan year following the 
year described in clause (ii)(II), subpara-
graph (A)(i)(II) and subparagraph (B) 
shall apply, except that for each plan year 
ending after such date for which the plan 
actuary certifies (at the time of the annual 
certification under subsection (a)(1) for 
such plan year) that the plan is not able to
117 
attain the increase described in subpara-
graph (A)(i) over the period described in 
subparagraph (B), subparagraph (B) shall 
be applied by substituting ‘the 15-year pe-
riod’ for ‘the 10-year period’. 
‘‘(D) REPORTING.—A summary of any 
funding improvement plan or modification 
thereto adopted during any plan year, together 
with annual updates regarding the funding ratio 
of the plan, shall be included in the annual re-
port for such plan year under section 104(a) and 
in the summary annual report described in sec-
tion 104(b)(3). 
‘‘(4) DEVELOPMENT OF FUNDING IMPROVEMENT 
PLAN.— 
‘‘(A) ACTIONS BY PLAN SPONSOR PENDING 
APPROVAL.—Pending the approval of a funding 
improvement plan under this paragraph, the 
plan sponsor shall take all reasonable actions, 
consistent with the terms of the plan and appli-
cable law, necessary to ensure— 
‘‘(i) an increase in the plan’s funded 
percentage, and
118 
‘‘(ii) postponement of an accumulated 
funding deficiency for at least 1 additional 
plan year. 
Such actions include applications for extensions 
of amortization periods under section 304(d), use 
of the shortfall funding method in making fund-
ing standard account computations, amendments 
to the plan’s benefit structure, reductions in fu-
ture benefit accruals, and other reasonable ac-
tions consistent with the terms of the plan and 
applicable law. 
‘‘(B) RECOMMENDATIONS
BY
PLAN
SPON-
SOR.— 
‘‘(i) IN GENERAL.—During the period 
of 90 days following the date on which a 
multiemployer plan is certified to be in en-
dangered status, the plan sponsor shall de-
velop and provide to the bargaining parties 
alternative proposals for revised benefit 
structures, contribution structures, or both, 
which, if adopted as amendments to the 
plan, may be reasonably expected to meet 
the benchmarks described in paragraph 
(3)(A). Such proposals shall include—
119 
‘‘(I) at least one proposal for re-
ductions in the amount of future ben-
efit accruals necessary to achieve the 
benchmarks, assuming no amendments 
increasing contributions under the 
plan (other than amendments increas-
ing contributions necessary to achieve 
the benchmarks after amendments have 
reduced future benefit accruals to the 
maximum extent permitted by law), 
and 
‘‘(II) at least one proposal for in-
creases in contributions under the plan 
necessary to achieve the benchmarks, 
assuming no amendments reducing fu-
ture benefit accruals under the plan. 
‘‘(ii) REQUESTS BY BARGAINING PAR-
TIES.—Upon the request of any bargaining 
party who— 
‘‘(I) employs at least 5 percent of 
the active participants, or 
‘‘(II) represents as an employee 
organization, for purposes of collective 
bargaining, at least 5 percent of the 
active participants,
120 
the plan sponsor shall provide all such par-
ties information as to other combinations of 
increases in contributions and reductions in 
future benefit accruals which would result 
in achieving the benchmarks. 
‘‘(iii) 
OTHER
INFORMATION.—The 
plan sponsor may, as it deems appropriate, 
prepare and provide the bargaining parties 
with additional information relating to con-
tribution structures or benefit structures or 
other information relevant to the funding 
improvement plan. 
‘‘(5) MAINTENANCE OF CONTRIBUTIONS PENDING 
APPROVAL OF FUNDING IMPROVEMENT PLAN.—Pend-
ing approval of a funding improvement plan by the 
bargaining parties with respect to a multiemployer 
plan, the multiemployer plan may not be amended so 
as to provide— 
‘‘(A) a reduction in the level of contribu-
tions for participants who are not in pay status, 
‘‘(B) a suspension of contributions with re-
spect to any period of service, or 
‘‘(C) any new direct or indirect exclusion of 
younger or newly hired employees from plan 
participation.
121 
‘‘(6) BENEFIT RESTRICTIONS PENDING APPROVAL 
OF FUNDING IMPROVEMENT PLAN.—Pending approval 
of a funding improvement plan by the bargaining 
parties with respect to a multiemployer plan— 
‘‘(A) RESTRICTIONS
ON
LUMP
SUM
AND 
SIMILAR DISTRIBUTIONS.—In any case in which 
the present value of a participant’s accrued ben-
efit under the plan exceeds $5,000, such benefit 
may not be distributed as an immediate dis-
tribution or in any other accelerated form. 
‘‘(B) 
PROHIBITION
ON
BENEFIT
IN-
CREASES.— 
‘‘(i) IN GENERAL.—No amendment of 
the plan which increases the liabilities of 
the plan by reason of any increase in bene-
fits, any change in the accrual of benefits, 
or any change in the rate at which benefits 
become nonforfeitable under the plan may 
be adopted. 
‘‘(ii) EXCEPTION.—Clause (i) shall not 
apply to any plan amendment which is re-
quired as a condition of qualification under 
part I of subchapter D of chapter 1 of sub-
title A of the Internal Revenue Code of 
1986.
122 
‘‘(7) DEFAULT CRITICAL STATUS IF NO FUNDING 
IMPROVEMENT PLAN ADOPTED.—If no plan amend-
ment adopting a funding improvement plan has been 
adopted by the end of the 240-day period referred to 
in subsection (b)(1), the plan enters into critical sta-
tus as of the first day of the succeeding plan year. 
‘‘(8) RESTRICTIONS UPON APPROVAL OF FUNDING 
IMPROVEMENT PLAN.—Upon adoption of a funding 
improvement plan with respect to a multiemployer 
plan, the plan may not be amended— 
‘‘(A) so as to be inconsistent with the fund-
ing improvement plan, or 
‘‘(B) so as to increase future benefit accru-
als, unless the plan actuary certifies in advance 
that, after taking into account the proposed in-
crease, the plan is reasonably expected to meet 
the the benchmarks described in paragraph 
(3)(A). 
‘‘(c) FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
CRITICAL STATUS.— 
‘‘(1) IN GENERAL.—In any case in which a mul-
tiemployer plan is in critical status for a plan year 
as described in paragraph (2) (or otherwise enters 
into critical status under this section) and no reha-
bilitation plan under this subsection with respect to
123 
such multiemployer plan is in effect for the plan year, 
the plan sponsor shall, in accordance with this sub-
section, amend the multiemployer plan to include a 
rehabilitation plan under this subsection. The amend-
ment shall be adopted not later than 240 days after 
the date on which the plan enters into critical status. 
‘‘(2) CRITICAL STATUS.—A multiemployer plan 
is in critical status for a plan year if— 
‘‘(A) the plan is in endangered status for 
the preceding plan year and the requirements of 
subsection (b)(1) were not met with respect to the 
plan for such preceding plan year, or 
‘‘(B) as determined by the plan actuary 
under subsection (a), the plan is described in 
paragraph (3). 
‘‘(3) CRITICALITY DESCRIPTION.—For purposes 
of paragraph (2)(B), a plan is described in this para-
graph if the plan is described in at least one of the 
following subparagraphs: 
‘‘(A) A plan is described in this subpara-
graph if, as of the beginning of the current plan 
year— 
‘‘(i) the funded percentage of the plan 
is less than 65 percent, and 
‘‘(ii) the sum of—
124 
‘‘(I) the market value of plan as-
sets, plus 
‘‘(II) the present value of the rea-
sonably anticipated employer and em-
ployee contributions for the current 
plan year and each of the 6 succeeding 
plan years, assuming that the terms of 
the one or more collective bargaining 
agreements pursuant to which the plan 
is maintained for the current plan 
year continue in effect for succeeding 
plan years, 
is less than the present value of all non-
forfeitable benefits for all participants and 
beneficiaries projected to be payable under 
the plan during the current plan year and 
each of the 6 succeeding plan years (plus 
administrative expenses for such plan 
years). 
‘‘(B) A plan is described in this subpara-
graph if, as of the beginning of the current plan 
year, the sum of— 
‘‘(i) the market value of plan assets, 
plus
125 
‘‘(ii) the present value of the reason-
ably anticipated employer and employee 
contributions for the current plan year and 
each of the 4 succeeding plan years, assum-
ing that the terms of the one or more collec-
tive bargaining agreements pursuant to 
which the plan is maintained for the cur-
rent plan year remain in effect for suc-
ceeding plan years, 
is less than the present value of all nonforfeitable 
benefits for all participants and beneficiaries 
projected to be payable under the plan during 
the current plan year and each of the 4 suc-
ceeding plan years (plus administrative expenses 
for such plan years). 
‘‘(C) A plan is described in this subpara-
graph if— 
‘‘(i) as of the beginning of the current 
plan year, the funded percentage of the plan 
is less than 65 percent, and 
‘‘(ii) the plan has an accumulated 
funding deficiency for the current plan year 
or is projected to have an accumulated 
funding deficiency for any of the 4 suc-
ceeding plan years, not taking into account
126 
any extension of amortization periods under 
section 304(d). 
‘‘(D) A plan is described in this subpara-
graph if— 
‘‘(i)(I) the plan’s normal cost for the 
current plan year, plus interest (determined 
at the rate used for determining cost under 
the plan) for the current plan year on the 
amount of unfunded benefit liabilities under 
the plan as of the last date of the preceding 
plan year, exceeds 
‘‘(II) the present value, as of the begin-
ning of the current plan year, of the reason-
ably anticipated employer and employee 
contributions for the current plan year, 
‘‘(ii) the present value, as of the begin-
ning of the current plan year, of nonforfeit-
able benefits of inactive participants is 
greater than the present value, as of the be-
ginning of the current plan year, of non-
forfeitable benefits of active participants, 
and 
‘‘(iii) the plan is projected to have an 
accumulated funding deficiency for the cur-
rent plan year or any of the 4 succeeding
127 
plan years, not taking into account any ex-
tension of amortization periods under sec-
tion 304(d). 
‘‘(E) A plan is described in this subpara-
graph if— 
‘‘(i) the funded percentage of the plan 
is greater than 65 percent for the current 
plan year, and 
‘‘(ii) the plan is projected to have an 
accumulated funding deficiency during any 
of the succeeding 3 plan years, not taking 
into account any extension of amortization 
periods under section 304(d). 
‘‘(4) REHABILITATION PLAN.— 
‘‘(A) IN GENERAL.—A rehabilitation plan 
shall consist of— 
‘‘(i) amendments to the plan providing 
(under reasonable actuarial assumptions) 
for measures, agreed to by the bargaining 
parties, to increase contributions, reduce 
plan expenditures (including plan mergers 
and consolidations), or reduce future benefit 
accruals, or to take any combination of such 
actions, determined necessary to cause the
128 
plan to cease, during the rehabilitation pe-
riod, to be in critical status, or 
‘‘(ii) reasonable measures to forestall 
possible insolvency (within the meaning of 
section 4245) if the plan sponsor determines 
that, upon exhaustion of all reasonable 
measures, the plan would not cease during 
the rehabilitation period to be in critical 
status. 
‘‘(B) REHABILITATION PERIOD.—The reha-
bilitation period for any rehabilitation plan 
adopted pursuant to this subsection is the 10- 
year period beginning on the earlier of— 
‘‘(i) the second anniversary of the date 
of the adoption of the rehabilitation plan, or 
‘‘(ii) the first day of the first plan year 
of the multiemployer plan following the 
plan year in which occurs the first date, 
after the date of the plan’s entry into crit-
ical status, as of which collective bargaining 
agreements covering at least 75 percent of 
active participants in such multiemployer 
plan (determined as of such date of entry) 
have expired.
129 
‘‘(C) REPORTING.—A summary of any re-
habilitation plan or modification thereto adopted 
during any plan year, together with annual up-
dates regarding the funding ratio of the plan, 
shall be included in the annual report for such 
plan year under section 104(a) and in the sum-
mary 
annual 
report 
described 
in 
section 
104(b)(3). 
‘‘(5) 
DEVELOPMENT
OF
REHABILITATION 
PLAN.— 
‘‘(A) PROPOSALS BY PLAN SPONSOR.— 
‘‘(i) IN
GENERAL.—Within 90 days 
after the date of entry into critical status 
(or the date as of which the requirements of 
subsection (b)(1) are not met with respect to 
the plan), the plan sponsor shall propose to 
all bargaining parties a range of alternative 
schedules of increases in contributions and 
reductions in future benefit accruals that 
would serve to carry out a rehabilitation 
plan under this subsection. 
‘‘(ii) PROPOSAL
ASSUMING
NO
CON-
TRIBUTION
INCREASES.—Such 
proposals 
shall include, as one of the proposed sched-
ules, a schedule of those reductions in future
130 
benefit accruals that would be necessary to 
cause the plan to cease to be in critical sta-
tus if there were no further increases in 
rates of contribution to the plan. 
‘‘(iii) PROPOSAL
WHERE
CONTRIBU-
TIONS ARE NECESSARY.—If the plan spon-
sor determines that the plan will not cease 
to be in critical status during the rehabili-
tation period unless the plan is amended to 
provide for an increase in contributions, the 
plan sponsor’s proposals shall include a 
schedule of those increases in contribution 
rates that would be necessary to cause the 
plan to cease to be in critical status if fu-
ture benefit accruals were reduced to the 
maximum extent permitted by law. 
‘‘(B) REQUESTS FOR ADDITIONAL SCHED-
ULES.—Upon the request of any bargaining 
party who— 
‘‘(i) employs at least 5 percent of the 
active participants, or 
‘‘(ii) represents as an employee organi-
zation, for purposes of collective bargaining, 
at least 5 percent of active participants,
131 
the plan sponsor shall include among the pro-
posed schedules such schedules of increases in 
contributions and reductions in future benefit 
accruals as may be specified by the bargaining 
parties. 
‘‘(C) SUBSEQUENT
AMENDMENTS.—Upon 
the adoption of a schedule of increases in con-
tributions or reductions in future benefit accru-
als as part of the rehabilitation plan, the plan 
sponsor may amend the plan thereafter to update 
the schedule to adjust for any experience of the 
plan contrary to past actuarial assumptions, ex-
cept that such an amendment may be made not 
more than once in any 3-year period. 
‘‘(D) ALLOCATION OF REDUCTIONS IN FU-
TURE BENEFIT ACCRUALS.—Any schedule con-
taining reductions in future benefit accruals 
forming a part of a rehabilitation plan shall be 
applicable with respect to any group of active 
participants who are employed by any bar-
gaining party (as an employer obligated to con-
tribute under the plan) in proportion to the ex-
tent to which increases in contributions under 
such schedule apply to such bargaining party.
132 
‘‘(E) LIMITATION ON REDUCTION IN RATES 
OF FUTURE ACCRUALS.—Any schedule proposed 
under this paragraph shall not reduce the rate of 
future accruals below the lower of— 
‘‘(i) a monthly benefit equal to 1 per-
cent of the contributions required to be 
made with respect to a participant or the 
equivalent standard accrual rate for a par-
ticipant or group of participants under the 
collective bargaining agreements in effect as 
of the first day of the plan year in which 
the plan enters critical status, or 
‘‘(ii) if lower, the accrual rate under 
the plan on such date. 
The equivalent standard accrual rate shall be de-
termined by the trustees based on the standard or 
average contribution base units that they deter-
mine to be representative for active participants 
and such other factors as they determine to be 
relevant. 
‘‘(6) MAINTENANCE OF CONTRIBUTIONS AND RE-
STRICTIONS ON BENEFITS PENDING ADOPTION OF RE-
HABILITATION
PLAN.—The rules of paragraphs (5) 
and (6) of subsection (b) shall apply for purposes of