390 
(A) 
IN
GENERAL.—Section 
4006(a)(7)(C)(ii) of such Act is amended by 
striking ‘‘subparagraph (B)(i)(I)’’ and inserting 
‘‘subparagraph (B)’’. 
(B) EFFECTIVE
DATE.—The amendment 
made by this paragraph shall take effect as if 
included in the provision of the Deficit Reduc-
tion Act of 2005 to which it relates. 
SEC. 402. SPECIAL FUNDING RULES FOR CERTAIN PLANS 
MAINTAINED BY COMMERCIAL AIRLINES. 
(a) IN GENERAL.—The plan sponsor of an eligible 
plan may elect to either— 
(1) have the rules of subsection (b) apply, or 
(2) have section 303 of the Employee Retire-
ment Income Security Act of 1974 and section 430 
of the Internal Revenue Code of 1986 applied to its 
first taxable year beginning in 2008 by amortizing 
the shortfall amortization base for such taxable year 
over a period of 10 plan years (rather than 7 plan 
years) beginning with such plan year. 
(b) ALTERNATIVE FUNDING SCHEDULE.— 
(1) IN GENERAL.—If an election is made under 
subsection (a)(1) to have this subsection apply to an 
eligible plan and the requirements of paragraphs (2) 
and (3) are met with respect to the plan— 
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391 
(A) in the case of any applicable plan year 
beginning before January 1, 2008, the plan 
shall not have an accumulated funding defi-
ciency for purposes of section 302 of the Em-
ployee Retirement Income Security Act of 1974 
and sections 412 and 4971 of the Internal Rev-
enue Code of 1986 if contributions to the plan 
for the plan year are not less than the min-
imum required contribution determined under 
subsection (e) for the plan for the plan year, 
and 
(B) in the case of any applicable plan year 
beginning on or after January 1, 2008, the 
minimum required contribution determined 
under sections 303 of such Act and 430 of such 
Code shall, for purposes of sections 302 and 
303 of such Act and sections 412, 430, and 
4971 of such Code, be equal to the minimum 
required contribution determined under sub-
section (e) for the plan for the plan year. 
(2) ACCRUAL RESTRICTIONS.— 
(A) IN
GENERAL.—The requirements of 
this paragraph are met if, effective as of the 
first day of the first applicable plan year and at 
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ccoleman on PROD1PC71 with BILLS
392 
all times thereafter while an election under this 
section is in effect, the plan provides that— 
(i) the accrued benefit, any death or 
disability benefit, and any social security 
supplement described in the last sentence 
of section 411(a)(9) of such Code and sec-
tion 204(b)(1)(G) of such Act, of each par-
ticipant are frozen at the amount of such 
benefit or supplement immediately before 
such first day, and 
(ii) all other benefits under the plan 
are eliminated, 
but only to the extent the freezing or elimi-
nation of such benefits would have been per-
mitted under section 411(d)(6) of such Code 
and section 204(g) of such Act if they had been 
implemented by a plan amendment adopted im-
mediately before such first day. 
(B) INCREASES IN SECTION 415 LIMITS.— 
If a plan provides that an accrued benefit of a 
participant which has been subject to any limi-
tation under section 415 of such Code will be 
increased if such limitation is increased, the 
plan shall not be treated as meeting the re-
quirements of this section unless, effective as of 
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ccoleman on PROD1PC71 with BILLS
393 
the first day of the first applicable plan year 
(or, if later, the date of the enactment of this 
Act) and at all times thereafter while an elec-
tion under this section is in effect, the plan pro-
vides that any such increase shall not take ef-
fect. A plan shall not fail to meet the require-
ments of section 411(d)(6) of such Code and 
section 204(g) of such Act solely because the 
plan is amended to meet the requirements of 
this subparagraph. 
(3) RESTRICTION ON APPLICABLE BENEFIT IN-
CREASES.— 
(A) IN
GENERAL.—The requirements of 
this paragraph are met if no applicable benefit 
increase takes effect at any time during the pe-
riod beginning on July 26, 2005, and ending on 
the day before the first day of the first applica-
ble plan year. 
(B) APPLICABLE
BENEFIT
INCREASE.— 
For purposes of this paragraph, the term ‘‘ap-
plicable benefit increase’’ means, with respect to 
any plan year, any increase in liabilities of the 
plan by plan amendment (or otherwise provided 
in regulations provided by the Secretary) which, 
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394 
but for this paragraph, would occur during the 
plan year by reason of— 
(i) any increase in benefits, 
(ii) any change in the accrual of bene-
fits, or 
(iii) any change in the rate at which 
benefits become nonforfeitable under the 
plan. 
(4) EXCEPTION
FOR
IMPUTED
DISABILITY 
SERVICE.—Paragraphs (2) and (3) shall not apply 
to any accrual or increase with respect to imputed 
service provided to a participant during any period 
of the participant’s disability occurring on or after 
the effective date of the plan amendment providing 
the restrictions under paragraph (2) (or on or after 
July 26, 2005, in the case of the restrictions under 
paragraph (3)) if the participant— 
(A) was receiving disability benefits as of 
such date, or 
(B) was receiving sick pay and subse-
quently determined to be eligible for disability 
benefits as of such date. 
(c) DEFINITIONS.—For purposes of this section— 
(1) ELIGIBLE PLAN.—The term ‘‘eligible plan’’ 
means a defined benefit plan (other than a multiem-
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395 
ployer plan) to which sections 302 of such Act and 
412 of such Code applies which is sponsored by an 
employer— 
(A) which is a commercial airline pas-
senger airline, or 
(B) the principal business of which is pro-
viding catering services to a commercial pas-
senger airline. 
(2) APPLICABLE PLAN YEAR.—The term ‘‘ap-
plicable plan year’’ means each plan year to which 
the election under subsection (a)(1) applies under 
subsection (d)(1)(A). 
(d) ELECTIONS AND RELATED TERMS.— 
(1) YEARS FOR WHICH ELECTION MADE.— 
(A) ALTERNATIVE FUNDING SCHEDULE.— 
If an election under subsection (a)(1) was made 
with respect to an eligible plan, the plan spon-
sor may select either a plan year beginning in 
2006 or a plan year beginning in 2007 as the 
first plan year to which such election applies. 
The election shall apply to such plan year and 
all subsequent years. The election shall be 
made— 
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ccoleman on PROD1PC71 with BILLS
396 
(i) not later than December 31, 2006, 
in the case of an election for a plan year 
beginning in 2006, or 
(ii) not later than December 31, 
2007, in the case of an election for a plan 
year beginning in 2007. 
(B) 10 YEAR AMORTIZATION.—An election 
under subsection (a)(2) shall be made not later 
than December 31, 2007. 
(C) ELECTION OF NEW PLAN YEAR FOR 
ALTERNATIVE
FUNDING
SCHEDULE.—In the 
case of an election under subsection (a)(1), the 
plan sponsor may specify a new plan year in 
such election and the plan year of the plan may 
be changed to such new plan year without the 
approval of the Secretary of the Treasury. 
(2) MANNER OF ELECTION.—A plan sponsor 
shall make any election under subsection (a) in such 
manner as the Secretary of the Treasury may pre-
scribe. Such election, once made, may be revoked 
only with the consent of such Secretary. 
(e) MINIMUM REQUIRED CONTRIBUTION.—In the 
case of an eligible plan with respect to which an election 
is made under subsection (a)(1)— 
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ccoleman on PROD1PC71 with BILLS
397 
(1) IN GENERAL.—In the case of any applicable 
plan year during the amortization period, the min-
imum required contribution shall be the amount nec-
essary to amortize the unfunded liability of the plan, 
determined as of the first day of the plan year, in 
equal annual installments (until fully amortized) 
over the remainder of the amortization period. Such 
amount shall be separately determined for each ap-
plicable plan year. 
(2) YEARS AFTER AMORTIZATION PERIOD.—In 
the case of any plan year beginning after the end of 
the amortization period, section 302(a)(2)(A) of 
such Act and section 412(a)(2)(A) of such Code 
shall apply to such plan, but the prefunding balance 
and funding standard carryover balance as of the 
first day of the first of such years under section 
303(f) of such Act and section 430(f) of such Code 
shall be zero. 
(3) DEFINITIONS.—For purposes of this sec-
tion— 
(A) UNFUNDED
LIABILITY.—The term 
‘‘unfunded liability’’ means the unfunded ac-
crued liability under the plan, determined under 
the unit credit funding method. 
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ccoleman on PROD1PC71 with BILLS
398 
(B) AMORTIZATION
PERIOD.—The term 
‘‘amortization period’’ means the 17-plan year 
period beginning with the first applicable plan 
year. 
(4) OTHER RULES.—In determining the min-
imum 
required 
contribution 
and 
amortization 
amount under this subsection— 
(A) the provisions of section 302(c)(3) of 
such Act and section 412(c)(3) of such Code, as 
in effect before the date of enactment of this 
section, shall apply, 
(B) a rate of interest of 8.85 percent shall 
be used for all calculations requiring an interest 
rate, and 
(C) the value of plan assets shall be equal 
to their fair market value. 
(5) SPECIAL RULE FOR CERTAIN PLAN SPIN-
OFFS.—For purposes of subsection (b), if, with re-
spect to any eligible plan to which this subsection 
applies— 
(A) any applicable plan year includes the 
date of the enactment of this Act, 
(B) a plan was spun off from the eligible 
plan during the plan year but before such date 
of enactment, 
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ccoleman on PROD1PC71 with BILLS
399 
the minimum required contribution under paragraph 
(1) for the eligible plan for such applicable plan year 
shall be an aggregate amount determined as if the 
plans were a single plan for that plan year (based 
on the full 12-month plan year in effect prior to the 
spin-off). The employer shall designate the allocation 
of such aggregate amount between such plans for 
the applicable plan year. 
(f) SPECIAL RULES FOR CERTAIN BALANCES AND 
WAIVERS.—In the case of an eligible plan with respect to 
which an election is made under subsection (a)(1)— 
(1) FUNDING STANDARD ACCOUNT AND CREDIT 
BALANCES.—Any charge or credit in the funding 
standard account under section 302 of such Act or 
section 412 of such Code, and any prefunding bal-
ance or funding standard carryover balance under 
section 303 of such Act or section 430 of such Code, 
as of the day before the first day of the first applica-
ble plan year, shall be reduced to zero. 
(2) WAIVED
FUNDING
DEFICIENCIES.—Any 
waived funding deficiency under sections 302 and 
303 of such Act or section 412 of such Code, as in 
effect before the date of enactment of this section, 
shall be deemed satisfied as of the first day of the 
first applicable plan year and the amount of such 
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400 
waived funding deficiency shall be taken into ac-
count in determining the plan’s unfunded liability 
under subsection (e)(3)(A). In the case of a plan 
amendment adopted to satisfy the requirements of 
subsection (b)(2), the plan shall not be deemed to 
violate section 304(b) of such Act or section 412(f) 
of such Code, as so in effect, by reason of such 
amendment or any increase in benefits provided to 
such plan’s participants under a separate plan that 
is a defined contribution plan or a multiemployer 
plan. 
(g) OTHER RULES FOR PLANS MAKING ELECTION 
UNDER THIS SECTION.— 
(1) SUCCESSOR PLANS TO CERTAIN PLANS.— 
If— 
(A) an election under paragraph (1) or (2) 
of subsection (a) is in effect with respect to any 
eligible plan, and 
(B) the eligible plan is maintained by an 
employer that establishes or maintains 1 or 
more other defined benefit plans (other than 
any multiemployer plan), and such other plans 
in combination provide benefit accruals to any 
substantial number of successor employees, 
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ccoleman on PROD1PC71 with BILLS
401 
the Secretary of the Treasury may, in the Sec-
retary’s discretion, determine that any trust of 
which any other such plan is a part does not con-
stitute a qualified trust under section 401(a) of the 
Internal Revenue Code of 1986 unless all benefit ob-
ligations of the eligible plan have been satisfied. For 
purposes of this paragraph, the term ‘‘successor em-
ployee’’ means any employee who is or was covered 
by the eligible plan and any employees who perform 
substantially the same type of work with respect to 
the same business operations as an employee covered 
by such eligible plan. 
(2) SPECIAL RULES FOR TERMINATIONS.— 
(A) PBGC LIABILITY
LIMITED.—Section 
4022 of the Employee Retirement Income Secu-
rity Act of 1974, as amended by this Act, is 
amended by adding at the end the following 
new subsection: 
‘‘(h) SPECIAL RULE FOR PLANS ELECTING CERTAIN 
FUNDING REQUIREMENTS.—If any plan makes an elec-
tion under section 402(a)(1) of the Pension Protection Act 
of 2006 and is terminated effective before the end of the 
10-year period beginning on the first day of the first appli-
cable plan year— 
‘‘(1) this section shall be applied— 
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402 
‘‘(A) by treating the first day of the first 
applicable plan year as the termination date of 
the plan, and 
‘‘(B) by determining the amount of guar-
anteed benefits on the basis of plan assets and 
liabilities as of such assumed termination date, 
and 
‘‘(2) notwithstanding section 4044(a), plan as-
sets shall first be allocated to pay the amount, if 
any, by which— 
‘‘(A) the amount of guaranteed benefits 
under this section (determined without regard 
to paragraph (1) and on the basis of plan as-
sets and liabilities as of the actual date of plan 
termination), exceeds 
‘‘(B) the amount determined under para-
graph (1).’’. 
(B) TERMINATION PREMIUM.—In applying 
section 4006(a)(7)(A) of the Employee Retire-
ment Income Security Act of 1974 to an eligible 
plan during any period in which an election 
under subsection (a)(1) is in effect— 
(i) ‘‘$2,500’’ shall be substituted for 
‘‘$1,250’’ in such section if such plan ter-
minates during the 5-year period beginning 
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ccoleman on PROD1PC71 with BILLS
403 
on the first day of the first applicable plan 
year with respect to such plan, and 
(ii) such section shall be applied with-
out regard to subparagraph (B) of section 
8101(d)(2) of the Deficit Reduction Act of 
2005 (relating to special rule for plans ter-
minated in bankruptcy). 
The substitution described in clause (i) shall 
not apply with respect to any plan if the Sec-
retary of Labor determines that such plan ter-
minated as a result of extraordinary cir-
cumstances such as a terrorist attack or other 
similar event. 
(3) LIMITATION ON DEDUCTIONS UNDER CER-
TAIN PLANS.—Section 404(a)(7)(C)(iv) of the Inter-
nal Revenue Code of 1986, as added by this Act, 
shall not apply with respect to any taxable year of 
a plan sponsor of an eligible plan if any applicable 
plan year with respect to such plan ends with or 
within such taxable year. 
(4) NOTICE.—In the case of a plan amendment 
adopted in order to comply with this section, any no-
tice required under section 204(h) of such Act or 
section 4980F(e) of such Code shall be provided 
within 15 days of the effective date of such plan 
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ccoleman on PROD1PC71 with BILLS
404 
amendment. This subsection shall not apply to any 
plan unless such plan is maintained pursuant to one 
or more collective bargaining agreements between 
employee representatives and 1 or more employers. 
(h) EXCLUSION
OF CERTAIN EMPLOYEES FROM 
MINIMUM COVERAGE REQUIREMENTS.— 
(1) IN GENERAL.—Section 410(b)(3) of such 
Code is amended by striking the last sentence and 
inserting the following: ‘‘For purposes of subpara-
graph (B), management pilots who are not rep-
resented in accordance with title II of the Railway 
Labor Act shall be treated as covered by a collective 
bargaining agreement described in such subpara-
graph if the management pilots manage the flight 
operations of air pilots who are so represented and 
the management pilots are, pursuant to the terms of 
the agreement, included in the group of employees 
benefitting under the trust described in such sub-
paragraph. Subparagraph (B) shall not apply in the 
case of a plan which provides contributions or bene-
fits for employees whose principal duties are not cus-
tomarily performed aboard an aircraft in flight 
(other than management pilots described in the pre-
ceding sentence).’’ 
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ccoleman on PROD1PC71 with BILLS
405 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to years beginning be-
fore, on, or after the date of the enactment of this 
Act. 
(i) EXTENSION OF SPECIAL RULE FOR ADDITIONAL 
FUNDING REQUIREMENTS.—In the case of an employer 
which is a commercial passenger airline, section 
302(d)(12) of the Employee Retirement Income Security 
Act of 1974 and section 412(l)(12) of the Internal Rev-
enue Code of 1986, as in effect before the date of the en-
actment of this Act, shall each be applied— 
(1) by substituting ‘‘December 28, 2007’’ for 
‘‘December 28, 2005’’ in subparagraph (D)(i) there-
of, and 
(2) without regard to subparagraph (D)(ii). 
(j) EFFECTIVE DATE.—Except as otherwise provided 
in this section, the provisions of and amendments made 
by this section shall apply to plan years ending after the 
date of the enactment of this Act. 
SEC. 403. LIMITATION ON PBGC GUARANTEE OF SHUT-
DOWN AND OTHER BENEFITS. 
(a) IN GENERAL.—Section 4022(b) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1322(b)) is amended by adding at the end the following: 
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ccoleman on PROD1PC71 with BILLS
406 
‘‘(8) If an unpredictable contingent event ben-
efit (as defined in section 206(g)(1)) is payable by 
reason of the occurrence of any event, this section 
shall be applied as if a plan amendment had been 
adopted on the date such event occurred.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to benefits that become payable 
as a result of an event which occurs after July 26, 2005. 
SEC. 404. RULES RELATING TO BANKRUPTCY OF EM-
PLOYER. 
(a) GUARANTEE.—Section 4022 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1322) 
is amended by adding at the end the following: 
‘‘(g) BANKRUPTCY FILING SUBSTITUTED FOR TER-
MINATION DATE.—If a contributing sponsor of a plan has 
filed or has had filed against such person a petition seek-
ing liquidation or reorganization in a case under title 11, 
United States Code, or under any similar Federal law or 
law of a State or political subdivision, and the case has 
not been dismissed as of the termination date of the plan, 
then this section shall be applied by treating the date such 
petition was filed as the termination date of the plan.’’. 
(b) ALLOCATION
OF
ASSETS
AMONG
PRIORITY 
GROUPS IN BANKRUPTCY PROCEEDINGS.—Section 4044 
of the Employee Retirement Income Security Act of 1974 
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