204
SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEM-
PLOYER PLANS IN ENDANGERED OR CRIT-
ICAL STATUS. 
(a) IN GENERAL.—Part 3 of subtitle B of title I of 
the Employee Retirement Income Security Act of 1974 (as 
amended by the preceding provisions of this Act) is 
amended further by inserting after section 304 the fol-
lowing new section: 
‘‘ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER 
PLANS IN ENDANGERED STATUS OR CRITICAL STATUS 
‘‘SEC. 305. (a) ANNUAL CERTIFICATION BY PLAN 
ACTUARY.—
‘‘(1) IN GENERAL.—During the 90-day period 
beginning on first day of each plan year of a multi-
employer plan, the plan actuary shall certify to the 
Secretary of the Treasury whether or not the plan 
is in endangered status for such plan year and 
whether or not the plan is in critical status for such 
plan year. 
‘‘(2) ACTUARIAL PROJECTIONS OF ASSETS AND 
LIABILITIES.—
‘‘(A) IN GENERAL.—In making the deter-
minations under paragraph (1), the plan actu-
ary shall make projections under subsections 
(b)(2) and (c)(2) for the current and succeeding 
plan years, using reasonable actuarial assump-
205
tions and methods, of the current value of the 
assets of the plan and the present value of all 
liabilities to participants and beneficiaries under 
the plan for the current plan year as of the be-
ginning of such year, as based on the actuarial 
statement prepared for the preceding plan year 
under section 103(d). 
‘‘(B) DETERMINATIONS OF FUTURE CON-
TRIBUTIONS.—Any such actuarial projection of 
plan assets shall assume—
‘‘(i) reasonably anticipated employer 
and employee contributions for the current 
and succeeding plan years, assuming that 
the terms of the one or more collective bar-
gaining agreements pursuant to which the 
plan is maintained for the current plan 
year continue in effect for succeeding plan 
years, or 
‘‘(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 significant demographic changes that 
would make continued application of such 
terms unreasonable.
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‘‘(3) PRESUMED STATUS IN ABSENCE OF TIME-
LY
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 notifi-
cation of the endangered or critical status to the 
participants and beneficiaries, the bargaining par-
ties, the Pension Benefit Guaranty Corporation, the 
Secretary of the Treasury, and the Secretary of 
Labor. 
‘‘(b) FUNDING RULES FOR MULTIEMPLOYER PLANS 
IN ENDANGERED STATUS.—
‘‘(1) IN
GENERAL.—In any case in which a 
multiemployer 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
207
multiemployer plan to include a funding improve-
ment plan upon approval thereof by the bargaining 
parties under this subsection. The amendment shall 
be adopted 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.—
‘‘(A) BENCHMARKS.—A funding improve-
ment plan shall consist of amendments to the 
plan formulated to provide, under reasonable 
actuarial assumptions, for the attainment, dur-
ing the funding improvement period under the
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funding improvement plan, of the following 
benchmarks: 
‘‘(i) INCREASE IN FUNDED PERCENT-
AGE.—An increase in the plan’s funded 
percentage such that—
‘‘(I) the difference between 100 
percent and the plan’s funded per-
centage for the last year of the fund-
ing improvement period, is not more 
than 
‘‘(II) 2⁄3 of the difference between 
100 percent and the plan’s funded 
percentage 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)). 
‘‘(B) FUNDING IMPROVEMENT PERIOD.—
The funding improvement period for any fund-
ing improvement plan adopted pursuant to this 
subsection is the 10-year period beginning on 
the earlier of—
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‘‘(i) the second anniversary of the 
date of the adoption of the funding im-
provement 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 cov-
ering on the day of such certification at 
least 75 percent of active participants in 
such multiemployer 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’. 
‘‘(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—
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‘‘(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 attain the increase described in subpara-
graph (A)(i) over the period described in 
subparagraph (B), subparagraph (B) shall
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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 an-
nual report for such plan year under section 
104(a) and in the summary annual report de-
scribed in section 104(b)(3). 
‘‘(4) DEVELOPMENT
OF
FUNDING
IMPROVE-
MENT 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 
‘‘(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),
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use of the shortfall funding method in making 
funding 
standard 
account 
computations, 
amendments to the plan’s benefit structure, re-
ductions in future benefit accruals, and other 
reasonable actions 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 para-
graph (3)(A). Such proposals shall in-
clude—
‘‘(I) at least one proposal for re-
ductions in the amount of future ben-
efit accruals necessary to achieve the 
benchmarks, assuming no amend-
ments increasing contributions under
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the plan (other than amendments in-
creasing contributions necessary to 
achieve the benchmarks after amend-
ments have reduced future benefit ac-
cruals to the maximum extent per-
mitted by law), and 
‘‘(II) at least one proposal for in-
creases in contributions under the 
plan necessary to achieve the bench-
marks, assuming no amendments re-
ducing future 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, 
the plan sponsor shall provide all such par-
ties information as to other combinations 
of increases in contributions and reduc-
214
tions 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 fund-
ing improvement plan. 
‘‘(5) MAINTENANCE OF CONTRIBUTIONS PEND-
ING APPROVAL OF FUNDING IMPROVEMENT PLAN.—
Pending approval of a funding improvement plan by 
the bargaining parties with respect to a multiem-
ployer 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. 
‘‘(6) BENEFIT
RESTRICTIONS
PENDING
AP-
PROVAL OF FUNDING IMPROVEMENT PLAN.—Pend-
ing approval of a funding improvement plan by the
215
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 
benefit under the plan exceeds $5,000, such 
benefit may not be distributed as an immediate 
distribution 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 
required as a condition of qualification 
under part I of subchapter D of chapter 1 
of subtitle A of the Internal Revenue Code 
of 1986. 
‘‘(7) DEFAULT CRITICAL STATUS IF NO FUND-
ING
IMPROVEMENT
PLAN
ADOPTED.—If no plan
216
amendment 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 status as of the first day of the succeeding 
plan year. 
‘‘(8) RESTRICTIONS UPON APPROVAL OF FUND-
ING
IMPROVEMENT
PLAN.—Upon adoption of a 
funding improvement plan with respect to a multi-
employer plan, the plan may not be amended—
‘‘(A) so as to be inconsistent with the 
funding 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 benchmarks described in paragraph (3)(A). 
‘‘(c) FUNDING RULES FOR MULTIEMPLOYER PLANS 
IN CRITICAL STATUS.—
‘‘(1) IN
GENERAL.—In any case in which a 
multiemployer plan is in critical status for a plan 
year as described in paragraph (2) (or otherwise en-
ters into critical status under this section) and no 
rehabilitation 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
217
subsection, amend the multiemployer plan to include 
a rehabilitation plan under this subsection. The 
amendment 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 
paragraph 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—
218
‘‘(I) the market value of plan as-
sets, plus 
‘‘(II) the present value of the 
reasonably anticipated employer and 
employee contributions for the current 
plan year and each of the 6 suc-
ceeding 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