Sec. 116. Restrictions on funding of nonqualified deferred compensation plans by employers maintaining underfunded or terminated single-employer plans.

TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS AND RELATED PROVISIONS

Subtitle A--Amendments to Employee Retirement Income Security Act of 1974

Sec. 201. Funding rules for multiemployer defined benefit plans.

Sec. 202. Additional funding rules for multiemployer plans in endangered or critical status.

Sec. 203. Measures to forestall insolvency of multiemployer plans.

Sec. 204. Withdrawal liability reforms.

Sec. 205. Prohibition on retaliation against employers exercising their rights to petition the Federal Government.

Sec. 206. Special rule for certain benefits funded under an agreement approved by the Pension Benefit Guaranty Corporation.

Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 211. Funding rules for multiemployer defined benefit plans.

Sec. 212. Additional funding rules for multiemployer plans in endangered or critical status.

Sec. 213. Measures to forestall insolvency of multiemployer plans.

Sec. 214. Exemption from excise taxes for certain multiemployer pension plans.

Subtitle C--Sunset of Additional Funding Rules

Sec. 221. Sunset of additional funding rules.

TITLE III--INTEREST RATE ASSUMPTIONS

Sec. 301. Extension of replacement of 30-year Treasury rates.

Sec. 302. Interest rate assumption for determination of lump sum distributions.

Sec. 303. Interest rate assumption for applying benefit limitations to lump sum distributions.

TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS

Sec. 401. PBGC premiums.

Sec. 402. Special funding rules for certain plans maintained by commercial airlines.

Sec. 403. Limitation on PBGC guarantee of shutdown and other benefits.

Sec. 404. Rules relating to bankruptcy of employer.

Sec. 405. PBGC premiums for small plans.

Sec. 406. Authorization for PBGC to pay interest on premium overpayment refunds.

Sec. 407. Rules for substantial owner benefits in terminated plans.

Sec. 408. Acceleration of PBGC computation of benefits attributable to recoveries from employers.

Sec. 409. Treatment of certain plans where cessation or change in membership of a controlled group.

Sec. 410. Missing participants.

Sec. 411. Director of the Pension Benefit Guaranty Corporation.

Sec. 412. Inclusion of information in the PBGC annual report.

TITLE V--DISCLOSURE

Sec. 501. Defined benefit plan funding notice.

Sec. 502. Access to multiemployer pension plan information.

Sec. 503. Additional annual reporting requirements.

Sec. 504. Electronic display of annual report information.

Sec. 505. Section 4010 filings with the PBGC.

Sec. 506. Disclosure of termination information to plan participants.

Sec. 507. Notice of freedom to divest employer securities.

Sec. 508. Periodic pension benefit statements.

Sec. 509. Notice to participants or beneficiaries of blackout periods.

TITLE VI--INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND FIDUCIARY RULES

Subtitle A--Investment Advice

Sec. 601. Prohibited transaction exemption for provision of investment advice.

Subtitle B--Prohibited Transactions

Sec. 611. Prohibited transaction rules relating to financial investments.

Sec. 612. Correction period for certain transactions involving securities and commodities.

Subtitle C--Fiduciary and Other Rules

Sec. 621. Inapplicability of relief from fiduciary liability during suspension of ability of participant or beneficiary to direct investments.

Sec. 622. Increase in maximum bond amount.

Sec. 623. Increase in penalties for coercive interference with exercise of ERISA rights.

Sec. 624. Treatment of investment of assets by plan where participant fails to exercise investment election.

Sec. 625. Clarification of fiduciary rules.

TITLE VII--BENEFIT ACCRUAL STANDARDS

Sec. 701. Benefit accrual standards.

Sec. 702. Regulations relating to mergers and acquisitions.

TITLE VIII--PENSION RELATED REVENUE PROVISIONS

Subtitle A--Deduction Limitations

Sec. 801. Increase in deduction limit for single-employer plans.

Sec. 802. Deduction limits for multiemployer plans.

Sec. 803. Updating deduction rules for combination of plans.

Subtitle B--Certain Pension Provisions Made Permanent

Sec. 811. Pensions and individual retirement arrangement provisions of Economic Growth and Tax Relief Reconciliation Act of 2001 made permanent.

Sec. 812. Saver's credit.

Subtitle C--Improvements in Portability, Distribution, and Contribution Rules

Sec. 821. Clarifications regarding purchase of permissive service credit.

Sec. 822. Allow rollover of after-tax amounts in annuity contracts.

Sec. 823. Clarification of minimum distribution rules for governmental plans.

Sec. 824. Allow direct rollovers from retirement plans to Roth IRAs.

Sec. 825. Eligibility for participation in retirement plans.

Sec. 826. Modifications of rules governing hardships and unforseen financial emergencies.

Sec. 827. Penalty-free withdrawals from retirement plans for individuals called to active duty for at least 179 days.

Sec. 828. Waiver of 10 percent early withdrawal penalty tax on certain distributions of pension plans for public safety employees.

Sec. 829. Allow rollovers by nonspouse beneficiaries of certain retirement plan distributions.

Sec. 830. Direct payment of tax refunds to individual retirement plans.

Sec. 831. Allowance of additional IRA payments in certain bankruptcy cases.

Sec. 832. Determination of average compensation for section 415 limits.

Sec. 833. Inflation indexing of gross income limitations on certain retirement savings incentives.

Subtitle D--Health and Medical Benefits

Sec. 841. Use of excess pension assets for future retiree health benefits and collectively bargained retiree health benefits.

Sec. 842. Transfer of excess pension assets to multiemployer health plan.

Sec. 843. Allowance of reserve for medical benefits of plans sponsored by bona fide associations.

Sec. 844. Treatment of annuity and life insurance contracts with a long-term care insurance feature.

Sec. 845. Distributions from governmental retirement plans for health and long-term care insurance for public safety officers.

Subtitle E--United States Tax Court Modernization

Sec. 851. Cost-of-living adjustments for Tax Court judicial survivor annuities.

Sec. 852. Cost of life insurance coverage for Tax Court judges age 65 or over.

Sec. 853. Participation of Tax Court judges in the Thrift Savings Plan.

Sec. 854. Annuities to surviving spouses and dependent children of special trial judges of the Tax Court.

Sec. 855. Jurisdiction of Tax Court over collection due process cases.

Sec. 856. Provisions for recall.

Sec. 857. Authority for special trial judges to hear and decide certain employment status cases.

Sec. 858. Confirmation of authority of Tax Court to apply doctrine of equitable recoupment.

Sec. 859. Tax Court filing fee in all cases commenced by filing petition.

Sec. 860. Expanded use of Tax Court practice fee for pro se taxpayers.

Subtitle F--Other Provisions

Sec. 861. Extension to all governmental plans of current moratorium on application of certain nondiscrimination rules applicable to State and local plans.

Sec. 862. Elimination of aggregate limit for usage of excess funds from black lung disability trusts.

Sec. 863. Treatment of death benefits from corporate-owned life insurance.

Sec. 864. Treatment of test room supervisors and proctors who assist in the administration of college entrance and placement exams.

Sec. 865. Grandfather rule for church plans which self-annuitize.

Sec. 866. Exemption for income from leveraged real estate held by church plans.

Sec. 867. Church plan rule.

Sec. 868. Gratuitous transfer for benefits of employees.

TITLE IX--INCREASE IN PENSION PLAN DIVERSIFICATION AND PARTICIPATION AND OTHER PENSION PROVISIONS

Sec. 901. Defined contribution plans required to provide employees with freedom to invest their plan assets.

Sec. 902. Increasing participation through automatic contribution arrangements.

Sec. 903. Treatment of eligible combined defined benefit plans and qualified cash or deferred arrangements.

Sec. 904. Faster vesting of employer nonelective contributions.

Sec. 905. Distributions during working retirement.

Sec. 906. Treatment of certain pension plans of Indian tribal governments.

TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION

Sec. 1001. Regulations on time and order of issuance of domestic relations orders.

Sec. 1002. Entitlement of divorced spouses to railroad retirement annuities independent of actual entitlement of employee.

Sec. 1003. Extension of tier II railroad retirement benefits to surviving former spouses pursuant to divorce agreements.

Sec. 1004. Requirement for additional survivor annuity option.

TITLE XI--ADMINISTRATIVE PROVISIONS

Sec. 1101. Employee plans compliance resolution system.

Sec. 1102. Notice and consent period regarding distributions.

Sec. 1103. Reporting simplification.

Sec. 1104. Voluntary early retirement incentive and employment retention plans maintained by local educational agencies and other entities.

Sec. 1105. No reduction in unemployment compensation as a result of pension rollovers.

Sec. 1106. Revocation of election relating to treatment as multiemployer plan.

Sec. 1107. Provisions relating to plan amendments.

TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS

Subtitle A--Charitable Giving Incentives

Sec. 1201. Tax-free distributions from individual retirement plans for charitable purposes.

Sec. 1202. Extension of modification of charitable deduction for contributions of food inventory.

Sec. 1203. Basis adjustment to stock of S corporation contributing property.

Sec. 1204. Extension of modification of charitable deduction for contributions of book inventory.

Sec. 1205. Modification of tax treatment of certain payments to controlling exempt organizations.

Sec. 1206. Encouragement of contributions of capital gain real property made for conservation purposes.

Sec. 1207. Excise taxes exemption for blood collector organizations.

Subtitle B--Reforming Exempt Organizations

Part 1--General Reforms

Sec. 1211. Reporting on certain acquisitions of interests in insurance contracts in which certain exempt organizations hold an interest.

Sec. 1212. Increase in penalty excise taxes relating to public charities, social welfare organizations, and private foundations.

Sec. 1213. Reform of charitable contributions of certain easements in registered historic districts and reduced deduction for portion of qualified conservation contribution attributable to rehabilitation credit.

Sec. 1214. Charitable contributions of taxidermy property.

Sec. 1215. Recapture of tax benefit for charitable contributions of exempt use property not used for an exempt use.

Sec. 1216. Limitation of deduction for charitable contributions of clothing and household items.

Sec. 1217. Modification of recordkeeping requirements for certain charitable contributions.

Sec. 1218. Contributions of fractional interests in tangible personal property.

Sec. 1219. Provisions relating to substantial and gross overstatements of valuations.

Sec. 1220. Additional standards for credit counseling organizations.

Sec. 1221. Expansion of the base of tax on private foundation net investment income.

Sec. 1222. Definition of convention or association of churches.

Sec. 1223. Notification requirement for entities not currently required to file.

Sec. 1224. Disclosure to State officials relating to exempt organizations.

Sec. 1225. Public disclosure of information relating to unrelated business income tax returns.

Sec. 1226. Study on donor advised funds and supporting organizations.

Part 2--Improved Accountability of Donor Advised Funds

Sec. 1231. Excise taxes relating to donor advised funds.

Sec. 1232. Excess benefit transactions involving donor advised funds and sponsoring organizations.

Sec. 1233. Excess business holdings of donor advised funds.

Sec. 1234. Treatment of charitable contribution deductions to donor advised funds.

Sec. 1235. Returns of, and applications for recognition by, sponsoring organizations.

Part 3--Improved Accountability of Supporting Organizations

Sec. 1241. Requirements for supporting organizations.

Sec. 1242. Excess benefit transactions involving supporting organizations.

Sec. 1243. Excess business holdings of supporting organizations.

Sec. 1244. Treatment of amounts paid to supporting organizations by private foundations.

Sec. 1245. Returns of supporting organizations.

TITLE XIII--OTHER PROVISIONS

Sec. 1301. Technical corrections relating to mine safety.

Sec. 1302. Going-to-the-sun road.

Sec. 1303. Exception to the local furnishing requirement of the tax-exempt bond rules.

Sec. 1304. Qualified tuition programs.

TITLE XIV--TARIFF PROVISIONS

Sec. 1401. Short title; table of contents.

TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION PLANS

Subtitle A--Amendments to Employee Retirement Income Security Act of 1974

SEC. 101. MINIMUM FUNDING STANDARDS.

(a) Repeal of Existing Funding Rules--Sections 302 through 308 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082 through 1086) are repealed.

(b) New Minimum Funding Standards--Part 3 of subtitle B of title I of such Act (as amended by subsection (a)) is amended by inserting after section 301 the following new section:

'SEC. 302. MINIMUM FUNDING STANDARDS.

'(a) Requirement To Meet Minimum Funding Standard-

'(1) IN GENERAL- A plan to which this part applies shall satisfy the minimum funding standard applicable to the plan for any plan year.

'(2) MINIMUM FUNDING STANDARD- For purposes of paragraph (1), a plan shall be treated as satisfying the minimum funding standard for a plan year if--

'(A) in the case of a defined benefit plan which is a single-employer plan, the employer makes contributions to or under the plan for the plan year which, in the aggregate, are not less than the minimum required contribution determined under section 303 for the plan for the plan year,

'(B) in the case of a money purchase plan which is a single-employer plan, the employer makes contributions to or under the plan for the plan year which are required under the terms of the plan, and

'(C) in the case of a multiemployer plan, the employers make contributions to or under the plan for any plan year which, in the aggregate, are sufficient to ensure that the plan does not have an accumulated funding deficiency under section 304 as of the end of the plan year.

'(b) Liability for Contributions-

'(1) IN GENERAL- Except as provided in paragraph (2), the amount of any contribution required by this section (including any required installments under paragraphs (3) and (4) of section 303(j)) shall be paid by the employer responsible for making contributions to or under the plan.

'(2) JOINT AND SEVERAL LIABILITY WHERE EMPLOYER MEMBER OF CONTROLLED GROUP- If the employer referred to in paragraph (1) is a member of a controlled group, each member of such group shall be jointly and severally liable for payment of such contributions.

'(c) Variance From Minimum Funding Standards-

'(1) WAIVER IN CASE OF BUSINESS HARDSHIP-

'(A) IN GENERAL- If--

'(i) an employer is (or in the case of a multiemployer plan, 10 percent or more of the number of employers contributing to or under the plan is) unable to satisfy the minimum funding standard for a plan year without temporary substantial business hardship (substantial business hardship in the case of a multiemployer plan), and

'(ii) application of the standard would be adverse to the interests of plan participants in the aggregate,

the Secretary of the Treasury may, subject to subparagraph (C), waive the requirements of subsection (a) for such year with respect to all or any portion of the minimum funding standard. The Secretary of the Treasury shall not waive the minimum funding standard with respect to a plan for more than 3 of any 15 (5 of any 15 in the case of a multiemployer plan) consecutive plan years.

'(B) EFFECTS OF WAIVER- If a waiver is granted under subparagraph (A) for any plan year--

'(i) in the case of a single-employer plan, the minimum required contribution under section 303 for the plan year shall be reduced by the amount of the waived funding deficiency and such amount shall be amortized as required under section 303(e), and

'(ii) in the case of a multiemployer plan, the funding standard account shall be credited under section 304(b)(3)(C) with the amount of the waived funding deficiency and such amount shall be amortized as required under section 304(b)(2)(C).

'(C) WAIVER OF AMORTIZED PORTION NOT ALLOWED- The Secretary of the Treasury may not waive under subparagraph (A) any portion of the minimum funding standard under subsection (a) for a plan year which is attributable to any waived funding deficiency for any preceding plan year.

'(2) DETERMINATION OF BUSINESS HARDSHIP- For purposes of this subsection, the factors taken into account in determining temporary substantial business hardship (substantial business hardship in the case of a multiemployer plan) shall include (but shall not be limited to) whether or not--

'(A) the employer is operating at an economic loss,

'(B) there is substantial unemployment or underemployment in the trade or business and in the industry concerned,

'(C) the sales and profits of the industry concerned are depressed or declining, and

'(D) it is reasonable to expect that the plan will be continued only if the waiver is granted.

'(3) WAIVED FUNDING DEFICIENCY- For purposes of this part, the term 'waived funding deficiency’ means the portion of the minimum funding standard under subsection (a) (determined without regard to the waiver) for a plan year waived by the Secretary of the Treasury and not satisfied by employer contributions.

'(4) SECURITY FOR WAIVERS FOR SINGLE-EMPLOYER PLANS, CONSULTATIONS-

'(A) SECURITY MAY BE REQUIRED-

'(i) IN GENERAL- Except as provided in subparagraph (C), the Secretary of the Treasury may require an employer maintaining a defined benefit plan which is a single-employer plan (within the meaning of section 4001(a)(15)) to provide security to such plan as a condition for granting or modifying a waiver under paragraph (1).

'(ii) SPECIAL RULES- Any security provided under clause (i) may be perfected and enforced only by the Pension Benefit Guaranty Corporation, or at the direction of the Corporation, by a contributing sponsor (within the meaning of section 4001(a)(13)), or a member of such sponsor's controlled group (within the meaning of section 4001(a)(14)).

'(B) CONSULTATION WITH THE PENSION BENEFIT GUARANTY CORPORATION- Except as provided in subparagraph (C), the Secretary of the Treasury shall, before granting or modifying a waiver under this subsection with respect to a plan described in subparagraph (A)(i)--

'(i) provide the Pension Benefit Guaranty Corporation with--

'(I) notice of the completed application for any waiver or modification, and

'(II) an opportunity to comment on such application within 30 days after receipt of such notice, and

'(ii) consider--

'(I) any comments of the Corporation under clause (i)(II), and

'(II) any views of any employee organization (within the meaning of section 3(4)) representing participants in the plan which are submitted in writing to the Secretary of the Treasury in connection with such application.

Information provided to the Corporation under this subparagraph shall be considered tax return information and subject to the safeguarding and reporting requirements of section 6103(p) of the Internal Revenue Code of 1986.

'(C) EXCEPTION FOR CERTAIN WAIVERS-

'(i) IN GENERAL- The preceding provisions of this paragraph shall not apply to any plan with respect to which the sum of--

'(I) the aggregate unpaid minimum required contributions for the plan year and all preceding plan years, and

'(II) the present value of all waiver amortization installments determined for the plan year and succeeding plan years under section 303(e)(2),

is less than $1,000,000.

'(ii) TREATMENT OF WAIVERS FOR WHICH APPLICATIONS ARE PENDING- The amount described in clause (i)(I) shall include any increase in such amount which would result if all applications for waivers of the minimum funding standard under this subsection which are pending with respect to such plan were denied.

'(iii) UNPAID MINIMUM REQUIRED CONTRIBUTION- For purposes of this subparagraph--

'(I) IN GENERAL- The term 'unpaid minimum required contribution’ means, with respect to any plan year, any minimum r equired contribution under section 303 for the plan year which is not paid on or before the due date (as determined under section 303(j)(1)) for the plan year.

'(II) ORDERING RULE- For purposes of subclause (I), any payment to or under a plan for any plan year shall be allocated first to unpaid minimum required contributions for all preceding plan years on a first-in, first-out basis and then to the minimum required contribution under section 303 for the plan year.

'(5) SPECIAL RULES FOR SINGLE-EMPLOYER PLANS-

'(A) APPLICATION MUST BE SUBMITTED BEFORE DATE 2 1/2 MONTHS AFTER CLOSE OF YEAR- In the case of a single-employer plan, no waiver may be granted under this subsection with respect to any plan for any plan year unless an application therefor is submitted to the Secretary of the Treasury not later than the 15th day of the 3rd month beginning after the close of such plan year.

'(B) SPECIAL RULE IF EMPLOYER IS MEMBER OF CONTROLLED GROUP- In the case of a single-employer plan, if an employer is a member of a controlled group, the temporary substantial business hardship requirements of paragraph (1) shall be treated as met only if such requirements are met--

'(i) with respect to such employer, and

'(ii) with respect to the controlled group of which such employer is a member (determined by treating all members of such group as a single employer).

The Secretary of the Treasury may provide that an analysis of a trade or business or industry of a member need not be conducted if such Secretary determines such analysis is not necessary because the taking into account of such member would not significantly affect the determination under this paragraph.

'(6) ADVANCE NOTICE-

'(A) IN GENERAL- The Secretary of the Treasury shall, before granting a waiver under this subsection, require each applicant to provide evidence satisfactory to such Secretary that the applicant has provided notice of the filing of the application for such waiver to each affected party (as defined in section 4001(a)(21)). Such notice shall include a description of the extent to which the plan is funded for benefits which are guaranteed under title IV and for benefit liabilities.

'(B) CONSIDERATION OF RELEVANT INFORMATION- The Secretary of the Treasury shall consider any relevant information provided by a person to whom notice was given under subparagraph (A).

'(7) RESTRICTION ON PLAN AMENDMENTS-

'(A) IN GENERAL- No amendment of a plan which increases the liabilities of the plan by reason of any increase in benefits, any change in the accrual of benefits, or any change in the rate at which benefits become nonforfeitable under the plan shall be adopted if a waiver under this subsection or an extension of time under section 304(d) is in effect with respect to the plan, or if a plan amendment described in subsection (d)(2) has been made at any time in the preceding 12 months (24 months in the case of a multiemployer plan). If a plan is amended in violation of the preceding sentence, any such waiver, or extension of time, shall not apply to any plan year ending on or after the date on which such amendment is adopted.

'(B) EXCEPTION- Subparagraph (A) shall not apply to any plan amendment which--

'(i) the Secretary of the Treasury determines to be reasonable and which provides for only de minimis increases in the liabilities of the plan,

'(ii) only repeals an amendment described in subsection (d)(2), or

'(iii) is required as a condition of qualification under part I of subchapter D of chapter 1 of the Internal Revenue Code of 1986.

'(8) CROSS REFERENCE- For corresponding duties of the Secretary of the Treasury with regard to implementation of the Internal Revenue Code of 1986, see section 412(c) of such Code.

'(d) Miscellaneous Rules-

'(1) CHANGE IN METHOD OR YEAR- If the funding method, the valuation date, or a plan year for a plan is changed, the change shall take effect only if approved by the Secretary of the Treasury.

'(2) CERTAIN RETROACTIVE PLAN AMENDMENTS- For purposes of this section, any amendment applying to a plan year which--

'(A) is adopted after the close of such plan year but no later than 2 1/2 months after the close of the plan year (or, in the case of a multiemployer plan, no later than 2 years after the close of such plan year),

'(B) does not reduce the accrued benefit of any participant determined as of the beginning of the first plan year to which the amendment applies, and

'(C) does not reduce the accrued benefit of any participant determined as of the time of adoption except to the extent required by the circumstances,

shall, at the election of the plan administrator, be deemed to have been made on the first day of such plan year. No amendment described in this paragraph which reduces the accrued benefits of any participant shall take effect unless the plan administrator files a notice with the Secretary of the Treasury notifying him of such amendment and such Secretary has approved such amendment, or within 90 days after the date on which such notice was filed, failed to disapprove such amendment. No amendment described in this subsection shall be approved by the Secretary of the Treasury unless such Secretary determines that such amendment is necessary because of a temporary substantial business hardship (as determined under subsection (c)(2)) or a substantial business hardship (as so determined) in the case of a multiemployer plan and that a waiver under subsection (c) (or, in the case of a multiemployer plan, any extension of the amortization period under section 304(d)) is unavailable or inadequate.

'(3) CONTROLLED GROUP- For purposes of this section, the term 'controlled group’ means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986.’.

(c) Clerical Amendment- The table of contents in section 1 of such Act is amended by striking the items relating to sections 302 through 308 and inserting the following new item:

'Sec. 302. Minimum funding standards.’.

(d) Effective Date- The amendments made by this section shall apply to plan years beginning after 2007.

SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION 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 101 of this Act) is amended by inserting after section 302 the following new section:

'SEC. 303. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION PLANS.

'(a) Minimum Required Contribution- For purposes of this section and section 302(a)(2)(A), except as provided in subsection (f), the term 'minimum required contribution’ means, with respect to any plan year of a single-employer plan--

'(1) in any case in which the value of plan assets of the plan (as reduced under subsection (f)(4)(B)) is less than the funding target of the plan for the plan year, the sum of--

'(A) the target normal cost of the plan for the plan year,

'(B) the shortfall amortization charge (if any) for the plan for the plan year determined under subsection (c), and

'(C) the waiver amortization charge (if any) for the plan for the plan year as determined under subsection (e); or

'(2) in any case in which the value of plan assets of the plan (as reduced under subsection (f)(4)(B)) equals or exceeds the funding target of the plan for the plan year, the target normal cost of the plan for the plan year reduced (but not below zero) by such excess.

'(b) Target Normal Cost- For purposes of this section, except as provided in subsection (i)(2) with respect to plans in at-risk status, the term 'target normal cost’ means, for any plan year, the present value of all benefits which are expected to accrue or to be earned under the plan during the plan year. For purposes of this subsection, if any benefit attributable to services performed in a preceding plan year is increased by reason of any increase in compensation during the current plan year, the increase in such benefit shall be treated as having accrued during the current plan year.

'(c) Shortfall Amortization Charge-

'(1) IN GENERAL- For purposes of this section, the shortfall amortization charge for a plan for any plan year is the aggregate total (not less than zero) of the shortfall amortization installments for such plan year with respect to the shortfall amortization bases for such plan year and each of the 6 preceding plan years.

'(2) SHORTFALL AMORTIZATION INSTALLMENT- For purposes of paragraph (1)--

'(A) DETERMINATION- The shortfall amortization installments are the amounts necessary to amortize the shortfall amortization base of the plan for any plan year in level annual installments over the 7-plan-year period beginning with such plan year.

'(B) SHORTFALL INSTALLMENT- The shortfall amortization installment for any plan year in the 7-plan-year period under subparagraph (A) with respect to any shortfall amortization base is the annual installment determined under subparagraph (A) for that year for that base.

'(C) SEGMENT RATES- In determining any shortfall amortization installment under this paragraph, the plan sponsor shall use the segment rates determined under subparagraph (C) of subsection (h)(2), applied under rules similar to the rules of subparagraph (B) of subsection (h)(2).

'(3) SHORTFALL AMORTIZATION BASE- For purposes of this section, the shortfall amortization base of a plan for a plan year is--

'(A) the funding shortfall of such plan for such plan year, minus

'(B) the present value (determined using the segment rates determined under subparagraph (C) of subsection (h)(2), applied under rules similar to the rules of subparagraph (B) of subsection (h)(2)) of the aggregate total of the shortfall amortization installments and waiver amortization installments which have been determined for such plan year and any succeeding plan year with respect to the shortfall amortization bases and waiver amortization bases of the plan for any plan year preceding such plan year.

'(4) FUNDING SHORTFALL- For purposes of this section, the funding shortfall of a plan for any plan year is the excess (if any) of--

'(A) the funding target of the plan for the plan year, over

'(B) the value of plan assets of the plan (as reduced under subsection (f)(4)(B)) for the plan year which are held by the plan on the valuation date.

'(5) EXEMPTION FROM NEW SHORTFALL AMORTIZATION BASE-

'(A) IN GENERAL- In any case in which the value of plan assets of the plan (as reduced under subsection (f)(4)(A)) is equal to or greater than the funding target of the plan for the plan year, the shortfall amortization base of the plan for such plan year shall be zero.

'(B) TRANSITION RULE-

'(i) IN GENERAL- Except as provided in clauses (iii) and (iv), in the case of plan years beginning after 2007 and before 2011, only the applicable percentage of the funding target shall be taken into account under paragraph (3)(A) in determining the funding shortfall for the plan year for purposes of subparagraph (A).

'(ii) APPLICABLE PERCENTAGE- For purposes of subparagraph (A), the applicable percentage shall be determined in accordance with the following table:

'In the case of a plan year beginning in calendar year, the applicable percentage is:

2008--92

2009--94

2010--96.

'(iii) LIMITATION- Clause (i) shall not apply with respect to any plan year after 2008 unless the shortfall amortization base for each of the preceding years beginning after 2007 was zero (determined after application of this subparagraph).

'(iv) TRANSITION RELIEF NOT AVAILABLE FOR NEW OR DEFICIT REDUCTION PLANS- Clause (i) shall not apply to a plan--

'(I) which was not in effect for a plan year beginning in 2007, or

'(II) which was in effect for a plan year beginning in 2007 and which was subject to section 302(d) (as in effect for plan years beginning in 2007), determined after the application of paragraphs (6) and (9) thereof.

'(6) EARLY DEEMED AMORTIZATION UPON ATTAINMENT OF FUNDING TARGET- In any case in which the funding shortfall of a plan for a plan year is zero, for purposes of determining the shortfall amortization charge for such plan year and succeeding plan years, the shortfall amortization bases for all preceding plan years (and all shortfall amortization installments determined with respect to such bases) shall be reduced to zero.

'(d) Rules Relating to Funding Target- For purposes of this section--

'(1) FUNDING TARGET- Except as provided in subsection (i)(1) with respect to plans in at-risk status, the funding target of a plan for a plan year is the present value of all benefits accrued or earned under the plan as of the beginning of the plan year.

'(2) FUNDING TARGET ATTAINMENT PERCENTAGE- The 'funding target attainment percentage’ of a plan for a plan year is the ratio (expressed as a percentage) which--

'(A) the value of plan assets for the plan year (as reduced under subsection (f)(4)(B)), bears to

'(B) the funding target of the plan for the plan year (determined without regard to subsection (i)(1)).

'(e) Waiver Amortization Charge-

'(1) DETERMINATION OF WAIVER AMORTIZATION CHARGE- The waiver amortization charge (if any) for a plan for any plan year is the aggregate total of the waiver amortization installments for such plan year with respect to the waiver amortization bases for each of the 5 preceding plan years.

'(2) WAIVER AMORTIZATION INSTALLMENT- For purposes of paragraph (1)--

'(A) DETERMINATION- The waiver amortization installments are the amounts necessary to amortize the waiver amortization base of the plan for any plan year in level annual installments over a period of 5 plan years beginning with the succeeding plan year.

'(B) WAIVER INSTALLMENT- The waiver amortization installment for any plan year in the 5-year period under subparagraph (A) with respect to any waiver amortization base is the annual installment determined under subparagraph (A) for that year for that base.

'(3) INTEREST RATE- In determining any waiver amortization installment under this subsection, the plan sponsor shall use the segment rates determined under subparagraph (C) of subsection (h)(2), applied under rules similar to the rules of subparagraph (B) of subsection (h)(2).

'(4) WAIVER AMORTIZATION BASE- The waiver amortization base of a plan for a plan year is the amount of the waived funding deficiency (if any) for such plan year under section 302(c).

'(5) EARLY DEEMED AMORTIZATION UPON ATTAINMENT OF FUNDING TARGET- In any case in which the funding shortfall of a plan for a plan year is zero, for purposes of determining the waiver amortization charge for such plan year and succeeding plan years, the waiver amortization bases for all preceding plan years (and all waiver amortization installments determined with respect to such bases) shall be reduced to zero.

'(f) Reduction of Minimum Required Contribution by Prefunding Balance and Funding Standard Carryover Balance-

'(1) ELECTION TO MAINTAIN BALANCES-

'(A) PREFUNDING BALANCE- The plan sponsor of a single-employer plan may elect to maintain a prefunding balance.

'(B) FUNDING STANDARD CARRYOVER BALANCE-

'(i) IN GENERAL- In the case of a single-employer plan described in clause (ii), the plan sponsor may elect to maintain a funding standard carryover balance, until such balance is reduced to zero.

'(ii) PLANS MAINTAINING FUNDING STANDARD ACCOUNT IN 2007- A plan is described in this clause if the plan--

'(I) was in effect for a plan year beginning in 2007, and

'(II) had a positive balance in the funding standard account under section 302(b) as in effect for such plan year and determined as of the end of such plan year.

'(2) APPLICATION OF BALANCES- A prefunding balance and a funding standard carryover balance maintained pursuant to this paragraph--

'(A) shall be available for crediting against the minimum required contribution, pursuant to an election under paragraph (3),

'(B) shall be applied as a reduction in the amount treated as the value of plan assets for purposes of this section, to the extent provided in paragraph (4), and

'(C) may be reduced at any time, pursuant to an election under paragraph (5).

'(3) ELECTION TO APPLY BALANCES AGAINST MINIMUM REQUIRED CONTRIBUTION-

'(A) IN GENERAL- Except as provided in subparagraphs (B) and (C), in the case of any plan year in which the plan sponsor elects to credit against the minimum required contribution for the current plan year all or a portion of the prefunding balance or the funding standard carryover balance for the current plan year (not in excess of such minimum required contribution), the minimum required contribution for the plan year shall be reduced as of the first day of the plan year by the amount so credited by the plan sponsor. For purposes of the preceding sentence, the minimum required contribution shall be determined after taking into account any waiver under section 302(c).

'(B) COORDINATION WITH FUNDING STANDARD CARRYOVER BALANCE- To the extent that any plan has a funding standard carryover balance greater than zero, no amount of the prefunding balance of such plan may be credited under this paragraph in reducing the minimum required contribution.

'(C) LIMITATION FOR UNDERFUNDED PLANS- The preceding provisions of this paragraph shall not apply for any plan year if the ratio (expressed as a percentage) which--

'(i) the value of plan assets for the preceding plan year (as reduced under paragraph (4)(C)), bears to

'(ii) the funding target of the plan for the preceding plan year (determined without regard to subsection (i)(1)),

is less than 80 percent. In the case of plan years beginning in 2008, the ratio under this subparagraph may be determined using such methods of estimation as the Secretary of the Treasury may prescribe.

'(4) EFFECT OF BALANCES ON AMOUNTS TREATED AS VALUE OF PLAN ASSETS- In the case of any plan maintaining a prefunding balance or a funding standard carryover balance pursuant to this subsection, the amount treated as the value of plan assets shall be deemed to be such amount, reduced as provided in the following subparagraphs:

'(A) APPLICABILITY OF SHORTFALL AMORTIZATION BASE- For purposes of subsection (c)(5), the value of plan assets is deemed to be such amount, reduced by the amount of the prefunding balance, but only if an election under paragraph (2) applying any portion of the prefunding balance in reducing the minimum required contribution is in effect for the plan year.

'(B) DETERMINATION OF EXCESS ASSETS, FUNDING SHORTFALL, AND FUNDING TARGET ATTAINMENT PERCENTAGE-

'(i) IN GENERAL- For purposes of subsections (a), (c)(4)(B), and (d)(2)(A), the value of plan assets is deemed to be such amount, reduced by the amount of the prefunding balance and the funding standard carryover balance.

'(ii) SPECIAL RULE FOR CERTAIN BINDING AGREEMENTS WITH PBGC- For purposes of subsection (c)(4)(B), the value of plan assets shall not be deemed to be reduced for a plan year by the amount of the specified balance if, with respect to such balance, there is in effect for a plan year a binding written agreement with the Pension Benefit Guaranty Corporation which provides that such balance is not available to reduce the minimum required contribution for the plan year. For purposes of the preceding sentence, the term 'specified balance’ means the prefunding balance or the funding standard carryover balance, as the case may be.

'(C) AVAILABILITY OF BALANCES IN PLAN YEAR FOR CREDITING AGAINST MINIMUM REQUIRED CONTRIBUTION- For purposes of paragraph (3)(C)(i) of this subsection, the value of plan assets is deemed to be such amount, reduced by the amount of the prefunding balance.

'(5) ELECTION TO REDUCE BALANCE PRIOR TO DETERMINATIONS OF VALUE OF PLAN ASSETS AND CREDITING AGAINST MINIMUM REQUIRED CONTRIBUTION-

'(A) IN GENERAL- The plan sponsor may elect to reduce by any amount the balance of the prefunding balance and the funding standard carryover balance for any plan year (but not below zero). Such reduction shall be effective prior to any determination of the value of plan assets for such plan year under this section and application of the balance in reducing the minimum required contribution for such plan for such plan year pursuant to an election under paragraph (2).

'(B) COORDINATION BETWEEN PREFUNDING BALANCE AND FUNDING STANDARD CARRYOVER BALANCE- To the extent that any plan has a funding standard carryover balance greater than zero, no election may be made under subparagraph (A) with respect to the prefunding balance.

'(6) PREFUNDING BALANCE-

'(A) IN GENERAL- A prefunding balance maintained by a plan shall consist of a beginning balance of zero, increased and decreased to the extent provided in subparagraphs (B) and (C), and adjusted further as provided in paragraph (8).

'(B) INCREASES-

'(i) IN GENERAL- As of the first day of each plan year beginning after 2008, the prefunding balance of a plan shall be increased by the amount elected by the plan sponsor for the plan year. Such amount shall not exceed the excess (if any) of--

'(I) the aggregate total of employer contributions to the plan for the preceding plan year, over--

'(II) the minimum required contribution for such preceding plan year.

'(ii) ADJUSTMENTS FOR INTEREST- Any excess contributions under clause (i) shall be properly adjusted for interest accruing for the periods between the first day of the current plan year and the dates on which the excess contributions were made, determined by using the effective interest rate for the preceding plan year and by treating contributions as being first used to satisfy the minimum required contribution.

'(iii) CERTAIN CONTRIBUTIONS NECESSARY TO AVOID BENEFIT LIMITATIONS DISREGARDED- The excess described in clause (i) with respect to any preceding plan year shall be reduced (but not below zero) by the amount of contributions an employer would be required to make under paragraph (1), (2), or (4) of section 206(g) to avoid a benefit limitation which would otherwise be imposed under such paragraph for the preceding plan year. Any contribution which may be taken into account in satisfying the requirements of more than 1 of such paragraphs shall be taken into account only once for purposes of this clause.

'(C) DECREASE- The prefunding balance of a plan shall be decreased (but not below zero) by--

'(i) as of the first day of each plan year after 2008, the amount of such balance credited under paragraph (2) (if any) in reducing the minimum required contribution of the plan for the preceding plan year, and

'(ii) as of the time specified in paragraph (5)(A), any reduction in such balance elected under paragraph (5).

'(7) FUNDING STANDARD CARRYOVER BALANCE-

'(A) IN GENERAL- A funding standard carryover balance maintained by a plan shall consist of a beginning balance determined under subparagraph (B), decreased to the extent provided in subparagraph (C), and adjusted further as provided in paragraph (8).

'(B) BEGINNING BALANCE- The beginning balance of the funding standard carryover balance shall be the positive balance described in paragraph (1)(B)(ii)(II).

'(C) DECREASES- The funding standard carryover balance of a plan shall be decreased (but not below zero) by--

'(ii) as of the time specified in paragraph (5)(A), any reduction in such balance elected under paragraph (5).

'(8) ADJUSTMENTS FOR INVESTMENT EXPERIENCE- In determining the prefunding balance or the funding standard carryover balance of a plan as of the first day of the plan year, the plan sponsor shall, in accordance with regulations prescribed by the Secretary of the Treasury, adjust such balance to reflect the rate of return on plan assets for the preceding plan year. Notwithstanding subsection (g)(3), such rate of return shall be determined on the basis of fair market value and shall properly take into account, in accordance with such regulations, all contributions, distributions, and other plan payments made during such period.

'(9) ELECTIONS- Elections under this subsection shall be made at such times, and in such form and manner, as shall be prescribed in regulations of the Secretary of the Treasury.

'(g) Valuation of Plan Assets and Liabilities-

'(1) TIMING OF DETERMINATIONS- Except as otherwise provided under this subsection, all determinations under this section for a plan year shall be made as of the valuation date of the plan for such plan year.

'(2) VALUATION DATE- For purposes of this section--

'(A) IN GENERAL- Except as provided in subparagraph (B), the valuation date of a plan for any plan year shall be the first day of the plan year.

'(B) EXCEPTION FOR SMALL PLANS- If, on each day during the preceding plan year, a plan had 100 or fewer participants, the plan may designate any day during the plan year as its valuation date for such plan year and succeeding plan years. For purposes of this subparagraph, all defined benefit plans which are single-employer plans and are maintained by the same employer (or any member of such employer's controlled group) shall be treated as 1 plan, but only participants with respect to such employer or member shall be taken into account.

'(C) APPLICATION OF CERTAIN RULES IN DETERMINATION OF PLAN SIZE- For purposes of this paragraph--

'(i) PLANS NOT IN EXISTENCE IN PRECEDING YEAR- In the case of the first plan year of any plan, subparagraph (B) shall apply to such plan by taking into account the number of participants that the plan is reasonably expected to have on days during such first plan year.

'(ii) PREDECESSORS- Any reference in subparagraph (B) to an employer shall include a reference to any predecessor of such employer.

'(3) DETERMINATION OF VALUE OF PLAN ASSETS- For purposes of this section--

'(A) IN GENERAL- Except as provided in subparagraph (B), the value of plan assets shall be the fair market value of the assets.

'(B) AVERAGING ALLOWED- A plan may determine the value of plan assets on the basis of the averaging of fair market values, but only if such method--

'(i) is permitted under regulations prescribed by the Secretary of the Treasury,

'(ii) does not provide for averaging of such values over more than the period beginning on the last day of the 25th month preceding the month in which the valuation date occurs and ending on the valuation date (or a similar period in the case of a valuation date which is not the 1st day of a month), and

'(iii) does not result in a determination of the value of plan assets which, at any time, is lower than 90 percent or greater than 110 percent of the fair market value of such assets at such time.

Any such averaging shall be adjusted for contributions and distributions (as provided by the Secretary of the Treasury).

'(4) ACCOUNTING FOR CONTRIBUTION RECEIPTS- For purposes of determining the value of assets under paragraph (3)--

'(A) PRIOR YEAR CONTRIBUTIONS- If--

'(i) an employer makes any contribution to the plan after the valuation date for the plan year in which the contribution is made, and

'(ii) the contribution is for a preceding plan year,

the contribution shall be taken into account as an asset of the plan as of the valuation date, except that in the case of any plan year beginning after 2008, only the present value (determined as of the valuation date) of such contribution may be taken into account. For purposes of the preceding sentence, present value shall be determined using the effective interest rate for the preceding plan year to which the contribution is properly allocable.

'(B) SPECIAL RULE FOR CURRENT YEAR CONTRIBUTIONS MADE BEFORE VALUATION DATE- If any contributions for any plan year are made to or under the plan during the plan year but before the valuation date for the plan year, the assets of the plan as of the valuation date shall not include--

'(i) such contributions, and

'(ii) interest on such contributions for the period between the date of the contributions and the valuation date, determined by using the effective interest rate for the plan year.

'(h) Actuarial Assumptions and Methods-

'(1) IN GENERAL- Subject to this subsection, the determination of any present value or other computation under this section shall be made on the basis of actuarial assumptions and methods--

'(A) each of which is reasonable (taking into account the experience of the plan and reasonable expectations), and

'(B) which, in combination, offer the actuary's best estimate of anticipated experience under the plan.

'(2) INTEREST RATES-

'(A) EFFECTIVE INTEREST RATE- For purposes of this section, the term 'effective interest rate’ means, with respect to any plan for any plan year, the single rate of interest which, if used to determine the present value of the plan's accrued or earned benefits referred to in subsection (d)(1), would result in an amount equal to the funding target of the plan for such plan year.

'(B) INTEREST RATES FOR DETERMINING FUNDING TARGET- For purposes of determining the funding target and normal cost of a plan for any plan year, the interest rate used in determining the present value of the benefits of the plan shall be--

'(i) in the case of benefits reasonably determined to be payable during the 5-year period beginning on the first day of the plan year, the first segment rate with respect to the applicable month,

'(ii) in the case of benefits reasonably determined to be payable during the 15-year period beginning at the end of the period described in clause (i), the second segment rate with respect to the applicable month, and

'(iii) in the case of benefits reasonably determined to be payable after the period described in clause (ii), the third segment rate with respect to the applicable month.

'(C) SEGMENT RATES- For purposes of this paragraph--

'(i) FIRST SEGMENT RATE- The term 'first segment rate’ means, with respect to any month, the single rate of interest which shall be determined by the Secretary of the Treasury for such month on the basis of the corporate bond yield curve for such month, taking into account only that portion of such yield curve which is based on bonds maturing during the 5-year period commencing with such month.

'(ii) SECOND SEGMENT RATE- The term 'second segment rate’ means, with respect to any month, the single rate of interest which shall be determined by the Secretary of the Treasury for such month on the basis of the corporate bond yield curve for such month, taking into account only that portion of such yield curve which is based on bonds maturing during the 15-year period beginning at the end of the period described in clause (i).

'(iii) THIRD SEGMENT RATE- The term 'third segment rate’ means, with respect to any month, the single rate of interest which shall be determined by the Secretary of the Treasury for such month on the basis of the corporate bond yield curve for such month, taking into account only that portion of such yield curve which is based on bonds maturing during periods beginning after the period described in clause (ii).

'(D) CORPORATE BOND YIELD CURVE- For purposes of this paragraph--

'(i) IN GENERAL- The term 'corporate bond yield curve’ means, with respect to any month, a yield curve which is prescribed by the Secretary of the Treasury for such month and which reflects the average, for the 24-month period ending with the month preceding such month, of monthly yields on investment grade corporate bonds with varying maturities and that are in the top 3 quality levels available.

'(ii) ELECTION TO USE YIELD CURVE- Solely for purposes of determining the minimum required contribution under this section, the plan sponsor may, in lieu of the segment rates determined under subparagraph (C), elect to use interest rates under the corporate bond yield curve. For purposes of the preceding sentence such curve shall be determined without regard to the 24-month averaging described in clause (i). Such election, once made, may be revoked only with the consent of the Secretary of the Treasury.

'(E) APPLICABLE MONTH- For purposes of this paragraph, the term 'applicable month’ means, with respect to any plan for any plan year, the month which includes the valuation date of such plan for such plan year or, at the election of the plan sponsor, any of the 4 months which precede such month. Any election made under this subparagraph shall apply to the plan year for which the election is made and all succeeding plan years, unless the election is revoked with the consent of the Secretary of the Treasury.

'(F) PUBLICATION REQUIREMENTS- The Secretary of the Treasury shall publish for each month the corporate bond yield curve (and the corporate bond yield curve reflecting the modification described in section 205(g)(3)(B)(iii)(I)) for such month and each of the rates determined under subparagraph (B) for such month. The Secretary of the Treasury shall also publish a description of the methodology used to determine such yield curve and such rates which is sufficiently detailed to enable plans to make reasonable projections regarding the yield curve and such rates for future months based on the plan's projection of future interest rates.

'(G) TRANSITION RULE-

'(i) IN GENERAL- Notwithstanding the preceding provisions of this paragraph, for plan years beginning in 2008 or 2009, the first, second, or third segment rate for a plan with respect to any month shall be equal to the sum of--

'(I) the product of such rate for such month determined without regard to this subparagraph, multiplied by the applicable percentage, and

'(II) the product of the rate determined under the rules of section 302(b)(5)(B)(ii)(II) (as in effect for plan years beginning in 2007), multiplied by a percentage equal to 100 percent minus the applicable percentage.

'(ii) APPLICABLE PERCENTAGE- For purposes of clause (i), the applicable percentage is 33 1/3 percent for plan years beginning in 2008 and 66 2/3 percent for plan years beginning in 2009.

'(iii) NEW PLANS INELIGIBLE- Clause (i) shall not apply to any plan if the first plan year of the plan begins after December 31, 2007.

'(iv) ELECTION- The plan sponsor may elect not to have this subparagraph apply. Such election, once made, may be revoked only with the consent of the Secretary of the Treasury.

'(3) MORTALITY TABLES-

'(A) IN GENERAL- Except as provided in subparagraph (C) or (D), the Secretary of the Treasury shall by regulation prescribe mortality tables to be used in determining any present value or making any computation under this section. Such tables shall be based on the actual experience of pension plans and projected trends in such experience. In prescribing such tables, the Secretary of the Treasury shall take into account results of available independent studies of mortality of individuals covered by pension plans.

'(B) PERIODIC REVISION- The Secretary of the Treasury shall (at least every 10 years) make revisions in any table in effect under subparagraph (A) to reflect the actual experience of pension plans and projected trends in such experience.

'(C) SUBSTITUTE MORTALITY TABLE-

'(i) IN GENERAL- Upon request by the plan sponsor and approval by the Secretary of the Treasury, a mortality table which meets the requirements of clause (iii) shall be used in determining any present value or making any computation under this section during the period of consecutive plan years (not to exceed 10) specified in the request.

'(ii) EARLY TERMINATION OF PERIOD- Notwithstanding clause (i), a mortality table described in clause (i) shall cease to be in effect as of the earliest of--

'(I) the date on which there is a significant change in the participants in the plan by reason of a plan spinoff or merger or otherwise, or

'(II) the date on which the plan actuary determines that such table does not meet the requirements of clause (iii).

'(iii) REQUIREMENTS- A mortality table meets the requirements of this clause if--

'(I) there is a sufficient number of plan participants, and the pension plans have been maintained for a sufficient period of time, to have credible information necessary for purposes of subclause (II), and

'(II) such table reflects the actual experience of the pension plans maintained by the sponsor and projected trends in general mortality experience.

'(iv) ALL PLANS IN CONTROLLED GROUP MUST USE SEPARATE TABLE- Except as provided by the Secretary of the Treasury, a plan sponsor may not use a mortality table under this subparagraph for any plan maintained by the plan sponsor unless--

'(I) a separate mortality table is established and used under this subparagraph for each other plan maintained by the plan sponsor and if the plan sponsor is a member of a controlled group, each member of the controlled group, and

'(II) the requirements of clause (iii) are met separately with respect to the table so established for each such plan, determined by only taking into account the participants of such plan, the time such plan has been in existence, and the actual experience of such plan.

'(v) DEADLINE FOR SUBMISSION AND DISPOSITION OF APPLICATION-

'(I) SUBMISSION- The plan sponsor shall submit a mortality table to the Secretary of the Treasury for approval under this subparagraph at least 7 months before the 1st day of the period described in clause (i).

'(II) DISPOSITION- Any mortality table submitted to the Secretary of the Treasury for approval under this subparagraph shall be treated as in effect as of the 1st day of the period described in clause (i) unless the Secretary of the Treasury, during the 180-day period beginning on the date of such submission, disapproves of such table and provides the reasons that such table fails to meet the requirements of clause (iii). The 180-day period shall be extended upon mutual agreement of the Secretary of the Treasury and the plan sponsor.

'(D) SEPARATE MORTALITY TABLES FOR THE DISABLED- Notwithstanding subparagraph (A)--

'(i) IN GENERAL- The Secretary of the Treasury shall establish mortality tables which may be used (in lieu of the tables under subparagraph (A)) under this subsection for individuals who are entitled to benefits under the plan on account of disability. The Secretary of the Treasury shall establish separate tables for individuals whose disabilities occur in plan years beginning before January 1, 1995, and for individuals whose disabilities occur in plan years beginning on or after such date.

'(ii) SPECIAL RULE FOR DISABILITIES OCCURRING AFTER 1994- In the case of disabilities occurring in plan years beginning after December 31, 1994, the tables under clause (i) shall apply only with respect to individuals described in such subclause who are disabled within the meaning of title II of the Social Security Act and the regulations thereunder.

'(iii) PERIODIC REVISION- The Secretary of the Treasury shall (at least every 10 years) make revisions in any table in effect under clause (i) to reflect the actual experience of pension plans and projected trends in such experience.

'(4) PROBABILITY OF BENEFIT PAYMENTS IN THE FORM OF LUMP SUMS OR OTHER OPTIONAL FORMS- For purposes of determining any present value or making any computation under this section, there shall be taken into account--

'(A) the probability that future benefit payments under the plan will be made in the form of optional forms of benefits provided under the plan (including lump sum distributions, determined on the basis of the plan's experience and other related assumptions), and

'(B) any difference in the present value of such future benefit payments resulting from the use of actuarial assumptions, in determining benefit payments in any such optional form of benefits, which are different from those specified in this subsection.

'(5) APPROVAL OF LARGE CHANGES IN ACTUARIAL ASSUMPTIONS-

'(A) IN GENERAL- No actuarial assumption used to determine the funding target for a plan to which this paragraph applies may be changed without the approval of the Secretary of the Treasury.

'(B) PLANS TO WHICH PARAGRAPH APPLIES- This paragraph shall apply to a plan only if--

'(i) the plan is a single-employer plan to which title IV applies,

'(ii) the aggregate unfunded vested benefits as of the close of the preceding plan year (as determined under section 4006(a)(3)(E)(iii)) of such plan and all other plans maintained by the contributing sponsors (as defined in section 4001(a)(13)) and members of such sponsors' controlled groups (as defined in section 4001(a)(14)) which are covered by title IV (disregarding plans with no unfunded vested benefits) exceed $50,000,000, and

'(iii) the change in assumptions (determined after taking into account any changes in interest rate and mortality table) results in a decrease in the funding shortfall of the plan for the current plan year that exceeds $50,000,000, or that exceeds $5,000,000 and that is 5 percent or more of the funding target of the plan before such change.

'(i) Special Rules for At-Risk Plans-

'(1) FUNDING TARGET FOR PLANS IN AT-RISK STATUS-

'(A) IN GENERAL- In the case of a plan which is in at-risk status for a plan year, the funding target of the plan for the plan year shall be equal to the sum of--

'(i) the present value of all benefits accrued or earned under the plan as of the beginning of the plan year, as determined by using the additional actuarial assumptions described in subparagraph (B), and

'(ii) in the case of a plan which also has been in at-risk status for at least 2 of the 4 preceding plan years, a loading factor determined under subparagraph (C).

'(B) ADDITIONAL ACTUARIAL ASSUMPTIONS- The actuarial assumptions described in this subparagraph are as follows:

'(i) All employees who are not otherwise assumed to retire as of the valuation date but who will be eligible to elect benefits during the plan year and the 10 succeeding plan years shall be assumed to retire at the earliest retirement date under the plan but not before the end of the plan year for which the at-risk funding target and at-risk target normal cost are being determined.

'(ii) All employees shall be assumed to elect the retirement benefit available under the plan at the assumed retirement age (determined after application of clause (i)) which would result in the highest present value of benefits.

'(C) LOADING FACTOR- The loading factor applied with respect to a plan under this paragraph for any plan year is the sum of--

'(i) $700, times the number of participants in the plan, plus

'(ii) 4 percent of the funding target (determined without regard to this paragraph) of the plan for the plan year.

'(2) TARGET NORMAL COST OF AT-RISK PLANS- In the case of a plan which is in at-risk status for a plan year, the target normal cost of the plan for such plan year shall be equal to the sum of--

'(A) the present value of all benefits which are expected to accrue or be earned under the plan during the plan year, determined using the additional actuarial assumptions described in paragraph (1)(B), plus

'(B) in the case of a plan which also has been in at-risk status for at least 2 of the 4 preceding plan years, a loading factor equal to 4 percent of the target normal cost (determined without regard to this paragraph) of the plan for the plan year.

'(3) MINIMUM AMOUNT- In no event shall--

'(A) the at-risk funding target be less than the funding target, as determined without regard to this subsection, or

'(B) the at-risk target normal cost be less than the target normal cost, as determined without regard to this subsection.

'(4) DETERMINATION OF AT-RISK STATUS- For purposes of this subsection--

'(A) IN GENERAL- A plan is in at-risk status for a plan year if--

'(i) the funding target attainment percentage for the preceding plan year (determined under this section without regard to this subsection) is less than 80 percent, and

'(ii) the funding target attainment percentage for the preceding plan year (determined under this section by using the additional actuarial assumptions described in paragraph (1)(B) in computing the funding target) is less than 70 percent.

'(B) TRANSITION RULE- In the case of plan years beginning in 2008, 2009, and 2010, subparagraph (A)(i) shall be applied by substituting the following percentages for '80 percent’:

'(i) 65 percent in the case of 2008.

'(ii) 70 percent in the case of 2009.

'(iii) 75 percent in the case of 2010.

In the case of plan years beginning in 2008, the funding target attainment percentage for the preceding plan year under subparagraph (A)(ii) may be determined using such methods of estimation as the Secretary of the Treasury may provide.

'(C) SPECIAL RULE FOR EMPLOYEES OFFERED EARLY RETIREMENT IN 2006-

'(i) IN GENERAL- For purposes of subparagraph (A)(ii), the additional actuarial assumptions described in paragraph (1)(B) shall not be taken into account with respect to any employee if--

'(I) such employee is employed by a specified automobile manufacturer,

'(II) such employee is offered a substantial amount of additional cash compensation, substantially enhanced retirement benefits under the plan, or materially reduced employment duties on the condition that by a specified date (not later than December 31, 2010) the employee retires (as defined under the terms of the plan),

'(III) such offer is made during 2006 and pursuant to a bona fide retirement incentive program and requires, by the terms of the offer, that such offer can be accepted not later than a specified date (not later than December 31, 2006), and

'(IV) such employee does not elect to accept such offer before the specified date on which the offer expires.

'(ii) SPECIFIED AUTOMOBILE MANUFACTURER- For purposes of clause (i), the term 'specified automobile manufacturer’ means--

'(I) any manufacturer of automobiles, and

'(II) any manufacturer of automobile parts which supplies such parts directly to a manufacturer of automobiles and which, after a transaction or series of transactions ending in 1999, ceased to be a member of a controlled group which included such manufacturer of automobiles.

'(5) TRANSITION BETWEEN APPLICABLE FUNDING TARGETS AND BETWEEN APPLICABLE TARGET NORMAL COSTS-

'(A) IN GENERAL- In any case in which a plan which is in at-risk status for a plan year has been in such status for a consecutive period of fewer than 5 plan years, the applicable amount of the funding target and of the target normal cost shall be, in lieu of the amount determined without regard to this paragraph, the sum of--

'(i) the amount determined under this section without regard to this subsection, plus

'(ii) the transition percentage for such plan year of the excess of the amount determined under this subsection (without regard to this paragraph) over the amount determined under this section without regard to this subsection.

'(B) TRANSITION PERCENTAGE- For purposes of subparagraph (A), the transition percentage shall be determined in accordance with the following table:

'If the consecutive number of years (including the plan year) the plan is in at-risk status is ___, the transition percentage is:

1--20

2--40

3--60

4--80.

'(C) YEARS BEFORE EFFECTIVE DATE- For purposes of this paragraph, plan years beginning before 2008 shall not be taken into account.

'(6) SMALL PLAN EXCEPTION- If, on each day during the preceding plan year, a plan had 500 or fewer participants, the plan shall not be treated as in at-risk status for the plan year. For purposes of this paragraph, all defined benefit plans (other than multiemployer plans) maintained by the same employer (or any member of such employer's controlled group) shall be treated as 1 plan, but only participants with respect to such employer or member shall be taken into account and the rules of subsection (g)(2)(C) shall apply.

'(j) Payment of Minimum Required Contributions-

'(1) IN GENERAL- For purposes of this section, the due date for any payment of any minimum required contribution for any plan year shall be 8 1/2 months after the close of the plan year.

'(2) INTEREST- Any payment required under paragraph (1) for a plan year that is made on a date other than the valuation date for such plan year shall be adjusted for interest accruing for the period between the valuation date and the payment date, at the effective rate of interest for the plan for such plan year.

'(3) ACCELERATED QUARTERLY CONTRIBUTION SCHEDULE FOR UNDERFUNDED PLANS-

'(A) FAILURE TO TIMELY MAKE REQUIRED INSTALLMENT- In any case in which the plan has a funding shortfall for the preceding plan year, the employer maintaining the plan shall make the required installments under this paragraph and if the employer fails to pay the full amount of a required installment for the plan year, then the amount of interest charged under paragraph (2) on the underpayment for the period of underpayment shall be determined by using a rate of interest equal to the rate otherwise used under paragraph (2) plus 5 percentage points.

'(B) AMOUNT OF UNDERPAYMENT, PERIOD OF UNDERPAYMENT- For purposes of subparagraph (A)--

'(i) AMOUNT- The amount of the underpayment shall be the excess of--

'(I) the required installment, over

'(II) the amount (if any) of the installment contributed to or under the plan on or before the due date for the installment.

'(ii) PERIOD OF UNDERPAYMENT- The period for which any interest is charged under this paragraph with respect to any portion of the underpayment shall run from the due date for the installment to the date on which such portion is contributed to or under the plan.

'(iii) ORDER OF CREDITING CONTRIBUTIONS- For purposes of clause (i)(II), contributions shall be credited against unpaid required installments in the order in which such installments are required to be paid.

'(C) NUMBER OF REQUIRED INSTALLMENTS; DUE DATES- For purposes of this paragraph--

'(i) PAYABLE IN 4 INSTALLMENTS- There shall be 4 required installments for each plan year.

'(ii) TIME FOR PAYMENT OF INSTALLMENTS- The due dates for required installments are set forth in the following table:

----------------------

'In the case of the following required installment, the due date is:

1st, April 15

2nd, July 15

3rd, October 15

4th, January 15 of the following year.

----------------------

'(D) AMOUNT OF REQUIRED INSTALLMENT- For purposes of this paragraph--

'(i) IN GENERAL- The amount of any required installment shall be 25 percent of the required annual payment.

'(ii) REQUIRED ANNUAL PAYMENT- For purposes of clause (i), the term 'required annual payment’ means the lesser of--

'(I) 90 percent of the minimum required contribution (determined without regard to this subsection) to the plan for the plan year under this section, or

'(II) 100 percent of the minimum required contribution (determined without regard to this subsection or to any waiver under section 302(c)) to the plan for the preceding plan year.

Subclause (II) shall not apply if the preceding plan year referred to in such clause was not a year of 12 months.

'(E) FISCAL YEARS AND SHORT YEARS-

'(i) FISCAL YEARS- In applying this paragraph to a plan year beginning on any date other than January 1, there shall be substituted for the months specified in this paragraph, the months which correspond thereto.

'(ii) SHORT PLAN YEAR- This subparagraph shall be applied to plan years of less than 12 months in accordance with regulations prescribed by the Secretary of the Treasury.

'(4) LIQUIDITY REQUIREMENT IN CONNECTION WITH QUARTERLY CONTRIBUTIONS-

'(A) IN GENERAL- A plan to which this paragraph applies shall be treated as failing to pay the full amount of any required installment under paragraph (3) to the extent that the value of the liquid assets paid in such installment is less than the liquidity shortfall (whether or not such liquidity shortfall exceeds the amount of such installment required to be paid but for this paragraph).

'(B) PLANS TO WHICH PARAGRAPH APPLIES- This paragraph shall apply to a plan (other than a plan described in subsection (g)(2)(B)) which--

'(i) is required to pay installments under paragraph (3) for a plan year, and

'(ii) has a liquidity shortfall for any quarter during such plan year.

'(C) PERIOD OF UNDERPAYMENT- For purposes of paragraph (3)(A), any portion of an installment that is treated as not paid under subparagraph (A) shall continue to be treated as unpaid until the close of the quarter in which the due date for such installment occurs.

'(D) LIMITATION ON INCREASE- If the amount of any required installment is increased by reason of subparagraph (A), in no event shall such increase exceed the amount which, when added to prior installments for the plan year, is necessary to increase the funding target attainment percentage of the plan for the plan year (taking into account the expected increase in funding target due to benefits accruing or earned during the plan year) to 100 percent.

'(E) DEFINITIONS- For purposes of this paragraph--

'(i) LIQUIDITY SHORTFALL- The term 'liquidity shortfall’ means, with respect to any required installment, an amount equal to the excess (as of the last day of the quarter for which such installment is made) of--

'(I) the base amount with respect to such quarter, over

'(II) the value (as of such last day) of the plan's liquid assets.

'(ii) BASE AMOUNT-

'(I) IN GENERAL- The term 'base amount’ means, with respect to any quarter, an amount equal to 3 times the sum of the adjusted disbursements from the plan for the 12 months ending on the last day of such quarter.

'(II) SPECIAL RULE- If the amount determined under subclause (I) exceeds an amount equal to 2 times the sum of the adjusted disbursements from the plan for the 36 months ending on the last day of the quarter and an enrolled actuary certifies to the satisfaction of the Secretary of the Treasury that such excess is the result of nonrecurring circumstances, the base amount with respect to such quarter shall be determined without regard to amounts related to those nonrecurring circumstances.

'(iii) DISBURSEMENTS FROM THE PLAN- The term 'disbursements from the plan’ means all disbursements from the trust, including purchases of annuities, payments of single sums and other benefits, and administrative expenses.

'(iv) ADJUSTED DISBURSEMENTS- The term 'adjusted disbursements' means disbursements from the plan reduced by the product of--

'(I) the plan's funding target attainment percentage for the plan year, and

'(II) the sum of the purchases of annuities, payments of single sums, and such other disbursements as the Secretary of the Treasury shall provide in regulations.

'(v) LIQUID ASSETS- The term 'liquid assets' means cash, marketable securities, and such other assets as specified by the Secretary of the Treasury in regulations.

'(vi) QUARTER- The term 'quarter’ means, with respect to any required installment, the 3-month period preceding the month in which the due date for such installment occurs.

'(F) REGULATIONS- The Secretary of the Treasury may prescribe such regulations as are necessary to carry out this paragraph.

'(k) Imposition of Lien Where Failure to Make Required Contributions-

'(1) IN GENERAL- In the case of a plan to which this subsection applies (as provided under paragraph (2)), if--

'(A) any person fails to make a contribution payment required by section 302 and this section before the due date for such payment, and

'(B) the unpaid balance of such payment (including interest), when added to the aggregate unpaid balance of all preceding such payments for which payment was not made before the due date (including interest), exceeds $1,000,000,

then there shall be a lien in favor of the plan in the amount determined under paragraph (3) upon all property and rights to property, whether real or personal, belonging to such person and any other person who is a member of the same controlled group of which such person is a member.

'(2) PLANS TO WHICH SUBSECTION APPLIES- This subsection shall apply to a single-employer plan covered under section 4021 for any plan year for which the funding target attainment percentage (as defined in subsection (d)(2)) of such plan is less than 100 percent.

'(3) AMOUNT OF LIEN- For purposes of paragraph (1), the amount of the lien shall be equal to the aggregate unpaid balance of contribution payments required under this section and section 302 for which payment has not been made before the due date.

'(4) NOTICE OF FAILURE; LIEN-

'(A) NOTICE OF FAILURE- A person committing a failure described in paragraph (1) shall notify the Pension Benefit Guaranty Corporation of such failure within 10 days of the due date for the required contribution payment.

'(B) PERIOD OF LIEN- The lien imposed by paragraph (1) shall arise on the due date for the required contribution payment and shall continue until the last day of the first plan year in which the plan ceases to be described in paragraph (1)(B). Such lien shall continue to run without regard to whether such plan continues to be described in paragraph (2) during the period referred to in the preceding sentence.

'(C) CERTAIN RULES TO APPLY- Any amount with respect to which a lien is imposed under paragraph (1) shall be treated as taxes due and owing the United States and rules similar to the rules of subsections (c), (d), and (e) of section 4068 shall apply with respect to a lien imposed by subsection (a) and the amount with respect to such lien.

'(5) ENFORCEMENT- Any lien created under paragraph (1) may be perfected and enforced only by the Pension Benefit Guaranty Corporation, or at the direction of the Pension Benefit Guaranty Corporation, by the contributing sponsor (or any member of the controlled group of the contributing sponsor).

'(6) DEFINITIONS- For purposes of this subsection--

'(A) CONTRIBUTION PAYMENT- The term 'contribution payment’ means, in connection with a plan, a contribution payment required to be made to the plan, including any required installment under paragraphs (3) and (4) of subsection (j).

'(B) DUE DATE; REQUIRED INSTALLMENT- The terms 'due date’ and 'required installment’ have the meanings given such terms by subsection (j), except that in the case of a payment other than a required installment, the due date shall be the date such payment is required to be made under section 303.

'(C) CONTROLLED GROUP- The term 'controlled group’ means any group treated as a single employer under subsections (b), (c), (m), and (o) of section 414 of the Internal Revenue Code of 1986.

'(l) Qualified Transfers to Health Benefit Accounts- In the case of a qualified transfer (as defined in section 420 of the Internal Revenue Code of 1986), any assets so transferred shall not, for purposes of this section, be treated as assets in the plan.’.

(b) Clerical Amendment- The table of sections in section 1 of such Act (as amended by section 101) is amended by inserting after the item relating to section 302 the following new item:

'Sec. 303. Minimum funding standards for single-employer defined benefit pension plans.’.

SEC. 103. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.

(a) Funding-Based Limits on Benefits and Benefit Accruals Under Single-Employer Plans- Section 206 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1056) is amended by adding at the end the following new subsection:

'(g) Funding-Based Limits on Benefits and Benefit Accruals Under Single-Employer Plans-

'(1) FUNDING-BASED LIMITATION ON SHUTDOWN BENEFITS AND OTHER UNPREDICTABLE CONTINGENT EVENT BENEFITS UNDER SINGLE-EMPLOYER PLANS-

'(A) IN GENERAL- If a participant of a defined benefit plan which is a single-employer plan is entitled to an unpredictable contingent event benefit payable with respect to any event occurring during any plan year, the plan shall provide that such benefit may not be provided if the adjusted funding target attainment percentage for such plan year--

'(i) is less than 60 percent, or

'(ii) would be less than 60 percent taking into account such occurrence.

'(B) EXEMPTION- Subparagraph (A) shall cease to apply with respect to any plan year, effective as of the first day of the plan year, upon payment by the plan sponsor of a contribution (in addition to any minimum required contribution under section 303) equal to--

'(i) in the case of subparagraph (A)(i), the amount of the increase in the funding target of the plan (under section 303) for the plan year attributable to the occurrence referred to in subparagraph (A), and

'(ii) in the case of subparagraph (A)(ii), the amount sufficient to result in a funding target attainment percentage of 60 percent.

'(C) UNPREDICTABLE CONTINGENT EVENT- For purposes of this paragraph, the term 'unpredictable contingent event benefit’ means any benefit payable solely by reason of--

'(i) a plant shutdown (or similar event, as determined by the Secretary of the Treasury), or

'(ii) an event other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or occurrence of death or disability.

'(2) LIMITATIONS ON PLAN AMENDMENTS INCREASING LIABILITY FOR BENEFITS-

'(A) IN GENERAL- No amendment to a defined benefit plan which is a single-employer plan which has the effect of increasing liabilities of the plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable may take effect during any plan year if the adjusted funding target attainment percentage for such plan year is--

'(i) less than 80 percent, or

'(ii) would be less than 80 percent taking into account such amendment.

'(B) EXEMPTION- Subparagraph (A) shall cease to apply with respect to any plan year, effective as of the first day of the plan year (or if later, the effective date of the amendment), upon payment by the plan sponsor of a contribution (in addition to any minimum required contribution under section 303) equal to--

'(i) in the case of subparagraph (A)(i), the amount of the increase in the funding target of the plan (under section 303) for the plan year attributable to the amendment, and

'(ii) in the case of subparagraph (A)(ii), the amount sufficient to result in an adjusted funding target attainment percentage of 80 percent.

'(C) EXCEPTION FOR CERTAIN BENEFIT INCREASES- Subparagraph (A) shall not apply to any amendment which provides for an increase in benefits under a formula which is not based on a participant's compensation, but only if the rate of such increase is not in excess of the contemporaneous rate of increase in average wages of participants covered by the amendment.

'(3) LIMITATIONS ON ACCELERATED BENEFIT DISTRIBUTIONS-

'(A) FUNDING PERCENTAGE LESS THAN 60 PERCENT- A defined benefit plan which is a single-employer plan shall provide that, in any case in which the plan's adjusted funding target attainment percentage for a plan year is less than 60 percent, the plan may not pay any prohibited payment after the valuation date for the plan year.

'(B) BANKRUPTCY- A defined benefit plan which is a single-employer plan shall provide that, during any period in which the plan sponsor is a debtor in a case under title 11, United States Code, or similar Federal or State law, the plan may not pay any prohibited payment. The preceding sentence shall not apply on or after the date on which the enrolled actuary of the plan certifies that the adjusted funding target attainment percentage of such plan is not less than 100 percent.

'(C) LIMITED PAYMENT IF PERCENTAGE AT LEAST 60 PERCENT BUT LESS THAN 80 PERCENT-

'(i) IN GENERAL- A defined benefit plan which is a single-employer plan shall provide that, in any case in which the plan's adjusted funding target attainment percentage for a plan year is 60 percent or greater but less than 80 percent, the plan may not pay any prohibited payment after the valuation date for the plan year to the extent the amount of the payment exceeds the lesser of--

'(I) 50 percent of the amount of the payment which could be made without regard to this subsection, or

'(II) the present value (determined under guidance prescribed by the Pension Benefit Guaranty Corporation, using the interest and mortality assumptions under section 205(g)) of the maximum guarantee with respect to the participant under section 4022.

'(ii) ONE-TIME APPLICATION-

'(I) IN GENERAL- The plan shall also provide that only 1 prohibited payment meeting the requirements of clause (i) may be made with respect to any participant during any period of consecutive plan years to which the limitations under either subparagraph (A) or (B) or this subparagraph applies.

'(II) TREATMENT OF BENEFICIARIES- For purposes of this clause, a participant and any beneficiary on his behalf (including an alternate payee, as defined in section 206(d)(3)(K)) shall be treated as 1 participant. If the accrued benefit of a participant is allocated to such an alternate payee and 1 or more other persons, the amount under clause (i) shall be allocated among such persons in the same manner as the accrued benefit is allocated unless the qualified domestic relations order (as defined in section 206(d)(3)(B)(i)) provides otherwise.

'(D) EXCEPTION- This paragraph shall not apply to any plan for any plan year if the terms of such plan (as in effect for the period beginning on September 1, 2005, and ending with such plan year) provide for no benefit accruals with respect to any participant during such period.

'(E) PROHIBITED PAYMENT- For purpose of this paragraph, the term 'prohibited payment’ means--

'(i) any payment, in excess of the monthly amount paid under a single life annuity (plus any social security supplements described in the last sentence of section 204(b)(1)(G)), to a participant or beneficiary whose annuity starting date (as defined in section 205(h)(2)) occurs during any period a limitation under subparagraph (A) or (B) is in effect,

'(ii) any payment for the purchase of an irrevocable commitment from an insurer to pay benefits, and

'(iii) any other payment specified by the Secretary of the Treasury by regulations.

'(4) LIMITATION ON BENEFIT ACCRUALS FOR PLANS WITH SEVERE FUNDING SHORTFALLS-

'(A) IN GENERAL- A defined benefit plan which is a single-employer plan shall provide that, in any case in which the plan's adjusted funding target attainment percentage for a plan year is less than 60 percent, benefit accruals under the plan shall cease as of the valuation date for the plan year.

'(5) RULES RELATING TO CONTRIBUTIONS REQUIRED TO AVOID BENEFIT LIMITATIONS-

'(A) SECURITY MAY BE PROVIDED-

'(i) IN GENERAL- For purposes of this subsection, the adjusted funding target attainment percentage shall be determined by treating as an asset of the plan any security provided by a plan sponsor in a form meeting the requirements of clause (ii).

'(ii) FORM OF SECURITY- The security required under clause (i) shall consist of--

'(I) a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412 of this Act,

'(II) cash, or United States obligations which mature in 3 years or less, held in escrow by a bank or similar financial institution, or

'(III) such other form of security as is satisfactory to the Secretary of the Treasury and the parties involved.

'(iii) ENFORCEMENT- Any security provided under clause (i) may be perfected and enforced at any time after the earlier of--

'(I) the date on which the plan terminates,

'(II) if there is a failure to make a payment of the minimum required contribution for any plan year beginning after the security is provided, the due date for the payment under section 303(j), or

'(III) if the adjusted funding target attainment percentage is less than 60 percent for a consecutive period of 7 years, the valuation date for the last year in the period.

'(iv) RELEASE OF SECURITY- The security shall be released (and any amounts thereunder shall be refunded together with any interest accrued thereon) at such time as the Secretary of the Treasury may prescribe in regulations, including regulations for partial releases of the security by reason of increases in the funding target attainment percentage.

'(B) PREFUNDING BALANCE OR FUNDING STANDARD CARRYOVER BALANCE MAY NOT BE USED- No prefunding balance or funding standard carryover balance under section 303(f) may be used under paragraph (1), (2), or (4) to satisfy any payment an employer may make under any such paragraph to avoid or terminate the application of any limitation under such paragraph.

'(C) DEEMED REDUCTION OF FUNDING BALANCES-

'(i) IN GENERAL- Subject to clause (iii), in any case in which a benefit limitation under paragraph (1), (2), (3), or (4) would (but for this subparagraph and determined without regard to paragraph (1)(B), (2)(B), or (4)(B)) apply to such plan for the plan year, the plan sponsor of such plan shall be treated for purposes of this Act as having made an election under section 303(f) to reduce the prefunding balance or funding standard carryover balance by such amount as is necessary for such benefit limitation to not apply to the plan for such plan year.

'(ii) EXCEPTION FOR INSUFFICIENT FUNDING BALANCES- Clause (i) shall not apply with respect to a benefit limitation for any plan year if the application of clause (i) would not result in the benefit limitation not applying for such plan year.

'(iii) RESTRICTIONS OF CERTAIN RULES TO COLLECTIVELY BARGAINED PLANS- With respect to any benefit limitation under paragraph (1), (2), or (4), clause (i) shall only apply in the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers.

'(6) NEW PLANS- Paragraphs (1), (2), and (4) shall not apply to a plan for the first 5 plan years of the plan. For purposes of this paragraph, the reference in this paragraph to a plan shall include a reference to any predecessor plan.

'(7) PRESUMED UNDERFUNDING FOR PURPOSES OF BENEFIT LIMITATIONS-

'(A) PRESUMPTION OF CONTINUED UNDERFUNDING- In any case in which a benefit limitation under paragraph (1), (2), (3), or (4) has been applied to a plan with respect to the plan year preceding the current plan year, the adjusted funding target attainment percentage of the plan for the current plan year shall be presumed to be equal to the adjusted funding target attainment percentage of the plan for the preceding plan year until the enrolled actuary of the plan certifies the actual adjusted funding target attainment percentage of the plan for the current plan year.

'(B) PRESUMPTION OF UNDERFUNDING AFTER 10TH MONTH- In any case in which no certification of the adjusted funding target attainment percentage for the current plan year is made with respect to the plan before the first day of the 10th month of such year, for purposes of paragraphs (1), (2), (3), and (4), such first day shall be deemed, for purposes of such paragraph, to be the valuation date of the plan for the current plan year and the plan's adjusted funding target attainment percentage shall be conclusively presumed to be less than 60 percent as of such first day.

'(C) PRESUMPTION OF UNDERFUNDING AFTER 4TH MONTH FOR NEARLY UNDERFUNDED PLANS- In any case in which--

'(i) a benefit limitation under paragraph (1), (2), (3), or (4) did not apply to a plan with respect to the plan year preceding the current plan year, but the adjusted funding target attainment percentage of the plan for such preceding plan year was not more than 10 percentage points greater than the percentage which would have caused such paragraph to apply to the plan with respect to such preceding plan year, and

'(ii) as of the first day of the 4th month of the current plan year, the enrolled actuary of the plan has not certified the actual adjusted funding target attainment percentage of the plan for the current plan year,

until the enrolled actuary so certifies, such first day shall be deemed, for purposes of such paragraph, to be the valuation date of the plan for the current plan year and the adjusted funding target attainment percentage of the plan as of such first day shall, for purposes of such paragraph, be presumed to be equal to 10 percentage points less than the adjusted funding target attainment percentage of the plan for such preceding plan year.

'(8) TREATMENT OF PLAN AS OF CLOSE OF PROHIBITED OR CESSATION PERIOD- For purposes of applying this part--

'(A) OPERATION OF PLAN AFTER PERIOD- Unless the plan provides otherwise, payments and accruals will resume effective as of the day following the close of the period for which any limitation of payment or accrual of benefits under paragraph (3) or (4) applies.

'(B) TREATMENT OF AFFECTED BENEFITS- Nothing in this paragraph shall be construed as affecting the plan's treatment of benefits which would have been paid or accrued but for this subsection.

'(9) TERMS RELATING TO FUNDING TARGET ATTAINMENT PERCENTAGE- For purposes of this subsection--

'(A) IN GENERAL- The term 'funding target attainment percentage’ has the same meaning given such term by section 303(d)(2).

'(B) ADJUSTED FUNDING TARGET ATTAINMENT PERCENTAGE- The term 'adjusted funding target attainment percentage’ means the funding target attainment percentage which is determined under subparagraph (A) by increasing each of the amounts under subparagraphs (A) and (B) of section 303(d)(2) by the aggregate amount of purchases of annuities for employees other than highly compensated employees (as defined in section 414(q) of the Internal Revenue Code of 1986) which were made by the plan during the preceding 2 plan years.

'(C) APPLICATION TO PLANS WHICH ARE FULLY FUNDED WITHOUT REGARD TO REDUCTIONS FOR FUNDING BALANCES-

'(i) IN GENERAL- In the case of a plan for any plan year, if the funding target attainment percentage is 100 percent or more (determined without regard to this subparagraph and without regard to the reduction in the value of assets under section 303(f)(4)), the funding target attainment percentage for purposes of subparagraphs (A) and (B) shall be determined without regard to such reduction.

'(ii) TRANSITION RULE- Clause (i) shall be applied to plan years beginning after 2007 and before 2011 by substituting for '100 percent’ the applicable percentage determined in accordance with the following table:

'In the case of a plan year beginning in calendar year, the applicable percentage is:

2008--92

2009--94

2010--96.

'(iii) LIMITATION- Clause (ii) shall not apply with respect to any plan year after 2008 unless the funding target attainment percentage (determined without regard to this subparagraph) of the plan for each preceding plan year after 2007 was not less than the applicable percentage with respect to such preceding plan year determined under clause (ii).

'(10) SPECIAL RULE FOR 2008- For purposes of this subsection, in the case of plan years beginning in 2008, the funding target attainment percentage for the preceding plan year may be determined using such methods of estimation as the Secretary of the Treasury may provide.’.

(b) Notice Requirement-

(1) IN GENERAL- Section 101 of such Act (29 U.S.C. 1021) is amended--

(A) by redesignating subsection (j) as subsection (k); and

(B) by inserting after subsection (i) the following new subsection:

'(j) Notice of Funding-Based Limitation on Certain Forms of Distribution- The plan administrator of a single-employer plan shall provide a written notice to plan participants and beneficiaries within 30 days--

'(1) after the plan has become subject to a restriction described in paragraph (1) or (3) of section 206(g)),

'(2) in the case of a plan to which section 206(g)(4) applies, after the valuation date for the plan year described in section 206(g)(4)(B) for which the plan's adjusted funding target attainment percentage for t he plan year is less than 60 percent (or, if earlier, the date such percentage is deemed to be less than 60 percent under section 206(g)(7)), and

'(3) at such other time as may be determined by the Secretary of the Treasury.

The notice required to be provided under this subsection shall be in writing, except that such notice may be in electronic or other form to the extent that such form is reasonably a ccessible to the recipient.’.

(2) ENFORCEMENT- Section 502(c)(4) of such Act (29 U.S.C. 1132(c)(4)) is amended by striking 'section 302(b)(7)(F)(iv)’ and inserting 'section 101(j) or 302(b)(7)(F)(iv)’.

(1) IN GENERAL- The amendments made by this section shall apply to plan years beginning after December 31, 2007.

(2) COLLECTIVE BARGAINING EXCEPTION- In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified before January 1, 2008, the amendments made by this section shall not apply to plan years beginning before the earlier of--

(A) the later of--

(i) the date on which the last collective bargaining agreement relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act), or

(ii) the first day of the first plan year to which the amendments made by this subsection would (but for this subparagraph) apply, or

(B) January 1, 2010.

For purposes of subparagraph (A)(i), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by this section shall not be treated as a termination of such collective bargaining agreement.

SEC. 104. SPECIAL RULES FOR MULTIPLE EMPLOYER PLANS OF CERTAIN COOPERATIVES.

(a) General Rule- Except as provided in this section, if a plan in existence on July 26, 2005, was an eligible cooperative plan for its plan year which includes such date, the amendments made by this subtitle and subtitle B shall not apply to plan years beginning before the earlier of--

(1) the first plan year for which the plan ceases to be an eligible cooperative plan, or

(2) January 1, 2017.

(b) Interest Rate- In applying section 302(b)(5)(B) of the Employee Retirement Income Security Act of 1974 and section 412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before the amendments made by this subtitle and subtitle B) to an eligible cooperative plan for plan years beginning after December 31, 2007, and before the first plan year to which such amendments apply, the third segment rate determined under section 303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii) of such Code (as added by such amendments) shall be used in lieu of the interest rate otherwise used.

(c) Eligible Cooperative Plan Defined- For purposes of this section, a plan shall be treated as an eligible cooperative plan for a plan year if the plan is maintained by more than 1 employer and at least 85 percent of the employers are--

(1) rural cooperatives (as defined in section 401(k)(7)(B) of such Code without regard to clause (iv) thereof), or

(2) organizations which are--

(A) cooperative organizations described in section 1381(a) of such Code which are more than 50-percent owned by agricultural producers or by cooperatives owned by agricultural producers, or

(B) more than 50-percent owned, or controlled by, one or more cooperative organizations described in subparagraph (A).

A plan shall also be treated as an eligible cooperative plan for any plan year for which it is described in section 210(a) of the Employee Retirement Income Security Act of 1974 and is maintained by a rural telephone cooperative association described in section 3(40)(B)(v) of such Act.

SEC. 105. TEMPORARY RELIEF FOR CERTAIN PBGC SETTLEMENT PLANS.

(a) General Rule- Except as provided in this section, if a plan in existence on July 26, 2005, was a PBGC settlement plan as of such date, the amendments made by this subtitle and subtitle B shall not apply to plan years beginning before January 1, 2014.

(b) Interest Rate- In applying section 302(b)(5)(B) of the Employee Retirement Income Security Act of 1974 and section 412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before the amendments made by this subtitle and subtitle B), to a PBGC settlement plan for plan years beginning after December 31, 2007, and before January 1, 2014, the third segment rate determined under section 303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii) of such Code (as added by such amendments) shall be used in lieu of the interest rate otherwise used.

(c) PBGC Settlement Plan- For purposes of this section, the term 'PBGC settlement plan’ means a defined benefit plan (other than a multiemployer plan) to which section 302 of such Act and section 412 of such Code apply and--

(1) which was sponsored by an employer which was in bankruptcy, giving rise to a claim by the Pension Benefit Guaranty Corporation of not greater than $150,000,000, and the sponsorship of which was assumed by another employer that was not a member of the same controlled group as the bankrupt sponsor and the claim of the Pension Benefit Guaranty Corporation was settled or withdrawn in connection with the assumption of the sponsorship, or

(2) which, by agreement with the Pension Benefit Guaranty Corporation, was spun off from a plan subsequently terminated by such Corporation under section 4042 of the Employee Retirement Income Security Act of 1974.

SEC. 106. SPECIAL RULES FOR PLANS OF CERTAIN GOVERNMENT CONTRACTORS.

(a) General Rule- Except as provided in this section, if a plan is an eligible government contractor plan, this subtitle and subtitle B shall not apply to plan years beginning before the earliest of--

(1) the first plan year for which the plan ceases to be an eligible government contractor plan,

(2) the effective date of the Cost Accounting Standards Pension Harmonization Rule, or

(3) January 1, 2011.

(b) Interest Rate- In applying section 302(b)(5)(B) of the Employee Retirement Income Security Act of 1974 and section 412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before the amendments made by this subtitle and subtitle B) to an eligible government contractor plan for plan years beginning after December 31, 2007, and before the first plan year to which such amendments apply, the third segment rate determined under section 303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii) of such Code (as added by such amendments) shall be used in lieu of the interest rate otherwise used.

(c) Eligible Government Contractor Plan Defined- For purposes of this section, a plan shall be treated as an eligible government contractor plan if it is maintained by a corporation or a member of the same affiliated group (as defined by section 1504(a) of the Internal Revenue Code of 1986), whose primary source of revenue is derived from business performed under contracts with the United States that are subject to the Federal Acquisition Regulations (chapter 1 of title 48, CFR) and that are also subject to the Defense Federal Acquisition Regulation Supplement (chapter 2 of title 48, CFR), and whose revenue derived from such business in the previous fiscal year exceeded $5,000,000,000, and whose pension plan costs that are assignable under those contracts are subject to sections 412 and 413 of the Cost Accounting Standards (48 CFR 9904.412 and 9904.413).

(d) Cost Accounting Standards Pension Harmonization Rule- The Cost Accounting Standards Board shall review and revise sections 412 and 413 of the Cost Accounting Standards (48 CFR 9904.412 and 9904.413) to harmonize the minimum required contribution under the Employee Retirement Income Security Act of 1974 of eligible government contractor plans and government reimbursable pension plan costs not later than January 1, 2010. Any final rule adopted by the Cost Accounting Standards Board shall be deemed the Cost Accounting Standards Pension Harmonization Rule.

SEC. 107. TECHNICAL AND CONFORMING AMENDMENTS.

(a) Miscellaneous Amendments to Title I- Subtitle B of title I of such Act (29 U.S.C. 1021 et seq.) is amended--

(1) in section 101(d)(3), by striking 'section 302(e)’ and inserting 'section 303(j)’;

(2) in section 103(d)(8)(B), by striking 'the requirements of section 302(c)(3)’ and inserting 'the applicable requirements of sections 303(h) and 304(c)(3)’;

(3) in section 103(d), by striking paragraph (11) and inserting the following:

'(11) If the current value of the assets of the plan is less than 70 percent of--

'(A) in the case of a single-employer plan, the funding target (as defined in section 303(d)(1)) of the plan, or

'(B) in the case of a multiemployer plan, the current liability (as defined in section 304(c)(6)(D)) under the plan,

the percentage which such value is of the amount described in subparagraph (A) or (B).’;

(4) in section 203(a)(3)(C), by striking 'section 302(c)(8)’ and inserting 'section 302(d)(2)’;

(5) in section 204(g)(1), by striking 'section 302(c)(8)’ and inserting 'section 302(d)(2)’;

(6) in section 204(i)(2)(B), by striking 'section 302(c)(8)’ and inserting 'section 302(d)(2)’;

(7) in section 204(i)(3), by striking 'funded current liability percentage (within the meaning of section 302(d)(8) of this Act)’ and inserting 'funding target attainment percentage (as defined in section 303(d)(2))’;

(8) in section 204(i)(4), by striking 'section 302(c)(11)(A), without regard to section 302(c)(11)(B)’ and inserting 'section 302(b)(1), without regard to section 302(b)(2)’;

(9) in section 206(e)(1), by striking 'section 302(d)’ and inserting 'section 303(j)(4)’, and by striking 'section 302(e)(5)’ and inserting 'section 303(j)(4)(E)(i)’;

(10) in section 206(e)(3), by striking 'section 302(e) by reason of paragraph (5)(A) thereof’ and inserting 'section 303(j)(3) by reason of section 303(j)(4)(A)’; and

(11) in sections 101(e)(3), 403(c)(1), and 408(b)(13), by striking 'American Jobs Creation Act of 2004’ and inserting 'Pension Protection Act of 2006’.

(b) Miscellaneous Amendments to Title IV- Title IV of such Act is amended--

(1) in section 4001(a)(13) (29 U.S.C. 1301(a)(13)), by striking '302(c)(11)(A)’ and inserting '302(b)(1)’, by striking '412(c)(11)(A)’ and inserting '412(b)(1)’, by striking '302(c)(11)(B)’ and inserting '302(b)(2)’, and by striking '412(c)(11)(B)’ and inserting '412(b)(2)’;

(2) in section 4003(e)(1) (29 U.S.C. 1303(e)(1)), by striking '302(f)(1)(A) and (B)’ and inserting '303(k)(1)(A) and (B)’, and by striking '412(n)(1)(A) and (B)’ and inserting '430(k)(1)(A) and (B)’;

(3) in section 4010(b)(2) (29 U.S.C. 1310(b)(2)), by striking '302(f)(1)(A) and (B)’ and inserting '303(k)(1)(A) and (B)’, and by striking '412(n)(1)(A) and (B)’ and inserting '430(k)(1)(A) and (B)’;

(4) in section 4062(c) (29 U.S.C. 1362(c)), by striking paragraphs (1), (2), and (3) and inserting the following:

'(1) the sum of the shortfall amortization charge (within the meaning of section 303(c)(1) of this Act and 430(d)(1) of the Internal Revenue Code of 1986) with respect to the plan (if any) for the plan year in which the termination date occurs, plus the aggregate total of shortfall amortization installments (if any) determined for succeeding plan years under section 303(c)(2) of this Act and section 430(d)(2) of such Code (which, for purposes of this subparagraph, shall include any increase in such sum which would result if all applications for waivers of the minimum funding standard under section 302(c) of this Act and section 412(c) of such Code which are pending with respect to such plan were denied and if no additional contributions (other than those already made by the termination date) were made for the plan year in which the termination date occurs or for any previous plan year), and

'(2) the sum of the waiver amortization charge (within the meaning of section 303(e)(1) of this Act and 430(e)(1) of the Internal Revenue Code of 1986) with respect to the plan (if any) for the plan year in which the termination date occurs, plus the aggregate total of waiver amortization installments (if any) determined for succeeding plan years under section 303(e)(2) of this Act and section 430(e)(2) of such Code,’;

(5) in section 4071 (29 U.S.C. 1371), by striking '302(f)(4)’ and inserting '303(k)(4)’;

(6) in section 4243(a)(1)(B) (29 U.S.C. 1423(a)(1)(B)), by striking '302(a)’ and inserting '304(a)’, and, in clause (i), by striking '302(a)’ and inserting '304(a)’;

(7) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)), by striking '303(a)’ and inserting '302(c)’;

(8) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)), by striking '303(c)’ and inserting '302(c)(3)’; and

(9) in section 4243(g) (29 U.S.C. 1423(g)), by striking '302(c)(3)’ and inserting '304(c)(3)’.

(c) Amendments to Reorganization Plan No. 4 of 1978- Section 106(b)(ii) of Reorganization Plan No. 4 of 1978 (ratified and affirmed as law by Public Law 98-532 (98 Stat. 2705)) is amended by striking '302(c)(8)’ and inserting '302(d)(2)’, by striking '304(a) and (b)(2)(A)’ and inserting '304(d)(1), (d)(2), and (e)(2)(A)’, and by striking '412(c)(8), (e), and (f)(2)(A)’ and inserting '412(c)(2) and 431(d)(1), (d)(2), and (e)(2)(A)’.

(d) Repeal of Expired Authority for Temporary Variances- Section 207 of such Act (29 U.S.C. 1057) is repealed.

(e) Effective Date- The amendments made by this section shall apply to plan years beginning after 2007.

Subtitle B--Amendments to Internal Revenue Code of 1986

SEC. 111. MINIMUM FUNDING STANDARDS.

(a) New Minimum Funding Standards- Section 412 of the Internal Revenue Code of 1986 (relating to minimum funding standards) is amended to read as follows:

'SEC. 412. MINIMUM FUNDING STANDARDS.

'(a) Requirement to Meet Minimum Funding Standard-

'(1) IN GENERAL- A plan to which this section applies shall satisfy the minimum funding standard applicable to the plan for any plan year.

'(2) MINIMUM FUNDING STANDARD- For purposes of paragraph (1), a plan shall be treated as satisfying the minimum funding standard for a plan year if--

'(A) in the case of a defined benefit plan which is not a multiemployer plan, the employer makes contributions to or under the plan for the plan year which, in the aggregate, are not less than the minimum required contribution determined under section 430 for the plan for the plan year,

'(B) in the case of a money purchase plan which is not a multiemployer plan, the employer makes contributions to or under the plan for the plan year which are required under the terms of the plan, and

'(b) Liability for Contributions-

'(1) IN GENERAL- Except as provided in paragraph (2), the amount of any contribution required by this section (including any required installments under paragraphs (3) and (4) of section 430(j)) shall be paid by the employer responsible for making contributions to or under the plan.

'(c) Variance From Minimum Funding Standards-

'(1) WAIVER IN CASE OF BUSINESS HARDSHIP-

'(A) IN GENERAL- If--

'(ii) application of the standard would be adverse to the interests of plan participants in the aggregate,

the Secretary may, subject to subparagraph (C), waive the requirements of subsection (a) for such year with respect to all or any portion of the minimum funding standard. The Secretary shall not waive the minimum funding standard with respect to a plan for more than 3 of any 15 (5 of any 15 in the case of a multiemployer plan) consecutive plan years

'(B) EFFECTS OF WAIVER- If a waiver is granted under subparagraph (A) for any plan year--

'(i) in the case of a defined benefit plan which is not a multiemployer plan, the minimum required contribution under section 430 for the plan year shall be reduced by the amount of the waived funding deficiency and such amount shall be amortized as required under section 430(e), and

'(ii) in the case of a multiemployer plan, the funding standard account shall be credited under section 431(b)(3)(C) with the amount of the waived funding deficiency and such amount shall be amortized as required under section 431(b)(2)(C).

'(C) WAIVER OF AMORTIZED PORTION NOT ALLOWED- The Secretary may not waive under subparagraph (A) any portion of the minimum funding standard under subsection (a) for a plan year which is attributable to any waived funding deficiency for any preceding plan year.

'(A) the employer is operating at an economic loss,

'(B) there is substantial unemployment or underemployment in the trade or business and in the industry concerned,

'(C) the sales and profits of the industry concerned are depressed or declining, and

'(D) it is reasonable to expect that the plan will be continued only if the waiver is granted.

'(3) WAIVED FUNDING DEFICIENCY- For purposes of this section and part III of this subchapter, the term 'waived funding deficiency’ means the portion of the minimum funding standard under subsection (a) (determined without regard to the waiver) for a plan year waived by the Secretary and not satisfied by employer contributions.

'(4) SECURITY FOR WAIVERS FOR SINGLE-EMPLOYER PLANS, CONSULTATIONS-

'(A) SECURITY MAY BE REQUIRED-

'(i) IN GENERAL- Except as provided in subparagraph (C), the Secretary may require an employer maintaining a defined benefit plan which is a single-employer plan (within the meaning of section 4001(a)(15) of the Employee Retirement Income Security Act of 1974) to provide security to such plan as a condition for granting or modifying a waiver under paragraph (1).

'(ii) SPECIAL RULES- Any security provided under clause (i) may be perfected and enforced only by the Pension Benefit Guaranty Corporation, or at the direction of the Corporation, by a contributing sponsor (within the meaning of section 4001(a)(13) of the Employee Retirement Income Security Act of 1974), or a member of such sponsor's controlled group (within the meaning of section 4001(a)(14) of such Act).

'(B) CONSULTATION WITH THE PENSION BENEFIT GUARANTY CORPORATION- Except as provided in subparagraph (C), the Secretary shall, before granting or modifying a waiver under this subsection with respect to a plan described in subparagraph (A)(i)--

'(i) provide the Pension Benefit Guaranty Corporation with--

'(I) notice of the completed application for any waiver or modification, and

'(II) an opportunity to comment on such application within 30 days after receipt of such notice, and

'(ii) consider--

'(I) any comments of the Corporation under clause (i)(II), and

'(II) any views of any employee organization (within the meaning of section 3(4) of the Employee Retirement Income Security Act of 1974) representing participants in the plan which are submitted in writing to the Secretary in connection with such application.

Information provided to the Corporation under this subparagraph shall be considered tax return information and subject to the safeguarding and reporting requirements of section 6103(p).

'(C) EXCEPTION FOR CERTAIN WAIVERS-

'(i) IN GENERAL- The preceding provisions of this paragraph shall not apply to any plan with respect to which the sum of--

'(I) the aggregate unpaid minimum required contributions (within the meaning of section 4971(c)(4)) for the plan year and all preceding plan years, and

'(II) the present value of all waiver amortization installments determined for the plan year and succeeding plan years under section 430(e)(2),

is less than $1,000,000.

'(5) SPECIAL RULES FOR SINGLE-EMPLOYER PLANS-

'(A) APPLICATION MUST BE SUBMITTED BEFORE DATE 2 1/2 MONTHS AFTER CLOSE OF YEAR- In the case of a defined benefit plan which is not a multiemployer plan, no waiver may be granted under this subsection with respect to any plan for any plan year unless an application therefor is submitted to the Secretary not later than the 15th day of the 3rd month beginning after the close of such plan year.

'(B) SPECIAL RULE IF EMPLOYER IS MEMBER OF CONTROLLED GROUP- In the case of a defined benefit plan which is not a multiemployer plan, if an employer is a member of a controlled group, the temporary substantial business hardship requirements of paragraph (1) shall be treated as met only if such requirements are met--

'(i) with respect to such employer, and

'(ii) with respect to the controlled group of which such employer is a member (determined by treating all members of such group as a single employer).

The Secretary may provide that an analysis of a trade or business or industry of a member need not be conducted if the Secretary determines such analysis is not necessary because the taking into account of such member would not significantly affect the determination under this paragraph.

'(6) ADVANCE NOTICE-

'(A) IN GENERAL- The Secretary shall, before granting a waiver under this subsection, require each applicant to provide evidence satisfactory to the Secretary that the applicant has provided notice of the filing of the application for such waiver to each affected party (as defined in section 4001(a)(21) of the Employee Retirement Income Security Act of 1974). Such notice shall include a description of the extent to which the plan is funded for benefits which are guaranteed under title IV of the Employee Retirement Income Security Act of 1974 and for benefit liabilities.

'(B) CONSIDERATION OF RELEVANT INFORMATION- The Secretary shall consider any relevant information provided by a person to whom notice was given under subparagraph (A).

'(7) RESTRICTION ON PLAN AMENDMENTS-

'(A) IN GENERAL- No amendment of a plan which increases the liabilities of the plan by reason of any increase in benefits, any change in the accrual of benefits, or any change in the rate at which benefits become nonforfeitable under the plan shall be adopted if a waiver under this subsection or an extension of time under section 431(d) is in effect with respect to the plan, or if a plan amendment described in subsection (d)(2) has been made at any time in the preceding 12 months (24 months in the case of a multiemployer plan). If a plan is amended in violation of the preceding sentence, any such waiver, or extension of time, shall not apply to any plan year ending on or after the date on which such amendment is adopted.

'(B) EXCEPTION- Subparagraph (A) shall not apply to any plan amendment which--

'(i) the Secretary determines to be reasonable and which provides for only de minimis increases in the liabilities of the plan,

'(ii) only repeals an amendment described in subsection (d)(2), or

'(iii) is required as a condition of qualification under part I of subchapter D, of chapter 1.

'(d) Miscellaneous Rules-

'(1) CHANGE IN METHOD OR YEAR- If the funding method, the valuation date, or a plan year for a plan is changed, the change shall take effect only if approved by the Secretary.

'(2) CERTAIN RETROACTIVE PLAN AMENDMENTS- For purposes of this section, any amendment applying to a plan year which--

'(B) does not reduce the accrued benefit of any participant determined as of the beginning of the first plan year to which the amendment applies, and

'(C) does not reduce the accrued benefit of any participant determined as of the time of adoption except to the extent required by the circumstances,

shall, at the election of the plan administrator, be deemed to have been made on the first day of such plan year. No amendment described in this paragraph which reduces the accrued benefits of any participant shall take effect unless the plan administrator files a notice with the Secretary notifying him of such amendment and the Secretary has approved such amendment, or within 90 days after the date on which such notice was filed, failed to disapprove such amendment. No amendment described in this subsection shall be approved by the Secretary unless the Secretary determines that such amendment is necessary because of a temporary substantial business hardship (as determined under subsection (c)(2)) or a substantial business hardship (as so determined) in the case of a multiemployer plan and that a waiver under subsection (c) (or, in the case of a multiemployer plan, any extension of the amortization period under section 431(d)) is unavailable or inadequate.

'(3) CONTROLLED GROUP- For purposes of this section, the term 'controlled group’ means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414.

'(e) Plans to Which Section Applies-

'(1) IN GENERAL- Except as provided in paragraphs (2) and (4), this section applies to a plan if, for any plan year beginning on or after the effective date of this section for such plan under the Employee Retirement Income Security Act of 1974--

'(A) such plan included a trust which qualified (or was determined by the Secretary to have qualified) under section 401(a), or

'(B) such plan satisfied (or was determined by the Secretary to have satisfied) the requirements of section 403(a).

'(2) EXCEPTIONS- This section shall not apply to--

'(A) any profit-sharing or stock bonus plan,

'(B) any insurance contract plan described in paragraph (3),

'(C) any governmental plan (within the meaning of section 414(d)),

'(D) any church plan (within the meaning of section 414(e)) with respect to which the election provided by section 410(d) has not been made,

'(E) any plan which has not, at any time after September 2, 1974, provided for employer contributions, or

'(F) any plan established and maintained by a society, order, or association described in section 501(c)(8) or (9), if no part of the contributions to or under such plan are made by employers of participants in such plan.

No plan described in subparagraph (C), (D), or (F) shall be treated as a qualified plan for purposes of section 401(a) unless such plan meets the requirements of section 401(a)(7) as in effect on September 1, 1974.

'(3) CERTAIN INSURANCE CONTRACT PLANS- A plan is described in this paragraph if--

'(A) the plan is funded exclusively by the purchase of individual insurance contracts,

'(B) such contracts provide for level annual premium payments to be paid extending not later than the retirement age for each individual participating in the plan, and commencing with the date the individual became a participant in the plan (or, in the case of an increase in benefits, commencing at the time such increase becomes effective),

'(C) benefits provided by the plan are equal to the benefits provided under each contract at normal retirement age under the plan and are guaranteed by an insurance carrier (licensed under the laws of a State to do business with the plan) to the extent premiums have been paid,

'(D) premiums payable for the plan year, and all prior plan years, under such contracts have been paid before lapse or there is reinstatement of the policy,

'(E) no rights under such contracts have been subject to a security interest at any time during the plan year, and

'(F) no policy loans are outstanding at any time during the plan year.

A plan funded exclusively by the purchase of group insurance contracts which is determined under regulations prescribed by the Secretary to have the same characteristics as contracts described in the preceding sentence shall be treated as a plan described in this paragraph.

'(4) CERTAIN TERMINATED MULTIEMPLOYER PLANS- This section applies with respect to a terminated multiemployer plan to which section 4021 of the Employee Retirement Income Security Act of 1974 applies until the last day of the plan year in which the plan terminates (within the meaning of section 4041A(a)(2) of such Act).’.

(b) Effective Date- The amendments made by this section shall apply to plan years beginning after December 31, 2007.

SEC. 112. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION PLANS.

(a) In General- Subchapter D of chapter 1 of the Internal Revenue Code of 1986 (relating to deferred compensation, etc.) is amended by adding at the end the following new part:

'PART III--MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION PLANS

'SEC. 430. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION PLANS.

'(a) Minimum Required Contribution- For purposes of this section and section 412(a)(2)(A), except as provided in subsection (f), the term 'minimum required contribution’ means, with respect to any plan year of a defined benefit plan which is not a multiemployer plan--

'(1) in any case in which the value of plan assets of the plan (as reduced under subsection (f)(4)(B)) is less than the funding target of the plan for the plan year, the sum of--

'(A) the target normal cost of the plan for the plan year,

'(B) the shortfall amortization charge (if any) for the plan for the plan year determined under subsection (c), and

'(C) the waiver amortization charge (if any) for the plan for the plan year as determined under subsection (e);

'(c) Shortfall Amortization Charge-

'(2) SHORTFALL AMORTIZATION INSTALLMENT- For purposes of paragraph (1)--

'(3) SHORTFALL AMORTIZATION BASE- For purposes of this section, the shortfall amortization base of a plan for a plan year is--

'(A) the funding shortfall of such plan for such plan year, minus

'(4) FUNDING SHORTFALL- For purposes of this section, the funding shortfall of a plan for any plan year is the excess (if any) of--

'(A) the funding target of the plan for the plan year, over

'(B) the value of plan assets of the plan (as reduced under subsection (f)(4)(B)) for the plan year which are held by the plan on the valuation date.

'(5) EXEMPTION FROM NEW SHORTFALL AMORTIZATION BASE-

'(B) TRANSITION RULE-

'(ii) APPLICABLE PERCENTAGE- For purposes of subparagraph (A), the applicable percentage shall be determined in accordance with the following table:

'In the case of a plan year beginning in calendar year___, the applicable percentage is:

2008--92

2009--94

2010--96.

'(iv) TRANSITION RELIEF NOT AVAILABLE FOR NEW OR DEFICIT REDUCTION PLANS- Clause (i) shall not apply to a plan--

'(I) which was not in effect for a plan year beginning in 2007, or

'(II) which was in effect for a plan year beginning in 2007 and which was subject to section 412(l) (as in effect for plan years beginning in 2007), determined after the application of paragraphs (6) and (9) thereof.

'(d) Rules Relating to Funding Target- For purposes of this section--

'(2) FUNDING TARGET ATTAINMENT PERCENTAGE- The 'funding target attainment percentage’ of a plan for a plan year is the ratio (expressed as a percentage) which--

'(A) the value of plan assets for the plan year (as reduced under subsection (f)(4)(B)), bears to

'(B) the funding target of the plan for the plan year (determined without regard to subsection (i)(1)).

'(e) Waiver Amortization Charge-

'(2) WAIVER AMORTIZATION INSTALLMENT- For purposes of paragraph (1)--

'(4) WAIVER AMORTIZATION BASE- The waiver amortization base of a plan for a plan year is the amount of the waived funding deficiency (if any) for such plan year under section 412(c).

'(f) Reduction of Minimum Required Contribution by Prefunding Balance and Funding Standard Carryover Balance-

'(1) ELECTION TO MAINTAIN BALANCES-

'(A) PREFUNDING BALANCE- The plan sponsor of a defined benefit plan which is not a multiemployer plan may elect to maintain a prefunding balance.

'(B) FUNDING STANDARD CARRYOVER BALANCE-

'(i) IN GENERAL- In the case of a defined benefit plan (other than a multiemployer plan) described in clause (ii), the plan sponsor may elect to maintain a funding standard carryover balance, until such balance is reduced to zero.

'(ii) PLANS MAINTAINING FUNDING STANDARD ACCOUNT IN 2007- A plan is described in this clause if the plan--

'(I) was in effect for a plan year beginning in 2007, and

'(II) had a positive balance in the funding standard account under section 412(b) as in effect for such plan year and determined as of the end of such plan year.

'(2) APPLICATION OF BALANCES- A prefunding balance and a funding standard carryover balance maintained pursuant to this paragraph--

'(A) shall be available for crediting against the minimum required contribution, pursuant to an election under paragraph (3),

'(B) shall be applied as a reduction in the amount treated as the value of plan assets for purposes of this section, to the extent provided in paragraph (4), and

'(C) may be reduced at any time, pursuant to an election under paragraph (5).

'(3) ELECTION TO APPLY BALANCES AGAINST MINIMUM REQUIRED CONTRIBUTION-

'(A) IN GENERAL- Except as provided in subparagraphs (B) and (C), in the case of any plan year in which the plan sponsor elects to credit against the minimum required contribution for the current plan year all or a portion of the prefunding balance or the funding standard carryover balance for the current plan year (not in excess of such minimum required contribution), the minimum required contribution for the plan year shall be reduced as of the first day of the plan year by the amount so credited by the plan sponsor as of the first day of the plan year. For purposes of the preceding sentence, the minimum required contribution shall be determined after taking into account any waiver under section 412(c).

'(C) LIMITATION FOR UNDERFUNDED PLANS- The preceding provisions of this paragraph shall not apply for any plan year if the ratio (expressed as a percentage) which--

'(i) the value of plan assets for the preceding plan year (as reduced under paragraph (4)(C)), bears to

'(ii) the funding target of the plan for the preceding plan year (determined without regard to subsection (i)(1)),

is less than 80 percent. In the case of plan years beginning in 2008, the ratio under this subparagraph may be determined using such methods of estimation as the Secretary may prescribe.

'(B) DETERMINATION OF EXCESS ASSETS, FUNDING SHORTFALL, AND FUNDING TARGET ATTAINMENT PERCENTAGE-

'(5) ELECTION TO REDUCE BALANCE PRIOR TO DETERMINATIONS OF VALUE OF PLAN ASSETS AND CREDITING AGAINST MINIMUM REQUIRED CONTRIBUTION-

'(6) PREFUNDING BALANCE-

'(B) INCREASES-

'(I) the aggregate total of employer contributions to the plan for the preceding plan year, over--

'(II) the minimum required contribution for such preceding plan year.

'(C) DECREASES- The prefunding balance of a plan shall be decreased (but not below zero) by the sum of--

'(ii) as of the time specified in paragraph (5)(A), any reduction in such balance elected under paragraph (5).

'(7) FUNDING STANDARD CARRYOVER BALANCE-

'(B) BEGINNING BALANCE- The beginning balance of the funding standard carryover balance shall be the positive balance described in paragraph (1)(B)(ii)(II).

'(C) DECREASES- The funding standard carryover balance of a plan shall be decreased (but not below zero) by--

'(ii) as of the time specified in paragraph (5)(A), any reduction in such balance elected under paragraph (5).

'(9) ELECTIONS- Elections under this subsection shall be made at such times, and in such form and manner, as shall be prescribed in regulations of the Secretary.

'(g) Valuation of Plan Assets and Liabilities-

'(2) VALUATION DATE- For purposes of this section--

'(A) IN GENERAL- Except as provided in subparagraph (B), the valuation date of a plan for any plan year shall be the first day of the plan year.

'(B) EXCEPTION FOR SMALL PLANS- If, on each day during the preceding plan year, a plan had 100 or fewer participants, the plan may designate any day during the plan year as its valuation date for such plan year and succeeding plan years. For purposes of this subparagraph, all defined benefit plans (other than multiemployer plans) maintained by the same employer (or any member of such employer's controlled group) shall be treated as 1 plan, but only participants with respect to such employer or member shall be taken into account.

'(C) APPLICATION OF CERTAIN RULES IN DETERMINATION OF PLAN SIZE- For purposes of this paragraph--

'(ii) PREDECESSORS- Any reference in subparagraph (B) to an employer shall include a reference to any predecessor of such employer.

'(3) DETERMINATION OF VALUE OF PLAN ASSETS- For purposes of this section--

'(A) IN GENERAL- Except as provided in subparagraph (B), the value of plan assets shall be the fair market value of the assets.

'(B) AVERAGING ALLOWED- A plan may determine the value of plan assets on the basis of the averaging of fair market values, but only if such method--

'(i) is permitted under regulations prescribed by the Secretary,

'(iii) does not result in a determination of the value of plan assets which, at any time, is lower than 90 percent or greater than 110 percent of the fair market value of such assets at such time.

Any such averaging shall be adjusted for contributions and distributions (as provided by the Secretary).

'(4) ACCOUNTING FOR CONTRIBUTION RECEIPTS- For purposes of determining the value of assets under paragraph (3)--

'(A) PRIOR YEAR CONTRIBUTIONS- If--

'(i) an employer makes any contribution to the plan after the valuation date for the plan year in which the contribution is made, and

'(ii) the contribution is for a preceding plan year,

'(i) such contributions, and

'(ii) interest on such contributions for the period between the date of the contributions and the valuation date, determined by using the effective interest rate for the plan year.

'(h) Actuarial Assumptions and Methods-

'(1) IN GENERAL- Subject to this subsection, the determination of any present value or other computation under this section shall be made on the basis of actuarial assumptions and methods--

'(A) each of which is reasonable (taking into account the experience of the plan and reasonable expectations), and

'(B) which, in combination, offer the actuary's best estimate of anticipated experience under the plan.

'(2) INTEREST RATES-

'(B) INTEREST RATES FOR DETERMINING FUNDING TARGET- For purposes of determining the funding target of a plan for any plan year, the interest rate used in determining the present value of the liabilities of the plan shall be--

'(i) in the case of benefits reasonably determined to be payable during the 5-year period beginning on the first day of the plan year, the first segment rate with respect to the applicable month,

'(iii) in the case of benefits reasonably determined to be payable after the period described in clause (ii), the third segment rate with respect to the applicable month.

'(C) SEGMENT RATES- For purposes of this paragraph--

'(i) FIRST SEGMENT RATE- The term ' first segment rate’ means, with respect to any month, the single rate of interest which shall be determined by the Secretary for such month on the basis of the corporate bond yield curve for such month, taking into account only that portion of such yield curve which is based on bonds maturing during the 5-year period commencing with such month.

'(ii) SECOND SEGMENT RATE- The term 'second segment rate’ means, with respect to any month, the single rate of interest which shall be determined by the Secretary for such month on the basis of the corporate bond yield curve for such month, taking into account only that portion of such yield curve which is based on bonds maturing during the 15-year period beginning at the end of the period described in clause (i).

'(iii) THIRD SEGMENT RATE- The term 'third segment rate’ means, with respect to any month, the single rate of interest which shall be determined by the Secretary for such month on the basis of the corporate bond yield curve for such month, taking into account only that portion of such yield curve which is based on bonds maturing during periods beginning after the period described in clause (ii).

'(D) CORPORATE BOND YIELD CURVE- For purposes of this paragraph--

'(i) IN GENERAL- The term 'corporate bond yield curve’ means, with respect to any month, a yield curve which is prescribed by the Secretary for such month and which reflects the average, for the 24-month period ending with the month preceding such month, of monthly yields on investment grade corporate bonds with varying maturities and that are in the top 3 quality levels available.

'(F) PUBLICATION REQUIREMENTS- The Secretary shall publish for each month the corporate bond yield curve (and the corporate bond yield curve reflecting the modification described in section 417(e)(3)(D)(i)) for such month and each of the rates determined under subparagraph (B) for such month. The Secretary shall also publish a description of the methodology used to determine such yield curve and such rates which is sufficiently detailed to enable plans to make reasonable projections regarding the yield curve and such rates for future months based on the plan's projection of future interest rates.

'(G) TRANSITION RULE-

'(I) the product of such rate for such month determined without regard to this subparagraph, multiplied by the applicable percentage, and

'(II) the product of the rate determined under the rules of section 412(b)(5)(B)(ii)(II) (as in effect for plan years beginning in 2007), multiplied by a percentage equal to 100 percent minus the applicable percentage.

'(ii) APPLICABLE PERCENTAGE- For purposes of clause (i), the applicable percentage is 33 1/3 percent for plan years beginning in 2008 and 66 2/3 percent for plan years beginning in 2009.

'(iii) NEW PLANS INELIGIBLE- Clause (i) shall not apply to any plan if the first plan year of the plan begins after December 31, 2007.

'(iv) ELECTION- The plan sponsor may elect not to have this subparagraph apply. Such election, once made, may be revoked only with the consent of the Secretary.

'(3) MORTALITY TABLES-

'(A) IN GENERAL- Except as provided in subparagraph (C) or (D), the Secretary shall by regulation prescribe mortality tables to be used in determining any present value or making any computation under this section. Such tables shall be based on the actual experience of pension plans and projected trends in such experience. In prescribing such tables, the Secretary shall take into account results of available independent studies of mortality of individuals covered by pension plans.

'(B) PERIODIC REVISION- The Secretary shall (at least every 10 years) make revisions in any table in effect under subparagraph (A) to reflect the actual experience of pension plans and projected trends in such experience.

'(C) SUBSTITUTE MORTALITY TABLE-

'(i) IN GENERAL- Upon request by the plan sponsor and approval by the Secretary, a mortality table which meets the requirements of clause (iii) shall be used in determining any present value or making any computation under this section during the period of consecutive plan years (not to exceed 10) specified in the request.

'(ii) EARLY TERMINATION OF PERIOD- Notwithstanding clause (i), a mortality table described in clause (i) shall cease to be in effect as of the earliest of--

'(I) the date on which there is a significant change in the participants in the plan by reason of a plan spinoff or merger or otherwise, or

'(II) the date on which the plan actuary determines that such table does not meet the requirements of clause (iii).

'(iii) REQUIREMENTS- A mortality table meets the requirements of this clause if--

'(II) such table reflects the actual experience of the pension plans maintained by the sponsor and projected trends in general mortality experience.

'(iv) ALL PLANS IN CONTROLLED GROUP MUST USE SEPARATE TABLE- Except as provided by the Secretary, a plan sponsor may not use a mortality table under this subparagraph for any plan maintained by the plan sponsor unless--

'(v) DEADLINE FOR SUBMISSION AND DISPOSITION OF APPLICATION-

'(I) SUBMISSION- The plan sponsor shall submit a mortality table to the Secretary for approval under this subparagraph at least 7 months before the 1st day of the period described in clause (i).

'(II) DISPOSITION- Any mortality table submitted to the Secretary for approval under this subparagraph shall be treated as in effect as of the 1st day of the period described in clause (i) unless the Secretary, during the 180-day period beginning on the date of such submission, disapproves of such table and provides the reasons that such table fails to meet the requirements of clause (iii). The 180-day period shall be extended upon mutual agreement of the Secretary and the plan sponsor.

'(D) SEPARATE MORTALITY TABLES FOR THE DISABLED- Notwithstanding subparagraph (A)--

'(i) IN GENERAL- The Secretary shall establish mortality tables which may be used (in lieu of the tables under subparagraph (A)) under this subsection for individuals who are entitled to benefits under the plan on account of disability. The Secretary shall establish separate tables for individuals whose disabilities occur in plan years beginning before January 1, 1995, and for individuals whose disabilities occur in plan years beginning on or after such date.

'(iii) PERIODIC REVISION- The Secretary shall (at least every 10 years) make revisions in any table in effect under clause (i) to reflect the actual experience of pension plans and projected trends in such experience.

'(5) APPROVAL OF LARGE CHANGES IN ACTUARIAL ASSUMPTIONS-

'(A) IN GENERAL- No actuarial assumption used to determine the funding target for a plan to which this paragraph applies may be changed without the approval of the Secretary.

'(B) PLANS TO WHICH PARAGRAPH APPLIES- This paragraph shall apply to a plan only if--

'(i) the plan is a defined benefit plan (other than a multiemployer plan) to which title IV of the Employee Retirement Income Security Act of 1974 applies,

'(ii) the aggregate unfunded vested benefits as of the close of the preceding plan year (as determined under section 4006(a)(3)(E)(iii) of the Employee Retirement Income Security Act of 1974) of such plan and all other plans maintained by the contributing sponsors (as defined in section 4001(a)(13) of such Act) and members of such sponsors' controlled groups (as defined in section 4001(a)(14) of such Act) which are covered by title IV (disregarding plans with no unfunded vested benefits) exceed $50,000,000, and

'(i) Special Rules for At-Risk Plans-

'(1) FUNDING TARGET FOR PLANS IN AT-RISK STATUS-

'(A) IN GENERAL- In the case of a plan which is in at-risk status for a plan year, the funding target of the plan for the plan year shall be equal to the sum of--

'(ii) in the case of a plan which also has been in at-risk status for at least 2 of the 4 preceding plan years, a loading factor determined under subparagraph (C).

'(B) ADDITIONAL ACTUARIAL ASSUMPTIONS- The actuarial assumptions described in this subparagraph are as follows:

'(C) LOADING FACTOR- The loading factor applied with respect to a plan under this paragraph for any plan year is the sum of--

'(i) $700, times the number of participants in the plan, plus

'(ii) 4 percent of the funding target (determined without regard to this paragraph) of the plan for the plan year.

'(2) TARGET NORMAL COST OF AT-RISK PLANS- In the case of a plan which is in at-risk status for a plan year, the target normal cost of the plan for such plan year shall be equal to the sum of--

'(3) MINIMUM AMOUNT- In no event shall--

'(A) the at-risk funding target be less than the funding target, as determined without regard to this subsection, or

'(B) the at-risk target normal cost be less than the target normal cost, as determined without regard to this subsection.

'(4) DETERMINATION OF AT-RISK STATUS- For purposes of this subsection--

'(A) IN GENERAL- A plan is in at-risk status for a plan year if--

'(i) the funding target attainment percentage for the preceding plan year (determined under this section without regard to this subsection) is less than 80 percent, and

'(B) TRANSITION RULE- In the case of plan years beginning in 2008, 2009, and 2010, subparagraph (A)(i) shall be applied by substituting the following percentages for '80 percent’:

'(i) 65 percent in the case of 2008.

'(ii) 70 percent in the case of 2009.

'(iii) 75 percent in the case of 2010.

'(C) SPECIAL RULE FOR EMPLOYEES OFFERED EARLY RETIREMENT IN 2006-

'(i) IN GENERAL- For purposes of subparagraph (A)(ii), the additional actuarial assumptions described in paragraph (1)(B) shall not be taken into account with respect to any employee if--

'(I) such employee is employed by a specified automobile manufacturer,

'(IV) such employee does not elect to accept such offer before the specified date on which the offer expires.

'(ii) SPECIFIED AUTOMOBILE MANUFACTURER- For purposes of clause (i), the term 'specified automobile manufacturer’ means--

'(I) any manufacturer of automobiles, and

'(5) TRANSITION BETWEEN APPLICABLE FUNDING TARGETS AND BETWEEN APPLICABLE TARGET NORMAL COSTS-

'(i) the amount determined under this section without regard to this subsection, plus

'(B) TRANSITION PERCENTAGE- For purposes of subparagraph (A), the transition percentage shall be determined in accordance with the following table:

'If the consecutive number of years (including the plan year) the plan is in at-risk status is___, the transition percentage is--

1--20

2--40

3--60

4--80.

'(C) YEARS BEFORE EFFECTIVE DATE- For purposes of this paragraph, plan years beginning before 2008 shall not be taken into account.

'(j) Payment of Minimum Required Contributions-

'(1) IN GENERAL- For purposes of this section, the due date for any payment of any minimum required contribution for any plan year shall be 8 1/2 months after the close of the plan year.

'(3) ACCELERATED QUARTERLY CONTRIBUTION SCHEDULE FOR UNDERFUNDED PLANS-

'(B) AMOUNT OF UNDERPAYMENT, PERIOD OF UNDERPAYMENT- For purposes of subparagraph (A)--

'(i) AMOUNT- The amount of the underpayment shall be the excess of--

'(I) the required installment, over

'(II) the amount (if any) of the installment contributed to or under the plan on or before the due date for the installment.

'(C) NUMBER OF REQUIRED INSTALLMENTS; DUE DATES- For purposes of this paragraph--

'(i) PAYABLE IN 4 INSTALLMENTS- There shall be 4 required installments for each plan year.

'(ii) TIME FOR PAYMENT OF INSTALLMENTS- The due dates for required installments are set forth in the following table:

----------------------

'In the case of the following required installment, the due date is:

1st, April 15

2nd, July 15

3rd, October 15

4th, January 15 of the following year.

----------------------

'(D) AMOUNT OF REQUIRED INSTALLMENT- For purposes of this paragraph--

'(i) IN GENERAL- The amount of any required installment shall be 25 percent of the required annual payment.

'(ii) REQUIRED ANNUAL PAYMENT- For purposes of clause (i), the term 'required annual payment’ means the lesser of--

'(I) 90 percent of the minimum required contribution (determined without regard to this subsection) to the plan for the plan year under this section, or

'(II) 100 percent of the minimum required contribution (determined without regard to this subsection or to any waiver under section 302(c)) to the plan for the preceding plan year.

Subclause (II) shall not apply if the preceding plan year referred to in such clause was not a year of 12 months.

'(E) FISCAL YEARS AND SHORT YEARS-

'(ii) SHORT PLAN YEAR- This subparagraph shall be applied to plan years of less than 12 months in accordance with regulations prescribed by the Secretary.

'(4) LIQUIDITY REQUIREMENT IN CONNECTION WITH QUARTERLY CONTRIBUTIONS-

'(B) PLANS TO WHICH PARAGRAPH APPLIES- This paragraph shall apply to a plan (other than a plan described in subsection (g)(2)(B)) which--

'(i) is required to pay installments under paragraph (3) for a plan year, and

'(ii) has a liquidity shortfall for any quarter during such plan year.

'(E) DEFINITIONS- For purposes of this paragraph--

'(I) the base amount with respect to such quarter, over

'(II) the value (as of such last day) of the plan's liquid assets.

'(ii) BASE AMOUNT-

'(II) SPECIAL RULE- If the amount determined under subclause (I) exceeds an amount equal to 2 times the sum of the adjusted disbursements from the plan for the 36 months ending on the last day of the quarter and an enrolled actuary certifies to the satisfaction of the Secretary that such excess is the result of nonrecurring circumstances, the base amount with respect to such quarter shall be determined without regard to amounts related to those nonrecurring circumstances.

'(iv) ADJUSTED DISBURSEMENTS- The term 'adjusted disbursements' means disbursements from the plan reduced by the product of--

'(I) the plan's funding target attainment percentage for the plan year, and

'(II) the sum of the purchases of annuities, payments of single sums, and such other disbursements as the Secretary shall provide in regulations.

'(v) LIQUID ASSETS- The term 'liquid assets' means cash, marketable securities, and such other assets as specified by the Secretary in regulations.

'(vi) QUARTER- The term 'quarter’ means, with respect to any required installment, the 3-month period preceding the month in which the due date for such installment occurs.

'(F) REGULATIONS- The Secretary may prescribe such regulations as are necessary to carry out this paragraph.

'(k) Imposition of Lien Where Failure to Make Required Contributions-

'(1) IN GENERAL- In the case of a plan to which this subsection applies, if--

'(A) any person fails to make a contribution payment required by section 412 and this section before the due date for such payment, and

'(2) PLANS TO WHICH SUBSECTION APPLIES- This subsection shall apply to a defined benefit plan (other than a multiemployer plan) covered under section 4021 of the Employee Retirement Income Security Act of 1974 for any plan year for which the funding target attainment percentage (as defined in subsection (d)(2)) of such plan is less than 100 percent.

'(3) AMOUNT OF LIEN- For purposes of paragraph (1), the amount of the lien shall be equal to the aggregate unpaid balance of contribution payments required under this section and section 412 for which payment has not been made before the due date.

'(4) NOTICE OF FAILURE; LIEN-

'(C) CERTAIN RULES TO APPLY- Any amount with respect to which a lien is imposed under paragraph (1) shall be treated as taxes due and owing the United States and rules similar to the rules of subsections (c), (d), and (e) of section 4068 of the Employee Retirement Income Security Act of 1974 shall apply with respect to a lien imposed by subsection (a) and the amount with respect to such lien.

'(6) DEFINITIONS- For purposes of this subsection--

'(C) CONTROLLED GROUP- The term 'controlled group’ means any group treated as a single employer under subsections (b), (c), (m), and (o) of section 414.

'(l) Qualified Transfers to Health Benefit Accounts- In the case of a qualified transfer (as defined in section 420), any assets so transferred shall not, for purposes of this section, be treated as assets in the plan.’.

(b) Effective Date- The amendments made by this section shall apply with respect to plan years beginning after December 31, 2007.

SEC. 113. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.

(a) Prohibition of Shutdown Benefits and Other Unpredictable Contingent Event Benefits Under Single-Employer Plans-

(1) IN GENERAL- Part III of subchapter D of chapter 1 of the Internal Revenue Code of 1986 (relating to deferred compensation, etc.) is amended--

(A) by striking the heading and inserting the following:

'PART III--RULES RELATING TO MINIMUM FUNDING STANDARDS AND BENEFIT LIMITATIONS

'SUBPART A. MINIMUM FUNDING STANDARDS FOR PENSION PLANS.

'SUBPART B. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.

'Subpart A--Minimum Funding Standards for Pension Plans

'Sec. 430. Minimum funding standards for single-employer defined benefit pension plans.’,

and

(B) by adding at the end the following new subpart:

'Subpart B--Benefit Limitations Under Single-Employer Plans

'Sec. 436. Funding-based limitation on shutdown benefits and other unpredictable contingent event benefits under single-employer plans.

'SEC. 436. FUNDING-BASED LIMITS ON BENEFITS AND BENEFIT ACCRUALS UNDER SINGLE-EMPLOYER PLANS.

'(a) General Rule- For purposes of section 401(a)(29), a defined benefit plan which is a single-employer plan shall be treated as meeting the requirements of this section if the plan meets the requirements of subsections (b), (c), (d), and (e).

'(b) Funding-Based Limitation on Shutdown Benefits and Other Unpredictable Contingent Event Benefits Under Single-Employer Plans-

'(1) IN GENERAL- If a participant of a defined benefit plan which is a single-employer plan is entitled to an unpredictable contingent event benefit payable with respect to any event occurring during any plan year, the plan shall provide that such benefit may not be provided if the adjusted funding target attainment percentage for such plan year--

'(A) is less than 60 percent, or

'(B) would be less than 60 percent taking into account such occurrence.

'(2) EXEMPTION- Paragraph (1) shall cease to apply with respect to any plan year, effective as of the first day of the plan year, upon payment by the plan sponsor of a contribution (in addition to any minimum required contribution under section 303) equal to--

'(A) in the case of paragraph (1)(A), the amount of the increase in the funding target of the plan (under section 430) for the plan year attributable to the occurrence referred to in paragraph (1), and

'(B) in the case of paragraph (1)(B), the amount sufficient to result in a funding target attainment percentage of 60 percent.

'(3) UNPREDICTABLE CONTINGENT EVENT- For purposes of this subsection, the term 'unpredictable contingent event benefit’ means any benefit payable solely by reason of--

'(A) a plant shutdown (or similar event, as determined by the Secretary), or

'(B) any event other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or occurrence of death or disability.

'(c) Limitations on Plan Amendments Increasing Liability for Benefits-

'(1) IN GENERAL- No amendment to a defined benefit plan which is a single-employer plan which has the effect of increasing liabilities of the plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable may take effect during any plan year if the adjusted funding target attainment percentage for such plan year is--

'(A) less than 80 percent, or

'(B) would be less than 80 percent taking into account such amendment.

'(2) EXEMPTION- Paragraph (1) shall cease to apply with respect to any plan year, effective as of the first day of the plan year (or if later, the effective date of the amendment), upon payment by the plan sponsor of a contribution (in addition to any minimum required contribution under section 430) equal to--

'(A) in the case of paragraph (1)(A), the amount of the increase in the funding target of the plan (under section 430) for the plan year attributable to the amendment, and

'(B) in the case of paragraph (1)(B), the amount sufficient to result in an adjusted funding target attainment percentage of 80 percent.

'(3) EXCEPTION FOR CERTAIN BENEFIT INCREASES- Paragraph (1) shall not apply to any amendment which provides for an increase in benefits under a formula which is not based on a participant's compensation, but only if the rate of such increase is not in excess of the contemporaneous rate of increase in average wages of participants covered by the amendment.

'(d) Limitations on Accelerated Benefit Distributions-

'(1) FUNDING PERCENTAGE LESS THAN 60 PERCENT- A defined benefit plan which is a single-employer plan shall provide that, in any case in which the plan's adjusted funding target attainment percentage for a plan year is less than 60 percent, the plan may not pay any prohibited payment after the valuation date for the plan year.

'(2) BANKRUPTCY- A defined benefit plan which is a single-employer plan shall provide that, during any period in which the plan sponsor is a debtor in a case under title 11, United States Code, or similar Federal or State law, the plan may not pay any prohibited payment. The preceding sentence shall not apply on or after the date on which the enrolled actuary of the plan certifies that the adjusted funding target attainment percentage of such plan is not less than 100 percent.

'(3) LIMITED PAYMENT IF PERCENTAGE AT LEAST 60 PERCENT BUT LESS THAN 80 PERCENT-

'(A) IN GENERAL- A defined benefit plan which is a single-employer plan shall provide that, in any case in which the plan's adjusted funding target attainment percentage for a plan year is 60 percent or greater but less than 80 percent, the plan may not pay any prohibited payment after the valuation date for the plan year to the extent the amount of the payment exceeds the lesser of--

'(i) 50 percent of the amount of the payment which could be made without regard to this section, or

'(ii) the present value (determined under guidance prescribed by the Pension Benefit Guaranty Corporation, using the interest and mortality assumptions under section 417(e)) of the maximum guarantee with respect to the participant under section 4022 of the Employee Retirement Income Security Act of 1974.

'(B) ONE-TIME APPLICATION-

'(i) IN GENERAL- The plan shall also provide that only 1 prohibited payment meeting the requirements of subparagraph (A) may be made with respect to any participant during any period of consecutive plan years to which the limitations under either paragraph (1) or (2) or this paragraph applies.

'(ii) TREATMENT OF BENEFICIARIES- For purposes of this subparagraph, a participant and any beneficiary on his behalf (including an alternate payee, as defined in section 414(p)(8)) shall be treated as 1 participant. If the accrued benefit of a participant is allocated to such an alternate payee and 1 or more other persons, the amount under subparagraph (A) shall be allocated among such persons in the same manner as the accrued benefit is allocated unless the qualified domestic relations order (as defined in section 414(p)(1)(A)) provides otherwise.

'(4) EXCEPTION- This subsection shall not apply to any plan for any plan year if the terms of such plan (as in effect for the period beginning on September 1, 2005, and ending with such plan year) provide for no benefit accruals with respect to any participant during such period.

'(5) PROHIBITED PAYMENT- For purpose of this subsection, the term 'prohibited payment’ means--

'(A) any payment, in excess of the monthly amount paid under a single life annuity (plus any social security supplements described in the last sentence of section 411(a)(9)), to a participant or beneficiary whose annuity starting date (as defined in section 417(f)(2)) occurs during any period a limitation under paragraph (1) or (2) is in effect,

'(B) any payment for the purchase of an irrevocable commitment from an insurer to pay benefits, and

'(C) any other payment specified by the Secretary by regulations.

'(e) Limitation on Benefit Accruals for Plans With Severe Funding Shortfalls-

'(1) IN GENERAL- A defined benefit plan which is a single-employer plan shall provide that, in any case in which the plan's adjusted funding target attainment percentage for a plan year is less than 60 percent, benefit accruals under the plan shall cease as of the valuation date for the plan year.

'(f) Rules Relating to Contributions Required to Avoid Benefit Limitations-

'(1) SECURITY MAY BE PROVIDED-

'(A) IN GENERAL- For purposes of this section, the adjusted funding target attainment percentage shall be determined by treating as an asset of the plan any security provided by a plan sponsor in a form meeting the requirements of subparagraph (B).

'(B) FORM OF SECURITY- The security required under subparagraph (A) shall consist of--

'(i) a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412 of the Employee Retirement Income Security Act of 1974,

'(ii) cash, or United States obligations which mature in 3 years or less, held in escrow by a bank or similar financial institution, or

'(iii) such other form of security as is satisfactory to the Secretary and the parties involved.

'(C) ENFORCEMENT- Any security provided under subparagraph (A) may be perfected and enforced at any time after the earlier of--

'(i) the date on which the plan terminates,

'(ii) if there is a failure to make a payment of the minimum required contribution for any plan year beginning after the security is provided, the due date for the payment under section 430(j), or

'(iii) if the adjusted funding target attainment percentage is less than 60 percent for a consecutive period of 7 years, the valuation date for the last year in the period.

'(D) RELEASE OF SECURITY- The security shall be released (and any amounts thereunder shall be refunded together with any interest accrued thereon) at such time as the Secretary may prescribe in regulations, including regulations for partial releases of the security by reason of increases in the funding target attainment percentage.

'(2) PREFUNDING BALANCE OR FUNDING STANDARD CARRYOVER BALANCE MAY NOT BE USED- No prefunding balance under section 430(f) or funding standard carryover balance may be used under subsection (b), (c), or (e) to satisfy any payment an employer may make under any such subsection to avoid or terminate the application of any limitation under such subsection.

'(3) DEEMED REDUCTION OF FUNDING BALANCES-

'(A) IN GENERAL- Subject to subparagraph (C), in any case in which a benefit limitation under subsection (b), (c), (d), or (e) would (but for this subparagraph and determined without regard to subsection (b)(2), (c)(2), or (e)(2)) apply to such plan for the plan year, the plan sponsor of such plan shall be treated for purposes of this title as having made an election under section 430(f) to reduce the prefunding balance or funding standard carryover balance by such amount as is necessary for such benefit limitation to not apply to the plan for such plan year.

'(B) EXCEPTION FOR INSUFFICIENT FUNDING BALANCES- Subparagraph (A) shall not apply with respect to a benefit limitation for any plan year if the application of subparagraph (A) would not result in the benefit limitation not applying for such plan year.

'(C) RESTRICTIONS OF CERTAIN RULES TO COLLECTIVELY BARGAINED PLANS- With respect to any benefit limitation under subsection (b), (c), or (e), subparagraph (A) shall only apply in the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers.

'(g) New Plans- Subsections (b), (c), and (e) shall not apply to a plan for the first 5 plan years of the plan. For purposes of this subsection, the reference in this subsection to a plan shall include a reference to any predecessor plan.

'(h) Presumed Underfunding for Purposes of Benefit Limitations-

'(1) PRESUMPTION OF CONTINUED UNDERFUNDING- In any case in which a benefit limitation under subsection (b), (c), (d), or (e) has been applied to a plan with respect to the plan year preceding the current plan year, the adjusted funding target attainment percentage of the plan for the current plan year shall be presumed to be equal to the adjusted funding target attainment percentage of the plan for the preceding plan year until the enrolled actuary of the plan certifies the actual adjusted funding target attainment percentage of the plan for the current plan year.

'(2) PRESUMPTION OF UNDERFUNDING AFTER 10TH MONTH- In any case in which no certification of the adjusted funding target attainment percentage for the current plan year is made with respect to the plan before the first day of the 10th month of such year, for purposes of subsections (b), (c), (d), and (e), such first day shall be deemed, for purposes of such subsection, to be the valuation date of the plan for the current plan year and the plan's adjusted funding target attainment percentage shall be conclusively presumed to be less than 60 percent as of such first day.

'(3) PRESUMPTION OF UNDERFUNDING AFTER 4TH MONTH FOR NEARLY UNDERFUNDED PLANS- In any case in which--

'(A) a benefit limitation under subsection (b), (c), (d), or (e) did not apply to a plan with respect to the plan year preceding the current plan year, but the adjusted funding target attainment percentage of the plan for such preceding plan year was not more than 10 percentage points greater than the percentage which would have caused such subsection to apply to the plan with respect to such preceding plan year, and

'(B) as of the first day of the 4th month of the current plan year, the enrolled actuary of the plan has not certified the actual adjusted funding target attainment percentage of the plan for the current plan year,

until the enrolled actuary so certifies, such first day shall be deemed, for purposes of such subsection, to be the valuation date of the plan for the current plan year and the adjusted funding target attainment percentage of the plan as of such first day shall, for purposes of such subsection, be presumed to be equal to 10 percentage points less than the adjusted funding target attainment percentage of the plan for such preceding plan year.

'(i) Treatment of Plan as of Close of Prohibited or Cessation Period- For purposes of applying this title--

'(1) OPERATION OF PLAN AFTER PERIOD- Unless the plan provides otherwise, payments and accruals will resume effective as of the day following the close of the period for which any limitation of payment or accrual of benefits under subsection (d) or (e) applies.

'(2) TREATMENT OF AFFECTED BENEFITS- Nothing in this subsection shall be construed as affecting the plan's treatment of benefits which would have been paid or accrued but for this section.

'(j) Terms Relating to Funding Target Attainment Percentage- For purposes of this section--

'(1) IN GENERAL- The term 'funding target attainment percentage’ has the same meaning given such term by section 430(d)(2).

'(2) ADJUSTED FUNDING TARGET ATTAINMENT PERCENTAGE- The term 'adjusted funding target attainment percentage’ means the funding target attainment percentage which is determined under paragraph (1) by increasing each of the amounts under subparagraphs (A) and (B) of section 430(d)(2) by the aggregate amount of purchases of annuities for employees other than highly compensated employees (as defined in section 414(q)) which were made by the plan during the preceding 2 plan years.

'(3) APPLICATION TO PLANS WHICH ARE FULLY FUNDED WITHOUT REGARD TO REDUCTIONS FOR FUNDING BALANCES-

'(A) IN GENERAL- In the case of a plan for any plan year, if the funding target attainment percentage is 100 percent or more (determined without regard to this paragraph and without regard to the reduction in the value of assets under section 430(f)(4)(A)), the funding target attainment percentage for purposes of paragraph (1) shall be determined without regard to such reduction.

'(B) TRANSITION RULE- Subparagraph (A) shall be applied to plan years beginning after 2007 and before 2011 by substituting for '100 percent’ the applicable percentage determined in accordance with the following table:

'In the case of a plan year beginning in calendar year___, the applicable percentage is:

2008--92

2009--94

2010--96.

'(C) LIMITATION- Subparagraph (B) shall not apply with respect to any plan year after 2008 unless the funding target attainment percentage (determined without regard to this paragraph) of the plan for each preceding plan year after 2007 was not less than the applicable percentage with respect to such preceding plan year determined under subparagraph (B).

'(k) Special Rule for 2008- For purposes of this section, in the case of plan years beginning in 2008, the funding target attainment percentage for the preceding plan year may be determined using such methods of estimation as the Secretary may provide.’.

(2) CLERICAL AMENDMENT- The table of parts for subchapter D of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

'Part III--Rules Relating to Minimum Funding Standards and Benefit Limitations’.

(b) Effective Date-

(1) IN GENERAL- The amendments made by this section shall apply to plan years beginning after December 31, 2007.

(A) the later of--

(ii) the first day of the first plan year to which the amendments made by this subsection would (but for this subparagraph) apply, or

(B) January 1, 2010.

SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS.

(a) Amendments Related to Qualification Requirements-

(1) Section 401(a)(29) of the Internal Revenue Code of 1986 is amended to read as follows:

'(29) BENEFIT LIMITATIONS ON PLANS IN AT-RISK STATUS- In the case of a defined benefit plan (other than a multiemployer plan) to which the requirements of section 412 apply, the trust of which the plan is a part shall not constitute a qualified trust under this subsection unless the plan meets the requirements of section 436.’.

(2) Section 401(a)(32) of such Code is amended--

(A) in subparagraph (A), by striking '412(m)(5)’ each place it appears and inserting 'section 430(j)(4)’, and

(B) in subparagraph (C), by striking 'section 412(m)’ and inserting 'section 430(j)’.

(3) Section 401(a)(33) of such Code is amended--

(A) in subparagraph (B)(i), by striking 'funded current liability percentage (within the meaning of section 412(l)(8))’ and inserting 'funding target attainment percentage (as defined in section 430(d)(2))’,

(B) in subparagraph (B)(iii), by striking 'subsection 412(c)(8)’ and inserting 'section 412(c)(2)’, and

(C) in subparagraph (D), by striking 'section 412(c)(11) (without regard to subparagraph (B) thereof)’ and inserting 'section 412(b)(2) (without regard to subparagraph (B) thereof)’.

(b) Vesting Rules- Section 411 of such Code is amended--

(1) by striking 'section 412(c)(8)’ in subsection (a)(3)(C) and inserting 'section 412(c)(2)’,

(2) in subsection (b)(1)(F)--

(A) by striking 'paragraphs (2) and (3) of section 412(i)’ in clause (ii) and inserting 'subparagraphs (B) and (C) of section 412(e)(3)’, and

(B) by striking 'paragraphs (4), (5), and (6) of section 412(i)’ and inserting 'subparagraphs (D), (E), and (F) of section 412(e)(3)’, and

(3) by striking 'section 412(c)(8)’ in subsection (d)(6)(A) and inserting 'section 412(e)(2)’.

(c) Mergers and Consolidations of Plans- Subclause (I) of section 414(l)(2)(B)(i) of such Code is amended to read as follows:

'(I) the amount determined under section 431(c)(6)(A)(i) in the case of a multiemployer plan (and the sum of the funding shortfall and target normal cost determined under section 430 in the case of any other plan), over’.

(d) Transfer of Excess Pension Assets to Retiree Health Accounts-

(1) Section 420(e)(2) of such Code is amended to read as follows:

'(2) EXCESS PENSION ASSETS- The term 'excess pension assets' means the excess (if any) of--

'(A) the lesser of--

'(i) the fair market value of the plan's assets (reduced by the prefunding balance and funding standard carryover balance determined under section 430(f)), or

'(ii) the value of plan assets as determined under section 430(g)(3) after reduction under section 430(f), over

'(B) 125 percent of the sum of the funding shortfall and the target normal cost determined under section 430 for such plan year.’.

(2) Section 420(e)(4) of such Code is amended to read as follows:

'(4) COORDINATION WITH SECTION 430- In the case of a qualified transfer, any assets so transferred shall not, for purposes of this section and section 430, be treated as assets in the plan.’.

(e) Excise Taxes-

(1) IN GENERAL- Subsections (a) and (b) of section 4971 of such Code are amended to read as follows:

'(a) Initial Tax- If at any time during any taxable year an employer maintains a plan to which section 412 applies, there is hereby imposed for the taxable year a tax equal to--

'(1) in the case of a single-employer plan, 10 percent of the aggregate unpaid minimum required contributions for all plan years remaining unpaid as of the end of any plan year ending with or within the taxable year, and

'(2) in the case of a multiemployer plan, 5 percent of the accumulated funding deficiency determined under section 431 as of the end of any plan year ending with or within the taxable year.

'(b) Additional Tax- If--

'(1) a tax is imposed under subsection (a)(1) on any unpaid required minimum contribution and such amount remains unpaid as of the close of the taxable period, or

'(2) a tax is imposed under subsection (a)(2) on any accumulated funding deficiency and the accumulated funding deficiency is not corrected within the taxable period,

there is hereby imposed a tax equal to 100 percent of the unpaid minimum required contribution or accumulated funding deficiency, whichever is applicable, to the extent not so paid or corrected.’.

(2) Section 4971(c) of such Code is amended--

(A) by striking 'the last two sentences of section 412(a)’ in paragraph (1) and inserting 'section 431’, and

(B) by adding at the end the following new paragraph:

'(4) UNPAID MINIMUM REQUIRED CONTRIBUTION-

'(A) IN GENERAL- The term 'unpaid minimum required contribution’ means, with respect to any plan year, any minimum required contribution under section 430 for the plan year which is not paid on or before the due date (as determined under section 430(j)(1)) for the plan year.

'(B) ORDERING RULE- Any payment to or under a plan for any plan year shall be allocated first to unpaid minimum required contributions for all preceding plan years on a first-in, first-out basis and then to the minimum required contribution under section 430 for the plan year.’.

(3) Section 4971(e)(1) of such Code is amended by striking 'section 412(b)(3)(A)’ and inserting 'section 412(a)(1)(A)’.

(4) Section 4971(f)(1) of such Code is amended--

(A) by striking 'section 412(m)(5)’ and inserting 'section 430(j)(4)’, and

(B) by striking 'section 412(m)’ and inserting 'section 430(j)’.

(5) Section 4972(c)(7) of such Code is amended by striking 'except to the extent that such contributions exceed the full-funding limitation (as defined in section 412(c)(7), determined without regard to subparagraph (A)(i)(I) thereof)’ and ins erting 'except, in the case of a multiemployer plan, to the extent that such contributions exceed the full-funding limitation (as defined in section 431(c)(6))’.

(f) Reporting Requirements- Section 6059(b) of such Code is amended--

(1) by striking 'the accumulated funding deficiency (as defined in section 412(a))’ in paragraph (2) and inserting 'the minimum required contribution determined under section 430, or the accumulated funding deficiency determined under section 431,’, and

(2) by striking paragraph (3)(B) and inserting:

'(B) the requirements for reasonable actuarial assumptions under section 430(h)(1) or 431(c)(3), whichever are applicable, have been complied with.’.

SEC. 115. MODIFICATION OF TRANSITION RULE TO PENSION FUNDING REQUIREMENTS.

(a) In General- In the case of a plan that--

(1) was not required to pay a variable rate premium for the plan year beginning in 1996,

(2) has not, in any plan year beginning after 1995, merged with another plan (other than a plan sponsored by an employer that was in 1996 within the controlled group of the plan sponsor), and

(3) is sponsored by a company that is engaged primarily in the interurban or interstate passenger bus service,

the rules described in subsection (b) shall apply for any plan year beginning after December 31, 2007.

(b) Modified Rules- The rules described in this subsection are as follows:

(1) For purposes of section 430(j)(3) of the Internal Revenue Code of 1986 and section 303(j)(3) of the Employee Retirement Income Security Act of 1974, the plan shall be treated as not having a funding shortfall for any plan year.

(2) For purposes of--

(A) determining unfunded vested benefits under section 4006(a)(3)(E)(iii) of such Act, and

(B) determining any present value or making any computation under section 412 of such Code or section 302 of such Act,

the mortality table shall be the mortality table used by the plan.

(3) Section 430(c)(5)(B) of such Code and section 303(c)(5)(B) of such Act (relating to phase-in of funding target for exemption from new shortfall amortization base) shall each be applied by substituting '2012’ for '2011’ therein and by substituting for the table therein the following:

----------------------

'In the case of a plan year beginning in calendar year__, the applicable percentage is:

----------------------

2008--90 percent

2009--92 percent

2010--94 percent

2011--96 percent.

----------------------

(c) Definitions- Any term used in this section which is also used in section 430 of such Code or section 303 of such Act shall have the meaning provided such term in such section. If the same term has a different meaning in such Code and such Act, such term shall, for purposes of this section, have the meaning provided by such Code when applied with respect to such Code and the meaning provided by such Act when applied with respect to such Act.

(d) Special Rule for 2006 and 2007-

(1) IN GENERAL- Section 769(c)(3) of the Retirement Protection Act of 1994, as added by section 201 of the Pension Funding Equity Act of 2004, is amended by striking 'and 2005’ and inserting ', 2005, 2006, and 2007’.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to plan years beginning after December 31, 2005.

(e) Conforming Amendment-

(1) Section 769 of the Retirement Protection Act of 1994 is amended by striking subsection (c).

(2) The amendment made by paragraph (1) shall take effect on December 31, 2007, and shall apply to plan years beginning after such date.

SEC. 116. RESTRICTIONS ON FUNDING OF NONQUALIFIED DEFERRED COMPENSATION PLANS BY EMPLOYERS MAINTAINING UNDERFUNDED OR TERMINATED SINGLE-EMPLOYER PLANS.

(a) Amendments of Internal Revenue Code- Subsection (b) of section 409A of the Internal Revenue Code of 1986 (providing rules relating to funding) is amended by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively, and by inserting after paragraph (2) the following new paragraph:

'(3) TREATMENT OF EMPLOYER'S DEFINED BENEFIT PLAN DURING RESTRICTED PERIOD-

'(A) IN GENERAL- If--

'(i) during any restricted period with respect to a single-employer defined benefit plan, assets are set aside or reserved (directly or indirectly) in a trust (or other arrangement as determined by the Secretary) or transferred to such a trust or other arrangement for purposes of paying deferred compensation of an applicable covered employee under a nonqualified deferred compensation plan of the plan sponsor or member of a controlled group which includes the plan sponsor, or

'(ii) a nonqualified deferred compensation plan of the plan sponsor or member of a controlled group which includes the plan sponsor provides that assets will become restricted to the provision of benefits under the plan in connection with such restricted period (or other similar financial measure determined by the Secretary) with respect to the defined benefit plan, or assets are so restricted,

such assets shall, for purposes of section 83, be treated as property transferred in connection with the performance of services whether or not such assets are available to satisfy claims of general creditors. Clause (i) shall not apply with respect to any assets which are so set aside before the restricted period with respect to the defined benefit plan.

'(B) RESTRICTED PERIOD- For purposes of this section, the term 'restricted period’ means, with respect to any plan described in subparagraph (A)--

'(i) any period during which the plan is in at-risk status (as defined in section 430(i));

'(ii) any period the plan sponsor is a debtor in a case under title 11, United States Code, or similar Federal or State law, and

'(iii) the 12-month period beginning on the date which is 6 months before the termination date of the plan if, as of the termination date, the plan is not sufficient for benefit liabilities (within the meaning of section 4041 of the Employee Retirement Income Security Act of 1974).

'(C) SPECIAL RULE FOR PAYMENT OF TAXES ON DEFERRED COMPENSATION INCLUDED IN INCOME- If an employer provides directly or indirectly for the payment of any Federal, State, or local income taxes with respect to any compensation required to be included in gross income by reason of this paragraph--

'(i) interest shall be imposed under subsection (a)(1)(B)(i)(I) on the amount of such payment in the same manner as if such payment was part of the deferred compensation to which it relates,

'(ii) such payment shall be taken into account in determining the amount of the additional tax under subsection (a)(1)(B)(i)(II) in the same manner as if such payment was part of the deferred compensation to which it relates, and

'(iii) no deduction shall be allowed under this title with respect to such payment.

'(D) OTHER DEFINITIONS- For purposes of this section--

'(i) APPLICABLE COVERED EMPLOYEE- The term 'applicable covered employee’ means any--

'(I) covered employee of a plan sponsor,

'(II) covered employee of a member of a controlled group which includes the plan sponsor, and

'(III) former employee who was a covered employee at the time of termination of employment with the plan sponsor or a member of a controlled group which includes the plan sponsor.

'(ii) COVERED EMPLOYEE- The term 'covered employee’ means an individual described in section 162(m)(3) or an individual subject to the requirements of section 16(a) of the Securities Exchange Act of 1934.’.

(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 apply to transfers or other reservation of assets after the date of the enactment of this Act.

TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS AND RELATED PROVISIONS

Subtitle A--Amendments to Employee Retirement Income Security 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 this Act) is amended by inserting after section 303 the following new section:

'MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER PLANS

'Sec. 304. (a) In General- For purposes of section 302, the accumulated funding deficiency of a multiemployer 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

'(2) if the multiemployer plan is in reorganization for any plan year, the accumulated funding deficiency of the plan determined under section 4243.

'(b) Funding Standard Account-

'(1) ACCOUNT REQUIRED- Each multiemployer plan to which this part applies shall establish and maintain a funding standard account. Such account shall be credited and charged solely as provided 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 amortized)--

'(i) in the case of a plan which comes into existence on or after January 1, 2008, the 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,

'(ii) separately, with respect to each plan year, the net increase (if any) in unfunded past service liability under the plan arising from plan amendments adopted in such year, over a period of 15 plan years,

'(iii) separately, with respect to each plan year, the net experience loss (if any) under the plan, over a period of 15 plan years, and

'(iv) 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 amortized) 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 the Pension Protection Act of 2006), and

'(E) the amount necessary to amortize in equal annual installments (until fully amortized) over a period of 20 years the contributions 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 before the date of the enactment of the Pension Protection Act of 2006).

'(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 amortized)--

'(i) separately, with respect to each plan year, the net decrease (if any) in unfunded past service liability under the plan 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 deficiency (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 determined under the funding standard account if such plan year follows a plan year for which such deficiency was determined under the alternative minimum funding standard under section 305 (as in effect on the day before the date of the enactment of the Pension Protection Act of 2006), the excess (if any) of any debit balance in the funding standard account (determined without regard to this subparagraph) over any debit balance in the alternative minimum funding standard account.

'(4) SPECIAL RULE FOR AMOUNTS FIRST AMORTIZED IN PLAN YEARS BEFORE 2008- In the case of any amount amortized under section 302(b) (as in effect on the day before the date of the enactment of the Pension Protection Act of 2006) over any period beginning with a plan year beginning before 2008, 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 required to be amortized under the other such paragraph, with the resulting amount to be amortized over a period determined on the basis of the remaining amortization periods for all items entering into whichever of the two amounts being offset is the greater.

'(6) INTEREST- The funding standard account (and items therein) shall be charged or credited (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) 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 withdrawal liability under part 1 of subtitle E of title IV shall be considered an amount contributed by the employer to or under the plan. The Secretary of the Treasury may prescribe by regulation additional charges and credits to a multiemployer plan's funding standard account to the extent necessary to prevent withdrawal liability payments from being unduly reflected as advance funding for plan liabilities.

'(B) ADJUSTMENTS WHEN A MULTIEMPLOYER 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--

'(i) shall be eliminated by an offsetting 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 Corporation 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 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 the Pension Protection Act of 2006) for any plan year, the funding standard account shall be charged in the plan year to which the portion of the net experience loss deferred by such election was deferred with the amount so deferred (and paragraph (2)(B)(iii) 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 302 in such manner as is determined by the Secretary of the Treasury.

'(G) SHORT-TERM BENEFITS- To the extent that any plan amendment increases the unfunded past service liability under the plan by reason of an increase in benefits which are not payable as a life annuity but are payable under the terms of the plan for a period that does not exceed 14 years from the effective date of the amendment, paragraph (2)(B)(ii) shall be applied separately with respect to such increase in unfunded past service liability by substituting the number of years of the period during which such benefits are payable for '15’.

'(c) Additional Rules-

'(1) DETERMINATIONS TO BE MADE UNDER FUNDING METHOD- For purposes of this part, normal 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 determined on the basis of any reasonable actuarial method of valuation which takes into account 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 of indebtedness which is not in default as to principal or interest may, at the election of the plan administrator, be determined on an amortized 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 indebtedness, and may be revoked only with the consent of such Secretary.

'(3) ACTUARIAL ASSUMPTIONS MUST BE REASONABLE- For purposes of this section, all costs, liabilities, rates of interest, and other factors under the plan shall be determined on the basis of actuarial assumptions and methods--

'(A) each of which is reasonable (taking into account the experience of the plan and reasonable expectations), and

'(B) which, in combination, offer the actuary's best estimate of anticipated experience under the plan.

'(4) TREATMENT OF CERTAIN CHANGES AS EXPERIENCE GAIN OR LOSS- For purposes of this section, if--

'(A) a change in benefits under the Social Security Act or in other retirement benefits created under Federal or State law, or

'(B) a change in the definition of the term 'wages' under section 3121 of the Internal Revenue Code of 1986, or a change in the amount of such wages taken into account under regulations 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 paragraph) 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 subparagraphs (B), (C), and (D) of subsection (b) (2) and subparagraph (B) of subsection (b)(3) which are required to be amortized shall be considered fully amortized for purposes of such subparagraphs.

'(6) FULL-FUNDING LIMITATION-

'(A) IN GENERAL- For purposes of paragraph (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 method if such accrued liability cannot be directly 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 determined 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 liability of the plan (including the expected increase in current liability due to benefits accruing during the plan year), over

'(II) the value of the plan's assets determined under paragraph (2).

'(ii) ASSETS- For purposes of clause (i), assets shall not be reduced by any credit balance in the funding standard account.

'(C) FULL FUNDING LIMITATION- For purposes of this paragraph, unless otherwise provided by the plan, the accrued liability under a multiemployer plan shall not include benefits which are not nonforfeitable under the plan after the termination of the plan (taking into consideration section 411(d)(3) of the Internal Revenue Code of 1986).

'(D) CURRENT LIABILITY- For purposes of this paragraph--

'(i) IN GENERAL- The term 'current liability’ means all liabilities to employees and their beneficiaries under the plan.

'(ii) TREATMENT OF UNPREDICTABLE CONTINGENT EVENT BENEFITS- For purposes of clause (i), any benefit contingent on an event other than--

'(I) age, service, compensation, death, or disability, or

'(II) an event which is reasonably and reliably predictable (as determined by the Secretary of the Treasury),

shall not be taken into account until the event on which the benefit is contingent occurs.

'(iii) INTEREST RATE USED- The rate of interest used to determine current liability under this paragraph shall be the rate of interest determined under subparagraph (E).

'(iv) MORTALITY TABLES-

'(I) COMMISSIONERS’ STANDARD TABLE- In the case of plan years beginning before the first plan year to which the first tables prescribed under subclause (II) apply, the mortality table used in determining current liability under this paragraph shall be the table prescribed by the Secretary of the Treasury which is based on the prevailing commissioners' standard table (described in section 807(d)(5)(A) of the Internal Revenue Code of 1986) used to determine reserves for group annuity contracts issued on January 1, 1993.

'(II) SECRETARIAL AUTHORITY- The Secretary of the Treasury may by regulation prescribe for plan years beginning after December 31, 1999, mortality tables to be used in determining current liability under this subsection. Such tables shall be based upon the actual experience of pension plans and projected trends in such experience. In prescribing such tables, such Secretary shall take into account results of available independent studies of mortality of individuals covered by pension plans.

'(v) SEPARATE MORTALITY TABLES FOR THE DISABLED- Notwithstanding clause (iv)--

'(I) IN GENERAL- The Secretary of the Treasury shall establish mortality tables which may be used (in lieu of the tables under clause (iv)) to determine current liability under this subsection for individuals who are entitled to benefits under the plan on account of disability. Such Secretary shall establish separate tables for individuals whose disabilities occur in plan years beginning before January 1, 1995, and for individuals whose disabilities occur in plan years beginning on or after such date.

'(II) SPECIAL RULE FOR DISABILITIES OCCURRING AFTER 1994- In the case of disabilities occurring in plan years beginning after December 31, 1994, the tables under subclause (I) shall apply only with respect to individuals described in such subclause who are disabled within the meaning of title II of the Social Security Act and the regulations thereunder.

'(vi) PERIODIC REVIEW- The Secretary of the Treasury shall periodically (at least every 5 years) review any tables in effect under this subparagraph and shall, to the extent such Secretary determines necessary, by regulation update the tables to reflect the actual experience of pension plans and projected trends in such experience.

'(E) REQUIRED CHANGE OF INTEREST RATE- For purposes of determining a plan's current liability for purposes of this paragraph--

'(i) IN GENERAL- If any rate of interest used under the plan under subsection (b)(6) to determine cost is not within the permissible range, the plan shall establish a new rate of interest within the permissible range.

'(ii) PERMISSIBLE RANGE- For purposes of this subparagraph--

'(I) IN GENERAL- Except as provided in subclause (II), the term 'permissible range’ means a rate of interest which is not more than 5 percent above, and not more than 10 percent below, the weighted average of the rates of interest on 30-year Treasury securities during the 4-year period ending on the last day before the beginning of the plan year.

'(II) SECRETARIAL AUTHORITY- If the Secretary of the Treasury finds that the lowest rate of interest permissible under subclause (I) is unreasonably high, such Secretary may prescribe a lower rate of interest, except that such rate may not be less than 80 percent of the average rate determined under such subclause.

'(iii) ASSUMPTIONS- Notwithstanding paragraph (3)(A), the interest rate used under the plan shall be--

'(I) determined without taking into account the experience of the plan and reasonable expectations, but

'(II) consistent with the assumptions which reflect the purchase rates which would be used by insurance companies to satisfy the liabilities under the plan.

'(7) ANNUAL VALUATION-

'(A) IN GENERAL- For purposes of this section, a determination of experience gains and losses and a valuation of the plan's liability shall be made not less frequently than once every year, except that such determination shall be made more frequently to the extent requi red in particular cases under regulations prescribed by the Secretary of the Treasury.

'(B) VALUATION DATE-

'(i) CURRENT YEAR- Except as provided in clause (ii), the valuation referred to in subparagraph (A) shall be made as of a date within the plan year to which the valuation refers or within one month prior to the beginning of such year.

'(ii) USE OF PRIOR YEAR VALUATION- The valuation referred to in subparagraph (A) may be made as of a date within the plan year prior to the year to which the valuation refers if, as of such date, the value of the assets of the plan are not less than 100 percent of the plan's current liability (as defined in paragraph (6)(D) without regard to clause (iv) thereof).

'(iii) ADJUSTMENTS- Information under clause (ii) shall, in accordance with regulations, be actuarially adjusted to reflect significant differences in participants.

'(iv) LIMITATION- A change in funding method to use a prior year valuation, as provided in clause (ii), may not be made unless as of the valuation date within the prior plan year, the value of the assets of the plan are not less than 125 percent of the plan's current liability (as defined in paragraph (6)(D) without regard to clause (iv) thereof).

'(8) TIME WHEN CERTAIN CONTRIBUTIONS DEEMED MADE- For purposes of this section, any contributions for a plan year made by an employer after the last day of such plan year, but not later than two and one-half months after such day, shall be deemed to have been made on such last day. For purposes of this subparagraph, such two and one-half month period may be extended for not more than six months under regulations prescribed by the Secretary of the Treasury.

'(d) Extension of Amortization Periods for Multiemployer Plans-

'(1) AUTOMATIC EXTENSION UPON APPLICATION BY CERTAIN PLANS-

'(A) IN GENERAL- If the plan sponsor of a multiemployer plan--

'(i) submits to the Secretary of the Treasury an application for an extension of the period of years required to amortize any unfunded liability described in any clause of subsection (b)(2)(B) or described in subsection (b)(4), and

'(ii) includes with the application a certification by the plan's actuary described in subparagraph (B),

the Secretary of the Treasury shall extend the amortization period for the period of time (not in excess of 5 years) specified in the application. Such extension shall be in addition to any extension under paragraph (2).

'(B) CRITERIA- A certification with respect to a multiemployer plan is described in this subparagraph if the plan's actuary certifies that, based on reasonable assumptions--

'(i) absent the extension under subparagraph (A), the plan would have an accumulated funding deficiency in the current plan year or any of the 9 succeeding plan years,

'(ii) the plan sponsor has adopted a plan to improve the plan's funding status,

'(iii) the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended, and

'(iv) the notice required under paragraph (3)(A) has been provided.

'(C) TERMINATION- The preceding provisions of this paragraph shall not apply with respect to any application submitted after December 31, 2014.

'(2) ALTERNATIVE EXTENSION-

'(A) IN GENERAL- If the plan sponsor of a multiemployer plan submits to the Secretary of the Treasury an application for an extension of the period of years required to amortize any unfunded liability described in any clause of subsection (b)(2)(B) or described in subsection (b)(4), the Secretary of the Treasury may extend the amortization period for a period of time (not in excess of 10 years reduced by the number of years of any extension under paragraph (1) with respect to such unfunded liability) if the Secretary of the Treasury makes the determination described in subparagraph (B). Such extension shall be in addition to any extension under paragraph (1).

'(B) DETERMINATION- The Secretary of the Treasury may grant an extension under subparagraph (A) if such Secretary determines that--

'(i) such extension would carry out the purposes of this Act and would provide adequate protection for participants under the plan and their beneficiaries, and

'(ii) the failure to permit such extension would--

'(I) result in a substantial risk to the voluntary continuation of the plan, or a substantial curtailment of pension benefit levels or employee compensation, and

'(II) be adverse to the interests of plan participants in the aggregate.

'(C) ACTION BY SECRETARY OF THE TREASURY- The Secretary of the Treasury shall act upon any application for an extension under this paragraph within 180 days of the submission of such application. If such Secretary rejects the application for an extension under this paragraph, such Secretary shall provide notice to the plan detailing the specific reasons for the rejection, including references to the criteria set forth above.

'(3) ADVANCE NOTICE-

'(A) IN GENERAL- The Secretary of the Treasury shall, before granting an extension under this subsection, require each applicant to provide evidence satisfactory to such Secretary that the applicant has provided notice of the filing of the application for such extension to each affected party (as defined in section 4001(a)(21)) with respect to the affected plan. Such notice shall include a description of the extent to which the plan is funded for benefits which are guaranteed under title IV and for benefit liabilities.

'(B) CONSIDERATION OF RELEVANT INFORMATION- The Secretary of the Treasury shall consider any relevant information provided by a person to whom notice was given under paragraph (1).’.

(b) Shortfall Funding Method-

(1) IN GENERAL- A multiemployer plan meeting the criteria of paragraph (2) may adopt, use, or cease using, the shortfall funding method and such adoption, use, or cessation of use of such method, shall be deemed approved by the Secretary of the Treasury under section 302(d)(1) of the Employee Retirement Income Security Act of 1974 and section 412(d)(1) of the Internal Revenue Code of 1986.

(2) CRITERIA- A multiemployer pension plan meets the criteria of this clause if--

(A) the plan has not used the shortfall funding method during the 5-year period ending on the day before the date the plan is to use the method under paragraph (1); and

(B) the plan is not operating under an amortization period extension under section 304(d) of such Act and did not operate under such an extension during such 5-year period.

(3) SHORTFALL FUNDING METHOD DEFINED- For purposes of this subsection, the term 'shortfall funding method’ means the shortfall funding method described in Treasury Regulations section 1.412(c)(1)-2 (26 CFR 1.412(c)(1)-2).

(4) BENEFIT RESTRICTIONS TO APPLY- The benefit restrictions under section 302(c)(7) of such Act and section 412(c)(7) of such Code shall apply during any period a multiemployer plan is on the shortfall funding method pursuant to this subsection.

(5) USE OF SHORTFALL METHOD NOT TO PRECLUDE OTHER OPTIONS- Nothing in this subsection shall be construed to affect a multiemployer plan's ability to adopt the shortfall funding method with the Secretary's permission under otherwise applicable regulations or to affect a multiemployer plan's right to change funding methods, with or without the Secretary's consent, as provided in applicable rules and regulations.

(1) Section 301 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1081) is amended by striking subsection (d).

(2) The table of contents in section 1 of such Act (as amended by this Act) is amended by inserting after the item relating to section 303 the following new item:

'Sec. 304. Minimum funding standards for multiemployer plans.’.

(d) Effective Date-

(1) IN GENERAL- The amendments made by this section shall apply to plan years beginning after 2007.

(2) SPECIAL RULE FOR CERTAIN AMORTIZATION EXTENSIONS- If the Secretary of the Treasury grants an extension under section 304 of the Employee Retirement Income Security Act of 1974 and section 412(e) of the Internal Revenue Code of 1986 with respect to any application filed with the Secretary of the Treasury on or before June 30, 2005, the extension (and any modification thereof) shall be applied and administered under the rules of such sections as in effect before the enactment of this Act, including the use of the rate of interest determined under section 6621(b) of such Code.

SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN ENDANGERED OR CRITICAL 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 by inserting after section 304 the following new section:

'ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN ENDANGERED STATUS OR CRITICAL STATUS

'Sec. 305. (a) General Rule- For purposes of this part, in the case of a multiemployer plan in effect on July 16, 2006--

'(1) if the plan is in endangered status--

'(A) the plan sponsor shall adopt and implement a funding improvement plan in accordance with the requirements of subsection (c), and

'(B) the requirements of subsection (d) shall apply during the funding plan adoption period and the funding improvement period, and

'(2) if the plan is in critical status--

'(A) the plan sponsor shall adopt and implement a rehabilitation plan in accordance with the requirements of subsection (e), and

'(B) the requirements of subsection (f) shall apply during the rehabilitation plan adoption period and the rehabilitation period.

'(b) Determination of Endangered and Critical Status- For purposes of this section--

'(1) ENDANGERED STATUS- A multiemployer plan is in endangered status for a plan year if, as determined by the plan actuary under paragraph (3), the plan is not in critical status for the plan year and, as of the beginning of the plan year, either--

'(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, 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).

For purposes of this section, a plan shall be treated as in seriously endangered status for a plan year if the plan is described in both subparagraphs (A) and (B).

'(2) CRITICAL STATUS- A multiemployer plan is in critical status for a plan year if, as determined by the plan actuary under paragraph (3), the plan is described in 1 or more of the following subparagraphs as of the beginning of the plan year:

'(A) A plan is described in this subparagraph if--

'(i) the funded percentage of the plan is less than 65 percent, and

'(ii) the sum of--

'(I) the fair market value of plan assets, plus

'(II) the present value of the reasonably anticipated employer contributions for the current plan year and each of the 6 succeeding plan years, assuming that the terms of all 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 nonforfeitable benefits 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 subparagraph if--

'(i) the plan has an accumulated funding deficiency for the current plan year, not taking into account any extension of amortization periods under section 304(d), or

'(ii) the plan is projected to have an accumulated funding deficiency for any of the 3 succeeding plan years (4 succeeding plan years if the funded percentage of the plan is 65 percent or less), not taking into account any extension of amortization periods under section 304(d).

'(C) A plan is described in this subparagraph if--

'(i)(I) the plan's normal cost for the current plan year, plus interest (determined at the rate used for determining costs 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 of the reasonably anticipated employer and employee contributions for the current plan year,

'(ii) the present value, as of the beginning of the current plan year, of nonforfeitable benefits of inactive participants is greater than the present value of nonforfeitable benefits of active participants, and

'(iii) the plan has an accumulated funding deficiency for the current plan year, or is projected to have such a deficiency for any of the 4 succeeding plan years, not taking into account any extension of amortization periods under section 304(d).

'(D) A plan is described in this subparagraph if the sum of--

'(i) the fair market value of plan assets, plus

'(ii) the present value of the reasonably anticipated employer contributions for the current plan year and each of the 4 succeeding plan years, assuming that the terms of all 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 benefits projected to be payable under the plan during the current plan year and each of the 4 succeeding plan years (plus administrative expenses for such plan years).

'(3) ANNUAL CERTIFICATION BY PLAN ACTUARY-

'(A) IN GENERAL- Not later than the 90th day of each plan year of a multiemployer plan, the plan actuary shall certify to the Secretary of the Treasury and to the plan sponsor--

'(i) whether or not the plan is in endangered status for such plan year and whether or not the plan is or will be in critical status for such plan year, and

'(ii) in the case of a plan which is in a funding improvement or rehabilitation period, whether or not the plan is making the scheduled progress in meeting the requirements of its funding improvement or rehabilitation plan.

'(B) ACTUARIAL PROJECTIONS OF ASSETS AND LIABILITIES-

'(i) IN GENERAL- In making the determinations and projections under this subsection, the plan actuary shall make projections required for the current and succeeding plan years 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 beginning of such year. The actuary's projections shall be based on reasonable actuarial estimates, assumptions, and methods that, except as provided in clause (iii), offer the actuary's best estimate of anticipated experience under the plan. The projected present value of liabilities as of the beginning of such year shall be determined based on the most recent of either--

'(I) the actuarial statement required under section 103(d) with respect to the most recently filed annual report, or

'(II) the actuarial valuation for the preceding plan year.

'(ii) DETERMINATIONS OF FUTURE CONTRIBUTIONS- Any actuarial projection of plan assets shall assume--

'(I) reasonably anticipated employer contributions for the current and 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, or

'(II) that employer contributions 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 such assumption unreasonable.

'(iii) PROJECTED INDUSTRY ACTIVITY- Any projection of activity in the industry or industries covered by the plan, including future covered employment and contribution levels, shall be based on information provided by the plan sponsor, which shall act reasonably and in good faith.

'(C) PENALTY FOR FAILURE TO SECURE TIMELY ACTUARIAL CERTIFICATION- Any failure of the plan's actuary to certify the plan's status under this subsection by the date specified in subparagraph (A) shall be treated for purposes of section 502(c)(2) as a failure or refusal by the plan administrator to file the annual report required to be filed with the Secretary under section 101(b)(4).

'(D) NOTICE-

'(i) IN GENERAL- In any case in which it is certified under subparagraph (A) that a multiemployer plan is or will be in endangered or critical status for a plan year, the plan sponsor shall, not later than 30 days after the date of the certification, provide notification of the endangered or critical status to the participants and beneficiaries, the bargaining parties, the Pension Benefit Guaranty Corporation, and the Secretary.

'(ii) PLANS IN CRITICAL STATUS- If it is certified under subparagraph (A) that a multiemployer plan is or will be in critical status, the plan sponsor shall include in the notice under clause (i) an explanation of the possibility that--

'(I) adjustable benefits (as defined in subsection (e)(8)) may be reduced, and

'(II) such reductions may apply to participants and beneficiaries whose benefit commencement date is on or after the date such notice is provided for the first plan year in which the plan is in critical status.

'(iii) MODEL NOTICE- The Secretary shall prescribe a model notice that a multiemployer plan may use to satisfy the requirements under clause (ii).

'(c) Funding Improvement Plan Must Be Adopted 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, the plan sponsor, in accordance with this subsection--

'(A) shall adopt a funding improvement plan not later than 240 days following the required date for the actuarial certification of endangered status under subsection (b)(3)(A), and

'(B) within 30 days after the adoption of the funding improvement plan--

'(i) shall provide to the bargaining parties 1 or more schedules showing revised benefit structures, revised contribution structures, or both, which, if adopted, may reasonably be expected to enable the multiemployer plan to meet the applicable benchmarks in accordance with the funding improvement plan, including--

'(I) one proposal for reductions in the amount of future benefit accruals necessary to achieve the applicable benchmarks, assuming no amendments increasing contributions under the plan (other than amendments increasing contributions necessary to achieve the applicable benchmarks after amendments have reduced future benefit accruals to the maximum extent permitted by law), and

'(II) one proposal for increases in contributions under the plan necessary to achieve the applicable benchmarks, assuming no amendments reducing future benefit accruals under the plan, and

'(ii) may, if the plan sponsor deems appropriate, prepare and provide the bargaining parties with additional information relating to contribution rates or benefit reductions, alternative schedules, or other information relevant to achieving the applicable benchmarks in accordance with the funding improvement plan.

For purposes of this section, the term 'applicable benchmarks' means the requirements applicable to the multiemployer plan under paragraph (3) (as modified by paragraph (5)).

'(2) EXCEPTION FOR YEARS AFTER PROCESS BEGINS- Paragraph (1) shall not apply to a plan year if such year is in a funding plan adoption period or funding improvement period by reason of the plan being in endangered status for a preceding plan year. For purposes of this section, such preceding plan year shall be the initial determination year with respect to the funding improvement plan to which it relates.

'(3) FUNDING IMPROVEMENT PLAN- For purposes of this section--

'(A) IN GENERAL- A funding improvement plan is a plan which consists of the actions, including options or a range of options to be proposed to the bargaining parties, formulated to provide, based on reasonably anticipated experience and reasonable actuarial assumptions, for the attainment by the plan during the funding improvement period of the following requirements:

'(i) INCREASE IN PLAN'S FUNDING PERCENTAGE- The plan's funded percentage as of the close of the funding improvement period equals or exceeds a percentage equal to the sum of--

'(I) such percentage as of the beginning of such period, plus

'(II) 33 percent of the difference between 100 percent and the percentage under subclause (I).

'(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) SERIOUSLY ENDANGERED PLANS- In the case of a plan in seriously endangered status, except as provided in paragraph (5), subparagraph (A)(i)(II) shall be applied by substituting '20 percent’ for '33 percent’.

'(4) FUNDING IMPROVEMENT PERIOD- For purposes of this section--

'(A) IN GENERAL- The funding improvement period for any funding improvement plan adopted pursuant to this subsection is the 10-year period beginning on the first day of the first plan year of the multiemployer plan beginning after the earlier of--

'(i) the second anniversary of the date of the adoption of the funding improvement plan, or

'(ii) the expiration of the collective bargaining agreements in effect on the due date for the actuarial certification of endangered status for the initial determination year under subsection (b)(3)(A) and covering, as of such due date, at least 75 percent of the active participants in such multiemployer plan.

'(B) SERIOUSLY ENDANGERED PLANS- In the case of a plan in seriously endangered status, except as provided in paragraph (5), subparagraph (A) shall be applied by substituting '15-year period’ for '10-year period’.

'(C) COORDINATION WITH CHANGES IN STATUS-

'(i) PLANS NO LONGER IN ENDANGERED STATUS- If the plan's actuary certifies under subsection (b)(3)(A) for a plan year in any funding plan adoption period or funding improvement period that the plan is no longer in endangered status and is not in critical status, the funding plan adoption period or funding improvement period, whichever is applicable, shall end as of the close of the preceding plan year.

'(ii) PLANS IN CRITICAL STATUS- If the plan's actuary certifies under subsection (b)(3)(A) for a plan year in any funding plan adoption period or funding improvement period that the plan is in critical status, the funding plan adoption period or funding improvement period, whichever is applicable, shall end as of the close of the plan year preceding the first plan year in the rehabilitation period with respect to such status.

'(D) PLANS IN ENDANGERED STATUS AT END OF PERIOD- If the plan's actuary certifies under subsection (b)(3)(A) for the first plan year following the close of the period described in subparagraph (A) that the plan is in endangered status, the provisions of this subsection and subsection (d) shall be applied as if such first plan year were an initial determination year, except that the plan may not be amended in a manner inconsistent with the funding improvement plan in effect for the preceding plan year until a new funding improvement plan is adopted.

'(5) SPECIAL RULES FOR SERIOUSLY ENDANGERED PLANS MORE THAN 70 PERCENT FUNDED-

'(A) IN GENERAL- If the funded percentage of a plan in seriously endangered status was more than 70 percent as of the beginning of the initial determination year--

'(i) paragraphs (3)(B) and (4)(B) shall apply only if the plan's actuary certifies, within 30 days after the certification under subsection (b)(3)(A) for the initial determination year, that, based on the terms of the plan and the collective bargaining agreements in effect at the time of such certification, the plan is not projected to meet the requirements of paragraph (3)(A) (without regard to paragraphs (3)(B) and (4)(B)), and

'(ii) if there is a certification under clause (i), the plan may, in formulating its funding improvement plan, only take into account the rules of paragraph (3)(B) and (4)(B) for plan years in the funding improvement period beginning on or before the date on which the last of the collective bargaining agreements described in paragraph (4)(A)(ii) expires.

'(B) SPECIAL RULE AFTER EXPIRATION OF AGREEMENTS- Notwithstanding subparagraph (A)(ii), if, for any plan year ending after the date described in subparagraph (A)(ii), the plan actuary certifies (at the time of the annual certification under subsection (b)(3)(A) for such plan year) that, based on the terms of the plan and collective bargaining agreements in effect at the time of that annual certification, the plan is not projected to be able to meet the requirements of paragraph (3)(A) (without regard to paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and (4)(B) shall continue to apply for such year.

'(6) UPDATES TO FUNDING IMPROVEMENT PLAN AND SCHEDULES-

'(A) FUNDING IMPROVEMENT PLAN- The plan sponsor shall annually update the funding improvement plan and shall file the update with the plan's annual report under section 104.

'(B) SCHEDULES- The plan sponsor shall annually update any schedule of contribution rates provided under this subsection to reflect the experience of the plan.

'(C) DURATION OF SCHEDULE- A schedule of contribution rates provided by the plan sponsor and relied upon by bargaining parties in negotiating a collective bargaining agreement shall remain in effect for the duration of that collective bargaining agreement.

'(7) IMPOSITION OF DEFAULT SCHEDULE WHERE FAILURE TO ADOPT FUNDING IMPROVEMENT PLAN-

'(A) IN GENERAL- If--

'(i) a collective bargaining agreement providing for contributions under a multiemployer plan that was in effect at the time the plan entered endangered status expires, and

'(ii) after receiving one or more schedules from the plan sponsor under paragraph (1)(B), the bargaining parties with respect to such agreement fail to agree on changes to contribution or benefit schedules necessary to meet the applicable benchmarks in accordance with the funding improvement plan,

the plan sponsor shall implement the schedule described in paragraph (1)(B)(i)(I) beginning on the date specified in subparagraph (B).

'(B) DATE OF IMPLEMENTATION- The date specified in this subparagraph is the earlier of the date--

'(i) on which the Secretary certifies that the parties are at an impasse, or

'(ii) which is 180 days after the date on which the collective bargaining agreement described in subparagraph (A) expires.

'(8) FUNDING PLAN ADOPTION PERIOD- For purposes of this section, the term 'funding plan adoption period’ means the period beginning on the date of t he certification under subsection (b)(3)(A) for the initial determination year and ending on the day before the first day of the funding improvement period.

'(d) Rules for Operation of Plan During Adoption and Improvement Periods-

'(1) SPECIAL RULES FOR PLAN ADOPTION PERIOD- During the funding plan adoption period--

'(A) the plan sponsor may not accept a collective b argaining agreement or participation agreement with respect to the multiemployer plan that provides for--

'(i) a reduction in the level of contributions for any participants,

'(ii) a suspension of contributions with respect to any period of service, or

'(iii) any new direct or indirect exclusion of younger or newly hired employees from plan participation,

'(B) no amendment of the plan which increases the liabilities of the plan by reason of any increase in benefits, any change in the accrual of benefits, or any change in the rate at which benefits become nonforfeitable under the plan may be adopted unless the amendment is required as a condition of qualification under part I of subchapter D of chapter 1 of the Internal Revenue Code of 1986 or to comply with other applicable law, and

'(C) in the case of a plan in seriously endangered status, the plan sponsor shall take all reasonable actions which are consistent with the terms of the plan and applicable law and which are expected, based on reasonable assumptions, to achieve--

'(i) an increase in the plan's funded percentage, and

'(ii) postponement of an accumulated funding deficiency for at least 1 additional plan year.

Actions under subparagraph (C) include applications for extensions of amortization periods under section 304(d), use of the shortfall funding method in making funding standard account computations, amendments to the plan's benefit structure, reductions in future benefit accruals, and other reasonable actions consistent with the terms of the plan and applicable law.

'(2) COMPLIANCE WITH FUNDING IMPROVEMENT PLAN-

'(A) IN GENERAL- A plan may not be amended after the date of the adoption of a funding improvement plan so as to be inconsistent with the funding improvement plan.

'(B) NO REDUCTION IN CONTRIBUTIONS- A plan sponsor may not during any funding improvement period accept a collective bargaining agreement or participation agreement with respect to the multiemployer plan that provides for--

'(i) a reduction in the level of contributions for any participants,

'(ii) a suspension of contributions with respect to any period of service, or

'(iii) any new direct or indirect exclusion of younger or newly hired employees from plan participation.

'(C) SPECIAL RULES FOR BENEFIT INCREASES- A plan may not be amended after the date of the adoption of a funding improvement plan so as to increase benefits, including future benefit accruals, unless the plan actuary certifies that the benefit increase is consistent with the funding improvement plan and is paid for out of contributions not required by the funding improvement plan to meet the applicable benchmark in accordance with the schedule contemplated in the funding improvement plan.

'(e) Rehabilitation Plan Must Be Adopted 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, the plan sponsor, in accordance with this subsection--

'(A) shall adopt a rehabilitation plan not later than 240 days following the required date for the actuarial certification of critical status under subsection (b)(3)(A), and

'(B) within 30 days after the adoption of the rehabilitation plan--

'(i) shall provide to the bargaining parties 1 or more schedules showing revised benefit structures, revised contribution structures, or both, which, if adopted, may reasonably be expected to enable the multiemployer plan to emerge from critical status in accordance with the rehabilitation plan, and

'(ii) may, if the plan sponsor deems appropriate, prepare and provide the bargaining parties with additional information relating to contribution rates or benefit reductions, alternative schedules, or other information relevant to emerging from critical status in accordance with the rehabilitation plan.

The schedule or schedules described in subparagraph (B)(i) shall reflect reductions in future benefit accruals and adjustable benefits, and increases in contributions, that the plan sponsor determines are reasonably necessary to emerge from critical status. One schedule shall be designated as the default schedule and such schedule shall assume that there are no increases in contributions under the plan other than the increases necessary to emerge from critical status after future benefit accruals and other benefits (other than benefits the reduction or elimination of which are not permitted under section 204(g)) have been reduced to the maximum extent permitted by law.

'(2) EXCEPTION FOR YEARS AFTER PROCESS BEGINS- Paragraph (1) shall not apply to a plan year if such year is in a rehabilitation plan adoption period or rehabilitation period by reason of the plan being in critical status for a preceding plan year. For purposes of this section, such preceding plan year shall be the initial critical year with respect to the rehabilitation plan to which it relates.

'(3) REHABILITATION PLAN- For purposes of this section--

'(A) IN GENERAL- A rehabilitation plan is a plan which consists of--

'(i) actions, including options or a range of options to be proposed to the bargaining parties, formulated, based on reasonably anticipated experience and reasonable actuarial assumptions, to enable the plan to cease to be in critical status by the end of the rehabilitation period and may include reductions in plan expenditures (including plan mergers and consolidations), reductions in future benefit accruals or increases in contributions, if agreed to by the bargaining parties, or any combination of such actions, or

'(ii) if the plan sponsor determines that, based on reasonable actuarial assumptions and upon exhaustion of all reasonable measures, the plan can not reasonably be expected to emerge from critical status by the end of the rehabilitation period, reasonable measures to emerge from critical status at a later time or to forestall possible insolvency (within the meaning of section 4245).

A rehabilitation plan must provide annual standards for meeting the requirements of such rehabilitation plan. Such plan shall also include the schedules required to be provided under paragraph (1)(B)(i) and if clause (ii) applies, shall set forth the alternatives considered, explain why the plan is not reasonably expected to emerge from critical status by the end of the rehabilitation period, and specify when, if ever, the plan is expected to emerge from critical status in accordance with the rehabilitation plan.

'(B) UPDATES TO REHABILITATION PLAN AND SCHEDULES-

'(i) REHABILITATION PLAN- The plan sponsor shall annually update the rehabilitation plan and shall file the update with the plan's annual report under section 104.

'(ii) SCHEDULES- The plan sponsor shall annually update any schedule of contribution rates provided under this subsection to reflect the experience of the plan.

'(iii) DURATION OF SCHEDULE- A schedule of contribution rates provided by the plan sponsor and relied upon by bargaining parties in negotiating a collective bargaining agreement shall remain in effect for the duration of that collective bargaining agreement.

'(C) IMPOSITION OF DEFAULT SCHEDULE WHERE FAILURE TO ADOPT REHABILITATION PLAN-

'(i) IN GENERAL- If--

'(I) a collective bargaining agreement providing for contributions under a multiemployer plan that was in effect at the time the plan entered critical status expires, and

'(II) after receiving one or more schedules from the plan sponsor under paragraph (1)(B), the bargaining parties with respect to such agreement fail to adopt a contribution or benefit schedules with terms consistent with the rehabilitation plan and the schedule from the plan sponsor under paragraph (1)(B)(i),

the plan sponsor shall implement the default schedule described in the last sentence of paragraph (1) beginning on the date specified in clause (ii).

'(ii) DATE OF IMPLEMENTATION- The date specified in this clause is the earlier of the date--

'(I) on which the Secretary certifies that the parties are at an impasse, or

'(II) which is 180 days after the date on which the collective bargaining agreement described in clause (i) expires.

'(4) REHABILITATION PERIOD- For purposes of this section--

'(A) IN GENERAL- The rehabilitation period for a plan in critical status is the 10-year period beginning on the first day of the first plan year of the multiemployer plan following the earlier of--

'(i) the second anniversary of the date of the adoption of the rehabilitation plan, or

'(ii) the expiration of the collective bargaining agreements in effect on the date of the due date for the actuarial certification of critical status for the initial critical year under subsection (a)(1) and covering, as of such date at least 75 percent of the active participants in such multiemployer plan.

If a plan emerges from critical status as provided under subparagraph (B) before the end of such 10-year period, the rehabilitation period shall end with the plan year preceding the plan year for which the determination under subparagraph (B) is made.

'(B) EMERGENCE- A plan in critical status shall remain in such status until a plan year for which the plan actuary certifies, in accordance with subsection (b)(3)(A), that the plan is not projected to have an accumulated funding deficiency for the plan year or any of the 9 succeeding plan years, without regard to the use of the shortfall method and taking into account any extension of amortization periods under section 304(d).

'(5) REHABILITATION PLAN ADOPTION PERIOD- For purposes of this section, the term 'rehabilitation plan adoption period’ means the period beginning on the date of the certification under subsection (b)(3)(A) for the initial critical year and ending on the day before the first day of the rehabilitation period.

'(6) LIMITATION ON REDUCTION IN RATES OF FUTURE ACCRUALS- Any reduction in the rate of future accruals under the default schedule described in paragraph (1)(B)(i) shall not reduce the rate of future accruals below--

'(A) a monthly benefit (payable as a single life annuity commencing at the participant's normal retirement age) equal to 1 percent of the contributions required to be made with respect to a participant, or the equivalent standard accrual rate for a participant or group of participants under the collective bargaining agreements in effect as of the first day of the initial critical year, or

'(B) if lower, the accrual rate under the plan on such first day.

The equivalent standard accrual rate shall be determined by the plan sponsor based on the standard or average contribution base units which the plan sponsor determines to be representative for active participants and such other factors as the plan sponsor determines to be relevant. Nothing in this paragraph shall be construed as limiting the ability of the plan sponsor to prepare and provide the bargaining parties with alternative schedules to the default schedule that established lower or higher accrual and contribution rates than the rates otherwise described in this paragraph.

'(7) AUTOMATIC EMPLOYER SURCHARGE-

'(A) IMPOSITION OF SURCHARGE- Each employer otherwise obligated to make contributions for the initial critical year shall be obligated to pay to the plan for such year a surcharge equal to 5 percent of the contributions otherwise required under the applicable collective bargaining agreement (or other agreement pursuant to which the employer contributes). For each succeeding plan year in which the plan is in critical status for a consecutive period of years beginning with the initial critical year, the surcharge shall be 10 percent of the contributions otherwise so required.

'(B) ENFORCEMENT OF SURCHARGE- The surcharges under subparagraph (A) shall be due and payable on the same schedule as the contributions on which the surcharges are based. Any failure to make a surcharge payment shall be treated as a delinquent contribution under section 515 and shall be enforceable as such.

'(C) SURCHARGE TO TERMINATE UPON COLLECTIVE BARGAINING AGREEMENT RENEGOTIATION- The surcharge under this paragraph shall cease to be effective with respect to employees covered by a collective bargaining agreement (or other agreement pursuant to which the employer contributes), beginning on the effective date of a collective bargaining agreement (or other such agreement) that includes terms consistent with a schedule presented by the plan sponsor under paragraph (1)(B)(i), as modified under subparagraph (B) of paragraph (3).

'(D) SURCHARGE NOT TO APPLY UNTIL EMPLOYER RECEIVES NOTICE- The surcharge under this paragraph shall not apply to an employer until 30 days after the employer has been notified by the plan sponsor that the plan is in critical status and that the surcharge is in effect.

'(E) SURCHARGE NOT TO GENERATE INCREASED BENEFIT ACCRUALS- Notwithstanding any provision of a plan to the contrary, the amount of any surcharge under this paragraph shall not be the basis for any benefit accrual under the plan.

'(8) BENEFIT ADJUSTMENTS-

'(A) ADJUSTABLE BENEFITS-

'(i) IN GENERAL- Notwithstanding section 204(g), the plan sponsor shall, subject to the notice requirements in subparagraph (C), make any reductions to adjustable benefits which the plan sponsor deems appropriate, based upon the outcome of collective bargaining over the schedule or schedules provided under paragraph (1)(B)(i).

'(ii) EXCEPTION FOR RETIREES- Except in the case of adjustable benefits described in clause (iv)(III), the plan sponsor of a plan in critical status shall not reduce adjustable benefits of any participant or beneficiary whose benefit commencement date is before the date on which the plan provides notice to the participant or beneficiary under subsection (b)(3)(D) for the initial critical year.

'(iii) PLAN SPONSOR FLEXIBILITY- The plan sponsor shall include in the schedules provided to the bargaining parties an allowance for funding the benefits of participants with respect to whom contributions are not currently required to be made, and shall reduce their benefits to the extent permitted under this title and considered appropriate by the plan sponsor based on the plan's then current overall funding status.

'(iv) ADJUSTABLE BENEFIT DEFINED- For purposes of this paragraph, the term 'adjustable benefit’ means--

'(I) benefits, rights, and features under the plan, including post-retirement death benefits, 60-month guarantees, disability benefits not yet in pay status, and similar benefits,

'(II) any early retirement benefit or retirement-type subsidy (within the meaning of section 204(g)(2)(A)) and any benefit payment option (other than the qualified joint and survivor annuity), and

'(III) benefit increases that would not be eligible for a guarantee under section 4022A on the first day of initial critical year because the increases were adopted (or, if later, took effect) less than 60 months before such first day.

'(B) NORMAL RETIREMENT BENEFITS PROTECTED- Except as provided in subparagraph (A)(iv)(III), nothing in this paragraph shall be construed to permit a plan to reduce the level of a participant's accrued benefit payable at normal retirement age.

'(C) NOTICE REQUIREMENTS-

'(i) IN GENERAL- No reduction may be made to adjustable benefits under subparagraph (A) unless notice of such reduction has been given at least 30 days before the general effective date of such reduction for all participants and beneficiaries to--

'(I) plan participants and beneficiaries,

'(II) each employer who has an obligation to contribute (within the meaning of section 4212(a)) under the plan, and

'(III) each employee organization which, for purposes of collective bargaining, represents plan participants employed by such an employer.

'(ii) CONTENT OF NOTICE- The notice under clause (i) shall contain--

'(I) sufficient information to enable participants and beneficiaries to understand the effect of any reduction on their benefits, including an estimate (on an annual or monthly basis) of any affected adjustable benefit that a participant or beneficiary would otherwise have been eligible for as of the general effective date described in clause (i), and

'(II) information as to the rights and remedies of plan participants and beneficiaries as well as how to contact the Department of Labor for further information and assistance where appropriate.

'(iii) FORM AND MANNER- Any notice under clause (i)--

'(I) shall be provided in a form and manner prescribed in regulations of the Secretary,

'(II) shall be written in a manner so as to be understood by the average plan participant, and

'(III) may be provided in written, electronic, or other appropriate form to the extent such form is reasonably accessible to persons to whom the notice is required to be provided.

The Secretary shall in the regulations prescribed under subclause (I) establish a model notice that a plan sponsor may use to meet the requirements of this subparagraph.

'(9) ADJUSTMENTS DISREGARDED IN WITHDRAWAL LIABILITY DETERMINATION-

'(A) BENEFIT REDUCTIONS- Any benefit reductions under this subsection shall be disregarded in determining a plan's unfunded vested benefits for purposes of determining an employer's withdrawal liability under section 4201.

'(B) SURCHARGES- Any surcharges under paragraph (7) shall be disregarded in determining an employer's withdrawal liability under section 4211, except for purposes of determining the unfunded vested benefits attributable to an employer under section 4211(c)(4) or a comparable method approved under section 4211(c)(5).

'(C) SIMPLIFIED CALCULATIONS- The Pension Benefit Guaranty Corporation shall prescribe simplified methods for the application of this paragraph in determining withdrawal liability.

'(f) Rules for Operation of Plan During Adoption and Rehabilitation Period-

'(1) COMPLIANCE WITH REHABILITATION PLAN-

'(A) IN GENERAL- A plan may not be amended after the date of the adoption of a rehabilitation plan under subsection (e) so as to be inconsistent with the rehabilitation plan.

'(B) SPECIAL RULES FOR BENEFIT INCREASES- A plan may not be amended after the date of the adoption of a rehabilitation plan under subsection (e) so as to increase benefits, including future benefit accruals, unless the plan actuary certifies that such increase is paid for out of additional contributions not contemplated by the rehabilitation plan, and, after taking into account the benefit increase, the multiemployer plan still is reasonably expected to emerge from critical status by the end of the rehabilitation period on the schedule contemplated in the rehabilitation plan.

'(2) RESTRICTION ON LUMP SUMS AND SIMILAR BENEFITS-

'(A) IN GENERAL- Effective on the date the notice of certification of the plan's critical status for the initial critical year under subsection (b)(3)(D) is sent, and notwithstanding section 204(g), the plan shall not pay--

'(i) any payment, in excess of the monthly amount paid under a single life annuity (plus any social security supplements described in the last sentence of section 204(b)(1)(G)),

'(ii) any payment for the purchase of an irrevocable commitment from an insurer to pay benefits, and

'(iii) any other payment specified by the Secretary of the Treasury by regulations.

'(B) EXCEPTION- Subparagraph (A) shall not apply to a benefit which under section 203(e) may be immediately distributed without the consent of the participant or to any makeup payment in the case of a retroactive annuity starting date or any similar payment of benefits owed with respect to a prior period.

'(3) ADJUSTMENTS DISREGARDED IN WITHDRAWAL LIABILITY DETERMINATION- Any benefit reductions under this subsection shall be disregarded in determining a plan's unfunded vested benefits for purposes of determining an employer's withdrawal liability under section 4201.

'(4) SPECIAL RULES FOR PLAN ADOPTION PERIOD- During the rehabilitation plan adoption period--

'(A) the plan sponsor may not accept a collective bargaining agreement or participation agreement with respect to the multiemployer plan that provides for--

'(i) a reduction in the level of contributions for any participants,

'(ii) a suspension of contributions with respect to any period of service, or

'(iii) any new direct or indirect exclusion of younger or newly hired employees from plan participation, and

'(g) Expedited Resolution of Plan Sponsor Decisions- If, within 60 days of the due date for adoption of a funding improvement plan or a rehabilitation plan under subsection (e), the plan sponsor of a plan in endangered status or a plan in critical status has not agreed on a funding improvement plan or rehabilitation plan, then any member of the board or group that constitutes the plan sponsor may require that the plan sponsor enter into an expedited dispute resolution procedure for the development and adoption of a funding improvement plan or rehabilitation plan.

'(h) Nonbargained Participation-

'(1) BOTH BARGAINED AND NONBARGAINED EMPLOYEE-PARTICIPANTS- In the case of an employer that contributes to a multiemployer plan with respect to both employees who are covered by one or more collective bargaining agreements and employees who are not so covered, if the plan is in endangered status or in critical status, benefits of and contributions for the nonbargained employees, including surcharges on those contributions, shall be determined as if those nonbargained employees were covered under the first to expire of the employer's collective bargaining agreements in effect when the plan entered endangered or critical status.

'(2) NONBARGAINED EMPLOYEES ONLY- In the case of an employer that contributes to a multiemployer plan only with respect to employees who are not covered by a collective bargaining agreement, this section shall be applied as if the employer were the bargaining party, and its participation agreement with the plan were a collective bargaining agreement with a term ending on the first day of the plan year beginning after the employer is provided the schedule or schedules described in subsections (c) and (e).

'(i) Definitions; Actuarial Method- For purposes of this section--

'(1) BARGAINING PARTY- The term 'bargaining party’ means--

'(A)(i) except as provided in clause (ii), an employer who has an obligation to contribute under the plan; or

'(ii) in the case of a plan described under section 404(c) of the Internal Revenue Code of 1986, or a continuation of such a plan, the association of employers that is the employer settlor of the plan; and

'(B) an employee organization which, for purposes of collective bargaining, represents plan participants employed by an employer who has an obligation to contribute under the plan.

'(2) FUNDED PERCENTAGE- The term 'funded percentage’ means the percentage equal to a fraction--

'(A) the numerator of which is the value of the plan's assets, as determined under section 304(c)(2), and

'(B) the denominator of which is the accrued liability of the plan, determined using actuarial assumptions described in section 304(c)(3).

'(3) ACCUMULATED FUNDING DEFICIENCY- The term 'accumulated funding deficiency’ has the meaning given such term in section 304(a).

'(4) ACTIVE PARTICIPANT- The term 'active participant’ means, in connection with a multiemployer plan, a participant who is in covered service under the plan.

'(5) INACTIVE PARTICIPANT- The term 'inactive participant’ means, in connection with a multiemployer plan, a participant, or the beneficiary or alternate payee of a participant, who--

'(A) is not in covered service under the plan, and

'(B) is in pay status under the plan or has a nonforfeitable right to benefits under the plan.

'(6) PAY STATUS- A person is in pay status under a multiemployer plan if--

'(A) at any time during the current plan year, such person is a participant or beneficiary under the plan and is paid an early, late, normal, or disability retirement benefit under the plan (or a death benefit under the plan related to a retirement benefit), or

'(B) to the extent provided in regulations of the Secretary of the Treasury, such person is entitled to such a benefit under the plan.

'(7) OBLIGATION TO CONTRIBUTE- The term 'obligation to contribute’ has the meaning given such term under section 4212(a).

'(8) ACTUARIAL METHOD- Notwithstanding any other provision of this section, the actuary's determinations with respect to a plan's normal cost, actuarial accrued liability, and improvements in a plan's funded percentage under this section shall be based upon the unit credit funding method (whether or not that method is used for the plan's actuarial valuation).

'(9) PLAN SPONSOR- In the case of a plan described under section 404(c) of the Internal Revenue Code of 1986, or a continuation of such a plan, the term 'plan sponsor’ means the bargaining parties described under paragraph (1).

'(10) BENEFIT COMMENCEMENT DATE- The term 'benefit commencement date’ means the annuity starting date (or in the case of a retroactive annuity starting date, the date on which benefit payments begin).’.

(b) Enforcement- Section 502 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132) is amended--

(1) in subsection (a)(6) by striking '(6), or (7)’ and inserting '(6), (7), or (8)’;

(2) by redesignating subsection (c)(8) as subsection (c)(9); and

(3) by inserting after subsection (c)(7) the following new paragraph:

'(8) The Secretary may assess against any plan sponsor of a multiemployer plan a civil penalty of not more than $1,100 per day--

'(A) for each violation by such sponsor of the requirement under section 305 to adopt by the deadline established in that section a funding improvement plan or rehabilitation plan with respect to a multiemployer which is in endangered or critical status, or

'(B) in the case of a plan in endangered status which is not in seriously endangered status, for failure by the plan to meet the applicable benchmarks under section 305 by the end of the funding improvement period with respect to the plan.’.

(c) Cause of Action To Compel Adoption or Implementation of Funding Improvement or Rehabilitation Plan- Section 502(a) of the Employee Retirement Income Security Act of 1974 is amended by striking 'or’ at the end of paragraph (8), by striking the period at the end of paragraph (9) and inserting '; or’ and by adding at the end the following:

'(10) in the case of a multiemployer plan that has been certified by the actuary to be in endangered or critical status under section 305, if the plan sponsor--

'(A ) has not adopted a funding improvement or rehabilitation plan under that section by the deadline established in such section, or

'(B) fails to update or comply with the terms of the funding improvement or rehabilitation plan in accordance with the requirements of such section,

by an employer that has an obligation to contribute with respect to the multiemployer plan or an employee organization that represents active participants in the multiemployer plan, for an order compelling the plan sponsor to adopt a funding improvement or rehabilitation plan or to update or comply with the terms of the funding improvement or rehabilitation plan in accordance with the requirements of such section and the funding improvement or rehabilitation plan.’.

(d) No Additional Contributions Required- Section 302(b) of the Employee Retirement Income Security Act of 1974, as amended by this Act, is amended by adding at the end the following new paragraph:

'(3) MULTIEMPLOYER PLANS IN CRITICAL STATUS- Paragraph (1) shall not apply in the case of a multiemployer plan for any plan year in which the plan is in critical status pursuant to section 305. This paragraph shall only apply if the plan adopts a rehabilitation plan in accordance with section 305(e) and complies with the terms of such rehabilitation plan (and any updates or modifications of the plan).’.

(e) Conforming Amendment- The table of contents in section 1 of such Act (as amended by the preceding provisions of this Act) is amended by inserting after the item relating to section 304 the following new item:

'Sec. 305. Additional funding rules for multiemployer plans in endangered status or critical status.’.

(f) Effective Dates-

(1) IN GENERAL- The amendments made by this section shall apply with respect to plan years beginning after 2007.

(2) SPECIAL RULE FOR CERTAIN NOTICES- In any case in which a plan's actuary certifies that it is reasonably expected that a multiemployer plan will be in critical status under section 305(b)(3) of the Employee Retirement Income Security Act of 1974, as added by this section, with respect to the first plan year beginning after 2007, the notice required under subparagraph (D) of such section may be provided at any time after the date of enactment, so long as it is provided on or before the last date for providing the notice under such subparagraph.

(3) SPECIAL RULE FOR CERTAIN RESTORED BENEFITS- In the case of a multiemployer plan--

(A) with respect to which benefits were reduced pursuant to a plan amendment adopted on or after January 1, 2002, and before June 30, 2005, and

(B) which, pursuant to the plan document, the trust agreement, or a formal written communication from the plan sponsor to participants provided before June 30, 2005, provided for the restoration of such benefits,

the amendments made by this section shall not apply to such benefit restorations to the extent that any restriction on the providing or accrual of such benefits would otherwise apply by reason of such amendments.

SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER PLANS.

(a) Advance Determination of Impending Insolvency Over 5 Years- Section 4245(d)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1426(d)(1)) is amended--

(1) by striking '3 plan years' the second place it appears and inserting '5 plan years’; and

(2) by adding at the end the following new sentence: 'If the plan sponsor makes such a determination that the plan will be insolvent in any of the next 5 plan years, the plan sponsor shall make the comparison under this paragraph at least annually until the plan sponsor makes a determination that the plan will not be insolvent in any of the next 5 plan years.’.

(b) Effective Date- The amendments made by this section shall apply with respect to determinations made in plan years beginning after 2007.

SEC. 204. WITHDRAWAL LIABILITY REFORMS.

(a) Update of Rules Relating to Limitations on Withdrawal Liability-

(1) INCREASE IN LIMITS- Section 4225(a)(2) of such Act (29 U.S.C. 1405(a)(2)) is amended by striking the table contained therein and inserting the following new table:

----------------------

'If the liquidation or distribution value of the employer after the sale or exchange is ___, the portion is--

Not more than $5,000,000--30 percent of the amount.

More than $5,000,000, but not more than $10,000,000--$1,500,000, plus 35 percent of the amount in excess of $5,000,000.

More than $10,000,000, but not more than $15,000,000--$3,250,000, plus 40 percent of the amount in excess of $10,000,000.

More than $15,000,000, but not more than $17,500,000--$5,250,000, plus 45 percent of the amount in excess of $15,000,000.

More than $17,500,000, but not more than $20,000,000--$6,375,000, plus 50 percent of the amount in excess of $17,500,000.

More than $20,000,000, but not more than $22,500,000--$7,625,000, plus 60 percent of the amount in excess of $20,000,000.

More than $22,500,000, but not more than $25,000,000--$9,125,000, plus 70 percent of the amount in excess of $22,500,000.

More than $25,000,000--$10,875,000, plus 80 percent of the amount in excess of $25,000,000.’.

----------------------

(2) PLANS USING ATTRIBUTABLE METHOD- Section 4225(a)(1)(B) of such Act (29 U.S.C. 1405(a)(1)(B)) is amended to read as follows:

'(B) in the case of a plan using the attributable method of allocating withdrawal liability, the unfunded vested benefits attributable to employees of the employer.’.

(3) EFFECTIVE DATE- The amendments made by this subsection shall apply to sales occurring on or after January 1, 2007.

(b) Withdrawal Liability Continues if Work Contracted Out-

(1) IN GENERAL- Clause (i) of section 4205(b)(2)(A) of such Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting 'or to an entity or entities owned or controlled by the employer’ after 'to another location’.

(2) EFFECTIVE DATE- The amendment made by this subsection shall apply with respect to work transferred on or after the date of the enactment of this Act.

(1) IN GENERAL- Section 4210(b) of such Act (29 U.S.C. 1390(b)) is amended--

(A) by striking paragraph (1); and

(B) by redesignating paragraphs (2) through (4) as paragraphs (1) through (3), respectively.

(2) FRESH START OPTION- Section 4211(c)(5) of such Act (29 U.S.C. 1391(c)(5)) is amended by adding at the end the following new subparagraph:

'(E) FRESH START OPTION- Notwithstanding paragraph (1), a plan may be amended to provide that the withdrawal liability method described in subsection (b) shall be applied by substituting the plan year which is specified in the amendment and for which the plan has no unfunded vested benefits for the plan year ending before September 26, 1980.’.

(3) EFFECTIVE DATE- The amendments made by this subsection shall apply with respect to plan withdrawals occurring on or after January 1, 2007.

(d) Procedures Applicable to Disputes Involving Pension Plan Withdrawal Liability-

(1) IN GENERAL- Section 4221 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1401) is amended by adding at the end the following:

'(g) Procedures Applicable to Certain Disputes-

'(1) IN GENERAL- If--

'(A) a plan sponsor of a plan determines that--

'(i) a complete or partial withdrawal of an employer has occurred, or

'(ii) an employer is liable for withdrawal liability payments with respect to such complete or partial withdrawal, and

'(B) such determination is based in whole or in part on a finding by the plan sponsor under section 4212(c) that a principal purpose of any transaction which occurred after December 31, 1998, and at least 5 years (2 years in the case of a small employer) before the date of the complete or partial withdrawal was to evade or avoid withdrawal liability under this subtitle,

then the person against which the withdrawal liability is assessed based solely on the application of section 4212(c) may elect to use the special rule under paragraph (2) in applying subsection (d) of this section and section 4219(c) to such person.

'(2) SPECIAL RULE- Notwithstanding subsection (d) and section 4219(c), if an electing person contests the plan sponsor's determination with respect to withdrawal liability payments under paragraph (1) through an arbitration proceeding pursuant to subsection (a), through an action brought in a court of competent jurisdiction for review of such an arbitration decision, or as otherwise permitted by law, the electing person shall not be obligated to make the withdrawal liability payments until a final decision in the arbitration proceeding, or in court, upholds the plan sponsor's determination, but only if the electing person--

'(A) provides notice to the plan sponsor of its election to apply the special rule in this paragraph within 90 days after the plan sponsor notifies the electing person of its liability by reason of the application of section 4212(c); and

'(B) if a final decision in the arbitration proceeding, or in court, of the withdrawal liability dispute has not been rendered within 12 months from the date of such notice, the electing person provides to the plan, effective as of the first day following the 12-month period, a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412 of this Act, or an amount held in escrow by a bank or similar financial institution satisfactory to the plan, in an amount equal to the sum of the withdrawal liability payments that would otherwise be due under subsection (d) and section 4219(c) for the 12-month period beginning with the first anniversary of such notice. Such bond or escrow shall remain in effect until there is a final decision in the arbitration proceeding, or in court, of the withdrawal liability dispute, at which time such bond or escrow shall be paid to the plan if such final decision upholds the plan sponsor's determination.

'(3) DEFINITION OF SMALL EMPLOYER- For purposes of this subsection--

'(A) IN GENERAL- The term 'small employer’ means any employer which, for the calendar year in which the transaction referred to in paragraph (1)(B) occurred and for each of the 3 preceding years, on average--

'(i) employs not more than 500 employees, and

'(ii) is required to make contributions to the plan for not more than 250 employees.

'(B) CONTROLLED GROUP- Any group treated as a single employer under subsection (b)(1) of section 4001, without regard to any transaction that was a basis for the plan's finding under section 4212, shall be treated as a single employer for purposes of this subparagraph.

'(4) ADDITIONAL SECURITY PENDING RESOLUTION OF DISPUTE- If a withdrawal liability dispute to which this subsection applies is not concluded by 12 months after the electing person posts the bond or escrow described in paragraph (2), the electing person shall, at the start of each succeeding 12-month period, provide an additional bond or amount held in escrow equal to the sum of the withdrawal liability payments that would otherwise be payable to the plan during that period.

'(5) The liability of the party furnishing a bond or escrow under this subsection shall be reduced, upon the payment of the bond or escrow to the plan, by the amount thereof.’.

(2) EFFECTIVE DATE- The amendments made by this subsection shall apply to any person that receives a notification under section 4219(b)(1) of the Employee Retirement Income Security Act of 1974 on or after the date of enactment of this Act with respect to a transaction that occurred after December 31, 1998.

SEC. 205. PROHIBITION ON RETALIATION AGAINST EMPLOYERS EXERCISING THEIR RIGHTS TO PETITION THE FEDERAL GOVERNMENT.

Section 510 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1140) is amended by inserting before the last sentence thereof the following new sentence: 'In the case of a multiemployer plan, it shall be unlawful for the plan sponsor or any other person to discriminate against any contributing employer for exercising rights under this Act or for giving information or testifying in any inquiry or proceeding relating to this Act before Congress.’.

SEC. 206. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED UNDER AN AGREEMENT APPROVED BY THE PENSION BENEFIT GUARANTY CORPORATION.

In the case of a multiemployer plan that is a party to an agreement that was approved by the Pension Benefit Guaranty Corporation prior to June 30, 2005, and that--

(1) increases benefits, and

(2) provides for special withdrawal liability rules under section 4203(f) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1383),

the amendments made by sections 201, 202, 211, and 212 of this Act shall not apply to the benefit increases under any plan amendment adopted prior to June 30, 2005, that are funded pursuant to such agreement if the plan is funded in compliance with such agreement (and any amendments thereto).

Subtitle B--Amendments to Internal Revenue Code of 1986

SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS.

(a) In General- Subpart A of part III of subchapter D of chapter 1 of the Internal Revenue Code of 1986 (as added by this Act) is amended by inserting after section 430 the following new section:

'SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER PLANS.

'(a) In General- For purposes of section 412, the accumulated funding deficiency of a multiemployer plan for any plan year is--

'(2) if the multiemployer plan is in reorganization for any plan year, the accumulated funding deficiency of the plan determined under section 4243 of the Employee Retirement Income Security Act of 1974.

'(b) Funding Standard Account-

'(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 amortized)--

'(iii) separately, with respect to each plan year, the net experience loss (if any) under the plan, over a period of 15 plan years, and

'(iv) 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 412(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 amortized) over a period of 5 plan years any amount credited to the funding standard account under section 412(b)(3)(D) (as in effect on the day before the date of the enactment of the Pension Protection Act of 2006), and

'(E) the amount necessary to amortize in equal annual installments (until fully amortized) over a period of 20 years the contributions which would be required to be made under the plan but for the provisions of section 412(c)(7)(A)(i)(I) (as in effect on the day before the date of the enactment of the Pension Protection Act of 2006).

'(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 amortized)--

'(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 deficiency (within the meaning of section 412(c)(3)) for the plan year, and

'(D) in the case of a plan year for which the accumulated funding deficiency is determined under the funding standard account if such plan year follows a plan year for which such deficiency was determined under the alternative minimum funding standard under section 412(g) (as in effect on the day before the date of the enactment of the Pension Protection Act of 2006), the excess (if any) of any debit balance in the funding standard account (determined without regard to this subparagraph) over any debit balance in the alternative minimum funding standard account.

'(4) SPECIAL RULE FOR AMOUNTS FIRST AMORTIZED IN PLAN YEARS BEFORE 2008- In the case of any amount amortized under section 412(b) (as in effect on the day before the date of the enactment of the Pension Protection Act of 2006) over any period beginning with a plan year beginning before 2008 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, amounts required to be amortized under paragraph (2) or paragraph (3), as the case may be--

'(7) 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 withdrawal liability under part 1 of subtitle E of title IV of the Employee Retirement Income Security Act of 1974 shall be considered an amount contributed by the employer to or under the plan. The Secretary may prescribe by regulation additional charges and credits to a multiemployer plan's funding standard account to the extent necessary to prevent withdrawal liability payments from being unduly reflected as advance funding for plan liabilities.

'(i) shall be eliminated by an offsetting 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) of such Act 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 Corporation pursuant to section 4222 of such Act or to a fund exempt under section 501(c)(22) pursuant to section 4223 of such 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 of title IV of such Act 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.

'(E) ELECTION FOR DEFERRAL OF CHARGE FOR PORTION OF NET EXPERIENCE LOSS- If an election is in effect under section 412(b)(7)(F) (as in effect on the day before the date of the enactment of the Pension Protection Act of 2006) for any plan year, the funding standard account shall be charged in the plan year to which the portion of the net experience loss deferred by such election was deferred with the amount so deferred (and paragraph (2)(B)(iii) 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.

'(c) Additional Rules-

'(B) ELECTION WITH RESPECT TO BONDS- The value of a bond or other evidence of indebtedness which is not in default as to principal or interest may, at the election of the plan administrator, be determined on an amortized 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 shall by regulations provide, shall apply to all such evidences of indebtedness, and may be revoked only with the consent of the Secretary.

'(A) each of which is reasonable (taking into account the experience of the plan and reasonable expectations), and

'(B) which, in combination, offer the actuary's best estimate of anticipated experience under the plan.

'(4) TREATMENT OF CERTAIN CHANGES AS EXPERIENCE GAIN OR LOSS- For purposes of this section, if--

'(A) a change in benefits under the Social Security Act or in other retirement benefits created under Federal or State law, or

'(B) a change in the definition of the term 'wages' under section 3121, or a change in the amount of such wages taken into account under regulations prescribed for purposes of section 401(a)(5),

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 paragraph) 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 subparagraphs (B), (C), and (D) of subsection (b)(2) and subparagraph (B) of subsection (b)(3) which are required to be amortized shall be considered fully amortized for purposes of such subparagraphs.

'(6) FULL-FUNDING LIMITATION-

'(A) IN GENERAL- For purposes of paragraph (5), the term 'full-funding limitation’ means the excess (if any) of--

'(ii) the lesser of--

'(I) the fair market value of the plan's assets, or

'(II) the value of such assets determined 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 liability of the plan (including the expected increase in current liability due to benefits accruing during the plan year), over

'(II) the value of the plan's assets determined under paragraph (2).

'(ii) ASSETS- For purposes of clause (i), assets shall not be reduced by any credit balance in the funding standard account.

'(D) CURRENT LIABILITY- For purposes of this paragraph--

'(i) IN GENERAL- The term 'current liability’ means all liabilities t o employees and their beneficiaries under the plan.

'(ii) TREATMENT OF UNPREDICTABLE CONTINGENT EVENT BENEFITS- For purposes of clause (i), any benefit contingent on an event other than--

'(I) age, service, compensation, death, or disability, or

'(II) an event which is reasonably and reliably predictable (as determined by the Secretary),

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shall not be taken into account until the event on which the benefit is contingent occurs.

'(iii) INTEREST RATE USED- The rate of interest used to determine current liability under this paragraph shall be the rate of interest determined under subparagraph (E).

'(iv) MORTALITY TABLES-

'(I) COMMISSIONERS’ STANDARD TABLE- In the case of plan years beginning before the first plan year to which the first tables prescribed under subclause (II) apply, the mortality table used in determining current liability under this paragraph shall be the table prescribed by the Secretary which is based on the prevailing commissioners' standard table (described in section 807(d)(5)(A)) used to determine reserves for group annuity contracts issued on January 1, 1993.

'(II) SECRETARIAL AUTHORITY- The Secretary may by regulation prescribe for plan years beginning after December 31, 1999, mortality tables to be used in determining current liability under this subsection. Such tables shall be based upon the actual experience of pension plans and projected trends in such experience. In prescribing such tables, the Secretary shall take into account results of available independent studies of mortality of individuals covered by pension plans.

'(v) SEPARATE MORTALITY TABLES FOR THE DISABLED- Notwithstanding clause (iv)--

'(I) IN GENERAL- The Secretary shall establish mortality tables which may be used (in lieu of the tables under clause (iv)) to determine current liability under this subsection for individuals who are entitled to benefits under the plan on account of disability. The Secretary shall establish separate tables for individuals whose disabilities occur in plan years beginning before January 1, 1995, and for individuals whose disabilities occur in plan years beginning on or after such date.

'(vi) PERIODIC REVIEW- The Secretary shall periodically (at least every 5 years) review any tables in effect under this subparagraph and shall, to the extent such Secretary determines necessary, by regulation update the tables to reflect the actual experience of pension plans and projected trends in such experience.

'(E) REQUIRED CHANGE OF INTEREST RATE- For purposes of determining a plan's current liability for purposes of this paragraph--

'(ii) PERMISSIBLE RANGE- For purposes of this subparagraph--

'(II) SECRETARIAL AUTHORITY- If the Secretary finds that the lowest rate of interest permissible under subclause (I) is unreasonably high, the Secretary may prescribe a lower rate of interest, except that such rate may not be less than 80 percent of the average rate determined under such subclause.

'(iii) ASSUMPTIONS- Notwithstanding paragraph (3)(A), the interest rate used under the plan shall be--

'(I) determined without taking into account the experience of the plan and reasonable expectations, but

'(II) consistent with the assumptions which reflect the purchase rates which would be used by insurance companies to satisfy the liabilities under the plan.

'(7) ANNUAL VALUATION-

'(A) IN GENERAL- For purposes of this section, a determination of experience gains and losses and a valuation of the plan's liability shall be made not less frequently than once every year, except that such determination shall be made more frequently to the extent required in particular cases under regulations prescribed by the Secretary.

'(B) VALUATION DATE-

'(iii) ADJUSTMENTS- Information under clause (ii) shall, in accordance with regulations, be actuarially adjusted to reflect significant differences in participants.

'(d) Extension of Amortization Periods for Multiemployer Plans-

'(1) AUTOMATIC EXTENSION UPON APPLICATION BY CERTAIN PLANS-

'(A) IN GENERAL- If the plan sponsor of a multiemployer plan--

'(i) submits to the Secretary an application for an extension of the period of years required to amortize any unfunded liability described in any clause of subsection (b)(2)(B) or described in subsection (b)(4), and

'(ii) includes with the application a certification by the plan's actuary described in subparagraph (B),

the Secretary shall extend the amortization period for the period of time (not in excess of 5 years) specified in the application. Such extension shall be in addition to any extension under paragraph (2).

'(B) CRITERIA- A certification with respect to a multiemployer plan is described in this subparagraph if the plan's actuary certifies that, based on reasonable assumptions--

'(i) absent the extension under subparagraph (A), the plan would have an accumulated funding deficiency in the current plan year or any of the 9 succeeding plan years,

'(ii) the plan sponsor has adopted a plan to improve the plan's funding status,

'(iii) the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended, and

'(iv) the notice required under paragraph (3)(A) has been provided.

'(C) TERMINATION- The preceding provisions of this paragraph shall not apply with respect to any application submitted after December 31, 2014.

'(2) ALTERNATIVE EXTENSION-

'(A) IN GENERAL- If the plan sponsor of a multiemployer plan submits to the Secretary an application for an extension of the period of years required to amortize any unfunded liability described in any clause of subsection (b)(2)(B) or described in subsection (b)(4), the Secretary may extend the amortization period for a period of time (not in excess of 10 years reduced by the number of years of any extension under paragraph (1) with respect to such unfunded liability) if the Secretary makes the determination described in subparagraph (B). Such extension shall be in addition to any extension under paragraph (1).

'(B) DETERMINATION- The Secretary may grant an extension under subparagraph (A) if the Secretary determines that--

'(i) such extension would carry out the purposes of this Act and would provide adequate protection for participants under the plan and their beneficiaries, and

'(ii) the failure to permit such extension would--

'(I) result in a substantial risk to the voluntary continuation of the plan, or a substantial curtailment of pension benefit levels or employee compensation, and

'(II) be adverse to the interests of plan participants in the aggregate.

'(C) ACTION BY SECRETARY- The Secretary shall act upon any application for an extension under this paragraph within 180 days of the submission of such application. If the Secretary rejects the application for an extension under this paragraph, the Secretary shall provide notice to the plan detailing the specific reasons for the rejection, including references to the criteria set forth above.

'(3) ADVANCE NOTICE-

'(A) IN GENERAL- The Secretary shall, before granting an extension under this subsection, require each applicant to provide evidence satisfactory to such Secretary that the applicant has provided notice of the filing of the application for such extension to each affected party (as defined in section 4001(a)(21) of the Employee Retirement Income Security Act of 1974) with respect to the affected plan. Such notice shall include a description of the extent to which the plan is funded for benefits which are guaranteed under title IV of such Act and for benefit liabilities.

'(B) CONSIDERATION OF RELEVANT INFORMATION- The Secretary shall consider any relevant information provided by a person to whom notice was given under paragraph (1).’.

(b) Effective Date-

(1) IN GENERAL- The amendments made by this section shall apply to plan years beginning after 2007.

SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN ENDANGERED OR CRITICAL STATUS.

(a) In General- Subpart A of part III of subchapter D of chapter 1 of the Internal Revenue Code of 1986 (as amended by this Act) is amended by inserting after section 431 the following new section:

'SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN ENDANGERED STATUS OR CRITICAL STATUS.

'(a) General Rule- For purposes of this part, in the case of a multiemployer plan in effect on July 16, 2006--

'(1) if the plan is in endangered status--

'(A) the plan sponsor shall adopt and implement a funding improvement plan in accordance with the requirements of subsection (c), and

'(B) the requirements of subsection (d) shall apply during the funding plan adoption period and the funding improvement period, and

'(2) if the plan is in critical status--

'(A) the plan sponsor shall adopt and implement a rehabilitation plan in accordance with the requirements of subsection (e), and

'(B) the requirements of subsection (f) shall apply during the rehabilitation plan adoption period and the rehabilitation period.

'(b) Determination of Endangered and Critical Status- For purposes of this section--

'(A) the plan's funded percentage for such plan year is less than 80 percent, or

For purposes of this section, a plan shall be treated as in seriously endangered status for a plan year if the plan is described in both subparagraphs (A) and (B).

'(A) A plan is described in this subparagraph if--

'(i) the funded percentage of the plan is less than 65 percent, and

'(ii) the sum of--

'(I) the fair market value of plan assets, plus

'(B) A plan is described in this subparagraph if--

'(i) the plan has an accumulated funding deficiency for the current plan year, not taking into account any extension of amortization periods under section 431(d), or

'(C) A plan is described in this subparagraph if--

'(II) the present value of the reasonably anticipated employer and employee contributions for the current plan year,

'(D) A plan is described in this subparagraph if the sum of--

'(i) the fair market value of plan assets, plus

'(3) ANNUAL CERTIFICATION BY PLAN ACTUARY-

'(A) IN GENERAL- Not later than the 90th day of each plan year of a multiemployer plan, the plan actuary shall certify to the Secretary and to the plan sponsor--

'(i) whether or not the plan is in endangered status for such plan year and whether or not the plan is or will be in critical status for such plan year, and

'(B) ACTUARIAL PROJECTIONS OF ASSETS AND LIABILITIES-

'(I) the actuarial statement required under section 103(d) of the Employee Retirement Income Security Act of 1974 with respect to the most recently filed annual report, or

'(II) the actuarial valuation for the preceding plan year.

'(ii) DETERMINATIONS OF FUTURE CONTRIBUTIONS- Any actuarial projection of plan assets shall assume--

'(C) PENALTY FOR FAILURE TO SECURE TIMELY ACTUARIAL CERTIFICATION- Any failure of the plan's actuary to certify the plan's status under this subsection by the date specified in subparagraph (A) shall be treated for purposes of section 502(c)(2) of the Employee Retirement Income Security Act of 1974 as a failure or refusal by the plan administrator to file the annual report required to be filed with the Secretary under section 101(b)(4) of such Act.

'(D) NOTICE-

'(I) adjustable benefits (as defined in subsection (e)(8)) may be reduced, and

'(iii) MODEL NOTICE- The Secretary of Labor shall prescribe a model notice that a multiemployer plan may use to satisfy the requirements under clause (ii).