[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2830 Reported in House (RH)]







                                                 Union Calendar No. 172
109th CONGRESS
  1st Session
                                H. R. 2830

                  [Report No. 109-232, Parts I and II]

 To amend the Employee Retirement Income Security Act of 1974 and the 
Internal Revenue Code of 1986 to reform the pension funding rules, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 9, 2005

  Mr. Boehner (for himself, Mr. Thomas, Mr. Sam Johnson of Texas, Mr. 
    Kline, Mr. McKeon, Mr. Tiberi, and Mr. Boustany) introduced the 
 following bill; which was referred to the Committee on Education and 
the Workforce, and in addition to the Committee on Ways and Means, for 
a period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

                           September 22, 2005

  Reported from the Committee on Education and the Workforce with an 
                               amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                           September 22, 2005

   Referral to the Committee on Ways and Means extended for a period 
                ending not later than September 30, 2005

                           September 30, 2005

   Referral to the Committee on Ways and Means extended for a period 
                 ending not later than November 4, 2005

                            November 4, 2005

   Referral to the Committee on Ways and Means extended for a period 
                ending not later than November 18, 2005

                           November 18, 2005

   Referral to the Committee on Ways and Means extended for a period 
                 ending not later than December 6, 2005

                            December 6, 2005

 Additional sponsors: Mr. Shaw, Mr. Sessions, Mr. Otter, Mr. Calvert, 
   Mr. Westmoreland, Mr. Price of Georgia, Mr. Issa, Mr. Bartlett of 
                Maryland, Mr. Manzullo, and Mr. Gerlach

                            December 6, 2005

   Reported from the Committee on Ways and Means with an amendment; 
committed to the Committee of the Whole House on the State of the Union 
                       and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                           in boldface roman]
[For text of introduced bill, see copy of bill as introduced on June 9, 
                                 2005]

_______________________________________________________________________

                                 A BILL


 
 To amend the Employee Retirement Income Security Act of 1974 and the 
Internal Revenue Code of 1986 to reform the pension funding rules, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Pension Protection 
Act of 2005''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and 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.
Sec. 102. Funding rules for single-employer defined benefit pension 
                            plans.
Sec. 103. Benefit limitations under single-employer plans.
Sec. 104. Technical and conforming amendments.

        Subtitle B--Amendments to Internal Revenue Code of 1986

 [See introduced bill, page 71, line 1 through page 140, line 13].

                      Subtitle C--Other Provisions

Sec. 121. Modification of transition rule to pension funding 
                            requirements.
Sec. 122. Treatment of nonqualified deferred compensation plans when 
                            employer defined benefit plan in at-risk 
                            status [See introduced bill, page 142, line 
                            3 through page 143, line 16].

    TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS

 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. Removal of restrictions with respect to procedures applicable 
                            to disputes involving withdrawal liability.

        Subtitle B--Amendments to Internal Revenue Code of 1986

 [See introduced bill, page 200, line 8 through page 251, line 15].

                      TITLE III--OTHER PROVISIONS

Sec. 301. Interest rate assumption for determination of lump sum 
                            distributions.
Sec. 302. Interest rate assumption for applying benefit limitations to 
                            lump sum distributions [See introduced 
                            bill, page 254, line 6 through page 255, 
                            line 7].
Sec. 303. Distributions during working retirement.
Sec. 304. Other amendments relating to prohibited transactions.
Sec. 305. Correction period for certain transactions involving 
                            securities and commodities.
Sec. 306. Government Accountability Office pension funding report.

          TITLE IV--IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS

Sec. 401. Increases in PBGC premiums.

                          TITLE V--DISCLOSURE

Sec. 501. Defined benefit plan funding notices.
Sec. 502. Additional disclosure requirements.
Sec. 503. Section 4010 filings with the PBGC.

                      TITLE VI--INVESTMENT ADVICE

Sec. 601. Amendments to Employee Retirement Income Security Act of 1974 
                            providing prohibited transaction exemption 
                            for provision of investment advice.
Sec. 602. Amendments to Internal Revenue Code of 1986 providing 
                            prohibited transaction exemption for 
                            provision of investment advice [See 
                            introduced bill, page 287, line 15 through 
                            page 298, line 23].

                  TITLE VII--BENEFIT ACCRUAL STANDARDS

Sec. 701. Improvements in benefit accrual standards.

                   TITLE VIII--DEDUCTION LIMITATIONS

 [See introduced bill, page 299, line 1 through page 305, line 20].

 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 further by 
inserting after section 301 the following new section:

                      ``minimum funding standards

    ``Sec. 302. (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.--In the case of a single-employer plan, 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 contribution 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 required 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 the Secretary of the Treasury 
                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 24 months. 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.--Paragraph (1) 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 substantial business 
        hardship (as determined under subsection (c)(2)) 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 2005.

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 further by inserting after section 302 the 
following new section:

``minimum funding standards for single-employer defined benefit pension 
                                 plans

    ``Sec. 303. (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 defined benefit plan which is a single employer 
plan--
            ``(1) in any case in which the value of plan assets of the 
        plan (as reduced under subsection (f)(4)) 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);
            ``(2) in any case in which the value of plan assets of the 
        plan (as reduced under subsection (f)(4)) exceeds the funding 
        target of the plan for the plan year, the target normal cost of 
        the plan for the plan year reduced by such excess; or
            ``(3) in any other case, the target normal cost of the plan 
        for the plan year.
    ``(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 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.--The plan sponsor 
        shall determine, with respect to the shortfall amortization 
        base of the plan for any plan year, the amounts necessary to 
        amortize such shortfall amortization base, in level annual 
        installments over a period of 7 plan years beginning with such 
        plan year. For purposes of paragraph (1), the annual 
        installment of such amortization for each plan year in such 7-
        plan-year period is the shortfall amortization installment for 
        such plan year with respect to such shortfall amortization 
        base. 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 the excess (if any) of--
                    ``(A) the funding shortfall of such plan for such 
                plan year, over
                    ``(B) the sum of--
                            ``(i) 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, for 
                        such plan year and the 5 succeeding plan years, 
                        which have been determined with respect to the 
                        shortfall amortization bases of the plan for 
                        each of the 6 plan years preceding such plan 
                        year, and
                            ``(ii) the present value (as so determined) 
                        of the aggregate total of the waiver 
                        amortization installments for such plan year 
                        and the 5 succeeding plan years, which have 
                        been determined with respect to the waiver 
                        amortization bases of the plan for each of the 
                        5 plan years preceding such plan year.
                In any case in which the value of plan assets of the 
                plan (as reduced under subsection (f)(4)) 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.
            ``(4) Funding shortfall.--
                    ``(A) In general.--For purposes of this section, 
                except as provided in subparagraph (B), the funding 
                shortfall of a plan for any plan year is the excess (if 
                any) of--
                            ``(i) the funding target of the plan for 
                        the plan year, over
                            ``(ii) the value of plan assets of the plan 
                        (as reduced under subsection (f)(4)) for the 
                        plan year which are held by the plan on the 
                        valuation date.
                    ``(B) Transition rule.--
                            ``(i) In general.--For purposes of 
                        paragraph (3), in the case of a non-defecit 
                        reduction plan, subparagraph (A) shall be 
                        applied to plan years beginning after 2005 and 
                        before 2010 by substituting for the amount 
                        described in subparagraph (A)(i) the applicable 
                        percentage of the funding target of the plan 
                        for the plan year determined under the 
                        following table:


 
                                                                 The
                                                             applicable
 ``In the case of a plan year beginning in calendar year:    percentage
                                                                 is:
 
2006......................................................    92 percent
2007......................................................    94 percent
2008......................................................    96 percent
2009......................................................   98 percent.

                            ``(ii) Non-deficit reduction plan.--For 
                        purposes of clause (i), the term `non-deficit 
                        reduction plan' means any plan--
                                    ``(I) to which this part (as in 
                                effect on the day before the date of 
                                the enactment of the Pension Protection 
                                Act of 2005) applied for the plan year 
                                beginning in 2005, and
                                    ``(II) to which section 302(d) (as 
                                so in effect) did not apply for such 
                                plan year.
            ``(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 
        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 
        liabilities to participants and their beneficiaries under the 
        plan for 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)), 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.--The plan sponsor 
        shall determine, with respect to the waiver amortization base 
        of the plan for any plan year, the amounts necessary to 
        amortize such waiver amortization base, in level annual 
        installments over a period of 5 plan years beginning with the 
        succeeding plan year. For purposes of paragraph (1), the annual 
        installment of such amortization for each plan year in such 5-
        plan year period is the waiver amortization installment for 
        such plan year with respect to such waiver amortization 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 base for all preceding plan 
        years shall be reduced to zero.
    ``(f) Reduction of Minimum Required Contribution by Pre-Funding 
Balance and Funding Standard Carryover Balance.--
            ``(1) Election to maintain balances.--
                    ``(A) Pre-funding balance.--The plan sponsor of a 
                single-employer plan may elect to maintain a pre-
                funding 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 2005.--A plan is described in this 
                        clause if the plan--
                                    ``(I) was in effect for a plan year 
                                beginning in 2005, 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 pre-funding 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 pre-funding 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 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 pre-funding 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)), 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.
            ``(4) Effect of balances on amounts treated as value of 
        plan assets.--In the case of any plan maintaining a pre-funding 
        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 
                charge and waiver amortization charge.--For purposes of 
                subsection (c)(3), the value of plan assets is deemed 
                to be such amount, reduced by the amount of the pre-
                funding balance, but only if an election under 
                paragraph (2) applying any portion of the pre-funding 
                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.--
                For purposes of subsections (a), (c)(4)(A)(ii), and 
                (d)(2)(A), the value of plan assets is deemed to be 
                such amount, reduced by the amount of the pre-funding 
                balance and the funding standard carryover balance.
                    ``(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 pre-funding 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 pre-funding 
                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 pre-funding 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 pre-funding 
                balance.
            ``(6) Pre-funding balance.--
                    ``(A) In general.--A pre-funding 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.--As of the valuation date for each 
                plan year beginning after 2006, the pre-funding 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 (increased by 
                        interest on any portion of such minimum 
                        required contribution remaining unpaid as of 
                        the valuation date for the current plan year, 
                        at the effective interest rate for the plan for 
                        the preceding plan year, for the period 
                        beginning with the first day of such preceding 
                        plan year and ending on the date that payment 
                        of such portion is made).
                    ``(C) Decreases.--As of the valuation date for each 
                plan year after 2006, the pre-funding balance of a plan 
                shall be decreased (but not below zero) by the sum of--
                            ``(i) 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) 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.--As of the valuation date for each 
                plan year after 2006, the funding standard carryover 
                balance of a plan shall be decreased (but not below 
                zero) by the sum of--
                            ``(i) 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) any reduction in such balance 
                        elected under paragraph (5).
            ``(8) Adjustments to balances.--In determining the pre-
        funding balance or the funding standard carryover balance of a 
        plan as of the valuation date (before applying any increase or 
        decrease under paragraph (6) or (7)), the plan sponsor shall, 
        in accordance with regulations which shall be prescribed by the 
        Secretary of the Treasury, adjust such balance so as to reflect 
        the rate of net gain or loss (determined, notwithstanding 
        subsection (g)(3), on the basis of fair market value) 
        experienced by all plan assets for the period beginning with 
        the valuation date for the preceding plan year and ending with 
        the date preceding the valuation date for the current plan 
        year, properly taking 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 500 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 employees of 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) Authorization of use of actuarial value.--For 
        purposes of this section, the value of plan 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, except that--
                    ``(A) any such method providing for averaging of 
                fair market values may not provide for averaging of 
                such values over more than the 3 most recent plan years 
                (including the current plan year), and
                    ``(B) any such method may 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.
            ``(4) Accounting for contribution receipts.--For purposes 
        of this section--
                    ``(A) Contributions for prior plan years taken into 
                account.--For purposes of determining the value of plan 
                assets for any current plan year, in any case in which 
                a contribution properly allocable to amounts owed for a 
                preceding plan year is made on or after the valuation 
                date of the plan for such current plan year, such 
                contribution shall be taken into account, except that 
                any such contribution made during any such current plan 
                year beginning after 2006 shall be taken into account 
                only in an amount equal to its present value 
                (determined using the effective rate of interest for 
                the plan for the preceding plan year) as of the 
                valuation date of the plan for such current plan year.
                    ``(B) Contributions for current plan year 
                disregarded.--For purposes of determining the value of 
                plan assets for any current plan year, contributions 
                which are properly allocable to amounts owed for such 
                plan year shall not be taken into account, and, in the 
                case of any such contribution made before the valuation 
                date of the plan for such plan year, such value of plan 
                assets shall be reduced for interest on such amount 
                determined using the effective rate of interest of the 
                plan for the preceding plan year for the period 
                beginning when such payment was made and ending on the 
                valuation date of the plan.
            ``(5) Accounting for plan liabilities.--For purposes of 
        this section--
                    ``(A) Liabilities taken into account for current 
                plan year.--In determining the value of liabilities 
                under a plan for a plan year, liabilities shall be 
                taken into account to the extent attributable to 
                benefits (including any early retirement or similar 
                benefit) accrued or earned as of the beginning of the 
                plan year.
                    ``(B) Accruals during current plan year 
                disregarded.--For purposes of subparagraph (A), 
                benefits accrued or earned during such plan year shall 
                not be taken into account, irrespective of whether the 
                valuation date of the plan for such plan year is later 
                than the first day of such 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 liabilities 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 
                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 liabilities 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 liabilities 
                        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 liabilities 
                        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 a 3-year weighted average of 
                        yields on investment grade corporate bonds with 
                        varying maturities.
                            ``(ii) 3-year weighted average.--The term 
                        `3-year weighted average' means an average 
                        determined by using a methodology under which 
                        the most recent year is weighted 50 percent, 
                        the year preceding such year is weighted 35 
                        percent, and the second year preceding such 
                        year is weighted 15 percent.
                    ``(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 administrator, 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 2006 or 2007, 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 2005), 
                                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 
                        2006 and 66\2/3\ percent for plan years 
                        beginning in 2007.
            ``(3) Mortality table.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C), the mortality table used in 
                determining any present value or making any computation 
                under this section shall be the RP-2000 Combined 
                Mortality Table, using Scale AA, as published by the 
                Society of Actuaries, as in effect on the date of the 
                enactment of the Pension Protection Act of 2005 and as 
                revised from time to time under subparagraph (B).
                    ``(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 for a period not to exceed 10 years, a 
                        mortality table which meets the requirements of 
                        clause (ii) shall be used in determining any 
                        present value or making any computation under 
                        this section. A mortality table described in 
                        this clause shall cease to be in effect if the 
                        plan actuary determines at any time that such 
                        table does not meet the requirements of 
                        subclauses (I) and (II) of clause (ii).
                            ``(ii) Requirements.--A mortality table 
                        meets the requirements of this clause if the 
                        Secretary of the Treasury determines that--
                                    ``(I) such table reflects the 
                                actual experience of the pension plan 
                                and projected trends in such 
                                experience, and
                                    ``(II) such table is significantly 
                                different from the table described in 
                                subparagraph (A).
                            ``(iii) Deadline for disposition of 
                        application.--Any mortality table submitted to 
                        the Secretary of the Treasury for approval 
                        under this subparagraph shall be treated as in 
                        effect for the succeeding plan year 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 (ii).
                    ``(D) Transition rule.--Under regulations of the 
                Secretary of the Treasury, any difference in 
                assumptions as set forth in the mortality table 
                specified in subparagraph (A) and assumptions as set 
                forth in the mortality table described in section 
                302(d)(7)(C)(ii) (as in effect for plan years beginning 
                in 2005) shall be phased in ratably over the first 
                period of 5 plan years beginning in or after 2006 so as 
                to be fully effective for the fifth plan year.
            ``(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 single-employer 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 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
                            ``(ii) 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 any case in which a plan is 
                in at-risk status for a plan year, the funding target 
                of the plan for the plan year is the sum of--
                            ``(i) the present value of all liabilities 
                        to participants and their beneficiaries under 
                        the plan for the plan year, as determined by 
                        using, in addition to the actuarial assumptions 
                        described in subsection (g), the supplemental 
                        actuarial assumptions described in subparagraph 
                        (B), plus
                            ``(ii) a loading factor determined under 
                        subparagraph (C).
                    ``(B) Supplemental actuarial assumptions.--The 
                actuarial assumptions used in determining the valuation 
                of the funding target shall include, in addition to the 
                actuarial assumptions described in subsection (h), an 
                assumption that all participants will elect benefits at 
                such times and in such forms as will result in the 
                highest present value of liabilities under subparagraph 
                (A)(i).
                    ``(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 any case in 
        which a plan is in at-risk status for a plan year, the target 
        normal cost of the plan for such plan year shall be 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 under the actuarial 
                assumptions used under paragraph (1), plus
                    ``(B) the loading factor under paragraph (1)(C), 
                excluding the portion of the loading factor described 
                in paragraph (1)(C)(i).
            ``(3) Determination of at-risk status.--For purposes of 
        this subsection, a plan is in `at-risk status' for a plan year 
        if the funding target attainment percentage of the plan for the 
        preceding plan year was less than 60 percent.
            ``(4) 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 this 
                paragraph, the `transition percentage' for a plan year 
                is the product derived by multiplying--
                            ``(i) 20 percent, by
                            ``(ii) the number of plan years during the 
                        period described in subparagraph (A).
    ``(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 made after the valuation date for such plan 
        year shall be increased by interest, for the period from the 
        valuation date to 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) Interest penalty for failure to meet 
                accelerated quarterly payment schedule.--In any case in 
                which the plan has a funding shortfall for the 
                preceding plan year, if the required installment is not 
                paid in full, then the minimum required contribution 
                for the plan year (as increased under paragraph (2)) 
                shall be further increased by an amount equal to the 
                interest on the amount of the underpayment for the 
                period of the underpayment, using an interest rate 
                equal to the excess of--
                            ``(i) 175 percent of the Federal mid-term 
                        rate (as in effect under section 1274 of the 
                        Internal Revenue Code of 1986 for the 1st month 
                        of such plan year), over
                            ``(ii) the effective rate of interest for 
                        the plan for the plan year.
                    ``(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      The due date is:
 required installment:
  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 (without regard 
                                to any waiver under section 302(c)) to 
                                the plan for the plan year under this 
                                section, or
                                    ``(II) in the case of a plan year 
                                beginning after 2006, 100 percent of 
                                the minimum required contribution 
                                (without regard 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 that 
                would be described in subsection (f)(2)(B) if `100' 
                were substituted for `500' therein) 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 
                subparagraph:
                            ``(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 covered under 
        section 4021 of this Act and 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 defined benefit plan which is a single-
        employer plan 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 (i).
                    ``(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.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after 2005.

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

    (a) Prohibition of Shutdown Benefits and Other Unpredictable 
Contingent Event Benefits 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) Prohibition of Shutdown Benefits and Other Unpredictable 
Contingent Event Benefits Under Single-Employer Plans.--
            ``(1) In general.--No pension plan which is a single-
        employer plan may provide benefits to which participants are 
        entitled solely by reason of the occurrence of--
                    ``(A) a plant shutdown, or
                    ``(B) any other unpredictable contingent event.
            ``(2) Unpredictable contingent event.--For purposes of this 
        subsection, the term `unpredictable contingent event' means an 
        event other than--
                    ``(A) attainment of any age, performance of any 
                service, receipt or derivation of any compensation, or 
                the occurrence of death or disability, or
                    ``(B) an event which is reasonably and reliably 
                predictable (as determined by the Secretary of the 
                Treasury).''.
    (b) Other Limits on Benefits and Benefit Accruals.--
            (1) In general.--Section 206 of such Act (as amended by 
        subsection (a)) is amended further by adding at the end the 
        following new subsection:
    ``(h) Funding-Based Limits on Benefits and Benefit Accruals Under 
Single-Employer Plans.--
            ``(1) Limitations on plan amendments increasing liability 
        for benefits.--
                    ``(A) In general.--No amendment to 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 to the plan may take 
                effect during any plan year if the funding target 
                attainment percentage as of the valuation date of the 
                plan for such plan year is--
                            ``(i) less than 80 percent, or
                            ``(ii) would be less than 80 percent taking 
                        into account such amendment.
                For purposes of this subparagraph, any increase in 
                benefits under the plan by reason of an increase in the 
                benefit rate provided under the plan or on the basis of 
                an increase in compensation shall be treated as 
                affected by plan amendment.
                    ``(B) Exemption.--Subparagraph (A) shall cease to 
                apply with respect to any plan year, effective as of 
                the first date 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 a funding 
                        target attainment percentage of 80 percent.
            ``(2) Funding-based limitation on certain forms of 
        distribution.--
                    ``(A) In general.--A single-employer plan shall 
                provide that, in any case in which the plan's funding 
                target attainment percentage as of the valuation date 
                of the plan for a plan year is less than 80 percent, 
                the plan may not after such date pay any prohibited 
                payment (as defined in section 206(e)).
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to any plan for any plan year if the terms of such plan 
                (as in effect for the period beginning on June 29, 
                2005, and ending with such plan year) provide for no 
                benefit accruals with respect to any participant during 
                such period.
            ``(3) Limitations on benefit accruals for plans with severe 
        funding shortfalls.--A single-employer plan shall provide that, 
        in any case in which the plan's funding target attainment 
        percentage as of the valuation date of the plan for a plan year 
        is less than 60 percent, all future benefit accruals under the 
        plan shall cease as of such date.
            ``(4) New plans.--Paragraphs (1) and (3) 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.
            ``(5) Presumed underfunding for purposes of benefit 
        limitations based on prior year's funding status.--
                    ``(A) Presumption of continued underfunding.--In 
                any case in which a benefit limitation under paragraph 
                (1), (2), or (3) has been applied to a plan with 
                respect to the plan year preceding the current plan 
                year, the funding target attainment percentage of the 
                plan as of the valuation date of the plan for the 
                current plan year shall be presumed to be equal to the 
                funding target attainment percentage of the plan as of 
                the valuation date of the plan for the preceding plan 
                year until the enrolled actuary of the plan certifies 
                the actual funding target attainment percentage of the 
                plan as of the valuation date of the plan for the 
                current plan year.
                    ``(B) Presumption of underfunding after 10th 
                month.--In any case in which no such certification is 
                made with respect to the plan before the first day of 
                the 10th month of the current plan year, for purposes 
                of paragraphs (1), (2), and (3), the plan's funding 
                target attainment percentage shall be conclusively 
                presumed to be less than 60 percent as of the first day 
                of such 10th month, and such day shall be deemed, for 
                purposes of such paragraphs, to be the valuation date 
                of the plan for the current plan year.
                    ``(C) Presumption of underfunding after 4th month 
                for nearly underfunded plans.--In any case in which--
                            ``(i) a benefit limitation under paragraph 
                        (1), (2), or (3) did not apply to a plan with 
                        respect to the plan year preceding the current 
                        plan year, but the 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 
                        funding target attainment percentage of the 
                        plan as of the valuation date 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 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 funding target 
                attainment percentage of the plan as of the valuation 
                date of the plan for such preceding plan year.
            ``(6) Restoration by plan amendment of benefits or benefit 
        accrual.--In any case in which a prohibition under paragraph 
        (2) of the payment of lump sum distributions or benefits in any 
        other accelerated form or a cessation of benefit accruals under 
        paragraph (3) is applied to a plan with respect to any plan 
        year and such prohibition or cessation, as the case may be, 
        ceases to apply to any subsequent plan year, the plan may 
        provide for the resumption of such benefit payment or such 
        benefit accrual only by means of the adoption of a plan 
        amendment after the valuation date of the plan for such 
        subsequent plan year. The preceding sentence shall not apply to 
        a prohibition or cessation required by reason of paragraph (5).
            ``(7) Funding target attainment percentage.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `funding target attainment percentage' means, 
                with respect to any plan for any plan year, the ratio 
                (expressed as a percentage) which--
                            ``(i) the value of plan assets for the plan 
                        year (as determined under section 303(g)) 
                        reduced by the pre-funding balance and the 
                        funding standard carryover balance (within the 
                        meaning of section 303(f)), bears to
                            ``(ii) the funding target of the plan for 
                        the plan year (as determined under section 
                        303(d)(1), but without regard to section 
                        303(i)(1)).
                    ``(B) Application to plans which are fully funded 
                without regard to reductions for funding balances.--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 under subparagraph 
                (A)(i) for the pre-funding balance and the funding 
                standard carryover balance), subparagraph (A) shall be 
                applied without regard to such reduction.''.
            (2) Notice requirement.--
                    (A) In general.--Section 101 of such Act (29 U.S.C. 
                1021) is amended--
                            (i) by redesignating subsection (j) as 
                        subsection (k); and
                            (ii) 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 after the plan has become subject to the restriction described 
in section 206(h)(2) or at such other time as may be determined by the 
Secretary.''.
                    (B) Enforcement.--Section 502(c)(4) of such Act (29 
                U.S.C. 1132(c)(4)) is amended by striking ``section 
                302(b)(7)(F)(vi)'' and inserting ``sections 101(j) and 
                302(b)(7)(F)(vi)''.
    (c) Special Rule for Plan Amendments.--A plan shall not fail to 
meet the requirements of section 204(g) of the Employee Retirement 
Income Security Act of 1974 or section 411(d)(6) of the Internal 
Revenue Code of 1986 solely by reason of the adoption by the plan of an 
amendment necessary to meet the requirements of the amendments made by 
this section.
    (d) Effective Date.--
            (1) Shutdown benefits.--Except as provided in paragraph 
        (3), the amendments made by subsection (a) shall apply with 
        respect to plant shutdowns, or other unpredictable contingent 
        events, occurring after 2006.
            (2) Other benefits.--Except as provided in paragraph (3), 
        the amendments made by subsection (b) shall apply with respect 
        to plan years beginning after 2006.
            (3) 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 the date of the enactment of this 
        Act, the amendments made by this subsection 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, 2009.
        For purposes of clause (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 subsection shall not be treated as a termination of such 
        collective bargaining agreement.

SEC. 104. 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 101(f)(2)(B), by striking clause (i) and 
        inserting the following:
                            ``(i) a statement as to whether--
                                    ``(I) in the case of a single-
                                employer plan, the plan's funding 
                                target attainment percentage (as 
                                defined in section 303(d)(2)), or
                                    ``(II) in the case of a 
                                multiemployer plan, the plan's funded 
                                percentage (as defined in section 
                                305(d)(2)),
                        is at least 100 percent (and, if not, the 
                        actual percentage);'';
            (3) 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)'';
            (4) 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).'';
            (5) in section 203(a)(3)(C), by striking ``section 
        302(c)(8)'' and inserting ``section 302(d)(2)'';
            (6) in section 204(g)(1), by striking ``section 302(c)(8)'' 
        and inserting ``section 302(d)(2)'';
            (7) in section 204(i)(2)(B), by striking ``section 
        302(c)(8)'' and inserting ``section 302(d)(2)'';
            (8) 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))'';
            (9) 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)'';
            (10) 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)'';
            (11) 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
            (12) 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 2005''.
    (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 4011(b) (29 U.S.C. 1311(b)), by striking 
        ``to which'' and all that follows and inserting ``for any plan 
        year for which the plan's funding target attainment percentage 
        (as defined in section 303(d)(2)) is at least 90 percent.'';
            (5) in section 4062(c)(1) (29 U.S.C. 1362(c)(1)), by 
        striking paragraphs (1), (2), and (3) and inserting the 
        following:
            ``(1)(A) in the case of a single-employer plan, the sum of 
        the shortfall amortization charge (within the meaning of 
        section 303(c)(1) of this Act and 430(c)(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(c)(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), or
            ``(B) in the case of a multiemployer plan, the outstanding 
        balance of the accumulated funding deficiencies (within the 
        meaning of section 304(a)(2) of this Act and section 431(a) of 
        the Internal Revenue Code of 1986) of the plan (if any) (which, 
        for purposes of this subparagraph, shall include the amount of 
        any increase in such accumulated funding deficiencies of the 
        plan which would result if all pending applications for waivers 
        of the minimum funding standard under section 302(c) of this 
        Act or section 412(c) of such Code and for extensions of the 
        amortization period under section 304(d) of this Act or section 
        431(d) of such Code 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),
            ``(2)(A) in the case of a single-employer plan, the sum of 
        the waiver amortization charge (within the meaning of section 
        303(e)(1) of this Act and 430(j)(2) 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(j)(3) of such Code, or
            ``(B) in the case of a multiemployer plan, the outstanding 
        balance of the amount of waived funding deficiencies of the 
        plan waived before such date under section 302(c) of this Act 
        or section 412(c) of such Code (if any), and
            ``(3) in the case of a multiemployer plan, the outstanding 
        balance of the amount of decreases in the minimum funding 
        standard allowed before such date under section 304(d) of this 
        Act or section 431(d) of such Code (if any);'';
            (6) in section 4071 (29 U.S.C. 1371), by striking 
        ``302(f)(4)'' and inserting ``303(k)(4)'';
            (7) 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)'';
            (8) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)), by 
        striking ``303(a)'' and inserting ``302(c)'';
            (9) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)), by 
        striking ``303(c)'' and inserting ``302(c)(3)''; and
            (10) 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(d)(2) 
and 431(d)(1), (d)(2), and (e)(2)(A)''.
    (d) Repeal of Expired Authority for Temporary Variances.--
            (1) In general.--Section 207 of such Act (29 U.S.C. 1057) 
        is repealed.
            (2) Conforming amendment.--The table of contents in section 
        1 of such Act is amended by striking the item relating to 
        section 207.
    (e) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after 2005.

        Subtitle B--Amendments to Internal Revenue Code of 1986

SEC. 111. [SEE INTRODUCED BILL, PAGE 71, LINE 1 THROUGH PAGE 140, LINE 
              13.]

                      Subtitle C--Other Provisions

SEC. 121. 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 2005.
    (b) Modified Rules.--The rules described in this subsection are as 
follows:
            (1) For purposes of section 430(i)(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) Notwithstanding section 303(f)(4)(B) of such Act, for 
        purposes of section 303(c)(4)(B) of such Act, the value of plan 
        assets is deemed to be such amount, reduced by the amount of 
        the pre-funding balance if, pursuant to a binding written 
        agreement with the Pension Benefit Guaranty Corporation entered 
        into before January 1, 2006, the funding standard carryover 
        balance is not available to reduce the minimum required 
        contribution for the plan year.
            (4) Section 430(c)(4)(B) of such Code and section 
        303(c)(4)(B) of such Act (relating to phase-in of funding 
        target for determination of funding shortfall) shall each be 
        applied by substituting ``2011'' for ``2010'' therein and by 
        substituting for the table therein the following:


 
                                                                 The
                                                             applicable
  In the case of a plan year beginning in calendar year:     percentage
                                                                 is:
 
2006......................................................    90 percent
2007......................................................    92 percent
2008......................................................    94 percent
2009......................................................    96 percent
2010......................................................   98 percent.

    (c) Definitions.--Any term used in this section which is also used 
in section 303 of such Act shall have the meaning provided such term in 
such section.
    (d) Conforming Amendment.--
            (1) Section 769 of the Retirement Protection Act of 1994 
        (26 U.S.C. 412 note) is amended by striking subsection (c).
            (2) The amendment made this subsection shall apply to plan 
        years beginning after 2005.

SEC. 122. TREATMENT OF NONQUALIFIED DEFERRED COMPENSATION PLANS WHEN 
              EMPLOYER DEFINED BENEFIT PLAN IN AT-RISK STATUS.

    [See introduced bill, page 142, line 3 through page 143, line 16]

    TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS

 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 section 102) is 
amended further by inserting after section 303 the following new 
section:

          ``minimum funding standards for multiemployer plans

    ``Sec. 304. (a) In General.--For purposes of 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 in existence on 
                        January 1, 1974, the unfunded past service 
                        liability under the plan on the first day of 
                        the first plan year to which this section 
                        applies, over a period of 40 plan years,
                            ``(ii) in the case of a plan which comes 
                        into existence after January 1, 1974, 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,
                            ``(iii) 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,
                            ``(iv) separately, with respect to each 
                        plan year, the net experience loss (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(v) separately, with respect to each plan 
                        year, the net loss (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 15 plan years,
                    ``(C) the amount necessary to amortize each waived 
                funding deficiency (within the meaning of section 
                302(c)(3)) for each prior plan year in equal annual 
                installments (until fully amortized) over a period of 
                15 plan years,
                    ``(D) the amount necessary to amortize in equal 
                annual installments (until fully 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 2005), 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 2005).
            ``(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 2005), 
                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 to plan 
        years before 2006.--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 2005) over any 
        period beginning with a plan year beginning before 2006, in 
        lieu of the amortization described in paragraphs (2)(B) and 
        (3)(B), such amount shall continue to be amortized under such 
        section as so in effect.
            ``(5) Combining and offsetting amounts to be amortized.--
        Under regulations prescribed by the Secretary of the Treasury, 
        amounts required to be amortized under paragraph (2) or 
        paragraph (3), as the case may be--
                    ``(A) may be combined into one amount under such 
                paragraph to be amortized over a period determined on 
                the basis of the remaining amortization period for all 
                items entering into such combined amount, and
                    ``(B) may be offset against amounts 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.--Except as provided in subsection (c)(9), 
        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) Certain amortization charges and credits.--In the 
        case of a plan which, immediately before the date of the 
        enactment of the Multiemployer Pension Plan Amendments Act of 
        1980, was a multiemployer plan (within the meaning of section 
        3(37) as in effect immediately before such date)--
                    ``(A) any amount described in paragraph (2)(B)(ii), 
                (2)(B)(iii), or (3)(B)(i) of this subsection which 
                arose in a plan year beginning before such date shall 
                be amortized in equal annual installments (until fully 
                amortized) over 40 plan years, beginning with the plan 
                year in which the amount arose;
                    ``(B) any amount described in paragraph (2)(B)(iv) 
                or (3)(B)(ii) of this subsection which arose in a plan 
                year beginning before such date shall be amortized in 
                equal annual installments (until fully amortized) over 
                20 plan years, beginning with the plan year in which 
                the amount arose;
                    ``(C) any change in past service liability which 
                arises during the period of 3 plan years beginning on 
                or after such date, and results from a plan amendment 
                adopted before such date, shall be amortized in equal 
                annual installments (until fully amortized) over 40 
                plan years, beginning with the plan year in which the 
                change arises; and
                    ``(D) any change in past service liability which 
                arises during the period of 2 plan years beginning on 
                or after such date, and results from the changing of a 
                group of participants from one benefit level to another 
                benefit level under a schedule of plan benefits which--
                            ``(i) was adopted before such date, and
                            ``(ii) was effective for any plan 
                        participant before the beginning of the first 
                        plan year beginning on or after such date,
                shall be amortized in equal annual installments (until 
                fully amortized) over 40 plan years, beginning with the 
                plan year in which the change arises.
            ``(8) Special rules relating to charges and credits to 
        funding standard account.--For purposes of this part--
                    ``(A) Withdrawal liability.--Any amount received by 
                a multiemployer plan in payment of all or part of an 
                employer's 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 2005) 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)(iv) shall not apply to 
                the amount so charged).
                    ``(F) Financial assistance.--Any amount of any 
                financial assistance from the Pension Benefit Guaranty 
                Corporation to any plan, and any repayment of such 
                amount, shall be taken into account under this section 
                and section 412 in such manner as is determined by the 
                Secretary of the Treasury.
                    ``(G) Short-term benefits.--To the extent that any 
                plan amendment increases the unfunded past service 
                liability under the plan by reason of an increase in 
                benefits which are payable under the plan during a 
                period that does not exceed 14 years, paragraph 
                (2)(B)(iii) 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.--In the case of 
                                plan years beginning after December 31, 
                                1995, 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 required 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.
            ``(9) Interest rule for waivers and extensions.--The 
        interest rate applicable for any plan year for purposes of 
        computing the amortization charge described in subsection 
        (b)(2)(C) and in connection with an extension granted under 
        subsection (d) shall be the greater of--
                    ``(A) 150 percent of the Federal mid-term rate (as 
                in effect under section 1274 of the Internal Revenue 
                Code of 1986 for the 1st month of such plan year), or
                    ``(B) the rate of interest used under the plan for 
                determining costs.
    ``(d) Extension of Amortization Periods for Multiemployer Plans.--
In the case of a multiemployer plan--
            ``(1) Extension.--The period of years required to amortize 
        any unfunded liability (described in any clause of subsection 
        (b)(2)(B)) of any multiemployer plan may be extended (in 
        addition to any extension under paragraph (2)) by the Secretary 
        of the Treasury for a period of time (not in excess of 5 years) 
        if such Secretary determines that such extension would carry 
        out the purposes of this Act and would provide adequate 
        protection for participants under the plan and their 
        beneficiaries and if he determines that the failure to permit 
        such extension would--
                    ``(A) result in--
                            ``(i) a substantial risk to the voluntary 
                        continuation of the plan, or
                            ``(ii) a substantial curtailment of pension 
                        benefit levels or employee compensation, and
                    ``(B) be adverse to the interests of plan 
                participants in the aggregate.
            ``(2) Additional extension.--The period of years required 
        to amortize any unfunded liability (described in any clause of 
        subsection (b)(2)(B)) of any multiemployer plan may be extended 
        (in addition to any extension under paragraph (1)) by the 
        Secretary of the Treasury for a period of time (not in excess 
        of 5 years) if such Secretary determines that--
                    ``(A) absent the extension, the plan would have an 
                accumulated funding deficiency in any of the next 10 
                plan years,
                    ``(B) the plan sponsor has adopted a plan to 
                improve the plan's funding status, and
                    ``(C) taking into account the extension, the plan 
                is projected to have suficient assets to timely pay its 
                expected benefit liabilities and other anticipated 
                expenditures
            ``(3) Advance notice.--
                    ``(A) In general.--The Secretary of the Treasury 
                shall, before granting an extension under this section, 
                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) Conforming Amendments.--
            (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 section 102 of this Act) is amended further by 
        inserting after the item relating to section 303 the following 
        new item:

``Sec. 304. Minimum funding standards for multiemployer plans.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after 2005.

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 further by inserting after section 
304 the following new section:

``additional funding rules for multiemployer plans in endangered status 
                           or critical status

    ``Sec. 305. (a) Annual Certification by Plan Actuary.--
            ``(1) In general.--During the 90-day period beginning on 
        first day of each plan year of a multiemployer plan, the plan 
        actuary shall certify to the Secretary of the Treasury whether 
        or not the plan is in endangered status for such plan year and 
        whether or not the plan is in critical status for such plan 
        year.
            ``(2) Actuarial projections of assets and liabilities.--
                    ``(A) In general.--In making the determinations 
                under paragraph (1), the plan actuary shall make 
                projections under subsections (b)(2) and (c)(2) for the 
                current and succeeding plan years, using reasonable 
                actuarial assumptions and methods, of the current value 
                of the assets of the plan and the present value of all 
                liabilities to participants and beneficiaries under the 
                plan for the current plan year as of the beginning of 
                such year, as based on the actuarial statement prepared 
                for the preceding plan year under section 103(d).
                    ``(B) Determinations of future contributions.--Any 
                such actuarial projection of plan assets shall assume--
                            ``(i) reasonably anticipated employer and 
                        employee contributions for the current and 
                        succeeding plan years, assuming that the terms 
                        of the one or more collective 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 and employee 
                        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 
                        continued application of such terms 
                        unreasonable.
            ``(3) Presumed status in absence of timely actuarial 
        certification.--If certification under this subsection is not 
        made before the end of the 90-day period specified in paragraph 
        (1), the plan shall be presumed to be in critical status for 
        such plan year until such time as the plan actuary makes a 
        contrary certification.
            ``(4) Notice.--In any case in which a multiemployer plan is 
        certified to be in endangered status under paragraph (1) or 
        enters into critical status, the plan sponsor shall, not later 
        than 30 days after the date of the certification or entry, 
        provide notification of the endangered or critical status to 
        the participants and beneficiaries, the bargaining parties, the 
        Pension Benefit Guaranty Corporation, the Secretary of the 
        Treasury, and the Secretary of Labor.
    ``(b) Funding Rules for Multiemployer Plans in Endangered Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in endangered status for a plan year and no funding 
        improvement plan under this subsection with respect to such 
        multiemployer plan is in effect for the plan year, the plan 
        sponsor shall, in accordance with this subsection, amend the 
        multiemployer plan to include a funding improvement plan upon 
        approval thereof by the bargaining parties under this 
        subsection. The amendment shall be adopted not later than 240 
        days after the date on which the plan is certified to be in 
        endangered status under subsection (a)(1).
            ``(2) Endangered status.--A multiemployer plan is in 
        endangered status for a plan year if, as determined by the plan 
        actuary under subsection (a)--
                    ``(A) the plan's funded percentage for such plan 
                year is less than 80 percent, or
                    ``(B) the plan has an accumulated funding 
                deficiency for such plan year under section 304 or is 
                projected to have such an accumulated funding 
                deficiency for any of the 6 succeeding plan years, 
                taking into account any extension of amortization 
                periods under section 304(d).
            ``(3) Funding improvement plan.--
                    ``(A) Benchmarks.--A funding improvement plan shall 
                consist of amendments to the plan formulated to 
                provide, under reasonable actuarial assumptions, for 
                the attainment, during the funding improvement period 
                under the funding improvement plan, of the following 
                benchmarks:
                            ``(i) Increase in funded percentage.--An 
                        increase in the plan's funded percentage such 
                        that--
                                    ``(I) the difference between 100 
                                percent and the plan's funded 
                                percentage for the last year of the 
                                funding improvement period, is not more 
                                than
                                    ``(II) \2/3\ of the difference 
                                between 100 percent and the plan's 
                                funded percentage for the first year of 
                                the funding improvement period.
                            ``(ii) Avoidance of accumulated funding 
                        deficiencies.--No accumulated funding 
                        deficiency for any plan year during the funding 
                        improvement period (taking into account any 
                        extension of amortization periods under section 
                        304(d)).
                    ``(B) Funding improvement period.--The funding 
                improvement period for any funding improvement plan 
                adopted pursuant to this subsection is the 10-year 
                period beginning on the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the funding improvement plan, 
                        or
                            ``(ii) the first day of the first plan year 
                        of the multiemployer plan following the plan 
                        year in which occurs the first date after the 
                        day of the certification as of which collective 
                        bargaining agreements covering on the day of 
                        such certification at least 75 percent of 
                        active participants in such multiemployer plan 
                        have expired.
                    ``(C) Special rules for certain seriously 
                underfunded plans.--
                            ``(i) In the case of a plan in which the 
                        funded percentage of a plan for the plan year 
                        is 70 percent or less, subparagraph (A)(i)(II) 
                        shall be applied by substituting `\4/5\' for 
                        `\2/3\' and subparagraph (B) shall be applied 
                        by substituting `the 15-year period' for `the 
                        10-year period'.
                            ``(ii) In the case of a plan in which the 
                        funded percentage of a plan for the plan year 
                        is more than 70 percent but less than 80 
                        percent, and--
                                    ``(I) the plan actuary certifies 
                                within 30 days after certification 
                                under subsection (a)(1) that the plan 
                                is not able to attain the increase 
                                described in subparagraph (A)(i) over 
                                the period described in subparagraph 
                                (B), and
                                    ``(II) the plan year is prior to 
                                the day described in subparagraph 
                                (B)(ii),
                        subparagraph (A)(i)(II) shall be applied by 
                        substituting `\4/5\' for `\2/3\' and 
                        subparagraph (B) shall be applied by 
                        substituting `the 15-year period' for `the 10-
                        year period'.
                            ``(iii) For any plan year following the 
                        year described in clause (ii)(II), subparagraph 
                        (A)(i)(II) and subparagraph (B) shall apply, 
                        except that for each plan year ending after 
                        such date for which the plan actuary certifies 
                        (at the time of the annual certification under 
                        subsection (a)(1) for such plan year) that the 
                        plan is not able to attain the increase 
                        described in subparagraph (A)(i) over the 
                        period described in subparagraph (B), 
                        subparagraph (B) shall be applied by 
                        substituting `the 15-year period' for `the 10-
                        year period'.
                    ``(D) Reporting.--A summary of any funding 
                improvement plan or modification thereto adopted during 
                any plan year, together with annual updates regarding 
                the funding ratio of the plan, shall be included in the 
                annual report for such plan year under section 104(a) 
                and in the summary annual report described in section 
                104(b)(3).
            ``(4) Development of funding improvement plan.--
                    ``(A) Actions by plan sponsor pending approval.--
                Pending the approval of a funding improvement plan 
                under this paragraph, the plan sponsor shall take all 
                reasonable actions, consistent with the terms of the 
                plan and applicable law, necessary to ensure--
                            ``(i) an increase in the plan's funded 
                        percentage, and
                            ``(ii) postponement of an accumulated 
                        funding deficiency for at least 1 additional 
                        plan year.
                Such actions include applications for extensions of 
                amortization periods under section 304(d), 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.
                    ``(B) Recommendations by plan sponsor.--
                            ``(i) In general.--During the period of 90 
                        days following the date on which a 
                        multiemployer plan is certified to be in 
                        endangered status, the plan sponsor shall 
                        develop and provide to the bargaining parties 
                        alternative proposals for revised benefit 
                        structures, contribution structures, or both, 
                        which, if adopted as amendments to the plan, 
                        may be reasonably expected to meet the 
                        benchmarks described in paragraph (3)(A). Such 
                        proposals shall include--
                                    ``(I) at least one proposal for 
                                reductions in the amount of future 
                                benefit accruals necessary to achieve 
                                the benchmarks, assuming no amendments 
                                increasing contributions under the plan 
                                (other than amendments increasing 
                                contributions necessary to achieve the 
                                benchmarks after amendments have 
                                reduced future benefit accruals to the 
                                maximum extent permitted by law), and
                                    ``(II) at least one proposal for 
                                increases in contributions under the 
                                plan necessary to achieve the 
                                benchmarks, assuming no amendments 
                                reducing future benefit accruals under 
                                the plan.
                            ``(ii) Requests by bargaining parties.--
                        Upon the request of any bargaining party who--
                                    ``(I) employs at least 5 percent of 
                                the active participants, or
                                    ``(II) represents as an employee 
                                organization, for purposes of 
                                collective bargaining, at least 5 
                                percent of the active participants,
                        the plan sponsor shall provide all such parties 
                        information as to other combinations of 
                        increases in contributions and reductions in 
                        future benefit accruals which would result in 
                        achieving the benchmarks.
                            ``(iii) Other information.--The plan 
                        sponsor may, as it deems appropriate, prepare 
                        and provide the bargaining parties with 
                        additional information relating to contribution 
                        structures or benefit structures or other 
                        information relevant to the funding improvement 
                        plan.
            ``(5) Maintenance of contributions pending approval of 
        funding improvement plan.--Pending approval of a funding 
        improvement plan by the bargaining parties with respect to a 
        multiemployer plan, the multiemployer plan may not be amended 
        so as to provide--
                    ``(A) a reduction in the level of contributions for 
                participants who are not in pay status,
                    ``(B) a suspension of contributions with respect to 
                any period of service, or
                    ``(C) any new direct or indirect exclusion of 
                younger or newly hired employees from plan 
                participation.
            ``(6) Benefit restrictions pending approval of funding 
        improvement plan.--Pending approval of a funding improvement 
        plan by the bargaining parties with respect to a multiemployer 
        plan--
                    ``(A) Restrictions on lump sum and similar 
                distributions.--In any case in which the present value 
                of a participant's accrued benefit under the plan 
                exceeds $5,000, such benefit may not be distributed as 
                an immediate distribution or in any other accelerated 
                form.
                    ``(B) Prohibition on benefit increases.--
                            ``(i) In general.--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.
                            ``(ii) Exception.--Clause (i) shall not 
                        apply to any plan amendment which is required 
                        as a condition of qualification under part I of 
                        subchapter D of chapter 1 of subtitle A of the 
                        Internal Revenue Code of 1986.
            ``(7) Default critical status if no funding improvement 
        plan adopted.--If no plan amendment adopting a funding 
        improvement plan has been adopted by the end of the 240-day 
        period referred to in subsection (b)(1), the plan enters into 
        critical status as of the first day of the succeeding plan 
        year.
            ``(8) Restrictions upon approval of funding improvement 
        plan.--Upon adoption of a funding improvement plan with respect 
        to a multiemployer plan, the plan may not be amended--
                    ``(A) so as to be inconsistent with the funding 
                improvement plan, or
                    ``(B) so as to increase future benefit accruals, 
                unless the plan actuary certifies in advance that, 
                after taking into account the proposed increase, the 
                plan is reasonably expected to meet the the benchmarks 
                described in paragraph (3)(A).
    ``(c) Funding Rules for Multiemployer Plans in Critical Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in critical status for a plan year as described in 
        paragraph (2) (or otherwise enters into critical status under 
        this section) and no rehabilitation plan under this subsection 
        with respect to such multiemployer plan is in effect for the 
        plan year, the plan sponsor shall, in accordance with this 
        subsection, amend the multiemployer plan to include a 
        rehabilitation plan under this subsection. The amendment shall 
        be adopted not later than 240 days after the date on which the 
        plan enters into critical status.
            ``(2) Critical status.--A multiemployer plan is in critical 
        status for a plan year if--
                    ``(A) the plan is in endangered status for the 
                preceding plan year and the requirements of subsection 
                (b)(1) were not met with respect to the plan for such 
                preceding plan year, or
                    ``(B) as determined by the plan actuary under 
                subsection (a), the plan is described in paragraph (3).
            ``(3) Criticality description.--For purposes of paragraph 
        (2)(B), a plan is described in this paragraph if the plan is 
        described in at least one of the following subparagraphs:
                    ``(A) A plan is described in this subparagraph if, 
                as of the beginning of the current plan year--
                            ``(i) the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the sum of--
                                    ``(I) the market value of plan 
                                assets, plus
                                    ``(II) the present value of the 
                                reasonably anticipated employer and 
                                employee contributions for the current 
                                plan year and each of the 6 succeeding 
                                plan years, assuming that the terms of 
                                the one or more collective bargaining 
                                agreements pursuant to which the plan 
                                is maintained for the current plan year 
                                continue in effect for succeeding plan 
                                years,
                        is less than the present value of all 
                        nonforfeitable benefits for all participants 
                        and beneficiaries projected to be payable under 
                        the plan during the current plan year and each 
                        of the 6 succeeding plan years (plus 
                        administrative expenses for such plan years).
                    ``(B) A plan is described in this subparagraph if, 
                as of the beginning of the current plan year, the sum 
                of--
                            ``(i) the market value of plan assets, plus
                            ``(ii) the present value of the reasonably 
                        anticipated employer and employee contributions 
                        for the current plan year and each of the 4 
                        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 remain in 
                        effect for succeeding plan years,
                is less than the present value of all nonforfeitable 
                benefits for all participants and beneficiaries 
                projected to be payable under the plan during the 
                current plan year and each of the 4 succeeding plan 
                years (plus administrative expenses for such plan 
                years).
                    ``(C) A plan is described in this subparagraph if--
                            ``(i) as of the beginning of the current 
                        plan year, the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the plan has an accumulated funding 
                        deficiency for the current plan year or is 
                        projected to have an accumulated funding 
                        deficiency for any of the 4 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--
                            ``(i)(I) the plan's normal cost for the 
                        current plan year, plus interest (determined at 
                        the rate used for determining cost under the 
                        plan) for the current plan year on the amount 
                        of unfunded benefit liabilities under the plan 
                        as of the last date of the preceding plan year, 
                        exceeds
                            ``(II) the present value, as of the 
                        beginning of the current plan year, 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, 
                        as of the beginning of the current plan year, 
                        of nonforfeitable benefits of active 
                        participants, and
                            ``(iii) the plan is projected to have an 
                        accumulated funding deficiency for the current 
                        plan year or any of the 4 succeeding plan 
                        years, not taking into account any extension of 
                        amortization periods under section 304(d).
                    ``(E) A plan is described in this subparagraph if--
                            ``(i) the funded percentage of the plan is 
                        greater than 65 percent for the current plan 
                        year, and
                            ``(ii) the plan is projected to have an 
                        accumulated funding deficiency during any of 
                        the succeeding 3 plan years, not taking into 
                        account any extension of amortization periods 
                        under section 304(d).
            ``(4) Rehabilitation plan.--
                    ``(A) In general.--A rehabilitation plan shall 
                consist of--
                            ``(i) amendments to the plan providing 
                        (under reasonable actuarial assumptions) for 
                        measures, agreed to by the bargaining parties, 
                        to increase contributions, reduce plan 
                        expenditures (including plan mergers and 
                        consolidations), or reduce future benefit 
                        accruals, or to take any combination of such 
                        actions, determined necessary to cause the plan 
                        to cease, during the rehabilitation period, to 
                        be in critical status, or
                            ``(ii) reasonable measures to forestall 
                        possible insolvency (within the meaning of 
                        section 4245) if the plan sponsor determines 
                        that, upon exhaustion of all reasonable 
                        measures, the plan would not cease during the 
                        rehabilitation period to be in critical status.
                    ``(B) Rehabilitation period.--The rehabilitation 
                period for any rehabilitation plan adopted pursuant to 
                this subsection is the 10-year period beginning on the 
                earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the rehabilitation plan, or
                            ``(ii) the first day of the first plan year 
                        of the multiemployer plan following the plan 
                        year in which occurs the first date, after the 
                        date of the plan's entry into critical status, 
                        as of which collective bargaining agreements 
                        covering at least 75 percent of active 
                        participants in such multiemployer plan 
                        (determined as of such date of entry) have 
                        expired.
                    ``(C) Reporting.--A summary of any rehabilitation 
                plan or modification thereto adopted during any plan 
                year, together with annual updates regarding the 
                funding ratio of the plan, shall be included in the 
                annual report for such plan year under section 104(a) 
                and in the summary annual report described in section 
                104(b)(3).
            ``(5) Development of rehabilitation plan.--
                    ``(A) Proposals by plan sponsor.--
                            ``(i) In general.--Within 90 days after the 
                        date of entry into critical status (or the date 
                        as of which the requirements of subsection 
                        (b)(1) are not met with respect to the plan), 
                        the plan sponsor shall propose to all 
                        bargaining parties a range of alternative 
                        schedules of increases in contributions and 
                        reductions in future benefit accruals that 
                        would serve to carry out a rehabilitation plan 
                        under this subsection.
                            ``(ii) Proposal assuming no contribution 
                        increases.--Such proposals shall include, as 
                        one of the proposed schedules, a schedule of 
                        those reductions in future benefit accruals 
                        that would be necessary to cause the plan to 
                        cease to be in critical status if there were no 
                        further increases in rates of contribution to 
                        the plan.
                            ``(iii) Proposal where contributions are 
                        necessary.--If the plan sponsor determines that 
                        the plan will not cease to be in critical 
                        status during the rehabilitation period unless 
                        the plan is amended to provide for an increase 
                        in contributions, the plan sponsor's proposals 
                        shall include a schedule of those increases in 
                        contribution rates that would be necessary to 
                        cause the plan to cease to be in critical 
                        status if future benefit accruals were reduced 
                        to the maximum extent permitted by law.
                    ``(B) Requests for additional schedules.--Upon the 
                request of any bargaining party who--
                            ``(i) employs at least 5 percent of the 
                        active participants, or
                            ``(ii) represents as an employee 
                        organization, for purposes of collective 
                        bargaining, at least 5 percent of active 
                        participants,
                the plan sponsor shall include among the proposed 
                schedules such schedules of increases in contributions 
                and reductions in future benefit accruals as may be 
                specified by the bargaining parties.
                    ``(C) Subsequent amendments.--Upon the adoption of 
                a schedule of increases in contributions or reductions 
                in future benefit accruals as part of the 
                rehabilitation plan, the plan sponsor may amend the 
                plan thereafter to update the schedule to adjust for 
                any experience of the plan contrary to past actuarial 
                assumptions, except that such an amendment may be made 
                not more than once in any 3-year period.
                    ``(D) Allocation of reductions in future benefit 
                accruals.--Any schedule containing reductions in future 
                benefit accruals forming a part of a rehabilitation 
                plan shall be applicable with respect to any group of 
                active participants who are employed by any bargaining 
                party (as an employer obligated to contribute under the 
                plan) in proportion to the extent to which increases in 
                contributions under such schedule apply to such 
                bargaining party.
                    ``(E) Limitation on reduction in rates of future 
                accruals.--Any schedule proposed under this paragraph 
                shall not reduce the rate of future accruals below the 
                lower of--
                            ``(i) a monthly benefit equal to 1 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 plan year in which the plan enters 
                        critical status, or
                            ``(ii) if lower, the accrual rate under the 
                        plan on such date.
                The equivalent standard accrual rate shall be 
                determined by the trustees based on the standard or 
                average contribution base units that they determine to 
                be representative for active participants and such 
                other factors as they determine to be relevant.
            ``(6) Maintenance of contributions and restrictions on 
        benefits pending adoption of rehabilitation plan.--The rules of 
        paragraphs (5) and (6) of subsection (b) shall apply for 
        purposes of this subsection by substituting the term 
        `rehabilitation plan' for `funding improvement plan'.
            ``(7) Special rules.--
                    ``(A) Automatic employer surcharge.--
                            ``(i) 5 percent and 10 percent surcharge.--
                        For the first plan year in which the plan is in 
                        critical status, each employer otherwise 
                        obligated to make a contribution for that plan 
                        year shall be obligated to pay to the plan a 
                        surcharge equal to 5 percent of the 
                        contribution otherwise required under the 
                        respective collective bargaining agreement (or 
                        other agreement pursuant to which the employer 
                        contributes). For each consecutive plan year 
                        thereafter in which the plan is in critical 
                        status, the surcharge shall be 10 percent of 
                        the contribution otherwise required under the 
                        respective collective bargaining agreement (or 
                        other agreement pursuant to which the employer 
                        contributes).
                            ``(ii) Enforcement of surcharge.--The 
                        surcharges under clause (i) shall be due and 
                        payable on the same schedule as the 
                        contributions on which they 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.
                            ``(iii) Surcharge to terminate upon cba 
                        renegotiation.--The surcharge under this 
                        paragraph shall cease to be effective with 
                        respect to employees covered by a collective 
                        bargaining agreement, beginning on the date on 
                        which that agreement is renegotiated to 
                        include--
                                    ``(I) a schedule of benefits and 
                                contributions published by the trustees 
                                pursuant to the plan's rehabilitation 
                                plan, or
                                    ``(II) otherwise collectively 
                                bargained benefit changes.
                            ``(iv) Surcharge not to apply until 
                        employer receives 30-day notice.--The surcharge 
                        under this subparagraph shall not apply to an 
                        employer until 30 days after the employer has 
                        been notified by the trustees that the plan is 
                        in critical status and that the surcharge is in 
                        effect.
                            ``(v) Surcharge not to generate increased 
                        benefit accruals.--Notwithstanding any 
                        provision of a plan to the contrary, the amount 
                        of any surcharge shall not be the basis for any 
                        benefit accruals under the plan.
                    ``(B) Benefit adjustments.--
                            ``(i) In general.--The trustees shall make 
                        appropriate reductions, if any, to adjustable 
                        benefits based upon the outcome of collective 
                        bargaining over the schedules provided under 
                        paragraph (5).
                            ``(ii) Retiree protection.--Except as 
                        provided in subparagraph (C), the trustees of a 
                        plan in critical status may not reduce 
                        adjustable benefits of any participant or 
                        beneficiary who was in pay status at least one 
                        year before the first day of the first plan 
                        year in which the plan enters into critical 
                        status.
                            ``(iii) Trustee flexibility.--The trustees 
                        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 based on the plan's then 
                        current overall funding status and its future 
                        prospects in light of the results of the 
                        parties' negotiations.
                    ``(C) Adjustable benefit defined.--For purposes of 
                this paragraph, the term `adjustable benefit' means--
                            ``(i) benefits, rights, and features, such 
                        as post-retirement death benefits, 60-month 
                        guarantees, disability benefits not yet in pay 
                        status, and similar benefits,
                            ``(ii) retirement-type subsidies, early 
                        retirement benefits, and benefit payment 
                        options (other than the 50 percent qualified 
                        joint-and-survivor benefit and single life 
                        annuity), and
                            ``(iii) benefit increases that would not be 
                        eligible for a guarantee under section 4022A on 
                        the first day of the plan year in which the 
                        plan enters into critical status because they 
                        were adopted, or if later, took effect less 
                        than 60 months before reorganization.
                    ``(D) Normal retirement benefits protected.--
                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 which is not 
                an adjustable benefit.
                    ``(E) Adjustments disregarded in withdrawal 
                liability determination.--
                            ``(i) Benefit reductions.--Any benefit 
                        reductions under this paragraph shall be 
                        disregarded in determining a plan's unfunded 
                        vested benefits for purposes of determining an 
                        employer's withdrawal liability under section 
                        4201.
                            ``(ii) Surcharges.--Any surcharges under 
                        this paragraph 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 or under a modified 
                        attributable method adopted with the approval 
                        of the Pension Benefit Guaranty Corporation 
                        under subsection (c)(5) of that section.
            ``(8) Restrictions upon approval of rehabilitation plan.--
        Upon adoption of a rehabilitation plan with respect to a 
        multiemployer plan, the plan may not be amended--
                    ``(A) so as to be inconsistent with the 
                rehabilitation plan, or
                    ``(B) so as to increase future benefit accruals, 
                unless the plan actuary certifies in advance that, 
                after taking into account the proposed increase, the 
                plan is reasonably expected to cease to be in critical 
                status.
            ``(9) Implementation of default schedule upon failure to 
        adopt rehabilitation plan.--If the plan is not amended by the 
        end of the 240-day period after entry into critical status to 
        include a rehabilitation plan, the plan sponsor shall amend the 
        plan to implement the schedule required by paragraph 
        (5)(A)(ii).
            ``(10) Deemed withdrawal.--Upon the failure of any employer 
        who has an obligation to contribute under the plan to make 
        contributions in compliance with the schedule adopted under 
        paragraph (4) as part of the rehabilitation plan, the failure 
        of the employer may, at the discretion of the plan sponsor, be 
        treated as a withdrawal by the employer from the plan under 
        section 4203 or a partial withdrawal by the employer under 
        section 4205.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Bargaining party.--The term `bargaining party' means, 
        in connection with a multiemployer plan--
                    ``(A) an employer who has an obligation to 
                contribute under the plan, and
                    ``(B) an employee organization which, for purposes 
                of collective bargaining, represents plan participants 
                employed by such an employer.
            ``(2) Funded percentage.--The term `funded percentage' 
        means the percentage expressed as a ratio of which--
                    ``(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.
            ``(3) Accumulated funding deficiency.--The term 
        `accumulated funding deficiency' has the meaning provided 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 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 provided such term under section 
        4212(a).
            ``(8) Entry into critical status.--A plan shall be treated 
        as entering into critical status as of the date that such plan 
        is certified to be in critical status under subsection (a)(1), 
        is presumed to be in critical status under subsection (a)(3), 
        or enters into critical status under subsection (b)(7).''.
    (b) Conforming Amendment.--The table of contents in section 1 of 
such Act (as amended by the preceding provisions of this Act) is 
amended further 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.''.
    (c) Effective Date.--The amendment made by this section shall apply 
with respect to plan years beginning after 2005.

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 
2005.

SEC. 204. WITHDRAWAL LIABILITY REFORMS.

    (a) Repeal of Limitation on Withdrawal Liability in the Event of 
Certain Sales of Employer Assets to Unrelated Parties.--
            (1) In general.--Section 4225 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1405) is repealed.
            (2) Conforming amendment.--The table of contents in section 
        1 of such Act is amended by striking the item relating to 
        section 4225.
            (3) Effective date.--The amendments made by this section 
        shall apply with respect to sales occurring on or after January 
        1, 2006.
    (b) Repeal of Limitation to 20 Annual Payments.--
            (1) In general.--Section 4219(c)(1) of such Act (29 U.S.C. 
        1399(c)(1)) is amended by striking subparagraph (B).
            (2) Effective date.--The amendment made by this section 
        shall apply with respect to withdrawals occurring on or after 
        January 1, 2006.
    (c) 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 another party or parties'' 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.
    (d) Repeal of Special Rule for Long and Short Haul Trucking 
Industry.--
            (1) In general.--Subsection (d) of section 4203 of such Act 
        (29 U.S.C. 1383(d)) is repealed.
            (2) Effective date.--The repeal under this subsection shall 
        apply with respect to cessations to have obligations to 
        contribute to multiemployer plans and cessations of covered 
        operations under such plans occurring on or after January 1, 
        2006.
    (e) Application of Forgiveness Rule to Plans Primarily Covering 
Employees in the Building and Construction.--
            (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) Effective date.--The amendments made by this subsection 
        shall apply with respect to plan withdrawals occurring on or 
        after January 1, 2006.

SEC. 205. REMOVAL OF RESTRICTIONS WITH RESPECT TO PROCEDURES APPLICABLE 
              TO DISPUTES INVOLVING WITHDRAWAL LIABILITY.

    (a) In General.--Section 4221(f)(1) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1401(f)(1)) is amended--
            (1) in subparagraph (A) by inserting ``and'' after 
        ``plan,'', and
            (2) by striking subparagraphs (B) and (C) and inserting the 
        following new subparagraph:
                    ``(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 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,''.
    (b) Small Employer.--Paragraph (2) of section 4221(f) of such Act 
is amended by adding at the end the following new subparagraph:
                    ``(C) Small employer.--For purposes of paragraph 
                (1)(B)--
                            ``(i) In general.--The term `small 
                        employer' means any employer who (as of 
                        immediately before the transaction referred to 
                        in paragraph (1)(B))--
                                    ``(I) employs not more than 500 
                                employees, and
                                    ``(II) is required to make 
                                contributions to the plan for not more 
                                than 250 employees.
                            ``(ii) Controlled group.--Any group treated 
                        as a single employer under subsection (b), (c), 
                        (m), or (o) of section 414 of the Internal 
                        Revenue Code of 1986 shall be treated as a 
                        single employer for purposes of this 
                        subparagraph.''.
    (c) Additional Amendments.--
            (1) Subparagraph (A) of section 4221(f)(2) of such Act (29 
        U.S.C. 1401(f)(2)) is amended by striking ``Notwithstanding'' 
        and inserting ``In the case of a transaction occurring before 
        January 1, 1999, and at least 5 years before the date of the 
        complete or partial withdrawal, notwithstanding''.
            (2) Section 4221(f)(2)(B) of such Act (29 U.S.C. 
        1401(f)(2)(B)) is amended--
                    (A) by inserting ``with respect to withdrawal 
                liability payments'' after ``determination'' the first 
                place it appears, and
                    (B) by striking ``any'' and inserting ``the''.
    (d) Effective Date.--The amendments made by this section shall 
apply to any employer that receives a notification under section 
4219(b)(1) of the Employee Retirement Income Security Act of 1974 on or 
after the date of the enactment of this Act.

        Subtitle B--Amendments to Internal Revenue Code of 1986

SEC. 211. [SEE INTRODUCED BILL, PAGE 200, LINE 8 THROUGH PAGE 251, LINE 
              15.]

                      TITLE III--OTHER PROVISIONS

SEC. 301. INTEREST RATE ASSUMPTION FOR DETERMINATION OF LUMP SUM 
              DISTRIBUTIONS.

    (a) Amendments to Employee Retirement Income Security Act of 
1974.--Paragraph (3) of section 205(g) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1055(g)(3)) is amended to read 
as follows:
    ``(3)(A) For purposes of paragraphs (1) and (2), the present value 
shall not be less than the present value calculated by using the 
applicable mortality table and the applicable interest rate.
    ``(B) For purposes of subparagraph (A)--
            ``(i) The term `applicable mortality table' means a 
        mortality table, modified as appropriate by the Secretary of 
        the Treasury, based on the mortality table specified for the 
        plan year under section 303(h)(3).
            ``(ii) The term `applicable interest rate' means the 
        adjusted first, second, and third segment rates applied under 
        rules similar to the rules of section 303(h)(2)(C) for the 
        month before the date of the distribution or such other time as 
        the Secretary of the Treasury may by regulations prescribe.
            ``(iii) For purposes of clause (ii), the adjusted first, 
        second, and third segment rates are the first, second, and 
        third segment rates which would be determined under section 
        303(h)(2)(C) if--
                    ``(I) section 303(h)(2)(D)(i) were applied by 
                substituting `the yields' for `a 3-year weighted 
                average of yields',
                    ``(II) section 303(h)(2)(G)(i)(II) were applied by 
                substituting `section 205(g)(3)(A)(ii)(II)' for 
                `section 302(b)(5)(B)(ii)(II)', and
                    ``(III) the applicable percentage under section 
                303(h)(2)(G) were determined in accordance with the 
                following table:


 
 
 
``In the case of plan years         The applicable percentage is:
 beginning in:
  2006............................  20 percent
  2007............................  40 percent
  2008............................  60 percent
  2009............................  80 percent.''.

    (b) Amendments to Internal Revenue Code of 1986.--[See introduced 
bill, page 252, line 19 through page 254, line 5]
    (c) Special Rule for Plan Amendments.--A plan shall not fail to 
meet the requirements of section 204(g) of the Employee Retirement 
Income Security Act of 1974 solely by reason of the adoption by the 
plan of an amendment necessary to meet the requirements of the 
amendments made by this section.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after 2005.

SEC. 302. INTEREST RATE ASSUMPTION FOR APPLYING BENEFIT LIMITATIONS TO 
              LUMP SUM DISTRIBUTIONS.

    [See introduced bill, page 254, line 6 through page 255, line 7]

SEC. 303. DISTRIBUTIONS DURING WORKING RETIREMENT.

    (a) In General.--Subparagraph (A) of section 3(2) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1002(2)) is amended 
by adding at the end the following new sentence: ``A distribution from 
a plan, fund, or program shall not be treated as made in a form other 
than retirement income or as a distribution prior to termination of 
covered employment solely because such distribution is made to an 
employee who has attained age 62 and who is not separated from 
employment at the time of such distribution.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to distributions in plan years beginning after 2005.

SEC. 304. OTHER AMENDMENTS RELATING TO PROHIBITED TRANSACTIONS.

    (a) Definition of Amount Involved.--Section 502(i) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1132(i)) is amended 
to read as follows:
    ``(i)(1) In the case of a transaction prohibited by section 406 by 
a party in interest with respect to a plan to which this part applies, 
the Secretary may assess a civil penalty against such party in 
interest. The amount of such penalty may not exceed 5 percent of the 
amount involved in each such transaction for each year or part thereof 
during which the prohibited transaction continues, except that, if the 
transaction is not corrected (in such manner as the Secretary shall 
prescribe in regulations) within 90 days after notice from the 
Secretary (or such longer period as the Secretary may permit), such 
penalty may be in an amount not more than 100 percent of the amount 
involved.
    ``(2) For purposes of paragraph (1)--
            ``(A) Except as provided in subparagraphs (C) and (D), the 
        term `amount involved' means, with respect to a prohibited 
        transaction, the greater of--
                    ``(i) the amount of money and the fair market value 
                of the other property given, or
                    ``(ii) the amount of money and the fair market 
                value of the other property received.
            ``(B) For purposes of subparagraph (A), fair market value--
                    ``(i) shall be determined as of the date on which 
                the prohibited transaction occurs; and
                    ``(ii) shall be the highest fair market value 
                during the period between the date of the transaction 
                and the date of correction.
            ``(C) In the case of services described in subsection 
        (b)(2) or (c)(2) of section 408, the term `amount involved' 
        means only the amount of excess compensation.
            ``(D) In the case of principal transactions involving 
        securities or commodities, the term `amount involved' means 
        only the amount received by the disqualified person in excess 
        of the amount such person would have received in an arm's 
        length transaction with an unrelated party as of the same date.
            ``(E) For the purposes of this paragraph--
                    ``(i) the term `security' has the meaning given 
                such term by section 475(c)(2) of the Internal Revenue 
                Code of 1986 (without regard to subparagraph (F)(iii) 
                and the last sentence thereof) , and
                    ``(ii) the term `commodity' has the meaning given 
                such term by section 475(e)(2) of such Code (without 
                regard to subparagraph (D)(iii) thereof).''.
    (b) Exemption for Block Trading.--Section 408(b) of such Act (29 
U.S.C. 1108(b)), as amended by section 601, is further amended by 
adding at the end the following new paragraph:
            ``(15)(A) Any transaction involving the purchase or sale of 
        securities between a plan and a party in interest (other than a 
        fiduciary) with respect to a plan if--
                    ``(i) the transaction involves a block trade,
                    ``(ii) at the time of the transaction, the interest 
                of the plan (together with the interests of any other 
                plans maintained by the same plan sponsor), does not 
                exceed 10 percent of the aggregate size of the block 
                trade, and
                    ``(iii) the terms of the transaction, including the 
                price, are at least as favorable to the plan as an 
                arm's length transaction.
            ``(B) For purposes of this paragraph, the term `block 
        trade' includes any trade which will be allocated across two or 
        more client accounts of a fiduciary.''.
    (c) Bonding Relief.-- Section 412(a) of such Act (29 U.S.C. 
1112(a)) is amended--
            (1) by redesignating paragraph (2) as paragraph (3);
            (2) by striking ``and'' at the end of paragraph (1); and
            (3) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) no bond shall be required of an entity which is 
        subject to regulation as a broker or a dealer under section 15 
        of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
        or an entity registered under the Investment Advisers Act of 
        1940 (15 U.S.C. 80b-1 et seq.), including requirements imposed 
        by a self-regulatory organization (within the meaning of 
        section 3(a)(26) of such Act (15 U.S.C. 78c(a)(26)), or any 
        affiliate with respect to which the broker or dealer agrees to 
        be liable to the same extent as if they held the assets 
        directly.''.
    (d) Exemption for Electronic Communication Network.--Section 408(b) 
of such Act (as amended by subsection (b)) is further amended by adding 
at the end the following:
            ``(16) Any transaction involving the purchase and sale of 
        securities or other property between a plan and a fiduciary or 
        a party in interest if--
                    ``(A) the transaction is executed through an 
                exchange, electronic communication network, alternative 
                trading system, or similar execution system or trading 
                venue subject to regulation and oversight by the 
                applicable governmental regulating entity,
                    ``(B) neither the execution system nor the parties 
                to the transaction take into account the identity of 
                the parties in the execution of trades,
                    ``(C) the transaction is effected pursuant to rules 
                designed to match purchases and sales at the best price 
                available through the execution system, and
                    ``(D) the price and compensation associated with 
                the purchase and sale are not greater than an arm's 
                length transaction with an unrelated party.''.
    (e) Conforming ERISA's Prohibited Transaction Provision to FERSA.--
Section 408(b) of such Act (29 U.S.C. 1106), as amended by subsection 
(d), is further amended by adding at the end the following new 
paragraph:
            ``(17)(A) transactions described in subparagraphs (A), (B), 
        and (D) of section 406(a)(1) between a plan and a party that is 
        a party in interest (under section 3(14)) solely by reason of 
        providing services, but only if in connection with such 
        transaction the plan receives no less, nor pays no more, than 
        adequate consideration.
            ``(B) For purposes of this paragraph, the term `adequate 
        consideration' means--
                    ``(i) in the case of a security for which there is 
                a generally recognized market--
                            ``(I) the price of the security prevailing 
                        on a national securities exchange which is 
                        registered under section 6 of the Securities 
                        Exchange Act of 1934, taking into account 
                        factors such as the size of the transaction and 
                        marketability of the security, or
                            ``(II) if the security is not traded on 
                        such a national securities exchange, a price 
                        not less favorable to the plan than the 
                        offering price for the security as established 
                        by the current bid and asked prices quoted by 
                        persons independent of the issuer and of the 
                        party in interest, taking into account factors 
                        such as the size of the transaction and 
                        marketability of the security, and
                    ``(ii) in the case of an asset other than a 
                security for which there is a generally recognized 
                market, the fair market value of the asset as 
                determined in good faith by a fiduciary or fiduciaries 
                in accordance with regulations prescribed by the 
                Secretary.''.
    (f) Relief for Foreign Exchange Transactions.-- Section 408(b) of 
such Act (as amended by the preceding provisions of this section) is 
further amended by adding at the end the following new paragraph:
            ``(18) Any foreign exchange transactions, between a bank or 
        broker-dealer, or any affiliate of either thereof, and a plan 
        with respect to which the bank or broker-dealer, or any 
        affiliate, is a trustee, custodian, fiduciary, or other party 
        in interest, if--
                    ``(A) the transaction is in connection with the 
                purchase or sale of securities,
                    ``(B) at the time the foreign exchange transaction 
                is entered into, the terms of the transaction are not 
                less favorable to the plan than the terms generally 
                available in comparable arm's length foreign exchange 
                transactions between unrelated parties, or the terms 
                afforded by the bank or the broker-dealer (or any 
                affiliate thereof) in comparable arm's-length foreign 
                exchange transactions involving unrelated parties,
                    ``(C) the exchange rate used by the bank or broker-
                dealer for a particular foreign exchange transaction 
                must be at a rate no less favorable than the rate 
                quoted for transactions of similar size at the time of 
                the transaction as displayed on an independent service 
                that reports rates of exchange in the foreign currency 
                market for such currency, and
                    ``(D) the bank or broker-dealer, or any affiliate, 
                does not have investment discretion, or provide 
                investment advice, with respect to the securities 
                transaction.''.
    (g) Definition of Plan Asset Vehicle.--Section 3 of such Act (29 
U.S.C. 1002) is amended by adding at the end the following new 
paragraph:
    ``(42) the term `plan assets' means plan assets as defined by such 
regulations as the Secretary may prescribe, except that under such 
regulations the assets of any entity shall not be treated as plan 
assets if, immediately after the most recent acquisition of any equity 
interest in the entity, less than 50 percent of the total value of all 
equity interests in the entity are held by employee benefit plan 
investors. For purposes of determinations pursuant to this paragraph, 
the value of any equity interest owned by a person (other than such an 
employee benefit plan) who has discretionary authority or control with 
respect to the assets of the entity or any person who provides 
investment advice for a fee (direct or indirect) with respect to such 
assets, or any affiliate of such a person, shall be disregarded for 
purposes of calculating the 50 percent threshold. An entity shall be 
considered to hold plan assets only to the extent of the percentage of 
the equity interest owned by benefit plan investors. For purposes of 
this paragraph, the term `benefit plan investor' means an employee 
benefit plan subject to this part and any plan to which section 4975 of 
the Internal Revenue Code of 1986 applies.''.

SEC. 305. CORRECTION PERIOD FOR CERTAIN TRANSACTIONS INVOLVING 
              SECURITIES AND COMMODITIES.

    (a) In General.--Section 408(b) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1108(b)), as amended by sections 304 
and 601, is further amended by adding at the end the following new 
paragraph:
            ``(19)(A) Except as provided in subparagraphs (B) and (C), 
        a transaction described in section 406(a) in connection with 
        the acquisition, holding, or disposition of any security or 
        commodity, if the transaction is corrected before the end of 
        the correction period.
            ``(B) Subparagraph (A) does not apply to any transaction 
        between a plan and a plan sponsor or its affiliates that 
        involves the acquisition or sale of an employer security (as 
        defined in section 407(d)(1)) or the acquisition, sale, or 
        lease of employer real property (as defined in section 
        407(d)(2)).
            ``(C) In the case of any fiduciary or other party in 
        interest (or any other person knowingly participating in such 
        transaction), subparagraph (A) does not apply to any prohibited 
        transaction if, at the time such transaction is discovered, 
        such fiduciary or party in interest (or other person) knew that 
        the transaction would (without regard to this paragraph) 
        constitute a violation of section 406(a).
            ``(D) For purposes of this paragraph, the term `correction 
        period' means, in connection with a fiduciary or party in 
        interest (or other person knowingly participating in the 
        transaction), the 14-day period beginning on the date on which 
        such fiduciary or party in interest (or other person) 
        discovers, or reasonably should have discovered, that the 
        transaction would (without regard to this paragraph) constitute 
        a violation of section 406(a).
            ``(E) For purposes of this paragraph--
                    ``(i) The term `security' has the meaning given 
                such term by section 475(c)(2) of the Internal Revenue 
                Code of 1986 (without regard to subparagraph (F)(iii) 
                and the last sentence thereof).
                    ``(ii) The term `commodity' has the meaning given 
                such term by section 475(e)(2) of such Code (without 
                regard to subparagraph (D)(iii) thereof).
                    ``(iii) The term `correct' means, with respect to a 
                transaction, to undo the transaction to the extent 
                possible, but in any case, to make good to the plan or 
                affected account any losses resulting from the 
                transaction and to restore to the plan or affected 
                account any profits made through use of the plan. ''.
    (b) Effective Date.--The amendments made by this section shall 
apply to any transaction which the fiduciary or disqualified person 
discovers, or reasonably should have discovered, after the date of the 
enactment of this Act, constitutes a prohibited transaction.

SEC. 306. GOVERNMENT ACCOUNTABILITY OFFICE PENSION FUNDING REPORT.

    (a) In General.--The Comptroller General of the Government 
Accountability Office shall transmit to the Congress a pension funding 
report not later than one year after the date of the enactment of this 
Act.
    (b) Report Content.--The pension funding report required under 
subsection (a) shall include an analysis of the feasibility, 
advantages, and disadvantages of--
            (1) requiring an employee pension benefit plan to insure a 
        portion of such plan's total investments;
            (2) requiring an employee pension benefit plan to adhere to 
        uniform solvency standards set by the Pension Benefit Guaranty 
        Corporation, which are similar to those applied on a State 
        level in the insurance industry; and
            (3) amortizing a single-employer defined benefit pension 
        plan's shortfall amortization base (referred to in section 
        303(c)(3) of the Employee Retirement Income Security Act of 
        1974 (as amended by this Act)) over various periods of not more 
        than 7 years.

          TITLE IV--IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS

SEC. 401. INCREASES IN PBGC PREMIUMS.

    (a) Flat-Rate Premiums.--Section 4006(a)(3) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)) is 
amended--
            (1) by striking clause (i) of subparagraph (A) and 
        inserting the following:
            ``(i) in the case of a single-employer plan, an amount 
        equal to--
                    ``(I) for plan years beginning after December 31, 
                1990, and before January 1, 2006, $19, or
                    ``(II) for plan years beginning after December 31, 
                2005, the amount determined under subparagraph (F),
        plus the additional premium (if any) determined under 
        subparagraph (E) for each individual who is a participant in 
        such plan during the plan year;''; and
            (2) by adding at the end the following new subparagraph:
    ``(F)(i) Except as otherwise provided in this subparagraph, for 
purposes of determining the annual premium rate payable to the 
corporation by a single-employer plan for basic benefits guaranteed 
under this title, the amount determined under this subparagraph is the 
greater of $30 or the adjusted amount determined under clause (ii).
    ``(ii) For plan years beginning after 2006, the adjusted amount 
determined under this clause is the product derived by multiplying $30 
by the ratio of--
            ``(I) the national average wage index (as defined in 
        section 209(k)(1) of the Social Security Act) for the first of 
        the 2 calendar years preceding the calendar year in which the 
        plan year begins, to
            ``(II) the national average wage index (as so defined) for 
        2004,
with such product, if not a multiple of $1, being rounded to the next 
higher multiple of $1 where such product is a multiple of $0.50 but not 
of $1, and to the nearest multiple of $1 in any other case.
    ``(iii) For purposes of determining the annual premium rate payable 
to the corporation by a single-employer plan for basic benefits 
guaranteed under this title for any plan year beginning after 2005 and 
before 2010--
            ``(I) except as provided in subclause (II), the premium 
        amount referred to in subparagraph (A)(i)(II) for any such plan 
        year is the amount set forth in connection with such plan year 
        in the following table:


 
 
 
``If the plan year begins in:       The amount is:
  2006............................  $21.20
  2007............................  $23.40
  2008............................  $25.60
  2009............................  $27.80; or

            ``(II) if the plan's funding target attainment percentage 
        for the plan year preceding the current plan year was less than 
        80 percent, the premium amount referred to in subparagraph 
        (A)(i)(II) for such current plan year is the amount set forth 
        in connection with such current plan year in the following 
        table:


 
 
 
``If the plan year begins in:       The amount is:
  2006............................  $22.67
  2007............................  $26.33
  2008 or 2009....................  the amount provided under clause
                                     (i).

    ``(iv) For purposes of this subparagraph, the term `funding target 
attainment percentage' has the meaning provided such term in section 
303(d)(2).''.
    (b) Risk-Based Premiums.--
            (1) Conforming amendments related to funding rules for 
        single-employer plans.--Section 4006(a)(3)(E) of such Act is 
        amended by striking clauses (iii) and (iv) and inserting the 
        following:
    ``(iii)(I) For purposes of clause (ii), except as provided in 
subclause (II), the term `unfunded vested benefits' means, for a plan 
year, the amount which would be the plan's funding shortfall (as 
defined in section 303(c)(4)), if the value of plan assets of the plan 
were equal to the fair market value of such assets and only vested 
benefits were taken into account.
    ``(II) The interest rate used in valuing vested benefits for 
purposes of subclause (I) shall be equal to the first, second, or third 
segment rate which would be determined under section 303(h)(2)(C) if 
section 303(h)(2)(D)(i) were applied by substituting `the yields' for 
`the 3-year weighted average of yields', as applicable under rules 
similar to the rules under section 303(h)(2)(B).''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply with respect to plan years beginning after 2005.

                          TITLE V--DISCLOSURE

SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICES.

    (a) Application of Plan Funding Notice Requirements to All Defined 
Benefit Plans.--Section 101(f) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1021(f)) is amended--
            (1) in the heading, by striking ``Multiemployer'';
            (2) in paragraph (1), by striking ``which is a 
        multiemployer plan''; and
            (3) by striking paragraph (2)(B)(iii) and inserting the 
        following:
                            ``(iii)(I) in the case of a single-employer 
                        plan, a summary of the rules governing 
                        termination of single-employer plans under 
                        subtitle C of title IV, or
                            ``(II) in the case of a multiemployer plan, 
                        a summary of the rules governing insolvent 
                        multiemployer plans, including the limitations 
                        on benefit payments and any potential benefit 
                        reductions and suspensions (and the potential 
                        effects of such limitations, reductions, and 
                        suspensions on the plan); and''.
    (b) Inclusion of Statement of the Ratio of Inactive Participants to 
Active Participants.--Section 101(f)(2)(B) of such Act (29 U.S.C. 
1021(f)(2)(B)) is amended--
            (1) in clause (iii)(II) (added by subsection (a)(3) of this 
        section), by striking ``and'' at the end;
            (2) in clause (iv), by striking ``apply.'' and inserting 
        ``apply; and''; and
            (3) by adding at the end the following new clause:
                            ``(v) a statement of the ratio, as of the 
                        end of the plan year to which the notice 
                        relates, of--
                                    ``(I) the number of participants 
                                who are not in covered service under 
                                the plan and are in pay status under 
                                the plan or have a nonforfeitable right 
                                to benefits under the plan, to
                                    ``(II) the number of participants 
                                who are in covered service under the 
                                plan.''.
    (c) Comparison of Monthly Average of Value of Plan Assets to 
Projected Current Liabilities.--Section 101(f)(2)(B) of such Act (29 
U.S.C. 1021(f)(2)(B)) (as amended by the preceding provisions of this 
section) is amended further--
            (1) by striking clause (ii) and inserting the following:
                            ``(ii) a statement of a reasonable estimate 
                        of--
                                    ``(I) the value of the plan's 
                                assets for the plan year to which the 
                                notice relates,
                                    ``(II) projected liabilities of the 
                                plan for the plan year to which the 
                                notice relates, and
                                    ``(III) the ratio of the estimated 
                                amount determined under subclause (I) 
                                to the estimated amount determined 
                                under subclause (II);''; and
            (2) by adding at the end (after and below clause (v)) the 
        following:
                ``For purposes of determining a plan's projected 
                liabilities for a plan year under clause (ii)(II), such 
                projected liabilities shall be determined by projecting 
                forward in a reasonable manner to the end of the plan 
                year the liabilities of the plan to participants and 
                beneficiaries as of the first day of the plan year, 
                taking into account any significant events that occur 
                during the plan year and that have a material effect on 
                such liabilities, including any plan amendments in 
                effect for the plan year.''.
    (d) Statement of Plan's Funding Policy and Method of Asset 
Allocation.--Section 101(f)(2)(B) of such Act (as amended by the 
preceding provisions of this section) is amended further--
            (1) in clause (iv), by striking ``and'' at the end;
            (2) in clause (v), by striking the period and inserting 
        ``; and''; and
            (3) by inserting after clause (v) the following new clause:
                            ``(vi) a statement setting forth the 
                        funding policy of the plan and the asset 
                        allocation of investments under the plan 
                        (expressed as percentages of total assets) as 
                        of the end of the plan year to which the notice 
                        relates.''.
    (e) Notice of Funding Improvement Plan or Rehabilitation Plan 
Adopted by Multiemployer Plan.--Section 101(f)(2)(B) of such Act (as 
amended by the preceding provisions of this section) is amended 
further--
            (1) in clause (v), by striking ``and'' at the end;
            (2) in clause (vi), by striking the period and inserting 
        ``; and''; and
            (3) by inserting after clause (vi) the following new 
        clause:
                            ``(vii) a summary of any funding 
                        improvement plan, rehabilitation plan, or 
                        modification thereof adopted under section 305 
                        during the plan year to which the notice 
                        relates.''.
    (f) Notice Due 90 Days After Plan's Valuation Date.--
            (1) In general.--Section 101(f)(3) of such Act (29 U.S.C. 
        1021(f)(3)) is amended by striking ``two months after the 
        deadline (including extensions) for filing the annual report 
        for the plan year'' and inserting ``90 days after the end of 
        the plan year''.
            (2) Model notice.--Not later than 180 days after the date 
        of the enactment of this Act, the Secretary of Labor shall 
        publish a model version of the notice required by section 
        101(f) of the Employee Retirement Income Security Act of 1974.
    (g) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2005.

SEC. 502. ADDITIONAL DISCLOSURE REQUIREMENTS.

    (a) Additional Annual Reporting Requirements.--Section 103 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1023) is 
amended--
            (1) in subsection (a)(1)(B), by striking ``subsections (d) 
        and (e)'' and inserting ``subsections (d), (e), and (f)''; and
            (2) by adding at the end the following new subsection:
    ``(f)(1) With respect to any defined benefit plan, an annual report 
under this section for a plan year shall include the following:
            ``(A) The ratio, as of the end of such plan year, of--
                    ``(i) the number of participants who, as of the end 
                of such plan year, are not in covered service under the 
                plan and are in pay status under the plan or have a 
                nonforfeitable right to benefits under the plan, to
                    ``(ii) the number of participants who are in 
                covered service under the plan as of the end of such 
                plan year.
            ``(B) In any case in which any liabilities to participants 
        or their beneficiaries under such plan as of the end of such 
        plan year consist (in whole or in part) of liabilities to such 
        participants and beneficiaries borne by 2 or more pension plans 
        as of immediately before such plan year, the funded ratio of 
        each of such 2 or more pension plans as of immediately before 
        such plan year and the funded ratio of the plan with respect to 
        which the annual report is filed as of the end of such plan 
        year.
            ``(C) For purposes of this paragraph, the term `funded 
        ratio' means, in connection with a plan, the percentage which--
                    ``(i) the value of the plan's assets is of
                    ``(ii) the liabilities to participants and 
                beneficiaries under the plan.
    ``(2) With respect to any defined benefit plan which is a 
multiemployer plan, an annual report under this section for a plan year 
shall include the following:
            ``(A) The number of employers obligated to contribute to 
        the plan as of the end of such plan year.
            ``(B) The number of participants under the plan on whose 
        behalf no employer contributions have been made to the plan for 
        such plan year. For purposes of this subparagraph, the term 
        `employer contribution' means, in connection with a 
        participant, a contribution made by an employer as an employer 
        of such participant.''.
    (b) Additional Information in Annual Actuarial Statement Regarding 
Plan Retirement Projections.--Section 103(d) of such Act (29 U.S.C. 
1023(d)) is amended--
            (1) by redesignating paragraphs (12) and (13) as paragraphs 
        (13) and (14), respectively; and
            (2) by inserting after paragraph (11) the following new 
        paragraph:
            ``(12) A statement explaining the actuarial assumptions and 
        methods used in projecting future retirements and forms of 
        benefit distributions under the plan.''.
    (c) Filing After 275 Days After Plan Year Only in Cases of 
Hardship.--Section 104(a)(1) of such Act (29 U.S.C. 1024(a)(1)) is 
amended by inserting after the first sentence the following new 
sentence: ``In the case of a pension plan, the Secretary may extend the 
deadline for filing the annual report for any plan year past 275 days 
after the close of the plan year only on a case by case basis and only 
in cases of hardship, in accordance with regulations which shall be 
prescribed by the Secretary.''.
    (d) Internet Display of Information.--Section 104(b) of such Act 
(29 U.S.C. 1024(b)) is amended by adding at the end the following:
    ``(5) Identification and basic plan information and actuarial 
information included in the annual report for any plan year shall be 
filed with the Secretary in an electronic format which accommodates 
display on the Internet, in accordance with regulations which shall be 
prescribed by the Secretary. The Secretary shall provide for display of 
such information included in the annual report, within 90 days after 
the date of the filing of the annual report, on a website maintained by 
the Secretary on the Internet and other appropriate media. Such 
information shall also be displayed on any website maintained by the 
plan sponsor (or by the plan administrator on behalf of the plan 
sponsor) on the Internet, in accordance with regulations which shall be 
prescribed by the Secretary.''.
    (e) Summary Annual Report Filed Within 15 Days After Deadline for 
Filing of Annual Report.--Section 104(b)(3) of such Act (29 U.S.C. 
1024(b)(3)) is amended--
            (1) by striking ``Within 210 days after the close of the 
        fiscal year of the plan,'' and inserting ``Within 15 business 
        days after the due date under subsection (a)(1) for the filing 
        of the annual report for the fiscal year of the plan,''; and
            (2) by striking ``the latest'' and inserting ``such''.
    (f) Disclosure of Plan Assets and Liabilities in Summary Annual 
Report.--
            (1) In general.--Section 104(b)(3) of such Act (as amended 
        by subsection (a)) is amended further--
                    (A) by inserting ``(A)'' after ``(3)''; and
                    (B) by adding at the end the following:
    ``(B) The material provided pursuant to subparagraph (A) to 
summarize the latest annual report shall be written in a manner 
calculated to be understood by the average plan participant and shall 
set forth the total assets and liabilities of the plan for the plan 
year for which the latest annual report was filed and for each of the 2 
preceding plan years, as reported in the annual report for each such 
plan year under this section.''.
    (g) Information Made Available to Participants, Beneficiaries, and 
Employers With Respect to Multiemployer Plans.--
            (1) In general.--Section 101 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1021) (as amended by 
        section 103(b)(2)(A)) is further amended--
                    (A) by redesignating subsection (k) as subsection 
                (l); and
                    (B) by inserting after subsection (j) the following 
                new subsection:
    ``(k) Multiemployer Plan Information Made Available on Request.--
            ``(1) In general.--Each administrator of a multiemployer 
        plan shall furnish to any plan participant or beneficiary or 
        any employer having an obligation to contribute to the plan, 
        who so requests in writing--
                    ``(A) a copy of any actuarial report received by 
                the plan for any plan year which has been in receipt by 
                the plan for at least 30 days, and
                    ``(B) a copy of any financial report prepared for 
                the plan by any plan investment manager or advisor or 
                other person who is a plan fiduciary which has been in 
                receipt by the plan for at least 30 days.
            ``(2) Compliance.--Information required to be provided 
        under paragraph (1) --
                    ``(A) shall be provided to the requesting 
                participant, beneficiary, or employer within 30 days 
                after the request in a form and manner prescribed in 
                regulations of the Secretary, and
                    ``(B) may be provided in written, electronic, or 
                other appropriate form to the extent such form is 
                reasonably accessible to persons to whom the 
                information is required to be provided.
            ``(3) Limitations.--In no case shall a participant, 
        beneficiary, or employer be entitled under this subsection to 
        receive more than one copy of any report described in paragraph 
        (1) during any one 12-month period. The administrator may make 
        a reasonable charge to cover copying, mailing, and other costs 
        of furnishing copies of information pursuant to paragraph (1). 
        The Secretary may by regulations prescribe the maximum amount 
        which will constitute a reasonable charge under the preceding 
        sentence.''.
            (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
        1132(c)(4)) (as amended by section 103(b)(2)(B)) is further 
        amended by striking ``sections 101(j) and 302(b)(7)(F)(iv)'' 
        and inserting ``sections 101(j), 101(k), and 
        302(b)(7)(F)(iv)''.
            (3) Regulations.--The Secretary shall prescribe regulations 
        under section 101(k)(2) of the Employee Retirement Income 
        Security Act of 1974 (added by paragraph (1) of this 
        subsection) not later than 90 days after the date of the 
        enactment of this Act.
    (h) Notice of Potential Withdrawal Liability to Multiemployer 
Plans.--
            (1) In general.--Section 101 of such Act (as amended by 
        subsection (g) of this section) is further amended--
                    (A) by redesignating subsection (l) as subsection 
                (m); and
                    (B) by inserting after subsection (k) the following 
                new subsection:
    ``(l) Notice of Potential Withdrawal Liability.--
            ``(1) In general.--The plan sponsor or administrator of a 
        multiemployer plan shall furnish to any employer who has an 
        obligation to contribute under the plan and who so requests in 
        writing notice of--
                    ``(A) the amount which would be the amount of such 
                employer's withdrawal liability under part 1 of 
                subtitle E of title IV if such employer withdrew on the 
                last day of the plan year preceding the date of the 
                request, and
                    ``(B) the average increase, per participant under 
                the plan, in accrued liabilities under the plan as of 
                the end of such plan year to participants under such 
                plan on whose behalf no employer contributions are 
                payable (or their beneficiaries), which would be 
                attributable to such a withdrawal by such employer.
        For purposes of subparagraph (B), the term `employer 
        contribution' means, in connection with a participant, a 
        contribution made by an employer as an employer of such 
        participant.
            ``(2) Compliance.--Any notice required to be provided under 
        paragraph (1)--
                    ``(A) shall be provided to the requesting employer 
                within 180 days after the request in a form and manner 
                prescribed in regulations of the Secretary, and
                    ``(B) may be provided in written, electronic, or 
                other appropriate form to the extent such form is 
                reasonably accessible to employers to whom the 
                information is required to be provided.
            ``(3) Limitations.--In no case shall an employer be 
        entitled under this subsection to receive more than one notice 
        described in paragraph (1) during any one 12-month period. The 
        person required to provide such notice may make a reasonable 
        charge to cover copying, mailing, and other costs of furnishing 
        such notice pursuant to paragraph (1). The Secretary may by 
        regulations prescribe the maximum amount which will constitute 
        a reasonable charge under the preceding sentence.''.
            (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
        1132(c)(4)) (as amended by paragraph (1)) is further amended by 
        striking ``sections 101(j), 101(k), and 302(b)(7)(F)(iv)'' and 
        inserting ``sections 101(j), 101(k), 101(l), and 
        302(b)(7)(F)(iv)''.
    (i) Model Form.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of Labor shall publish a model 
form for providing the statements, schedules, and other material 
required to be provided under section 104(b)(3) of the Employee 
Retirement Income Security Act of 1974, as amended by this section.
    (j) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2005.

SEC. 503. SECTION 4010 FILINGS WITH THE PBGC.

    (a) Change in Criteria for Persons Required to Provide Information 
to PBGC.--Section 4010(b) of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1310(b)) is amended by striking paragraph (1), 
by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), 
respectively, and by inserting before paragraph (3) (as so 
redesignated) the following new paragraphs:
            ``(1) the aggregate funding target attainment percentage of 
        the plan (as defined in subsection (d)(2)) is less than 60 
        percent;
            ``(2)(A) the aggregate funding target attainment percentage 
        of the plan (as defined in subsection (d)(2)) is less than 75 
        percent, and
            ``(B) the plan sponsor is in an industry with respect to 
        which the corporation determines that there is substantial 
        unemployment or underemployment and the sales and profits are 
        depressed or declining; ''.
    (b) Notice to Participants and Beneficiaries.--Section 4010 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1310) is 
amended by adding at the end the following new subsection:
    ``(d) Notice to Participants and Beneficiaries.--
            ``(1) In general.--Not later than 90 days after the 
        submission by any person to the corporation of information or 
        documentary material with respect to any plan pursuant to 
        subsection (a), such person shall provide notice of such 
        submission to each participant and beneficiary under the plan 
        (and under all plans maintained by members of the controlled 
        group of each contributing sponsor of the plan). Such notice 
        shall also set forth--
                    ``(A) the number of single-employer plans covered 
                by this title which are in at-risk status and are 
                maintained by contributing sponsors of such plan (and 
                by members of their controlled groups) with respect to 
                which the funding target attainment percentage for the 
                preceding plan year of each plan is less than 60 
                percent;
                    ``(B) the value of the assets of each of the plans 
                described in subparagraph (A) for the plan year, the 
                funding target for each of such plans for the plan 
                year, and the funding target attainment percentage of 
                each of such plans for the plan year; and
                    ``(C) taking into account all single-employer plans 
                maintained by the contributing sponsor and the members 
                of its controlled group as of the end of such plan 
                year--
                            ``(i) the aggregate total of the values of 
                        plan assets of such plans as of the end of such 
                        plan year,
                            ``(ii) the aggregate total of the funding 
                        targets of such plans, as of the end of such 
                        plan year, taking into account only benefits to 
                        which participants and beneficiaries have a 
                        nonforfeitable right, and
                            ``(iii) the aggregate funding targets 
                        attainment percentage with respect to the 
                        contributing sponsor for the preceding plan 
                        year.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Value of plan assets.--The term `value of 
                plan assets' means the value of plan assets, as 
                determined under section 303(g)(3).
                    ``(B) Funding target.--The term `funding target' 
                has the meaning provided under section 303(d)(1).
                    ``(C) Funding target attainment percentage.--The 
                term `funding target attainment percentage' has the 
                meaning provided in section 303(d)(2).
                    ``(D) Aggregate funding targets attainment 
                percentage.--The term `aggregate funding targets 
                attainment percentage' with respect to a contributing 
                sponsor for a plan year is the percentage, taking into 
                account all plans maintained by the contributing 
                sponsor and the members of its controlled group as of 
                the end of such plan year, which
                            ``(i) the aggregate total of the values of 
                        plan assets, as of the end of such plan year, 
                        of such plans, is of
                            ``(ii) the aggregate total of the funding 
                        targets of such plans, as of the end of such 
                        plan year, taking into account only benefits to 
                        which participants and beneficiaries have a 
                        nonforfeitable right.
                    ``(E) At-risk status.--The term `at-risk status' 
                has the meaning provided in section 303(i)(3).
            ``(3) Compliance.--
                    ``(A) In general.--Any notice required to be 
                provided under paragraph (1) may be provided in 
                written, electronic, or other appropriate form to the 
                extent such form is reasonably accessible to 
                individuals to whom the information is required to be 
                provided.
                    ``(B) Limitations.--In no case shall a participant 
                or beneficiary be entitled under this subsection to 
                receive more than one notice described in paragraph (1) 
                during any one 12-month period. The person required to 
                provide such notice may make a reasonable charge to 
                cover copying, mailing, and other costs of furnishing 
                such notice pursuant to paragraph (1). The corporation 
                may by regulations prescribe the maximum amount which 
                will constitute a reasonable charge under the preceding 
                sentence.
            ``(4) Notice to congress.--Concurrent with the provision of 
        any notice under paragraph (1), such person shall provide such 
        notice to the Committee on Education and the Workforce of the 
        House of Representatives and the Committee on Health, 
        Education, Labor, and Pensions of the Senate, which shall be 
        treated as materials provided in executive session.''.
    (c) Effective Date.--The amendment made by this section shall apply 
with respect to plan years beginning after 2006.

                      TITLE VI--INVESTMENT ADVICE

SEC. 601. AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 
              PROVIDING PROHIBITED TRANSACTION EXEMPTION FOR PROVISION 
              OF INVESTMENT ADVICE.

    (a) Exemption From Prohibited Transactions.--Section 408(b) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1108(b)) is 
amended by adding at the end the following new paragraph:
            ``(14)(A) Any transaction described in subparagraph (B) in 
        connection with the provision of investment advice described in 
        section 3(21)(A)(ii), in any case in which--
                    ``(i) the investment of assets of the plan is 
                subject to the direction of plan participants or 
                beneficiaries,
                    ``(ii) the advice is provided to the plan or a 
                participant or beneficiary of the plan by a fiduciary 
                adviser in connection with any sale, acquisition, or 
                holding of a security or other property for purposes of 
                investment of plan assets, and
                    ``(iii) the requirements of subsection (g) are met 
                in connection with the provision of the advice.
            ``(B) The transactions described in this subparagraph are 
        the following:
                            ``(i) the provision of the advice to the 
                        plan, participant, or beneficiary;
                            ``(ii) the sale, acquisition, or holding of 
                        a security or other property (including any 
                        lending of money or other extension of credit 
                        associated with the sale, acquisition, or 
                        holding of a security or other property) 
                        pursuant to the advice; and
                            ``(iii) the direct or indirect receipt of 
                        fees or other compensation by the fiduciary 
                        adviser or an affiliate thereof (or any 
                        employee, agent, or registered representative 
                        of the fiduciary adviser or affiliate) in 
                        connection with the provision of the advice or 
                        in connection with a sale, acquisition, or 
                        holding of a security or other property 
                        pursuant to the advice.''.
    (b) Requirements.--Section 408 of such Act is amended further by 
adding at the end the following new subsection:
    ``(g) Requirements Relating to Provision of Investment Advice by 
Fiduciary Advisers.--
            ``(1) In general.--The requirements of this subsection are 
        met in connection with the provision of investment advice 
        referred to in section 3(21)(A)(ii), provided to an employee 
        benefit plan or a participant or beneficiary of an employee 
        benefit plan by a fiduciary adviser with respect to the plan in 
        connection with any sale, acquisition, or holding of a security 
        or other property for purposes of investment of amounts held by 
        the plan, if--
                    ``(A) in the case of the initial provision of the 
                advice with regard to the security or other property by 
                the fiduciary adviser to the plan, participant, or 
                beneficiary, the fiduciary adviser provides to the 
                recipient of the advice, at a time reasonably 
                contemporaneous with the initial provision of the 
                advice, a written notification (which may consist of 
                notification by means of electronic communication)--
                            ``(i) of all fees or other compensation 
                        relating to the advice that the fiduciary 
                        adviser or any affiliate thereof is to receive 
                        (including compensation provided by any third 
                        party) in connection with the provision of the 
                        advice or in connection with the sale, 
                        acquisition, or holding of the security or 
                        other property,
                            ``(ii) of any material affiliation or 
                        contractual relationship of the fiduciary 
                        adviser or affiliates thereof in the security 
                        or other property,
                            ``(iii) of any limitation placed on the 
                        scope of the investment advice to be provided 
                        by the fiduciary adviser with respect to any 
                        such sale, acquisition, or holding of a 
                        security or other property,
                            ``(iv) of the types of services provided by 
                        the fiduciary adviser in connection with the 
                        provision of investment advice by the fiduciary 
                        adviser,
                            ``(v) that the adviser is acting as a 
                        fiduciary of the plan in connection with the 
                        provision of the advice, and
                            ``(vi) that a recipient of the advice may 
                        separately arrange for the provision of advice 
                        by another adviser, that could have no material 
                        affiliation with and receive no fees or other 
                        compensation in connection with the security or 
                        other property,
                    ``(B) the fiduciary adviser provides appropriate 
                disclosure, in connection with the sale, acquisition, 
                or holding of the security or other property, in 
                accordance with all applicable securities laws,
                    ``(C) the sale, acquisition, or holding occurs 
                solely at the direction of the recipient of the advice,
                    ``(D) the compensation received by the fiduciary 
                adviser and affiliates thereof in connection with the 
                sale, acquisition, or holding of the security or other 
                property is reasonable, and
                    ``(E) the terms of the sale, acquisition, or 
                holding of the security or other property are at least 
                as favorable to the plan as an arm's length transaction 
                would be.
            ``(2) Standards for presentation of information.--
                    ``(A) In general.--The notification required to be 
                provided to participants and beneficiaries under 
                paragraph (1)(A) shall be written in a clear and 
                conspicuous manner and in a manner calculated to be 
                understood by the average plan participant and shall be 
                sufficiently accurate and comprehensive to reasonably 
                apprise such participants and beneficiaries of the 
                information required to be provided in the 
                notification.
                    ``(B) Model form for disclosure of fees and other 
                compensation.--The Secretary shall issue a model form 
                for the disclosure of fees and other compensation 
                required in paragraph (1)(A)(i) which meets the 
                requirements of subparagraph (A).
            ``(3) Exemption conditioned on making required information 
        available annually, on request, and in the event of material 
        change.--The requirements of paragraph (1)(A) shall be deemed 
        not to have been met in connection with the initial or any 
        subsequent provision of advice described in paragraph (1) to 
        the plan, participant, or beneficiary if, at any time during 
        the provision of advisory services to the plan, participant, or 
        beneficiary, the fiduciary adviser fails to maintain the 
        information described in clauses (i) through (iv) of 
        subparagraph (A) in currently accurate form and in the manner 
        described in paragraph (2) or fails--
                    ``(A) to provide, without charge, such currently 
                accurate information to the recipient of the advice no 
                less than annually,
                    ``(B) to make such currently accurate information 
                available, upon request and without charge, to the 
                recipient of the advice, or
                    ``(C) in the event of a material change to the 
                information described in clauses (i) through (iv) of 
                paragraph (1)(A), to provide, without charge, such 
                currently accurate information to the recipient of the 
                advice at a time reasonably contemporaneous to the 
                material change in information.
            ``(4) Maintenance for 6 years of evidence of compliance.--A 
        fiduciary adviser referred to in paragraph (1) who has provided 
        advice referred to in such paragraph shall, for a period of not 
        less than 6 years after the provision of the advice, maintain 
        any records necessary for determining whether the requirements 
        of the preceding provisions of this subsection and of 
        subsection (b)(14) have been met. A transaction prohibited 
        under section 406 shall not be considered to have occurred 
        solely because the records are lost or destroyed prior to the 
        end of the 6-year period due to circumstances beyond the 
        control of the fiduciary adviser.
            ``(5) Exemption for plan sponsor and certain other 
        fiduciaries.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                plan sponsor or other person who is a fiduciary (other 
                than a fiduciary adviser) shall not be treated as 
                failing to meet the requirements of this part solely by 
                reason of the provision of investment advice referred 
                to in section 3(21)(A)(ii) (or solely by reason of 
                contracting for or otherwise arranging for the 
                provision of the advice), if--
                            ``(i) the advice is provided by a fiduciary 
                        adviser pursuant to an arrangement between the 
                        plan sponsor or other fiduciary and the 
                        fiduciary adviser for the provision by the 
                        fiduciary adviser of investment advice referred 
                        to in such section,
                            ``(ii) the terms of the arrangement require 
                        compliance by the fiduciary adviser with the 
                        requirements of this subsection, and
                            ``(iii) the terms of the arrangement 
                        include a written acknowledgment by the 
                        fiduciary adviser that the fiduciary adviser is 
                        a fiduciary of the plan with respect to the 
                        provision of the advice.
                    ``(B) Continued duty of prudent selection of 
                adviser and periodic review.--Nothing in subparagraph 
                (A) shall be construed to exempt a plan sponsor or 
                other person who is a fiduciary from any requirement of 
                this part for the prudent selection and periodic review 
                of a fiduciary adviser with whom the plan sponsor or 
                other person enters into an arrangement for the 
                provision of advice referred to in section 
                3(21)(A)(ii). The plan sponsor or other person who is a 
                fiduciary has no duty under this part to monitor the 
                specific investment advice given by the fiduciary 
                adviser to any particular recipient of the advice.
                    ``(C) Availability of plan assets for payment for 
                advice.--Nothing in this part shall be construed to 
                preclude the use of plan assets to pay for reasonable 
                expenses in providing investment advice referred to in 
                section 3(21)(A)(ii).
            ``(6) Definitions.--For purposes of this subsection and 
        subsection (b)(14)--
                    ``(A) Fiduciary adviser.--The term `fiduciary 
                adviser' means, with respect to a plan, a person who is 
                a fiduciary of the plan by reason of the provision of 
                investment advice by the person to the plan or to a 
                participant or beneficiary and who is--
                            ``(i) registered as an investment adviser 
                        under the Investment Advisers Act of 1940 (15 
                        U.S.C. 80b-1 et seq.) or under the laws of the 
                        State in which the fiduciary maintains its 
                        principal office and place of business,
                            ``(ii) a bank or similar financial 
                        institution referred to in section 408(b)(4) or 
                        a savings association (as defined in section 
                        3(b)(1) of the Federal Deposit Insurance Act 
                        (12 U.S.C. 1813(b)(1))), but only if the advice 
                        is provided through a trust department of the 
                        bank or similar financial institution or 
                        savings association which is subject to 
                        periodic examination and review by Federal or 
                        State banking authorities,
                            ``(iii) an insurance company qualified to 
                        do business under the laws of a State,
                            ``(iv) a person registered as a broker or 
                        dealer under the Securities Exchange Act of 
                        1934 (15 U.S.C. 78a et seq.),
                            ``(v) an affiliate of a person described in 
                        any of clauses (i) through (iv), or
                            ``(vi) an employee, agent, or registered 
                        representative of a person described in any of 
                        clauses (i) through (v) who satisfies the 
                        requirements of applicable insurance, banking, 
                        and securities laws relating to the provision 
                        of the advice.
                    ``(B) Affiliate.--The term `affiliate' of another 
                entity means an affiliated person of the entity (as 
                defined in section 2(a)(3) of the Investment Company 
                Act of 1940 (15 U.S.C. 80a-2(a)(3))).
                    ``(C) Registered representative.--The term 
                `registered representative' of another entity means a 
                person described in section 3(a)(18) of the Securities 
                Exchange Act of 1934 (15 U.S.C. 78c(a)(18)) 
                (substituting the entity for the broker or dealer 
                referred to in such section) or a person described in 
                section 202(a)(17) of the Investment Advisers Act of 
                1940 (15 U.S.C. 80b-2(a)(17)) (substituting the entity 
                for the investment adviser referred to in such 
                section).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to advice referred to in section 3(21)(A)(ii) of the 
Employee Retirement Income Security Act of 1974 provided on or after 
January 1, 2006.

SEC. 602. AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 PROVIDING 
              PROHIBITED TRANSACTION EXEMPTION FOR PROVISION OF 
              INVESTMENT ADVICE.

    [See introduced bill, page 287, line 15 through page 298, line 23]

                  TITLE VII--BENEFIT ACCRUAL STANDARDS

SEC. 701. IMPROVEMENTS IN BENEFIT ACCRUAL STANDARDS.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) Rules relating to reduction in accrued benefits because 
        of attainment of any age.--Section 204(b)(1)(H) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 
        1054(b)(1)(H)) is amended by adding at the end the following 
        new clauses:
    ``(vii)(I) A plan shall not be treated as failing to meet the 
requirements of clause (i) if a participant's entire accrued benefit, 
as determined as of any date under the formula for determining benefits 
as set forth in the text of the plan documents, would be equal to or 
greater than that of any similarly situated, younger individual.
    ``(II) For purposes of this clause, an individual is similarly 
situated to a participant if such individual is identical to such 
participant in every respect (including period of service, 
compensation, position, date of hire, work history, and any other 
respect) except for age.
    ``(III) In determining the entire accrued benefit for purposes of 
this clause, the subsidized portion of any early retirement benefit 
(including any early retirement subsidy that is fully or partially 
included or reflected in an employee's opening balance or other 
transition benefits) shall be disregarded.
    ``(viii) A plan under which the accrued benefit payable under the 
plan upon distribution (or any portion thereof) is expressed as the 
balance of a hypothetical account maintained for the participant shall 
not be treated as failing to meet the requirements of clause (i) solely 
because interest accruing on such balance is taken into account.
    ``(ix) A plan shall not be treated as failing to meet the 
requirements of this subparagraph solely because the plan provides 
allowable offsets against those benefits under the plan which are 
attributable to employer contributions, based on benefits which are 
provided under title II of the Social Security Act, the Railroad 
Retirement Act of 1974, another plan described in section 401(a) of the 
Internal Revenue Code of 1986 maintained by the same employer, or under 
any retirement program for officers or employees of the Federal 
Government or of the government of any State or political subdivision 
thereof. For purposes of this clause, allowable offsets based on such 
benefits consist of offsets equal to all or part of the actual benefit 
payment amounts, reasonable projections or estimations of such benefit 
payment amounts, or actuarial equivalents of such actual benefit 
payment amounts, projections, or estimations (determined on the basis 
of reasonable actuarial assumptions).
    ``(x) A plan shall not be treated as failing to meet the 
requirements of this subparagraph solely because the plan provides a 
disparity in contributions or benefits with respect to which the 
requirements of section 401(l) of the Internal Revenue Code of 1986 are 
met.
    ``(xi)(I) A plan shall not be treated as failing to meet the 
requirements of this subparagraph solely because the plan provides for 
pre-retirement indexing of accrued benefits under the plan.
    ``(II) For purposes of this clause, the term `pre-retirement 
indexing' means, in connection with an accrued benefit, the periodic 
adjustment of the accrued benefit by means of the application of a 
recognized index or methodology so as to protect the economic value of 
the benefit against inflation prior to distribution.''.
            (2) Determinations of accrued benefit as balance of benefit 
        account.--Section 203 of such Act (29 U.S.C. 1053) is amended 
        by adding at the end the following new subsection:
    ``(f)(1) A defined benefit plan under which the accrued benefit 
payable under the plan upon distribution (or any portion thereof) is 
expressed as the balance of a hypothetical account maintained for the 
participant shall not be treated as failing to meet the requirements of 
subsection (a)(2) and section 205(g) solely because of the amount 
actually made available for such distribution under the terms of the 
plan, in any case in which the applicable interest rate that would be 
used under the terms of the plan to project the amount of the 
participant's account balance to normal retirement age is not greater 
than a market rate of return.
    ``(2) The Secretary of the Treasury may provide by regulation for 
rules governing the calculation of a market rate of return for purposes 
of paragraph (1) and for permissible methods of crediting interest to 
the account (including variable interest rates) resulting in effective 
rates of return meeting the requirements of paragraph (1).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to periods beginning on or after June 29, 2005.

                   TITLE VIII--DEDUCTION LIMITATIONS

SEC. 801. [SEE INTRODUCED BILL, PAGE 299, LINE 1 THROUGH PAGE 305, LINE 
              20.]

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Pension Protection 
Act of 2005''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and 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.
Sec. 102. Funding rules for single-employer defined benefit pension 
                            plans.
Sec. 103. Benefit limitations under single-employer plans.
Sec. 104. Technical and conforming amendments.
        Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 111. Minimum funding standards.
Sec. 112. Funding rules for single-employer defined benefit pension 
                            plans.
Sec. 113. Benefit limitations under single-employer plans.
Sec. 114. Technical and conforming amendments.
                      Subtitle C--Other Provisions

Sec. 121. Modification of transition rule to pension funding 
                            requirements.
Sec. 122. Treatment of nonqualified deferred compensation plans when 
                            employer defined benefit plan in at-risk 
                            status.
    TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS

 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. Removal of restrictions with respect to procedures applicable 
                            to disputes involving withdrawal liability.
        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.
                      TITLE III--OTHER PROVISIONS

Sec. 301. Interest rate for 2006 funding requirements.
Sec. 302. Interest rate assumption for determination of lump sum 
                            distributions.
Sec. 303. Interest rate assumption for applying benefit limitations to 
                            lump sum distributions.
Sec. 304. Distributions during working retirement.
Sec. 305. Other amendments relating to prohibited transactions.
Sec. 306. Correction period for certain transactions involving 
                            securities and commodities.
Sec. 307. Government Accountability Office pension funding report.
          TITLE IV--IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS

Sec. 401. Increases in PBGC premiums.
                          TITLE V--DISCLOSURE

Sec. 501. Defined benefit plan funding notices.
Sec. 502. Additional disclosure requirements.
Sec. 503. Section 4010 filings with the PBGC.
                      TITLE VI--INVESTMENT ADVICE

Sec. 601. Amendments to Employee Retirement Income Security Act of 1974 
                            providing prohibited transaction exemption 
                            for provision of investment advice.
Sec. 602. Amendments to Internal Revenue Code of 1986 providing 
                            prohibited transaction exemption for 
                            provision of investment advice.
                  TITLE VII--BENEFIT ACCRUAL STANDARDS

Sec. 701. Improvements in benefit accrual standards.
                   TITLE VIII--DEDUCTION LIMITATIONS

Sec. 801. Increase in deduction limits.
Sec. 802. Updating deduction rules for combination of plans.
 TITLE IX--ENHANCED RETIREMENTS SAVINGS AND DEFINED CONTRIBUTION PLANS

Sec. 901. Pensions and individual retirement arrangement provisions of 
                            Economic Growth and Tax Relief 
                            Reconciliation Act of 2001 made permanent.
Sec. 902. Saver's credit.
Sec. 903. Increasing participation through automatic contribution 
                            arrangements.
Sec. 904. Penalty-free withdrawals from retirement plans for 
                            individuals called to active duty for at 
                            least 179 days.
Sec. 905. Waiver of 10 percent early withdrawal penalty tax on certain 
                            distributions of pension plans for public 
                            safety employees.
Sec. 906. Combat zone compensation taken into account for purposes of 
                            determining limitation and deductibility of 
                            contributions to individual retirement 
                            plans.
Sec. 907. Direct payment of tax refunds to individual retirement plans.
Sec. 908. IRA eligibility for the disabled.
Sec. 909. Allow rollovers by nonspouse beneficiaries of certain 
                            retirement plan distributions.
        TITLE X--PROVISIONS TO ENHANCE HEALTH CARE AFFORDABILITY

Sec. 1001. Treatment of annuity and life insurance contracts with a 
                            long-term care insurance feature.
Sec. 1002. Disposition of unused health benefits in cafeteria plans and 
                            flexible spending arrangements.
Sec. 1003. Distributions from governmental retirement plans for health 
                            and long-term care insurance for public 
                            safety officers.

 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.

    [See section 101 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION 
              PLANS.

    [See section 102 of the bill as reported by the Committee on 
Education and the Workforce.]

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

    [See section 103 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 104. TECHNICAL AND CONFORMING AMENDMENTS.

    [See section 104 of the bill as reported by the Committee on 
Education and the Workforce.]

        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
                    ``(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 431 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 430(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.--In the case of a defined benefit plan which 
        is not a multiemployer plan, 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 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.
            ``(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 
        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 not a multiemployer plan 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 contribution (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.
                            ``(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.
            ``(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 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 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.--Paragraph (1) 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--
                    ``(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 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 substantial business hardship (as 
        determined under subsection (c)(2)) 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 paragraph (2), 
        this section applies to a plan if, for any plan year beginning 
        after December 31, 2006--
                    ``(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.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2006.

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);
            ``(2) in any case in which the value of plan assets of the 
        plan (as reduced under subsection (f)(4)(B)) exceeds the 
        funding target of the plan for the plan year, the target normal 
        cost of the plan for the plan year reduced by such excess; or
            ``(3) in any other case, the target normal cost of the plan 
        for the plan year.
    ``(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 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.--The plan sponsor 
        shall determine, with respect to the shortfall amortization 
        base of the plan for any plan year, the amounts necessary to 
        amortize such shortfall amortization base, in level annual 
        installments over a period of 7 plan years beginning with such 
        plan year. For purposes of paragraph (1), the annual 
        installment of such amortization for each plan year in such 7-
        plan-year period is the shortfall amortization installment for 
        such plan year with respect to such shortfall amortization 
        base. 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 the excess (if any) of--
                    ``(A) the funding shortfall of such plan for such 
                plan year, over
                    ``(B) the sum of--
                            ``(i) 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, for 
                        such plan year and the 5 succeeding plan years, 
                        which have been determined with respect to the 
                        shortfall amortization bases of the plan for 
                        each of the 6 plan years preceding such plan 
                        year, and
                            ``(ii) the present value (as so determined) 
                        of the aggregate total of the waiver 
                        amortization installments for such plan year 
                        and the 5 succeeding plan years, which have 
                        been determined with respect to the waiver 
                        amortization bases of the plan for each of the 
                        5 plan years preceding such plan year.
                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.
            ``(4) Funding shortfall.--
                    ``(A) In general.--For purposes of this section, 
                except as provided in subparagraph (B), the funding 
                shortfall of a plan for any plan year is the excess (if 
                any) of--
                            ``(i) the funding target of the plan for 
                        the plan year, over
                            ``(ii) 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.
                    ``(B) Transition rule.--
                            ``(i) In general.--For purposes of 
                        paragraph (3), in the case of a non-deficit 
                        reduction plan, subparagraph (A) shall be 
                        applied to plan years beginning after 2006 and 
                        before 2011 by substituting for the amount 
                        described in subparagraph (A)(i) the applicable 
                        percentage of the funding target of the plan 
                        for the plan year determined under the 
                        following table:


 
                                                                 The
                                                             applicable
 ``In the case of a plan year beginning in calendar year:    percentage
                                                                 is:
 
2007......................................................    92 percent
2008......................................................    94 percent
2009......................................................    96 percent
2010......................................................   98 percent.

                            ``(ii) Non-deficit reduction plan.--For 
                        purposes of clause (i), the term `non-deficit 
                        reduction plan' means any plan--
                                    ``(I) to which section 412 (as in 
                                effect on the day before the date of 
                                the enactment of the Pension Protection 
                                Act of 2005) applied for the plan year 
                                beginning in 2006, and
                                    ``(II) to which subsection (l) of 
                                such section (as so in effect) did not 
                                apply for such plan year.
            ``(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 
        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 
        liabilities to participants and their beneficiaries under the 
        plan for 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.--The plan sponsor 
        shall determine, with respect to the waiver amortization base 
        of the plan for any plan year, the amounts necessary to 
        amortize such waiver amortization base, in level annual 
        installments over a period of 5 plan years beginning with the 
        succeeding plan year. For purposes of paragraph (1), the annual 
        installment of such amortization for each plan year in such 5-
        plan year period is the waiver amortization installment for 
        such plan year with respect to such waiver amortization 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 
        412(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 base for all preceding plan 
        years shall be reduced to zero.
    ``(f) Reduction of Minimum Required Contribution by Pre-Funding 
Balance and Funding Standard Carryover Balance.--
            ``(1) Election to maintain balances.--
                    ``(A) Pre-funding balance.--The plan sponsor of a 
                defined benefit plan which is not a multiemployer plan 
                may elect to maintain a pre-funding 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 2006.--A plan is described in this 
                        clause if the plan--
                                    ``(I) was in effect for a plan year 
                                beginning in 2006, 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 pre-funding 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 pre-funding 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 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 412(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 pre-funding 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.
            ``(4) Effect of balances on amounts treated as value of 
        plan assets.--In the case of any plan maintaining a pre-funding 
        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)(3), the value of 
                plan assets is deemed to be such amount, reduced by the 
                amount of the pre-funding balance, but only if an 
                election under paragraph (2) applying any portion of 
                the pre-funding 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.--
                For purposes of subsections (a), (c)(4)(A)(ii), and 
                (d)(2)(A), the value of plan assets is deemed to be 
                such amount, reduced by the amount of the pre-funding 
                balance and the funding standard carryover balance.
                    ``(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 pre-funding 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 pre-funding 
                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 pre-funding 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 pre-funding 
                balance.
            ``(6) Pre-funding balance.--
                    ``(A) In general.--A pre-funding 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.--As of the valuation date for each 
                plan year beginning after 2007, the pre-funding 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 (increased by 
                        interest on any portion of such minimum 
                        required contribution remaining unpaid as of 
                        the valuation date for the current plan year, 
                        at the effective interest rate for the plan for 
                        the preceding plan year, for the period 
                        beginning with the first day of such preceding 
                        plan year and ending on the date that payment 
                        of such portion is made).
                    ``(C) Decreases.--As of the valuation date for each 
                plan year after 2007, the pre-funding balance of a plan 
                shall be decreased (but not below zero) by the sum of--
                            ``(i) 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) 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.--As of the valuation date for each 
                plan year after 2007, the funding standard carryover 
                balance of a plan shall be decreased (but not below 
                zero) by the sum of--
                            ``(i) 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) any reduction in such balance 
                        elected under paragraph (5).
            ``(8) Adjustments to balances.--In determining the pre-
        funding balance or the funding standard carryover balance of a 
        plan as of the valuation date (before applying any increase or 
        decrease under paragraph (6) or (7)), the plan sponsor shall, 
        in accordance with regulations which shall be prescribed by the 
        Secretary, adjust such balance so as to reflect the rate of net 
        gain or loss (determined, notwithstanding subsection (g)(3), on 
        the basis of fair market value) experienced by all plan assets 
        for the period beginning with the valuation date for the 
        preceding plan year and ending with the date preceding the 
        valuation date for the current plan year, properly taking 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.
    ``(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 500 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--
                            ``(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) Authorization of use of actuarial value.--For 
        purposes of this section, the value of plan 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, 
        except that--
                    ``(A) any such method providing for averaging of 
                fair market values may not provide for averaging of 
                such values over more than the 3 most recent plan years 
                (including the current plan year), and
                    ``(B) any such method may 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.
            ``(4) Accounting for contribution receipts.--For purposes 
        of this section--
                    ``(A) Contributions for prior plan years taken into 
                account.--For purposes of determining the value of plan 
                assets for any current plan year, in any case in which 
                a contribution properly allocable to amounts owed for a 
                preceding plan year is made on or after the valuation 
                date of the plan for such current plan year, such 
                contribution shall be taken into account, except that 
                any such contribution made during any such current plan 
                year beginning after 2007 shall be taken into account 
                only in an amount equal to its present value 
                (determined using the effective rate of interest for 
                the plan for the preceding plan year) as of the 
                valuation date of the plan for such current plan year.
                    ``(B) Contributions for current plan year 
                disregarded.--For purposes of determining the value of 
                plan assets for any current plan year, contributions 
                which are properly allocable to amounts owed for such 
                plan year shall not be taken into account, and, in the 
                case of any such contribution made before the valuation 
                date of the plan for such plan year, such value of plan 
                assets shall be reduced for interest on such amount 
                determined using the effective rate of interest of the 
                plan for the current plan year for the period beginning 
                when such payment was made and ending on the valuation 
                date of the plan.
            ``(5) Accounting for plan liabilities.--For purposes of 
        this section--
                    ``(A) Liabilities taken into account for current 
                plan year.--In determining the value of liabilities 
                under a plan for a plan year, liabilities shall be 
                taken into account to the extent attributable to 
                benefits (including any early retirement or similar 
                benefit) accrued or earned as of the beginning of the 
                plan year.
                    ``(B) Accruals during current plan year 
                disregarded.--For purposes of subparagraph (A), 
                benefits accrued or earned during such plan year shall 
                not be taken into account, irrespective of whether the 
                valuation date of the plan for such plan year is later 
                than the first day of such 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 liabilities 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 
                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 liabilities 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 liabilities 
                        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 liabilities 
                        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 a 
                        3-year weighted average of yields on investment 
                        grade corporate bonds with varying maturities.
                            ``(ii) 3-year weighted average.--The term 
                        `3-year weighted average' means an average 
                        determined by using a methodology under which 
                        the most recent year is weighted 50 percent, 
                        the year preceding such year is weighted 35 
                        percent, and the second year preceding such 
                        year is weighted 15 percent.
                    ``(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.
                    ``(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)(A)(iv)(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) In general.--Notwithstanding the 
                        preceding provisions of this paragraph, for 
                        plan years beginning in 2007 or 2008, 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 
                                412(b)(5)(B)(ii)(II) (as in effect for 
                                plan years beginning in 2006), 
                                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 
                        2007 and 66\2/3\ percent for plan years 
                        beginning in 2008.
                            ``(iii) New plans ineligible.--Clause (i) 
                        shall not apply to any plan if the first plan 
                        year of the plan begins after December 31, 
                        2006.
            ``(3) Mortality table.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C), the mortality table used in 
                determining any present value or making any computation 
                under this section shall be the RP-2000 Combined 
                Mortality Table, using Scale AA, as published by the 
                Society of Actuaries, as in effect on the date of the 
                enactment of the Pension Protection Act of 2005 and as 
                revised from time to time under subparagraph (B).
                    ``(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 for a 
                        period not to exceed 10 years, a mortality 
                        table which meets the requirements of clause 
                        (ii) shall be used in determining any present 
                        value or making any computation under this 
                        section. A mortality table described in this 
                        clause shall cease to be in effect if the plan 
                        actuary determines at any time that such table 
                        does not meet the requirements of subclauses 
                        (I) and (II) of clause (ii).
                            ``(ii) Requirements.--A mortality table 
                        meets the requirements of this clause if the 
                        Secretary determines that--
                                    ``(I) such table reflects the 
                                actual experience of the pension plan 
                                and projected trends in such 
                                experience, and
                                    ``(II) such table is significantly 
                                different from the table described in 
                                subparagraph (A).
                            ``(iii) Deadline for disposition of 
                        application.--Any mortality table submitted to 
                        the Secretary for approval under this 
                        subparagraph shall be treated as in effect for 
                        the succeeding plan year 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 (ii).
                    ``(D) Transition rule.--Under regulations of the 
                Secretary, any difference in assumptions as set forth 
                in the mortality table specified in subparagraph (A) 
                and assumptions as set forth in the mortality table 
                described in section 412(l)(7)(C)(ii) (as in effect for 
                plan years beginning in 2006) shall be phased in 
                ratably over the first period of 5 plan years beginning 
                in or after 2007 so as to be fully effective for the 
                fifth plan year. The preceding sentence shall not apply 
                to any plan if the first plan year of the plan begins 
                after December 31, 2006.
            ``(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.
                    ``(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
                            ``(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 any case in which a plan is 
                in at-risk status for a plan year, the funding target 
                of the plan for the plan year is the sum of--
                            ``(i) the present value of all liabilities 
                        to participants and their beneficiaries under 
                        the plan for the plan year, as determined by 
                        using, in addition to the actuarial assumptions 
                        described in subsection (g), the supplemental 
                        actuarial assumptions described in subparagraph 
                        (B), plus
                            ``(ii) a loading factor determined under 
                        subparagraph (C).
                    ``(B) Supplemental actuarial assumptions.--The 
                actuarial assumptions used in determining the valuation 
                of the funding target shall include, in addition to the 
                actuarial assumptions described in subsection (h), an 
                assumption that all participants will elect benefits at 
                such times and in such forms as will result in the 
                highest present value of liabilities under subparagraph 
                (A)(i).
                    ``(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 any case in 
        which a plan is in at-risk status for a plan year, the target 
        normal cost of the plan for such plan year shall be 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 under the actuarial 
                assumptions used under paragraph (1), plus
                    ``(B) the loading factor under paragraph (1)(C), 
                excluding the portion of the loading factor described 
                in paragraph (1)(C)(i).
            ``(3) Determination of at-risk status.--For purposes of 
        this subsection, a plan is in `at-risk status' for a plan year 
        if the funding target attainment percentage of the plan for the 
        preceding plan year was less than 60 percent.
            ``(4) 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 this 
                paragraph, the `transition percentage' for a plan year 
                is the product derived by multiplying--
                            ``(i) 20 percent, by
                            ``(ii) the number of plan years during the 
                        period described in subparagraph (A).
    ``(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) Interest penalty for failure to meet 
                accelerated quarterly payment schedule.--In any case in 
                which the plan has a funding shortfall for the 
                preceding plan year, if the required installment is not 
                paid in full, then the minimum required contribution 
                for the plan year (as increased under paragraph (2)) 
                shall be further increased by an amount equal to the 
                interest on the amount of the underpayment for the 
                period of the underpayment, using an interest rate 
                equal to the excess of--
                            ``(i) 175 percent of the Federal mid-term 
                        rate (as in effect under section 1274 for the 
                        1st month of such plan year), over
                            ``(ii) the effective rate of interest for 
                        the plan for the plan year.
                    ``(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      The due date is:
 required installment:
  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 (without regard 
                                to any waiver under section 412(c)) to 
                                the plan for the plan year under this 
                                section, or
                                    ``(II) in the case of a plan year 
                                beginning after 2007, 100 percent of 
                                the minimum required contribution 
                                (without regard to any waiver under 
                                section 412(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.
            ``(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 that 
                would be described in subsection (f)(2)(B) if `100' 
                were substituted for `500' therein) 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 
                subparagraph:
                            ``(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 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 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
                    ``(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 defined benefit plan (other than a 
        multiemployer plan) 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. This subsection shall 
        not apply to any plan to which section 4021 of the Employee 
        Retirement Income Security Act of 1974 does not apply (as such 
        section is in effect on the date of the enactment of the 
        Pension Protection Act of 2005).
            ``(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.--
                    ``(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 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.
            ``(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 (i).
                    ``(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 430.
                    ``(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, 2006.

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. Prohibition of shutdown benefits and other unpredictable 
                            contingent event benefits under single-
                            employer plans.

``SEC. 436. PROHIBITION OF SHUTDOWN BENEFITS AND OTHER UNPREDICTABLE 
              CONTINGENT EVENT BENEFITS UNDER SINGLE-EMPLOYER PLANS.

    ``(a) In General.--No pension plan which is defined benefit plan 
(other than a multiemployer plan) may provide benefits to which 
participants are entitled solely by reason of the occurrence of--
            ``(1) a plant shutdown, or
            ``(2) any other unpredictable contingent event.
    ``(b) Unpredictable Contingent Event.--For purposes of this 
subsection, the term `unpredictable contingent event' means an event 
other than--
            ``(1) attainment of any age, performance of any service, 
        receipt or derivation of any compensation, or the occurrence of 
        death or disability, or
            ``(2) an event which is reasonably and reliably predictable 
        (as determined by the Secretary).''.
            (2) Clerical amendment.--The table of parts for suchapter 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) Other Limits on Benefits and Benefit Accruals.--
            (1) In general.--Subpart B of part III of subchapter D of 
        chapter 1 of such Code is amended by adding at the end the 
        following:

``SEC. 437. FUNDING-BASED LIMITS ON BENEFITS AND BENEFIT ACCRUALS UNDER 
              SINGLE-EMPLOYER PLANS.

    ``(a) Limitations on Plan Amendments Increasing Liability for 
Benefits.--
            ``(1) In general.--No amendment to a defined benefit plan 
        (other than a multiemployer 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 to the plan may take effect during any plan year 
        if the funding target attainment percentage as of the valuation 
        date of the plan for such plan year is--
                    ``(A) less than 80 percent, or
                    ``(B) would be less than 80 percent taking into 
                account such amendment.
        For purposes of this subparagraph, any increase in benefits 
        under the plan by reason of an increase in the benefit rate 
        provided under the plan or on the basis of an increase in 
        compensation shall be treated as effected by plan amendment.
            ``(2) Exemption.--Paragraph (1) shall cease to apply with 
        respect to any plan year, effective as of the first date 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 a funding target attainment 
                percentage of 80 percent.
    ``(b) Funding-Based Limitation on Certain Forms of Distribution.--
            ``(1) In general.--A defined benefit plan (other than a 
        multiemployer plan) shall provide that, in any case in which 
        the plan's funding target attainment percentage as of the 
        valuation date of the plan for a plan year is less than 80 
        percent, the plan may not after such date pay any payment 
        described in section 401(a)(32)(B).
            ``(2) Exception.--Paragraph (1) shall not apply to any plan 
        for any plan year if the terms of such plan (as in effect for 
        the period beginning on June 29, 2005, and ending with such 
        plan year) provide for no benefit accruals with respect to any 
        participant during such period.
    ``(c) Limitations on Benefit Accruals for Plans With Severe Funding 
Shortfalls.--A defined benefit plan (other than a multiemployer plan) 
shall provide that, in any case in which the plan's funding target 
attainment percentage as of the valuation date of the plan for a plan 
year is less than 60 percent, all future benefit accruals under the 
plan shall cease as of such date.
    ``(d) New Plans.--Subsections (a) and (c) 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.
    ``(e) Presumed Underfunding for Purposes of Benefit Limitations 
Based on Prior Year's Funding Status.--
            ``(1) Presumption of continued underfunding.--In any case 
        in which a benefit limitation under subsection (a), (b), or (c) 
        has been applied to a plan with respect to the plan year 
        preceding the current plan year, the funding target attainment 
        percentage of the plan as of the valuation date of the plan for 
        the current plan year shall be presumed to be equal to the 
        funding target attainment percentage of the plan as of the 
        valuation date of the plan for the preceding plan year until 
        the enrolled actuary of the plan certifies the actual funding 
        target attainment percentage of the plan as of the valuation 
        date of the plan for the current plan year.
            ``(2) Presumption of underfunding after 10th month.--In any 
        case in which no such certification is made with respect to the 
        plan before the first day of the 10th month of the current plan 
        year, for purposes of subsections (a), (b), and (c), the plan's 
        funding target attainment percentage shall be conclusively 
        presumed to be less than 60 percent as of the first day of such 
        10th month, and such day shall be deemed, for purposes of such 
        subsections, to be the valuation date of the plan for the 
        current plan year.
            ``(3) Presumption of underfunding after 4th month for 
        nearly underfunded plans.--In any case in which--
                    ``(A) a benefit limitation under subsection (a), 
                (b), or (c) did not apply to a plan with respect to the 
                plan year preceding the current plan year, but the 
                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 funding target attainment 
                percentage of the plan as of the valuation date 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 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 funding target attainment 
        percentage of the plan as of the valuation date of the plan for 
        such preceding plan year.
    ``(f) Restoration by Plan Amendment of Benefits or Benefit 
Accrual.--In any case in which a prohibition under subsection (b) of 
the payment of lump sum distributions or benefits in any other 
accelerated form or a cessation of benefit accruals under subsection 
(c) is applied to a plan with respect to any plan year and such 
prohibition or cessation, as the case may be, ceases to apply to any 
subsequent plan year, the plan may provide for the resumption of such 
benefit payment or such benefit accrual only by means of the adoption 
of a plan amendment after the valuation date of the plan for such 
subsequent plan year. The preceding sentence shall not apply to a 
prohibition or cessation required by reason of subsection (e).
    ``(g) Funding Target Attainment Percentage.--
            ``(1) In general.--For purposes of this section, the term 
        `funding target attainment percentage' means, with respect to 
        any plan for any plan year, the ratio (expressed as a 
        percentage) which--
                    ``(A) the value of plan assets for the plan year 
                (as determined under section 430(g)) reduced by the 
                pre-funding balance and the funding standard carryover 
                balance (within the meaning of section 430(f)), bears 
                to
                    ``(B) the funding target of the plan for the plan 
                year (as determined under section 430(d)(1), but 
                without regard to section 430(i)(1)).
            ``(2) Application to plans which are fully funded without 
        regard to reductions for funding balances.--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 under 
        paragraph (1)(A) for the pre-funding balance and the funding 
        standard carryover balance), paragraph (1) shall be applied 
        without regard to such reduction.''.
            (2) Clerical amendment.--The table of sections for such 
        subpart is amended by adding at the end the following new item:

``Sec. 437. Funding-based limits on benefits and benefit accruals under 
                            single-employer plans.''.
    (c) Special Rule for Plan Amendments.--A plan shall not fail to 
meet the requirements of section 411(d)(6) of the Internal Revenue Code 
of 1986 or section 204(g) of the Employee Retirement Income Security 
Act of 1974 solely by reason of the adoption by the plan of an 
amendment necessary to meet the requirements of the amendments made by 
this section.
    (d) Effective Date.--
            (1) Shutdown benefits.--Except as provided in paragraph 
        (3), the amendments made by subsection (a) shall apply with 
        respect to plant shutdowns, or other unpredictable contingent 
        events, occurring after December 31, 2006.
            (2) Other benefits.--Except as provided in paragraph (3), 
        the amendments made by subsection (b) shall apply with respect 
        to plan years beginning after December 31, 2006.
            (3) 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 the date of the enactment of this 
        Act, the amendments made by this subsection 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, 2009.
        For purposes of clause (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 subsection shall not be treated as a termination of such 
        collective bargaining agreement.
    (e) Special Rule for 2007.--For purposes of applying subsection (e) 
of section 437 of such Code (as added by this section) to current plan 
years (within the meaning of such subsection) beginning in 2007, the 
modified funded current liability percentage of the plan for the 
preceding year shall be substituted for the funding target attainment 
percentage of the plan for the preceding year. For purposes of the 
preceding sentence, the term ``modified funded current liability 
percentage'' means the funded current liability percentage (as defined 
in section 412(l)(8) of such Code), reduced as described in 
subparagraph (E) thereof in the case of a plan with a funded current 
liability percentage (as so defined and before such reduction) which is 
less than 100 percent.

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 sections 436 and 437.''.
            (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 ``430(j)(4)'', and
                    (B) in subparagraph (C), by striking ``section 
                412(m) by reason of paragraph (5)(A) thereof'' and 
                inserting ``section 430(j)(3) by reason of section 
                430(j)(4)(A)''.
            (3) Section 401(a)(33) of such Code is amended--
                    (A) in subparagraph (B)(i), by striking ``funded 
                current liability percentage (as defined in 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(d)(2)'', and
                    (C) in subparagraph (D), by striking ``section 
                412(c)(11) (without regard to subparagraph (B) 
                thereof)'' and inserting ``section 412(b) (without 
                regard to paragraph (2) 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(d)(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(d)(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 target liability amount 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 pre-funding balance and 
                        the funding standard carryover balance, as 
                        determined under section 430(f)), or
                            ``(ii) the value of plan assets as 
                        determined under section 430(g)(3) (reduced by 
                        the pre-funding balance and the funding 
                        standard carryover balance, as determined under 
                        section 430(f)), over
                    ``(B) 125 percent of the sum of the target 
                liability amount 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, 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 defined benefit plan which is not a 
        multiemployer 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 in the order in which such contributions 
                became due 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)(2)''.
            (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)(3)''.
            (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 
        inserting ``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,''.
    (g) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2006.

                      Subtitle C--Other Provisions

SEC. 121. 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, 2006.
    (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) Notwithstanding section 430(f)(4)(B) of such Code and 
        section 303(f)(4)(B) of such Act, for purposes of section 
        430(c)(4)(A)(ii) of such Code and section 303(c)(4)(A)(ii) of 
        such Act, the value of plan assets is deemed to be such amount, 
        reduced by the amount of the pre-funding balance if, pursuant 
        to a binding written agreement with the Pension Benefit 
        Guaranty Corporation entered into before January 1, 2007, the 
        funding standard carryover balance is not available to reduce 
        the minimum required contribution for the plan year.
            (4) Section 430(c)(4)(B) of such Code and section 
        303(c)(4)(B) of such Act (relating to phase-in of funding 
        target for determination of funding shortfall) shall each be 
        applied by substituting ``2012'' for ``2011'' therein and by 
        substituting for the table therein the following:


 
                                                                 The
                                                             applicable
  In the case of a plan year beginning in calendar year:     percentage
                                                                 is:
 
2007......................................................    90 percent
2008......................................................    92 percent
2009......................................................    94 percent
2010......................................................    96 percent
2011......................................................   98 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.--
            (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, and 2006''.
            (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, 2006, and shall apply to plan years beginning 
        after such date.

SEC. 122. TREATMENT OF NONQUALIFIED DEFERRED COMPENSATION PLANS WHEN 
              EMPLOYER DEFINED BENEFIT PLAN IN AT-RISK STATUS.

    (a) In General.--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) Employer's defined benefit plan in at-risk status.--
        If--
                    ``(A) during any period in which a defined benefit 
                plan to which section 412 applies is in an at-risk 
                status (as defined in section 430(i)(3)), assets are 
                set aside (directly or indirectly) in a trust (or other 
                arrangement determined by the Secretary), or 
                transferred to such a trust or other arrangement, for 
                purposes of paying deferred compensation under a 
                nonqualified deferred compensation plan of the employer 
                maintaining the defined benefit plan, or
                    ``(B) a nonqualified deferred compensation plan of 
                the employer provides that assets will become 
                restricted to the provision of benefits under the plan 
                in connection with such at-risk status (or other 
                similar financial measure determined by the Secretary) 
                of 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. Subparagraph (A) shall not apply 
        with respect to any assets which are so set aside before the 
        defined benefit plan is in at-risk status.''.
    (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 reservations of assets after December 31, 2005.
    (d) Special Rule for 2006.--For purposes of determining if a plan 
is in at-risk status (within the meaning of section 409A of such Code, 
as added by this section) for any plan year beginning in 2006, such 
section shall be applied by substituting the plan's modified funded 
current liability percentage for the plan's funding target attainment 
percentage. For purposes of the preceding sentence, the term ``modified 
funded current liability percentage'' means the funded current 
liability percentage (as defined in section 412(l)(8) of such Code), 
reduced as described in subparagraph (E) thereof.

    TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS

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

SEC. 201. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS.

    [See section 201 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
              ENDANGERED OR CRITICAL STATUS.

    [See section 202 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER PLANS.

    [See section 203 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 204. WITHDRAWAL LIABILITY REFORMS.

    [See section 204 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 205. REMOVAL OF RESTRICTIONS WITH RESPECT TO PROCEDURES APPLICABLE 
              TO DISPUTES INVOLVING WITHDRAWAL LIABILITY.

    [See section 205 of the bill as reported by the Committee on 
Education and the Workforce.]

        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 (added by section 112 of this Act) 
is amended by adding at the end 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--
            ``(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 section 412 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 418B.
    ``(b) Funding Standard Account.--
            ``(1) Account required.--Each multiemployer plan to which 
        section 412 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 in existence on 
                        January 1, 1974, the unfunded past service 
                        liability under the plan on the first day of 
                        the first plan year to which section 412 
                        applies, over a period of 40 plan years,
                            ``(ii) in the case of a plan which comes 
                        into existence after January 1, 1974, the 
                        unfunded past service liability under the plan 
                        on the first day of the first plan year to 
                        which section 412 applies, over a period of 15 
                        plan years,
                            ``(iii) 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,
                            ``(iv) separately, with respect to each 
                        plan year, the net experience loss (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(v) separately, with respect to each plan 
                        year, the net loss (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 15 plan years,
                    ``(C) the amount necessary to amortize each waived 
                funding deficiency (within the meaning of section 
                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 2005), 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 2005).
            ``(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 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 
                2005), 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 to plan 
        years before 2007.--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 2005) over any 
        period beginning with a plan year beginning before 2007, 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--
                    ``(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.--Except as provided in subsection (c)(9), 
        the funding standard account (and items therein) shall be 
        charged or credited (as determined under regulations prescribed 
        by the Secretary) with interest at the appropriate rate 
        consistent with the rate or rates of interest used under the 
        plan to determine costs.
            ``(7) Certain amortization charges and credits.--In the 
        case of a plan which, immediately before the date of the 
        enactment of the Multiemployer Pension Plan Amendments Act of 
        1980, was a multiemployer plan (within the meaning of section 
        414(f) as in effect immediately before such date)--
                    ``(A) any amount described in paragraph (2)(B)(ii), 
                (2)(B)(iii), or (3)(B)(i) of this subsection which 
                arose in a plan year beginning before such date shall 
                be amortized in equal annual installments (until fully 
                amortized) over 40 plan years, beginning with the plan 
                year in which the amount arose,
                    ``(B) any amount described in paragraph (2)(B)(iv) 
                or (3)(B)(ii) of this subsection which arose in a plan 
                year beginning before such date shall be amortized in 
                equal annual installments (until fully amortized) over 
                20 plan years, beginning with the plan year in which 
                the amount arose,
                    ``(C) any change in past service liability which 
                arises during the period of 3 plan years beginning on 
                or after such date, and results from a plan amendment 
                adopted before such date, shall be amortized in equal 
                annual installments (until fully amortized) over 40 
                plan years, beginning with the plan year in which the 
                change arises, and
                    ``(D) any change in past service liability which 
                arises during the period of 2 plan years beginning on 
                or after such date, and results from the changing of a 
                group of participants from one benefit level to another 
                benefit level under a schedule of plan benefits which--
                            ``(i) was adopted before such date, and
                            ``(ii) was effective for any plan 
                        participant before the beginning of the first 
                        plan year beginning on or after such date,
                shall be amortized in equal annual installments (until 
                fully amortized) over 40 plan years, beginning with the 
                plan year in which the change arises.
            ``(8) Special rules relating to charges and credits to 
        funding standard account.--For purposes of this section--
                    ``(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.
                    ``(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 
                418B(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 the 
                Employee Retirement Income Security Act of 1974 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 2005) 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)(iv) shall not apply to 
                the amount so charged).
                    ``(F) Financial assistance.--Any amount of any 
                financial assistance from the Pension Benefit Guaranty 
                Corporation to any plan, and any repayment of such 
                amount, shall be taken into account under this section 
                and section 412 in such manner as is determined by the 
                Secretary.
                    ``(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 payable under the plan during a 
                period that does not exceed 14 years, paragraph 
                (2)(B)(iii) 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 section, 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 section, 
                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.
                    ``(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.
            ``(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, 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--
                            ``(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)).
                    ``(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),
                        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.--In the case of 
                                plan years beginning after December 31, 
                                1995, 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.
                                    ``(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 
                        shall periodically (at least every 5 years) 
                        review any tables in effect under this 
                        subparagraph and shall, to the extent the 
                        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 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.--
                            ``(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.
            ``(9) Interest rule for waivers and extensions.--The 
        interest rate applicable for any plan year for purposes of 
        computing the amortization charge described in subsection 
        (b)(2)(C) and in connection with an extension granted under 
        subsection (d) shall be the greater of--
                    ``(A) 150 percent of the Federal mid-term rate (as 
                in effect under section 1274 for the 1st month of such 
                plan year), or
                    ``(B) the rate of interest used under the plan for 
                determining costs.
    ``(d) Extension of Amortization Periods for Multiemployer Plans.--
In the case of a multiemployer plan--
            ``(1) Extension.--The period of years required to amortize 
        any unfunded liability (described in any clause of subsection 
        (b)(2)(B)) of any multiemployer plan shall be extended by the 
        Secretary for a period of time (not in excess of 5 years) if 
        the Secretary determines that--
                    ``(A) absent the extension, the plan would have an 
                accumulated funding deficiency in any of the next 10 
                plan years,
                    ``(B) the plan sponsor has adopted a plan to 
                improve the plan's funding status, and
                    ``(C) taking into account the extension, the plan 
                is projected to have sufficient assets to timely pay 
                its expected benefit liabilities and other anticipated 
                expenditures
            ``(2) Additional extension.--The period of years required 
        to amortize any unfunded liability (described in any clause of 
        subsection (b)(2)(B)) of any multiemployer plan may be extended 
        (in addition to any extension under paragraph (1)) by the 
        Secretary for a period of time (not in excess of 5 years) if 
        the Secretary determines that such extension would carry out 
        the purposes of the Employee Retirement Income Security Act of 
        1974 and would provide adequate protection for participants 
        under the plan and their beneficiaries and if the Secretary 
        determines that the failure to permit such extension would--
                    ``(A) result in--
                            ``(i) a substantial risk to the voluntary 
                        continuation of the plan, or
                            ``(ii) a substantial curtailment of pension 
                        benefit levels or employee compensation, and
                    ``(B) be adverse to the interests of plan 
                participants in the aggregate.
            ``(3) Advance notice.--
                    ``(A) In general.--The Secretary shall, before 
                granting an extension under this section, require each 
                applicant to provide evidence satisfactory to the 
                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) Conforming Amendments.--
            (1) Section 418(b)(2) of such Code is amended--
                    (A) by striking ``section 412(b)(2)'' in 
                subparagraph (A) and inserting ``section 431(b)(2)'', 
                and
                    (B) by striking ``section 412(b)(3)(B)'' in 
                subparagraph (B) and inserting ``section 
                431(b)(3)(B)''.
            (2) Section 418B of such Code is amended--
                    (A) by striking ``section 412(b)(2)(A) or (B)'' in 
                subsection (d)(1)(B) and inserting ``section 
                431(b)(2)(A) or (B)'',
                    (B) by striking ``section 412(c)(8)'' in subsection 
                (e) and inserting ``section 412(d)(2)'', and
                    (C) by striking ``section 412(c)(3)'' in subsection 
                (g) and inserting ``section 431(c)(3)''.
            (3) Section 418D(a)(2) of such Code is amended--
                    (A) by striking ``section 412(c)(8)'' and inserting 
                ``section 412(d)(2)'', and
                    (B) by striking ``section 412(c)(10)'' and 
                inserting ``section 431(c)(8)''.
    (c) Clerical Amendment.--The table of sections for subpart A of 
part III of subchapter D of chapter 1 of such Code is amended by adding 
after the item relating to section 430 the following new item:

``Sec. 431. Minimum funding standards for multiemployer plans.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2006.

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 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) Annual Certification by Plan Actuary.--
            ``(1) In general.--During the 90-day period beginning on 
        first day of each plan year of a multiemployer plan, the plan 
        actuary shall certify to the Secretary whether or not the plan 
        is in endangered status for such plan year and whether or not 
        the plan is in critical status for such plan year.
            ``(2) Actuarial projections of assets and liabilities.--
                    ``(A) In general.--In making the determinations 
                under paragraph (1), the plan actuary shall make 
                projections under subsections (b)(2) and (c)(2) for the 
                current and succeeding plan years, using reasonable 
                actuarial assumptions and methods, of the current value 
                of the assets of the plan and the present value of all 
                liabilities to participants and beneficiaries under the 
                plan for the current plan year as of the beginning of 
                such year, as based on the actuarial statement prepared 
                for the preceding plan year under section 103(d) of the 
                Employee Retirement Income Security Act of 1974.
                    ``(B) Determinations of future contributions.--Any 
                such actuarial projection of plan assets shall assume--
                            ``(i) reasonably anticipated employer and 
                        employee contributions for the current and 
                        succeeding plan years, assuming that the terms 
                        of the one or more collective 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 and employee 
                        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 
                        continued application of such terms 
                        unreasonable.
            ``(3) Presumed status in absence of timely actuarial 
        certification.--If certification under this subsection is not 
        made before the end of the 90-day period specified in paragraph 
        (1), the plan shall be presumed to be in critical status for 
        such plan year until such time as the plan actuary makes a 
        contrary certification.
            ``(4) Notice.--In any case in which a multiemployer plan is 
        certified to be in endangered status under paragraph (1) or 
        enters into critical status, the plan sponsor shall, not later 
        than 30 days after the date of the certification or entry, 
        provide notification of the endangered or critical status to 
        the participants and beneficiaries, the bargaining parties, the 
        Pension Benefit Guaranty Corporation, the Secretary of the 
        Treasury, and the Secretary of Labor.
    ``(b) Funding Rules for Multiemployer Plans in Endangered Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in endangered status for a plan year and no funding 
        improvement plan under this subsection with respect to such 
        multiemployer plan is in effect for the plan year, the plan 
        sponsor shall, in accordance with this subsection, amend the 
        multiemployer plan to include a funding improvement plan upon 
        approval thereof by the bargaining parties under this 
        subsection. The amendment shall be adopted not later than 240 
        days after the date on which the plan is certified to be in 
        endangered status under subsection (a)(1).
            ``(2) Endangered status.--A multiemployer plan is in 
        endangered status for a plan year if, as determined by the plan 
        actuary under subsection (a)--
                    ``(A) the plan's funded percentage for such plan 
                year is less than 80 percent, or
                    ``(B) the plan has an accumulated funding 
                deficiency for such plan year under section 431 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 431(d).
            ``(3) Funding improvement plan.--
                    ``(A) Benchmarks.--A funding improvement plan shall 
                consist of amendments to the plan formulated to 
                provide, under reasonable actuarial assumptions, for 
                the attainment, during the funding improvement period 
                under the funding improvement plan, of the following 
                benchmarks:
                            ``(i) Increase in funded percentage.--An 
                        increase in the plan's funded percentage such 
                        that--
                                    ``(I) the difference between 100 
                                percent and the plan's funded 
                                percentage for the last year of the 
                                funding improvement period, is not more 
                                than
                                    ``(II) \2/3\ of the difference 
                                between 100 percent and the plan's 
                                funded percentage for the first year of 
                                the funding improvement period.
                            ``(ii) Avoidance of accumulated funding 
                        deficiencies.--No accumulated funding 
                        deficiency for any plan year during the funding 
                        improvement period (taking into account any 
                        extension of amortization periods under section 
                        431(d)).
                    ``(B) Funding improvement period.--The funding 
                improvement period for any funding improvement plan 
                adopted pursuant to this subsection is the 10-year 
                period beginning on the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the funding improvement plan, 
                        or
                            ``(ii) the first day of the first plan year 
                        of the multiemployer plan following the plan 
                        year in which occurs the first date after the 
                        day of the certification as of which collective 
                        bargaining agreements covering on the day of 
                        such certification at least 75 percent of 
                        active participants in such multiemployer plan 
                        have expired.
                    ``(C) Special rules for certain seriously 
                underfunded plans.--
                            ``(i) In the case of a plan in which the 
                        funded percentage of a plan for the plan year 
                        is 70 percent or less, subparagraph (A)(i)(II) 
                        shall be applied by substituting `\4/5\' for 
                        `\2/3\' and subparagraph (B) shall be applied 
                        by substituting `the 15-year period' for `the 
                        10-year period'.
                            ``(ii) In the case of a plan in which the 
                        funded percentage of a plan for the plan year 
                        is more than 70 percent but less than 80 
                        percent, and--
                                    ``(I) the plan actuary certifies 
                                within 30 days after certification 
                                under subsection (a)(1) that the plan 
                                is not able to attain the increase 
                                described in subparagraph (A)(i) over 
                                the period described in subparagraph 
                                (B), and
                                    ``(II) the plan year is prior to 
                                the day described in subparagraph 
                                (B)(ii),
                        subparagraph (A)(i)(II) shall be applied by 
                        substituting `\4/5\' for `\2/3\' and 
                        subparagraph (B) shall be applied by 
                        substituting `the 15-year period' for `the 10-
                        year period'.
                            ``(iii) For any plan year following the 
                        year described in clause (ii)(II), subparagraph 
                        (A)(i)(II) and subparagraph (B) shall apply, 
                        except that for each plan year ending after 
                        such date for which the plan actuary certifies 
                        (at the time of the annual certification under 
                        subsection (a)(1) for such plan year) that the 
                        plan is not able to attain the increase 
                        described in subparagraph (A)(i) over the 
                        period described in subparagraph (B), 
                        subparagraph (B) shall be applied by 
                        substituting `the 15-year period' for `the 10-
                        year period'.
                    ``(D) Reporting.--A summary of any funding 
                improvement plan or modification thereto adopted during 
                any plan year, together with annual updates regarding 
                the funding ratio of the plan, shall be included in the 
                annual report for such plan year under section 104(a) 
                of the Employee Retirement Income Security Act of 1974 
                and in the summary annual report described in section 
                104(b)(3) of such Act.
            ``(4) Development of funding improvement plan.--
                    ``(A) Actions by plan sponsor pending approval.--
                Pending the approval of a funding improvement plan 
                under this paragraph, the plan sponsor shall take all 
                reasonable actions, consistent with the terms of the 
                plan and applicable law, necessary to ensure--
                            ``(i) an increase in the plan's funded 
                        percentage, and
                            ``(ii) postponement of an accumulated 
                        funding deficiency for at least 1 additional 
                        plan year.
                Such actions include applications for extensions of 
                amortization periods under section 431(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.
                    ``(B) Recommendations by plan sponsor.--
                            ``(i) In general.--During the period of 90 
                        days following the date on which a 
                        multiemployer plan is certified to be in 
                        endangered status, the plan sponsor shall 
                        develop and provide to the bargaining parties 
                        alternative proposals for revised benefit 
                        structures, contribution structures, or both, 
                        which, if adopted as amendments to the plan, 
                        may be reasonably expected to meet the 
                        benchmarks described in paragraph (3)(A). Such 
                        proposals shall include--
                                    ``(I) at least one proposal for 
                                reductions in the amount of future 
                                benefit accruals necessary to achieve 
                                the benchmarks, assuming no amendments 
                                increasing contributions under the plan 
                                (other than amendments increasing 
                                contributions necessary to achieve the 
                                benchmarks after amendments have 
                                reduced future benefit accruals to the 
                                maximum extent permitted by law), and
                                    ``(II) at least one proposal for 
                                increases in contributions under the 
                                plan necessary to achieve the 
                                benchmarks, assuming no amendments 
                                reducing future benefit accruals under 
                                the plan.
                            ``(ii) Requests by bargaining parties.--
                        Upon the request of any bargaining party who--
                                    ``(I) employs at least 5 percent of 
                                the active participants, or
                                    ``(II) represents as an employee 
                                organization, for purposes of 
                                collective bargaining, at least 5 
                                percent of the active participants,
                        the plan sponsor shall provide all such parties 
                        information as to other combinations of 
                        increases in contributions and reductions in 
                        future benefit accruals which would result in 
                        achieving the benchmarks.
                            ``(iii) Other information.--The plan 
                        sponsor may, as it deems appropriate, prepare 
                        and provide the bargaining parties with 
                        additional information relating to contribution 
                        structures or benefit structures or other 
                        information relevant to the funding improvement 
                        plan.
            ``(5) Maintenance of contributions pending approval of 
        funding improvement plan.--Pending approval of a funding 
        improvement plan by the bargaining parties with respect to a 
        multiemployer plan, the multiemployer plan may not be amended 
        so as to provide--
                    ``(A) a reduction in the level of contributions for 
                participants who are not in pay status,
                    ``(B) a suspension of contributions with respect to 
                any period of service, or
                    ``(C) any new direct or indirect exclusion of 
                younger or newly hired employees from plan 
                participation.
            ``(6) Benefit restrictions pending approval of funding 
        improvement plan.--Pending approval of a funding improvement 
        plan by the bargaining parties with respect to a multiemployer 
        plan--
                    ``(A) Restrictions on lump sum and similar 
                distributions.--In any case in which the present value 
                of a participant's accrued benefit under the plan 
                exceeds $5,000, such benefit may not be distributed as 
                an immediate distribution or in any other accelerated 
                form.
                    ``(B) Prohibition on benefit increases.--
                            ``(i) In general.--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.
                            ``(ii) Exception.--Clause (i) shall not 
                        apply to any plan amendment which is required 
                        as a condition of qualification under part I of 
                        subchapter D of chapter 1 of subtitle A.
            ``(7) Default critical status if no funding improvement 
        plan adopted.--If no plan amendment adopting a funding 
        improvement plan has been adopted by the end of the 240-day 
        period referred to in subsection (b)(1), the plan enters into 
        critical status as of the first day of the succeeding plan 
        year.
            ``(8) Restrictions upon approval of funding improvement 
        plan.--Upon adoption of a funding improvement plan with respect 
        to a multiemployer plan, the plan may not be amended--
                    ``(A) so as to be inconsistent with the funding 
                improvement plan, or
                    ``(B) so as to increase future benefit accruals, 
                unless the plan actuary certifies in advance that, 
                after taking into account the proposed increase, the 
                plan is reasonably expected to meet the the benchmarks 
                described in paragraph (3)(A).
    ``(c) Funding Rules for Multiemployer Plans in Critical Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in critical status for a plan year as described in 
        paragraph (2) (or otherwise enters into critical status under 
        this section) and no rehabilitation plan under this subsection 
        with respect to such multiemployer plan is in effect for the 
        plan year, the plan sponsor shall, in accordance with this 
        subsection, amend the multiemployer plan to include a 
        rehabilitation plan under this subsection. The amendment shall 
        be adopted not later than 240 days after the date on which the 
        plan enters into critical status.
            ``(2) Critical status.--A multiemployer plan is in critical 
        status for a plan year if--
                    ``(A) the plan is in endangered status for the 
                preceding plan year and the requirements of subsection 
                (b)(1) were not met with respect to the plan for such 
                preceding plan year, or
                    ``(B) as determined by the plan actuary under 
                subsection (a), the plan is described in paragraph (3).
            ``(3) Criticality description.--For purposes of paragraph 
        (2)(B), a plan is described in this paragraph if the plan is 
        described in at least one of the following subparagraphs:
                    ``(A) A plan is described in this subparagraph if, 
                as of the beginning of the current plan year--
                            ``(i) the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the sum of--
                                    ``(I) the market value of plan 
                                assets, plus
                                    ``(II) the present value of the 
                                reasonably anticipated employer and 
                                employee contributions for the current 
                                plan year and each of the 6 succeeding 
                                plan years, assuming that the terms of 
                                the one or more collective bargaining 
                                agreements pursuant to which the plan 
                                is maintained for the current plan year 
                                continue in effect for succeeding plan 
                                years,
                        is less than the present value of all 
                        nonforfeitable benefits for all participants 
                        and beneficiaries projected to be payable under 
                        the plan during the current plan year and each 
                        of the 6 succeeding plan years (plus 
                        administrative expenses for such plan years).
                    ``(B) A plan is described in this subparagraph if, 
                as of the beginning of the current plan year, the sum 
                of--
                            ``(i) the market value of plan assets, plus
                            ``(ii) the present value of the reasonably 
                        anticipated employer and employee contributions 
                        for the current plan year and each of the 4 
                        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 remain in 
                        effect for succeeding plan years,
                is less than the present value of all nonforfeitable 
                benefits for all participants and beneficiaries 
                projected to be payable under the plan during the 
                current plan year and each of the 4 succeeding plan 
                years (plus administrative expenses for such plan 
                years).
                    ``(C) A plan is described in this subparagraph if--
                            ``(i) as of the beginning of the current 
                        plan year, the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the plan has an accumulated funding 
                        deficiency for the current plan year or is 
                        projected to have an accumulated funding 
                        deficiency for any of the 4 succeeding plan 
                        years, not taking into account any extension of 
                        amortization periods under section 431(d).
                    ``(D) 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 cost under the 
                        plan) for the current plan year on the amount 
                        of unfunded benefit liabilities under the plan 
                        as of the last date of the preceding plan year, 
                        exceeds
                            ``(II) the present value, as of the 
                        beginning of the current plan year, 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, 
                        as of the beginning of the current plan year, 
                        of nonforfeitable benefits of active 
                        participants, and
                            ``(iii) the plan is projected to have an 
                        accumulated funding deficiency for the current 
                        plan year or any of the 4 succeeding plan 
                        years, not taking into account any extension of 
                        amortization periods under section 431(d).
                    ``(E) A plan is described in this subparagraph if--
                            ``(i) the funded percentage of the plan is 
                        greater than 65 percent for the current plan 
                        year, and
                            ``(ii) the plan is projected to have an 
                        accumulated funding deficiency during any of 
                        the succeeding 3 plan years, not taking into 
                        account any extension of amortization periods 
                        under section 431(d).
            ``(4) Rehabilitation plan.--
                    ``(A) In general.--A rehabilitation plan shall 
                consist of--
                            ``(i) amendments to the plan providing 
                        (under reasonable actuarial assumptions) for 
                        measures, agreed to by the bargaining parties, 
                        to increase contributions, reduce plan 
                        expenditures (including plan mergers and 
                        consolidations), or reduce future benefit 
                        accruals, or to take any combination of such 
                        actions, determined necessary to cause the plan 
                        to cease, during the rehabilitation period, to 
                        be in critical status, or
                            ``(ii) reasonable measures to forestall 
                        possible insolvency (within the meaning of 
                        section 418E) if the plan sponsor determines 
                        that, upon exhaustion of all reasonable 
                        measures, the plan would not cease during the 
                        rehabilitation period to be in critical status.
                    ``(B) Rehabilitation period.--The rehabilitation 
                period for any rehabilitation plan adopted pursuant to 
                this subsection is the 10-year period beginning on the 
                earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the rehabilitation plan, or
                            ``(ii) the first day of the first plan year 
                        of the multiemployer plan following the plan 
                        year in which occurs the first date, after the 
                        date of the plan's entry into critical status, 
                        as of which collective bargaining agreements 
                        covering at least 75 percent of active 
                        participants in such multiemployer plan 
                        (determined as of such date of entry) have 
                        expired.
                    ``(C) Reporting.--A summary of any rehabilitation 
                plan or modification thereto adopted during any plan 
                year, together with annual updates regarding the 
                funding ratio of the plan, shall be included in the 
                annual report for such plan year under section 104(a) 
                of the Employee Retirement Income Security Act of 1974 
                and in the summary annual report described in section 
                104(b)(3).
            ``(5) Development of rehabilitation plan.--
                    ``(A) Proposals by plan sponsor.--
                            ``(i) In general.--Within 90 days after the 
                        date of entry into critical status (or the date 
                        as of which the requirements of subsection 
                        (b)(1) are not met with respect to the plan), 
                        the plan sponsor shall propose to all 
                        bargaining parties a range of alternative 
                        schedules of increases in contributions and 
                        reductions in future benefit accruals that 
                        would serve to carry out a rehabilitation plan 
                        under this subsection.
                            ``(ii) Proposal assuming no contribution 
                        increases.--Such proposals shall include, as 
                        one of the proposed schedules, a schedule of 
                        those reductions in future benefit accruals 
                        that would be necessary to cause the plan to 
                        cease to be in critical status if there were no 
                        further increases in rates of contribution to 
                        the plan.
                            ``(iii) Proposal where contributions are 
                        necessary.--If the plan sponsor determines that 
                        the plan will not cease to be in critical 
                        status during the rehabilitation period unless 
                        the plan is amended to provide for an increase 
                        in contributions, the plan sponsor's proposals 
                        shall include a schedule of those increases in 
                        contribution rates that would be necessary to 
                        cause the plan to cease to be in critical 
                        status if future benefit accruals were reduced 
                        to the maximum extent permitted by law.
                    ``(B) Requests for additional schedules.--Upon the 
                request of any bargaining party who--
                            ``(i) employs at least 5 percent of the 
                        active participants, or
                            ``(ii) represents as an employee 
                        organization, for purposes of collective 
                        bargaining, at least 5 percent of active 
                        participants,
                the plan sponsor shall include among the proposed 
                schedules such schedules of increases in contributions 
                and reductions in future benefit accruals as may be 
                specified by the bargaining parties.
                    ``(C) Subsequent amendments.--Upon the adoption of 
                a schedule of increases in contributions or reductions 
                in future benefit accruals as part of the 
                rehabilitation plan, the plan sponsor may amend the 
                plan thereafter to update the schedule to adjust for 
                any experience of the plan contrary to past actuarial 
                assumptions, except that such an amendment may be made 
                not more than once in any 3-year period.
                    ``(D) Allocation of reductions in future benefit 
                accruals.--Any schedule containing reductions in future 
                benefit accruals forming a part of a rehabilitation 
                plan shall be applicable with respect to any group of 
                active participants who are employed by any bargaining 
                party (as an employer obligated to contribute under the 
                plan) in proportion to the extent to which increases in 
                contributions under such schedule apply to such 
                bargaining party.
                    ``(E) Limitation on reduction in rates of future 
                accruals.--Any schedule proposed under this paragraph 
                shall not reduce the rate of future accruals below the 
                lower of--
                            ``(i) a monthly benefit equal to 1 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 plan year in which the plan enters 
                        critical status, or
                            ``(ii) if lower, the accrual rate under the 
                        plan on such date.
                The equivalent standard accrual rate shall be 
                determined by the trustees based on the standard or 
                average contribution base units that they determine to 
                be representative for active participants and such 
                other factors as they determine to be relevant.
            ``(6) Maintenance of contributions and restrictions on 
        benefits pending adoption of rehabilitation plan.--The rules of 
        paragraphs (5) and (6) of subsection (b) shall apply for 
        purposes of this subsection by substituting the term 
        `rehabilitation plan' for `funding improvement plan'.
            ``(7) Restrictions upon approval of rehabilitation plan.--
        Upon adoption of a rehabilitation plan with respect to a 
        multiemployer plan, the plan may not be amended--
                    ``(A) so as to be inconsistent with the 
                rehabilitation plan, or
                    ``(B) so as to increase future benefit accruals, 
                unless the plan actuary certifies in advance that, 
                after taking into account the proposed increase, the 
                plan is reasonably expected to cease to be in critical 
                status.
            ``(8) Implementation of default schedule upon failure to 
        adopt rehabilitation plan.--If the plan is not amended by the 
        end of the 240-day period after entry into critical status to 
        include a rehabilitation plan, the plan sponsor shall amend the 
        plan to implement the schedule required by paragraph 
        (5)(A)(ii).
            ``(9) Deemed withdrawal.--Upon the failure of any employer 
        who has an obligation to contribute under the plan to make 
        contributions in compliance with the schedule adopted under 
        paragraph (4) as part of the rehabilitation plan, the failure 
        of the employer may, at the discretion of the plan sponsor, be 
        treated as a withdrawal by the employer from the plan under 
        section 4203 of the Employee Retirement Income Security Act of 
        1974 or a partial withdrawal by the employer under section 4205 
        of such Act.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Bargaining party.--The term `bargaining party' means, 
        in connection with a multiemployer plan--
                    ``(A) an employer who has an obligation to 
                contribute under the plan, and
                    ``(B) an employee organization which, for purposes 
                of collective bargaining, represents plan participants 
                employed by such an employer.
            ``(2) Funded percentage.--The term `funded percentage' 
        means the percentage expressed as a ratio of which--
                    ``(A) the numerator of which is the value of the 
                plan's assets, as determined under section 431(c)(2), 
                and
                    ``(B) the denominator of which is the accrued 
                liability of the plan.
            ``(3) Accumulated funding deficiency.--The term 
        `accumulated funding deficiency' has the meaning provided such 
        term in section 431(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 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, such person is entitled to such a benefit 
                under the plan.
            ``(7) Obligation to contribute.--The term `obligation to 
        contribute' has the meaning provided such term under section 
        4212(a) of the Employee Retirement Income Security Act of 1974.
            ``(8) Entry into critical status.--A plan shall be treated 
        as entering into critical status as of the date that such plan 
        is certified to be in critical status under subsection (a)(1), 
        is presumed to be in critical status under subsection (a)(3), 
        or enters into critical status under subsection (b)(7).''.
    (b) Clerical Amendment.--The table of sections for subpart A of 
part III of subchapter D of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 432. Additional funding rules for multiemployer plans in 
                            endangered status or critical status.''.
    (c) Effective Date.--The amendment made by this section shall apply 
with respect to plan years beginning after December 31, 2005.
    (d) Special Rule for 2006.--In the case of any plan year beginning 
in 2006, any reference in section 432 of the Internal Revenue Code of 
1986 (as added by this section) to section 431 of such Code (as added 
by this Act) shall be treated as a reference to the corresponding 
provision of such Code as in effect for plan years beginning in such 
year.

SEC. 213. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER PLANS.

    (a) Advance Determination of Impending Insolvency Over 5 Years.--
Section 418E(d)(1) of the Internal Revenue Code of 1986 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 
December 31, 2005.

                      TITLE III--OTHER PROVISIONS

SEC. 301. INTEREST RATE FOR 2006 FUNDING REQUIREMENTS.

    (a) In General.--Subclause (II) of section 412(b)(5)(B)(ii) of the 
Internal Revenue Code of 1986 is amended--
            (1) by striking ``January 1, 2006'' and inserting ``January 
        1, 2007'', and
            (2) by striking ``and 2005'' in the heading and inserting 
        ``, 2005, and 2006''.
    (b) Current Liability.--Subclause (IV) of section 412(l)(7)(C)(i) 
of such Code is amended--
            (1) by striking ``or 2005'' and inserting ``, 2005, or 
        2006'', and
            (2) by striking ``and 2005'' in the heading and inserting 
        ``, 2005, and 2006''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2005.

SEC. 302. INTEREST RATE ASSUMPTION FOR DETERMINATION OF LUMP SUM 
              DISTRIBUTIONS.

    (a) Amendments to Employee Retirement Income Security Act of 
1974.--[See section 301(a) of the bill as reported by the Committee on 
Education and the Workforce.]
    (b) Amendments to Internal Revenue Code of 1986.--Section 
417(e)(3)(A) of the Internal Revenue Code of 1986 is amended by 
striking clause (ii) and inserting the following:
                            ``(ii) For purposes of clause (i), the term 
                        `applicable mortality table' means a mortality 
                        table, modified as appropriate by the 
                        Secretary, based on the mortality table 
                        specified for the plan year under section 
                        430(h)(3).
                            ``(iii) For purposes of clause (i), the 
                        term `applicable interest rate' means the 
                        adjusted first, second, and third segment rates 
                        applied under rules similar to the rules of 
                        section 430(h)(2)(C) for the month before the 
                        date of the distribution or such other time as 
                        the Secretary may by regulations prescribe.
                            ``(iv) For purposes of clause (iii), the 
                        adjusted first, second, and third segment rates 
                        are the first, second, and third segment rates 
                        which would be determined under section 
                        430(h)(2)(C) if--
                                    ``(I) section 430(h)(2)(D)(i) were 
                                applied by substituting `the yields' 
                                for `a 3-year weighted average of 
                                yields',
                                    ``(II) section 430(h)(2)(G)(i)(II) 
                                were applied by substituting `section 
                                417(e)(3)(A)(ii)(II)' for `section 
                                412(b)(5)(B)(ii)(II)', and
                                    ``(III) the applicable percentage 
                                under section 430(h)(2)(G) were 
                                determined in accordance with the 
                                following table:


 
 
 
``In the case of plan years         The applicable percentage is:
 beginning in:
  2007............................  20 percent
  2008............................  40 percent
  2009............................  60 percent
  2010............................  80 percent.''.

    (c) Special Rule for Plan Amendments.--A plan shall not fail to 
meet the requirements of section 411(d)(6) of the Internal Revenue Code 
of 1986 or section 204(g) of the Employee Retirement Income Security 
Act of 1974 solely by reason of the adoption by the plan of an 
amendment necessary to meet the requirements of the amendments made by 
this section.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after December 31, 2006.

SEC. 303. INTEREST RATE ASSUMPTION FOR APPLYING BENEFIT LIMITATIONS TO 
              LUMP SUM DISTRIBUTIONS.

    (a) In General.--Clause (ii) of section 415(b)(2)(E) of the 
Internal Revenue Code of 1986 is amended to read as follows:
                            ``(ii) For purposes of adjusting any 
                        benefit under subparagraph (B) for any form of 
                        benefit subject to section 417(e)(3), the 
                        interest rate assumption shall not be less than 
                        the greater of--
                                    ``(I) 5.5 percent,
                                    ``(II) the rate that provides a 
                                benefit of not more than 105 percent of 
                                the benefit that would be provided if 
                                the applicable interest rate (as 
                                defined in section 417(e)(3)) were the 
                                interest rate assumption, or
                                    ``(III) the rate specified under 
                                the plan.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to distributions made in years beginning after December 31, 2005.

SEC. 304. DISTRIBUTIONS DURING WORKING RETIREMENT.

    (a) Amendment to the Employee Retirement Income Security Act of 
1974.--[See section 303(a) of the bill as reported by the Committee on 
Education and the Workforce.]
    (b) Amendment to the Internal Revenue Code of 1986.--Subsection (a) 
of section 401 of the Internal Revenue Code of 1986 is amended by 
inserting after paragraph (34) the following new paragraph:
            ``(35) Distributions during working retirement.--A trust 
        forming part of a pension plan shall not be treated as failing 
        to constitute a qualified trust under this section solely 
        because a distribution is made from such trust to an employee 
        who has attained age 62 and who is not separated from 
        employment at the time of such distribution.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions in plan years beginning after December 31, 2005.

SEC. 305. OTHER AMENDMENTS RELATING TO PROHIBITED TRANSACTIONS.

    [See section 304 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 306. CORRECTION PERIOD FOR CERTAIN TRANSACTIONS INVOLVING 
              SECURITIES AND COMMODITIES.

    [See section 305 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 307. GOVERNMENT ACCOUNTABILITY OFFICE PENSION FUNDING REPORT.

    [See section 306 of the bill as reported by the Committee on 
Education and the Workforce.]

          TITLE IV--IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS

SEC. 401. INCREASES IN PBGC PREMIUMS.

    (a) Flat-Rate Premiums.--Section 4006(a)(3) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)) is 
amended--
            (1) by striking clause (i) of subparagraph (A) and 
        inserting the following:
            ``(i) in the case of a single-employer plan, an amount 
        equal to--
                    ``(I) for plan years beginning after December 31, 
                1990, and before January 1, 2006, $19, or
                    ``(II) for plan years beginning after December 31, 
                2005, the amount determined under subparagraph (F),
        plus the additional premium (if any) determined under 
        subparagraph (E) for each individual who is a participant in 
        such plan during the plan year;''; and
            (2) by adding at the end the following new subparagraph:
    ``(F)(i) Except as otherwise provided in this subparagraph, for 
purposes of determining the annual premium rate payable to the 
corporation by a single-employer plan for basic benefits guaranteed 
under this title, the amount determined under this subparagraph is the 
greater of $30 or the adjusted amount determined under clause (ii).
    ``(ii) For plan years beginning after 2006, the adjusted amount 
determined under this clause is the product derived by multiplying $30 
by the ratio of--
            ``(I) the national average wage index (as defined in 
        section 209(k)(1) of the Social Security Act) for the first of 
        the 2 calendar years preceding the calendar year in which the 
        plan year begins, to
            ``(II) the national average wage index (as so defined) for 
        2004,
with such product, if not a multiple of $1, being rounded to the next 
higher multiple of $1 where such product is a multiple of $0.50 but not 
of $1, and to the nearest multiple of $1 in any other case.
    ``(iii) For purposes of determining the annual premium rate payable 
to the corporation by a single-employer plan for basic benefits 
guaranteed under this title for any plan year beginning after 2005 and 
before 2010--
            ``(I) except as provided in subclause (II), the premium 
        amount referred to in subparagraph (A)(i)(II) for any such plan 
        year is the amount set forth in connection with such plan year 
        in the following table:


 
 
 
``If the plan year begins in:       The amount is:
  2006............................  $21.20
  2007............................  $23.40
  2008............................  $25.60
  2009............................  $27.80; or

            ``(II) if the plan's funding target attainment percentage 
        for the plan year preceding the current plan year was less than 
        80 percent, the premium amount referred to in subparagraph 
        (A)(i)(II) for such current plan year is the amount set forth 
        in connection with such current plan year in the following 
        table:


 
 
 
``If the plan year begins in:       The amount is:
  2006............................  $22.67
  2007............................  $26.33
  2008 or 2009....................  the amount provided under clause
                                     (i).

    ``(iv) For purposes of this subparagraph, the term `funding target 
attainment percentage' has the meaning provided such term in section 
303(d)(2).''.
    (b) Premium Rate for Certain Terminated Single-Employer Plans.--
Subsection (a) of section 4006 of such Act (29 U.S.C. 1306) is amended 
by adding at the end the following:
    ``(7) Premium Rate for Certain Terminated Single-Employer Plans.--
            ``(A) In general.--If there is a termination of a single-
        employer plan under clause (ii) or (iii) of section 
        4041(c)(2)(B) or section 4042, there shall be payable to the 
        corporation, with respect to each applicable 12-month period, a 
        premium at a rate equal to $1,250 multiplied by the number of 
        individuals who were participants in the plan immediately 
        before the termination date. Such premium shall be in addition 
        to any other premium under this section.
            ``(B) Special rule for plans terminated in bankruptcy 
        reorganization.--If the plan is terminated under 
        4041(c)(2)(B)(ii) or under section 4042 and, as of the 
        termination date, a person who is (as of such date) a 
        contributing sponsor of the plan or a member of such sponsor's 
        controlled group has filed or has had filed against such person 
        a petition seeking reorganization in a case under title 11 of 
        the United States Code, or under any similar law of a State or 
        a political subdivision of a State (or a case described in 
        section 4041(c)(2)(B)(i) filed by or against such person has 
        been converted, as of such date, to such a case in which 
        reorganization is sought), subparagraph (A) shall not apply to 
        such plan until the date of the discharge of such person in 
        such case.
            ``(C) Applicable 12-month period.--For purposes of 
        subparagraph (A)--
                    ``(i) In general.--The term `applicable 12-month 
                period' means--
                            ``(I) the 12-month period beginning with 
                        the first month following the month in which 
                        the termination date occurs, and
                            ``(II) each of the first two 12-month 
                        periods immediately following the period 
                        described in subclause (I).
                    ``(ii) Plans terminated in bankruptcy 
                reorganization.--In any case in which the requirements 
                of subparagraph (B) are met in connection with the 
                termination of the plan with respect to 1 or more 
                persons described in such subparagraph, the 12-month 
                period described in clause (i)(I) shall be the 12-month 
                period beginning with the first month following the 
                month which includes the earliest date as of which each 
                such person is discharged in the case described in such 
                clause in connection with such person.
            ``(D) Coordination with section 4007.--
                    ``(i) Notwithstanding section 4007--
                            ``(I) premiums under this paragraph shall 
                        be due within 30 days after the beginning of 
                        any applicable 12-month period, and
                            ``(II) the designated payor shall be the 
                        person who is the contributing sponsor as of 
                        immediately before the termination date.
                    ``(ii) The fifth sentence of section 4007(a) shall 
                not apply in connection with premiums determined under 
                this paragraph.''.
    (c) Risk-Based Premiums.--
            (1) Extension through 2006.--Section 4006(a)(3)(E)(iii)(V) 
        of such Act is amended by striking ``January 1, 2006'' and 
        inserting ``January 1, 2007''.
            (2) Conforming amendments related to funding rules for 
        single-employer plans.--Section 4006(a)(3)(E) of such Act is 
        amended by striking clauses (iii) and (iv) and inserting the 
        following:
    ``(iii)(I) For purposes of clause (ii), except as provided in 
subclause (II), the term `unfunded vested benefits' means, for a plan 
year, the amount which would be the plan's funding shortfall (as 
defined in section 303(c)(4)), if the value of plan assets of the plan 
were equal to the fair market value of such assets and only vested 
benefits were taken into account.
    ``(II) The interest rate used in valuing vested benefits for 
purposes of subclause (I) shall be equal to the first, second, or third 
segment rate which would be determined under section 303(h)(2)(C) if 
section 303(h)(2)(D)(i) were applied by substituting `the yields' for 
`the 3-year weighted average of yields', as applicable under rules 
similar to the rules under section 303(h)(2)(B).''.
    (d) Effective Dates.--
            (1) In general.--The amendments made by subsection (a) and 
        (c)(1) shall apply to plan years beginning after December 31, 
        2005.
            (2) Premium rate for certain terminated single-employer 
        plans.--The amendment made by subsection (b) shall apply with 
        respect to cases commenced under title 11, United States Code, 
        or under any similar law of a State or political subdivision of 
        a State after October 26, 2005.
            (3) Conforming amendments related to funding rules for 
        single-employer plans.--The amendments made by subsection 
        (c)(2) shall take effect on December 31, 2006, and shall apply 
        to plan years beginning after such date.

                          TITLE V--DISCLOSURE

SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICES.

    [See section 501 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 502. ADDITIONAL DISCLOSURE REQUIREMENTS.

    [See section 502 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 503. SECTION 4010 FILINGS WITH THE PBGC.

    (a) Change in Criteria for Persons Required to Provide Information 
to PBGC.--Section 4010(b) of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1310(b)) is amended by striking paragraph (1), 
by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), 
respectively, and by inserting before paragraph (3) (as so 
redesignated) the following new paragraphs:
            ``(1) the aggregate funding target attainment percentage of 
        the plan (as defined in subsection (d)(2)) is less than 60 
        percent;
            ``(2)(A) the aggregate funding target attainment percentage 
        of the plan (as defined in subsection (d)(2)) is less than 75 
        percent, and
            ``(B) the plan sponsor is in an industry with respect to 
        which the corporation determines that there is substantial 
        unemployment or underemployment and the sales and profits are 
        depressed or declining;''.
    (b) Notice to Participants and Beneficiaries.--Section 4010 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1310) is 
amended by adding at the end the following new subsection:
    ``(d) Notice to Participants and Beneficiaries.--
            ``(1) In general.--Not later than 90 days after the 
        submission by any person to the corporation of information or 
        documentary material with respect to any plan pursuant to 
        subsection (a), such person shall provide notice of such 
        submission to each participant and beneficiary under the plan 
        (and under all plans maintained by members of the controlled 
        group of each contributing sponsor of the plan). Such notice 
        shall also set forth--
                    ``(A) the number of single-employer plans covered 
                by this title which are in at-risk status and are 
                maintained by contributing sponsors of such plan (and 
                by members of their controlled groups) with respect to 
                which the funding target attainment percentage for the 
                preceding plan year of each plan is less than 60 
                percent;
                    ``(B) the value of the assets of each of the plans 
                described in subparagraph (A) for the plan year, the 
                funding target for each of such plans for the plan 
                year, and the funding target attainment percentage of 
                each of such plans for the plan year; and
                    ``(C) taking into account all single-employer plans 
                maintained by the contributing sponsor and the members 
                of its controlled group as of the end of such plan 
                year--
                            ``(i) the aggregate total of the values of 
                        plan assets of such plans as of the end of such 
                        plan year,
                            ``(ii) the aggregate total of the funding 
                        targets of such plans, as of the end of such 
                        plan year, taking into account only benefits to 
                        which participants and beneficiaries have a 
                        nonforfeitable right, and
                            ``(iii) the aggregate funding targets 
                        attainment percentage with respect to the 
                        contributing sponsor for the preceding plan 
                        year.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Value of plan assets.--The term `value of 
                plan assets' means the value of plan assets, as 
                determined under section 303(g)(3).
                    ``(B) Funding target.--The term `funding target' 
                has the meaning provided under section 303(d)(1).
                    ``(C) Funding target attainment percentage.--The 
                term `funding target attainment percentage' has the 
                meaning provided in section 303(d)(2).
                    ``(D) Aggregate funding targets attainment 
                percentage.--The term `aggregate funding targets 
                attainment percentage' with respect to a contributing 
                sponsor for a plan year is the percentage, taking into 
                account all plans maintained by the contributing 
                sponsor and the members of its controlled group as of 
                the end of such plan year, which
                            ``(i) the aggregate total of the values of 
                        plan assets, as of the end of such plan year, 
                        of such plans, is of
                            ``(ii) the aggregate total of the funding 
                        targets of such plans, as of the end of such 
                        plan year, taking into account only benefits to 
                        which participants and beneficiaries have a 
                        nonforfeitable right.
                    ``(E) At-risk status.--The term `at-risk status' 
                has the meaning provided in section 303(i)(3).
            ``(3) Compliance.--
                    ``(A) In general.--Any notice required to be 
                provided under paragraph (1) may be provided in 
                written, electronic, or other appropriate form to the 
                extent such form is reasonably accessible to 
                individuals to whom the information is required to be 
                provided.
                    ``(B) Limitations.--In no case shall a participant 
                or beneficiary be entitled under this subsection to 
                receive more than one notice described in paragraph (1) 
                during any one 12-month period. The person required to 
                provide such notice may make a reasonable charge to 
                cover copying, mailing, and other costs of furnishing 
                such notice pursuant to paragraph (1). The corporation 
                may by regulations prescribe the maximum amount which 
                will constitute a reasonable charge under the preceding 
                sentence.
            ``(4) Notice to congress.--Concurrent with the provision of 
        any notice under paragraph (1), such person shall provide such 
        notice to the Committee on Education and the Workforce and the 
        Committee on Ways and Means of the House of Representatives and 
        the Committee on Health, Education, Labor, and Pensions and the 
        Committee on Finance of the Senate, which shall be treated as 
        materials provided in executive session.''.
    (c) Effective Date.--The amendment made by this section shall apply 
with respect to plan years beginning after December 31, 2006.

                      TITLE VI--INVESTMENT ADVICE

SEC. 601. AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 
              PROVIDING PROHIBITED TRANSACTION EXEMPTION FOR PROVISION 
              OF INVESTMENT ADVICE.

    [See section 601 of the bill as reported by the Committee on 
Education and the Workforce.]

SEC. 602. AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 PROVIDING 
              PROHIBITED TRANSACTION EXEMPTION FOR PROVISION OF 
              INVESTMENT ADVICE.

    (a) Exemption From Prohibited Transactions.--Subsection (d) of 
section 4975 of the Internal Revenue Code of 1986 (relating to 
exemptions from tax on prohibited transactions) is amended--
            (1) in paragraph (15), by striking ``or'' at the end;
            (2) in paragraph (16), by striking the period at the end 
        and inserting ``; or''; and
            (3) by adding at the end the following new paragraph:
            ``(17) any transaction described in subsection (f)(8)(A) in 
        connection with the provision of investment advice described in 
        subsection (e)(3)(B)(i), in any case in which--
                    ``(A) the investment of assets of the plan is 
                subject to the direction of plan participants or 
                beneficiaries,
                    ``(B) the advice is provided to the plan or a 
                participant or beneficiary of the plan by a fiduciary 
                adviser in connection with any sale, acquisition, or 
                holding of a security or other property for purposes of 
                investment of plan assets, and
                    ``(C) the requirements of subsection (f)(8)(B) are 
                met in connection with the provision of the advice.''.
    (b) Allowed Transactions and Requirements.--Subsection (f) of such 
section 4975 (relating to other definitions and special rules) is 
amended by adding at the end the following new paragraph:
            ``(8) Provisions relating to investment advice provided by 
        fiduciary advisers.--
                    ``(A) Transactions allowable in connection with 
                investment advice provided by fiduciary advisers.--The 
                transactions referred to in subsection (d)(17), in 
                connection with the provision of investment advice by a 
                fiduciary adviser, are the following:
                            ``(i) the provision of the advice to the 
                        plan, participant, or beneficiary;
                            ``(ii) the sale, acquisition, or holding of 
                        a security or other property (including any 
                        lending of money or other extension of credit 
                        associated with the sale, acquisition, or 
                        holding of a security or other property) 
                        pursuant to the advice; and
                            ``(iii) the direct or indirect receipt of 
                        fees or other compensation by the fiduciary 
                        adviser or an affiliate thereof (or any 
                        employee, agent, or registered representative 
                        of the fiduciary adviser or affiliate) in 
                        connection with the provision of the advice or 
                        in connection with a sale, acquisition, or 
                        holding of a security or other property 
                        pursuant to the advice.
                    ``(B) Requirements relating to provision of 
                investment advice by fiduciary advisers.--The 
                requirements of this subparagraph (referred to in 
                subsection (d)(17)(C)) are met in connection with the 
                provision of investment advice referred to in 
                subsection (e)(3)(B), provided to a plan or a 
                participant or beneficiary of a plan by a fiduciary 
                adviser with respect to the plan in connection with any 
                sale, acquisition, or holding of a security or other 
                property for purposes of investment of amounts held by 
                the plan, if--
                            ``(i) in the case of the initial provision 
                        of the advice with regard to the security or 
                        other property by the fiduciary adviser to the 
                        plan, participant, or beneficiary, the 
                        fiduciary adviser provides to the recipient of 
                        the advice, at a time reasonably 
                        contemporaneous with the initial provision of 
                        the advice, a written notification (which may 
                        consist of notification by means of electronic 
                        communication)--
                                    ``(I) of all fees or other 
                                compensation relating to the advice 
                                that the fiduciary adviser or any 
                                affiliate thereof is to receive 
                                (including compensation provided by any 
                                third party) in connection with the 
                                provision of the advice or in 
                                connection with the sale, acquisition, 
                                or holding of the security or other 
                                property,
                                    ``(II) of any material affiliation 
                                or contractual relationship of the 
                                fiduciary adviser or affiliates thereof 
                                in the security or other property,
                                    ``(III) of any limitation placed on 
                                the scope of the investment advice to 
                                be provided by the fiduciary adviser 
                                with respect to any such sale, 
                                acquisition, or holding of a security 
                                or other property,
                                    ``(IV) of the types of services 
                                provided by the fiduciary adviser in 
                                connection with the provision of 
                                investment advice by the fiduciary 
                                adviser,
                                    ``(V) that the adviser is acting as 
                                a fiduciary of the plan in connection 
                                with the provision of the advice, and
                                    ``(VI) that a recipient of the 
                                advice may separately arrange for the 
                                provision of advice by another adviser, 
                                that could have no material affiliation 
                                with and receive no fees or other 
                                compensation in connection with the 
                                security or other property,
                            ``(ii) the fiduciary adviser provides 
                        appropriate disclosure, in connection with the 
                        sale, acquisition, or holding of the security 
                        or other property, in accordance with all 
                        applicable securities laws,
                            ``(iii) the sale, acquisition, or holding 
                        occurs solely at the direction of the recipient 
                        of the advice,
                            ``(iv) the compensation received by the 
                        fiduciary adviser and affiliates thereof in 
                        connection with the sale, acquisition, or 
                        holding of the security or other property is 
                        reasonable, and
                            ``(v) the terms of the sale, acquisition, 
                        or holding of the security or other property 
                        are at least as favorable to the plan as an 
                        arm's length transaction would be.
                    ``(C) Standards for presentation of information.--
                The notification required to be provided to 
                participants and beneficiaries under subparagraph 
                (B)(i) shall be written in a clear and conspicuous 
                manner and in a manner calculated to be understood by 
                the average plan participant and shall be sufficiently 
                accurate and comprehensive to reasonably apprise such 
                participants and beneficiaries of the information 
                required to be provided in the notification.
                    ``(D) Exemption conditioned on making required 
                information available annually, on request, and in the 
                event of material change.--The requirements of 
                subparagraph (B)(i) shall be deemed not to have been 
                met in connection with the initial or any subsequent 
                provision of advice described in subparagraph (B) to 
                the plan, participant, or beneficiary if, at any time 
                during the provision of advisory services to the plan, 
                participant, or beneficiary, the fiduciary adviser 
                fails to maintain the information described in 
                subclauses (I) through (IV) of subparagraph (B)(i) in 
                currently accurate form and in the manner required by 
                subparagraph (C), or fails--
                            ``(i) to provide, without charge, such 
                        currently accurate information to the recipient 
                        of the advice no less than annually,
                            ``(ii) to make such currently accurate 
                        information available, upon request and without 
                        charge, to the recipient of the advice, or
                            ``(iii) in the event of a material change 
                        to the information described in subclauses (I) 
                        through (IV) of subparagraph (B)(i), to 
                        provide, without charge, such currently 
                        accurate information to the recipient of the 
                        advice at a time reasonably contemporaneous to 
                        the material change in information.
                    ``(E) Maintenance for 6 years of evidence of 
                compliance.--A fiduciary adviser referred to in 
                subparagraph (B) who has provided advice referred to in 
                such subparagraph shall, for a period of not less than 
                6 years after the provision of the advice, maintain any 
                records necessary for determining whether the 
                requirements of the preceding provisions of this 
                paragraph and of subsection (d)(17) have been met. A 
                transaction prohibited under subsection (c)(1) shall 
                not be considered to have occurred solely because the 
                records are lost or destroyed prior to the end of the 
                6-year period due to circumstances beyond the control 
                of the fiduciary adviser.
                    ``(F) Exemption for plan sponsor and certain other 
                fiduciaries.--A plan sponsor or other person who is a 
                fiduciary (other than a fiduciary adviser) shall not be 
                treated as failing to meet the requirements of this 
                section solely by reason of the provision of investment 
                advice referred to in subsection (e)(3)(B) (or solely 
                by reason of contracting for or otherwise arranging for 
                the provision of the advice), if--
                            ``(i) the advice is provided by a fiduciary 
                        adviser pursuant to an arrangement between the 
                        plan sponsor or other fiduciary and the 
                        fiduciary adviser for the provision by the 
                        fiduciary adviser of investment advice referred 
                        to in such section,
                            ``(ii) the terms of the arrangement require 
                        compliance by the fiduciary adviser with the 
                        requirements of this paragraph,
                            ``(iii) the terms of the arrangement 
                        include a written acknowledgment by the 
                        fiduciary adviser that the fiduciary adviser is 
                        a fiduciary of the plan with respect to the 
                        provision of the advice, and
                            ``(iv) the requirements of part 4 of 
                        subtitle B of title I of the Employee 
                        Retirement Income Security Act of 1974 are met 
                        in connection with the provision of such 
                        advice.
                    ``(G) Definitions.--For purposes of this paragraph 
                and subsection (d)(17)--
                            ``(i) Fiduciary adviser.--The term 
                        `fiduciary adviser' means, with respect to a 
                        plan, a person who is a fiduciary of the plan 
                        by reason of the provision of investment advice 
                        by the person to the plan or to a participant 
                        or beneficiary and who is--
                                    ``(I) registered as an investment 
                                adviser under the Investment Advisers 
                                Act of 1940 (15 U.S.C. 80b-1 et seq.) 
                                or under the laws of the State in which 
                                the fiduciary maintains its principal 
                                office and place of business,
                                    ``(II) a bank or similar financial 
                                institution referred to in subsection 
                                (d)(4) or a savings association (as 
                                defined in section 3(b)(1) of the 
                                Federal Deposit Insurance Act (12 
                                U.S.C. 1813(b)(1))), but only if the 
                                advice is provided through a trust 
                                department of the bank or similar 
                                financial institution or savings 
                                association which is subject to 
                                periodic examination and review by 
                                Federal or State banking authorities,
                                    ``(III) an insurance company 
                                qualified to do business under the laws 
                                of a State,
                                    ``(IV) a person registered as a 
                                broker or dealer under the Securities 
                                Exchange Act of 1934 (15 U.S.C. 78a et 
                                seq.),
                                    ``(V) an affiliate of a person 
                                described in any of subclauses (I) 
                                through (IV), or
                                    ``(VI) an employee, agent, or 
                                registered representative of a person 
                                described in any of subclauses (I) 
                                through (V) who satisfies the 
                                requirements of applicable insurance, 
                                banking, and securities laws relating 
                                to the provision of the advice.
                            ``(ii) Affiliate.--The term `affiliate' of 
                        another entity means an affiliated person of 
                        the entity (as defined in section 2(a)(3) of 
                        the Investment Company Act of 1940 (15 U.S.C. 
                        80a-2(a)(3))).
                            ``(iii) Registered representative.--The 
                        term `registered representative' of another 
                        entity means a person described in section 
                        3(a)(18) of the Securities Exchange Act of 1934 
                        (15 U.S.C. 78c(a)(18)) (substituting the entity 
                        for the broker or dealer referred to in such 
                        section) or a person described in section 
                        202(a)(17) of the Investment Advisers Act of 
                        1940 (15 U.S.C. 80b-2(a)(17)) (substituting the 
                        entity for the investment adviser referred to 
                        in such section).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to advice referred to in section 4975(c)(3)(B) of 
the Internal Revenue Code of 1986 provided on or after January 1, 2006.

                  TITLE VII--BENEFIT ACCRUAL STANDARDS

SEC. 701. IMPROVEMENTS IN BENEFIT ACCRUAL STANDARDS.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--[See section 701(a) of the bill as reported by the Committee on 
Education and the Workforce.]
    (b) Amendments to the Internal Revenue Code of 1986.--
            (1) Rules relating to reduction in accrued benefits because 
        of attainment of any age.--Subparagraph (H) of section 
        411(b)(1) of the Internal Revenue Code of 1986 is amended by 
        adding at the end the following new clauses:
                            ``(vi) Comparison to similarly situated 
                        younger individual.--
                                    ``(I) In general.--A plan shall not 
                                be treated as failing to meet the 
                                requirements of clause (i) if a 
                                participant's entire accrued benefit, 
                                as determined as of any date under the 
                                formula for determining benefits as set 
                                forth in the text of the plan 
                                documents, would be equal to or greater 
                                than that of any similarly situated, 
                                younger individual.
                                    ``(II) Similarly situated.--For 
                                purposes of this clause, an individual 
                                is similarly situated to a participant 
                                if such individual is identical to such 
                                participant in every respect (including 
                                period of service, compensation, 
                                position, date of hire, work history, 
                                and any other respect) except for age.
                                    ``(III) Disregard of subsidized 
                                early retirement benefits.--In 
                                determining the entire accrued benefit 
                                for purposes of this clause, the 
                                subsidized portion of any early 
                                retirement benefit (including any early 
                                retirement subsidy that is fully or 
                                partially included or reflected in an 
                                employee's opening balance or other 
                                transition benefits) shall be 
                                disregarded.
                            ``(vii) Interest on hypothetical 
                        accounts.--A plan under which the accrued 
                        benefit payable under the plan upon 
                        distribution (or any portion thereof) is 
                        expressed as the balance of a hypothetical 
                        account maintained for the participant shall 
                        not be treated as failing to meet the 
                        requirements of clause (i) solely because 
                        interest accruing on such balance is taken into 
                        account.
                            ``(viii) Certain offsets permitted.--A plan 
                        shall not be treated as failing to meet the 
                        requirements of this subparagraph solely 
                        because the plan provides allowable offsets 
                        against those benefits under the plan which are 
                        attributable to employer contributions, based 
                        on benefits which are provided under title II 
                        of the Social Security Act, the Railroad 
                        Retirement Act of 1974, another plan described 
                        in section 401(a) maintained by the same 
                        employer, or under any retirement program for 
                        officers or employees of the Federal Government 
                        or of the government of any State or political 
                        subdivision thereof. For purposes of this 
                        clause, allowable offsets based on such 
                        benefits consist of offsets equal to all or 
                        part of the actual benefit payment amounts, 
                        reasonable projections or estimations of such 
                        benefit payment amounts, or actuarial 
                        equivalents of such actual benefit payment 
                        amounts, projections, or estimations 
                        (determined on the basis of reasonable 
                        actuarial assumptions).
                            ``(ix) Permitted disparities in plan 
                        contributions or benefits.--A plan shall not be 
                        treated as failing to meet the requirements of 
                        this subparagraph solely because the plan 
                        provides a disparity in contributions or 
                        benefits with respect to which the requirements 
                        of section 401(l) are met.
                            ``(x) Pre-retirement indexing permitted.--
                                    ``(I) In general.--A plan shall not 
                                be treated as failing to meet the 
                                requirements of this subparagraph 
                                solely because the plan provides for 
                                pre-retirement indexing of accrued 
                                benefits under the plan.
                                    ``(II) Pre-retirement indexing.--
                                For purposes of this clause, the term 
                                `pre-retirement indexing' means, in 
                                connection with an accrued benefit, the 
                                periodic adjustment of the accrued 
                                benefit by means of the application of 
                                a recognized index or methodology so as 
                                to protect the economic value of the 
                                benefit against inflation prior to 
                                distribution.''.
            (2) Determinations of accrued benefit as balance of benefit 
        account.--Subsection (a) of section 411 of such Code is amended 
        by adding at the end the following new paragraph:
            ``(13) Determinations of accrued benefit as balance of 
        benefit account.--
                    ``(A) In general.--A defined benefit plan under 
                which the accrued benefit payable under the plan upon 
                distribution (or any portion thereof) is expressed as 
                the balance of a hypothetical account maintained for 
                the participant shall not be treated as failing to meet 
                the requirements of subsection (a)(2) and section 
                417(e) solely because of the amount actually made 
                available for such distribution under the terms of the 
                plan, in any case in which the applicable interest rate 
                that would be used under the terms of the plan to 
                project the amount of the participant's account balance 
                to normal retirement age is not greater than a market 
                rate of return.
                    ``(B) Regulations.--The Secretary may provide by 
                regulation for rules governing the calculation of a 
                market rate of return for purposes of subparagraph (A) 
                and for permissible methods of crediting interest to 
                the account (including variable interest rates) 
                resulting in effective rates of return meeting the 
                requirements of subparagraph (A).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to periods beginning on or after June 29, 2005.

                   TITLE VIII--DEDUCTION LIMITATIONS

SEC. 801. INCREASE IN DEDUCTION LIMITS.

    (a) Increase in Deduction Limit for Single-Employer Plans.--Section 
404 of the Internal Revenue Code of 1986 (relating to deduction for 
contributions of an employer to an employees' trust or annuity plan and 
compensation under a deferred payment plan) is amended--
            (1) in subsection (a)(1)(A), by inserting ``in the case of 
        a defined benefit plan other than a multiemployer plan, in an 
        amount determined under subsection (o), and in the case of any 
        other plan'' after ``section 501(a),'', and
            (2) by inserting at the end the following new subsection:
    ``(o) Deduction Limit for Single-Employer Plans.--For purposes of 
subsection (a)(1)(A)--
            ``(1) In general.--In the case of a defined benefit plan to 
        which subsection (a)(1)(A) applies (other than a multiemployer 
        plan), the amount determined under this subsection for any 
        taxable year shall be equal to the amount determined under 
        paragraph (2) with respect to each plan year ending with or 
        within the taxable year.
            ``(2) Determination of amount.--The amount determined under 
        this paragraph for any plan year shall be equal to the excess 
        (if any) of--
                    ``(A) the greater of--
                            ``(i) the sum of--
                                    ``(I) 150 percent of the funding 
                                target applicable to the plan for such 
                                plan year, determined under section 
                                430, plus
                                    ``(II) the target normal cost 
                                applicable to the plan for such plan 
                                year, determined under section 430(b), 
                                or
                            ``(ii) in the case of a plan that is not in 
                        an at-risk status (as determined under 430(i)), 
                        the sum of--
                                    ``(I) the funding target which 
                                would be applicable to the plan for 
                                such plan year if such plan were in an 
                                at-risk status, determined under 
                                section 430(d) (with regard to section 
                                430(i)), plus
                                    ``(II) the target normal cost which 
                                would be applicable to the plan for 
                                such plan year if such plan were in an 
                                at-risk status, determined under 
                                section 430(d) (with regard to section 
                                430(i)), over
                    ``(B) the value of the plan assets (determined 
                under section 430(g)).
            ``(3) Special rule for terminating plans.--In the case of a 
        plan which, subject to section 4041 of the Employee Retirement 
        Income Security Act of 1974, terminates during the plan year, 
        the amount determined under paragraph (2) shall not be less 
        than the amount required to make the plan sufficient for 
        benefit liabilities (within the meaning of section 4041(d) of 
        such Act).
            ``(4) Definitions.--Any term used in this subsection which 
        is also used in section 430 shall have the same meaning given 
        such term by section 430.''.
    (b) Increase in Deduction Limit for Multiemployer Plans.--Section 
404(a)(1)(D) of such Code is amended to read as follows:
                    ``(D) Minimum deduction for multiemployer plans.--
                In the case of a defined benefit plan which is a 
                multiemployer plan, except as provided in regulations, 
                the maximum amount deductible under the limitations of 
                this paragraph shall not be less than the excess (if 
                any) of--
                            ``(i) 140 percent of the current liability 
                        of the plan determined under section 
                        431(c)(6)(D), over
                            ``(ii) the value of the plan's assets 
                        determined under section 431(c)(2).''.
    (c) Technical and Conforming Amendments.--
            (1) The last sentence of section 404(a)(1)(A) of such Code 
        is amended by striking ``section 412'' each place it appears 
        and inserting ``section 431''.
            (2) Section 404(a)(1)(B) of such Code is amended--
                    (A) by striking ``In the case of a plan'' and 
                inserting ``In the case of a multiemployer plan'',
                    (B) by striking ``section 412(c)(7)'' each place it 
                appears and inserting ``section 431(c)(6)'',
                    (C) by striking ``section 412(c)(7)(B)'' and 
                inserting ``section 431(c)(6)(D)'',
                    (D) by striking ``section 412(c)(7)(A)'' and 
                inserting ``section 431(c)(6)(A)'', and
                    (E) by striking ``section 412'' and inserting 
                ``section 431''.
            (3) Section 404(a)(1) of such Code is amended by striking 
        subparagraph (F).
            (4) Section 404(a)(7) of such Code is amended--
                    (A) in subparagraph (A)(ii), by striking ``for the 
                plan year'' and all that follows and inserting ``which 
                are multiemployer plans for the plan year which ends 
                with or within such taxable year (or for any prior plan 
                year) and the maximum amount of employer contributions 
                allowable under subsection (o) with respect to any such 
                defined benefit plans which are not multiemployer plans 
                for the plan year.'',
                    (B) by striking ``section 412(l)'' in the last 
                sentence of subparagraph (A) and inserting ``paragraph 
                (1)(D)(ii)'', and
                    (C) by striking subparagraph (D) and inserting:
                    ``(D) Insurance contract plans.--For purposes of 
                this paragraph, a plan described in section 412(e)(3) 
                shall be treated as a defined benefit plan.''.
            (5) Section 404A(g)(3)(A) of such Code is amended by 
        striking ``paragraphs (3) and (7) of section 412(c)'' and 
        inserting ``sections 430(h)(1) and 431(c)(3) and (6)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions for taxable years beginning after December 31, 
2006.

SEC. 802. UPDATING DEDUCTION RULES FOR COMBINATION OF PLANS.

    (a) In General.--Subparagraph (C) of section 404(a)(7) of the 
Internal Revenue Code of 1986 (relating to limitation on deductions 
where combination of defined contribution plan and defined benefit 
plan) is amended by adding after clause (ii) the following new clause:
                            ``(iii) Limitation.--In the case of 
                        employer contributions to 1 or more defined 
                        contribution plans, this paragraph shall only 
                        apply to the extent that such contributions 
                        exceed 6 percent of the compensation otherwise 
                        paid or accrued during the taxable year to the 
                        beneficiaries under such plans. For purposes of 
                        this clause, amounts carried over from 
                        preceding taxable years under subparagraph (B) 
                        shall be treated as employer contributions to 1 
                        or more defined contributions to the extent 
                        attributable to employer contributions to such 
                        plans in such preceding taxable years.''.
    (b) Conforming Amendments.--Subparagraph (A) of section 4972(c)(6) 
of such Code (relating to nondeductible contributions) is amended to 
read as follows:
                    ``(A) so much of the contributions to 1 or more 
                defined contribution plans which are not deductible 
                when contributed solely because of section 404(a)(7) as 
                does not exceed the amount of contributions described 
                in section 401(m)(4)(A), or''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions for taxable years beginning after December 31, 
2006.

 TITLE IX--ENHANCED RETIREMENTS SAVINGS AND DEFINED CONTRIBUTION PLANS

SEC. 901. PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS OF 
              ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 
              MADE PERMANENT.

    Title IX of the Economic Growth and Tax Relief Reconciliation Act 
of 2001 shall not apply to the provisions of, and amendments made by, 
subtitles (A) through (F) of title VI of such Act (relating to pension 
and individual retirement arrangement provisions).

SEC. 902. SAVER'S CREDIT.

    (a) Permanency.--Section 25B of the Internal Revenue Code of 1986 
(relating to elective deferrals and IRA contributions by certain 
individuals) is amended by striking subsection (h).
    (b) Voluntary Deposit Into Qualified Account.--
            (1) Section 25B of such Code, as amended by subsection (a), 
        is further amended by adding at the end the following new 
        subsection:
    ``(h) Voluntary Deposit Into Qualified Account.--
            ``(1) In general.--So much of any overpayment under section 
        6401(b) as does not exceed the amount allowed as a tax credit 
        under subsection (a) shall, at the election of the taxpayer, be 
        paid on behalf of the individual taxpayer to an applicable 
        retirement plan designated by the individual, except that in 
        the case of a joint return, each spouse shall be entitled to 
        designate an applicable retirement plan with respect to 
        payments attributable to such spouse.
            ``(2) Applicable retirement plan.--For purposes of this 
        subsection, the term `applicable retirement plan' means any 
        eligible retirement plan (as defined in section 402(c)(8)(B)) 
        that elects to accept deposits under this subsection.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to taxable years beginning after December 31, 2006.

SEC. 903. INCREASING PARTICIPATION THROUGH AUTOMATIC CONTRIBUTION 
              ARRANGEMENTS.

    (a) In General.--Section 401(k) of the Internal Revenue Code of 
1986 (relating to cash or deferred arrangement) is amended by adding at 
the end the following new paragraph:
            ``(13) Alternative method for automatic contribution 
        arrangements to meet nondiscrimination requirements.--
                    ``(A) In general.--A qualified automatic 
                contribution arrangement shall be treated as meeting 
                the requirements of paragraph (3)(A)(ii).
                    ``(B) Qualified automatic contribution 
                arrangement.--For purposes of this paragraph, the term 
                `qualified automatic contribution arrangement' means 
                any cash or deferred arrangement which meets the 
                requirements of subparagraphs (C) through (F).
                    ``(C) Automatic deferral.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if, under the arrangement, 
                        each employee eligible to participate in the 
                        arrangement is treated as having elected to 
                        have the employer make elective contributions 
                        in an amount equal to a qualified percentage of 
                        compensation.
                            ``(ii) Election out.--The election treated 
                        as having been made under clause (i) shall 
                        cease to apply with respect to any employee if 
                        such employee makes an affirmative election--
                                    ``(I) to not have such 
                                contributions made, or
                                    ``(II) to make elective 
                                contributions at a level specified in 
                                such affirmative election.
                            ``(iii) Qualified percentage.--For purposes 
                        of this subparagraph, the term `qualified 
                        percentage' means, with respect to any 
                        employee, any percentage determined under the 
                        arrangement if such percentage is applied 
                        uniformly, does not exceed 10 percent, and is 
                        at least--
                                    ``(I) 3 percent during the period 
                                ending on the last day of the first 
                                plan year which begins after the date 
                                on which the first elective 
                                contribution described in clause (i) is 
                                made with respect to such employee,
                                    ``(II) 4 percent during the first 
                                plan year following the plan year 
                                described in subclause (I),
                                    ``(III) 5 percent during the second 
                                plan year following the plan year 
                                described in subclause (I), and
                                    ``(IV) 6 percent during any 
                                subsequent plan year.
                            ``(iv) Automatic deferral for current 
                        employees not required.--Clause (i) shall be 
                        applied without taking into account any 
                        employee who was eligible to participate in the 
                        arrangement (or a predecessor arrangement) 
                        immediately before the date on which such 
                        arrangement becomes a qualified automatic 
                        contribution arrangement (determined after 
                        application of this clause).
                    ``(D) Participation.--
                            ``(i) In general.--An arrangement meets the 
                        requirements of this subparagraph for any year 
                        if, during the plan year or the preceding plan 
                        year, elective contributions are made on behalf 
                        of at least 70 percent of the employees 
                        eligible to participate in the arrangement 
                        other than--
                                    ``(I) highly compensated employees, 
                                and
                                    ``(II) at the election of the plan 
                                administrator, employees described in 
                                subparagraph (C)(iv).
                            ``(ii) First plan year.--An arrangement 
                        (other than a successor arrangement) shall be 
                        treated as meeting the requirements of this 
                        subparagraph with respect to the first plan 
                        year with respect to which such arrangement is 
                        a qualified automatic contribution arrangement 
                        (determined without regard to this 
                        subparagraph).
                    ``(E) Matching or nonelective contributions.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if, under the arrangement, 
                        the employer--
                                    ``(I) makes matching contributions 
                                on behalf of each employee who is not a 
                                highly compensated employee in an 
                                amount equal to 50 percent of the 
                                elective contributions of the employee 
                                to the extent such elective 
                                contributions do not exceed 6 percent 
                                of compensation, or
                                    ``(II) is required, without regard 
                                to whether the employee makes an 
                                elective contribution or employee 
                                contribution, to make a contribution to 
                                a defined contribution plan on behalf 
                                of each employee who is not a highly 
                                compensated employee and who is 
                                eligible to participate in the 
                                arrangement in an amount equal to at 
                                least 2 percent of the employee's 
                                compensation.
                            ``(ii) Application of rules for matching 
                        contributions.--The rules of clauses (ii) and 
                        (iii) of paragraph (12)(B) shall apply for 
                        purposes of clause (i)(I).
                            ``(iii) Withdrawal and vesting 
                        restrictions.--An arrangement shall not be 
                        treated as meeting the requirements of clause 
                        (i) unless, with respect to employer 
                        contributions (including matching 
                        contributions) taken into account in 
                        determining whether the requirements of clause 
                        (i) are met--
                                    ``(I) any employee who has 
                                completed at least 2 years of service 
                                (within the meaning of section 411(a)) 
                                has a nonforfeitable right to 100 
                                percent of the employee's accrued 
                                benefit derived from such employer 
                                contributions, and
                                    ``(II) the requirements of 
                                subparagraph (B) of paragraph (2) are 
                                met with respect to all such employer 
                                contributions.
                            ``(iv) Application of certain other 
                        rules.--The rules of subparagraphs (E)(ii) and 
                        (F) of paragraph (12) shall apply for purposes 
                        of subclauses (I) and (II) of clause (i).
                    ``(F) Notice requirements.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if, within a reasonable 
                        period before each plan year, each employee 
                        eligible to participate in the arrangement for 
                        such year receives written notice of the 
                        employee's rights and obligations under the 
                        arrangement which--
                                    ``(I) is sufficiently accurate and 
                                comprehensive to apprise the employee 
                                of such rights and obligations, and
                                    ``(II) is written in a manner 
                                calculated to be understood by the 
                                average employee to whom the 
                                arrangement applies.
                            ``(ii) Timing and content requirements.--A 
                        notice shall not be treated as meeting the 
                        requirements of clause (i) with respect to an 
                        employee unless--
                                    ``(I) the notice explains the 
                                employee's right under the arrangement 
                                to elect not to have elective 
                                contributions made on the employee's 
                                behalf (or to elect to have such 
                                contributions made at a different 
                                percentage),
                                    ``(II) in the case of an 
                                arrangement under which the employee 
                                may elect among 2 or more investment 
                                options, the notice explains how 
                                contributions made under the 
                                arrangement will be invested in the 
                                absence of any investment election by 
                                the employee, and
                                    ``(III) the employee has a 
                                reasonable period of time after receipt 
                                of the notice described in subclauses 
                                (I) and (II) and before the first 
                                elective contribution is made to make 
                                either such election.''.
    (b) Matching Contributions.--Section 401(m) of such Code (relating 
to nondiscrimination test for matching contributions and employee 
contributions) is amended by redesignating paragraph (12) as paragraph 
(13) and by inserting after paragraph (11) the following new paragraph:
            ``(12) Alternative method for automatic contribution 
        arrangements.--A defined contribution plan shall be treated as 
        meeting the requirements of paragraph (2) with respect to 
        matching contributions if the plan--
                    ``(A) is a qualified automatic contribution 
                arrangement (as defined in subsection (k)(13)), and
                    ``(B) meets the requirements of paragraph 
                (11)(B).''.
    (c) Exclusion From Definition of Top-Heavy Plans.--
            (1) Elective contribution rule.--Clause (i) of section 
        416(g)(4)(H) of such Code is amended by inserting ``or 
        401(k)(13)'' after ``section 401(k)(12)''.
            (2) Matching contribution rule.--Clause (ii) of section 
        416(g)(4)(H) of such Code is amended by inserting ``or 
        401(m)(12)'' after ``section 401(m)(11)''.
    (d) Corrective Distributions.--
            (1) In general.--Section 414 of the Internal Revenue Code 
        of 1986 (relating to definitions and special rules) is amended 
        by adding at the end the following new subsection:
    ``(w) Automatic Contribution Arrangements.--
            ``(1) In general.--No tax shall be imposed under section 
        72(t) on a distribution from an applicable employer plan to the 
        employee with respect to whom such contribution relates if such 
        distribution does not exceed the erroneous automatic 
        contribution amount and is made not later than the 1st April 15 
        following the close of the taxable year in which such 
        contribution was made.
            ``(2) Erroneous automatic contribution amount.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `erroneous automatic 
                contribution amount' means the lesser of--
                            ``(i) the amount of automatic contributions 
                        made during the applicable period which the 
                        employee elects in a notice to the plan 
                        administrator to treat as an erroneous 
                        automatic contribution amount for purposes of 
                        this subsection, or
                            ``(ii) $500.
                    ``(B) Automatic contribution.--The term `automatic 
                contribution' means contributions which, under the 
                terms of the plan--
                            ``(i) the employee can elect to be made as 
                        contributions under the plan on behalf of the 
                        employee, or to the employee directly in cash, 
                        and
                            ``(ii) which are made on behalf of the 
                        employee under the plan pursuant to a plan 
                        provision treating the employee as having 
                        elected to have the employer make such 
                        contributions on behalf of the employee until 
                        the employee affirmatively elects not to have 
                        such contribution made or affirmatively elects 
                        to make contributions as a specified level.
            ``(3) Applicable employer plan.--For purposes of this 
        subsection, the term `applicable employer plan'means--
                    ``(A) an employees' trust described in section 
                401(a) which is exempt from tax under section 501(a), 
                and
                    ``(B) a plan under which amounts are contributed by 
                an individual's employer for an annuity contract 
                described in section 403(b).
            ``(4) Applicable period.--For purposes of this subsection, 
        the term `applicable period' means, with respect to any 
        employee, the three month period that begins on the first date 
        that an automatic contribution described in paragraph (2)(B) is 
        made with respect to such employee.''.
            (2) Vesting conforming amendments.--
                    (A) Section 411(a)(3)(G) of such Code is amended by 
                inserting ``an erroneous automatic contribution under 
                section 414(w),'' after ``402(g)(2)(A),''.
                    (B) The heading of section 411(a)(3)(G) of such 
                Code is amended by inserting ``or erroneous automatic 
                contribution'' before the period.
                    (C) Section 401(k)(8)(E) of such Code is amended by 
                inserting ``an erroneous automatic contribution under 
                section 414(w),'' after ``402(g)(2)(A),''.
                    (D) The heading of section 401(k)(8)(E) of such 
                Code is amended by inserting ``or erroneous automatic 
                contribution'' before the period.
    (e) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2005.

SEC. 904. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR 
              INDIVIDUALS CALLED TO ACTIVE DUTY FOR AT LEAST 179 DAYS.

    (a) In General.--Paragraph (2) of section 72(t) of the Internal 
Revenue Code of 1986 (relating to 10-percent additional tax on early 
distributions from qualified retirement plans) is amended by adding at 
the end the following new subparagraph:
                    ``(G) Distributions from retirement plans to 
                individuals called to active duty.--
                            ``(i) In general.--Any qualified reservist 
                        distribution.
                            ``(ii) Amount distributed may be repaid.--
                        Any individual who receives a qualified 
                        reservist distribution may, at any time during 
                        the 2-year period beginning on the day after 
                        the end of the active duty period, make one or 
                        more contributions to an individual retirement 
                        plan of such individual in an aggregate amount 
                        not to exceed the amount of such distribution. 
                        The dollar limitations otherwise applicable to 
                        contributions to individual retirement plans 
                        shall not apply to any contribution made 
                        pursuant to the preceding sentence. No 
                        deduction shall be allowed for any contribution 
                        pursuant to this clause.
                            ``(iii) Qualified reservist distribution.--
                        For purposes of this subparagraph, the term 
                        `qualified reservist distribution' means any 
                        distribution to an individual if--
                                    ``(I) such distribution is from an 
                                individual retirement plan, or from 
                                amounts attributable to employer 
                                contributions made pursuant to elective 
                                deferrals described in subparagraph (A) 
                                or (C) of section 402(g)(3) or section 
                                501(c)(18)(D)(iii),
                                    ``(II) such individual was (by 
                                reason of being a member of a reserve 
                                component (as defined in section 101 of 
                                title 37, United States Code)), ordered 
                                or called to active duty for a period 
                                in excess of 179 days or for an 
                                indefinite period, and
                                    ``(III) such distribution is made 
                                during the period beginning on the date 
                                of such order or call and ending at the 
                                close of the active duty period.
                            ``(iv) Application of subparagraph.--This 
                        subparagraph applies to individuals ordered or 
                        called to active duty after September 11, 2001, 
                        and before September 12, 2007. In no event 
                        shall the 2-year period referred to in clause 
                        (ii) end before the date which is 2-years after 
                        the date of the enactment of this 
                        subparagraph.''.
    (b) Conforming Amendments.--
            (1) Section 401(k)(2)(B)(i) of such Code is amended by 
        striking ``or'' at the end of subclause (III), by striking 
        ``and'' at the end of subclause (IV) and inserting ``or'', and 
        by inserting after subclause (IV) the following new subclause:
                                    ``(V) in the case of a qualified 
                                reservist distribution (as defined in 
                                section 72(t)(2)(G)(iii)), the date on 
                                which a period referred to in subclause 
                                (III) of such section begins, and''.
            (2) Section 403(b)(7)(A)(ii) of such Code is amended by 
        inserting ``(unless such amount is a distribution to which 
        section 72(t)(2)(G) applies)'' after ``distributee''.
            (3) Section 403(b)(11) of such Code is amended by striking 
        ``or'' at the end of subparagraph (A), by striking the period 
        at the end of subparagraph (B) and inserting ``, or'', and by 
        inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) for distributions to which section 
                72(t)(2)(G) applies.''.
    (c) Effective Date; Waiver of Limitations.--
            (1) Effective date.--The amendment made by this section 
        shall apply to distributions after September 11, 2001.
            (2) Waiver of limitations.--If refund or credit of any 
        overpayment of tax resulting from the amendments made by this 
        section is prevented at any time before the close of the 1-year 
        period beginning on the date of the enactment of this Act by 
        the operation of any law or rule of law (including res 
        judicata), such refund or credit may nevertheless be made or 
        allowed if claim therefor is filed before the close of such 
        period.

SEC. 905. WAIVER OF 10 PERCENT EARLY WITHDRAWAL PENALTY TAX ON CERTAIN 
              DISTRIBUTIONS OF PENSION PLANS FOR PUBLIC SAFETY 
              EMPLOYEES.

    (a) In General.--Section 72(t)(2) of the Internal Revenue Code of 
1986 (relating to subsection not to apply to certain distributions), as 
amended by section 904, is amended by adding at the end the following 
new subsection:
                    ``(H) DROP distributions to qualified public safety 
                employees in governmental plans.--
                            ``(i) In general.--Distributions to an 
                        individual who is a qualified public safety 
                        employee from a governmental plan within the 
                        meaning of section 414(d) to the extent such 
                        distributions are attributable to a DROP 
                        benefit.
                            ``(ii) Definitions.--For purposes of this 
                        subparagraph--
                                    ``(I) DROP benefit.--The term `DROP 
                                benefit' means a feature of a 
                                governmental plan which is a defined 
                                benefit plan and under which an 
                                employee elects to receive credits to 
                                an account (including a notional 
                                account) in the plan which are not in 
                                excess of the plan benefits (payable in 
                                the form of an annuity) that would have 
                                been provided if the employee had 
                                retired under the plan at a specified 
                                earlier retirement date and which are 
                                in lieu of increases in the employee's 
                                accrued pension benefit based on years 
                                of service after the effective date of 
                                the DROP election.
                                    ``(II) Qualified public safety 
                                employee.--The term `qualified public 
                                safety employee' means any employee of 
                                any police department or fire 
                                department organized and operated by a 
                                State or political subdivision of a 
                                State if the employee provides police 
                                protection, firefighting services, or 
                                emergency medical services for any area 
                                within the jurisdiction of such State 
                                or political subdivision and if the 
                                employee was eligible to retire on or 
                                before the date of such election and 
                                receive immediate retirement 
                                benefits.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to distributions after the date of the enactment of this Act.

SEC. 906. COMBAT ZONE COMPENSATION TAKEN INTO ACCOUNT FOR PURPOSES OF 
              DETERMINING LIMITATION AND DEDUCTIBILITY OF CONTRIBUTIONS 
              TO INDIVIDUAL RETIREMENT PLANS.

    (a) In General.--Subsection (f) of section 219 of the Internal 
Revenue Code of 1986 is amended by redesignating paragraph (7) as 
paragraph (8) and by inserting after paragraph (6) the following new 
paragraph:
            ``(7) Special rule for compensation earned by members of 
        the armed forces for service in a combat zone.--For purposes of 
        subsections (b)(1)(B) and (c), the amount of compensation 
        includible in an individual's gross income shall be determined 
        without regard to section 112.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 907. DIRECT PAYMENT OF TAX REFUNDS TO INDIVIDUAL RETIREMENT PLANS.

    (a) In General.--The Secretary of the Treasury (or the Secretary's 
delegate) shall make available a form (or modify existing forms) for 
use by individuals to direct that a portion of any refund of 
overpayment of tax imposed by chapter 1 of the Internal Revenue Code of 
1986 be paid directly to an individual retirement plan (as defined in 
section 7701(a)(37) of such Code) of such individual.
    (b) Effective Date.--The form required by subsection (a) shall be 
made available for taxable years beginning after December 31, 2006.

SEC. 908. IRA ELIGIBILITY FOR THE DISABLED.

    (a) In General.--Subsection (f) of section 219 of the Internal 
Revenue Code of 1986 (relating to other definitions and special rules), 
as amended by this Act, is further amended by redesignating paragraph 
(8) as paragraph (9) and by inserting after paragraph (7) the following 
new paragraph:
            ``(8) Special rule for certain disabled individuals.--In 
        the case of an individual--
                    ``(A) who is disabled (within the meaning of 
                section 72(m)(7)), and
                    ``(B) who has not attained the applicable age (as 
                defined in section 401(a)(9)(H)) before the close of 
                the taxable year,
        subparagraph (B) of subsection (b)(1) shall not apply.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2005.

SEC. 909. ALLOW ROLLOVERS BY NONSPOUSE BENEFICIARIES OF CERTAIN 
              RETIREMENT PLAN DISTRIBUTIONS.

    (a) In General.--
            (1) Qualified plans.--Section 402(c) of the Internal 
        Revenue Code of 1986 (relating to rollovers from exempt trusts) 
        is amended by adding at the end the following new paragraph:
            ``(11) Distributions to inherited individual retirement 
        plan of nonspouse beneficiary.--
                    ``(A) In general.--If, with respect to any portion 
                of a distribution from an eligible retirement plan of a 
                deceased employee, a direct trustee-to-trustee transfer 
                is made to an individual retirement plan described in 
                clause (i) or (ii) of paragraph (8)(B) established for 
                the purposes of receiving the distribution on behalf of 
                an individual who is a designated beneficiary (as 
                defined by section 401(a)(9)(E)) of the employee and 
                who is not the surviving spouse of the employee--
                            ``(i) the transfer shall be treated as an 
                        eligible rollover distribution for purposes of 
                        this subsection,
                            ``(ii) the individual retirement plan shall 
                        be treated as an inherited individual 
                        retirement account or individual retirement 
                        annuity (within the meaning of section 
                        408(d)(3)(C)) for purposes of this title, and
                            ``(iii) section 401(a)(9)(B) (other than 
                        clause (iv) thereof) shall apply to such plan.
                    ``(B) Certain trusts treated as beneficiaries.--For 
                purposes of this paragraph, to the extent provided in 
                rules prescribed by the Secretary, a trust maintained 
                for the benefit of one or more designated beneficiaries 
                shall be treated in the same manner as a trust 
                designated beneficiary.''.
            (2) Section 403(a) plans.--Subparagraph (B) of section 
        403(a)(4) of such Code (relating to rollover amounts) is 
        amended by inserting ``and (11)'' after ``(7)''.
            (3) Section 403(b) plans.--Subparagraph (B) of section 
        403(b)(8) of such Code (relating to rollover amounts) is 
        amended by striking ``and (9)'' and inserting ``, (9), and 
        (11)''.
            (4) Section 457 plans.--Subparagraph (B) of section 
        457(e)(16) of such Code (relating to rollover amounts) is 
        amended by striking ``and (9)'' and inserting ``, (9), and 
        (11)''.
    (b) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2005.

        TITLE X--PROVISIONS TO ENHANCE HEALTH CARE AFFORDABILITY

SEC. 1001. TREATMENT OF ANNUITY AND LIFE INSURANCE CONTRACTS WITH A 
              LONG-TERM CARE INSURANCE FEATURE.

    (a) Exclusion From Gross Income.--Subsection (e) of section 72 of 
the Internal Revenue Code of 1986 (relating to amounts not received as 
annuities) is amended by redesignating paragraph (11) as paragraph (12) 
and by inserting after paragraph (10) the following new paragraph:
            ``(11) Special rules for certain combination contracts 
        providing long-term care insurance.--Notwithstanding paragraphs 
        (2), (5)(C), and (10), in the case of any charge against the 
        cash value of an annuity contract or the cash surrender value 
        of a life insurance contract made as payment for coverage under 
        a qualified long-term care insurance contract which is part of 
        or a rider on such annuity or life insurance contract--
                    ``(A) the investment in the contract shall be 
                reduced (but not below zero) by such charge, and
                    ``(B) such charge shall not be includible in gross 
                income.''.
    (b) Tax-Free Exchanges Among Certain Insurance Policies.--
            (1) Annuity contracts can include qualified long-term care 
        insurance riders.--Paragraph (2) of section 1035(b) of such 
        Code is amended by adding at the end the following new 
        sentence: ``For purposes of the preceding sentence, a contract 
        shall not fail to be treated as an annuity contract solely 
        because a qualified long-term care insurance contract is a part 
        of or a rider on such contract.''.
            (2) Life insurance contracts can include qualified long-
        term care insurance riders.--Paragraph (3) of section 1035(b) 
        of such Code is amended by adding at the end the following new 
        sentence: ``For purposes of the preceding sentence, a contract 
        shall not fail to be treated as a life insurance contract 
        solely because a qualified long-term care insurance contract is 
        a part of or a rider on such contract.''.
            (3) Expansion of tax-free exchanges of life insurance, 
        endowment, and annuity contracts for long-term care 
        contracts.--Subsection (a) of section 1035 of such Code 
        (relating to certain exchanges of insurance policies) is 
        amended--
                    (A) in paragraph (1) by striking ``contract;'' and 
                inserting ``contract or for a qualified long-term care 
                insurance contract;'',
                    (B) in paragraph (2) by striking ``contract;'' and 
                inserting ``contract, or (C) for a qualified long-term 
                care insurance contract;'', and
                    (C) in paragraph (3) by striking ``contract.'' and 
                inserting ``contract or for a qualified long-term care 
                insurance contract.''.
            (4) Tax-free exchanges of qualified long-term care 
        insurance contract.--Subsection (a) of section 1035 of such 
        Code (relating to certain exchanges of insurance policies) is 
        amended by striking ``or'' at the end of paragraph (2), by 
        striking the period at the end of paragraph (3) and inserting 
        ``; or'', and by inserting after paragraph (3) the following 
        new paragraph:
            ``(4) a qualified long-term care insurance contract for a 
        qualified long-term care insurance contract.''.
    (c) Treatment of Coverage Provided as Part of a Life Insurance or 
Annuity Contract.--Subsection (e) of section 7702B of such Code 
(relating to treatment of qualified long-term care insurance) is 
amended to read as follows:
    ``(e) Treatment of Coverage Provided as Part of a Life Insurance or 
Annuity Contract.--
            ``(1) Coverage treated as contract.--Except as otherwise 
        provided in regulations prescribed by the Secretary, in the 
        case of any long-term care insurance coverage (whether or not 
        qualified) provided by a rider on or as part of a life 
        insurance contract or an annuity contract, this title shall 
        apply as if the portion of the contract providing such coverage 
        is a separate contract.
            ``(2) Denial of deduction under section 213.--No deduction 
        shall be allowed under section 213(a) for any payment made for 
        coverage under a qualified long-term care insurance contract if 
        such payment is made as a charge against the cash value of an 
        annuity contract or the cash surrender value of a life 
        insurance contract.
            ``(3) Application of section 7702.--Section 7702(c)(2) 
        (relating to the guideline premium limitation) shall be applied 
        by increasing the guideline premium limitation with respect to 
        the life insurance contract, as of any date--
                    ``(A) by the sum of any charges (but not premium 
                payments) against the life insurance contract's cash 
                surrender value (within the meaning of section 
                7702(f)(2)(A)) for coverage under the qualified long-
                term care insurance contract made to that date under 
                the life insurance contract, less
                    ``(B) any such charges the imposition of which 
                reduces the premiums paid for the life insurance 
                contract (within the meaning of section 7702(f)(1)).
            ``(4) Portion defined.--For purposes of this subsection, 
        the term `portion' means only the terms and benefits under a 
        life insurance contract or annuity contract that are in 
        addition to the terms and benefits under the contract without 
        regard to long-term care insurance coverage.
            ``(5) Annuity contracts to which paragraph (1) does not 
        apply.--For purposes of this subsection, none of the following 
        shall be treated as an annuity contract:
                    ``(A) A trust described in section 401(a) which is 
                exempt from tax under section 501(a).
                    ``(B) A contract--
                            ``(i) purchased by a trust described in 
                        subparagraph (A),
                            ``(ii) purchased as part of a plan 
                        described in section 403(a),
                            ``(iii) described in section 403(b),
                            ``(iv) provided for employees of a life 
                        insurance company under a plan described in 
                        section 818(a)(3), or
                            ``(v) from an individual retirement account 
                        or an individual retirement annuity.
                    ``(C) A contract purchased by an employer for the 
                benefit of the employee (or the employee's spouse).
        Any dividend described in section 404(k) which is received by a 
        participant or beneficiary shall, for purposes of this 
        paragraph, be treated as paid under a separate contract to 
        which subparagraph (B)(i) applies.''.
    (d) Information Reporting.--
            (1) Subpart B of part III of subchapter A of chapter 61 of 
        such Code (relating to information concerning transactions with 
        other persons) is amended by adding at the end the following 
        new section:

``SEC. 6050U. CHARGES OR PAYMENTS FOR QUALIFIED LONG-TERM CARE 
              INSURANCE CONTRACTS UNDER COMBINED ARRANGEMENTS.

    ``(a) Requirement of Reporting.--Any person who makes a charge 
against the cash value of an annuity contract, or the cash surrender 
value of a life insurance contract, which is excludible from gross 
income under section 72(e)(11) shall make a return, according to the 
forms or regulations prescribed by the Secretary, setting forth--
            ``(1) the amount of the aggregate of such charges against 
        each such contract for the calendar year,
            ``(2) the amount of the reduction in the investment in each 
        such contract by reason of such charges, and
            ``(3) the name, address, and TIN of the individual who is 
        the holder of each such contract.
    ``(b) Statements to Be Furnished to Persons With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each individual whose name is required 
to be set forth in such return a written statement showing--
            ``(1) the name, address, and phone number of the 
        information contact of the person making the payments, and
            ``(2) the information required to be shown on the return 
        with respect to such individual.
The written statement required under the preceding sentence shall be 
furnished to the individual on or before January 31 of the year 
following the calendar year for which the return under subsection (a) 
was required to be made.''.
            (2) Clerical amendment.--The table of sections for subpart 
        B of part III of subchapter A of such chapter 61 of such Code 
        is amended by adding at the end the following new item:

``Sec. 6050U. Charges or payments for qualified long-term care 
                            insurance contracts under combined 
                            arrangements.''.
    (e) Treatment of Policy Acquisition Expenses.--Subsection (e) of 
section 848 of such Code (relating to classification of contracts) is 
amended by adding at the end the following new paragraph:
            ``(6) Treatment of certain qualified long-term care 
        insurance contract arrangements.--An annuity or life insurance 
        contract which includes a qualified long-term care insurance 
        contract as a part of or a rider on such annuity or life 
        insurance contract shall be treated as a specified insurance 
        contract not described in subparagraph (A) or (B) of subsection 
        (c)(1).''.
    (f) Treatment as Qualified Additional Benefit.--Subparagraph (A) of 
section 7702(f)(5) of such Code (relating to qualified additional 
benefits) is amended by striking ``or'' at the end of clause (iv), by 
redesignating clause (v) as clause (vi), and by inserting after clause 
(iv) the following new clause:
                            ``(v) qualified long-term care insurance 
                        contract which is a part of or a rider on the 
                        contract, or''.
    (g) Effective Dates.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to contracts issued 
        before, on, or after December 31, 2006, but only with respect 
        to periods beginning after such date.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply with respect to exchanges occurring after December 
        31, 2006.

SEC. 1002. DISPOSITION OF UNUSED HEALTH BENEFITS IN CAFETERIA PLANS AND 
              FLEXIBLE SPENDING ARRANGEMENTS.

    (a) In General.--Section 125 of the Internal Revenue Code of 1986 
(relating to cafeteria plans) is amended by redesignating subsections 
(h) and (i) as subsections (i) and (j), respectively, and by inserting 
after subsection (g) the following:
    ``(h) Contributions of Certain Unused Health Benefits.--
            ``(1) In general.--For purposes of this title, a plan or 
        other arrangement shall not fail to be treated as a cafeteria 
        plan solely because qualified benefits under such plan include 
        a health flexible spending arrangement under which not more 
        than $500 of unused health benefits may be--
                    ``(A) carried forward to the succeeding plan year 
                of such health flexible spending arrangement, or
                    ``(B) to the extent permitted by section 106(d), 
                contributed by the employer to a health savings account 
                (as defined in section 223(d)) maintained for the 
                benefit of the employee.
            ``(2) Health flexible spending arrangement.--For purposes 
        of this subsection, the term `health flexible spending 
        arrangement' means a flexible spending arrangement (as defined 
        in section 106(c)) that is a qualified benefit and only permits 
        reimbursement for expenses for medical care (as defined in 
        section 213(d)(1), without regard to subparagraphs (C) and (D) 
        thereof).
            ``(3) Unused health benefits.--For purposes of this 
        subsection, with respect to an employee, the term `unused 
        health benefits' means the excess of--
                    ``(A) the maximum amount of reimbursement allowable 
                to the employee for a plan year under a health flexible 
                spending arrangement, over
                    ``(B) the actual amount of reimbursement for such 
                year under such arrangement.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to taxable years beginning after December 31, 2005.

SEC. 1003. DISTRIBUTIONS FROM GOVERNMENTAL RETIREMENT PLANS FOR HEALTH 
              AND LONG-TERM CARE INSURANCE FOR PUBLIC SAFETY OFFICERS.

    (a) In General.--Section 402 of the Internal Revenue Code of 1986 
(relating to taxability of beneficiary of employees' trust) is amended 
by adding at the end the following new subsection:
    ``(l) Distributions From Governmental Plans for Health and Long-
Term Care Insurance.--
            ``(1) In general.--In the case of an employee who is an 
        eligible retired public safety officer who makes the election 
        described in paragraph (6) with respect to any taxable year of 
        such employee, gross income of such employee for such taxable 
        year does not include any distribution from an eligible 
        retirement plan to the extent that the aggregate amount of such 
        distributions does not exceed the amount paid by such employee 
        for qualified health insurance premiums of the employee, his 
        spouse, or dependents (as defined in section 152) for such 
        taxable year.
            ``(2) Limitation.--The amount which may be excluded from 
        gross income for the taxable year by reason of paragraph (1) 
        shall not exceed $5,000.
            ``(3) Distributions must otherwise be includible.--
                    ``(A) In general.--An amount shall be treated as a 
                distribution for purposes of paragraph (1) only to the 
                extent that such amount would be includible in gross 
                income without regard to paragraph (1).
                    ``(B) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which an 
                amount is treated as a distribution for purposes of 
                subparagraph (A), the aggregate amounts distributed 
                from an eligible retirement plan in a taxable year (up 
                to the amount excluded under paragraph (1)) shall be 
                treated as includible in gross income (without regard 
                to subparagraph (A)) to the extent that such amount 
                does not exceed the aggregate amount which would have 
                been so includible if all amounts distributed from all 
                eligible retirement plans were treated as 1 contract 
                for purposes of determining the inclusion of such 
                distribution under section 72. Proper adjustments shall 
                be made in applying section 72 to other distributions 
                in such taxable year and subsequent taxable years.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Eligible retirement plan.--For purposes of 
                paragraph (1), the term `eligible retirement plan' 
                means a governmental plan (within the meaning of 
                section 414(d)) which is described in clause (iii), 
                (iv), (v), or (vi) of subsection (c)(8)(B).
                    ``(B) Eligible retired public safety officer.--The 
                term `eligible retired public safety officer' means an 
                individual who, by reason of disability or attainment 
                of normal retirement age, is separated from service as 
                a public safety officer with the employer who maintains 
                the eligible retirement plan from which distributions 
                subject to paragraph (1) are made.
                    ``(C) Public safety officer.--The term `public 
                safety officer' shall have the same meaning given such 
                term by section 1204(8)(A) of the Omnibus Crime Control 
                and Safe Streets Act of 1968 (42 U.S.C. 3796b(8)(A)).
                    ``(D) Qualified health insurance premiums.--The 
                term `qualified health insurance premiums' means 
                premiums for coverage for the eligible retired public 
                safety officer, his spouse, and dependents, by an 
                accident or health insurance plan or qualified long-
                term care insurance contract (as defined in section 
                7702B(b)).
            ``(5) Special rules.--For purposes of this subsection--
                    ``(A) Direct payment to insurer required.--
                Paragraph (1) shall only apply to a distribution if 
                payment of the premiums is made directly to the 
                provider of the accident or health insurance plan or 
                qualified long-term care insurance contract by 
                deduction from a distribution from the eligible 
                retirement plan.
                    ``(B) Related plans treated as 1.--All eligible 
                retirement plans of an employer shall be treated as a 
                single plan.
            ``(6) Election described.--
                    ``(A) In general.--For purposes of paragraph (1), 
                an election is described in this paragraph if the 
                election is made by an employee after separation from 
                service with respect to amounts not distributed from an 
                eligible retirement plan to have amounts from such plan 
                distributed in order to pay for qualified health 
                insurance premiums.
                    ``(B) Special rule.--A plan shall not be treated as 
                violating the requirements of section 401, or as 
                engaging in a prohibited transaction for purposes of 
                section 503(b), merely because it provides for an 
                election with respect to amounts that are otherwise 
                distributable under the plan or merely because of a 
                distribution made pursuant to an election described in 
                subparagraph (A).
            ``(7) Coordination with medical expense deduction.--The 
        amounts excluded from gross income under paragraph (1) shall 
        not be taken into account under section 213.
            ``(8) Coordination with deduction for health insurance 
        costs of self-employed individuals.--The amounts excluded from 
        gross income under paragraph (1) shall not be taken into 
        account under section 162(l).''.
    (b) Conforming Amendments.--
            (1) Section 403(a) of such Code (relating to taxability of 
        beneficiary under a qualified annuity plan) is amended by 
        inserting after paragraph (1) the following new paragraph:
            ``(2) Special rule for health and long-term care 
        insurance.--To the extent provided in section 402(l), paragraph 
        (1) shall not apply to the amount distributed under the 
        contract which is otherwise includible in gross income under 
        this subsection.''.
            (2) Section 403(b) of such Code (relating to taxability of 
        beneficiary under annuity purchased by section 501(c)(3) 
        organization or public school) is amended by inserting after 
        paragraph (1) the following new paragraph:
            ``(2) Special rule for health and long-term care 
        insurance.--To the extent provided in section 402(l), paragraph 
        (1) shall not apply to the amount distributed under the 
        contract which is otherwise includible in gross income under 
        this subsection.''.
            (3) Section 457(a) of such Code (relating to year of 
        inclusion in gross income) is amended by adding at the end the 
        following new paragraph:
            ``(3) Special rule for health and long-term care 
        insurance.--In the case of a plan of an eligible employer 
        described in subsection (e)(1)(A), to the extent provided in 
        section 402(l), paragraph (1) shall not apply to amounts 
        otherwise includible in gross income under this subsection.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions in taxable years beginning after December 31, 
2005.
                                                 Union Calendar No. 172

109th CONGRESS

  1st Session

                               H. R. 2830

                  [Report No. 109-232, Parts I and II]

_______________________________________________________________________

                                 A BILL

 To amend the Employee Retirement Income Security Act of 1974 and the 
Internal Revenue Code of 1986 to reform the pension funding rules, and 
                          for other purposes.

_______________________________________________________________________

                            December 6, 2005

   Reported from the Committee on Ways and Means with an amendment; 
committed to the Committee of the Whole House on the State of the Union 
                       and ordered to be printed