    [Congressional Bills 109th Congress]
    [From the U.S. Government Publishing Office]
    [H.R. 4 Engrossed in House (EH)]

    109th CONGRESS
      2d Session
                                     H. R. 4

    _______________________________________________________________________

                                     AN ACT

    To provide economic security for all Americans, 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 2006''.
        (b) Table of Contents.--The table of contents for this Act (other
    than so much of title XIV as follows section 1401) 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. Special rules for multiple employer plans of certain
                                cooperatives.
    Sec. 105. Temporary relief for certain PBGC settlement plans.
    Sec. 106. Special rules for plans of certain government contractors.
    Sec. 107. 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.
    Sec. 115. Modification of transition rule to pension funding
                                requirements.
    Sec. 116. Restrictions on funding of nonqualified deferred compensation
                                plans by employers maintaining underfunded
                                or terminated single-employer plans.
      TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS AND
                               RELATED PROVISIONS

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

    Sec. 201. Funding rules for multiemployer defined benefit plans.
    Sec. 202. Additional funding rules for multiemployer plans in
                                endangered or critical status.
    Sec. 203. Measures to forestall insolvency of multiemployer plans.
    Sec. 204. Withdrawal liability reforms.
    Sec. 205. Prohibition on retaliation against employers exercising their
                                rights to petition the Federal government.
    Sec. 206. Special rule for certain benefits funded under an agreement
                                approved by the Pension Benefit Guaranty
                                Corporation.
            Subtitle B--Amendments to Internal Revenue Code of 1986

    Sec. 211. Funding rules for multiemployer defined benefit plans.
    Sec. 212. Additional funding rules for multiemployer plans in
                                endangered or critical status.
    Sec. 213. Measures to forestall insolvency of multiemployer plans.
    Sec. 214. Exemption from excise taxes for certain multiemployer pension
                                plans.
                 Subtitle C--Sunset of Additional Funding Rules

    Sec. 221. Sunset of additional funding rules.
                      TITLE III--INTEREST RATE ASSUMPTIONS

    Sec. 301. Extension of replacement of 30-year Treasury rates.
    Sec. 302. Interest rate assumption for determination of lump sum
                                distributions.
    Sec. 303. Interest rate assumption for applying benefit limitations to
                                lump sum distributions.
                TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS

    Sec. 401. PBGC premiums.
    Sec. 402. Special funding rules for certain plans maintained by
                                commercial airlines.
    Sec. 403. Limitation on PBGC guarantee of shutdown and other benefits.
    Sec. 404. Rules relating to bankruptcy of employer.
    Sec. 405. PBGC premiums for small plans.
    Sec. 406. Authorization for PBGC to pay interest on premium overpayment
                                refunds.
    Sec. 407. Rules for substantial owner benefits in terminated plans.
    Sec. 408. Acceleration of PBGC computation of benefits attributable to
                                recoveries from employers.
    Sec. 409. Treatment of certain plans where cessation or change in
                                membership of a controlled group.
    Sec. 410. Missing participants.
    Sec. 411. Director of the Pension Benefit Guaranty Corporation.
    Sec. 412. Inclusion of information in the PBGC annual report.
                              TITLE V--DISCLOSURE

    Sec. 501. Defined benefit plan funding notice.
    Sec. 502. Access to multiemployer pension plan information.
    Sec. 503. Additional annual reporting requirements.
    Sec. 504. Electronic display of annual report information.
    Sec. 505. Section 4010 filings with the PBGC.
    Sec. 506. Disclosure of termination information to plan participants.
    Sec. 507. Notice of freedom to divest employer securities.
    Sec. 508. Periodic pension benefit statements.
    Sec. 509. Notice to participants or beneficiaries of blackout periods.
      TITLE VI--INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND FIDUCIARY
                                     RULES

                         Subtitle A--Investment Advice

    Sec. 601. Prohibited transaction exemption for provision of investment
                                advice.
                      Subtitle B--Prohibited Transactions

    Sec. 611. Prohibited transaction rules relating to financial
                                investments.
    Sec. 612. Correction period for certain transactions involving
                                securities and commodities.
                     Subtitle C--Fiduciary and Other Rules

    Sec. 621. Inapplicability of relief from fiduciary liability during
                                suspension of ability of participant or
                                beneficiary to direct investments.
    Sec. 622. Increase in maximum bond amount.
    Sec. 623. Increase in penalties for coercive interference with exercise
                                of ERISA rights.
    Sec. 624. Treatment of investment of assets by plan where participant
                                fails to exercise investment election.
    Sec. 625. Clarification of fiduciary rules.
                      TITLE VII--BENEFIT ACCRUAL STANDARDS

    Sec. 701. Benefit accrual standards.
    Sec. 702. Regulations relating to mergers and acquisitions.
                 TITLE VIII--PENSION RELATED REVENUE PROVISIONS

                       Subtitle A--Deduction Limitations

    Sec. 801. Increase in deduction limit for single-employer plans.
    Sec. 802. Deduction limits for multiemployer plans.
    Sec. 803. Updating deduction rules for combination of plans.
             Subtitle B--Certain Pension Provisions Made Permanent

    Sec. 811. Pensions and individual retirement arrangement provisions of
                                Economic Growth and Tax Relief
                                Reconciliation Act of 2001 made permanent.
    Sec. 812. Saver's credit.
    Subtitle C--Improvements in Portability, Distribution, and Contribution
                                     Rules

    Sec. 821. Clarifications regarding purchase of permissive service
                                credit.
    Sec. 822. Allow rollover of after-tax amounts in annuity contracts.
    Sec. 823. Clarification of minimum distribution rules for governmental
                                plans.
    Sec. 824. Allow direct rollovers from retirement plans to Roth IRAs.
    Sec. 825. Eligibility for participation in retirement plans.
    Sec. 826. Modifications of rules governing hardships and unforseen
                                financial emergencies.
    Sec. 827. Penalty-free withdrawals from retirement plans for
                                individuals called to active duty for at
                                least 179 days.
    Sec. 828. Waiver of 10 percent early withdrawal penalty tax on certain
                                distributions of pension plans for public
                                safety employees.
    Sec. 829. Allow rollovers by nonspouse beneficiaries of certain
                                retirement plan distributions.
    Sec. 830. Direct payment of tax refunds to individual retirement plans.
    Sec. 831. Allowance of additional IRA payments in certain bankruptcy
                                cases.
    Sec. 832. Determination of average compensation for section 415 limits.
    Sec. 833. Inflation indexing of gross income limitations on certain
                                retirement savings incentives.
                    Subtitle D--Health and Medical Benefits

    Sec. 841. Use of excess pension assets for future retiree health
                                benefits and collectively bargained retiree
                                health benefits.
    Sec. 842. Transfer of excess pension assets to multiemployer health
                                plan.
    Sec. 843. Allowance of reserve for medical benefits of plans sponsored
                                by bona fide associations.
    Sec. 844. Treatment of annuity and life insurance contracts with a
                                long-term care insurance feature.
    Sec. 845. Distributions from governmental retirement plans for health
                                and Long-Term care insurance for public
                                safety officers.
               Subtitle E--United States Tax Court Modernization

    Sec. 851. Cost-of-living adjustments for Tax Court judicial survivor
                                annuities.
    Sec. 852. Cost of life insurance coverage for Tax Court judges age 65
                                or over.
    Sec. 853. Participation of Tax Court judges in the Thrift Savings Plan.
    Sec. 854. Annuities to surviving spouses and dependent children of
                                special trial judges of the Tax Court.
    Sec. 855. Jurisdiction of Tax Court over collection due process cases.
    Sec. 856. Provisions for recall.
    Sec. 857. Authority for special trial judges to hear and decide certain
                                employment status cases.
    Sec. 858. Confirmation of authority of Tax Court to apply doctrine of
                                equitable recoupment.
    Sec. 859. Tax Court filing fee in all cases commenced by filing
                                petition.
    Sec. 860. Expanded use of Tax Court practice fee for pro se taxpayers.
                          Subtitle F--Other Provisions

    Sec. 861. Extension to all governmental plans of current moratorium on
                                application of certain nondiscrimination
                                rules applicable to State and local plans.
    Sec. 862. Elimination of aggregate limit for usage of excess funds from
                                black lung disability trusts.
    Sec. 863. Treatment of death benefits from corporate-owned life
                                insurance.
    Sec. 864. Treatment of test room supervisors and proctors who assist in
                                the administration of college entrance and
                                placement exams.
    Sec. 865. Grandfather rule for church plans which self-annuitize.
    Sec. 866. Exemption for income from leveraged real estate held by
                                church plans.
    Sec. 867. Church plan rule.
    Sec. 868. Gratuitous transfer for benefits of employees.
     TITLE IX--INCREASE IN PENSION PLAN DIVERSIFICATION AND PARTICIPATION
                          AND OTHER PENSION PROVISIONS

    Sec. 901. Defined contribution plans required to provide employees with
                                freedom to invest their plan assets.
    Sec. 902. Increasing participation through automatic contribution
                                arrangements.
    Sec. 903. Treatment of eligible combined defined benefit plans and
                                qualified cash or deferred arrangements.
    Sec. 904. Faster vesting of employer nonelective contributions.
    Sec. 905. Distributions during working retirement.
    Sec. 906. Treatment of certain pension plans of Indian tribal
                                governments.
           TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION

    Sec. 1001. Regulations on time and order of issuance of domestic
                                relations orders.
    Sec. 1002. Entitlement of divorced spouses to railroad retirement
                                annuities independent of actual entitlement
                                of employee.
    Sec. 1003. Extension of tier II railroad retirement benefits to
                                surviving former spouses pursuant to
                                divorce agreements.
    Sec. 1004. Requirement for additional survivor annuity option.
                      TITLE XI--ADMINISTRATIVE PROVISIONS

    Sec. 1101. Employee plans compliance resolution system.
    Sec. 1102. Notice and consent period regarding distributions.
    Sec. 1103. Reporting simplification.
    Sec. 1104. Voluntary early retirement incentive and employment
                                retention plans maintained by local
                                educational agencies and other entities.
    Sec. 1105. No reduction in unemployment compensation as a result of
                                pension rollovers.
    Sec. 1106. Revocation of election relating to treatment as
                                multiemployer plan.
    Sec. 1107. Provisions relating to plan amendments.
             TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS

                    Subtitle A--Charitable Giving Incentives

    Sec. 1201. Tax-free distributions from individual retirement plans for
                                charitable purposes.
    Sec. 1202. Extension of modification of charitable deduction for
                                contributions of food inventory.
    Sec. 1203. Basis adjustment to stock of S corporation contributing
                                property.
    Sec. 1204. Extension of modification of charitable deduction for
                                contributions of book inventory.
    Sec. 1205. Modification of tax treatment of certain payments to
                                controlling exempt organizations.
    Sec. 1206. Encouragement of contributions of capital gain real property
                                made for conservation purposes.
    Sec. 1207. Excise taxes exemption for blood collector organizations.
                   Subtitle B--Reforming Exempt Organizations

                            Part 1--General Reforms

    Sec. 1211. Reporting on certain acquisitions of interests in insurance
                                contracts in which certain exempt
                                organizations hold an interest.
    Sec. 1212. Increase in penalty excise taxes relating to public
                                charities, social welfare organizations,
                                and private foundations.
    Sec. 1213. Reform of charitable contributions of certain easements in
                                registered historic districts and reduced
                                deduction for portion of qualified
                                conservation contribution attributable to
                                rehabilitation credit.
    Sec. 1214. Charitable contributions of taxidermy property.
    Sec. 1215. Recapture of tax benefit for charitable contributions of
                                exempt use property not used for an exempt
                                use.
    Sec. 1216. Limitation of deduction for charitable contributions of
                                clothing and household items.
    Sec. 1217. Modification of recordkeeping requirements for certain
                                charitable contributions.
    Sec. 1218. Contributions of fractional interests in tangible personal
                                property.
    Sec. 1219. Provisions relating to substantial and gross overstatements
                                of valuations.
    Sec. 1220. Additional standards for credit counseling organizations.
    Sec. 1221. Expansion of the base of tax on private foundation net
                                investment income.
    Sec. 1222. Definition of convention or association of churches.
    Sec. 1223. Notification requirement for entities not currently required
                                to file.
    Sec. 1224. Disclosure to State officials relating to exempt
                                organizations.
    Sec. 1225. Public disclosure of information relating to unrelated
                                business income tax returns.
    Sec. 1226. Study on donor advised funds and supporting organizations.
             Part 2--Improved Accountability of Donor Advised Funds

    Sec. 1231. Excise taxes relating to donor advised funds.
    Sec. 1232. Excess benefit transactions involving donor advised funds
                                and sponsoring organizations.
    Sec. 1233. Excess business holdings of donor advised funds.
    Sec. 1234. Treatment of charitable contribution deductions to donor
                                advised funds.
    Sec. 1235. Returns of, and applications for recognition by, sponsoring
                                organizations.
          Part 3--Improved Accountability of Supporting Organizations

    Sec. 1241. Requirements for supporting organizations.
    Sec. 1242. Excess benefit transactions involving supporting
                                organizations.
    Sec. 1243. Excess business holdings of supporting organizations.
    Sec. 1244. Treatment of amounts paid to supporting organizations by
                                private foundations.
    Sec. 1245. Returns of supporting organizations.
                          TITLE XIII--OTHER PROVISIONS

    Sec. 1301. Technical corrections relating to mine safety.
    Sec. 1302. Going-to-the-sun road.
    Sec. 1303. Exception to the local furnishing requirement of the tax-
                                exempt bond rules.
    Sec. 1304. Qualified tuition programs.
                          TITLE XIV--TARIFF PROVISIONS

    Sec. 1401. Short title; table of contents.

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

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

    SEC. 101. MINIMUM FUNDING STANDARDS.

        (a) Repeal of Existing Funding Rules.--Sections 302 through 308 of
    the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082
    through 1086) are repealed.
        (b) New Minimum Funding Standards.--Part 3 of subtitle B of title I
    of such Act (as amended by subsection (a)) is amended by inserting
    after section 301 the following new section:

    ``SEC. 302. MINIMUM FUNDING STANDARDS.

        ``(a) Requirement to Meet Minimum Funding Standard.--
                ``(1) In general.--A plan to which this part applies shall
            satisfy the minimum funding standard applicable to the plan for
            any plan year.
                ``(2) Minimum funding standard.--For purposes of paragraph
            (1), a plan shall be treated as satisfying the minimum funding
            standard for a plan year if--
                        ``(A) in the case of a defined benefit plan which
                    is a single-employer plan, the employer makes
                    contributions to or under the plan for the plan year
                    which, in the aggregate, are not less than the minimum
                    required contribution determined under section 303 for
                    the plan for the plan year,
                        ``(B) in the case of a money purchase plan which is
                    a single-employer plan, the employer makes
                    contributions to or under the plan for the plan year
                    which are required under the terms of the plan, and
                        ``(C) in the case of a multiemployer plan, the
                    employers make contributions to or under the plan for
                    any plan year which, in the aggregate, are sufficient
                    to ensure that the plan does not have an accumulated
                    funding deficiency under section 304 as of the end of
                    the plan year.
        ``(b) Liability for Contributions.--
                ``(1) In general.--Except as provided in paragraph (2), the
            amount of any contribution required by this section (including
            any required installments under paragraphs (3) and (4) of
            section 303(j)) shall be paid by the employer responsible for
            making contributions to or under the plan.
                ``(2) Joint and several liability where employer member of
            controlled group.--If the employer referred to in paragraph (1)
            is a member of a controlled group, each member of such group
            shall be jointly and severally liable for payment of such
            contributions.
        ``(c) Variance From Minimum Funding Standards.--
                ``(1) Waiver in case of business hardship.--
                        ``(A) In general.--If--
                                ``(i) an employer is (or in the case of a
                            multiemployer plan, 10 percent or more of the
                            number of employers contributing to or under
                            the plan is) unable to satisfy the minimum
                            funding standard for a plan year without
                            temporary substantial business hardship
                            (substantial business hardship in the case of a
                            multiemployer plan), and
                                ``(ii) application of the standard would be
                            adverse to the interests of plan participants
                            in the aggregate,
                    the Secretary of the Treasury may, subject to
                    subparagraph (C), waive the requirements of subsection
                    (a) for such year with respect to all or any portion of
                    the minimum funding standard. The Secretary of the
                    Treasury shall not waive the minimum funding standard
                    with respect to a plan for more than 3 of any 15 (5 of
                    any 15 in the case of a multiemployer plan) consecutive
                    plan years.
                        ``(B) Effects of waiver.--If a waiver is granted
                    under subparagraph (A) for any plan year--
                                ``(i) in the case of a single-employer
                            plan, the minimum required contribution under
                            section 303 for the plan year shall be reduced
                            by the amount of the waived funding deficiency
                            and such amount shall be amortized as required
                            under section 303(e), and
                                ``(ii) in the case of a multiemployer plan,
                            the funding standard account shall be credited
                            under section 304(b)(3)(C) with the amount of
                            the waived funding deficiency and such amount
                            shall be amortized as required under section
                            304(b)(2)(C).
                        ``(C) Waiver of amortized portion not allowed.--The
                    Secretary of the Treasury may not waive under
                    subparagraph (A) any portion of the minimum funding
                    standard under subsection (a) for a plan year which is
                    attributable to any waived funding deficiency for any
                    preceding plan year.
                ``(2) Determination of business hardship.--For purposes of
            this subsection, the factors taken into account in determining
            temporary substantial business hardship (substantial business
            hardship in the case of a multiemployer plan) shall include
            (but shall not be limited to) whether or not--
                        ``(A) the employer is operating at an economic
                    loss,
                        ``(B) there is substantial unemployment or
                    underemployment in the trade or business and in the
                    industry concerned,
                        ``(C) the sales and profits of the industry
                    concerned are depressed or declining, and
                        ``(D) it is reasonable to expect that the plan will
                    be continued only if the waiver is granted.
                ``(3) Waived funding deficiency.--For purposes of this
            part, the term `waived funding deficiency' means the portion of
            the minimum funding standard under subsection (a) (determined
            without regard to the waiver) for a plan year waived by the
            Secretary of the Treasury and not satisfied by employer
            contributions.
                ``(4) Security for waivers for single-employer plans,
            consultations.--
                        ``(A) Security may be required.--
                                ``(i) In general.--Except as provided in
                            subparagraph (C), the Secretary of the Treasury
                            may require an employer maintaining a defined
                            benefit plan which is a single-employer plan
                            (within the meaning of section 4001(a)(15)) to
                            provide security to such plan as a condition
                            for granting or modifying a waiver under
                            paragraph (1).
                                ``(ii) Special rules.--Any security
                            provided under clause (i) may be perfected and
                            enforced only by the Pension Benefit Guaranty
                            Corporation, or at the direction of the
                            Corporation, by a contributing sponsor (within
                            the meaning of section 4001(a)(13)), or a
                            member of such sponsor's controlled group
                            (within the meaning of section 4001(a)(14)).
                        ``(B) Consultation with the pension benefit
                    guaranty corporation.--Except as provided in
                    subparagraph (C), the Secretary of the Treasury shall,
                    before granting or modifying a waiver under this
                    subsection with respect to a plan described in
                    subparagraph (A)(i)--
                                ``(i) provide the Pension Benefit Guaranty
                            Corporation with--
                                        ``(I) notice of the completed
                                    application for any waiver or
                                    modification, and
                                        ``(II) an opportunity to comment on
                                    such application within 30 days after
                                    receipt of such notice, and
                                ``(ii) consider--
                                        ``(I) any comments of the
                                    Corporation under clause (i)(II), and
                                        ``(II) any views of any employee
                                    organization (within the meaning of
                                    section 3(4)) representing participants
                                    in the plan which are submitted in
                                    writing to the Secretary of the
                                    Treasury in connection with such
                                    application.
                    Information provided to the Corporation under this
                    subparagraph shall be considered tax return information
                    and subject to the safeguarding and reporting
                    requirements of section 6103(p) of the Internal Revenue
                    Code of 1986.
                        ``(C) Exception for certain waivers.--
                                ``(i) In general.--The preceding provisions
                            of this paragraph shall not apply to any plan
                            with respect to which the sum of--
                                        ``(I) the aggregate unpaid minimum
                                    required contributions for the plan
                                    year and all preceding plan years, and
                                        ``(II) the present value of all
                                    waiver amortization installments
                                    determined for the plan year and
                                    succeeding plan years under section
                                    303(e)(2),
                            is less than $1,000,000.
                                ``(ii) Treatment of waivers for which
                            applications are pending.--The amount described
                            in clause (i)(I) shall include any increase in
                            such amount which would result if all
                            applications for waivers of the minimum funding
                            standard under this subsection which are
                            pending with respect to such plan were denied.
                                ``(iii) Unpaid minimum required
                            contribution.--For purposes of this
                            subparagraph--
                                        ``(I) In general.--The term `unpaid
                                    minimum required contribution' means,
                                    with respect to any plan year, any
                                    minimum 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 such Secretary determines such
                    analysis is not necessary because the taking into
                    account of such member would not significantly affect
                    the determination under this paragraph.
                ``(6) Advance notice.--
                        ``(A) In general.--The Secretary of the Treasury
                    shall, before granting a waiver under this subsection,
                    require each applicant to provide evidence satisfactory
                    to such Secretary that the applicant has provided
                    notice of the filing of the application for such waiver
                    to each affected party (as defined in section
                    4001(a)(21)). Such notice shall include a description
                    of the extent to which the plan is funded for benefits
                    which are guaranteed under title IV and for benefit
                    liabilities.
                        ``(B) Consideration of relevant information.--The
                    Secretary of the Treasury shall consider any relevant
                    information provided by a person to whom notice was
                    given under subparagraph (A).
                ``(7) Restriction on plan amendments.--
                        ``(A) In general.--No amendment of a plan which
                    increases the liabilities of the plan by reason of any
                    increase in benefits, any change in the accrual of
                    benefits, or any change in the rate at which benefits
                    become nonforfeitable under the plan shall be adopted
                    if a waiver under this subsection or an extension of
                    time under section 304(d) is in effect with respect to
                    the plan, or if a plan amendment described in
                    subsection (d)(2) has been made at any time in the
                    preceding 12 months (24 months in the case of a
                    multiemployer plan). If a plan is amended in violation
                    of the preceding sentence, any such waiver, or
                    extension of time, shall not apply to any plan year
                    ending on or after the date on which such amendment is
                    adopted.
                        ``(B) Exception.--Subparagraph (A) shall not apply
                    to any plan amendment which--
                                ``(i) the Secretary of the Treasury
                            determines to be reasonable and which provides
                            for only de minimis increases in the
                            liabilities of the plan,
                                ``(ii) only repeals an amendment described
                            in subsection (d)(2), or
                                ``(iii) is required as a condition of
                            qualification under part I of subchapter D of
                            chapter 1 of the Internal Revenue Code of 1986.
                ``(8) Cross reference.--For corresponding duties of the
            Secretary of the Treasury with regard to implementation of the
            Internal Revenue Code of 1986, see section 412(c) of such Code.
        ``(d) Miscellaneous Rules.--
                ``(1) Change in method or year.--If the funding method, the
            valuation date, or a plan year for a plan is changed, the
            change shall take effect only if approved by the Secretary of
            the Treasury.
                ``(2) Certain retroactive plan amendments.--For purposes of
            this section, any amendment applying to a plan year which--
                        ``(A) is adopted after the close of such plan year
                    but no later than 2\1/2\ months after the close of the
                    plan year (or, in the case of a multiemployer plan, no
                    later than 2 years after the close of such plan year),
                        ``(B) does not reduce the accrued benefit of any
                    participant determined as of the beginning of the first
                    plan year to which the amendment applies, and
                        ``(C) does not reduce the accrued benefit of any
                    participant determined as of the time of adoption
                    except to the extent required by the circumstances,
            shall, at the election of the plan administrator, be deemed to
            have been made on the first day of such plan year. No amendment
            described in this paragraph which reduces the accrued benefits
            of any participant shall take effect unless the plan
            administrator files a notice with the Secretary of the Treasury
            notifying him of such amendment and such Secretary has approved
            such amendment, or within 90 days after the date on which such
            notice was filed, failed to disapprove such amendment. No
            amendment described in this subsection shall be approved by the
            Secretary of the Treasury unless such Secretary determines that
            such amendment is necessary because of a temporary substantial
            business hardship (as determined under subsection (c)(2)) or a
            substantial business hardship (as so determined) in the case of
            a multiemployer plan and that a waiver under subsection (c)
            (or, in the case of a multiemployer plan, any extension of the
            amortization period under section 304(d)) is unavailable or
            inadequate.
                ``(3) Controlled group.--For purposes of this section, the
            term `controlled group' means any group treated as a single
            employer under subsection (b), (c), (m), or (o) of section 414
            of the Internal Revenue Code of 1986.''.
        (c) Clerical Amendment.--The table of contents in section 1 of such
    Act is amended by striking the items relating to sections 302 through
    308 and inserting the following new item:

    ``Sec. 302. Minimum funding standards.''.
        (d) Effective Date.--The amendments made by this section shall
    apply to plan years beginning after 2007.

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

        (a) In General.--Part 3 of subtitle B of title I of the Employee
    Retirement Income Security Act of 1974 (as amended by section 101 of
    this Act) is amended by inserting after section 302 the following new
    section:

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

        ``(a) Minimum Required Contribution.--For purposes of this section
    and section 302(a)(2)(A), except as provided in subsection (f), the
    term `minimum required contribution' means, with respect to any plan
    year of a single-employer plan--
                ``(1) in any case in which the value of plan assets of the
            plan (as reduced under subsection (f)(4)(B)) is less than the
            funding target of the plan for the plan year, the sum of--
                        ``(A) the target normal cost of the plan for the
                    plan year,
                        ``(B) the shortfall amortization charge (if any)
                    for the plan for the plan year determined under
                    subsection (c), and
                        ``(C) the waiver amortization charge (if any) for
                    the plan for the plan year as determined under
                    subsection (e); or
                ``(2) in any case in which the value of plan assets of the
            plan (as reduced under subsection (f)(4)(B)) equals or exceeds
            the funding target of the plan for the plan year, the target
            normal cost of the plan for the plan year reduced (but not
            below zero) by such excess.
        ``(b) Target Normal Cost.--For purposes of this section, except as
    provided in subsection (i)(2) with respect to plans in at-risk status,
    the term `target normal cost' means, for any plan year, the present
    value of all benefits which are expected to accrue or to be earned
    under the plan during the plan year. For purposes of this subsection,
    if any benefit attributable to services performed in a preceding plan
    year is increased by reason of any increase in compensation during the
    current plan year, the increase in such benefit shall be treated as
    having accrued during the current plan year.
        ``(c) Shortfall Amortization Charge.--
                ``(1) In general.--For purposes of this section, the
            shortfall amortization charge for a plan for any plan year is
            the aggregate total (not less than zero) of the shortfall
            amortization installments for such plan year with respect to
            the shortfall amortization bases for such plan year and each of
            the 6 preceding plan years.
                ``(2) Shortfall amortization installment.--For purposes of
            paragraph (1)--
                        ``(A) Determination.--The shortfall amortization
                    installments are the amounts necessary to amortize the
                    shortfall amortization base of the plan for any plan
                    year in level annual installments over the 7-plan-year
                    period beginning with such plan year.
                        ``(B) Shortfall installment.--The shortfall
                    amortization installment for any plan year in the 7-
                    plan-year period under subparagraph (A) with respect to
                    any shortfall amortization base is the annual
                    installment determined under subparagraph (A) for that
                    year for that base.
                        ``(C) Segment rates.--In determining any shortfall
                    amortization installment under this paragraph, the plan
                    sponsor shall use the segment rates determined under
                    subparagraph (C) of subsection (h)(2), applied under
                    rules similar to the rules of subparagraph (B) of
                    subsection (h)(2).
                ``(3) Shortfall amortization base.--For purposes of this
            section, the shortfall amortization base of a plan for a plan
            year is--
                        ``(A) the funding shortfall of such plan for such
                    plan year, minus
                        ``(B) the present value (determined using the
                    segment rates determined under subparagraph (C) of
                    subsection (h)(2), applied under rules similar to the
                    rules of subparagraph (B) of subsection (h)(2)) of the
                    aggregate total of the shortfall amortization
                    installments and waiver amortization installments which
                    have been determined for such plan year and any
                    succeeding plan year with respect to the shortfall
                    amortization bases and waiver amortization bases of the
                    plan for any plan year preceding such plan year.
                ``(4) Funding shortfall.--For purposes of this section, the
            funding shortfall of a plan for any plan year is the excess (if
            any) of--
                        ``(A) the funding target of the plan for the plan
                    year, over
                        ``(B) the value of plan assets of the plan (as
                    reduced under subsection (f)(4)(B)) for the plan year
                    which are held by the plan on the valuation date.
                ``(5) Exemption from new shortfall amortization base.--
                        ``(A) In general.--In any case in which the value
                    of plan assets of the plan (as reduced under subsection
                    (f)(4)(A)) is equal to or greater than the funding
                    target of the plan for the plan year, the shortfall
                    amortization base of the plan for such plan year shall
                    be zero.
                        ``(B) Transition rule.--
                                ``(i) In general.--Except as provided in
                            clauses (iii) and (iv), in the case of plan
                            years beginning after 2007 and before 2011,
                            only the applicable percentage of the funding
                            target shall be taken into account under
                            paragraph (3)(A) in determining the funding
                            shortfall for the plan year for purposes of
                            subparagraph (A).
                                ``(ii) Applicable percentage.--For purposes
                            of subparagraph (A), the applicable percentage
                            shall be determined in accordance with the
                            following table:

    ``In the case of a plan year                             The applicable
       beginning in calendar year:                            percentage is
            2008...................................................     92
            2009...................................................     94
            2010...................................................     96.
                                ``(iii) Limitation.--Clause (i) shall not
                            apply with respect to any plan year after 2008
                            unless the shortfall amortization base for each
                            of the preceding years beginning after 2007 was
                            zero (determined after application of this
                            subparagraph).
                                ``(iv) Transition relief not available for
                            new or deficit reduction plans.--Clause (i)
                            shall not apply to a plan--
                                        ``(I) which was not in effect for a
                                    plan year beginning in 2007, or
                                        ``(II) which was in effect for a
                                    plan year beginning in 2007 and which
                                    was subject to section 302(d) (as in
                                    effect for plan years beginning in
                                    2007), determined after the application
                                    of paragraphs (6) and (9) thereof.
                ``(6) Early deemed amortization upon attainment of funding
            target.--In any case in which the funding shortfall of a plan
            for a plan year is zero, for purposes of determining the
            shortfall amortization charge for such plan year and succeeding
            plan years, the shortfall amortization bases for all preceding
            plan years (and all shortfall amortization installments
            determined with respect to such bases) shall be reduced to
            zero.
        ``(d) Rules Relating to Funding Target.--For purposes of this
    section--
                ``(1) Funding target.--Except as provided in subsection
            (i)(1) with respect to plans in at-risk status, the funding
            target of a plan for a plan year is the present value of all
            benefits accrued or earned under the plan as of the beginning
            of the plan year.
                ``(2) Funding target attainment percentage.--The `funding
            target attainment percentage' of a plan for a plan year is the
            ratio (expressed as a percentage) which--
                        ``(A) the value of plan assets for the plan year
                    (as reduced under subsection (f)(4)(B)), bears to
                        ``(B) the funding target of the plan for the plan
                    year (determined without regard to subsection (i)(1)).
        ``(e) Waiver Amortization Charge.--
                ``(1) Determination of waiver amortization charge.--The
            waiver amortization charge (if any) for a plan for any plan
            year is the aggregate total of the waiver amortization
            installments for such plan year with respect to the waiver
            amortization bases for each of the 5 preceding plan years.
                ``(2) Waiver amortization installment.--For purposes of
            paragraph (1)--
                        ``(A) Determination.--The waiver amortization
                    installments are the amounts necessary to amortize the
                    waiver amortization base of the plan for any plan year
                    in level annual installments over a period of 5 plan
                    years beginning with the succeeding plan year.
                        ``(B) Waiver installment.--The waiver amortization
                    installment for any plan year in the 5-year period
                    under subparagraph (A) with respect to any waiver
                    amortization base is the annual installment determined
                    under subparagraph (A) for that year for that base.
                ``(3) Interest rate.--In determining any waiver
            amortization installment under this subsection, the plan
            sponsor shall use the segment rates determined under
            subparagraph (C) of subsection (h)(2), applied under rules
            similar to the rules of subparagraph (B) of subsection (h)(2).
                ``(4) Waiver amortization base.--The waiver amortization
            base of a plan for a plan year is the amount of the waived
            funding deficiency (if any) for such plan year under section
            302(c).
                ``(5) Early deemed amortization upon attainment of funding
            target.--In any case in which the funding shortfall of a plan
            for a plan year is zero, for purposes of determining the waiver
            amortization charge for such plan year and succeeding plan
            years, the waiver amortization bases for all preceding plan
            years (and all waiver amortization installments determined with
            respect to such bases) shall be reduced to zero.
        ``(f) Reduction of Minimum Required Contribution by Prefunding
    Balance and Funding Standard Carryover Balance.--
                ``(1) Election to maintain balances.--
                        ``(A) Prefunding balance.--The plan sponsor of a
                    single-employer plan may elect to maintain a prefunding
                    balance.
                        ``(B) Funding standard carryover balance.--
                                ``(i) In general.--In the case of a single-
                            employer plan described in clause (ii), the
                            plan sponsor may elect to maintain a funding
                            standard carryover balance, until such balance
                            is reduced to zero.
                                ``(ii) Plans maintaining funding standard
                            account in 2007.--A plan is described in this
                            clause if the plan--
                                        ``(I) was in effect for a plan year
                                    beginning in 2007, and
                                        ``(II) had a positive balance in
                                    the funding standard account under
                                    section 302(b) as in effect for such
                                    plan year and determined as of the end
                                    of such plan year.
                ``(2) Application of balances.--A prefunding balance and a
            funding standard carryover balance maintained pursuant to this
            paragraph--
                        ``(A) shall be available for crediting against the
                    minimum required contribution, pursuant to an election
                    under paragraph (3),
                        ``(B) shall be applied as a reduction in the amount
                    treated as the value of plan assets for purposes of
                    this section, to the extent provided in paragraph (4),
                    and
                        ``(C) may be reduced at any time, pursuant to an
                    election under paragraph (5).
                ``(3) Election to apply balances against minimum required
            contribution.--
                        ``(A) In general.--Except as provided in
                    subparagraphs (B) and (C), in the case of any plan year
                    in which the plan sponsor elects to credit against the
                    minimum required contribution for the current plan year
                    all or a portion of the prefunding balance or the
                    funding standard carryover balance for the current plan
                    year (not in excess of such minimum required
                    contribution), the minimum required contribution for
                    the plan year shall be reduced as of the first day of
                    the plan year by the amount so credited by the plan
                    sponsor. For purposes of the preceding sentence, the
                    minimum required contribution shall be determined after
                    taking into account any waiver under section 302(c).
                        ``(B) Coordination with funding standard carryover
                    balance.--To the extent that any plan has a funding
                    standard carryover balance greater than zero, no amount
                    of the prefunding balance of such plan may be credited
                    under this paragraph in reducing the minimum required
                    contribution.
                        ``(C) Limitation for underfunded plans.--The
                    preceding provisions of this paragraph shall not apply
                    for any plan year if the ratio (expressed as a
                    percentage) which--
                                ``(i) the value of plan assets for the
                            preceding plan year (as reduced under paragraph
                            (4)(C)), bears to
                                ``(ii) the funding target of the plan for
                            the preceding plan year (determined without
                            regard to subsection (i)(1)),
                    is less than 80 percent. In the case of plan years
                    beginning in 2008, the ratio under this subparagraph
                    may be determined using such methods of estimation as
                    the Secretary of the Treasury may prescribe.
                ``(4) Effect of balances on amounts treated as value of
            plan assets.--In the case of any plan maintaining a prefunding
            balance or a funding standard carryover balance pursuant to
            this subsection, the amount treated as the value of plan assets
            shall be deemed to be such amount, reduced as provided in the
            following subparagraphs:
                        ``(A) Applicability of shortfall amortization
                    base.--For purposes of subsection (c)(5), the value of
                    plan assets is deemed to be such amount, reduced by the
                    amount of the prefunding balance, but only if an
                    election under paragraph (2) applying any portion of
                    the prefunding balance in reducing the minimum required
                    contribution is in effect for the plan year.
                        ``(B) Determination of excess assets, funding
                    shortfall, and funding target attainment percentage.--
                                ``(i) In general.--For purposes of
                            subsections (a), (c)(4)(B), and (d)(2)(A), the
                            value of plan assets is deemed to be such
                            amount, reduced by the amount of the prefunding
                            balance and the funding standard carryover
                            balance.
                                ``(ii) Special rule for certain binding
                            agreements with pbgc.--For purposes of
                            subsection (c)(4)(B), the value of plan assets
                            shall not be deemed to be reduced for a plan
                            year by the amount of the specified balance if,
                            with respect to such balance, there is in
                            effect for a plan year a binding written
                            agreement with the Pension Benefit Guaranty
                            Corporation which provides that such balance is
                            not available to reduce the minimum required
                            contribution for the plan year. For purposes of
                            the preceding sentence, the term `specified
                            balance' means the prefunding balance or the
                            funding standard carryover balance, as the case
                            may be.
                        ``(C) Availability of balances in plan year for
                    crediting against minimum required contribution.--For
                    purposes of paragraph (3)(C)(i) of this subsection, the
                    value of plan assets is deemed to be such amount,
                    reduced by the amount of the prefunding balance.
                ``(5) Election to reduce balance prior to determinations of
            value of plan assets and crediting against minimum required
            contribution.--
                        ``(A) In general.--The plan sponsor may elect to
                    reduce by any amount the balance of the prefunding
                    balance and the funding standard carryover balance for
                    any plan year (but not below zero). Such reduction
                    shall be effective prior to any determination of the
                    value of plan assets for such plan year under this
                    section and application of the balance in reducing the
                    minimum required contribution for such plan for such
                    plan year pursuant to an election under paragraph (2).
                        ``(B) Coordination between prefunding balance and
                    funding standard carryover balance.--To the extent that
                    any plan has a funding standard carryover balance
                    greater than zero, no election may be made under
                    subparagraph (A) with respect to the prefunding
                    balance.
                ``(6) Prefunding balance.--
                        ``(A) In general.--A prefunding balance maintained
                    by a plan shall consist of a beginning balance of zero,
                    increased and decreased to the extent provided in
                    subparagraphs (B) and (C), and adjusted further as
                    provided in paragraph (8).
                        ``(B) Increases.--
                                ``(i) In general.--As of the first day of
                            each plan year beginning after 2008, the
                            prefunding balance of a plan shall be increased
                            by the amount elected by the plan sponsor for
                            the plan year. Such amount shall not exceed the
                            excess (if any) of--
                                        ``(I) the aggregate total of
                                    employer contributions to the plan for
                                    the preceding plan year, over--
                                        ``(II) the minimum required
                                    contribution for such preceding plan
                                    year.
                                ``(ii) Adjustments for interest.--Any
                            excess contributions under clause (i) shall be
                            properly adjusted for interest accruing for the
                            periods between the first day of the current
                            plan year and the dates on which the excess
                            contributions were made, determined by using
                            the effective interest rate for the preceding
                            plan year and by treating contributions as
                            being first used to satisfy the minimum
                            required contribution.
                                ``(iii) Certain contributions necessary to
                            avoid benefit limitations disregarded.--The
                            excess described in clause (i) with respect to
                            any preceding plan year shall be reduced (but
                            not below zero) by the amount of contributions
                            an employer would be required to make under
                            paragraph (1), (2), or (4) of section 206(g) to
                            avoid a benefit limitation which would
                            otherwise be imposed under such paragraph for
                            the preceding plan year. Any contribution which
                            may be taken into account in satisfying the
                            requirements of more than 1 of such paragraphs
                            shall be taken into account only once for
                            purposes of this clause.
                        ``(C) Decrease.--The prefunding balance of a plan
                    shall be decreased (but not below zero) by--
                                ``(i) as of the first day of each plan year
                            after 2008, the amount of such balance credited
                            under paragraph (2) (if any) in reducing the
                            minimum required contribution of the plan for
                            the preceding plan year, and
                                ``(ii) as of the time specified in
                            paragraph (5))(A), any reduction in such
                            balance elected under paragraph (5).
                ``(7) Funding standard carryover balance.--
                        ``(A) In general.--A funding standard carryover
                    balance maintained by a plan shall consist of a
                    beginning balance determined under subparagraph (B),
                    decreased to the extent provided in subparagraph (C),
                    and adjusted further as provided in paragraph (8).
                        ``(B) Beginning balance.--The beginning balance of
                    the funding standard carryover balance shall be the
                    positive balance described in paragraph (1)(B)(ii)(II).
                        ``(C) Decreases.--The funding standard carryover
                    balance of a plan shall be decreased (but not below
                    zero) by--
                                ``(i) as of the first day of each plan year
                            after 2008, the amount of such balance credited
                            under paragraph (2) (if any) in reducing the
                            minimum required contribution of the plan for
                            the preceding plan year, and
                                ``(ii) as of the time specified in
                            paragraph (5))(A), any reduction in such
                            balance elected under paragraph (5).
                ``(8) Adjustments for investment experience.--In
            determining the prefunding balance or the funding standard
            carryover balance of a plan as of the first day of the plan
            year, the plan sponsor shall, in accordance with regulations
            prescribed by the Secretary of the Treasury, adjust such
            balance to reflect the rate of return on plan assets for the
            preceding plan year. Notwithstanding subsection (g)(3), such
            rate of return shall be determined on the basis of fair market
            value and shall properly take into account, in accordance with
            such regulations, all contributions, distributions, and other
            plan payments made during such period.
                ``(9) Elections.--Elections under this subsection shall be
            made at such times, and in such form and manner, as shall be
            prescribed in regulations of the Secretary of the Treasury.
        ``(g) Valuation of Plan Assets and Liabilities.--
                ``(1) Timing of determinations.--Except as otherwise
            provided under this subsection, all determinations under this
            section for a plan year shall be made as of the valuation date
            of the plan for such plan year.
                ``(2) Valuation date.--For purposes of this section--
                        ``(A) In general.--Except as provided in
                    subparagraph (B), the valuation date of a plan for any
                    plan year shall be the first day of the plan year.
                        ``(B) Exception for small plans.--If, on each day
                    during the preceding plan year, a plan had 100 or fewer
                    participants, the plan may designate any day during the
                    plan year as its valuation date for such plan year and
                    succeeding plan years. For purposes of this
                    subparagraph, all defined benefit plans which are
                    single-employer plans and are maintained by the same
                    employer (or any member of such employer's controlled
                    group) shall be treated as 1 plan, but only
                    participants with respect to such employer or member
                    shall be taken into account.
                        ``(C) Application of certain rules in determination
                    of plan size.--For purposes of this paragraph--
                                ``(i) Plans not in existence in preceding
                            year.--In the case of the first plan year of
                            any plan, subparagraph (B) shall apply to such
                            plan by taking into account the number of
                            participants that the plan is reasonably
                            expected to have on days during such first plan
                            year.
                                ``(ii) Predecessors.--Any reference in
                            subparagraph (B) to an employer shall include a
                            reference to any predecessor of such employer.
                ``(3) Determination of value of plan assets.--For purposes
            of this section--
                        ``(A) In general.--Except as provided in
                    subparagraph (B), the value of plan assets shall be the
                    fair market value of the assets.
                        ``(B) Averaging allowed.--A plan may determine the
                    value of plan assets on the basis of the averaging of
                    fair market values, but only if such method--
                                ``(i) is permitted under regulations
                            prescribed by the Secretary of the Treasury,
                                ``(ii) does not provide for averaging of
                            such values over more than the period beginning
                            on the last day of the 25th month preceding the
                            month in which the valuation date occurs and
                            ending on the valuation date (or a similar
                            period in the case of a valuation date which is
                            not the 1st day of a month), and
                                ``(iii) does not result in a determination
                            of the value of plan assets which, at any time,
                            is lower than 90 percent or greater than 110
                            percent of the fair market value of such assets
                            at such time.
                    Any such averaging shall be adjusted for contributions
                    and distributions (as provided by the Secretary of the
                    Treasury).
                ``(4) Accounting for contribution receipts.--For purposes
            of determining the value of assets under paragraph (3)--
                        ``(A) Prior year contributions.--If--
                                ``(i) an employer makes any contribution to
                            the plan after the valuation date for the plan
                            year in which the contribution is made, and
                                ``(ii) the contribution is for a preceding
                            plan year,
                    the contribution shall be taken into account as an
                    asset of the plan as of the valuation date, except that
                    in the case of any plan year beginning after 2008, only
                    the present value (determined as of the valuation date)
                    of such contribution may be taken into account. For
                    purposes of the preceding sentence, present value shall
                    be determined using the effective interest rate for the
                    preceding plan year to which the contribution is
                    properly allocable.
                        ``(B) Special rule for current year contributions
                    made before valuation date.--If any contributions for
                    any plan year are made to or under the plan during the
                    plan year but before the valuation date for the plan
                    year, the assets of the plan as of the valuation date
                    shall not include--
                                ``(i) such contributions, and
                                ``(ii) interest on such contributions for
                            the period between the date of the
                            contributions and the valuation date,
                            determined by using the effective interest rate
                            for the plan year.
        ``(h) Actuarial Assumptions and Methods.--
                ``(1) In general.--Subject to this subsection, the
            determination of any present value or other computation under
            this section shall be made on the basis of actuarial
            assumptions and methods--
                        ``(A) each of which is reasonable (taking into
                    account the experience of the plan and reasonable
                    expectations), and
                        ``(B) which, in combination, offer the actuary's
                    best estimate of anticipated experience under the plan.
                ``(2) Interest rates.--
                        ``(A) Effective interest rate.--For purposes of
                    this section, the term `effective interest rate' means,
                    with respect to any plan for any plan year, the single
                    rate of interest which, if used to determine the
                    present value of the plan's accrued or earned benefits
                    referred to in subsection (d)(1), would result in an
                    amount equal to the funding target of the plan for such
                    plan year.
                        ``(B) Interest rates for determining funding
                    target.--For purposes of determining the funding target
                    and normal cost of a plan for any plan year, the
                    interest rate used in determining the present value of
                    the benefits of the plan shall be--
                                ``(i) in the case of benefits reasonably
                            determined to be payable during the 5-year
                            period beginning on the first day of the plan
                            year, the first segment rate with respect to
                            the applicable month,
                                ``(ii) in the case of benefits reasonably
                            determined to be payable during the 15-year
                            period beginning at the end of the period
                            described in clause (i), the second segment
                            rate with respect to the applicable month, and
                                ``(iii) in the case of benefits reasonably
                            determined to be payable after the period
                            described in clause (ii), the third segment
                            rate with respect to the applicable month.
                        ``(C) Segment rates.--For purposes of this
                    paragraph--
                                ``(i) First segment rate.--The term `first
                            segment rate' means, with respect to any month,
                            the single rate of interest which shall be
                            determined by the Secretary of the Treasury for
                            such month on the basis of the corporate bond
                            yield curve for such month, taking into account
                            only that portion of such yield curve which is
                            based on bonds maturing during the 5-year
                            period commencing with such month.
                                ``(ii) Second segment rate.--The term
                            `second segment rate' means, with respect to
                            any month, the single rate of interest which
                            shall be determined by the Secretary of the
                            Treasury for such month on the basis of the
                            corporate bond yield curve for such month,
                            taking into account only that portion of such
                            yield curve which is based on bonds maturing
                            during the 15-year period beginning at the end
                            of the period described in clause (i).
                                ``(iii) Third segment rate.--The term
                            `third segment rate' means, with respect to any
                            month, the single rate of interest which shall
                            be determined by the Secretary of the Treasury
                            for such month on the basis of the corporate
                            bond yield curve for such month, taking into
                            account only that portion of such yield curve
                            which is based on bonds maturing during periods
                            beginning after the period described in clause
                            (ii).
                        ``(D) Corporate bond yield curve.--For purposes of
                    this paragraph--
                                ``(i) In general.--The term `corporate bond
                            yield curve' means, with respect to any month,
                            a yield curve which is prescribed by the
                            Secretary of the Treasury for such month and
                            which reflects the average, for the 24-month
                            period ending with the month preceding such
                            month, of monthly yields on investment grade
                            corporate bonds with varying maturities and
                            that are in the top 3 quality levels available.
                                ``(ii) Election to use yield curve.--Solely
                            for purposes of determining the minimum
                            required contribution under this section, the
                            plan sponsor may, in lieu of the segment rates
                            determined under subparagraph (C), elect to use
                            interest rates under the corporate bond yield
                            curve. For purposes of the preceding sentence
                            such curve shall be determined without regard
                            to the 24-month averaging described in clause
                            (i). Such election, once made, may be revoked
                            only with the consent of the Secretary of the
                            Treasury.
                        ``(E) Applicable month.--For purposes of this
                    paragraph, the term `applicable month' means, with
                    respect to any plan for any plan year, the month which
                    includes the valuation date of such plan for such plan
                    year or, at the election of the plan sponsor, any of
                    the 4 months which precede such month. Any election
                    made under this subparagraph shall apply to the plan
                    year for which the election is made and all succeeding
                    plan years, unless the election is revoked with the
                    consent of the Secretary of the Treasury.
                        ``(F) Publication requirements.--The Secretary of
                    the Treasury shall publish for each month the corporate
                    bond yield curve (and the corporate bond yield curve
                    reflecting the modification described in section
                    205(g)(3)(B)(iii)(I)) for such month and each of the
                    rates determined under subparagraph (B) for such month.
                    The Secretary of the Treasury shall also publish a
                    description of the methodology used to determine such
                    yield curve and such rates which is sufficiently
                    detailed to enable plans to make reasonable projections
                    regarding the yield curve and such rates for future
                    months based on the plan's projection of future
                    interest rates.
                        ``(G) Transition rule.--
                                ``(i) In general.--Notwithstanding the
                            preceding provisions of this paragraph, for
                            plan years beginning in 2008 or 2009, the
                            first, second, or third segment rate for a plan
                            with respect to any month shall be equal to the
                            sum of--
                                        ``(I) the product of such rate for
                                    such month determined without regard to
                                    this subparagraph, multiplied by the
                                    applicable percentage, and
                                        ``(II) the product of the rate
                                    determined under the rules of section
                                    302(b)(5)(B)(ii)(II) (as in effect for
                                    plan years beginning in 2007),
                                    multiplied by a percentage equal to 100
                                    percent minus the applicable
                                    percentage.
                                ``(ii) Applicable percentage.--For purposes
                            of clause (i), the applicable percentage is
                            33\1/3\ percent for plan years beginning in
                            2008 and 66\2/3\ percent for plan years
                            beginning in 2009.
                                ``(iii) New plans ineligible.--Clause (i)
                            shall not apply to any plan if the first plan
                            year of the plan begins after December 31,
                            2007.
                                ``(iv) Election.--The plan sponsor may
                            elect not to have this subparagraph apply. Such
                            election, once made, may be revoked only with
                            the consent of the Secretary of the Treasury.
                ``(3) Mortality tables.--
                        ``(A) In general.--Except as provided in
                    subparagraph (C) or (D), the Secretary of the Treasury
                    shall by regulation prescribe mortality tables to be
                    used in determining any present value or making any
                    computation under this section. Such tables shall be
                    based on the actual experience of pension plans and
                    projected trends in such experience. In prescribing
                    such tables, the Secretary of the Treasury shall take
                    into account results of available independent studies
                    of mortality of individuals covered by pension plans.
                        ``(B) Periodic revision.--The Secretary of the
                    Treasury shall (at least every 10 years) make revisions
                    in any table in effect under subparagraph (A) to
                    reflect the actual experience of pension plans and
                    projected trends in such experience.
                        ``(C) Substitute mortality table.--
                                ``(i) In general.--Upon request by the plan
                            sponsor and approval by the Secretary of the
                            Treasury, a mortality table which meets the
                            requirements of clause (iii) shall be used in
                            determining any present value or making any
                            computation under this section during the
                            period of consecutive plan years (not to exceed
                            10) specified in the request.
                                ``(ii) Early termination of period.--
                            Notwithstanding clause (i), a mortality table
                            described in clause (i) shall cease to be in
                            effect as of the earliest of--
                                        ``(I) the date on which there is a
                                    significant change in the participants
                                    in the plan by reason of a plan spinoff
                                    or merger or otherwise, or
                                        ``(II) the date on which the plan
                                    actuary determines that such table does
                                    not meet the requirements of clause
                                    (iii).
                                ``(iii) Requirements.--A mortality table
                            meets the requirements of this clause if--
                                        ``(I) there is a sufficient number
                                    of plan participants, and the pension
                                    plans have been maintained for a
                                    sufficient period of time, to have
                                    credible information necessary for
                                    purposes of subclause (II), and
                                        ``(II) such table reflects the
                                    actual experience of the pension plans
                                    maintained by the sponsor and projected
                                    trends in general mortality experience.
                                ``(iv) All plans in controlled group must
                            use separate table.--Except as provided by the
                            Secretary of the Treasury, a plan sponsor may
                            not use a mortality table under this
                            subparagraph for any plan maintained by the
                            plan sponsor unless--
                                        ``(I) a separate mortality table is
                                    established and used under this
                                    subparagraph for each other plan
                                    maintained by the plan sponsor and if
                                    the plan sponsor is a member of a
                                    controlled group, each member of the
                                    controlled group, and
                                        ``(II) the requirements of clause
                                    (iii) are met separately with respect
                                    to the table so established for each
                                    such plan, determined by only taking
                                    into account the participants of such
                                    plan, the time such plan has been in
                                    existence, and the actual experience of
                                    such plan.
                                ``(v) Deadline for submission and
                            disposition of application.--
                                        ``(I) Submission.--The plan sponsor
                                    shall submit a mortality table to the
                                    Secretary of the Treasury for approval
                                    under this subparagraph at least 7
                                    months before the 1st day of the period
                                    described in clause (i).
                                        ``(II) Disposition.--Any mortality
                                    table submitted to the Secretary of the
                                    Treasury for approval under this
                                    subparagraph shall be treated as in
                                    effect as of the 1st day of the period
                                    described in clause (i) unless the
                                    Secretary of the Treasury, during the
                                    180-day period beginning on the date of
                                    such submission, disapproves of such
                                    table and provides the reasons that
                                    such table fails to meet the
                                    requirements of clause (iii). The 180-
                                    day period shall be extended upon
                                    mutual agreement of the Secretary of
                                    the Treasury and the plan sponsor.
                        ``(D) Separate mortality tables for the disabled.--
                    Notwithstanding subparagraph (A)--
                                ``(i) In general.--The Secretary of the
                            Treasury shall establish mortality tables which
                            may be used (in lieu of the tables under
                            subparagraph (A)) under this subsection for
                            individuals who are entitled to benefits under
                            the plan on account of disability. The
                            Secretary of the Treasury shall establish
                            separate tables for individuals whose
                            disabilities occur in plan years beginning
                            before January 1, 1995, and for individuals
                            whose disabilities occur in plan years
                            beginning on or after such date.
                                ``(ii) Special rule for disabilities
                            occurring after 1994.--In the case of
                            disabilities occurring in plan years beginning
                            after December 31, 1994, the tables under
                            clause (i) shall apply only with respect to
                            individuals described in such subclause who are
                            disabled within the meaning of title II of the
                            Social Security Act and the regulations
                            thereunder.
                                ``(iii) Periodic revision.--The Secretary
                            of the Treasury shall (at least every 10 years)
                            make revisions in any table in effect under
                            clause (i) to reflect the actual experience of
                            pension plans and projected trends in such
                            experience.
                ``(4) Probability of benefit payments in the form of lump
            sums or other optional forms.--For purposes of determining any
            present value or making any computation under this section,
            there shall be taken into account--
                        ``(A) the probability that future benefit payments
                    under the plan will be made in the form of optional
                    forms of benefits provided under the plan (including
                    lump sum distributions, determined on the basis of the
                    plan's experience and other related assumptions), and
                        ``(B) any difference in the present value of such
                    future benefit payments resulting from the use of
                    actuarial assumptions, in determining benefit payments
                    in any such optional form of benefits, which are
                    different from those specified in this subsection.
                ``(5) Approval of large changes in actuarial assumptions.--
                        ``(A) In general.--No actuarial assumption used to
                    determine the funding target for a plan to which this
                    paragraph applies may be changed without the approval
                    of the Secretary of the Treasury.
                        ``(B) Plans to which paragraph applies.--This
                    paragraph shall apply to a plan only if--
                                ``(i) the plan is a single-employer plan to
                            which title IV applies,
                                ``(ii) the aggregate unfunded vested
                            benefits as of the close of the preceding plan
                            year (as determined under section
                            4006(a)(3)(E)(iii)) of such plan and all other
                            plans maintained by the contributing sponsors
                            (as defined in section 4001(a)(13)) and members
                            of such sponsors' controlled groups (as defined
                            in section 4001(a)(14)) which are covered by
                            title IV (disregarding plans with no unfunded
                            vested benefits) exceed $50,000,000, and
                                ``(iii) the change in assumptions
                            (determined after taking into account any
                            changes in interest rate and mortality table)
                            results in a decrease in the funding shortfall
                            of the plan for the current plan year that
                            exceeds $50,000,000, or that exceeds $5,000,000
                            and that is 5 percent or more of the funding
                            target of the plan before such change.
        ``(i) Special Rules for At-Risk Plans.--
                ``(1) Funding target for plans in at-risk status.--
                        ``(A) In general.--In the case of a plan which is
                    in at-risk status for a plan year, the funding target
                    of the plan for the plan year shall be equal to the sum
                    of--
                                ``(i) the present value of all benefits
                            accrued or earned under the plan as of the
                            beginning of the plan year, as determined by
                            using the additional actuarial assumptions
                            described in subparagraph (B), and
                                ``(ii) in the case of a plan which also has
                            been in at-risk status for at least 2 of the 4
                            preceding plan years, a loading factor
                            determined under subparagraph (C).
                        ``(B) Additional actuarial assumptions.--The
                    actuarial assumptions described in this subparagraph
                    are as follows:
                                ``(i) All employees who are not otherwise
                            assumed to retire as of the valuation date but
                            who will be eligible to elect benefits during
                            the plan year and the 10 succeeding plan years
                            shall be assumed to retire at the earliest
                            retirement date under the plan but not before
                            the end of the plan year for which the at-risk
                            funding target and at-risk target normal cost
                            are being determined.
                                ``(ii) All employees shall be assumed to
                            elect the retirement benefit available under
                            the plan at the assumed retirement age
                            (determined after application of clause (i))
                            which would result in the highest present value
                            of benefits.
                        ``(C) Loading factor.--The loading factor applied
                    with respect to a plan under this paragraph for any
                    plan year is the sum of--
                                ``(i) $700, times the number of
                            participants in the plan, plus
                                ``(ii) 4 percent of the funding target
                            (determined without regard to this paragraph)
                            of the plan for the plan year.
                ``(2) Target normal cost of at-risk plans.--In the case of
            a plan which is in at-risk status for a plan year, the target
            normal cost of the plan for such plan year shall be equal to
            the sum of--
                        ``(A) the present value of all benefits which are
                    expected to accrue or be earned under the plan during
                    the plan year, determined using the additional
                    actuarial assumptions described in paragraph (1)(B),
                    plus
                        ``(B) in the case of a plan which also has been in
                    at-risk status for at least 2 of the 4 preceding plan
                    years, a loading factor equal to 4 percent of the
                    target normal cost (determined without regard to this
                    paragraph) of the plan for the plan year.
                ``(3) Minimum amount.--In no event shall--
                        ``(A) the at-risk funding target be less than the
                    funding target, as determined without regard to this
                    subsection, or
                        ``(B) the at-risk target normal cost be less than
                    the target normal cost, as determined without regard to
                    this subsection.
                ``(4) Determination of at-risk status.--For purposes of
            this subsection--
                        ``(A) In general.--A plan is in at-risk status for
                    a plan year if--
                                ``(i) the funding target attainment
                            percentage for the preceding plan year
                            (determined under this section without regard
                            to this subsection) is less than 80 percent,
                            and
                                ``(ii) the funding target attainment
                            percentage for the preceding plan year
                            (determined under this section by using the
                            additional actuarial assumptions described in
                            paragraph (1)(B) in computing the funding
                            target) is less than 70 percent.
                        ``(B) Transition rule.--In the case of plan years
                    beginning in 2008, 2009, and 2010, subparagraph (A)(i)
                    shall be applied by substituting the following
                    percentages for `80 percent':
                                ``(i) 65 percent in the case of 2008.
                                ``(ii) 70 percent in the case of 2009.
                                ``(iii) 75 percent in the case of 2010.
                    In the case of plan years beginning in 2008, the
                    funding target attainment percentage for the preceding
                    plan year under subparagraph (A)(ii) may be determined
                    using such methods of estimation as the Secretary of
                    the Treasury may provide.
                        ``(C) Special rule for employees offered early
                    retirement in 2006.--
                                ``(i) In general.--For purposes of
                            subparagraph (A)(ii), the additional actuarial
                            assumptions described in paragraph (1)(B) shall
                            not be taken into account with respect to any
                            employee if--
                                        ``(I) such employee is employed by
                                    a specified automobile manufacturer,
                                        ``(II) such employee is offered a
                                    substantial amount of additional cash
                                    compensation, substantially enhanced
                                    retirement benefits under the plan, or
                                    materially reduced employment duties on
                                    the condition that by a specified date
                                    (not later than December 31, 2010) the
                                    employee retires (as defined under the
                                    terms of the plan),
                                        ``(III) such offer is made during
                                    2006 and pursuant to a bona fide
                                    retirement incentive program and
                                    requires, by the terms of the offer,
                                    that such offer can be accepted not
                                    later than a specified date (not later
                                    than December 31, 2006), and
                                        ``(IV) such employee does not elect
                                    to accept such offer before the
                                    specified date on which the offer
                                    expires.
                                ``(ii) Specified automobile manufacturer.--
                            For purposes of clause (i), the term `specified
                            automobile manufacturer' means--
                                        ``(I) any manufacturer of
                                    automobiles, and
                                        ``(II) any manufacturer of
                                    automobile parts which supplies such
                                    parts directly to a manufacturer of
                                    automobiles and which, after a
                                    transaction or series of transactions
                                    ending in 1999, ceased to be a member
                                    of a controlled group which included
                                    such manufacturer of automobiles.
                ``(5) Transition between applicable funding targets and
            between applicable target normal costs.--
                        ``(A) In general.--In any case in which a plan
                    which is in at-risk status for a plan year has been in
                    such status for a consecutive period of fewer than 5
                    plan years, the applicable amount of the funding target
                    and of the target normal cost shall be, in lieu of the
                    amount determined without regard to this paragraph, the
                    sum of--
                                ``(i) the amount determined under this
                            section without regard to this subsection, plus
                                ``(ii) the transition percentage for such
                            plan year of the excess of the amount
                            determined under this subsection (without
                            regard to this paragraph) over the amount
                            determined under this section without regard to
                            this subsection.
                        ``(B) Transition percentage.--For purposes of
                    subparagraph (A), the transition percentage shall be
                    determined in accordance with the following table:

    ``If the consecutive number of
       years (including the plan year)                       The transition
     the plan is in at-risk status is--                     percentage is--
            1......................................................     20
            2......................................................     40
            3......................................................     60
            4......................................................     80.
                        ``(C) Years before effective date.--For purposes of
                    this paragraph, plan years beginning before 2008 shall
                    not be taken into account.
                ``(6) Small plan exception.--If, on each day during the
            preceding plan year, a plan had 500 or fewer participants, the
            plan shall not be treated as in at-risk status for the plan
            year. For purposes of this paragraph, all defined benefit plans
            (other than multiemployer plans) maintained by the same
            employer (or any member of such employer's controlled group)
            shall be treated as 1 plan, but only participants with respect
            to such employer or member shall be taken into account and the
            rules of subsection (g)(2)(C) shall apply.
        ``(j) Payment of Minimum Required Contributions.--
                ``(1) In general.--For purposes of this section, the due
            date for any payment of any minimum required contribution for
            any plan year shall be 8\1/2\ months after the close of the
            plan year.
                ``(2) Interest.--Any payment required under paragraph (1)
            for a plan year that is made on a date other than the valuation
            date for such plan year shall be adjusted for interest accruing
            for the period between the valuation date and the payment date,
            at the effective rate of interest for the plan for such plan
            year.
                ``(3) Accelerated quarterly contribution schedule for
            underfunded plans.--
                        ``(A) Failure to timely make required
                    installment.--In any case in which the plan has a
                    funding shortfall for the preceding plan year, the
                    employer maintaining the plan shall make the required
                    installments under this paragraph and if the employer
                    fails to pay the full amount of a required installment
                    for the plan year, then the amount of interest charged
                    under paragraph (2) on the underpayment for the period
                    of underpayment shall be determined by using a rate of
                    interest equal to the rate otherwise used under
                    paragraph (2) plus 5 percentage points.
                        ``(B) Amount of underpayment, period of
                    underpayment.--For purposes of subparagraph (A)--
                                ``(i) Amount.--The amount of the
                            underpayment shall be the excess of--
                                        ``(I) the required installment,
                                    over
                                        ``(II) the amount (if any) of the
                                    installment contributed to or under the
                                    plan on or before the due date for the
                                    installment.
                                ``(ii) Period of underpayment.--The period
                            for which any interest is charged under this
                            paragraph with respect to any portion of the
                            underpayment shall run from the due date for
                            the installment to the date on which such
                            portion is contributed to or under the plan.
                                ``(iii) Order of crediting contributions.--
                            For purposes of clause (i)(II), contributions
                            shall be credited against unpaid required
                            installments in the order in which such
                            installments are required to be paid.
                        ``(C) Number of required installments; due dates.--
                    For purposes of this paragraph--
                                ``(i) Payable in 4 installments.--There
                            shall be 4 required installments for each plan
                            year.
                                ``(ii) Time for payment of installments.--
                            The due dates for required installments are set
                            forth in the following table:

    In the case of the following        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 (determined
                                    without regard to this subsection) to
                                    the plan for the plan year under this
                                    section, or
                                        ``(II) 100 percent of the minimum
                                    required contribution (determined
                                    without regard to this subsection or to
                                    any waiver under section 302(c)) to the
                                    plan for the preceding plan year.
                            Subclause (II) shall not apply if the preceding
                            plan year referred to in such clause was not a
                            year of 12 months.
                        ``(E) Fiscal years and short years.--
                                ``(i) Fiscal years.--In applying this
                            paragraph to a plan year beginning on any date
                            other than January 1, there shall be
                            substituted for the months specified in this
                            paragraph, the months which correspond thereto.
                                ``(ii) Short plan year.--This subparagraph
                            shall be applied to plan years of less than 12
                            months in accordance with regulations
                            prescribed by the Secretary of the Treasury.
                ``(4) Liquidity requirement in connection with quarterly
            contributions.--
                        ``(A) In general.--A plan to which this paragraph
                    applies shall be treated as failing to pay the full
                    amount of any required installment under paragraph (3)
                    to the extent that the value of the liquid assets paid
                    in such installment is less than the liquidity
                    shortfall (whether or not such liquidity shortfall
                    exceeds the amount of such installment required to be
                    paid but for this paragraph).
                        ``(B) Plans to which paragraph applies.--This
                    paragraph shall apply to a plan (other than a plan
                    described in subsection (g)(2)(B)) which--
                                ``(i) is required to pay installments under
                            paragraph (3) for a plan year, and
                                ``(ii) has a liquidity shortfall for any
                            quarter during such plan year.
                        ``(C) Period of underpayment.--For purposes of
                    paragraph (3)(A), any portion of an installment that is
                    treated as not paid under subparagraph (A) shall
                    continue to be treated as unpaid until the close of the
                    quarter in which the due date for such installment
                    occurs.
                        ``(D) Limitation on increase.--If the amount of any
                    required installment is increased by reason of
                    subparagraph (A), in no event shall such increase
                    exceed the amount which, when added to prior
                    installments for the plan year, is necessary to
                    increase the funding target attainment percentage of
                    the plan for the plan year (taking into account the
                    expected increase in funding target due to benefits
                    accruing or earned during the plan year) to 100
                    percent.
                        ``(E) Definitions.--For purposes of this
                    paragraph--
                                ``(i) Liquidity shortfall.--The term
                            `liquidity shortfall' means, with respect to
                            any required installment, an amount equal to
                            the excess (as of the last day of the quarter
                            for which such installment is made) of--
                                        ``(I) the base amount with respect
                                    to such quarter, over
                                        ``(II) the value (as of such last
                                    day) of the plan's liquid assets.
                                ``(ii) Base amount.--
                                        ``(I) In general.--The term `base
                                    amount' means, with respect to any
                                    quarter, an amount equal to 3 times the
                                    sum of the adjusted disbursements from
                                    the plan for the 12 months ending on
                                    the last day of such quarter.
                                        ``(II) Special rule.--If the amount
                                    determined under subclause (I) exceeds
                                    an amount equal to 2 times the sum of
                                    the adjusted disbursements from the
                                    plan for the 36 months ending on the
                                    last day of the quarter and an enrolled
                                    actuary certifies to the satisfaction
                                    of the Secretary of the Treasury that
                                    such excess is the result of
                                    nonrecurring circumstances, the base
                                    amount with respect to such quarter
                                    shall be determined without regard to
                                    amounts related to those nonrecurring
                                    circumstances.
                                ``(iii) Disbursements from the plan.--The
                            term `disbursements from the plan' means all
                            disbursements from the trust, including
                            purchases of annuities, payments of single sums
                            and other benefits, and administrative
                            expenses.
                                ``(iv) Adjusted disbursements.--The term
                            `adjusted disbursements' means disbursements
                            from the plan reduced by the product of--
                                        ``(I) the plan's funding target
                                    attainment percentage for the plan
                                    year, and
                                        ``(II) the sum of the purchases of
                                    annuities, payments of single sums, and
                                    such other disbursements as the
                                    Secretary of the Treasury shall provide
                                    in regulations.
                                ``(v) Liquid assets.--The term `liquid
                            assets' means cash, marketable securities, and
                            such other assets as specified by the Secretary
                            of the Treasury in regulations.
                                ``(vi) Quarter.--The term `quarter' means,
                            with respect to any required installment, the
                            3-month period preceding the month in which the
                            due date for such installment occurs.
                        ``(F) Regulations.--The Secretary of the Treasury
                    may prescribe such regulations as are necessary to
                    carry out this paragraph.
        ``(k) Imposition of Lien Where Failure to Make Required
    Contributions.--
                ``(1) In general.--In the case of a plan to which this
            subsection applies (as provided under paragraph (2)), if--
                        ``(A) any person fails to make a contribution
                    payment required by section 302 and this section before
                    the due date for such payment, and
                        ``(B) the unpaid balance of such payment (including
                    interest), when added to the aggregate unpaid balance
                    of all preceding such payments for which payment was
                    not made before the due date (including interest),
                    exceeds $1,000,000,
            then there shall be a lien in favor of the plan in the amount
            determined under paragraph (3) upon all property and rights to
            property, whether real or personal, belonging to such person
            and any other person who is a member of the same controlled
            group of which such person is a member.
                ``(2) Plans to which subsection applies.--This subsection
            shall apply to a single-employer plan covered under section
            4021 for any plan year for which the funding target attainment
            percentage (as defined in subsection (d)(2)) of such plan is
            less than 100 percent.
                ``(3) Amount of lien.--For purposes of paragraph (1), the
            amount of the lien shall be equal to the aggregate unpaid
            balance of contribution payments required under this section
            and section 302 for which payment has not been made before the
            due date.
                ``(4) Notice of failure; lien.--
                        ``(A) Notice of failure.--A person committing a
                    failure described in paragraph (1) shall notify the
                    Pension Benefit Guaranty Corporation of such failure
                    within 10 days of the due date for the required
                    contribution payment.
                        ``(B) Period of lien.--The lien imposed by
                    paragraph (1) shall arise on the due date for the
                    required contribution payment and shall continue until
                    the last day of the first plan year in which the plan
                    ceases to be described in paragraph (1)(B). Such lien
                    shall continue to run without regard to whether such
                    plan continues to be described in paragraph (2) during
                    the period referred to in the preceding sentence.
                        ``(C) Certain rules to apply.--Any amount with
                    respect to which a lien is imposed under paragraph (1)
                    shall be treated as taxes due and owing the United
                    States and rules similar to the rules of subsections
                    (c), (d), and (e) of section 4068 shall apply with
                    respect to a lien imposed by subsection (a) and the
                    amount with respect to such lien.
                ``(5) Enforcement.--Any lien created under paragraph (1)
            may be perfected and enforced only by the Pension Benefit
            Guaranty Corporation, or at the direction of the Pension
            Benefit Guaranty Corporation, by the contributing sponsor (or
            any member of the controlled group of the contributing
            sponsor).
                ``(6) Definitions.--For purposes of this subsection--
                        ``(A) Contribution payment.--The term `contribution
                    payment' means, in connection with a plan, a
                    contribution payment required to be made to the plan,
                    including any required installment under paragraphs (3)
                    and (4) of subsection (j).
                        ``(B) Due date; required installment.--The terms
                    `due date' and `required installment' have the meanings
                    given such terms by subsection (j), except that in the
                    case of a payment other than a required installment,
                    the due date shall be the date such payment is required
                    to be made under section 303.
                        ``(C) Controlled group.--The term `controlled
                    group' means any group treated as a single employer
                    under subsections (b), (c), (m), and (o) of section 414
                    of the Internal Revenue Code of 1986.
        ``(l) Qualified Transfers to Health Benefit Accounts.--In the case
    of a qualified transfer (as defined in section 420 of the Internal
    Revenue Code of 1986), any assets so transferred shall not, for
    purposes of this section, be treated as assets in the plan.''.
        (b) Clerical Amendment.--The table of sections in section 1 of such
    Act (as amended by section 101) is amended by inserting after the item
    relating to section 302 the following new item:

    ``Sec. 303. Minimum funding standards for single-employer defined
                                benefit pension plans.''.
        (c) Effective Date.--The amendments made by this section shall
    apply with respect to plan years beginning after 2007.

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

        (a) Funding-Based Limits on Benefits and Benefit Accruals Under
    Single-Employer Plans.--Section 206 of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1056) is amended by adding at the end
    the following new subsection:
        ``(g) Funding-Based Limits on Benefits and Benefit Accruals Under
    Single-Employer Plans.--
                ``(1) Funding-based limitation on shutdown benefits and
            other unpredictable contingent event benefits under single-
            employer plans.--
                        ``(A) In general.--If a participant of a defined
                    benefit plan which is a single-employer plan is
                    entitled to an unpredictable contingent event benefit
                    payable with respect to any event occurring during any
                    plan year, the plan shall provide that such benefit may
                    not be provided if the adjusted funding target
                    attainment percentage for such plan year--
                                ``(i) is less than 60 percent, or
                                ``(ii) would be less than 60 percent taking
                            into account such occurrence.
                        ``(B) Exemption.--Subparagraph (A) shall cease to
                    apply with respect to any plan year, effective as of
                    the first day of the plan year, upon payment by the
                    plan sponsor of a contribution (in addition to any
                    minimum required contribution under section 303) equal
                    to--
                                ``(i) in the case of subparagraph (A)(i),
                            the amount of the increase in the funding
                            target of the plan (under section 303) for the
                            plan year attributable to the occurrence
                            referred to in subparagraph (A), and
                                ``(ii) in the case of subparagraph (A)(ii),
                            the amount sufficient to result in a funding
                            target attainment percentage of 60 percent.
                        ``(C) Unpredictable contingent event.--For purposes
                    of this paragraph, the term `unpredictable contingent
                    event benefit' means any benefit payable solely by
                    reason of--
                                ``(i) a plant shutdown (or similar event,
                            as determined by the Secretary of the
                            Treasury), or
                                ``(ii) an event other than the attainment
                            of any age, performance of any service, receipt
                            or derivation of any compensation, or
                            occurrence of death or disability.
                ``(2) Limitations on plan amendments increasing liability
            for benefits.--
                        ``(A) In general.--No amendment to a defined
                    benefit plan which is a single-employer plan which has
                    the effect of increasing liabilities of the plan by
                    reason of increases in benefits, establishment of new
                    benefits, changing the rate of benefit accrual, or
                    changing the rate at which benefits become
                    nonforfeitable may take effect during any plan year if
                    the adjusted funding target attainment percentage for
                    such plan year is--
                                ``(i) less than 80 percent, or
                                ``(ii) would be less than 80 percent taking
                            into account such amendment.
                        ``(B) Exemption.--Subparagraph (A) shall cease to
                    apply with respect to any plan year, effective as of
                    the first day of the plan year (or if later, the
                    effective date of the amendment), upon payment by the
                    plan sponsor of a contribution (in addition to any
                    minimum required contribution under section 303) equal
                    to--
                                ``(i) in the case of subparagraph (A)(i),
                            the amount of the increase in the funding
                            target of the plan (under section 303) for the
                            plan year attributable to the amendment, and
                                ``(ii) in the case of subparagraph (A)(ii),
                            the amount sufficient to result in an adjusted
                            funding target attainment percentage of 80
                            percent.
                        ``(C) Exception for certain benefit increases.--
                    Subparagraph (A) shall not apply to any amendment which
                    provides for an increase in benefits under a formula
                    which is not based on a participant's compensation, but
                    only if the rate of such increase is not in excess of
                    the contemporaneous rate of increase in average wages
                    of participants covered by the amendment.
                ``(3) Limitations on accelerated benefit distributions.--
                        ``(A) Funding percentage less than 60 percent.--A
                    defined benefit plan which is a single-employer plan
                    shall provide that, in any case in which the plan's
                    adjusted funding target attainment percentage for a
                    plan year is less than 60 percent, the plan may not pay
                    any prohibited payment after the valuation date for the
                    plan year.
                        ``(B) Bankruptcy.--A defined benefit plan which is
                    a single-employer plan shall provide that, during any
                    period in which the plan sponsor is a debtor in a case
                    under title 11, United States Code, or similar Federal
                    or State law, the plan may not pay any prohibited
                    payment. The preceding sentence shall not apply on or
                    after the date on which the enrolled actuary of the
                    plan certifies that the adjusted funding target
                    attainment percentage of such plan is not less than 100
                    percent.
                        ``(C) Limited payment if percentage at least 60
                    percent but less than 80 percent.--
                                ``(i) In general.--A defined benefit plan
                            which is a single-employer plan shall provide
                            that, in any case in which the plan's adjusted
                            funding target attainment percentage for a plan
                            year is 60 percent or greater but less than 80
                            percent, the plan may not pay any prohibited
                            payment after the valuation date for the plan
                            year to the extent the amount of the payment
                            exceeds the lesser of--
                                        ``(I) 50 percent of the amount of
                                    the payment which could be made without
                                    regard to this subsection, or
                                        ``(II) the present value
                                    (determined under guidance prescribed
                                    by the Pension Benefit Guaranty
                                    Corporation, using the interest and
                                    mortality assumptions under section
                                    205(g)) of the maximum guarantee with
                                    respect to the participant under
                                    section 4022.
                                ``(ii) One-time application.--
                                        ``(I) In general.--The plan shall
                                    also provide that only 1 prohibited
                                    payment meeting the requirements of
                                    clause (i) may be made with respect to
                                    any participant during any period of
                                    consecutive plan years to which the
                                    limitations under either subparagraph
                                    (A) or (B) or this subparagraph
                                    applies.
                                        ``(II) Treatment of
                                    beneficiaries.--For purposes of this
                                    clause, a participant and any
                                    beneficiary on his behalf (including an
                                    alternate payee, as defined in section
                                    206(d)(3)(K)) shall be treated as 1
                                    participant. If the accrued benefit of
                                    a participant is allocated to such an
                                    alternate payee and 1 or more other
                                    persons, the amount under clause (i)
                                    shall be allocated among such persons
                                    in the same manner as the accrued
                                    benefit is allocated unless the
                                    qualified domestic relations order (as
                                    defined in section 206(d)(3)(B)(i))
                                    provides otherwise.
                        ``(D) Exception.--This paragraph shall not apply to
                    any plan for any plan year if the terms of such plan
                    (as in effect for the period beginning on September 1,
                    2005, and ending with such plan year) provide for no
                    benefit accruals with respect to any participant during
                    such period.
                        ``(E) Prohibited payment.--For purpose of this
                    paragraph, the term `prohibited payment' means--
                                ``(i) any payment, in excess of the monthly
                            amount paid under a single life annuity (plus
                            any social security supplements described in
                            the last sentence of section 204(b)(1)(G)), to
                            a participant or beneficiary whose annuity
                            starting date (as defined in section 205(h)(2))
                            occurs during any period a limitation under
                            subparagraph (A) or (B) is in effect,
                                ``(ii) any payment for the purchase of an
                            irrevocable commitment from an insurer to pay
                            benefits, and
                                ``(iii) any other payment specified by the
                            Secretary of the Treasury by regulations.
                ``(4) Limitation on benefit accruals for plans with severe
            funding shortfalls.--
                        ``(A) In general.--A defined benefit plan which is
                    a single-employer plan shall provide that, in any case
                    in which the plan's adjusted funding target attainment
                    percentage for a plan year is less than 60 percent,
                    benefit accruals under the plan shall cease as of the
                    valuation date for the plan year.
                        ``(B) Exemption.--Subparagraph (A) shall cease to
                    apply with respect to any plan year, effective as of
                    the first day of the plan year, upon payment by the
                    plan sponsor of a contribution (in addition to any
                    minimum required contribution under section 303) equal
                    to the amount sufficient to result in an adjusted
                    funding target attainment percentage of 60 percent.
                ``(5) Rules relating to contributions required to avoid
            benefit limitations.--
                        ``(A) Security may be provided.--
                                ``(i) In general.--For purposes of this
                            subsection, the adjusted funding target
                            attainment percentage shall be determined by
                            treating as an asset of the plan any security
                            provided by a plan sponsor in a form meeting
                            the requirements of clause (ii).
                                ``(ii) Form of security.--The security
                            required under clause (i) shall consist of--
                                        ``(I) a bond issued by a corporate
                                    surety company that is an acceptable
                                    surety for purposes of section 412 of
                                    this Act,
                                        ``(II) cash, or United States
                                    obligations which mature in 3 years or
                                    less, held in escrow by a bank or
                                    similar financial institution, or
                                        ``(III) such other form of security
                                    as is satisfactory to the Secretary of
                                    the Treasury and the parties involved.
                                ``(iii) Enforcement.--Any security provided
                            under clause (i) may be perfected and enforced
                            at any time after the earlier of--
                                        ``(I) the date on which the plan
                                    terminates,
                                        ``(II) if there is a failure to
                                    make a payment of the minimum required
                                    contribution for any plan year
                                    beginning after the security is
                                    provided, the due date for the payment
                                    under section 303(j), or
                                        ``(III) if the adjusted funding
                                    target attainment percentage is less
                                    than 60 percent for a consecutive
                                    period of 7 years, the valuation date
                                    for the last year in the period.
                                ``(iv) Release of security.--The security
                            shall be released (and any amounts thereunder
                            shall be refunded together with any interest
                            accrued thereon) at such time as the Secretary
                            of the Treasury may prescribe in regulations,
                            including regulations for partial releases of
                            the security by reason of increases in the
                            funding target attainment percentage.
                        ``(B) Prefunding balance or funding standard
                    carryover balance may not be used.--No prefunding
                    balance or funding standard carryover balance under
                    section 303(f) may be used under paragraph (1), (2), or
                    (4) to satisfy any payment an employer may make under
                    any such paragraph to avoid or terminate the
                    application of any limitation under such paragraph.
                        ``(C) Deemed reduction of funding balances.--
                                ``(i) In general.--Subject to clause (iii),
                            in any case in which a benefit limitation under
                            paragraph (1), (2), (3), or (4) would (but for
                            this subparagraph and determined without regard
                            to paragraph (1)(B), (2)(B), or (4)(B)) apply
                            to such plan for the plan year, the plan
                            sponsor of such plan shall be treated for
                            purposes of this Act as having made an election
                            under section 303(f) to reduce the prefunding
                            balance or funding standard carryover balance
                            by such amount as is necessary for such benefit
                            limitation to not apply to the plan for such
                            plan year.
                                ``(ii) Exception for insufficient funding
                            balances.--Clause (i) shall not apply with
                            respect to a benefit limitation for any plan
                            year if the application of clause (i) would not
                            result in the benefit limitation not applying
                            for such plan year.
                                ``(iii) Restrictions of certain rules to
                            collectively bargained plans.--With respect to
                            any benefit limitation under paragraph (1),
                            (2), or (4), clause (i) shall only apply in the
                            case of a plan maintained pursuant to 1 or more
                            collective bargaining agreements between
                            employee representatives and 1 or more
                            employers.
                ``(6) New plans.--Paragraphs (1), (2) and (4) shall not
            apply to a plan for the first 5 plan years of the plan. For
            purposes of this paragraph, the reference in this paragraph to
            a plan shall include a reference to any predecessor plan.
                ``(7) Presumed underfunding for purposes of benefit
            limitations.--
                        ``(A) Presumption of continued underfunding.--In
                    any case in which a benefit limitation under paragraph
                    (1), (2), (3), or (4) has been applied to a plan with
                    respect to the plan year preceding the current plan
                    year, the adjusted funding target attainment percentage
                    of the plan for the current plan year shall be presumed
                    to be equal to the adjusted funding target attainment
                    percentage of the plan for the preceding plan year
                    until the enrolled actuary of the plan certifies the
                    actual adjusted funding target attainment percentage of
                    the plan for the current plan year.
                        ``(B) Presumption of underfunding after 10th
                    month.--In any case in which no certification of the
                    adjusted funding target attainment percentage for the
                    current plan year is made with respect to the plan
                    before the first day of the 10th month of such year,
                    for purposes of paragraphs (1), (2), (3), and (4), such
                    first day shall be deemed, for purposes of such
                    paragraph, to be the valuation date of the plan for the
                    current plan year and the plan's adjusted funding
                    target attainment percentage shall be conclusively
                    presumed to be less than 60 percent as of such first
                    day.
                        ``(C) Presumption of underfunding after 4th month
                    for nearly underfunded plans.--In any case in which--
                                ``(i) a benefit limitation under paragraph
                            (1), (2), (3), or (4) did not apply to a plan
                            with respect to the plan year preceding the
                            current plan year, but the adjusted funding
                            target attainment percentage of the plan for
                            such preceding plan year was not more than 10
                            percentage points greater than the percentage
                            which would have caused such paragraph to apply
                            to the plan with respect to such preceding plan
                            year, and
                                ``(ii) as of the first day of the 4th month
                            of the current plan year, the enrolled actuary
                            of the plan has not certified the actual
                            adjusted funding target attainment percentage
                            of the plan for the current plan year,
                    until the enrolled actuary so certifies, such first day
                    shall be deemed, for purposes of such paragraph, to be
                    the valuation date of the plan for the current plan
                    year and the adjusted funding target attainment
                    percentage of the plan as of such first day shall, for
                    purposes of such paragraph, be presumed to be equal to
                    10 percentage points less than the adjusted funding
                    target attainment percentage of the plan for such
                    preceding plan year.
                ``(8) Treatment of plan as of close of prohibited or
            cessation period.--For purposes of applying this part--
                        ``(A) Operation of plan after period.--Unless the
                    plan provides otherwise, payments and accruals will
                    resume effective as of the day following the close of
                    the period for which any limitation of payment or
                    accrual of benefits under paragraph (3) or (4) applies.
                        ``(B) Treatment of affected benefits.--Nothing in
                    this paragraph shall be construed as affecting the
                    plan's treatment of benefits which would have been paid
                    or accrued but for this subsection.
                ``(9) Terms relating to funding target attainment
            percentage.--For purposes of this subsection--
                        ``(A) In general.--The term `funding target
                    attainment percentage' has the same meaning given such
                    term by section 303(d)(2).
                        ``(B) Adjusted funding target attainment
                    percentage.--The term `adjusted funding target
                    attainment percentage' means the funding target
                    attainment percentage which is determined under
                    subparagraph (A) by increasing each of the amounts
                    under subparagraphs (A) and (B) of section 303(d)(2) by
                    the aggregate amount of purchases of annuities for
                    employees other than highly compensated employees (as
                    defined in section 414(q) of the Internal Revenue Code
                    of 1986) which were made by the plan during the
                    preceding 2 plan years.
                        ``(C) Application to plans which are fully funded
                    without regard to reductions for funding balances.--
                                ``(i) In general.--In the case of a plan
                            for any plan year, if the funding target
                            attainment percentage is 100 percent or more
                            (determined without regard to this subparagraph
                            and without regard to the reduction in the
                            value of assets under section 303(f)(4)), the
                            funding target attainment percentage for
                            purposes of subparagraphs (A) and (B) shall be
                            determined without regard to such reduction.
                                ``(ii) Transition rule.--Clause (i) shall
                            be applied to plan years beginning after 2007
                            and before 2011 by substituting for `100
                            percent' the applicable percentage determined
                            in accordance with the following table:

    ``In the case of a plan year                             The applicable
       beginning in calendar year:                            percentage is
            2008...................................................     92
            2009...................................................     94
            2010...................................................     96.
                                ``(iii) Limitation.--Clause (ii) shall not
                            apply with respect to any plan year after 2008
                            unless the funding target attainment percentage
                            (determined without regard to this
                            subparagraph) of the plan for each preceding
                            plan year after 2007 was not less than the
                            applicable percentage with respect to such
                            preceding plan year determined under clause
                            (ii).
                ``(10) Special rule for 2008.--For purposes of this
            subsection, in the case of plan years beginning in 2008, the
            funding target attainment percentage for the preceding plan
            year may be determined using such methods of estimation as the
            Secretary of the Treasury may provide.''.
        (b) Notice Requirement.--
                (1) In general.--Section 101 of such Act (29 U.S.C. 1021)
            is amended--
                        (A) by redesignating subsection (j) as subsection
                    (k); and
                        (B) by inserting after subsection (i) the following
                    new subsection:
        ``(j) Notice of Funding-Based Limitation on Certain Forms of
    Distribution.--The plan administrator of a single-employer plan shall
    provide a written notice to plan participants and beneficiaries within
    30 days--
                ``(1) after the plan has become subject to a restriction
            described in paragraph (1) or (3) of section 206(g)),
                ``(2) in the case of a plan to which section 206(g)(4)
            applies, after the valuation date for the plan year described
            in section 206(g)(4)(B) for which the plan's adjusted funding
            target attainment percentage for the plan year is less than 60
            percent (or, if earlier, the date such percentage is deemed to
            be less than 60 percent under section 206(g)(7)), and
                ``(3) at such other time as may be determined by the
            Secretary of the Treasury.
    The notice required to be provided under this subsection shall be in
    writing, except that such notice may be in electronic or other form to
    the extent that such form is reasonably accessible to the recipient.''.
                (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C.
            1132(c)(4)) is amended by striking ``section 302(b)(7)(F)(iv)''
            and inserting ``section 101(j) or 302(b)(7)(F)(iv)''.
        (c) Effective Dates.--
                (1) In general.--The amendments made by this section shall
            apply to plan years beginning after December 31, 2007.
                (2) Collective bargaining exception.--In the case of a plan
            maintained pursuant to 1 or more collective bargaining
            agreements between employee representatives and 1 or more
            employers ratified before January 1, 2008, the amendments made
            by this section shall not apply to plan years beginning before
            the earlier of--
                        (A) the later of--
                                (i) the date on which the last collective
                            bargaining agreement relating to the plan
                            terminates (determined without regard to any
                            extension thereof agreed to after the date of
                            the enactment of this Act), or
                                (ii) the first day of the first plan year
                            to which the amendments made by this subsection
                            would (but for this subparagraph) apply, or
                        (B) January 1, 2010.
            For purposes of subparagraph (A)(i), any plan amendment made
            pursuant to a collective bargaining agreement relating to the
            plan which amends the plan solely to conform to any requirement
            added by this section shall not be treated as a termination of
            such collective bargaining agreement.

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

        (a) General Rule.--Except as provided in this section, if a plan in
    existence on July 26, 2005, was an eligible cooperative plan for its
    plan year which includes such date, the amendments made by this
    subtitle and subtitle B shall not apply to plan years beginning before
    the earlier of--
                (1) the first plan year for which the plan ceases to be an
            eligible cooperative plan, or
                (2) January 1, 2017.
        (b) Interest Rate.--In applying section 302(b)(5)(B) of the
    Employee Retirement Income Security Act of 1974 and section
    412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before
    the amendments made by this subtitle and subtitle B) to an eligible
    cooperative plan for plan years beginning after December 31, 2007, and
    before the first plan year to which such amendments apply, the third
    segment rate determined under section 303(h)(2)(C)(iii) of such Act and
    section 430(h)(2)(C)(iii) of such Code (as added by such amendments)
    shall be used in lieu of the interest rate otherwise used.
        (c) Eligible Cooperative Plan Defined.--For purposes of this
    section, a plan shall be treated as an eligible cooperative plan for a
    plan year if the plan is maintained by more than 1 employer and at
    least 85 percent of the employers are--
                (1) rural cooperatives (as defined in section 401(k)(7)(B)
            of such Code without regard to clause (iv) thereof), or
                (2) organizations which are--
                        (A) cooperative organizations described in section
                    1381(a) of such Code which are more than 50-percent
                    owned by agricultural producers or by cooperatives
                    owned by agricultural producers, or
                        (B) more than 50-percent owned, or controlled by,
                    one or more cooperative organizations described in
                    subparagraph (A).
    A plan shall also be treated as an eligible cooperative plan for any
    plan year for which it is described in section 210(a) of the Employee
    Retirement Income Security Act of 1974 and is maintained by a rural
    telephone cooperative association described in section 3(40)(B)(v) of
    such Act.

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

        (a) General Rule.--Except as provided in this section, if a plan in
    existence on July 26, 2005, was a PBGC settlement plan as of such date,
    the amendments made by this subtitle and subtitle B shall not apply to
    plan years beginning before January 1, 2014.
        (b) Interest Rate.--In applying section 302(b)(5)(B) of the
    Employee Retirement Income Security Act of 1974 and section
    412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before
    the amendments made by this subtitle and subtitle B), to a PBGC
    settlement plan for plan years beginning after December 31, 2007, and
    before January 1, 2014, the third segment rate determined under section
    303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii) of such
    Code (as added by such amendments) shall be used in lieu of the
    interest rate otherwise used.
        (c) PBGC Settlement Plan.--For purposes of this section, the term
    ``PBGC settlement plan'' means a defined benefit plan (other than a
    multiemployer plan) to which section 302 of such Act and section 412 of
    such Code apply and--
                (1) which was sponsored by an employer which was in
            bankruptcy, giving rise to a claim by the Pension Benefit
            Guaranty Corporation of not greater than $150,000,000, and the
            sponsorship of which was assumed by another employer that was
            not a member of the same controlled group as the bankrupt
            sponsor and the claim of the Pension Benefit Guaranty
            Corporation was settled or withdrawn in connection with the
            assumption of the sponsorship, or
                (2) which, by agreement with the Pension Benefit Guaranty
            Corporation, was spun off from a plan subsequently terminated
            by such Corporation under section 4042 of the Employee
            Retirement Income Security Act of 1974.

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

        (a) General Rule.--Except as provided in this section, if a plan is
    an eligible government contractor plan, this subtitle and subtitle B
    shall not apply to plan years beginning before the earliest of--
                (1) the first plan year for which the plan ceases to be an
            eligible government contractor plan,
                (2) the effective date of the Cost Accounting Standards
            Pension Harmonization Rule, or
                (3) January 1, 2011.
        (b) Interest Rate.--In applying section 302(b)(5)(B) of the
    Employee Retirement Income Security Act of 1974 and section
    412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before
    the amendments made by this subtitle and subtitle B) to an eligible
    government contractor plan for plan years beginning after December 31,
    2007, and before the first plan year to which such amendments apply,
    the third segment rate determined under section 303(h)(2)(C)(iii) of
    such Act and section 430(h)(2)(C)(iii) of such Code (as added by such
    amendments) shall be used in lieu of the interest rate otherwise used.
        (c) Eligible Government Contractor Plan Defined.--For purposes of
    this section, a plan shall be treated as an eligible government
    contractor plan if it is maintained by a corporation or a member of the
    same affiliated group (as defined by section 1504(a) of the Internal
    Revenue Code of 1986), whose primary source of revenue is derived from
    business performed under contracts with the United States that are
    subject to the Federal Acquisition Regulations (Chapter 1 of Title 48,
    C.F.R.) and that are also subject to the Defense Federal Acquisition
    Regulation Supplement (Chapter 2 of Title 48, C.F.R.), and whose
    revenue derived from such business in the previous fiscal year exceeded
    $5,000,000,000, and whose pension plan costs that are assignable under
    those contracts are subject to sections 412 and 413 of the Cost
    Accounting Standards (48 C.F.R. 9904.412 and 9904.413).
        (d) Cost Accounting Standards Pension Harmonization Rule.--The Cost
    Accounting Standards Board shall review and revise sections 412 and 413
    of the Cost Accounting Standards (48 C.F.R. 9904.412 and 9904.413) to
    harmonize the minimum required contribution under the Employee
    Retirement Income Security Act of 1974 of eligible government
    contractor plans and government reimbursable pension plan costs not
    later than January 1, 2010. Any final rule adopted by the Cost
    Accounting Standards Board shall be deemed the Cost Accounting
    Standards Pension Harmonization Rule.

    SEC. 107. TECHNICAL AND CONFORMING AMENDMENTS.

        (a) Miscellaneous Amendments to Title I.--Subtitle B of title I of
    such Act (29 U.S.C. 1021 et seq.) is amended--
                (1) in section 101(d)(3), by striking ``section 302(e)''
            and inserting ``section 303(j)'';
                (2) in section 103(d)(8)(B), by striking ``the requirements
            of section 302(c)(3)'' and inserting ``the applicable
            requirements of sections 303(h) and 304(c)(3)'';
                (3) in section 103(d), by striking paragraph (11) and
            inserting the following:
                ``(11) If the current value of the assets of the plan is
            less than 70 percent of--
                        ``(A) in the case of a single-employer plan, the
                    funding target (as defined in section 303(d)(1)) of the
                    plan, or
                        ``(B) in the case of a multiemployer plan, the
                    current liability (as defined in section 304(c)(6)(D))
                    under the plan,
            the percentage which such value is of the amount described in
            subparagraph (A) or (B).'';
                (4) in section 203(a)(3)(C), by striking ``section
            302(c)(8)'' and inserting ``section 302(d)(2)'';
                (5) in section 204(g)(1), by striking ``section 302(c)(8)''
            and inserting ``section 302(d)(2)'';
                (6) in section 204(i)(2)(B), by striking ``section
            302(c)(8)'' and inserting ``section 302(d)(2)'';
                (7) in section 204(i)(3), by striking ``funded current
            liability percentage (within the meaning of section 302(d)(8)
            of this Act)'' and inserting ``funding target attainment
            percentage (as defined in section 303(d)(2))'';
                (8) in section 204(i)(4), by striking ``section
            302(c)(11)(A), without regard to section 302(c)(11)(B)'' and
            inserting ``section 302(b)(1), without regard to section
            302(b)(2)'';
                (9) in section 206(e)(1), by striking ``section 302(d)''
            and inserting ``section 303(j)(4)'', and by striking ``section
            302(e)(5)'' and inserting ``section 303(j)(4)(E)(i)'';
                (10) in section 206(e)(3), by striking ``section 302(e) by
            reason of paragraph (5)(A) thereof'' and inserting ``section
            303(j)(3) by reason of section 303(j)(4)(A)''; and
                (11) in sections 101(e)(3), 403(c)(1), and 408(b)(13), by
            striking ``American Jobs Creation Act of 2004'' and inserting
            ``Pension Protection Act of 2006''.
        (b) Miscellaneous Amendments to Title IV.--Title IV of such Act is
    amended--
                (1) in section 4001(a)(13) (29 U.S.C. 1301(a)(13)), by
            striking ``302(c)(11)(A)'' and inserting ``302(b)(1)'', by
            striking ``412(c)(11)(A)'' and inserting ``412(b)(1)'', by
            striking ``302(c)(11)(B)'' and inserting ``302(b)(2)'', and by
            striking ``412(c)(11)(B)'' and inserting ``412(b)(2)'';
                (2) in section 4003(e)(1) (29 U.S.C. 1303(e)(1)), by
            striking ``302(f)(1)(A) and (B)'' and inserting ``303(k)(1)(A)
            and (B)'', and by striking ``412(n)(1)(A) and (B)'' and
            inserting ``430(k)(1)(A) and (B)'';
                (3) in section 4010(b)(2) (29 U.S.C. 1310(b)(2)), by
            striking ``302(f)(1)(A) and (B)'' and inserting ``303(k)(1)(A)
            and (B)'', and by striking ``412(n)(1)(A) and (B)'' and
            inserting ``430(k)(1)(A) and (B)'';
                (4) in section 4062(c) (29 U.S.C. 1362(c)), by striking
            paragraphs (1), (2), and (3) and inserting the following:
                ``(1) the sum of the shortfall amortization charge (within
            the meaning of section 303(c)(1) of this Act and 430(d)(1) of
            the Internal Revenue Code of 1986) with respect to the plan (if
            any) for the plan year in which the termination date occurs,
            plus the aggregate total of shortfall amortization installments
            (if any) determined for succeeding plan years under section
            303(c)(2) of this Act and section 430(d)(2) of such Code
            (which, for purposes of this subparagraph, shall include any
            increase in such sum which would result if all applications for
            waivers of the minimum funding standard under section 302(c) of
            this Act and section 412(c) of such Code which are pending with
            respect to such plan were denied and if no additional
            contributions (other than those already made by the termination
            date) were made for the plan year in which the termination date
            occurs or for any previous plan year), and
                ``(2) the sum of the waiver amortization charge (within the
            meaning of section 303(e)(1) of this Act and 430(e)(1) of the
            Internal Revenue Code of 1986) with respect to the plan (if
            any) for the plan year in which the termination date occurs,
            plus the aggregate total of waiver amortization installments
            (if any) determined for succeeding plan years under section
            303(e)(2) of this Act and section 430(e)(2) of such Code,'';
                (5) in section 4071 (29 U.S.C. 1371), by striking
            ``302(f)(4)'' and inserting ``303(k)(4)'';
                (6) in section 4243(a)(1)(B) (29 U.S.C. 1423(a)(1)(B)), by
            striking ``302(a)'' and inserting ``304(a)'', and, in clause
            (i), by striking ``302(a)'' and inserting ``304(a)'';
                (7) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)), by
            striking ``303(a)'' and inserting ``302(c)'';
                (8) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)), by
            striking ``303(c)'' and inserting ``302(c)(3)''; and
                (9) in section 4243(g) (29 U.S.C. 1423(g)), by striking
            ``302(c)(3)'' and inserting ``304(c)(3)''.
        (c) Amendments to Reorganization Plan No. 4 of 1978.--Section
    106(b)(ii) of Reorganization Plan No. 4 of 1978 (ratified and affirmed
    as law by Public Law 98-532 (98 Stat. 2705)) is amended by striking
    ``302(c)(8)'' and inserting ``302(d)(2)'', by striking ``304(a) and
    (b)(2)(A)'' and inserting ``304(d)(1), (d)(2), and (e)(2)(A)'', and by
    striking ``412(c)(8), (e), and (f)(2)(A)'' and inserting ``412(c)(2)
    and 431(d)(1), (d)(2), and (e)(2)(A)''.
        (d) Repeal of Expired Authority for Temporary Variances.--Section
    207 of such Act (29 U.S.C. 1057) is repealed.
        (e) Effective Date.--The amendments made by this section shall
    apply to plan years beginning after 2007.

            Subtitle B--Amendments to Internal Revenue Code of 1986

    SEC. 111. MINIMUM FUNDING STANDARDS.

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

    ``SEC. 412. MINIMUM FUNDING STANDARDS.

        ``(a) Requirement to Meet Minimum Funding Standard.--
                ``(1) In general.--A plan to which this section applies
            shall satisfy the minimum funding standard applicable to the
            plan for any plan year.
                ``(2) Minimum funding standard.--For purposes of paragraph
            (1), a plan shall be treated as satisfying the minimum funding
            standard for a plan year if--
                        ``(A) in the case of a defined benefit plan which
                    is not a multiemployer plan, the employer makes
                    contributions to or under the plan for the plan year
                    which, in the aggregate, are not less than the minimum
                    required contribution determined under section 430 for
                    the plan for the plan year,
                        ``(B) in the case of a money purchase plan which is
                    not a multiemployer plan, the employer makes
                    contributions to or under the plan for the plan year
                    which are required under the terms of the plan, and
                        ``(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.--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 a single-employer plan (within the
                            meaning of section 4001(a)(15) of the Employee
                            Retirement Income Security Act of 1974) to
                            provide security to such plan as a condition
                            for granting or modifying a waiver under
                            paragraph (1).
                                ``(ii) Special rules.--Any security
                            provided under clause (i) may be perfected and
                            enforced only by the Pension Benefit Guaranty
                            Corporation, or at the direction of the
                            Corporation, by a contributing sponsor (within
                            the meaning of section 4001(a)(13) of the
                            Employee Retirement Income Security Act of
                            1974), or a member of such sponsor's controlled
                            group (within the meaning of section
                            4001(a)(14) of such Act).
                        ``(B) Consultation with the pension benefit
                    guaranty corporation.--Except as provided in
                    subparagraph (C), the Secretary shall, before granting
                    or modifying a waiver under this subsection with
                    respect to a plan described in subparagraph (A)(i)--
                                ``(i) provide the Pension Benefit Guaranty
                            Corporation with--
                                        ``(I) notice of the completed
                                    application for any waiver or
                                    modification, and
                                        ``(II) an opportunity to comment on
                                    such application within 30 days after
                                    receipt of such notice, and
                                ``(ii) consider--
                                        ``(I) any comments of the
                                    Corporation under clause (i)(II), and
                                        ``(II) any views of any employee
                                    organization (within the meaning of
                                    section 3(4) of the Employee Retirement
                                    Income Security Act of 1974)
                                    representing participants in the plan
                                    which are submitted in writing to the
                                    Secretary in connection with such
                                    application.
                    Information provided to the Corporation under this
                    subparagraph shall be considered tax return information
                    and subject to the safeguarding and reporting
                    requirements of section 6103(p).
                        ``(C) Exception for certain waivers.--
                                ``(i) In general.--The preceding provisions
                            of this paragraph shall not apply to any plan
                            with respect to which the sum of--
                                        ``(I) the aggregate unpaid minimum
                                    required contributions (within the
                                    meaning of section 4971(c)(4)) for the
                                    plan year and all preceding plan years,
                                    and
                                        ``(II) the present value of all
                                    waiver amortization installments
                                    determined for the plan year and
                                    succeeding plan years under section
                                    430(e)(2),
                            is less than $1,000,000.
                                ``(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 each
                    affected party (as defined in section 4001(a)(21) of
                    the Employee Retirement Income Security Act of 1974).
                    Such notice shall include a description of the extent
                    to which the plan is funded for benefits which are
                    guaranteed under title IV of the Employee Retirement
                    Income Security Act of 1974 and for benefit
                    liabilities.
                        ``(B) Consideration of relevant information.--The
                    Secretary shall consider any relevant information
                    provided by a person to whom notice was given under
                    subparagraph (A).
                ``(7) Restriction on plan amendments.--
                        ``(A) In general.--No amendment of a plan which
                    increases the liabilities of the plan by reason of any
                    increase in benefits, any change in the accrual of
                    benefits, or any change in the rate at which benefits
                    become nonforfeitable under the plan shall be adopted
                    if a waiver under this subsection or an extension of
                    time under section 431(d) is in effect with respect to
                    the plan, or if a plan amendment described in
                    subsection (d)(2) has been made at any time in the
                    preceding 12 months (24 months in the case of a
                    multiemployer plan). If a plan is amended in violation
                    of the preceding sentence, any such waiver, or
                    extension of time, shall not apply to any plan year
                    ending on or after the date on which such amendment is
                    adopted.
                        ``(B) Exception.--Subparagraph (A) shall not apply
                    to any plan amendment which--
                                ``(i) the Secretary determines to be
                            reasonable and which provides for only de
                            minimis increases in the liabilities of the
                            plan,
                                ``(ii) only repeals an amendment described
                            in subsection (d)(2), or
                                ``(iii) is required as a condition of
                            qualification under part I of subchapter D, of
                            chapter 1.
        ``(d) Miscellaneous Rules.--
                ``(1) Change in method or year.--If the funding method, the
            valuation date, or a plan year for a plan is changed, the
            change shall take effect only if approved by the Secretary.
                ``(2) Certain retroactive plan amendments.--For purposes of
            this section, any amendment applying to a plan year which--
                        ``(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 temporary substantial business
            hardship (as determined under subsection (c)(2)) or a
            substantial business hardship (as so determined) in the case of
            a multiemployer plan and that a waiver under subsection (c)
            (or, in the case of a multiemployer plan, any extension of the
            amortization period under section 431(d)) is unavailable or
            inadequate.
                ``(3) Controlled group.--For purposes of this section, the
            term `controlled group' means any group treated as a single
            employer under subsection (b), (c), (m), or (o) of section 414.
        ``(e) Plans to Which Section Applies.--
                ``(1) In general.--Except as provided in paragraphs (2) and
            (4), this section applies to a plan if, for any plan year
            beginning on or after the effective date of this section for
            such plan under the Employee Retirement Income Security Act of
            1974--
                        ``(A) such plan included a trust which qualified
                    (or was determined by the Secretary to have qualified)
                    under section 401(a), or
                        ``(B) such plan satisfied (or was determined by the
                    Secretary to have satisfied) the requirements of
                    section 403(a).
                ``(2) Exceptions.--This section shall not apply to--
                        ``(A) any profit-sharing or stock bonus plan,
                        ``(B) any insurance contract plan described in
                    paragraph (3),
                        ``(C) any governmental plan (within the meaning of
                    section 414(d)),
                        ``(D) any church plan (within the meaning of
                    section 414(e)) with respect to which the election
                    provided by section 410(d) has not been made,
                        ``(E) any plan which has not, at any time after
                    September 2, 1974, provided for employer contributions,
                    or
                        ``(F) any plan established and maintained by a
                    society, order, or association described in section
                    501(c)(8) or (9), if no part of the contributions to or
                    under such plan are made by employers of participants
                    in such plan.
            No plan described in subparagraph (C), (D), or (F) shall be
            treated as a qualified plan for purposes of section 401(a)
            unless such plan meets the requirements of section 401(a)(7) as
            in effect on September 1, 1974.
                ``(3) Certain insurance contract plans.--A plan is
            described in this paragraph if--
                        ``(A) the plan is funded exclusively by the
                    purchase of individual insurance contracts,
                        ``(B) such contracts provide for level annual
                    premium payments to be paid extending not later than
                    the retirement age for each individual participating in
                    the plan, and commencing with the date the individual
                    became a participant in the plan (or, in the case of an
                    increase in benefits, commencing at the time such
                    increase becomes effective),
                        ``(C) benefits provided by the plan are equal to
                    the benefits provided under each contract at normal
                    retirement age under the plan and are guaranteed by an
                    insurance carrier (licensed under the laws of a State
                    to do business with the plan) to the extent premiums
                    have been paid,
                        ``(D) premiums payable for the plan year, and all
                    prior plan years, under such contracts have been paid
                    before lapse or there is reinstatement of the policy,
                        ``(E) no rights under such contracts have been
                    subject to a security interest at any time during the
                    plan year, and
                        ``(F) no policy loans are outstanding at any time
                    during the plan year.
            A plan funded exclusively by the purchase of group insurance
            contracts which is determined under regulations prescribed by
            the Secretary to have the same characteristics as contracts
            described in the preceding sentence shall be treated as a plan
            described in this paragraph.
                ``(4) Certain terminated multiemployer plans.--This section
            applies with respect to a terminated multiemployer plan to
            which section 4021 of the Employee Retirement Income Security
            Act of 1974 applies until the last day of the plan year in
            which the plan terminates (within the meaning of section
            4041A(a)(2) of such Act).''.
        (b) Effective Date.--The amendments made by this section shall
    apply to plan years beginning after December 31, 2007.

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

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

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

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

        ``(a) Minimum Required Contribution.--For purposes of this section
    and section 412(a)(2)(A), except as provided in subsection (f), the
    term `minimum required contribution' means, with respect to any plan
    year of a defined benefit plan which is not a multiemployer plan--
                ``(1) in any case in which the value of plan assets of the
            plan (as reduced under subsection (f)(4)(B)) is less than the
            funding target of the plan for the plan year, the sum of--
                        ``(A) the target normal cost of the plan for the
                    plan year,
                        ``(B) the shortfall amortization charge (if any)
                    for the plan for the plan year determined under
                    subsection (c), and
                        ``(C) the waiver amortization charge (if any) for
                    the plan for the plan year as determined under
                    subsection (e);
                ``(2) in any case in which the value of plan assets of the
            plan (as reduced under subsection (f)(4)(B)) equals or exceeds
            the funding target of the plan for the plan year, the target
            normal cost of the plan for the plan year reduced (but not
            below zero) by such excess.
        ``(b) Target Normal Cost.--For purposes of this section, except as
    provided in subsection (i)(2) with respect to plans in at-risk status,
    the term `target normal cost' means, for any plan year, the present
    value of all benefits which are expected to accrue or to be earned
    under the plan during the plan year. For purposes of this subsection,
    if any benefit attributable to services performed in a preceding plan
    year is increased by reason of any increase in compensation during the
    current plan year, the increase in such benefit shall be treated as
    having accrued during the current plan year.
        ``(c) Shortfall Amortization Charge.--
                ``(1) In general.--For purposes of this section, the
            shortfall amortization charge for a plan for any plan year is
            the aggregate total (not less than zero) of the shortfall
            amortization installments for such plan year with respect to
            the shortfall amortization bases for such plan year and each of
            the 6 preceding plan years.
                ``(2) Shortfall amortization installment.--For purposes of
            paragraph (1)--
                        ``(A) Determination.--The shortfall amortization
                    installments are the amounts necessary to amortize the
                    shortfall amortization base of the plan for any plan
                    year in level annual installments over the 7-plan-year
                    period beginning with such plan year.
                        ``(B) Shortfall installment.--The shortfall
                    amortization installment for any plan year in the 7-
                    plan-year period under subparagraph (A) with respect to
                    any shortfall amortization base is the annual
                    installment determined under subparagraph (A) for that
                    year for that base.
                        ``(C) Segment rates.--In determining any shortfall
                    amortization installment under this paragraph, the plan
                    sponsor shall use the segment rates determined under
                    subparagraph (C) of subsection (h)(2), applied under
                    rules similar to the rules of subparagraph (B) of
                    subsection (h)(2).
                ``(3) Shortfall amortization base.--For purposes of this
            section, the shortfall amortization base of a plan for a plan
            year is--
                        ``(A) the funding shortfall of such plan for such
                    plan year, minus
                        ``(B) the present value (determined using the
                    segment rates determined under subparagraph (C) of
                    subsection (h)(2), applied under rules similar to the
                    rules of subparagraph (B) of subsection (h)(2)) of the
                    aggregate total of the shortfall amortization
                    installments and waiver amortization installments which
                    have been determined for such plan year and any
                    succeeding plan year with respect to the shortfall
                    amortization bases and waiver amortization bases of the
                    plan for any plan year preceding such plan year.
                ``(4) Funding shortfall.--For purposes of this section, the
            funding shortfall of a plan for any plan year is the excess (if
            any) of--
                        ``(A) the funding target of the plan for the plan
                    year, over
                        ``(B) the value of plan assets of the plan (as
                    reduced under subsection (f)(4)(B)) for the plan year
                    which are held by the plan on the valuation date.
                ``(5) Exemption from new shortfall amortization base.--
                        ``(A) In general.--In any case in which the value
                    of plan assets of the plan (as reduced under subsection
                    (f)(4)(A)) is equal to or greater than the funding
                    target of the plan for the plan year, the shortfall
                    amortization base of the plan for such plan year shall
                    be zero.
                        ``(B) Transition rule.--
                                ``(i) In general.--Except as provided in
                            clauses (iii) and (iv), in the case of plan
                            years beginning after 2007 and before 2011,
                            only the applicable percentage of the funding
                            target shall be taken into account under
                            paragraph (3)(A) in determining the funding
                            shortfall for the plan year for purposes of
                            subparagraph (A).
                                ``(ii) Applicable percentage.--For purposes
                            of subparagraph (A), the applicable percentage
                            shall be determined in accordance with the
                            following table:

    ``In the case of a plan year                             The applicable
       beginning in calendar year:                            percentage is
            2008...................................................     92
            2009...................................................     94
            2010...................................................     96.
                                ``(iii) Limitation.--Clause (i) shall not
                            apply with respect to any plan year after 2008
                            unless the shortfall amortization base for each
                            of the preceding years beginning after 2007 was
                            zero (determined after application of this
                            subparagraph).
                                ``(iv) Transition relief not available for
                            new or deficit reduction plans.--Clause (i)
                            shall not apply to a plan--
                                        ``(I) which was not in effect for a
                                    plan year beginning in 2007, or
                                        ``(II) which was in effect for a
                                    plan year beginning in 2007 and which
                                    was subject to section 412(l) (as in
                                    effect for plan years beginning in
                                    2007), determined after the application
                                    of paragraphs (6) and (9) thereof.
                ``(6) Early deemed amortization upon attainment of funding
            target.--In any case in which the funding shortfall of a plan
            for a plan year is zero, for purposes of determining the
            shortfall amortization charge for such plan year and succeeding
            plan years, the shortfall amortization bases for all preceding
            plan years (and all shortfall amortization installments
            determined with respect to such bases) shall be reduced to
            zero.
        ``(d) Rules Relating to Funding Target.--For purposes of this
    section--
                ``(1) Funding target.--Except as provided in subsection
            (i)(1) with respect to plans in at-risk status, the funding
            target of a plan for a plan year is the present value of all
            benefits accrued or earned under the plan as of the beginning
            of the plan year.
                ``(2) Funding target attainment percentage.--The `funding
            target attainment percentage' of a plan for a plan year is the
            ratio (expressed as a percentage) which--
                        ``(A) the value of plan assets for the plan year
                    (as reduced under subsection (f)(4)(B)), bears to
                        ``(B) the funding target of the plan for the plan
                    year (determined without regard to subsection (i)(1)).
        ``(e) Waiver Amortization Charge.--
                ``(1) Determination of waiver amortization charge.--The
            waiver amortization charge (if any) for a plan for any plan
            year is the aggregate total of the waiver amortization
            installments for such plan year with respect to the waiver
            amortization bases for each of the 5 preceding plan years.
                ``(2) Waiver amortization installment.--For purposes of
            paragraph (1)--
                        ``(A) Determination.--The waiver amortization
                    installments are the amounts necessary to amortize the
                    waiver amortization base of the plan for any plan year
                    in level annual installments over a period of 5 plan
                    years beginning with the succeeding plan year.
                        ``(B) Waiver installment.--The waiver amortization
                    installment for any plan year in the 5-year period
                    under subparagraph (A) with respect to any waiver
                    amortization base is the annual installment determined
                    under subparagraph (A) for that year for that base.
                ``(3) Interest rate.--In determining any waiver
            amortization installment under this subsection, the plan
            sponsor shall use the segment rates determined under
            subparagraph (C) of subsection (h)(2), applied under rules
            similar to the rules of subparagraph (B) of subsection (h)(2).
                ``(4) Waiver amortization base.--The waiver amortization
            base of a plan for a plan year is the amount of the waived
            funding deficiency (if any) for such plan year under section
            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 bases for all preceding plan
            years (and all waiver amortization installments determined with
            respect to such bases) shall be reduced to zero.
        ``(f) Reduction of Minimum Required Contribution by Prefunding
    Balance and Funding Standard Carryover Balance.--
                ``(1) Election to maintain balances.--
                        ``(A) Prefunding balance.--The plan sponsor of a
                    defined benefit plan which is not a multiemployer plan
                    may elect to maintain a prefunding balance.
                        ``(B) Funding standard carryover balance.--
                                ``(i) In general.--In the case of a defined
                            benefit plan (other than a multiemployer plan)
                            described in clause (ii), the plan sponsor may
                            elect to maintain a funding standard carryover
                            balance, until such balance is reduced to zero.
                                ``(ii) Plans maintaining funding standard
                            account in 2007.--A plan is described in this
                            clause if the plan--
                                        ``(I) was in effect for a plan year
                                    beginning in 2007, and
                                        ``(II) had a positive balance in
                                    the funding standard account under
                                    section 412(b) as in effect for such
                                    plan year and determined as of the end
                                    of such plan year.
                ``(2) Application of balances.--A prefunding balance and a
            funding standard carryover balance maintained pursuant to this
            paragraph--
                        ``(A) shall be available for crediting against the
                    minimum required contribution, pursuant to an election
                    under paragraph (3),
                        ``(B) shall be applied as a reduction in the amount
                    treated as the value of plan assets for purposes of
                    this section, to the extent provided in paragraph (4),
                    and
                        ``(C) may be reduced at any time, pursuant to an
                    election under paragraph (5).
                ``(3) Election to apply balances against minimum required
            contribution.--
                        ``(A) In general.--Except as provided in
                    subparagraphs (B) and (C), in the case of any plan year
                    in which the plan sponsor elects to credit against the
                    minimum required contribution for the current plan year
                    all or a portion of the prefunding balance or the
                    funding standard carryover balance for the current plan
                    year (not in excess of such minimum required
                    contribution), the minimum required contribution for
                    the plan year shall be reduced as of the first day of
                    the plan year by the amount so credited by the plan
                    sponsor as of the first day of the plan year. For
                    purposes of the preceding sentence, the minimum
                    required contribution shall be determined after taking
                    into account any waiver under section 412(c).
                        ``(B) Coordination with funding standard carryover
                    balance.--To the extent that any plan has a funding
                    standard carryover balance greater than zero, no amount
                    of the prefunding balance of such plan may be credited
                    under this paragraph in reducing the minimum required
                    contribution.
                        ``(C) Limitation for underfunded plans.--The
                    preceding provisions of this paragraph shall not apply
                    for any plan year if the ratio (expressed as a
                    percentage) which--
                                ``(i) the value of plan assets for the
                            preceding plan year (as reduced under paragraph
                            (4)(C)), bears to
                                ``(ii) the funding target of the plan for
                            the preceding plan year (determined without
                            regard to subsection (i)(1)),
                    is less than 80 percent. In the case of plan years
                    beginning in 2008, the ratio under this subparagraph
                    may be determined using such methods of estimation as
                    the Secretary may prescribe.
                ``(4) Effect of balances on amounts treated as value of
            plan assets.--In the case of any plan maintaining a prefunding
            balance or a funding standard carryover balance pursuant to
            this subsection, the amount treated as the value of plan assets
            shall be deemed to be such amount, reduced as provided in the
            following subparagraphs:
                        ``(A) Applicability of shortfall amortization
                    base.--For purposes of subsection (c)(5), the value of
                    plan assets is deemed to be such amount, reduced by the
                    amount of the prefunding balance, but only if an
                    election under paragraph (2) applying any portion of
                    the prefunding balance in reducing the minimum required
                    contribution is in effect for the plan year.
                        ``(B) Determination of excess assets, funding
                    shortfall, and funding target attainment percentage.--
                                ``(i) In general.--For purposes of
                            subsections (a), (c)(4)(B), and (d)(2)(A), the
                            value of plan assets is deemed to be such
                            amount, reduced by the amount of the prefunding
                            balance and the funding standard carryover
                            balance.
                                ``(ii) Special rule for certain binding
                            agreements with pbgc.--For purposes of
                            subsection (c)(4)(B), the value of plan assets
                            shall not be deemed to be reduced for a plan
                            year by the amount of the specified balance if,
                            with respect to such balance, there is in
                            effect for a plan year a binding written
                            agreement with the Pension Benefit Guaranty
                            Corporation which provides that such balance is
                            not available to reduce the minimum required
                            contribution for the plan year. For purposes of
                            the preceding sentence, the term `specified
                            balance' means the prefunding balance or the
                            funding standard carryover balance, as the case
                            may be.
                        ``(C) Availability of balances in plan year for
                    crediting against minimum required contribution.--For
                    purposes of paragraph (3)(C)(i) of this subsection, the
                    value of plan assets is deemed to be such amount,
                    reduced by the amount of the prefunding balance.
                ``(5) Election to reduce balance prior to determinations of
            value of plan assets and crediting against minimum required
            contribution.--
                        ``(A) In general.--The plan sponsor may elect to
                    reduce by any amount the balance of the prefunding
                    balance and the funding standard carryover balance for
                    any plan year (but not below zero). Such reduction
                    shall be effective prior to any determination of the
                    value of plan assets for such plan year under this
                    section and application of the balance in reducing the
                    minimum required contribution for such plan for such
                    plan year pursuant to an election under paragraph (2).
                        ``(B) Coordination between prefunding balance and
                    funding standard carryover balance.--To the extent that
                    any plan has a funding standard carryover balance
                    greater than zero, no election may be made under
                    subparagraph (A) with respect to the prefunding
                    balance.
                ``(6) Prefunding balance.--
                        ``(A) In general.--A prefunding balance maintained
                    by a plan shall consist of a beginning balance of zero,
                    increased and decreased to the extent provided in
                    subparagraphs (B) and (C), and adjusted further as
                    provided in paragraph (8).
                        ``(B) Increases.--
                                ``(i) In general.--As of the first day of
                            each plan year beginning after 2008, the
                            prefunding balance of a plan shall be increased
                            by the amount elected by the plan sponsor for
                            the plan year. Such amount shall not exceed the
                            excess (if any) of--
                                        ``(I) the aggregate total of
                                    employer contributions to the plan for
                                    the preceding plan year, over--
                                        ``(II) the minimum required
                                    contribution for such preceding plan
                                    year.
                                ``(ii) Adjustments for interest.--Any
                            excess contributions under clause (i) shall be
                            properly adjusted for interest accruing for the
                            periods between the first day of the current
                            plan year and the dates on which the excess
                            contributions were made, determined by using
                            the effective interest rate for the preceding
                            plan year and by treating contributions as
                            being first used to satisfy the minimum
                            required contribution.
                                ``(iii) Certain contributions necessary to
                            avoid benefit limitations disregarded.--The
                            excess described in clause (i) with respect to
                            any preceding plan year shall be reduced (but
                            not below zero) by the amount of contributions
                            an employer would be required to make under
                            paragraph (1), (2), or (4) of section 206(g) to
                            avoid a benefit limitation which would
                            otherwise be imposed under such paragraph for
                            the preceding plan year. Any contribution which
                            may be taken into account in satisfying the
                            requirements of more than 1 of such paragraphs
                            shall be taken into account only once for
                            purposes of this clause.
                        ``(C) Decreases.--The prefunding balance of a plan
                    shall be decreased (but not below zero) by the sum of--
                                ``(i) as of the first day of each plan year
                            after 2008, the amount of such balance credited
                            under paragraph (2) (if any) in reducing the
                            minimum required contribution of the plan for
                            the preceding plan year, and
                                ``(ii) as of the time specified in
                            paragraph (5))(A), any reduction in such
                            balance elected under paragraph (5).
                ``(7) Funding standard carryover balance.--
                        ``(A) In general.--A funding standard carryover
                    balance maintained by a plan shall consist of a
                    beginning balance determined under subparagraph (B),
                    decreased to the extent provided in subparagraph (C),
                    and adjusted further as provided in paragraph (8).
                        ``(B) Beginning balance.--The beginning balance of
                    the funding standard carryover balance shall be the
                    positive balance described in paragraph (1)(B)(ii)(II).
                        ``(C) Decreases.--The funding standard carryover
                    balance of a plan shall be decreased (but not below
                    zero) by--
                                ``(i) as of the first day of each plan year
                            after 2008, the amount of such balance credited
                            under paragraph (2) (if any) in reducing the
                            minimum required contribution of the plan for
                            the preceding plan year, and
                                ``(ii) as of the time specified in
                            paragraph (5))(A), any reduction in such
                            balance elected under paragraph (5).
                ``(8) Adjustments for investment experience.--In
            determining the prefunding balance or the funding standard
            carryover balance of a plan as of the first day of the plan
            year, the plan sponsor shall, in accordance with regulations
            prescribed by the Secretary of the Treasury, adjust such
            balance to reflect the rate of return on plan assets for the
            preceding plan year. Notwithstanding subsection (g)(3), such
            rate of return shall be determined on the basis of fair market
            value and shall properly take into account, in accordance with
            such regulations, all contributions, distributions, and other
            plan payments made during such period.
                ``(9) Elections.--Elections under this subsection shall be
            made at such times, and in such form and manner, as shall be
            prescribed in regulations of the Secretary.
        ``(g) Valuation of Plan Assets and Liabilities.--
                ``(1) Timing of determinations.--Except as otherwise
            provided under this subsection, all determinations under this
            section for a plan year shall be made as of the valuation date
            of the plan for such plan year.
                ``(2) Valuation date.--For purposes of this section--
                        ``(A) In general.--Except as provided in
                    subparagraph (B), the valuation date of a plan for any
                    plan year shall be the first day of the plan year.
                        ``(B) Exception for small plans.--If, on each day
                    during the preceding plan year, a plan had 100 or fewer
                    participants, the plan may designate any day during the
                    plan year as its valuation date for such plan year and
                    succeeding plan years. For purposes of this
                    subparagraph, all defined benefit plans (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) Determination of value of plan assets.--For purposes
            of this section--
                        ``(A) In general.--Except as provided in
                    subparagraph (B), the value of plan assets shall be the
                    fair market value of the assets.
                        ``(B) Averaging allowed.--A plan may determine the
                    value of plan assets on the basis of the averaging of
                    fair market values, but only if such method--
                                ``(i) is permitted under regulations
                            prescribed by the Secretary,
                                ``(ii) does not provide for averaging of
                            such values over more than the period beginning
                            on the last day of the 25th month preceding the
                            month in which the valuation date occurs and
                            ending on the valuation date (or a similar
                            period in the case of a valuation date which is
                            not the 1st day of a month), and
                                ``(iii) does not result in a determination
                            of the value of plan assets which, at any time,
                            is lower than 90 percent or greater than 110
                            percent of the fair market value of such assets
                            at such time.
                    Any such averaging shall be adjusted for contributions
                    and distributions (as provided by the Secretary).
                ``(4) Accounting for contribution receipts.--For purposes
            of determining the value of assets under paragraph (3)--
                        ``(A) Prior year contributions.--If--
                                ``(i) an employer makes any contribution to
                            the plan after the valuation date for the plan
                            year in which the contribution is made, and
                                ``(ii) the contribution is for a preceding
                            plan year,
                    the contribution shall be taken into account as an
                    asset of the plan as of the valuation date, except that
                    in the case of any plan year beginning after 2008, only
                    the present value (determined as of the valuation date)
                    of such contribution may be taken into account. For
                    purposes of the preceding sentence, present value shall
                    be determined using the effective interest rate for the
                    preceding plan year to which the contribution is
                    properly allocable.
                        ``(B) Special rule for current year contributions
                    made before valuation date.--If any contributions for
                    any plan year are made to or under the plan during the
                    plan year but before the valuation date for the plan
                    year, the assets of the plan as of the valuation date
                    shall not include--
                                ``(i) such contributions, and
                                ``(ii) interest on such contributions for
                            the period between the date of the
                            contributions and the valuation date,
                            determined by using the effective interest rate
                            for the plan year.
        ``(h) Actuarial Assumptions and Methods.--
                ``(1) In general.--Subject to this subsection, the
            determination of any present value or other computation under
            this section shall be made on the basis of actuarial
            assumptions and methods--
                        ``(A) each of which is reasonable (taking into
                    account the experience of the plan and reasonable
                    expectations), and
                        ``(B) which, in combination, offer the actuary's
                    best estimate of anticipated experience under the plan.
                ``(2) Interest rates.--
                        ``(A) Effective interest rate.--For purposes of
                    this section, the term `effective interest rate' means,
                    with respect to any plan for any plan year, the single
                    rate of interest which, if used to determine the
                    present value of the plan's accrued or earned benefits
                    referred to in subsection (d)(1), would result in an
                    amount equal to the funding target of the plan for such
                    plan year.
                        ``(B) Interest rates for determining funding
                    target.--For purposes of determining the funding target
                    of a plan for any plan year, the interest rate used in
                    determining the present value of the liabilities of the
                    plan shall be--
                                ``(i) in the case of benefits reasonably
                            determined to be payable during the 5-year
                            period beginning on the first day of the plan
                            year, the first segment rate with respect to
                            the applicable month,
                                ``(ii) in the case of benefits reasonably
                            determined to be payable during the 15-year
                            period beginning at the end of the period
                            described in clause (i), the second segment
                            rate with respect to the applicable month, and
                                ``(iii) in the case of benefits reasonably
                            determined to be payable after the period
                            described in clause (ii), the third segment
                            rate with respect to the applicable month.
                        ``(C) Segment rates.--For purposes of this
                    paragraph--
                                ``(i) First segment rate.--The term `first
                            segment rate' means, with respect to any month,
                            the single rate of interest which shall be
                            determined by the Secretary for such month on
                            the basis of the corporate bond yield curve for
                            such month, taking into account only that
                            portion of such yield curve which is based on
                            bonds maturing during the 5-year period
                            commencing with such month.
                                ``(ii) Second segment rate.--The term
                            `second segment rate' means, with respect to
                            any month, the single rate of interest which
                            shall be determined by the Secretary for such
                            month on the basis of the corporate bond yield
                            curve for such month, taking into account only
                            that portion of such yield curve which is based
                            on bonds maturing during the 15-year period
                            beginning at the end of the period described in
                            clause (i).
                                ``(iii) Third segment rate.--The term
                            `third segment rate' means, with respect to any
                            month, the single rate of interest which shall
                            be determined by the Secretary for such month
                            on the basis of the corporate bond yield curve
                            for such month, taking into account only that
                            portion of such yield curve which is based on
                            bonds maturing during periods beginning after
                            the period described in clause (ii).
                        ``(D) Corporate bond yield curve.--For purposes of
                    this paragraph--
                                ``(i) In general.--The term `corporate bond
                            yield curve' means, with respect to any month,
                            a yield curve which is prescribed by the
                            Secretary for such month and which reflects the
                            average, for the 24-month period ending with
                            the month preceding such month, of monthly
                            yields on investment grade corporate bonds with
                            varying maturities and that are in the top 3
                            quality levels available.
                                ``(ii) Election to use yield curve.--Solely
                            for purposes of determining the minimum
                            required contribution under this section, the
                            plan sponsor may, in lieu of the segment rates
                            determined under subparagraph (C), elect to use
                            interest rates under the corporate bond yield
                            curve. For purposes of the preceding sentence
                            such curve shall be determined without regard
                            to the 24-month averaging described in clause
                            (i). Such election, once made, may be revoked
                            only with the consent of the Secretary.
                        ``(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)(D)(i)
                    for such month and each of the rates determined under
                    subparagraph (B) for such month. The Secretary shall
                    also publish a description of the methodology used to
                    determine such yield curve and such rates which is
                    sufficiently detailed to enable plans to make
                    reasonable projections regarding the yield curve and
                    such rates for future months based on the plan's
                    projection of future interest rates.
                        ``(G) Transition rule.--
                                ``(i) In general.--Notwithstanding the
                            preceding provisions of this paragraph, for
                            plan years beginning in 2008 or 2009, the
                            first, second, or third segment rate for a plan
                            with respect to any month shall be equal to the
                            sum of--
                                        ``(I) the product of such rate for
                                    such month determined without regard to
                                    this subparagraph, multiplied by the
                                    applicable percentage, and
                                        ``(II) the product of the rate
                                    determined under the rules of section
                                    412(b)(5)(B)(ii)(II) (as in effect for
                                    plan years beginning in 2007),
                                    multiplied by a percentage equal to 100
                                    percent minus the applicable
                                    percentage.
                                ``(ii) Applicable percentage.--For purposes
                            of clause (i), the applicable percentage is
                            33\1/3\ percent for plan years beginning in
                            2008 and 66\2/3\ percent for plan years
                            beginning in 2009.
                                ``(iii) New plans ineligible.--Clause (i)
                            shall not apply to any plan if the first plan
                            year of the plan begins after December 31,
                            2007.
                                ``(iv) Election.--The plan sponsor may
                            elect not to have this subparagraph apply. Such
                            election, once made, may be revoked only with
                            the consent of the Secretary.
                ``(3) Mortality tables.--
                        ``(A) In general.--Except as provided in
                    subparagraph (C) or (D), the Secretary shall by
                    regulation prescribe mortality tables to be used in
                    determining any present value or making any computation
                    under this section. Such tables shall be based on the
                    actual experience of pension plans and projected trends
                    in such experience. In prescribing such tables, the
                    Secretary shall take into account results of available
                    independent studies of mortality of individuals covered
                    by pension plans.
                        ``(B) Periodic revision.--The Secretary shall (at
                    least every 10 years) make revisions in any table in
                    effect under subparagraph (A) to reflect the actual
                    experience of pension plans and projected trends in
                    such experience.
                        ``(C) Substitute mortality table.--
                                ``(i) In general.--Upon request by the plan
                            sponsor and approval by the Secretary, a
                            mortality table which meets the requirements of
                            clause (iii) shall be used in determining any
                            present value or making any computation under
                            this section during the period of consecutive
                            plan years (not to exceed 10) specified in the
                            request.
                                ``(ii) Early termination of period.--
                            Notwithstanding clause (i), a mortality table
                            described in clause (i) shall cease to be in
                            effect as of the earliest of--
                                        ``(I) the date on which there is a
                                    significant change in the participants
                                    in the plan by reason of a plan spinoff
                                    or merger or otherwise, or
                                        ``(II) the date on which the plan
                                    actuary determines that such table does
                                    not meet the requirements of clause
                                    (iii).
                                ``(iii) Requirements.--A mortality table
                            meets the requirements of this clause if--
                                        ``(I) there is a sufficient number
                                    of plan participants, and the pension
                                    plans have been maintained for a
                                    sufficient period of time, to have
                                    credible information necessary for
                                    purposes of subclause (II), and
                                        ``(II) such table reflects the
                                    actual experience of the pension plans
                                    maintained by the sponsor and projected
                                    trends in general mortality experience.
                                ``(iv) All plans in controlled group must
                            use separate table.--Except as provided by the
                            Secretary, a plan sponsor may not use a
                            mortality table under this subparagraph for any
                            plan maintained by the plan sponsor unless--
                                        ``(I) a separate mortality table is
                                    established and used under this
                                    subparagraph for each other plan
                                    maintained by the plan sponsor and if
                                    the plan sponsor is a member of a
                                    controlled group, each member of the
                                    controlled group, and
                                        ``(II) the requirements of clause
                                    (iii) are met separately with respect
                                    to the table so established for each
                                    such plan, determined by only taking
                                    into account the participants of such
                                    plan, the time such plan has been in
                                    existence, and the actual experience of
                                    such plan.
                                ``(v) Deadline for submission and
                            disposition of application.--
                                        ``(I) Submission.--The plan sponsor
                                    shall submit a mortality table to the
                                    Secretary for approval under this
                                    subparagraph at least 7 months before
                                    the 1st day of the period described in
                                    clause (i).
                                        ``(II) Disposition.--Any mortality
                                    table submitted to the Secretary for
                                    approval under this subparagraph shall
                                    be treated as in effect as of the 1st
                                    day of the period described in clause
                                    (i) unless the Secretary, during the
                                    180-day period beginning on the date of
                                    such submission, disapproves of such
                                    table and provides the reasons that
                                    such table fails to meet the
                                    requirements of clause (iii). The 180-
                                    day period shall be extended upon
                                    mutual agreement of the Secretary and
                                    the plan sponsor.
                        ``(D) Separate mortality tables for the disabled.--
                    Notwithstanding subparagraph (A)--
                                ``(i) In general.--The Secretary shall
                            establish mortality tables which may be used
                            (in lieu of the tables under subparagraph (A))
                            under this subsection for individuals who are
                            entitled to benefits under the plan on account
                            of disability. The Secretary shall establish
                            separate tables for individuals whose
                            disabilities occur in plan years beginning
                            before January 1, 1995, and for individuals
                            whose disabilities occur in plan years
                            beginning on or after such date.
                                ``(ii) Special rule for disabilities
                            occurring after 1994.--In the case of
                            disabilities occurring in plan years beginning
                            after December 31, 1994, the tables under
                            clause (i) shall apply only with respect to
                            individuals described in such subclause who are
                            disabled within the meaning of title II of the
                            Social Security Act and the regulations
                            thereunder.
                                ``(iii) Periodic revision.--The Secretary
                            shall (at least every 10 years) make revisions
                            in any table in effect under clause (i) to
                            reflect the actual experience of pension plans
                            and projected trends in such experience.
                ``(4) Probability of benefit payments in the form of lump
            sums or other optional forms.--For purposes of determining any
            present value or making any computation under this section,
            there shall be taken into account--
                        ``(A) the probability that future benefit payments
                    under the plan will be made in the form of optional
                    forms of benefits provided under the plan (including
                    lump sum distributions, determined on the basis of the
                    plan's experience and other related assumptions), and
                        ``(B) any difference in the present value of such
                    future benefit payments resulting from the use of
                    actuarial assumptions, in determining benefit payments
                    in any such optional form of benefits, which are
                    different from those specified in this subsection.
                ``(5) Approval of large changes in actuarial assumptions.--
                        ``(A) In general.--No actuarial assumption used to
                    determine the funding target for a plan to which this
                    paragraph applies may be changed without the approval
                    of the Secretary.
                        ``(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 the case of a plan which is
                    in at-risk status for a plan year, the funding target
                    of the plan for the plan year shall be equal to the sum
                    of--
                                ``(i) the present value of all benefits
                            accrued or earned under the plan as of the
                            beginning of the plan year, as determined by
                            using the additional actuarial assumptions
                            described in subparagraph (B), and
                                ``(ii) in the case of a plan which also has
                            been in at-risk status for at least 2 of the 4
                            preceding plan years, a loading factor
                            determined under subparagraph (C).
                        ``(B) Additional actuarial assumptions.--The
                    actuarial assumptions described in this subparagraph
                    are as follows:
                                ``(i) All employees who are not otherwise
                            assumed to retire as of the valuation date but
                            who will be eligible to elect benefits during
                            the plan year and the 10 succeeding plan years
                            shall be assumed to retire at the earliest
                            retirement date under the plan but not before
                            the end of the plan year for which the at-risk
                            funding target and at-risk target normal cost
                            are being determined.
                                ``(ii) All employees shall be assumed to
                            elect the retirement benefit available under
                            the plan at the assumed retirement age
                            (determined after application of clause (i))
                            which would result in the highest present value
                            of benefits.
                        ``(C) Loading factor.--The loading factor applied
                    with respect to a plan under this paragraph for any
                    plan year is the sum of--
                                ``(i) $700, times the number of
                            participants in the plan, plus
                                ``(ii) 4 percent of the funding target
                            (determined without regard to this paragraph)
                            of the plan for the plan year.
                ``(2) Target normal cost of at-risk plans.--In the case of
            a plan which is in at-risk status for a plan year, the target
            normal cost of the plan for such plan year shall be equal to
            the sum of--
                        ``(A) the present value of all benefits which are
                    expected to accrue or be earned under the plan during
                    the plan year, determined using the additional
                    actuarial assumptions described in paragraph (1)(B),
                    plus
                        ``(B) in the case of a plan which also has been in
                    at-risk status for at least 2 of the 4 preceding plan
                    years, a loading factor equal to 4 percent of the
                    target normal cost (determined without regard to this
                    paragraph) of the plan for the plan year.
                ``(3) Minimum amount.--In no event shall--
                        ``(A) the at-risk funding target be less than the
                    funding target, as determined without regard to this
                    subsection, or
                        ``(B) the at-risk target normal cost be less than
                    the target normal cost, as determined without regard to
                    this subsection.
                ``(4) Determination of at-risk status.--For purposes of
            this subsection--
                        ``(A) In general.--A plan is in at-risk status for
                    a plan year if--
                                ``(i) the funding target attainment
                            percentage for the preceding plan year
                            (determined under this section without regard
                            to this subsection) is less than 80 percent,
                            and
                                ``(ii) the funding target attainment
                            percentage for the preceding plan year
                            (determined under this section by using the
                            additional actuarial assumptions described in
                            paragraph (1)(B) in computing the funding
                            target) is less than 70 percent.
                        ``(B) Transition rule.--In the case of plan years
                    beginning in 2008, 2009, and 2010, subparagraph (A)(i)
                    shall be applied by substituting the following
                    percentages for `80 percent':
                                ``(i) 65 percent in the case of 2008.
                                ``(ii) 70 percent in the case of 2009.
                                ``(iii) 75 percent in the case of 2010.
                    In the case of plan years beginning in 2008, the
                    funding target attainment percentage for the preceding
                    plan year under subparagraph (A)(ii) may be determined
                    using such methods of estimation as the Secretary may
                    provide.
                        ``(C) Special rule for employees offered early
                    retirement in 2006.--
                                ``(i) In general.--For purposes of
                            subparagraph (A)(ii), the additional actuarial
                            assumptions described in paragraph (1)(B) shall
                            not be taken into account with respect to any
                            employee if--
                                        ``(I) such employee is employed by
                                    a specified automobile manufacturer,
                                        ``(II) such employee is offered a
                                    substantial amount of additional cash
                                    compensation, substantially enhanced
                                    retirement benefits under the plan, or
                                    materially reduced employment duties on
                                    the condition that by a specified date
                                    (not later than December 31, 2010) the
                                    employee retires (as defined under the
                                    terms of the plan),
                                        ``(III) such offer is made during
                                    2006 and pursuant to a bona fide
                                    retirement incentive program and
                                    requires, by the terms of the offer,
                                    that such offer can be accepted not
                                    later than a specified date (not later
                                    than December 31, 2006), and
                                        ``(IV) such employee does not elect
                                    to accept such offer before the
                                    specified date on which the offer
                                    expires.
                                ``(ii) Specified automobile manufacturer.--
                            For purposes of clause (i), the term `specified
                            automobile manufacturer' means--
                                        ``(I) any manufacturer of
                                    automobiles, and
                                        ``(II) any manufacturer of
                                    automobile parts which supplies such
                                    parts directly to a manufacturer of
                                    automobiles and which, after a
                                    transaction or series of transactions
                                    ending in 1999, ceased to be a member
                                    of a controlled group which included
                                    such manufacturer of automobiles.
                ``(5) Transition between applicable funding targets and
            between applicable target normal costs.--
                        ``(A) In general.--In any case in which a plan
                    which is in at-risk status for a plan year has been in
                    such status for a consecutive period of fewer than 5
                    plan years, the applicable amount of the funding target
                    and of the target normal cost shall be, in lieu of the
                    amount determined without regard to this paragraph, the
                    sum of--
                                ``(i) the amount determined under this
                            section without regard to this subsection, plus
                                ``(ii) the transition percentage for such
                            plan year of the excess of the amount
                            determined under this subsection (without
                            regard to this paragraph) over the amount
                            determined under this section without regard to
                            this subsection.
                        ``(B) Transition percentage.--For purposes of
                    subparagraph (A), the transition percentage shall be
                    determined in accordance with the following table:

    ``If the consecutive number of
       years (including the plan year)                       The transition
     the plan is in at-risk status is--                     percentage is--
            1......................................................     20
            2......................................................     40
            3......................................................     60
            4......................................................     80.
                        ``(C) Years before effective date.--For purposes of
                    this paragraph, plan years beginning before 2008 shall
                    not be taken into account.
                ``(6) Small plan exception.--If, on each day during the
            preceding plan year, a plan had 500 or fewer participants, the
            plan shall not be treated as in at-risk status for the plan
            year. For purposes of this paragraph, all defined benefit plans
            (other than multiemployer plans) maintained by the same
            employer (or any member of such employer's controlled group)
            shall be treated as 1 plan, but only participants with respect
            to such employer or member shall be taken into account and the
            rules of subsection (g)(2)(C) shall apply.
        ``(j) Payment of Minimum Required Contributions.--
                ``(1) In general.--For purposes of this section, the due
            date for any payment of any minimum required contribution for
            any plan year shall be 8\1/2\ months after the close of the
            plan year.
                ``(2) Interest.--Any payment required under paragraph (1)
            for a plan year that is made on a date other than the valuation
            date for such plan year shall be adjusted for interest accruing
            for the period between the valuation date and the payment date,
            at the effective rate of interest for the plan for such plan
            year.
                ``(3) Accelerated quarterly contribution schedule for
            underfunded plans.--
                        ``(A) Failure to timely make required
                    installment.--In any case in which the plan has a
                    funding shortfall for the preceding plan year, the
                    employer maintaining the plan shall make the required
                    installments under this paragraph and if the employer
                    fails to pay the full amount of a required installment
                    for the plan year, then the amount of interest charged
                    under paragraph (2) on the underpayment for the period
                    of underpayment shall be determined by using a rate of
                    interest equal to the rate otherwise used under
                    paragraph (2) plus 5 percentage points.
                        ``(B) Amount of underpayment, period of
                    underpayment.--For purposes of subparagraph (A)--
                                ``(i) Amount.--The amount of the
                            underpayment shall be the excess of--
                                        ``(I) the required installment,
                                    over
                                        ``(II) the amount (if any) of the
                                    installment contributed to or under the
                                    plan on or before the due date for the
                                    installment.
                                ``(ii) Period of underpayment.--The period
                            for which any interest is charged under this
                            paragraph with respect to any portion of the
                            underpayment shall run from the due date for
                            the installment to the date on which such
                            portion is contributed to or under the plan.
                                ``(iii) Order of crediting contributions.--
                            For purposes of clause (i)(II), contributions
                            shall be credited against unpaid required
                            installments in the order in which such
                            installments are required to be paid.
                        ``(C) Number of required installments; due dates.--
                    For purposes of this paragraph--
                                ``(i) Payable in 4 installments.--There
                            shall be 4 required installments for each plan
                            year.
                                ``(ii) Time for payment of installments.--
                            The due dates for required installments are set
                            forth in the following table:

    In the case of the following        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 (determined
                                    without regard to this subsection) to
                                    the plan for the plan year under this
                                    section, or
                                        ``(II) 100 percent of the minimum
                                    required contribution (determined
                                    without regard to this subsection or to
                                    any waiver under section 302(c)) to the
                                    plan for the preceding plan year.
                            Subclause (II) shall not apply if the preceding
                            plan year referred to in such clause was not a
                            year of 12 months.
                        ``(E) Fiscal years and short years.--
                                ``(i) Fiscal years.--In applying this
                            paragraph to a plan year beginning on any date
                            other than January 1, there shall be
                            substituted for the months specified in this
                            paragraph, the months which correspond thereto.
                                ``(ii) Short plan year.--This subparagraph
                            shall be applied to plan years of less than 12
                            months in accordance with regulations
                            prescribed by the Secretary.
                ``(4) Liquidity requirement in connection with quarterly
            contributions.--
                        ``(A) In general.--A plan to which this paragraph
                    applies shall be treated as failing to pay the full
                    amount of any required installment under paragraph (3)
                    to the extent that the value of the liquid assets paid
                    in such installment is less than the liquidity
                    shortfall (whether or not such liquidity shortfall
                    exceeds the amount of such installment required to be
                    paid but for this paragraph).
                        ``(B) Plans to which paragraph applies.--This
                    paragraph shall apply to a plan (other than a plan
                    described in subsection (g)(2)(B)) which--
                                ``(i) is required to pay installments under
                            paragraph (3) for a plan year, and
                                ``(ii) has a liquidity shortfall for any
                            quarter during such plan year.
                        ``(C) Period of underpayment.--For purposes of
                    paragraph (3)(A), any portion of an installment that is
                    treated as not paid under subparagraph (A) shall
                    continue to be treated as unpaid until the close of the
                    quarter in which the due date for such installment
                    occurs.
                        ``(D) Limitation on increase.--If the amount of any
                    required installment is increased by reason of
                    subparagraph (A), in no event shall such increase
                    exceed the amount which, when added to prior
                    installments for the plan year, is necessary to
                    increase the funding target attainment percentage of
                    the plan for the plan year (taking into account the
                    expected increase in funding target due to benefits
                    accruing or earned during the plan year) to 100
                    percent.
                        ``(E) Definitions.--For purposes of this
                    paragraph--
                                ``(i) Liquidity shortfall.--The term
                            `liquidity shortfall' means, with respect to
                            any required installment, an amount equal to
                            the excess (as of the last day of the quarter
                            for which such installment is made) of--
                                        ``(I) the base amount with respect
                                    to such quarter, over
                                        ``(II) the value (as of such last
                                    day) of the plan's liquid assets.
                                ``(ii) Base amount.--
                                        ``(I) In general.--The term `base
                                    amount' means, with respect to any
                                    quarter, an amount equal to 3 times the
                                    sum of the adjusted disbursements from
                                    the plan for the 12 months ending on
                                    the last day of such quarter.
                                        ``(II) Special rule.--If the amount
                                    determined under subclause (I) exceeds
                                    an amount equal to 2 times the sum of
                                    the adjusted disbursements from the
                                    plan for the 36 months ending on the
                                    last day of the quarter and an enrolled
                                    actuary certifies to the satisfaction
                                    of the Secretary 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) covered under section 4021 of the Employee
            Retirement Income Security Act of 1974 for any plan year for
            which the funding target attainment percentage (as defined in
            subsection (d)(2)) of such plan is less than 100 percent.
                ``(3) Amount of lien.--For purposes of paragraph (1), the
            amount of the lien shall be equal to the aggregate unpaid
            balance of contribution payments required under this section
            and section 412 for which payment has not been made before the
            due date.
                ``(4) Notice of failure; lien.--
                        ``(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 (j).
                        ``(B) Due date; required installment.--The terms
                    `due date' and `required installment' have the meanings
                    given such terms by subsection (j), except that in the
                    case of a payment other than a required installment,
                    the due date shall be the date such payment is required
                    to be made under section 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, 2007.

    SEC. 113. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.

        (a) Prohibition of Shutdown Benefits and Other Unpredictable
    Contingent Event Benefits Under Single-Employer Plans.--
                (1) In general.--Part III of subchapter D of chapter 1 of
            the Internal Revenue Code of 1986 (relating to deferred
            compensation, etc.) is amended--
                        (A) by striking the heading and inserting the
                    following:

      ``PART III--RULES RELATING TO MINIMUM FUNDING STANDARDS AND BENEFIT
                                  LIMITATIONS

           ``subpart a. minimum funding standards for pension plans.
         ``subpart b. benefit limitations under single-employer plans.

            ``Subpart A--Minimum Funding Standards for Pension Plans

    ``Sec. 430. Minimum funding standards for single-employer defined
                                benefit pension plans.'', and
                        (B) by adding at the end the following new subpart:

          ``Subpart B--Benefit Limitations Under Single-Employer Plans

    ``Sec. 436. Funding-based limitation on shutdown benefits and other
                                unpredictable contingent event benefits
                                under single-employer plans.

    ``SEC. 436. FUNDING-BASED LIMITS ON BENEFITS AND BENEFIT ACCRUALS UNDER
                  SINGLE-EMPLOYER PLANS.

        ``(a) General Rule.--For purposes of section 401(a)(29), a defined
    benefit plan which is a single-employer plan shall be treated as
    meeting the requirements of this section if the plan meets the
    requirements of subsections (b), (c), (d), and (e).
        ``(b) Funding-Based Limitation on Shutdown Benefits and Other
    Unpredictable Contingent Event Benefits Under Single-Employer Plans.--
                ``(1) In general.--If a participant of a defined benefit
            plan which is a single-employer plan is entitled to an
            unpredictable contingent event benefit payable with respect to
            any event occurring during any plan year, the plan shall
            provide that such benefit may not be provided if the adjusted
            funding target attainment percentage for such plan year--
                        ``(A) is less than 60 percent, or
                        ``(B) would be less than 60 percent taking into
                    account such occurrence.
                ``(2) Exemption.--Paragraph (1) shall cease to apply with
            respect to any plan year, effective as of the first day of the
            plan year, upon payment by the plan sponsor of a contribution
            (in addition to any minimum required contribution under section
            303) equal to--
                        ``(A) in the case of paragraph (1)(A), the amount
                    of the increase in the funding target of the plan
                    (under section 430) for the plan year attributable to
                    the occurrence referred to in paragraph (1), and
                        ``(B) in the case of paragraph (1)(B), the amount
                    sufficient to result in a funding target attainment
                    percentage of 60 percent.
                ``(3) Unpredictable contingent event.--For purposes of this
            subsection, the term `unpredictable contingent event benefit'
            means any benefit payable solely by reason of--
                        ``(A) a plant shutdown (or similar event, as
                    determined by the Secretary), or
                        ``(B) any event other than the attainment of any
                    age, performance of any service, receipt or derivation
                    of any compensation, or occurrence of death or
                    disability.
        ``(c) Limitations on Plan Amendments Increasing Liability for
    Benefits.--
                ``(1) In general.--No amendment to a defined benefit plan
            which is a single-employer plan which has the effect of
            increasing liabilities of the plan by reason of increases in
            benefits, establishment of new benefits, changing the rate of
            benefit accrual, or changing the rate at which benefits become
            nonforfeitable may take effect during any plan year if the
            adjusted funding target attainment percentage for such plan
            year is--
                        ``(A) less than 80 percent, or
                        ``(B) would be less than 80 percent taking into
                    account such amendment.
                ``(2) Exemption.--Paragraph (1) shall cease to apply with
            respect to any plan year, effective as of the first day of the
            plan year (or if later, the effective date of the amendment),
            upon payment by the plan sponsor of a contribution (in addition
            to any minimum required contribution under section 430) equal
            to--
                        ``(A) in the case of paragraph (1)(A), the amount
                    of the increase in the funding target of the plan
                    (under section 430) for the plan year attributable to
                    the amendment, and
                        ``(B) in the case of paragraph (1)(B), the amount
                    sufficient to result in an adjusted funding target
                    attainment percentage of 80 percent.
                ``(3) Exception for certain benefit increases.--Paragraph
            (1) shall not apply to any amendment which provides for an
            increase in benefits under a formula which is not based on a
            participant's compensation, but only if the rate of such
            increase is not in excess of the contemporaneous rate of
            increase in average wages of participants covered by the
            amendment.
        ``(d) Limitations on Accelerated Benefit Distributions.--
                ``(1) Funding percentage less than 60 percent.--A defined
            benefit plan which is a single-employer plan shall provide
            that, in any case in which the plan's adjusted funding target
            attainment percentage for a plan year is less than 60 percent,
            the plan may not pay any prohibited payment after the valuation
            date for the plan year.
                ``(2) Bankruptcy.--A defined benefit plan which is a
            single-employer plan shall provide that, during any period in
            which the plan sponsor is a debtor in a case under title 11,
            United States Code, or similar Federal or State law, the plan
            may not pay any prohibited payment. The preceding sentence
            shall not apply on or after the date on which the enrolled
            actuary of the plan certifies that the adjusted funding target
            attainment percentage of such plan is not less than 100
            percent.
                ``(3) Limited payment if percentage at least 60 percent but
            less than 80 percent.--
                        ``(A) In general.--A defined benefit plan which is
                    a single-employer plan shall provide that, in any case
                    in which the plan's adjusted funding target attainment
                    percentage for a plan year is 60 percent or greater but
                    less than 80 percent, the plan may not pay any
                    prohibited payment after the valuation date for the
                    plan year to the extent the amount of the payment
                    exceeds the lesser of--
                                ``(i) 50 percent of the amount of the
                            payment which could be made without regard to
                            this section, or
                                ``(ii) the present value (determined under
                            guidance prescribed by the Pension Benefit
                            Guaranty Corporation, using the interest and
                            mortality assumptions under section 417(e)) of
                            the maximum guarantee with respect to the
                            participant under section 4022 of the Employee
                            Retirement Income Security Act of 1974.
                        ``(B) One-time application.--
                                ``(i) In general.--The plan shall also
                            provide that only 1 prohibited payment meeting
                            the requirements of subparagraph (A) may be
                            made with respect to any participant during any
                            period of consecutive plan years to which the
                            limitations under either paragraph (1) or (2)
                            or this paragraph applies.
                                ``(ii) Treatment of beneficiaries.--For
                            purposes of this subparagraph, a participant
                            and any beneficiary on his behalf (including an
                            alternate payee, as defined in section
                            414(p)(8)) shall be treated as 1 participant.
                            If the accrued benefit of a participant is
                            allocated to such an alternate payee and 1 or
                            more other persons, the amount under
                            subparagraph (A) shall be allocated among such
                            persons in the same manner as the accrued
                            benefit is allocated unless the qualified
                            domestic relations order (as defined in section
                            414(p)(1)(A)) provides otherwise.
                ``(4) Exception.--This subsection shall not apply to any
            plan for any plan year if the terms of such plan (as in effect
            for the period beginning on September 1, 2005, and ending with
            such plan year) provide for no benefit accruals with respect to
            any participant during such period.
                ``(5) Prohibited payment.--For purpose of this subsection,
            the term `prohibited payment' means--
                        ``(A) any payment, in excess of the monthly amount
                    paid under a single life annuity (plus any social
                    security supplements described in the last sentence of
                    section 411(a)(9)), to a participant or beneficiary
                    whose annuity starting date (as defined in section
                    417(f)(2)) occurs during any period a limitation under
                    paragraph (1) or (2) is in effect,
                        ``(B) any payment for the purchase of an
                    irrevocable commitment from an insurer to pay benefits,
                    and
                        ``(C) any other payment specified by the Secretary
                    by regulations.
        ``(e) Limitation on Benefit Accruals for Plans With Severe Funding
    Shortfalls.--
                ``(1) In general.--A defined benefit plan which is a
            single-employer plan shall provide that, in any case in which
            the plan's adjusted funding target attainment percentage for a
            plan year is less than 60 percent, benefit accruals under the
            plan shall cease as of the valuation date for the plan year.
                ``(2) Exemption.--Paragraph (1) shall cease to apply with
            respect to any plan year, effective as of the first day of the
            plan year, upon payment by the plan sponsor of a contribution
            (in addition to any minimum required contribution under section
            430) equal to the amount sufficient to result in an adjusted
            funding target attainment percentage of 60 percent.
        ``(f) Rules Relating to Contributions Required to Avoid Benefit
    Limitations.--
                ``(1) Security may be provided.--
                        ``(A) In general.--For purposes of this section,
                    the adjusted funding target attainment percentage shall
                    be determined by treating as an asset of the plan any
                    security provided by a plan sponsor in a form meeting
                    the requirements of subparagraph (B).
                        ``(B) Form of security.--The security required
                    under subparagraph (A) shall consist of--
                                ``(i) a bond issued by a corporate surety
                            company that is an acceptable surety for
                            purposes of section 412 of the Employee
                            Retirement Income Security Act of 1974,
                                ``(ii) cash, or United States obligations
                            which mature in 3 years or less, held in escrow
                            by a bank or similar financial institution, or
                                ``(iii) such other form of security as is
                            satisfactory to the Secretary and the parties
                            involved.
                        ``(C) Enforcement.--Any security provided under
                    subparagraph (A) may be perfected and enforced at any
                    time after the earlier of--
                                ``(i) the date on which the plan
                            terminates,
                                ``(ii) if there is a failure to make a
                            payment of the minimum required contribution
                            for any plan year beginning after the security
                            is provided, the due date for the payment under
                            section 430(j), or
                                ``(iii) if the adjusted funding target
                            attainment percentage is less than 60 percent
                            for a consecutive period of 7 years, the
                            valuation date for the last year in the period.
                        ``(D) Release of security.--The security shall be
                    released (and any amounts thereunder shall be refunded
                    together with any interest accrued thereon) at such
                    time as the Secretary may prescribe in regulations,
                    including regulations for partial releases of the
                    security by reason of increases in the funding target
                    attainment percentage.
                ``(2) Prefunding balance or funding standard carryover
            balance may not be used.--No prefunding balance under section
            430(f) or funding standard carryover balance may be used under
            subsection (b), (c), or (e) to satisfy any payment an employer
            may make under any such subsection to avoid or terminate the
            application of any limitation under such subsection.
                ``(3) Deemed reduction of funding balances.--
                        ``(A) In general.--Subject to subparagraph (C), in
                    any case in which a benefit limitation under subsection
                    (b), (c), (d), or (e) would (but for this subparagraph
                    and determined without regard to subsection (b)(2),
                    (c)(2), or (e)(2)) apply to such plan for the plan
                    year, the plan sponsor of such plan shall be treated
                    for purposes of this title as having made an election
                    under section 430(f) to reduce the prefunding balance
                    or funding standard carryover balance by such amount as
                    is necessary for such benefit limitation to not apply
                    to the plan for such plan year.
                        ``(B) Exception for insufficient funding
                    balances.--Subparagraph (A) shall not apply with
                    respect to a benefit limitation for any plan year if
                    the application of subparagraph (A) would not result in
                    the benefit limitation not applying for such plan year.
                        ``(C) Restrictions of certain rules to collectively
                    bargained plans.--With respect to any benefit
                    limitation under subsection (b), (c), or (e),
                    subparagraph (A) shall only apply in the case of a plan
                    maintained pursuant to 1 or more collective bargaining
                    agreements between employee representatives and 1 or
                    more employers.
        ``(g) New Plans.--Subsections (b), (c), and (e) shall not apply to
    a plan for the first 5 plan years of the plan. For purposes of this
    subsection, the reference in this subsection to a plan shall include a
    reference to any predecessor plan.
        ``(h) Presumed Underfunding for Purposes of Benefit Limitations.--
                ``(1) Presumption of continued underfunding.--In any case
            in which a benefit limitation under subsection (b), (c), (d),
            or (e) has been applied to a plan with respect to the plan year
            preceding the current plan year, the adjusted funding target
            attainment percentage of the plan for the current plan year
            shall be presumed to be equal to the adjusted funding target
            attainment percentage of the plan for the preceding plan year
            until the enrolled actuary of the plan certifies the actual
            adjusted funding target attainment percentage of the plan for
            the current plan year.
                ``(2) Presumption of underfunding after 10th month.--In any
            case in which no certification of the adjusted funding target
            attainment percentage for the current plan year is made with
            respect to the plan before the first day of the 10th month of
            such year, for purposes of subsections (b), (c), (d), and (e),
            such first day shall be deemed, for purposes of such
            subsection, to be the valuation date of the plan for the
            current plan year and the plan's adjusted funding target
            attainment percentage shall be conclusively presumed to be less
            than 60 percent as of such first day.
                ``(3) Presumption of underfunding after 4th month for
            nearly underfunded plans.--In any case in which--
                        ``(A) a benefit limitation under subsection (b),
                    (c), (d), or (e) did not apply to a plan with respect
                    to the plan year preceding the current plan year, but
                    the adjusted funding target attainment percentage of
                    the plan for such preceding plan year was not more than
                    10 percentage points greater than the percentage which
                    would have caused such subsection to apply to the plan
                    with respect to such preceding plan year, and
                        ``(B) as of the first day of the 4th month of the
                    current plan year, the enrolled actuary of the plan has
                    not certified the actual adjusted funding target
                    attainment percentage of the plan for the current plan
                    year,
            until the enrolled actuary so certifies, such first day shall
            be deemed, for purposes of such subsection, to be the valuation
            date of the plan for the current plan year and the adjusted
            funding target attainment percentage of the plan as of such
            first day shall, for purposes of such subsection, be presumed
            to be equal to 10 percentage points less than the adjusted
            funding target attainment percentage of the plan for such
            preceding plan year.
        ``(i) Treatment of Plan as of Close of Prohibited or Cessation
    Period.--For purposes of applying this title--
                ``(1) Operation of plan after period.--Unless the plan
            provides otherwise, payments and accruals will resume effective
            as of the day following the close of the period for which any
            limitation of payment or accrual of benefits under subsection
            (d) or (e) applies.
                ``(2) Treatment of affected benefits.--Nothing in this
            subsection shall be construed as affecting the plan's treatment
            of benefits which would have been paid or accrued but for this
            section.
        ``(j) Terms Relating to Funding Target Attainment Percentage.--For
    purposes of this section--
                ``(1) In general.--The term `funding target attainment
            percentage' has the same meaning given such term by section
            430(d)(2).
                ``(2) Adjusted funding target attainment percentage.--The
            term `adjusted funding target attainment percentage' means the
            funding target attainment percentage which is determined under
            paragraph (1) by increasing each of the amounts under
            subparagraphs (A) and (B) of section 430(d)(2) by the aggregate
            amount of purchases of annuities for employees other than
            highly compensated employees (as defined in section 414(q))
            which were made by the plan during the preceding 2 plan years.
                ``(3) Application to plans which are fully funded without
            regard to reductions for funding balances.--
                        ``(A) In general.--In the case of a plan for any
                    plan year, if the funding target attainment percentage
                    is 100 percent or more (determined without regard to
                    this paragraph and without regard to the reduction in
                    the value of assets under section 430(f)(4)(A)), the
                    funding target attainment percentage for purposes of
                    paragraph (1) shall be determined without regard to
                    such reduction.
                        ``(B) Transition rule.--Subparagraph (A) shall be
                    applied to plan years beginning after 2007 and before
                    2011 by substituting for `100 percent' the applicable
                    percentage determined in accordance with the following
                    table:

    ``In the case of a plan year                             The applicable
       beginning in calendar year:                            percentage is
            2008...................................................     92
            2009...................................................     94
            2010...................................................     96.
                        ``(C) Limitation.--Subparagraph (B) shall not apply
                    with respect to any plan year after 2008 unless the
                    funding target attainment percentage (determined
                    without regard to this paragraph) of the plan for each
                    preceding plan year after 2007 was not less than the
                    applicable percentage with respect to such preceding
                    plan year determined under subparagraph (B).
        ``(k) Special Rule for 2008.--For purposes of this section, in the
    case of plan years beginning in 2008, the funding target attainment
    percentage for the preceding plan year may be determined using such
    methods of estimation as the Secretary may provide.''.
                (2) Clerical amendment.--The table of parts for subchapter
            D of chapter 1 of the Internal Revenue Code of 1986 is amended
            by adding at the end the following new item:

      ``Part III--Rules Relating to Minimum Funding Standards and Benefit
                                 Limitations''.

        (b) Effective Date.--
                (1) In general.--The amendments made by this section shall
            apply to plan years beginning after December 31, 2007.
                (2) Collective bargaining exception.--In the case of a plan
            maintained pursuant to 1 or more collective bargaining
            agreements between employee representatives and 1 or more
            employers ratified before January 1, 2008, the amendments made
            by this section shall not apply to plan years beginning before
            the earlier of--
                        (A) the later of--
                                (i) the date on which the last collective
                            bargaining agreement relating to the plan
                            terminates (determined without regard to any
                            extension thereof agreed to after the date of
                            the enactment of this Act), or
                                (ii) the first day of the first plan year
                            to which the amendments made by this subsection
                            would (but for this subparagraph) apply, or
                        (B) January 1, 2010.
            For purposes of subparagraph (A)(i), any plan amendment made
            pursuant to a collective bargaining agreement relating to the
            plan which amends the plan solely to conform to any requirement
            added by this section shall not be treated as a termination of
            such collective bargaining agreement.

    SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS.

        (a) Amendments Related to Qualification Requirements.--
                (1) Section 401(a)(29) of the Internal Revenue Code of 1986
            is amended to read as follows:
                ``(29) Benefit limitations on plans in at-risk status.--In
            the case of a defined benefit plan (other than a multiemployer
            plan) to which the requirements of section 412 apply, the trust
            of which the plan is a part shall not constitute a qualified
            trust under this subsection unless the plan meets the
            requirements of section 436.''.
                (2) Section 401(a)(32) of such Code is amended--
                        (A) in subparagraph (A), by striking ``412(m)(5)''
                    each place it appears and inserting ``section
                    430(j)(4)'', and
                        (B) in subparagraph (C), by striking ``section
                    412(m)'' and inserting ``section 430(j)''.
                (3) Section 401(a)(33) of such Code is amended--
                        (A) in subparagraph (B)(i), by striking ``funded
                    current liability percentage (within the meaning of
                    section 412(l)(8))'' and inserting ``funding target
                    attainment percentage (as defined in section
                    430(d)(2))'',
                        (B) in subparagraph (B)(iii), by striking
                    ``subsection 412(c)(8)'' and inserting ``section
                    412(c)(2)'', and
                        (C) in subparagraph (D), by striking ``section
                    412(c)(11) (without regard to subparagraph (B)
                    thereof)'' and inserting ``section 412(b)(2) (without
                    regard to subparagraph (B) thereof)''.
        (b) Vesting Rules.--Section 411 of such Code is amended--
                (1) by striking ``section 412(c)(8)'' in subsection
            (a)(3)(C) and inserting ``section 412(c)(2)'',
                (2) in subsection (b)(1)(F)--
                        (A) by striking ``paragraphs (2) and (3) of section
                    412(i)'' in clause (ii) and inserting ``subparagraphs
                    (B) and (C) of section 412(e)(3)'', and
                        (B) by striking ``paragraphs (4), (5), and (6) of
                    section 412(i)'' and inserting ``subparagraphs (D),
                    (E), and (F) of section 412(e)(3)'', and
                (3) by striking ``section 412(c)(8)'' in subsection
            (d)(6)(A) and inserting ``section 412(e)(2)''.
        (c) Mergers and Consolidations of Plans.--Subclause (I) of section
    414(l)(2)(B)(i) of such Code is amended to read as follows:
                                        ``(I) the amount determined under
                                    section 431(c)(6)(A)(i) in the case of
                                    a multiemployer plan (and the sum of
                                    the funding shortfall and target normal
                                    cost determined under section 430 in
                                    the case of any other plan), over''.
        (d) Transfer of Excess Pension Assets to Retiree Health Accounts.--
                (1) Section 420(e)(2) of such Code is amended to read as
            follows:
                ``(2) Excess pension assets.--The term `excess pension
            assets' means the excess (if any) of--
                        ``(A) the lesser of--
                                ``(i) the fair market value of the plan's
                            assets (reduced by the prefunding balance and
                            funding standard carryover balance determined
                            under section 430(f)), or
                                ``(ii) the value of plan assets as
                            determined under section 430(g)(3) after
                            reduction under section 430(f), over
                        ``(B) 125 percent of the sum of the funding
                    shortfall and the target normal cost determined under
                    section 430 for such plan year.''.
                (2) Section 420(e)(4) of such Code is amended to read as
            follows:
                ``(4) Coordination with section 430.--In the case of a
            qualified transfer, any assets so transferred shall not, for
            purposes of this section and section 430, be treated as assets
            in the plan.''.
        (e) Excise Taxes.--
                (1) In general.--Subsections (a) and (b) of section 4971 of
            such Code are amended to read as follows:
        ``(a) Initial Tax.--If at any time during any taxable year an
    employer maintains a plan to which section 412 applies, there is hereby
    imposed for the taxable year a tax equal to--
                ``(1) in the case of a single-employer plan, 10 percent of
            the aggregate unpaid minimum required contributions for all
            plan years remaining unpaid as of the end of any plan year
            ending with or within the taxable year, and
                ``(2) in the case of a multiemployer plan, 5 percent of the
            accumulated funding deficiency determined under section 431 as
            of the end of any plan year ending with or within the taxable
            year.
        ``(b) Additional Tax.--If--
                ``(1) a tax is imposed under subsection (a)(1) on any
            unpaid required minimum contribution and such amount remains
            unpaid as of the close of the taxable period, or
                ``(2) a tax is imposed under subsection (a)(2) on any
            accumulated funding deficiency and the accumulated funding
            deficiency is not corrected within the taxable period,
    there is hereby imposed a tax equal to 100 percent of the unpaid
    minimum required contribution or accumulated funding deficiency,
    whichever is applicable, to the extent not so paid or corrected.''.
                (2) Section 4971(c) of such Code is amended--
                        (A) by striking ``the last two sentences of section
                    412(a)'' in paragraph (1) and inserting ``section
                    431'', and
                        (B) by adding at the end the following new
                    paragraph:
                ``(4) Unpaid minimum required contribution.--
                        ``(A) In general.--The term `unpaid minimum
                    required contribution' means, with respect to any plan
                    year, any minimum required contribution under section
                    430 for the plan year which is not paid on or before
                    the due date (as determined under section 430(j)(1))
                    for the plan year.
                        ``(B) Ordering rule.--Any payment to or under a
                    plan for any plan year shall be allocated first to
                    unpaid minimum required contributions for all preceding
                    plan years on a first-in, first-out basis and then to
                    the minimum required contribution under section 430 for
                    the plan year.''.
                (3) Section 4971(e)(1) of such Code is amended by striking
            ``section 412(b)(3)(A)'' and inserting ``section
            412(a)(1)(A)''.
                (4) Section 4971(f)(1) of such Code is amended--
                        (A) by striking ``section 412(m)(5)'' and inserting
                    ``section 430(j)(4)'', and
                        (B) by striking ``section 412(m)'' and inserting
                    ``section 430(j)''.
                (5) Section 4972(c)(7) of such Code is amended by striking
            ``except to the extent that such contributions exceed the full-
            funding limitation (as defined in section 412(c)(7), determined
            without regard to subparagraph (A)(i)(I) thereof)'' and
            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.''.

    SEC. 115. MODIFICATION OF TRANSITION RULE TO PENSION FUNDING
                  REQUIREMENTS.

        (a) In General.--In the case of a plan that--
                (1) was not required to pay a variable rate premium for the
            plan year beginning in 1996,
                (2) has not, in any plan year beginning after 1995, merged
            with another plan (other than a plan sponsored by an employer
            that was in 1996 within the controlled group of the plan
            sponsor); and
                (3) is sponsored by a company that is engaged primarily in
            the interurban or interstate passenger bus service,
    the rules described in subsection (b) shall apply for any plan year
    beginning after December 31, 2007.
        (b) Modified Rules.--The rules described in this subsection are as
    follows:
                (1) For purposes of section 430(j)(3) of the Internal
            Revenue Code of 1986 and section 303(j)(3) of the Employee
            Retirement Income Security Act of 1974, the plan shall be
            treated as not having a funding shortfall for any plan year.
                (2) For purposes of--
                        (A) determining unfunded vested benefits under
                    section 4006(a)(3)(E)(iii) of such Act, and
                        (B) determining any present value or making any
                    computation under section 412 of such Code or section
                    302 of such Act,
            the mortality table shall be the mortality table used by the
            plan.
                (3) Section 430(c)(5)(B) of such Code and section
            303(c)(5)(B) of such Act (relating to phase-in of funding
            target for exemption from new shortfall amortization base)
            shall each be applied by substituting ``2012'' for ``2011''
            therein and by substituting for the table therein the
            following:

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

    2008......................................................    90 percent
    2009......................................................    92 percent
    2010......................................................    94 percent
    2011......................................................   96 percent.

        (c) Definitions.--Any term used in this section which is also used
    in section 430 of such Code or section 303 of such Act shall have the
    meaning provided such term in such section. If the same term has a
    different meaning in such Code and such Act, such term shall, for
    purposes of this section, have the meaning provided by such Code when
    applied with respect to such Code and the meaning provided by such Act
    when applied with respect to such Act.
        (d) Special Rule for 2006 and 2007.--
                (1) In general.--Section 769(c)(3) of the Retirement
            Protection Act of 1994, as added by section 201 of the Pension
            Funding Equity Act of 2004, is amended by striking ``and 2005''
            and inserting ``, 2005, 2006, and 2007''.
                (2) Effective date.--The amendment made by paragraph (1)
            shall apply to plan years beginning after December 31, 2005.
        (e) Conforming Amendment.--
                (1) Section 769 of the Retirement Protection Act of 1994 is
            amended by striking subsection (c).
                (2) The amendment made by paragraph (1) shall take effect
            on December 31, 2007, and shall apply to plan years beginning
            after such date.

    SEC. 116. RESTRICTIONS ON FUNDING OF NONQUALIFIED DEFERRED COMPENSATION
                  PLANS BY EMPLOYERS MAINTAINING UNDERFUNDED OR TERMINATED
                  SINGLE-EMPLOYER PLANS.

        (a) Amendments of Internal Revenue Code.--Subsection (b) of section
    409A of the Internal Revenue Code of 1986 (providing rules relating to
    funding) is amended by redesignating paragraphs (3) and (4) as
    paragraphs (4) and (5), respectively, and by inserting after paragraph
    (2) the following new paragraph:
                ``(3) Treatment of employer's defined benefit plan during
            restricted period.--
                        ``(A) In general.--If-
                                ``(i) during any restricted period with
                            respect to a single-employer defined benefit
                            plan, assets are set aside or reserved
                            (directly or indirectly) in a trust (or other
                            arrangement as determined by the Secretary) or
                            transferred to such a trust or other
                            arrangement for purposes of paying deferred
                            compensation of an applicable covered employee
                            under a nonqualified deferred compensation plan
                            of the plan sponsor or member of a controlled
                            group which includes the plan sponsor, or
                                ``(ii) a nonqualified deferred compensation
                            plan of the plan sponsor or member of a
                            controlled group which includes the plan
                            sponsor provides that assets will become
                            restricted to the provision of benefits under
                            the plan in connection with such restricted
                            period (or other similar financial measure
                            determined by the Secretary) with respect to
                            the defined benefit plan, or assets are so
                            restricted,
                    such assets shall, for purposes of section 83, be
                    treated as property transferred in connection with the
                    performance of services whether or not such assets are
                    available to satisfy claims of general creditors.
                    Clause (i) shall not apply with respect to any assets
                    which are so set aside before the restricted period
                    with respect to the defined benefit plan.
                        ``(B) Restricted period.--For purposes of this
                    section, the term `restricted period' means, with
                    respect to any plan described in subparagraph (A)--
                                ``(i) any period during which the plan is
                            in at-risk status (as defined in section
                            430(i));
                                ``(ii) any period the plan sponsor is a
                            debtor in a case under title 11, United States
                            Code, or similar Federal or State law, and
                                ``(iii) the 12-month period beginning on
                            the date which is 6 months before the
                            termination date of the plan if, as of the
                            termination date, the plan is not sufficient
                            for benefit liabilities (within the meaning of
                            section 4041 of the Employee Retirement Income
                            Security Act of 1974).
                        ``(C) Special rule for payment of taxes on deferred
                    compensation included in income.--If an employer
                    provides directly or indirectly for the payment of any
                    Federal, State, or local income taxes with respect to
                    any compensation required to be included in gross
                    income by reason of this paragraph--
                                ``(i) interest shall be imposed under
                            subsection (a)(1)(B)(i)(I) on the amount of
                            such payment in the same manner as if such
                            payment was part of the deferred compensation
                            to which it relates,
                                ``(ii) such payment shall be taken into
                            account in determining the amount of the
                            additional tax under subsection
                            (a)(1)(B)(i)(II) in the same manner as if such
                            payment was part of the deferred compensation
                            to which it relates, and
                                ``(iii) no deduction shall be allowed under
                            this title with respect to such payment.
                        ``(D) Other definitions.--For purposes of this
                    section--
                                ``(i) Applicable covered employee.--The
                            term `applicable covered employee' means any--
                                        ``(I) covered employee of a plan
                                    sponsor,
                                        ``(II) covered employee of a member
                                    of a controlled group which includes
                                    the plan sponsor, and
                                        ``(III) former employee who was a
                                    covered employee at the time of
                                    termination of employment with the plan
                                    sponsor or a member of a controlled
                                    group which includes the plan sponsor.
                                ``(ii) Covered employee.--The term `covered
                            employee' means an individual described in
                            section 162(m)(3) or an individual subject to
                            the requirements of section 16(a) of the
                            Securities Exchange Act of 1934.''.
        (b) Conforming Amendments.--Paragraphs (4) and (5) of section
    409A(b) of such Code, as redesignated by subsection (a) of this
    subsection, are each amended by striking ``paragraph (1) or (2)'' each
    place it appears and inserting ``paragraph (1), (2), or (3)''.
        (c) Effective Date.--The amendments made by this section shall
    apply to transfers or other reservation of assets after the date of the
    enactment of this Act.

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

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

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

        (a) In General.--Part 3 of subtitle B of title I of the Employee
    Retirement Income Security Act of 1974 (as amended by this Act) is
    amended by inserting after section 303 the following new section:

              ``minimum funding standards for multiemployer plans

        ``Sec. 304.  (a) In General.--For purposes of section 302, the
    accumulated funding deficiency of a multiemployer plan for any plan
    year is--
                ``(1) except as provided in paragraph (2), the amount,
            determined as of the end of the plan year, equal to the excess
            (if any) of the total charges to the funding standard account
            of the plan for all plan years (beginning with the first plan
            year for which this part applies to the plan) over the total
            credits to such account for such years, and
                ``(2) if the multiemployer plan is in reorganization for
            any plan year, the accumulated funding deficiency of the plan
            determined under section 4243.
        ``(b) Funding Standard Account.--
                ``(1) Account required.--Each multiemployer plan to which
            this part applies shall establish and maintain a funding
            standard account. Such account shall be credited and charged
            solely as provided in this section.
                ``(2) Charges to account.--For a plan year, the funding
            standard account shall be charged with the sum of--
                        ``(A) the normal cost of the plan for the plan
                    year,
                        ``(B) the amounts necessary to amortize in equal
                    annual installments (until fully amortized)--
                                ``(i) in the case of a plan which comes
                            into existence on or after January 1, 2008, the
                            unfunded past service liability under the plan
                            on the first day of the first plan year to
                            which this section applies, over a period of 15
                            plan years,
                                ``(ii) separately, with respect to each
                            plan year, the net increase (if any) in
                            unfunded past service liability under the plan
                            arising from plan amendments adopted in such
                            year, over a period of 15 plan years,
                                ``(iii) separately, with respect to each
                            plan year, the net experience loss (if any)
                            under the plan, over a period of 15 plan years,
                            and
                                ``(iv) separately, with respect to each
                            plan year, the net loss (if any) resulting from
                            changes in actuarial assumptions used under the
                            plan, over a period of 15 plan years,
                        ``(C) the amount necessary to amortize each waived
                    funding deficiency (within the meaning of section
                    302(c)(3)) for each prior plan year in equal annual
                    installments (until fully amortized) over a period of
                    15 plan years,
                        ``(D) the amount necessary to amortize in equal
                    annual installments (until fully amortized) over a
                    period of 5 plan years any amount credited to the
                    funding standard account under section 302(b)(3)(D) (as
                    in effect on the day before the date of the enactment
                    of the Pension Protection Act of 2006), and
                        ``(E) the amount necessary to amortize in equal
                    annual installments (until fully amortized) over a
                    period of 20 years the contributions which would be
                    required to be made under the plan but for the
                    provisions of section 302(c)(7)(A)(i)(I) (as in effect
                    on the day before the date of the enactment of the
                    Pension Protection Act of 2006).
                ``(3) Credits to account.--For a plan year, the funding
            standard account shall be credited with the sum of--
                        ``(A) the amount considered contributed by the
                    employer to or under the plan for the plan year,
                        ``(B) the amount necessary to amortize in equal
                    annual installments (until fully amortized)--
                                ``(i) separately, with respect to each plan
                            year, the net decrease (if any) in unfunded
                            past service liability under the plan arising
                            from plan amendments adopted in such year, over
                            a period of 15 plan years,
                                ``(ii) separately, with respect to each
                            plan year, the net experience gain (if any)
                            under the plan, over a period of 15 plan years,
                            and
                                ``(iii) separately, with respect to each
                            plan year, the net gain (if any) resulting from
                            changes in actuarial assumptions used under the
                            plan, over a period of 15 plan years,
                        ``(C) the amount of the waived funding deficiency
                    (within the meaning of section 302(c)(3)) for the plan
                    year, and
                        ``(D) in the case of a plan year for which the
                    accumulated funding deficiency is determined under the
                    funding standard account if such plan year follows a
                    plan year for which such deficiency was determined
                    under the alternative minimum funding standard under
                    section 305 (as in effect on the day before the date of
                    the enactment of the Pension Protection Act of 2006),
                    the excess (if any) of any debit balance in the funding
                    standard account (determined without regard to this
                    subparagraph) over any debit balance in the alternative
                    minimum funding standard account.
                ``(4) Special rule for amounts first amortized in plan
            years before 2008.--In the case of any amount amortized under
            section 302(b) (as in effect on the day before the date of the
            enactment of the Pension Protection Act of 2006) over any
            period beginning with a plan year beginning before 2008, in
            lieu of the amortization described in paragraphs (2)(B) and
            (3)(B), such amount shall continue to be amortized under such
            section as so in effect.
                ``(5) Combining and offsetting amounts to be amortized.--
            Under regulations prescribed by the Secretary of the Treasury,
            amounts required to be amortized under paragraph (2) or
            paragraph (3), as the case may be--
                        ``(A) may be combined into one amount under such
                    paragraph to be amortized over a period determined on
                    the basis of the remaining amortization period for all
                    items entering into such combined amount, and
                        ``(B) may be offset against amounts required to be
                    amortized under the other such paragraph, with the
                    resulting amount to be amortized over a period
                    determined on the basis of the remaining amortization
                    periods for all items entering into whichever of the
                    two amounts being offset is the greater.
                ``(6) Interest.--The funding standard account (and items
            therein) shall be charged or credited (as determined under
            regulations prescribed by the Secretary of the Treasury) with
            interest at the appropriate rate consistent with the rate or
            rates of interest used under the plan to determine costs.
                ``(7) Special rules relating to charges and credits to
            funding standard account.--For purposes of this part--
                        ``(A) Withdrawal liability.--Any amount received by
                    a multiemployer plan in payment of all or part of an
                    employer's withdrawal liability under part 1 of
                    subtitle E of title IV shall be considered an amount
                    contributed by the employer to or under the plan. The
                    Secretary of the Treasury may prescribe by regulation
                    additional charges and credits to a multiemployer
                    plan's funding standard account to the extent necessary
                    to prevent withdrawal liability payments from being
                    unduly reflected as advance funding for plan
                    liabilities.
                        ``(B) Adjustments when a multiemployer plan leaves
                    reorganization.--If a multiemployer plan is not in
                    reorganization in the plan year but was in
                    reorganization in the immediately preceding plan year,
                    any balance in the funding standard account at the
                    close of such immediately preceding plan year--
                                ``(i) shall be eliminated by an offsetting
                            credit or charge (as the case may be), but
                                ``(ii) shall be taken into account in
                            subsequent plan years by being amortized in
                            equal annual installments (until fully
                            amortized) over 30 plan years.
                    The preceding sentence shall not apply to the extent of
                    any accumulated funding deficiency under section
                    4243(a) as of the end of the last plan year that the
                    plan was in reorganization.
                        ``(C) Plan payments to supplemental program or
                    withdrawal liability payment fund.--Any amount paid by
                    a plan during a plan year to the Pension Benefit
                    Guaranty Corporation pursuant to section 4222 of this
                    Act or to a fund exempt under section 501(c)(22) of the
                    Internal Revenue Code of 1986 pursuant to section 4223
                    of this Act shall reduce the amount of contributions
                    considered received by the plan for the plan year.
                        ``(D) Interim withdrawal liability payments.--Any
                    amount paid by an employer pending a final
                    determination of the employer's withdrawal liability
                    under part 1 of subtitle E of title IV and subsequently
                    refunded to the employer by the plan shall be charged
                    to the funding standard account in accordance with
                    regulations prescribed by the Secretary of the
                    Treasury.
                        ``(E) Election for deferral of charge for portion
                    of net experience loss.--If an election is in effect
                    under section 302(b)(7)(F) (as in effect on the day
                    before the date of the enactment of the Pension
                    Protection Act of 2006) for any plan year, the funding
                    standard account shall be charged in the plan year to
                    which the portion of the net experience loss deferred
                    by such election was deferred with the amount so
                    deferred (and paragraph (2)(B)(iii) shall not apply to
                    the amount so charged).
                        ``(F) Financial assistance.--Any amount of any
                    financial assistance from the Pension Benefit Guaranty
                    Corporation to any plan, and any repayment of such
                    amount, shall be taken into account under this section
                    and section 302 in such manner as is determined by the
                    Secretary of the Treasury.
                        ``(G) Short-term benefits.--To the extent that any
                    plan amendment increases the unfunded past service
                    liability under the plan by reason of an increase in
                    benefits which are not payable as a life annuity but
                    are payable under the terms of the plan for a period
                    that does not exceed 14 years from the effective date
                    of the amendment, paragraph (2)(B)(ii) shall be applied
                    separately with respect to such increase in unfunded
                    past service liability by substituting the number of
                    years of the period during which such benefits are
                    payable for `15'.
        ``(c) Additional Rules.--
                ``(1) Determinations to be made under funding method.--For
            purposes of this part, normal costs, accrued liability, past
            service liabilities, and experience gains and losses shall be
            determined under the funding method used to determine costs
            under the plan.
                ``(2) Valuation of assets.--
                        ``(A) In general.--For purposes of this part, the
                    value of the plan's assets shall be determined on the
                    basis of any reasonable actuarial method of valuation
                    which takes into account fair market value and which is
                    permitted under regulations prescribed by the Secretary
                    of the Treasury.
                        ``(B) Election with respect to bonds.--The value of
                    a bond or other evidence of indebtedness which is not
                    in default as to principal or interest may, at the
                    election of the plan administrator, be determined on an
                    amortized basis running from initial cost at purchase
                    to par value at maturity or earliest call date. Any
                    election under this subparagraph shall be made at such
                    time and in such manner as the Secretary of the
                    Treasury shall by regulations provide, shall apply to
                    all such evidences of indebtedness, and may be revoked
                    only with the consent of such Secretary.
                ``(3) Actuarial assumptions must be reasonable.--For
            purposes of this section, all costs, liabilities, rates of
            interest, and other factors under the plan shall be determined
            on the basis of actuarial assumptions and methods--
                        ``(A) each of which is reasonable (taking into
                    account the experience of the plan and reasonable
                    expectations), and
                        ``(B) which, in combination, offer the actuary's
                    best estimate of anticipated experience under the plan.
                ``(4) Treatment of certain changes as experience gain or
            loss.--For purposes of this section, if--
                        ``(A) a change in benefits under the Social
                    Security Act or in other retirement benefits created
                    under Federal or State law, or
                        ``(B) a change in the definition of the term
                    `wages' under section 3121 of the Internal Revenue Code
                    of 1986, or a change in the amount of such wages taken
                    into account under regulations prescribed for purposes
                    of section 401(a)(5) of such Code,
            results in an increase or decrease in accrued liability under a
            plan, such increase or decrease shall be treated as an
            experience loss or gain.
                ``(5) Full funding.--If, as of the close of a plan year, a
            plan would (without regard to this paragraph) have an
            accumulated funding deficiency in excess of the full funding
            limitation--
                        ``(A) the funding standard account shall be
                    credited with the amount of such excess, and
                        ``(B) all amounts described in subparagraphs (B),
                    (C), and (D) of subsection (b) (2) and subparagraph (B)
                    of subsection (b)(3) which are required to be amortized
                    shall be considered fully amortized for purposes of
                    such subparagraphs.
                ``(6) Full-funding limitation.--
                        ``(A) In general.--For purposes of paragraph (5),
                    the term `full-funding limitation' means the excess (if
                    any) of--
                                ``(i) the accrued liability (including
                            normal cost) under the plan (determined under
                            the entry age normal funding method if such
                            accrued liability cannot be directly calculated
                            under the funding method used for the plan),
                            over
                                ``(ii) the lesser of--
                                        ``(I) the fair market value of the
                                    plan's assets, or
                                        ``(II) the value of such assets
                                    determined under paragraph (2).
                        ``(B) Minimum amount.--
                                ``(i) In general.--In no event shall the
                            full-funding limitation determined under
                            subparagraph (A) be less than the excess (if
                            any) of--
                                        ``(I) 90 percent of the current
                                    liability of the plan (including the
                                    expected increase in current liability
                                    due to benefits accruing during the
                                    plan year), over
                                        ``(II) the value of the plan's
                                    assets determined under paragraph (2).
                                ``(ii) Assets.--For purposes of clause (i),
                            assets shall not be reduced by any credit
                            balance in the funding standard account.
                        ``(C) Full funding limitation.--For purposes of
                    this paragraph, unless otherwise provided by the plan,
                    the accrued liability under a multiemployer plan shall
                    not include benefits which are not nonforfeitable under
                    the plan after the termination of the plan (taking into
                    consideration section 411(d)(3) of the Internal Revenue
                    Code of 1986).
                        ``(D) Current liability.--For purposes of this
                    paragraph--
                                ``(i) In general.--The term `current
                            liability' means all liabilities to employees
                            and their beneficiaries under the plan.
                                ``(ii) Treatment of unpredictable
                            contingent event benefits.--For purposes of
                            clause (i), any benefit contingent on an event
                            other than--
                                        ``(I) age, service, compensation,
                                    death, or disability, or
                                        ``(II) an event which is reasonably
                                    and reliably predictable (as determined
                                    by the Secretary of the Treasury),
                            shall not be taken into account until the event
                            on which the benefit is contingent occurs.
                                ``(iii) Interest rate used.--The rate of
                            interest used to determine current liability
                            under this paragraph shall be the rate of
                            interest determined under subparagraph (E).
                                ``(iv) Mortality tables.--
                                        ``(I) Commissioners' standard
                                    table.--In the case of plan years
                                    beginning before the first plan year to
                                    which the first tables prescribed under
                                    subclause (II) apply, the mortality
                                    table used in determining current
                                    liability under this paragraph shall be
                                    the table prescribed by the Secretary
                                    of the Treasury which is based on the
                                    prevailing commissioners' standard
                                    table (described in section
                                    807(d)(5)(A) of the Internal Revenue
                                    Code of 1986) used to determine
                                    reserves for group annuity contracts
                                    issued on January 1, 1993.
                                        ``(II) Secretarial authority.--The
                                    Secretary of the Treasury may by
                                    regulation prescribe for plan years
                                    beginning after December 31, 1999,
                                    mortality tables to be used in
                                    determining current liability under
                                    this subsection. Such tables shall be
                                    based upon the actual experience of
                                    pension plans and projected trends in
                                    such experience. In prescribing such
                                    tables, such Secretary shall take into
                                    account results of available
                                    independent studies of mortality of
                                    individuals covered by pension plans.
                                ``(v) Separate mortality tables for the
                            disabled.--Notwithstanding clause (iv)--
                                        ``(I) In general.--The Secretary of
                                    the Treasury shall establish mortality
                                    tables which may be used (in lieu of
                                    the tables under clause (iv)) to
                                    determine current liability under this
                                    subsection for individuals who are
                                    entitled to benefits under the plan on
                                    account of disability. Such Secretary
                                    shall establish separate tables for
                                    individuals whose disabilities occur in
                                    plan years beginning before January 1,
                                    1995, and for individuals whose
                                    disabilities occur in plan years
                                    beginning on or after such date.
                                        ``(II) Special rule for
                                    disabilities occurring after 1994.--In
                                    the case of disabilities occurring in
                                    plan years beginning after December 31,
                                    1994, the tables under subclause (I)
                                    shall apply only with respect to
                                    individuals described in such subclause
                                    who are disabled within the meaning of
                                    title II of the Social Security Act and
                                    the regulations thereunder.
                                ``(vi) Periodic review.--The Secretary of
                            the Treasury shall periodically (at least every
                            5 years) review any tables in effect under this
                            subparagraph and shall, to the extent such
                            Secretary determines necessary, by regulation
                            update the tables to reflect the actual
                            experience of pension plans and projected
                            trends in such experience.
                        ``(E) Required change of interest rate.--For
                    purposes of determining a plan's current liability for
                    purposes of this paragraph--
                                ``(i) In general.--If any rate of interest
                            used under the plan under subsection (b)(6) to
                            determine cost is not within the permissible
                            range, the plan shall establish a new rate of
                            interest within the permissible range.
                                ``(ii) Permissible range.--For purposes of
                            this subparagraph--
                                        ``(I) In general.--Except as
                                    provided in subclause (II), the term
                                    `permissible range' means a rate of
                                    interest which is not more than 5
                                    percent above, and not more than 10
                                    percent below, the weighted average of
                                    the rates of interest on 30-year
                                    Treasury securities during the 4-year
                                    period ending on the last day before
                                    the beginning of the plan year.
                                        ``(II) Secretarial authority.--If
                                    the Secretary of the Treasury finds
                                    that the lowest rate of interest
                                    permissible under subclause (I) is
                                    unreasonably high, such Secretary may
                                    prescribe a lower rate of interest,
                                    except that such rate may not be less
                                    than 80 percent of the average rate
                                    determined under such subclause.
                                ``(iii) Assumptions.--Notwithstanding
                            paragraph (3)(A), the interest rate used under
                            the plan shall be--
                                        ``(I) determined without taking
                                    into account the experience of the plan
                                    and reasonable expectations, but
                                        ``(II) consistent with the
                                    assumptions which reflect the purchase
                                    rates which would be used by insurance
                                    companies to satisfy the liabilities
                                    under the plan.
                ``(7) Annual valuation.--
                        ``(A) In general.--For purposes of this section, a
                    determination of experience gains and losses and a
                    valuation of the plan's liability shall be made not
                    less frequently than once every year, except that such
                    determination shall be made more frequently to the
                    extent 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.
        ``(d) Extension of Amortization Periods for Multiemployer Plans.--
                ``(1) Automatic extension upon application by certain
            plans.--
                        ``(A) In general.--If the plan sponsor of a
                    multiemployer plan--
                                ``(i) submits to the Secretary of the
                            Treasury an application for an extension of the
                            period of years required to amortize any
                            unfunded liability described in any clause of
                            subsection (b)(2)(B) or described in subsection
                            (b)(4), and
                                ``(ii) includes with the application a
                            certification by the plan's actuary described
                            in subparagraph (B),
                    the Secretary of the Treasury shall extend the
                    amortization period for the period of time (not in
                    excess of 5 years) specified in the application. Such
                    extension shall be in addition to any extension under
                    paragraph (2).
                        ``(B) Criteria.--A certification with respect to a
                    multiemployer plan is described in this subparagraph if
                    the plan's actuary certifies that, based on reasonable
                    assumptions--
                                ``(i) absent the extension under
                            subparagraph (A), the plan would have an
                            accumulated funding deficiency in the current
                            plan year or any of the 9 succeeding plan
                            years,
                                ``(ii) the plan sponsor has adopted a plan
                            to improve the plan's funding status,
                                ``(iii) the plan is projected to have
                            sufficient assets to timely pay expected
                            benefits and anticipated expenditures over the
                            amortization period as extended, and
                                ``(iv) the notice required under paragraph
                            (3)(A) has been provided.
                        ``(C) Termination.--The preceding provisions of
                    this paragraph shall not apply with respect to any
                    application submitted after December 31, 2014.
                ``(2) Alternative extension.--
                        ``(A) In general.--If the plan sponsor of a
                    multiemployer plan submits to the Secretary of the
                    Treasury an application for an extension of the period
                    of years required to amortize any unfunded liability
                    described in any clause of subsection (b)(2)(B) or
                    described in subsection (b)(4), the Secretary of the
                    Treasury may extend the amortization period for a
                    period of time (not in excess of 10 years reduced by
                    the number of years of any extension under paragraph
                    (1) with respect to such unfunded liability) if the
                    Secretary of the Treasury makes the determination
                    described in subparagraph (B). Such extension shall be
                    in addition to any extension under paragraph (1).
                        ``(B) Determination.--The Secretary of the Treasury
                    may grant an extension under subparagraph (A) if such
                    Secretary determines that--
                                ``(i) such extension would carry out the
                            purposes of this Act and would provide adequate
                            protection for participants under the plan and
                            their beneficiaries, and
                                ``(ii) the failure to permit such extension
                            would--
                                        ``(I) result in a substantial risk
                                    to the voluntary continuation of the
                                    plan, or a substantial curtailment of
                                    pension benefit levels or employee
                                    compensation, and
                                        ``(II) be adverse to the interests
                                    of plan participants in the aggregate.
                        ``(C) Action by secretary of the treasury.--The
                    Secretary of the Treasury shall act upon any
                    application for an extension under this paragraph
                    within 180 days of the submission of such application.
                    If such Secretary rejects the application for an
                    extension under this paragraph, such Secretary shall
                    provide notice to the plan detailing the specific
                    reasons for the rejection, including references to the
                    criteria set forth above.
                ``(3) Advance notice.--
                        ``(A) In general.--The Secretary of the Treasury
                    shall, before granting an extension under this
                    subsection, require each applicant to provide evidence
                    satisfactory to such Secretary that the applicant has
                    provided notice of the filing of the application for
                    such extension to each affected party (as defined in
                    section 4001(a)(21)) with respect to the affected plan.
                    Such notice shall include a description of the extent
                    to which the plan is funded for benefits which are
                    guaranteed under title IV and for benefit liabilities.
                        ``(B) Consideration of relevant information.--The
                    Secretary of the Treasury shall consider any relevant
                    information provided by a person to whom notice was
                    given under paragraph (1).''.
        (b) Shortfall Funding Method.--
                (1) In general.--A multiemployer plan meeting the criteria
            of paragraph (2) may adopt, use, or cease using, the shortfall
            funding method and such adoption, use, or cessation of use of
            such method, shall be deemed approved by the Secretary of the
            Treasury under section 302(d)(1) of the Employee Retirement
            Income Security Act of 1974 and section 412(d)(1) of the
            Internal Revenue Code of 1986.
                (2) Criteria.--A multiemployer pension plan meets the
            criteria of this clause if--
                        (A) the plan has not used the shortfall funding
                    method during the 5-year period ending on the day
                    before the date the plan is to use the method under
                    paragraph (1); and
                        (B) the plan is not operating under an amortization
                    period extension under section 304(d) of such Act and
                    did not operate under such an extension during such 5-
                    year period.
                (3) Shortfall funding method defined.--For purposes of this
            subsection, the term ``shortfall funding method'' means the
            shortfall funding method described in Treasury Regulations
            section 1.412(c)(1)-2 (26 C.F.R. 1.412(c)(1)-2).
                (4) Benefit restrictions to apply.--The benefit
            restrictions under section 302(c)(7) of such Act and section
            412(c)(7) of such Code shall apply during any period a
            multiemployer plan is on the shortfall funding method pursuant
            to this subsection.
                (5) Use of shortfall method not to preclude other
            options.--Nothing in this subsection shall be construed to
            affect a multiemployer plan's ability to adopt the shortfall
            funding method with the Secretary's permission under otherwise
            applicable regulations or to affect a multiemployer plan's
            right to change funding methods, with or without the
            Secretary's consent, as provided in applicable rules and
            regulations.
        (c) 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 this Act) is amended by inserting after the item
            relating to section 303 the following new item:

    ``Sec. 304. Minimum funding standards for multiemployer plans.''.
        (d) Effective Date.--
                (1) In general.--The amendments made by this section shall
            apply to plan years beginning after 2007.
                (2) Special rule for certain amortization extensions.--If
            the Secretary of the Treasury grants an extension under section
            304 of the Employee Retirement Income Security Act of 1974 and
            section 412(e) of the Internal Revenue Code of 1986 with
            respect to any application filed with the Secretary of the
            Treasury on or before June 30, 2005, the extension (and any
            modification thereof) shall be applied and administered under
            the rules of such sections as in effect before the enactment of
            this Act, including the use of the rate of interest determined
            under section 6621(b) of such Code.

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

        (a) In General.--Part 3 of subtitle B of title I of the Employee
    Retirement Income Security Act of 1974 (as amended by the preceding
    provisions of this Act) is amended by inserting after section 304 the
    following new section:

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

        ``Sec. 305.  (a) General Rule.--For purposes of this part, in the
    case of a multiemployer plan in effect on July 16, 2006--
                ``(1) if the plan is in endangered status--
                        ``(A) the plan sponsor shall adopt and implement a
                    funding improvement plan in accordance with the
                    requirements of subsection (c), and
                        ``(B) the requirements of subsection (d) shall
                    apply during the funding plan adoption period and the
                    funding improvement period, and
                ``(2) if the plan is in critical status--
                        ``(A) the plan sponsor shall adopt and implement a
                    rehabilitation plan in accordance with the requirements
                    of subsection (e), and
                        ``(B) the requirements of subsection (f) shall
                    apply during the rehabilitation plan adoption period
                    and the rehabilitation period.
        ``(b) Determination of Endangered and Critical Status.--For
    purposes of this section--
                ``(1) Endangered status.--A multiemployer plan is in
            endangered status for a plan year if, as determined by the plan
            actuary under paragraph (3), the plan is not in critical status
            for the plan year and, as of the beginning of the plan year,
            either--
                        ``(A) the plan's funded percentage for such plan
                    year is less than 80 percent, or
                        ``(B) the plan has an accumulated funding
                    deficiency for such plan year, or is projected to have
                    such an accumulated funding deficiency for any of the 6
                    succeeding plan years, taking into account any
                    extension of amortization periods under section 304(d).
            For purposes of this section, a plan shall be treated as in
            seriously endangered status for a plan year if the plan is
            described in both subparagraphs (A) and (B).
                ``(2) Critical status.--A multiemployer plan is in critical
            status for a plan year if, as determined by the plan actuary
            under paragraph (3), the plan is described in 1 or more of the
            following subparagraphs as of the beginning of the plan year:
                        ``(A) A plan is described in this subparagraph if--
                                ``(i) the funded percentage of the plan is
                            less than 65 percent, and
                                ``(ii) the sum of--
                                        ``(I) the fair market value of plan
                                    assets, plus
                                        ``(II) the present value of the
                                    reasonably anticipated employer
                                    contributions for the current plan year
                                    and each of the 6 succeeding plan
                                    years, assuming that the terms of all
                                    collective bargaining agreements
                                    pursuant to which the plan is
                                    maintained for the current plan year
                                    continue in effect for succeeding plan
                                    years,
                            is less than the present value of all
                            nonforfeitable benefits projected to be payable
                            under the plan during the current plan year and
                            each of the 6 succeeding plan years (plus
                            administrative expenses for such plan years).
                        ``(B) A plan is described in this subparagraph if--
                                ``(i) the plan has an accumulated funding
                            deficiency for the current plan year, not
                            taking into account any extension of
                            amortization periods under section 304(d), or
                                ``(ii) the plan is projected to have an
                            accumulated funding deficiency for any of the 3
                            succeeding plan years (4 succeeding plan years
                            if the funded percentage of the plan is 65
                            percent or less), not taking into account any
                            extension of amortization periods under section
                            304(d).
                        ``(C) A plan is described in this subparagraph if--
                                ``(i)(I) the plan's normal cost for the
                            current plan year, plus interest (determined at
                            the rate used for determining costs under the
                            plan) for the current plan year on the amount
                            of unfunded benefit liabilities under the plan
                            as of the last date of the preceding plan year,
                            exceeds
                                ``(II) the present value of the reasonably
                            anticipated employer and employee contributions
                            for the current plan year,
                                ``(ii) the present value, as of the
                            beginning of the current plan year, of
                            nonforfeitable benefits of inactive
                            participants is greater than the present value
                            of nonforfeitable benefits of active
                            participants, and
                                ``(iii) the plan has an accumulated funding
                            deficiency for the current plan year, or is
                            projected to have such a deficiency for any of
                            the 4 succeeding plan years, not taking into
                            account any extension of amortization periods
                            under section 304(d).
                        ``(D) A plan is described in this subparagraph if
                    the sum of--
                                ``(i) the fair market value of plan assets,
                            plus
                                ``(ii) the present value of the reasonably
                            anticipated employer contributions for the
                            current plan year and each of the 4 succeeding
                            plan years, assuming that the terms of all
                            collective bargaining agreements pursuant to
                            which the plan is maintained for the current
                            plan year continue in effect for succeeding
                            plan years,
                    is less than the present value of all benefits
                    projected to be payable under the plan during the
                    current plan year and each of the 4 succeeding plan
                    years (plus administrative expenses for such plan
                    years).
                ``(3) Annual certification by plan actuary.--
                        ``(A) In general.--Not later than the 90th day of
                    each plan year of a multiemployer plan, the plan
                    actuary shall certify to the Secretary of the Treasury
                    and to the plan sponsor--
                                ``(i) whether or not the plan is in
                            endangered status for such plan year and
                            whether or not the plan is or will be in
                            critical status for such plan year, and
                                ``(ii) in the case of a plan which is in a
                            funding improvement or rehabilitation period,
                            whether or not the plan is making the scheduled
                            progress in meeting the requirements of its
                            funding improvement or rehabilitation plan.
                        ``(B) Actuarial projections of assets and
                    liabilities.--
                                ``(i) In general.--In making the
                            determinations and projections under this
                            subsection, the plan actuary shall make
                            projections required for the current and
                            succeeding plan years of the current value of
                            the assets of the plan and the present value of
                            all liabilities to participants and
                            beneficiaries under the plan for the current
                            plan year as of the beginning of such year. The
                            actuary's projections shall be based on
                            reasonable actuarial estimates, assumptions,
                            and methods that, except as provided in clause
                            (iii), offer the actuary's best estimate of
                            anticipated experience under the plan. The
                            projected present value of liabilities as of
                            the beginning of such year shall be determined
                            based on the most recent of either--
                                        ``(I) the actuarial statement
                                    required under section 103(d) with
                                    respect to the most recently filed
                                    annual report, or
                                        ``(II) the actuarial valuation for
                                    the preceding plan year.
                                ``(ii) Determinations of future
                            contributions.--Any actuarial projection of
                            plan assets shall assume--
                                        ``(I) reasonably anticipated
                                    employer contributions for the current
                                    and succeeding plan years, assuming
                                    that the terms of the one or more
                                    collective bargaining agreements
                                    pursuant to which the plan is
                                    maintained for the current plan year
                                    continue in effect for succeeding plan
                                    years, or
                                        ``(II) that employer contributions
                                    for the most recent plan year will
                                    continue indefinitely, but only if the
                                    plan actuary determines there have been
                                    no significant demographic changes that
                                    would make such assumption
                                    unreasonable.
                                ``(iii) Projected industry activity.--Any
                            projection of activity in the industry or
                            industries covered by the plan, including
                            future covered employment and contribution
                            levels, shall be based on information provided
                            by the plan sponsor, which shall act reasonably
                            and in good faith.
                        ``(C) Penalty for failure to secure timely
                    actuarial certification.--Any failure of the plan's
                    actuary to certify the plan's status under this
                    subsection by the date specified in subparagraph (A)
                    shall be treated for purposes of section 502(c)(2) as a
                    failure or refusal by the plan administrator to file
                    the annual report required to be filed with the
                    Secretary under section 101(b)(4).
                        ``(D) Notice.--
                                ``(i) In general.--In any case in which it
                            is certified under subparagraph (A) that a
                            multiemployer plan is or will be in endangered
                            or critical status for a plan year, the plan
                            sponsor shall, not later than 30 days after the
                            date of the certification, provide notification
                            of the endangered or critical status to the
                            participants and beneficiaries, the bargaining
                            parties, the Pension Benefit Guaranty
                            Corporation, and the Secretary.
                                ``(ii) Plans in critical status.--If it is
                            certified under subparagraph (A) that a
                            multiemployer plan is or will be in critical
                            status, the plan sponsor shall include in the
                            notice under clause (i) an explanation of the
                            possibility that--
                                        ``(I) adjustable benefits (as
                                    defined in subsection (e)(8)) may be
                                    reduced, and
                                        ``(II) such reductions may apply to
                                    participants and beneficiaries whose
                                    benefit commencement date is on or
                                    after the date such notice is provided
                                    for the first plan year in which the
                                    plan is in critical status.
                                ``(iii) Model notice.--The Secretary shall
                            prescribe a model notice that a multiemployer
                            plan may use to satisfy the requirements under
                            clause (ii).
        ``(c) Funding Improvement Plan Must Be Adopted for Multiemployer
    Plans in Endangered Status.--
                ``(1) In general.--In any case in which a multiemployer
            plan is in endangered status for a plan year, the plan sponsor,
            in accordance with this subsection--
                        ``(A) shall adopt a funding improvement plan not
                    later than 240 days following the required date for the
                    actuarial certification of endangered status under
                    subsection (b)(3)(A), and
                        ``(B) within 30 days after the adoption of the
                    funding improvement plan--
                                ``(i) shall provide to the bargaining
                            parties 1 or more schedules showing revised
                            benefit structures, revised contribution
                            structures, or both, which, if adopted, may
                            reasonably be expected to enable the
                            multiemployer plan to meet the applicable
                            benchmarks in accordance with the funding
                            improvement plan, including--
                                        ``(I) one proposal for reductions
                                    in the amount of future benefit
                                    accruals necessary to achieve the
                                    applicable benchmarks, assuming no
                                    amendments increasing contributions
                                    under the plan (other than amendments
                                    increasing contributions necessary to
                                    achieve the applicable benchmarks after
                                    amendments have reduced future benefit
                                    accruals to the maximum extent
                                    permitted by law), and
                                        ``(II) one proposal for increases
                                    in contributions under the plan
                                    necessary to achieve the applicable
                                    benchmarks, assuming no amendments
                                    reducing future benefit accruals under
                                    the plan, and
                                ``(ii) may, if the plan sponsor deems
                            appropriate, prepare and provide the bargaining
                            parties with additional information relating to
                            contribution rates or benefit reductions,
                            alternative schedules, or other information
                            relevant to achieving the applicable benchmarks
                            in accordance with the funding improvement
                            plan.
                    For purposes of this section, the term `applicable
                    benchmarks' means the requirements applicable to the
                    multiemployer plan under paragraph (3) (as modified by
                    paragraph (5)).
                ``(2) Exception for years after process begins.--Paragraph
            (1) shall not apply to a plan year if such year is in a funding
            plan adoption period or funding improvement period by reason of
            the plan being in endangered status for a preceding plan year.
            For purposes of this section, such preceding plan year shall be
            the initial determination year with respect to the funding
            improvement plan to which it relates.
                ``(3) Funding improvement plan.--For purposes of this
            section--
                        ``(A) In general.--A funding improvement plan is a
                    plan which consists of the actions, including options
                    or a range of options to be proposed to the bargaining
                    parties, formulated to provide, based on reasonably
                    anticipated experience and reasonable actuarial
                    assumptions, for the attainment by the plan during the
                    funding improvement period of the following
                    requirements:
                                ``(i) Increase in plan's funding
                            percentage.--The plan's funded percentage as of
                            the close of the funding improvement period
                            equals or exceeds a percentage equal to the sum
                            of--
                                        ``(I) such percentage as of the
                                    beginning of such period, plus
                                        ``(II) 33 percent of the difference
                                    between 100 percent and the percentage
                                    under subclause (I).
                                ``(ii) Avoidance of accumulated funding
                            deficiencies.--No accumulated funding
                            deficiency for any plan year during the funding
                            improvement period (taking into account any
                            extension of amortization periods under section
                            304(d)).
                        ``(B) Seriously endangered plans.--In the case of a
                    plan in seriously endangered status, except as provided
                    in paragraph (5), subparagraph (A)(i)(II) shall be
                    applied by substituting `20 percent' for `33 percent'.
                ``(4) Funding improvement period.--For purposes of this
            section--
                        ``(A) In general.--The funding improvement period
                    for any funding improvement plan adopted pursuant to
                    this subsection is the 10-year period beginning on the
                    first day of the first plan year of the multiemployer
                    plan beginning after the earlier of--
                                ``(i) the second anniversary of the date of
                            the adoption of the funding improvement plan,
                            or
                                ``(ii) the expiration of the collective
                            bargaining agreements in effect on the due date
                            for the actuarial certification of endangered
                            status for the initial determination year under
                            subsection (b)(3)(A) and covering, as of such
                            due date, at least 75 percent of the active
                            participants in such multiemployer plan.
                        ``(B) Seriously endangered plans.--In the case of a
                    plan in seriously endangered status, except as provided
                    in paragraph (5), subparagraph (A) shall be applied by
                    substituting `15-year period' for `10-year period'.
                        ``(C) Coordination with changes in status.--
                                ``(i) Plans no longer in endangered
                            status.--If the plan's actuary certifies under
                            subsection (b)(3)(A) for a plan year in any
                            funding plan adoption period or funding
                            improvement period that the plan is no longer
                            in endangered status and is not in critical
                            status, the funding plan adoption period or
                            funding improvement period, whichever is
                            applicable, shall end as of the close of the
                            preceding plan year.
                                ``(ii) Plans in critical status.--If the
                            plan's actuary certifies under subsection
                            (b)(3)(A) for a plan year in any funding plan
                            adoption period or funding improvement period
                            that the plan is in critical status, the
                            funding plan adoption period or funding
                            improvement period, whichever is applicable,
                            shall end as of the close of the plan year
                            preceding the first plan year in the
                            rehabilitation period with respect to such
                            status.
                        ``(D) Plans in endangered status at end of
                    period.--If the plan's actuary certifies under
                    subsection (b)(3)(A) for the first plan year following
                    the close of the period described in subparagraph (A)
                    that the plan is in endangered status, the provisions
                    of this subsection and subsection (d) shall be applied
                    as if such first plan year were an initial
                    determination year, except that the plan may not be
                    amended in a manner inconsistent with the funding
                    improvement plan in effect for the preceding plan year
                    until a new funding improvement plan is adopted.
                ``(5) Special rules for seriously endangered plans more
            than 70 percent funded.--
                        ``(A) In general.--If the funded percentage of a
                    plan in seriously endangered status was more than 70
                    percent as of the beginning of the initial
                    determination year--
                                ``(i) paragraphs (3)(B) and (4)(B) shall
                            apply only if the plan's actuary certifies,
                            within 30 days after the certification under
                            subsection (b)(3)(A) for the initial
                            determination year, that, based on the terms of
                            the plan and the collective bargaining
                            agreements in effect at the time of such
                            certification, the plan is not projected to
                            meet the requirements of paragraph (3)(A)
                            (without regard to paragraphs (3)(B) and
                            (4)(B)), and
                                ``(ii) if there is a certification under
                            clause (i), the plan may, in formulating its
                            funding improvement plan, only take into
                            account the rules of paragraph (3)(B) and
                            (4)(B) for plan years in the funding
                            improvement period beginning on or before the
                            date on which the last of the collective
                            bargaining agreements described in paragraph
                            (4)(A)(ii) expires.
                        ``(B) Special rule after expiration of
                    agreements.--Notwithstanding subparagraph (A)(ii), if,
                    for any plan year ending after the date described in
                    subparagraph (A)(ii), the plan actuary certifies (at
                    the time of the annual certification under subsection
                    (b)(3)(A) for such plan year) that, based on the terms
                    of the plan and collective bargaining agreements in
                    effect at the time of that annual certification, the
                    plan is not projected to be able to meet the
                    requirements of paragraph (3)(A) (without regard to
                    paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and
                    (4)(B) shall continue to apply for such year.
                ``(6) Updates to funding improvement plan and schedules.--
                        ``(A) Funding improvement plan.--The plan sponsor
                    shall annually update the funding improvement plan and
                    shall file the update with the plan's annual report
                    under section 104.
                        ``(B) Schedules.--The plan sponsor shall annually
                    update any schedule of contribution rates provided
                    under this subsection to reflect the experience of the
                    plan.
                        ``(C) Duration of schedule.--A schedule of
                    contribution rates provided by the plan sponsor and
                    relied upon by bargaining parties in negotiating a
                    collective bargaining agreement shall remain in effect
                    for the duration of that collective bargaining
                    agreement.
                ``(7) Imposition of default schedule where failure to adopt
            funding improvement plan.--
                        ``(A) In general.--If--
                                ``(i) a collective bargaining agreement
                            providing for contributions under a
                            multiemployer plan that was in effect at the
                            time the plan entered endangered status
                            expires, and
                                ``(ii) after receiving one or more
                            schedules from the plan sponsor under paragraph
                            (1)(B), the bargaining parties with respect to
                            such agreement fail to agree on changes to
                            contribution or benefit schedules necessary to
                            meet the applicable benchmarks in accordance
                            with the funding improvement plan,
                    the plan sponsor shall implement the schedule described
                    in paragraph (1)(B)(i)(I) beginning on the date
                    specified in subparagraph (B).
                        ``(B) Date of implementation.--The date specified
                    in this subparagraph is the earlier of the date--
                                ``(i) on which the Secretary certifies that
                            the parties are at an impasse, or
                                ``(ii) which is 180 days after the date on
                            which the collective bargaining agreement
                            described in subparagraph (A) expires.
                ``(8) Funding plan adoption period.--For purposes of this
            section, the term `funding plan adoption period' means the
            period beginning on the date of the certification under
            subsection (b)(3)(A) for the initial determination year and
            ending on the day before the first day of the funding
            improvement period.
        ``(d) Rules for Operation of Plan During Adoption and Improvement
    Periods.--
                ``(1) Special rules for plan adoption period.--During the
            funding plan adoption period--
                        ``(A) the plan sponsor may not accept a collective
                    bargaining agreement or participation agreement with
                    respect to the multiemployer plan that provides for--
                                ``(i) a reduction in the level of
                            contributions for any participants,
                                ``(ii) a suspension of contributions with
                            respect to any period of service, or
                                ``(iii) any new direct or indirect
                            exclusion of younger or newly hired employees
                            from plan participation,
                        ``(B) no amendment of the plan which increases the
                    liabilities of the plan by reason of any increase in
                    benefits, any change in the accrual of benefits, or any
                    change in the rate at which benefits become
                    nonforfeitable under the plan may be adopted unless the
                    amendment is required as a condition of qualification
                    under part I of subchapter D of chapter 1 of the
                    Internal Revenue Code of 1986 or to comply with other
                    applicable law, and
                        ``(C) in the case of a plan in seriously endangered
                    status, the plan sponsor shall take all reasonable
                    actions which are consistent with the terms of the plan
                    and applicable law and which are expected, based on
                    reasonable assumptions, to achieve--
                                ``(i) an increase in the plan's funded
                            percentage, and
                                ``(ii) postponement of an accumulated
                            funding deficiency for at least 1 additional
                            plan year.
            Actions under subparagraph (C) include applications for
            extensions of amortization periods under section 304(d), use of
            the shortfall funding method in making funding standard account
            computations, amendments to the plan's benefit structure,
            reductions in future benefit accruals, and other reasonable
            actions consistent with the terms of the plan and applicable
            law.
                ``(2) Compliance with funding improvement plan.--
                        ``(A) In general.--A plan may not be amended after
                    the date of the adoption of a funding improvement plan
                    so as to be inconsistent with the funding improvement
                    plan.
                        ``(B) No reduction in contributions.--A plan
                    sponsor may not during any funding improvement period
                    accept a collective bargaining agreement or
                    participation agreement with respect to the
                    multiemployer plan that provides for--
                                ``(i) a reduction in the level of
                            contributions for any participants,
                                ``(ii) a suspension of contributions with
                            respect to any period of service, or
                                ``(iii) any new direct or indirect
                            exclusion of younger or newly hired employees
                            from plan participation.
                        ``(C) Special rules for benefit increases.--A plan
                    may not be amended after the date of the adoption of a
                    funding improvement plan so as to increase benefits,
                    including future benefit accruals, unless the plan
                    actuary certifies that the benefit increase is
                    consistent with the funding improvement plan and is
                    paid for out of contributions not required by the
                    funding improvement plan to meet the applicable
                    benchmark in accordance with the schedule contemplated
                    in the funding improvement plan.
        ``(e) Rehabilitation Plan Must Be Adopted for Multiemployer Plans
    in Critical Status.--
                ``(1) In general.--In any case in which a multiemployer
            plan is in critical status for a plan year, the plan sponsor,
            in accordance with this subsection--
                        ``(A) shall adopt a rehabilitation plan not later
                    than 240 days following the required date for the
                    actuarial certification of critical status under
                    subsection (b)(3)(A), and
                        ``(B) within 30 days after the adoption of the
                    rehabilitation plan--
                                ``(i) shall provide to the bargaining
                            parties 1 or more schedules showing revised
                            benefit structures, revised contribution
                            structures, or both, which, if adopted, may
                            reasonably be expected to enable the
                            multiemployer plan to emerge from critical
                            status in accordance with the rehabilitation
                            plan, and
                                ``(ii) may, if the plan sponsor deems
                            appropriate, prepare and provide the bargaining
                            parties with additional information relating to
                            contribution rates or benefit reductions,
                            alternative schedules, or other information
                            relevant to emerging from critical status in
                            accordance with the rehabilitation plan.
            The schedule or schedules described in subparagraph (B)(i)
            shall reflect reductions in future benefit accruals and
            adjustable benefits, and increases in contributions, that the
            plan sponsor determines are reasonably necessary to emerge from
            critical status. One schedule shall be designated as the
            default schedule and such schedule shall assume that there are
            no increases in contributions under the plan other than the
            increases necessary to emerge from critical status after future
            benefit accruals and other benefits (other than benefits the
            reduction or elimination of which are not permitted under
            section 204(g)) have been reduced to the maximum extent
            permitted by law.
                ``(2) Exception for years after process begins.--Paragraph
            (1) shall not apply to a plan year if such year is in a
            rehabilitation plan adoption period or rehabilitation period by
            reason of the plan being in critical status for a preceding
            plan year. For purposes of this section, such preceding plan
            year shall be the initial critical year with respect to the
            rehabilitation plan to which it relates.
                ``(3) Rehabilitation plan.--For purposes of this section--
                        ``(A) In general.--A rehabilitation plan is a plan
                    which consists of--
                                ``(i) actions, including options or a range
                            of options to be proposed to the bargaining
                            parties, formulated, based on reasonably
                            anticipated experience and reasonable actuarial
                            assumptions, to enable the plan to cease to be
                            in critical status by the end of the
                            rehabilitation period and may include
                            reductions in plan expenditures (including plan
                            mergers and consolidations), reductions in
                            future benefit accruals or increases in
                            contributions, if agreed to by the bargaining
                            parties, or any combination of such actions, or
                                ``(ii) if the plan sponsor determines that,
                            based on reasonable actuarial assumptions and
                            upon exhaustion of all reasonable measures, the
                            plan can not reasonably be expected to emerge
                            from critical status by the end of the
                            rehabilitation period, reasonable measures to
                            emerge from critical status at a later time or
                            to forestall possible insolvency (within the
                            meaning of section 4245).
                    A rehabilitation plan must provide annual standards for
                    meeting the requirements of such rehabilitation plan.
                    Such plan shall also include the schedules required to
                    be provided under paragraph (1)(B)(i) and if clause
                    (ii) applies, shall set forth the alternatives
                    considered, explain why the plan is not reasonably
                    expected to emerge from critical status by the end of
                    the rehabilitation period, and specify when, if ever,
                    the plan is expected to emerge from critical status in
                    accordance with the rehabilitation plan.
                        ``(B) Updates to rehabilitation plan and
                    schedules.--
                                ``(i) Rehabilitation plan.--The plan
                            sponsor shall annually update the
                            rehabilitation plan and shall file the update
                            with the plan's annual report under section
                            104.
                                ``(ii) Schedules.--The plan sponsor shall
                            annually update any schedule of contribution
                            rates provided under this subsection to reflect
                            the experience of the plan.
                                ``(iii) Duration of schedule.--A schedule
                            of contribution rates provided by the plan
                            sponsor and relied upon by bargaining parties
                            in negotiating a collective bargaining
                            agreement shall remain in effect for the
                            duration of that collective bargaining
                            agreement.
                        ``(C) Imposition of default schedule where failure
                    to adopt rehabilitation plan.--
                                ``(i) In general.--If--
                                        ``(I) a collective bargaining
                                    agreement providing for contributions
                                    under a multiemployer plan that was in
                                    effect at the time the plan entered
                                    critical status expires, and
                                        ``(II) after receiving one or more
                                    schedules from the plan sponsor under
                                    paragraph (1)(B), the bargaining
                                    parties with respect to such agreement
                                    fail to adopt a contribution or benefit
                                    schedules with terms consistent with
                                    the rehabilitation plan and the
                                    schedule from the plan sponsor under
                                    paragraph (1)(B)(i),
                            the plan sponsor shall implement the default
                            schedule described in the last sentence of
                            paragraph (1) beginning on the date specified
                            in clause (ii).
                                ``(ii) Date of implementation.--The date
                            specified in this clause is the earlier of the
                            date--
                                        ``(I) on which the Secretary
                                    certifies that the parties are at an
                                    impasse, or
                                        ``(II) which is 180 days after the
                                    date on which the collective bargaining
                                    agreement described in clause (i)
                                    expires.
                ``(4) Rehabilitation period.--For purposes of this
            section--
                        ``(A) In general.--The rehabilitation period for a
                    plan in critical status is the 10-year period beginning
                    on the first day of the first plan year of the
                    multiemployer plan following the earlier of--
                                ``(i) the second anniversary of the date of
                            the adoption of the rehabilitation plan, or
                                ``(ii) the expiration of the collective
                            bargaining agreements in effect on the date of
                            the due date for the actuarial certification of
                            critical status for the initial critical year
                            under subsection (a)(1) and covering, as of
                            such date at least 75 percent of the active
                            participants in such multiemployer plan.
                    If a plan emerges from critical status as provided
                    under subparagraph (B) before the end of such 10-year
                    period, the rehabilitation period shall end with the
                    plan year preceding the plan year for which the
                    determination under subparagraph (B) is made.
                        ``(B) Emergence.--A plan in critical status shall
                    remain in such status until a plan year for which the
                    plan actuary certifies, in accordance with subsection
                    (b)(3)(A), that the plan is not projected to have an
                    accumulated funding deficiency for the plan year or any
                    of the 9 succeeding plan years, without regard to the
                    use of the shortfall method and taking into account any
                    extension of amortization periods under section 304(d).
                ``(5) Rehabilitation plan adoption period.--For purposes of
            this section, the term `rehabilitation plan adoption period'
            means the period beginning on the date of the certification
            under subsection (b)(3)(A) for the initial critical year and
            ending on the day before the first day of the rehabilitation
            period.
                ``(6) Limitation on reduction in rates of future
            accruals.--Any reduction in the rate of future accruals under
            the default schedule described in paragraph (1)(B)(i) shall not
            reduce the rate of future accruals below--
                        ``(A) a monthly benefit (payable as a single life
                    annuity commencing at the participant's normal
                    retirement age) equal to 1 percent of the contributions
                    required to be made with respect to a participant, or
                    the equivalent standard accrual rate for a participant
                    or group of participants under the collective
                    bargaining agreements in effect as of the first day of
                    the initial critical year, or
                        ``(B) if lower, the accrual rate under the plan on
                    such first day.
            The equivalent standard accrual rate shall be determined by the
            plan sponsor based on the standard or average contribution base
            units which the plan sponsor determines to be representative
            for active participants and such other factors as the plan
            sponsor determines to be relevant. Nothing in this paragraph
            shall be construed as limiting the ability of the plan sponsor
            to prepare and provide the bargaining parties with alternative
            schedules to the default schedule that established lower or
            higher accrual and contribution rates than the rates otherwise
            described in this paragraph.
                ``(7) Automatic employer surcharge.--
                        ``(A) Imposition of surcharge.--Each employer
                    otherwise obligated to make contributions for the
                    initial critical year shall be obligated to pay to the
                    plan for such year a surcharge equal to 5 percent of
                    the contributions otherwise required under the
                    applicable collective bargaining agreement (or other
                    agreement pursuant to which the employer contributes).
                    For each succeeding plan year in which the plan is in
                    critical status for a consecutive period of years
                    beginning with the initial critical year, the surcharge
                    shall be 10 percent of the contributions otherwise so
                    required.
                        ``(B) Enforcement of surcharge.--The surcharges
                    under subparagraph (A) shall be due and payable on the
                    same schedule as the contributions on which the
                    surcharges are based. Any failure to make a surcharge
                    payment shall be treated as a delinquent contribution
                    under section 515 and shall be enforceable as such.
                        ``(C) Surcharge to terminate upon collective
                    bargaining agreement renegotiation.--The surcharge
                    under this paragraph shall cease to be effective with
                    respect to employees covered by a collective bargaining
                    agreement (or other agreement pursuant to which the
                    employer contributes), beginning on the effective date
                    of a collective bargaining agreement (or other such
                    agreement) that includes terms consistent with a
                    schedule presented by the plan sponsor under paragraph
                    (1)(B)(i), as modified under subparagraph (B) of
                    paragraph (3).
                        ``(D) Surcharge not to apply until employer
                    receives notice.--The surcharge under this paragraph
                    shall not apply to an employer until 30 days after the
                    employer has been notified by the plan sponsor that the
                    plan is in critical status and that the surcharge is in
                    effect.
                        ``(E) Surcharge not to generate increased benefit
                    accruals.--Notwithstanding any provision of a plan to
                    the contrary, the amount of any surcharge under this
                    paragraph shall not be the basis for any benefit
                    accrual under the plan.
                ``(8) Benefit adjustments.--
                        ``(A) Adjustable benefits.--
                                ``(i) In general.--Notwithstanding section
                            204(g), the plan sponsor shall, subject to the
                            notice requirements in subparagraph (C), make
                            any reductions to adjustable benefits which the
                            plan sponsor deems appropriate, based upon the
                            outcome of collective bargaining over the
                            schedule or schedules provided under paragraph
                            (1)(B)(i).
                                ``(ii) Exception for retirees.--Except in
                            the case of adjustable benefits described in
                            clause (iv)(III), the plan sponsor of a plan in
                            critical status shall not reduce adjustable
                            benefits of any participant or beneficiary
                            whose benefit commencement date is before the
                            date on which the plan provides notice to the
                            participant or beneficiary under subsection
                            (b)(3)(D) for the initial critical year.
                                ``(iii) Plan sponsor flexibility.--The plan
                            sponsor shall include in the schedules provided
                            to the bargaining parties an allowance for
                            funding the benefits of participants with
                            respect to whom contributions are not currently
                            required to be made, and shall reduce their
                            benefits to the extent permitted under this
                            title and considered appropriate by the plan
                            sponsor based on the plan's then current
                            overall funding status.
                                ``(iv) Adjustable benefit defined.--For
                            purposes of this paragraph, the term
                            `adjustable benefit' means--
                                        ``(I) benefits, rights, and
                                    features under the plan, including
                                    post-retirement death benefits, 60-
                                    month guarantees, disability benefits
                                    not yet in pay status, and similar
                                    benefits,
                                        ``(II) any early retirement benefit
                                    or retirement-type subsidy (within the
                                    meaning of section 204(g)(2)(A)) and
                                    any benefit payment option (other than
                                    the qualified joint-and survivor
                                    annuity), and
                                        ``(III) benefit increases that
                                    would not be eligible for a guarantee
                                    under section 4022A on the first day of
                                    initial critical year because the
                                    increases were adopted (or, if later,
                                    took effect) less than 60 months before
                                    such first day.
                        ``(B) Normal retirement benefits protected.--Except
                    as provided in subparagraph (A)(iv)(III), nothing in
                    this paragraph shall be construed to permit a plan to
                    reduce the level of a participant's accrued benefit
                    payable at normal retirement age.
                        ``(C) Notice requirements.--
                                ``(i) In general.--No reduction may be made
                            to adjustable benefits under subparagraph (A)
                            unless notice of such reduction has been given
                            at least 30 days before the general effective
                            date of such reduction for all participants and
                            beneficiaries to--
                                        ``(I) plan participants and
                                    beneficiaries,
                                        ``(II) each employer who has an
                                    obligation to contribute (within the
                                    meaning of section 4212(a)) under the
                                    plan, and
                                        ``(III) each employee organization
                                    which, for purposes of collective
                                    bargaining, represents plan
                                    participants employed by such an
                                    employer.
                                ``(ii) Content of notice.--The notice under
                            clause (i) shall contain--
                                        ``(I) sufficient information to
                                    enable participants and beneficiaries
                                    to understand the effect of any
                                    reduction on their benefits, including
                                    an estimate (on an annual or monthly
                                    basis) of any affected adjustable
                                    benefit that a participant or
                                    beneficiary would otherwise have been
                                    eligible for as of the general
                                    effective date described in clause (i),
                                    and
                                        ``(II) information as to the rights
                                    and remedies of plan participants and
                                    beneficiaries as well as how to contact
                                    the Department of Labor for further
                                    information and assistance where
                                    appropriate.
                                ``(iii) Form and manner.--Any notice under
                            clause (i)--
                                        ``(I) shall be provided in a form
                                    and manner prescribed in regulations of
                                    the Secretary,
                                        ``(II) shall be written in a manner
                                    so as to be understood by the average
                                    plan participant, and
                                        ``(III) may be provided in written,
                                    electronic, or other appropriate form
                                    to the extent such form is reasonably
                                    accessible to persons to whom the
                                    notice is required to be provided.
                            The Secretary shall in the regulations
                            prescribed under subclause (I) establish a
                            model notice that a plan sponsor may use to
                            meet the requirements of this subparagraph.
                ``(9) Adjustments disregarded in withdrawal liability
            determination.--
                        ``(A) Benefit reductions.--Any benefit reductions
                    under this subsection shall be disregarded in
                    determining a plan's unfunded vested benefits for
                    purposes of determining an employer's withdrawal
                    liability under section 4201.
                        ``(B) Surcharges.--Any surcharges under paragraph
                    (7) shall be disregarded in determining an employer's
                    withdrawal liability under section 4211, except for
                    purposes of determining the unfunded vested benefits
                    attributable to an employer under section 4211(c)(4) or
                    a comparable method approved under section 4211(c)(5).
                        ``(C) Simplified calculations.--The Pension Benefit
                    Guaranty Corporation shall prescribe simplified methods
                    for the application of this paragraph in determining
                    withdrawal liability.
        ``(f) Rules for Operation of Plan During Adoption and
    Rehabilitation Period.--
                ``(1) Compliance with rehabilitation plan.--
                        ``(A) In general.--A plan may not be amended after
                    the date of the adoption of a rehabilitation plan under
                    subsection (e) so as to be inconsistent with the
                    rehabilitation plan.
                        ``(B) Special rules for benefit increases.--A plan
                    may not be amended after the date of the adoption of a
                    rehabilitation plan under subsection (e) so as to
                    increase benefits, including future benefit accruals,
                    unless the plan actuary certifies that such increase is
                    paid for out of additional contributions not
                    contemplated by the rehabilitation plan, and, after
                    taking into account the benefit increase, the
                    multiemployer plan still is reasonably expected to
                    emerge from critical status by the end of the
                    rehabilitation period on the schedule contemplated in
                    the rehabilitation plan.
                ``(2) Restriction on lump sums and similar benefits.--
                        ``(A) In general.--Effective on the date the notice
                    of certification of the plan's critical status for the
                    initial critical year under subsection (b)(3)(D) is
                    sent, and notwithstanding section 204(g), the plan
                    shall not pay--
                                ``(i) any payment, in excess of the monthly
                            amount paid under a single life annuity (plus
                            any social security supplements described in
                            the last sentence of section 204(b)(1)(G)),
                                ``(ii) any payment for the purchase of an
                            irrevocable commitment from an insurer to pay
                            benefits, and
                                ``(iii) any other payment specified by the
                            Secretary of the Treasury by regulations.
                        ``(B) Exception.--Subparagraph (A) shall not apply
                    to a benefit which under section 203(e) may be
                    immediately distributed without the consent of the
                    participant or to any makeup payment in the case of a
                    retroactive annuity starting date or any similar
                    payment of benefits owed with respect to a prior
                    period.
                ``(3) Adjustments disregarded in withdrawal liability
            determination.--Any benefit reductions under this subsection
            shall be disregarded in determining a plan's unfunded vested
            benefits for purposes of determining an employer's withdrawal
            liability under section 4201.
                ``(4) Special rules for plan adoption period.--During the
            rehabilitation plan adoption period--
                        ``(A) the plan sponsor may not accept a collective
                    bargaining agreement or participation agreement with
                    respect to the multiemployer plan that provides for--
                                ``(i) a reduction in the level of
                            contributions for any participants,
                                ``(ii) a suspension of contributions with
                            respect to any period of service, or
                                ``(iii) any new direct or indirect
                            exclusion of younger or newly hired employees
                            from plan participation, and
                        ``(B) no amendment of the plan which increases the
                    liabilities of the plan by reason of any increase in
                    benefits, any change in the accrual of benefits, or any
                    change in the rate at which benefits become
                    nonforfeitable under the plan may be adopted unless the
                    amendment is required as a condition of qualification
                    under part I of subchapter D of chapter 1 of the
                    Internal Revenue Code of 1986 or to comply with other
                    applicable law.
        ``(g) Expedited Resolution of Plan Sponsor Decisions.--If, within
    60 days of the due date for adoption of a funding improvement plan or a
    rehabilitation plan under subsection (e), the plan sponsor of a plan in
    endangered status or a plan in critical status has not agreed on a
    funding improvement plan or rehabilitation plan, then any member of the
    board or group that constitutes the plan sponsor may require that the
    plan sponsor enter into an expedited dispute resolution procedure for
    the development and adoption of a funding improvement plan or
    rehabilitation plan.
        ``(h) Nonbargained Participation.--
                ``(1) Both bargained and nonbargained employee-
            participants.--In the case of an employer that contributes to a
            multiemployer plan with respect to both employees who are
            covered by one or more collective bargaining agreements and
            employees who are not so covered, if the plan is in endangered
            status or in critical status, benefits of and contributions for
            the nonbargained employees, including surcharges on those
            contributions, shall be determined as if those nonbargained
            employees were covered under the first to expire of the
            employer's collective bargaining agreements in effect when the
            plan entered endangered or critical status.
                ``(2) Nonbargained employees only.--In the case of an
            employer that contributes to a multiemployer plan only with
            respect to employees who are not covered by a collective
            bargaining agreement, this section shall be applied as if the
            employer were the bargaining party, and its participation
            agreement with the plan were a collective bargaining agreement
            with a term ending on the first day of the plan year beginning
            after the employer is provided the schedule or schedules
            described in subsections (c) and (e).
        ``(i) Definitions; Actuarial Method.--For purposes of this
    section--
                ``(1) Bargaining party.--The term `bargaining party'
            means--
                        ``(A)(i) except as provided in clause (ii), an
                    employer who has an obligation to contribute under the
                    plan; or
                        ``(ii) in the case of a plan described under
                    section 404(c) of the Internal Revenue Code of 1986, or
                    a continuation of such a plan, the association of
                    employers that is the employer settlor of the plan; and
                        ``(B) an employee organization which, for purposes
                    of collective bargaining, represents plan participants
                    employed by an employer who has an obligation to
                    contribute under the plan.
                ``(2) Funded percentage.--The term `funded percentage'
            means the percentage equal to a fraction--
                        ``(A) the numerator of which is the value of the
                    plan's assets, as determined under section 304(c)(2),
                    and
                        ``(B) the denominator of which is the accrued
                    liability of the plan, determined using actuarial
                    assumptions described in section 304(c)(3).
                ``(3) Accumulated funding deficiency.--The term
            `accumulated funding deficiency' has the meaning given such
            term in section 304(a).
                ``(4) Active participant.--The term `active participant'
            means, in connection with a multiemployer plan, a participant
            who is in covered service under the plan.
                ``(5) Inactive participant.--The term `inactive
            participant' means, in connection with a multiemployer plan, a
            participant, or the beneficiary or alternate payee of a
            participant, who--
                        ``(A) is not in covered service under the plan, and
                        ``(B) is in pay status under the plan or has a
                    nonforfeitable right to benefits under the plan.
                ``(6) Pay status.--A person is in pay status under a
            multiemployer plan if--
                        ``(A) at any time during the current plan year,
                    such person is a participant or beneficiary under the
                    plan and is paid an early, late, normal, or disability
                    retirement benefit under the plan (or a death benefit
                    under the plan related to a retirement benefit), or
                        ``(B) to the extent provided in regulations of the
                    Secretary of the Treasury, such person is entitled to
                    such a benefit under the plan.
                ``(7) Obligation to contribute.--The term `obligation to
            contribute' has the meaning given such term under section
            4212(a).
                ``(8) Actuarial method.--Notwithstanding any other
            provision of this section, the actuary's determinations with
            respect to a plan's normal cost, actuarial accrued liability,
            and improvements in a plan's funded percentage under this
            section shall be based upon the unit credit funding method
            (whether or not that method is used for the plan's actuarial
            valuation).
                ``(9) Plan sponsor.--In the case of a plan described under
            section 404(c) of the Internal Revenue Code of 1986, or a
            continuation of such a plan, the term `plan sponsor' means the
            bargaining parties described under paragraph (1).
                ``(10) Benefit commencement date.--The term `benefit
            commencement date' means the annuity starting date (or in the
            case of a retroactive annuity starting date, the date on which
            benefit payments begin).''.
        (b) Enforcement.--Section 502 of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1132) is amended--
                (1) in subsection (a)(6) by striking ``(6), or (7)'' and
            inserting ``(6), (7), or (8)'';
                (2) by redesignating subsection (c)(8) as subsection
            (c)(9); and
                (3) by inserting after subsection (c)(7) the following new
            paragraph:
                ``(8) The Secretary may assess against any plan sponsor of
            a multiemployer plan a civil penalty of not more than $1,100
            per day--
                        ``(A) for each violation by such sponsor of the
                    requirement under section 305 to adopt by the deadline
                    established in that section a funding improvement plan
                    or rehabilitation plan with respect to a multiemployer
                    which is in endangered or critical status, or
                        ``(B) in the case of a plan in endangered status
                    which is not in seriously endangered status, for
                    failure by the plan to meet the applicable benchmarks
                    under section 305 by the end of the funding improvement
                    period with respect to the plan.''.
        (c) Cause of Action To Compel Adoption or Implementation of Funding
    Improvement or Rehabilitation Plan.--Section 502(a) of the Employee
    Retirement Income Security Act of 1974 is amended by striking ``or'' at
    the end of paragraph (8), by striking the period at the end of
    paragraph (9) and inserting ``; or'' and by adding at the end the
    following:
                ``(10) in the case of a multiemployer plan that has been
            certified by the actuary to be in endangered or critical status
            under section 305, if the plan sponsor--
                        ``(A) has not adopted a funding improvement or
                    rehabilitation plan under that section by the deadline
                    established in such section, or
                        ``(B) fails to update or comply with the terms of
                    the funding improvement or rehabilitation plan in
                    accordance with the requirements of such section,
            by an employer that has an obligation to contribute with
            respect to the multiemployer plan or an employee organization
            that represents active participants in the multiemployer plan,
            for an order compelling the plan sponsor to adopt a funding
            improvement or rehabilitation plan or to update or comply with
            the terms of the funding improvement or rehabilitation plan in
            accordance with the requirements of such section and the
            funding improvement or rehabilitation plan.''.
        (d) No Additional Contributions Required.--Section 302(b) of the
    Employee Retirement Income Security Act of 1974, as amended by this
    Act, is amended by adding at the end the following new paragraph:
                ``(3) Multiemployer plans in critical status.--Paragraph
            (1) shall not apply in the case of a multiemployer plan for any
            plan year in which the plan is in critical status pursuant to
            section 305. This paragraph shall only apply if the plan adopts
            a rehabilitation plan in accordance with section 305(e) and
            complies with the terms of such rehabilitation plan (and any
            updates or modifications of the plan).''.
        (e) Conforming Amendment.--The table of contents in section 1 of
    such Act (as amended by the preceding provisions of this Act) is
    amended by inserting after the item relating to section 304 the
    following new item:

    ``Sec. 305. Additional funding rules for multiemployer plans in
                                endangered status or critical status.''.
        (f) Effective Dates.--
                (1) In general.--The amendments made by this section shall
            apply with respect to plan years beginning after 2007.
                (2) Special rule for certain notices.--In any case in which
            a plan's actuary certifies that it is reasonably expected that
            a multiemployer plan will be in critical status under section
            305(b)(3) of the Employee Retirement Income Security Act of
            1974, as added by this section, with respect to the first plan
            year beginning after 2007, the notice required under
            subparagraph (D) of such section may be provided at any time
            after the date of enactment, so long as it is provided on or
            before the last date for providing the notice under such
            subparagraph.
                (3) Special rule for certain restored benefits.--In the
            case of a multiemployer plan--
                        (A) with respect to which benefits were reduced
                    pursuant to a plan amendment adopted on or after
                    January 1, 2002, and before June 30, 2005, and
                        (B) which, pursuant to the plan document, the trust
                    agreement, or a formal written communication from the
                    plan sponsor to participants provided before June 30,
                    2005, provided for the restoration of such benefits,
            the amendments made by this section shall not apply to such
            benefit restorations to the extent that any restriction on the
            providing or accrual of such benefits would otherwise apply by
            reason of such amendments.

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

        (a) Advance Determination of Impending Insolvency Over 5 Years.--
    Section 4245(d)(1) of the Employee Retirement Income Security Act of
    1974 (29 U.S.C. 1426(d)(1)) is amended--
                (1) by striking ``3 plan years'' the second place it
            appears and inserting ``5 plan years''; and
                (2) by adding at the end the following new sentence: ``If
            the plan sponsor makes such a determination that the plan will
            be insolvent in any of the next 5 plan years, the plan sponsor
            shall make the comparison under this paragraph at least
            annually until the plan sponsor makes a determination that the
            plan will not be insolvent in any of the next 5 plan years.''.
        (b) Effective Date.--The amendments made by this section shall
    apply with respect to determinations made in plan years beginning after
    2007.

    SEC. 204. WITHDRAWAL LIABILITY REFORMS.

        (a) Update of Rules Relating to Limitations on Withdrawal
    Liability.--
                (1) Increase in limits.--Section 4225(a)(2) of such Act (29
            U.S.C. 1405(a)(2)) is amended by striking the table contained
            therein and inserting the following new table:

    ----------------------------------------------------------------------------------------------------------------
     ``If the liquidation or distribution value of the employer
                  after the sale or exchange is--                                  The portion is--
    ----------------------------------------------------------------------------------------------------------------
    Not more than $5,000,000...................................  30 percent of the amount.
    More than $5,000,000, but not more than $10,000,000........  $1,500,000, plus 35 percent of the amount in excess
                                                                  of $5,000,000.
    More than $10,000,000, but not more than $15,000,000.......  $3,250,000, plus 40 percent of the amount in excess
                                                                  of $10,000,000.
    More than $15,000,000, but not more than $17,500,000.......  $5,250,000, plus 45 percent of the amount in excess
                                                                  of $15,000,000.
    More than $17,500,000, but not more than $20,000,000.......  $6,375,000, plus 50 percent of the amount in excess
                                                                  of $17,500,000.
    More than $20,000,000, but not more than $22,500,000.......  $7,625,000, plus 60 percent of the amount in excess
                                                                  of $20,000,000.
    More than $22,500,000, but not more than $25,000,000.......  $9,125,000, plus 70 percent of the amount in excess
                                                                  of $22,500,000.
    More than $25,000,000......................................  $10,875,000, plus 80 percent of the amount in
                                                                  excess of $25,000,000.''.
    ----------------------------------------------------------------------------------------------------------------

                (2) Plans using attributable method.--Section 4225(a)(1)(B)
            of such Act (29 U.S.C. 1405(a)(1)(B)) is amended to read as
            follows:
                        ``(B) in the case of a plan using the attributable
                    method of allocating withdrawal liability, the unfunded
                    vested benefits attributable to employees of the
                    employer.''.
                (3) Effective date.--The amendments made by this subsection
            shall apply to sales occurring on or after January 1, 2007.
        (b) Withdrawal Liability Continues if Work Contracted Out.--
                (1) In general.--Clause (i) of section 4205(b)(2)(A) of
            such Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting ``or
            to an entity or entities owned or controlled by the employer''
            after ``to another location''.
                (2) Effective date.--The amendment made by this subsection
            shall apply with respect to work transferred on or after the
            date of the enactment of this Act.
        (c) Application of Rules to Plans Primarily Covering Employees in
    the Building and Construction Industry.--
                (1) In general.--Section 4210(b) of such Act (29 U.S.C.
            1390(b)) is amended--
                        (A) by striking paragraph (1); and
                        (B) by redesignating paragraphs (2) through (4) as
                    paragraphs (1) through (3), respectively.
                (2) Fresh start option.--Section 4211(c)(5) of such Act (29
            U.S.C. 1391(c)(5)) is amended by adding at the end the
            following new subparagraph:
                        ``(E) Fresh start option.--Notwithstanding
                    paragraph (1), a plan may be amended to provide that
                    the withdrawal liability method described in subsection
                    (b) shall be applied by substituting the plan year
                    which is specified in the amendment and for which the
                    plan has no unfunded vested benefits for the plan year
                    ending before September 26, 1980.''.
                (3) Effective date.--The amendments made by this subsection
            shall apply with respect to plan withdrawals occurring on or
            after January 1, 2007.
        (d) Procedures Applicable to Disputes Involving Pension Plan
    Withdrawal Liability.--
                (1) In general.--Section 4221 of Employee Retirement Income
            Security Act of 1974 (29 U.S.C. 1401) is amended by adding at
            the end the following:
        ``(g) Procedures Applicable to Certain Disputes.--
                ``(1) In general.--If--
                        ``(A) a plan sponsor of a plan determines that--
                                ``(i) a complete or partial withdrawal of
                            an employer has occurred, or
                                ``(ii) an employer is liable for withdrawal
                            liability payments with respect to such
                            complete or partial withdrawal, and
                        ``(B) such determination is based in whole or in
                    part on a finding by the plan sponsor under section
                    4212(c) that a principal purpose of any transaction
                    which occurred after December 31, 1998, and at least 5
                    years (2 years in the case of a small employer) before
                    the date of the complete or partial withdrawal was to
                    evade or avoid withdrawal liability under this
                    subtitle,
            then the person against which the withdrawal liability is
            assessed based solely on the application of section 4212(c) may
            elect to use the special rule under paragraph (2) in applying
            subsection (d) of this section and section 4219(c) to such
            person.
                ``(2) Special rule.--Notwithstanding subsection (d) and
            section 4219(c), if an electing person contests the plan
            sponsor's determination with respect to withdrawal liability
            payments under paragraph (1) through an arbitration proceeding
            pursuant to subsection (a), through an action brought in a
            court of competent jurisdiction for review of such an
            arbitration decision, or as otherwise permitted by law, the
            electing person shall not be obligated to make the withdrawal
            liability payments until a final decision in the arbitration
            proceeding, or in court, upholds the plan sponsor's
            determination, but only if the electing person--
                        ``(A) provides notice to the plan sponsor of its
                    election to apply the special rule in this paragraph
                    within 90 days after the plan sponsor notifies the
                    electing person of its liability by reason of the
                    application of section 4212(c); and
                        ``(B) if a final decision in the arbitration
                    proceeding, or in court, of the withdrawal liability
                    dispute has not been rendered within 12 months from the
                    date of such notice, the electing person provides to
                    the plan, effective as of the first day following the
                    12-month period, a bond issued by a corporate surety
                    company that is an acceptable surety for purposes of
                    section 412 of this Act, or an amount held in escrow by
                    a bank or similar financial institution satisfactory to
                    the plan, in an amount equal to the sum of the
                    withdrawal liability payments that would otherwise be
                    due under subsection (d) and section 4219(c) for the
                    12-month period beginning with the first anniversary of
                    such notice. Such bond or escrow shall remain in effect
                    until there is a final decision in the arbitration
                    proceeding, or in court, of the withdrawal liability
                    dispute, at which time such bond or escrow shall be
                    paid to the plan if such final decision upholds the
                    plan sponsor's determination.
                ``(3) Definition of small employer.--For purposes of this
            subsection--
                        ``(A) In general.--The term `small employer' means
                    any employer which, for the calendar year in which the
                    transaction referred to in paragraph (1)(B) occurred
                    and for each of the 3 preceding years, on average--
                                ``(i) employs not more than 500 employees,
                            and
                                ``(ii) is required to make contributions to
                            the plan for not more than 250 employees.
                        ``(B) Controlled group.--Any group treated as a
                    single employer under subsection (b)(1) of section
                    4001, without regard to any transaction that was a
                    basis for the plan's finding under section 4212, shall
                    be treated as a single employer for purposes of this
                    subparagraph.
                ``(4) Additional security pending resolution of dispute.--
            If a withdrawal liability dispute to which this subsection
            applies is not concluded by 12 months after the electing person
            posts the bond or escrow described in paragraph (2), the
            electing person shall, at the start of each succeeding 12-month
            period, provide an additional bond or amount held in escrow
            equal to the sum of the withdrawal liability payments that
            would otherwise be payable to the plan during that period.
                ``(5) The liability of the party furnishing a bond or
            escrow under this subsection shall be reduced, upon the payment
            of the bond or escrow to the plan, by the amount thereof.''
                (2) Effective date.--The amendments made by this subsection
            shall apply to any person that receives a notification under
            section 4219(b)(1) of the Employee Retirement Income Security
            Act of 1974 on or after the date of enactment of this Act with
            respect to a transaction that occurred after December 31, 1998.

    SEC. 205. PROHIBITION ON RETALIATION AGAINST EMPLOYERS EXERCISING THEIR
                  RIGHTS TO PETITION THE FEDERAL GOVERNMENT.

        Section 510 of the Employee Retirement Income Security Act of 1974
    (29 U.S.C. 1140) is amended by inserting before the last sentence
    thereof the following new sentence:``In the case of a multiemployer
    plan, it shall be unlawful for the plan sponsor or any other person to
    discriminate against any contributing employer for exercising rights
    under this Act or for giving information or testifying in any inquiry
    or proceeding relating to this Act before Congress.''

    SEC. 206. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED UNDER AN AGREEMENT
                  APPROVED BY THE PENSION BENEFIT GUARANTY CORPORATION.

        In the case of a multiemployer plan that is a party to an agreement
    that was approved by the Pension Benefit Guaranty Corporation prior to
    June 30, 2005, and that--
                (1) increases benefits, and
                (2) provides for special withdrawal liability rules under
            section 4203(f) of the Employee Retirement Income Security Act
            of 1974 (29 U.S.C. 1383),
    the amendments made by sections 201, 202, 211, and 212 of this Act
    shall not apply to the benefit increases under any plan amendment
    adopted prior to June 30, 2005, that are funded pursuant to such
    agreement if the plan is funded in compliance with such agreement (and
    any amendments thereto).

            Subtitle B--Amendments to Internal Revenue Code of 1986

    SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS.

        (a) In General.--Subpart A of part III of subchapter D of chapter 1
    of the Internal Revenue Code of 1986 (as added by this Act) is amended
    by inserting after section 430 the following new section:

    ``SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER PLANS.

        ``(a) In General.--For purposes of section 412, the accumulated
    funding deficiency of a multiemployer plan for any plan year is--
                ``(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 of the Employee Retirement Income
            Security Act of 1974.
        ``(b) Funding Standard Account.--
                ``(1) Account required.--Each multiemployer plan to which
            this part applies shall establish and maintain a funding
            standard account. Such account shall be credited and charged
            solely as provided in this section.
                ``(2) Charges to account.--For a plan year, the funding
            standard account shall be charged with the sum of--
                        ``(A) the normal cost of the plan for the plan
                    year,
                        ``(B) the amounts necessary to amortize in equal
                    annual installments (until fully amortized)--
                                ``(i) in the case of a plan which comes
                            into existence on or after January 1, 2008, the
                            unfunded past service liability under the plan
                            on the first day of the first plan year to
                            which this section applies, over a period of 15
                            plan years,
                                ``(ii) separately, with respect to each
                            plan year, the net increase (if any) in
                            unfunded past service liability under the plan
                            arising from plan amendments adopted in such
                            year, over a period of 15 plan years,
                                ``(iii) separately, with respect to each
                            plan year, the net experience loss (if any)
                            under the plan, over a period of 15 plan years,
                            and
                                ``(iv) separately, with respect to each
                            plan year, the net loss (if any) resulting from
                            changes in actuarial assumptions used under the
                            plan, over a period of 15 plan years,
                        ``(C) the amount necessary to amortize each waived
                    funding deficiency (within the meaning of section
                    412(c)(3)) for each prior plan year in equal annual
                    installments (until fully amortized) over a period of
                    15 plan years,
                        ``(D) the amount necessary to amortize in equal
                    annual installments (until fully amortized) over a
                    period of 5 plan years any amount credited to the
                    funding standard account under section 412(b)(3)(D) (as
                    in effect on the day before the date of the enactment
                    of the Pension Protection Act of 2006), and
                        ``(E) the amount necessary to amortize in equal
                    annual installments (until fully amortized) over a
                    period of 20 years the contributions which would be
                    required to be made under the plan but for the
                    provisions of section 412(c)(7)(A)(i)(I) (as in effect
                    on the day before the date of the enactment of the
                    Pension Protection Act of 2006).
                ``(3) Credits to account.--For a plan year, the funding
            standard account shall be credited with the sum of--
                        ``(A) the amount considered contributed by the
                    employer to or under the plan for the plan year,
                        ``(B) the amount necessary to amortize in equal
                    annual installments (until fully amortized)--
                                ``(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
                    2006), the excess (if any) of any debit balance in the
                    funding standard account (determined without regard to
                    this subparagraph) over any debit balance in the
                    alternative minimum funding standard account.
                ``(4) Special rule for amounts first amortized in plan
            years before 2008.--In the case of any amount amortized under
            section 412(b) (as in effect on the day before the date of the
            enactment of the Pension Protection Act of 2006) over any
            period beginning with a plan year beginning before 2008 in lieu
            of the amortization described in paragraphs (2)(B) and (3)(B),
            such amount shall continue to be amortized under such section
            as so in effect.
                ``(5) Combining and offsetting amounts to be amortized.--
            Under regulations prescribed by the Secretary, amounts required
            to be amortized under paragraph (2) or paragraph (3), as the
            case may be--
                        ``(A) may be combined into one amount under such
                    paragraph to be amortized over a period determined on
                    the basis of the remaining amortization period for all
                    items entering into such combined amount, and
                        ``(B) may be offset against amounts required to be
                    amortized under the other such paragraph, with the
                    resulting amount to be amortized over a period
                    determined on the basis of the remaining amortization
                    periods for all items entering into whichever of the
                    two amounts being offset is the greater.
                ``(6) Interest.--The funding standard account (and items
            therein) shall be charged or credited (as determined under
            regulations prescribed by the Secretary of the Treasury) with
            interest at the appropriate rate consistent with the rate or
            rates of interest used under the plan to determine costs.
                ``(7) Special rules relating to charges and credits to
            funding standard account.--For purposes of this part--
                        ``(A) Withdrawal liability.--Any amount received by
                    a multiemployer plan in payment of all or part of an
                    employer's withdrawal liability under part 1 of
                    subtitle E of title IV 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
                    4243(a) of such Act as of the end of the last plan year
                    that the plan was in reorganization.
                        ``(C) Plan payments to supplemental program or
                    withdrawal liability payment fund.--Any amount paid by
                    a plan during a plan year to the Pension Benefit
                    Guaranty Corporation pursuant to section 4222 of such
                    Act or to a fund exempt under section 501(c)(22)
                    pursuant to section 4223 of such Act shall reduce the
                    amount of contributions considered received by the plan
                    for the plan year.
                        ``(D) Interim withdrawal liability payments.--Any
                    amount paid by an employer pending a final
                    determination of the employer's withdrawal liability
                    under part 1 of subtitle E of title IV of such Act and
                    subsequently refunded to the employer by the plan shall
                    be charged to the funding standard account in
                    accordance with regulations prescribed by the
                    Secretary.
                        ``(E) Election for deferral of charge for portion
                    of net experience loss.--If an election is in effect
                    under section 412(b)(7)(F) (as in effect on the day
                    before the date of the enactment of the Pension
                    Protection Act of 2006) for any plan year, the funding
                    standard account shall be charged in the plan year to
                    which the portion of the net experience loss deferred
                    by such election was deferred with the amount so
                    deferred (and paragraph (2)(B)(iii) shall not apply to
                    the amount so charged).
                        ``(F) Financial assistance.--Any amount of any
                    financial assistance from the Pension Benefit Guaranty
                    Corporation to any plan, and any repayment of such
                    amount, shall be taken into account under this section
                    and section 412 in such manner as is determined by the
                    Secretary.
                        ``(G) Short-term benefits.--To the extent that any
                    plan amendment increases the unfunded past service
                    liability under the plan by reason of an increase in
                    benefits which are not payable as a life annuity but
                    are payable under the terms of the plan for a period
                    that does not exceed 14 years from the effective date
                    of the amendment, paragraph (2)(B)(ii) shall be applied
                    separately with respect to such increase in unfunded
                    past service liability by substituting the number of
                    years of the period during which such benefits are
                    payable for `15'.
        ``(c) Additional Rules.--
                ``(1) Determinations to be made under funding method.--For
            purposes of this part, normal costs, accrued liability, past
            service liabilities, and experience gains and losses shall be
            determined under the funding method used to determine costs
            under the plan.
                ``(2) Valuation of assets.--
                        ``(A) In general.--For purposes of this part, the
                    value of the plan's assets shall be determined on the
                    basis of any reasonable actuarial method of valuation
                    which takes into account fair market value and which is
                    permitted under regulations prescribed by the
                    Secretary.
                        ``(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.--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 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 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.
        ``(d) Extension of Amortization Periods for Multiemployer Plans.--
                ``(1) Automatic extension upon application by certain
            plans.--
                        ``(A) In general.--If the plan sponsor of a
                    multiemployer plan--
                                ``(i) submits to the Secretary an
                            application for an extension of the period of
                            years required to amortize any unfunded
                            liability described in any clause of subsection
                            (b)(2)(B) or described in subsection (b)(4),
                            and
                                ``(ii) includes with the application a
                            certification by the plan's actuary described
                            in subparagraph (B),
                    the Secretary shall extend the amortization period for
                    the period of time (not in excess of 5 years) specified
                    in the application. Such extension shall be in addition
                    to any extension under paragraph (2).
                        ``(B) Criteria.--A certification with respect to a
                    multiemployer plan is described in this subparagraph if
                    the plan's actuary certifies that, based on reasonable
                    assumptions--
                                ``(i) absent the extension under
                            subparagraph (A), the plan would have an
                            accumulated funding deficiency in the current
                            plan year or any of the 9 succeeding plan
                            years,
                                ``(ii) the plan sponsor has adopted a plan
                            to improve the plan's funding status,
                                ``(iii) the plan is projected to have
                            sufficient assets to timely pay expected
                            benefits and anticipated expenditures over the
                            amortization period as extended, and
                                ``(iv) the notice required under paragraph
                            (3)(A) has been provided.
                        ``(C) Termination.--The preceding provisions of
                    this paragraph shall not apply with respect to any
                    application submitted after December 31, 2014.
                ``(2) Alternative extension.--
                        ``(A) In general.--If the plan sponsor of a
                    multiemployer plan submits to the Secretary an
                    application for an extension of the period of years
                    required to amortize any unfunded liability described
                    in any clause of subsection (b)(2)(B) or described in
                    subsection (b)(4), the Secretary may extend the
                    amortization period for a period of time (not in excess
                    of 10 years reduced by the number of years of any
                    extension under paragraph (1) with respect to such
                    unfunded liability) if the Secretary makes the
                    determination described in subparagraph (B). Such
                    extension shall be in addition to any extension under
                    paragraph (1).
                        ``(B) Determination.--The Secretary may grant an
                    extension under subparagraph (A) if the Secretary
                    determines that--
                                ``(i) such extension would carry out the
                            purposes of this Act and would provide adequate
                            protection for participants under the plan and
                            their beneficiaries, and
                                ``(ii) the failure to permit such extension
                            would--
                                        ``(I) result in a substantial risk
                                    to the voluntary continuation of the
                                    plan, or a substantial curtailment of
                                    pension benefit levels or employee
                                    compensation, and
                                        ``(II) be adverse to the interests
                                    of plan participants in the aggregate.
                        ``(C) Action by secretary.--The Secretary shall act
                    upon any application for an extension under this
                    paragraph within 180 days of the submission of such
                    application. If the Secretary rejects the application
                    for an extension under this paragraph, the Secretary
                    shall provide notice to the plan detailing the specific
                    reasons for the rejection, including references to the
                    criteria set forth above.
                ``(3) Advance notice.--
                        ``(A) In general.--The Secretary shall, before
                    granting an extension under this subsection, require
                    each applicant to provide evidence satisfactory to such
                    Secretary that the applicant has provided notice of the
                    filing of the application for such extension to each
                    affected party (as defined in section 4001(a)(21) of
                    the Employee Retirement Income Security Act of 1974)
                    with respect to the affected plan. Such notice shall
                    include a description of the extent to which the plan
                    is funded for benefits which are guaranteed under title
                    IV of such Act and for benefit liabilities.
                        ``(B) Consideration of relevant information.--The
                    Secretary shall consider any relevant information
                    provided by a person to whom notice was given under
                    paragraph (1).''.
        (b) Effective Date.--
                (1) In general.--The amendments made by this section shall
            apply to plan years beginning after 2007.
                (2) Special rule for certain amortization extensions.--If
            the Secretary of the Treasury grants an extension under section
            304 of the Employee Retirement Income Security Act of 1974 and
            section 412(e) of the Internal Revenue Code of 1986 with
            respect to any application filed with the Secretary of the
            Treasury on or before June 30, 2005, the extension (and any
            modification thereof) shall be applied and administered under
            the rules of such sections as in effect before the enactment of
            this Act, including the use of the rate of interest determined
            under section 6621(b) of such Code.

    SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN
                  ENDANGERED OR CRITICAL STATUS.

        (a) In General.--Subpart A of part III of subchapter D of chapter 1
    of the Internal Revenue Code of 1986 (as amended by this Act) is
    amended by inserting after section 431 the following new section:

    ``SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN
                  ENDANGERED STATUS OR CRITICAL STATUS.

        ``(a) General Rule.--For purposes of this part, in the case of a
    multiemployer plan in effect on July 16, 2006 --
                ``(1) if the plan is in endangered status--
                        ``(A) the plan sponsor shall adopt and implement a
                    funding improvement plan in accordance with the
                    requirements of subsection (c), and
                        ``(B) the requirements of subsection (d) shall
                    apply during the funding plan adoption period and the
                    funding improvement period, and
                ``(2) if the plan is in critical status--
                        ``(A) the plan sponsor shall adopt and implement a
                    rehabilitation plan in accordance with the requirements
                    of subsection (e), and
                        ``(B) the requirements of subsection (f) shall
                    apply during the rehabilitation plan adoption period
                    and the rehabilitation period.
        ``(b) Determination of Endangered and Critical Status.--For
    purposes of this section--
                ``(1) Endangered status.--A multiemployer plan is in
            endangered status for a plan year if, as determined by the plan
            actuary under paragraph (3), the plan is not in critical status
            for the plan year and, as of the beginning of the plan year,
            either--
                        ``(A) the plan's funded percentage for such plan
                    year is less than 80 percent, or
                        ``(B) the plan has an accumulated funding
                    deficiency for such plan year, or is projected to have
                    such an accumulated funding deficiency for any of the 6
                    succeeding plan years, taking into account any
                    extension of amortization periods under section 431(d).
            For purposes of this section, a plan shall be treated as in
            seriously endangered status for a plan year if the plan is
            described in both subparagraphs (A) and (B).
                ``(2) Critical status.--A multiemployer plan is in critical
            status for a plan year if, as determined by the plan actuary
            under paragraph (3), the plan is described in 1 or more of the
            following subparagraphs as of the beginning of the plan year:
                        ``(A) A plan is described in this subparagraph if--
                                ``(i) the funded percentage of the plan is
                            less than 65 percent, and
                                ``(ii) the sum of--
                                        ``(I) the fair market value of plan
                                    assets, plus
                                        ``(II) the present value of the
                                    reasonably anticipated employer
                                    contributions for the current plan year
                                    and each of the 6 succeeding plan
                                    years, assuming that the terms of all
                                    collective bargaining agreements
                                    pursuant to which the plan is
                                    maintained for the current plan year
                                    continue in effect for succeeding plan
                                    years,
                            is less than the present value of all
                            nonforfeitable benefits projected to be payable
                            under the plan during the current plan year and
                            each of the 6 succeeding plan years (plus
                            administrative expenses for such plan years).
                        ``(B) A plan is described in this subparagraph if--
                                ``(i) the plan has an accumulated funding
                            deficiency for the current plan year, not
                            taking into account any extension of
                            amortization periods under section 431(d), or
                                ``(ii) the plan is projected to have an
                            accumulated funding deficiency for any of the 3
                            succeeding plan years (4 succeeding plan years
                            if the funded percentage of the plan is 65
                            percent or less), not taking into account any
                            extension of amortization periods under section
                            431(d).
                        ``(C) A plan is described in this subparagraph if--
                                ``(i)(I) the plan's normal cost for the
                            current plan year, plus interest (determined at
                            the rate used for determining costs under the
                            plan) for the current plan year on the amount
                            of unfunded benefit liabilities under the plan
                            as of the last date of the preceding plan year,
                            exceeds
                                ``(II) the present value of the reasonably
                            anticipated employer and employee contributions
                            for the current plan year,
                                ``(ii) the present value, as of the
                            beginning of the current plan year, of
                            nonforfeitable benefits of inactive
                            participants is greater than the present value
                            of nonforfeitable benefits of active
                            participants, and
                                ``(iii) the plan has an accumulated funding
                            deficiency for the current plan year, or is
                            projected to have such a deficiency for any of
                            the 4 succeeding plan years, not taking into
                            account any extension of amortization periods
                            under section 431(d).
                        ``(D) A plan is described in this subparagraph if
                    the sum of--
                                ``(i) the fair market value of plan assets,
                            plus
                                ``(ii) the present value of the reasonably
                            anticipated employer contributions for the
                            current plan year and each of the 4 succeeding
                            plan years, assuming that the terms of all
                            collective bargaining agreements pursuant to
                            which the plan is maintained for the current
                            plan year continue in effect for succeeding
                            plan years,
                    is less than the present value of all benefits
                    projected to be payable under the plan during the
                    current plan year and each of the 4 succeeding plan
                    years (plus administrative expenses for such plan
                    years).
                ``(3) Annual certification by plan actuary.--
                        ``(A) In general.--Not later than the 90th day of
                    each plan year of a multiemployer plan, the plan
                    actuary shall certify to the Secretary and to the plan
                    sponsor--
                                ``(i) whether or not the plan is in
                            endangered status for such plan year and
                            whether or not the plan is or will be in
                            critical status for such plan year, and
                                ``(ii) in the case of a plan which is in a
                            funding improvement or rehabilitation period,
                            whether or not the plan is making the scheduled
                            progress in meeting the requirements of its
                            funding improvement or rehabilitation plan.
                        ``(B) Actuarial projections of assets and
                    liabilities.--
                                ``(i) In general.--In making the
                            determinations and projections under this
                            subsection, the plan actuary shall make
                            projections required for the current and
                            succeeding plan years of the current value of
                            the assets of the plan and the present value of
                            all liabilities to participants and
                            beneficiaries under the plan for the current
                            plan year as of the beginning of such year. The
                            actuary's projections shall be based on
                            reasonable actuarial estimates, assumptions,
                            and methods that, except as provided in clause
                            (iii), offer the actuary's best estimate of
                            anticipated experience under the plan. The
                            projected present value of liabilities as of
                            the beginning of such year shall be determined
                            based on the most recent of either--
                                        ``(I) the actuarial statement
                                    required under section 103(d) of the
                                    Employee Retirement Income Security Act
                                    of 1974 with respect to the most
                                    recently filed annual report, or
                                        ``(II) the actuarial valuation for
                                    the preceding plan year.
                                ``(ii) Determinations of future
                            contributions.--Any actuarial projection of
                            plan assets shall assume--
                                        ``(I) reasonably anticipated
                                    employer contributions for the current
                                    and succeeding plan years, assuming
                                    that the terms of the one or more
                                    collective bargaining agreements
                                    pursuant to which the plan is
                                    maintained for the current plan year
                                    continue in effect for succeeding plan
                                    years, or
                                        ``(II) that employer contributions
                                    for the most recent plan year will
                                    continue indefinitely, but only if the
                                    plan actuary determines there have been
                                    no significant demographic changes that
                                    would make such assumption
                                    unreasonable.
                                ``(iii) Projected industry activity.--Any
                            projection of activity in the industry or
                            industries covered by the plan, including
                            future covered employment and contribution
                            levels, shall be based on information provided
                            by the plan sponsor, which shall act reasonably
                            and in good faith.
                        ``(C) Penalty for failure to secure timely
                    actuarial certification.--Any failure of the plan's
                    actuary to certify the plan's status under this
                    subsection by the date specified in subparagraph (A)
                    shall be treated for purposes of section 502(c)(2) of
                    the Employee Retirement Income Security Act of 1974 as
                    a failure or refusal by the plan administrator to file
                    the annual report required to be filed with the
                    Secretary under section 101(b)(4) of such Act.
                        ``(D) Notice.--
                                ``(i) In general.--In any case in which it
                            is certified under subparagraph (A) that a
                            multiemployer plan is or will be in endangered
                            or critical status for a plan year, the plan
                            sponsor shall, not later than 30 days after the
                            date of the certification, provide notification
                            of the endangered or critical status to the
                            participants and beneficiaries, the bargaining
                            parties, the Pension Benefit Guaranty
                            Corporation, and the Secretary of Labor.
                                ``(ii) Plans in critical status.--If it is
                            certified under subparagraph (A) that a
                            multiemployer plan is or will be in critical
                            status, the plan sponsor shall include in the
                            notice under clause (i) an explanation of the
                            possibility that--
                                        ``(I) adjustable benefits (as
                                    defined in subsection (e)(8)) may be
                                    reduced, and
                                        ``(II) such reductions may apply to
                                    participants and beneficiaries whose
                                    benefit commencement date is on or
                                    after the date such notice is provided
                                    for the first plan year in which the
                                    plan is in critical status.
                                ``(iii) Model notice.--The Secretary of
                            Labor shall prescribe a model notice that a
                            multiemployer plan may use to satisfy the
                            requirements under clause (ii).
        ``(c) Funding Improvement Plan Must Be Adopted for Multiemployer
    Plans in Endangered Status.--
                ``(1) In general.--In any case in which a multiemployer
            plan is in endangered status for a plan year, the plan sponsor,
            in accordance with this subsection--
                        ``(A) shall adopt a funding improvement plan not
                    later than 240 days following the required date for the
                    actuarial certification of endangered status under
                    subsection (b)(3)(A), and
                        ``(B) within 30 days after the adoption of the
                    funding improvement plan--
                                ``(i) shall provide to the bargaining
                            parties 1 or more schedules showing revised
                            benefit structures, revised contribution
                            structures, or both, which, if adopted, may
                            reasonably be expected to enable the
                            multiemployer plan to meet the applicable
                            benchmarks in accordance with the funding
                            improvement plan, including--
                                        ``(I) one proposal for reductions
                                    in the amount of future benefit
                                    accruals necessary to achieve the
                                    applicable benchmarks, assuming no
                                    amendments increasing contributions
                                    under the plan (other than amendments
                                    increasing contributions necessary to
                                    achieve the applicable benchmarks after
                                    amendments have reduced future benefit
                                    accruals to the maximum extent
                                    permitted by law), and
                                        ``(II) one proposal for increases
                                    in contributions under the plan
                                    necessary to achieve the applicable
                                    benchmarks, assuming no amendments
                                    reducing future benefit accruals under
                                    the plan, and
                                ``(ii) may, if the plan sponsor deems
                            appropriate, prepare and provide the bargaining
                            parties with additional information relating to
                            contribution rates or benefit reductions,
                            alternative schedules, or other information
                            relevant to achieving the applicable benchmarks
                            in accordance with the funding improvement
                            plan.
                    For purposes of this section, the term `applicable
                    benchmarks' means the requirements applicable to the
                    multiemployer plan under paragraph (3) (as modified by
                    paragraph (5)).
                ``(2) Exception for years after process begins.--Paragraph
            (1) shall not apply to a plan year if such year is in a funding
            plan adoption period or funding improvement period by reason of
            the plan being in endangered status for a preceding plan year.
            For purposes of this section, such preceding plan year shall be
            the initial determination year with respect to the funding
            improvement plan to which it relates.
                ``(3) Funding improvement plan.--For purposes of this
            section--
                        ``(A) In general.--A funding improvement plan is a
                    plan which consists of the actions, including options
                    or a range of options to be proposed to the bargaining
                    parties, formulated to provide, based on reasonably
                    anticipated experience and reasonable actuarial
                    assumptions, for the attainment by the plan during the
                    funding improvement period of the following
                    requirements:
                                ``(i) Increase in plan's funding
                            percentage.--The plan's funded percentage as of
                            the close of the funding improvement period
                            equals or exceeds a percentage equal to the sum
                            of--
                                        ``(I) such percentage as of the
                                    beginning of such period, plus
                                        ``(II) 33 percent of the difference
                                    between 100 percent and the percentage
                                    under subclause (I).
                                ``(ii) Avoidance of accumulated funding
                            deficiencies.--No accumulated funding
                            deficiency for any plan year during the funding
                            improvement period (taking into account any
                            extension of amortization periods under section
                            304(d)).
                        ``(B) Seriously endangered plans.--In the case of a
                    plan in seriously endangered status, except as provided
                    in paragraph (5), subparagraph (A)(i)(II) shall be
                    applied by substituting `20 percent' for `33 percent'.
                ``(4) Funding improvement period.--For purposes of this
            section--
                        ``(A) In general.--The funding improvement period
                    for any funding improvement plan adopted pursuant to
                    this subsection is the 10-year period beginning on the
                    first day of the first plan year of the multiemployer
                    plan beginning after the earlier of--
                                ``(i) the second anniversary of the date of
                            the adoption of the funding improvement plan,
                            or
                                ``(ii) the expiration of the collective
                            bargaining agreements in effect on the due date
                            for the actuarial certification of endangered
                            status for the initial determination year under
                            subsection (b)(3)(A) and covering, as of such
                            due date, at least 75 percent of the active
                            participants in such multiemployer plan.
                        ``(B) Seriously endangered plans.--In the case of a
                    plan in seriously endangered status, except as provided
                    in paragraph (5), subparagraph (A) shall be applied by
                    substituting `15-year period' for `10-year period'.
                        ``(C) Coordination with changes in status.--
                                ``(i) Plans no longer in endangered
                            status.--If the plan's actuary certifies under
                            subsection (b)(3)(A) for a plan year in any
                            funding plan adoption period or funding
                            improvement period that the plan is no longer
                            in endangered status and is not in critical
                            status, the funding plan adoption period or
                            funding improvement period, whichever is
                            applicable, shall end as of the close of the
                            preceding plan year.
                                ``(ii) Plans in critical status.--If the
                            plan's actuary certifies under subsection
                            (b)(3)(A) for a plan year in any funding plan
                            adoption period or funding improvement period
                            that the plan is in critical status, the
                            funding plan adoption period or funding
                            improvement period, whichever is applicable,
                            shall end as of the close of the plan year
                            preceding the first plan year in the
                            rehabilitation period with respect to such
                            status.
                        ``(D) Plans in endangered status at end of
                    period.--If the plan's actuary certifies under
                    subsection (b)(3)(A) for the first plan year following
                    the close of the period described in subparagraph (A)
                    that the plan is in endangered status, the provisions
                    of this subsection and subsection (d) shall be applied
                    as if such first plan year were an initial
                    determination year, except that the plan may not be
                    amended in a manner inconsistent with the funding
                    improvement plan in effect for the preceding plan year
                    until a new funding improvement plan is adopted.
                ``(5) Special rules for seriously endangered plans more
            than 70 percent funded.--
                        ``(A) In general.--If the funded percentage of a
                    plan in seriously endangered status was more than 70
                    percent as of the beginning of the initial
                    determination year--
                                ``(i) paragraphs (3)(B) and (4)(B) shall
                            apply only if the plan's actuary certifies,
                            within 30 days after the certification under
                            subsection (b)(3)(A) for the initial
                            determination year, that, based on the terms of
                            the plan and the collective bargaining
                            agreements in effect at the time of such
                            certification, the plan is not projected to
                            meet the requirements of paragraph (3)(A)
                            (without regard to paragraphs (3)(B) and
                            (4)(B)), and
                                ``(ii) if there is a certification under
                            clause (i), the plan may, in formulating its
                            funding improvement plan, only take into
                            account the rules of paragraph (3)(B) and
                            (4)(B) for plan years in the funding
                            improvement period beginning on or before the
                            date on which the last of the collective
                            bargaining agreements described in paragraph
                            (4)(A)(ii) expires.
                        ``(B) Special rule after expiration of
                    agreements.--Notwithstanding subparagraph (A)(ii), if,
                    for any plan year ending after the date described in
                    subparagraph (A)(ii), the plan actuary certifies (at
                    the time of the annual certification under subsection
                    (b)(3)(A) for such plan year) that, based on the terms
                    of the plan and collective bargaining agreements in
                    effect at the time of that annual certification, the
                    plan is not projected to be able to meet the
                    requirements of paragraph (3)(A) (without regard to
                    paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and
                    (4)(B) shall continue to apply for such year.
                ``(6) Updates to funding improvement plans and schedules.--
                        ``(A) Funding improvement plan.--The plan sponsor
                    shall annually update the funding improvement plan and
                    shall file the update with the plan's annual report
                    under section 104 of the Employee Retirement Income
                    Security Act of 1974.
                        ``(B) Schedules.--The plan sponsor shall annually
                    update any schedule of contribution rates provided
                    under this subsection to reflect the experience of the
                    plan.
                        ``(C) Duration of schedule.--A schedule of
                    contribution rates provided by the plan sponsor and
                    relied upon by bargaining parties in negotiating a
                    collective bargaining agreement shall remain in effect
                    for the duration of that collective bargaining
                    agreement.
                ``(7) Imposition of default schedule where failure to adopt
            funding improvement plan.--
                        ``(A) In general.--If--
                                ``(i) a collective bargaining agreement
                            providing for contributions under a
                            multiemployer plan that was in effect at the
                            time the plan entered endangered status
                            expires, and
                                ``(ii) after receiving one or more
                            schedules from the plan sponsor under paragraph
                            (1)(B), the bargaining parties with respect to
                            such agreement fail to agree on changes to
                            contribution or benefit schedules necessary to
                            meet the applicable benchmarks in accordance
                            with the funding improvement plan,
                    the plan sponsor shall implement the schedule described
                    in paragraph (1)(B)(i)(I) beginning on the date
                    specified in subparagraph (B).
                        ``(B) Date of implementation.--The date specified
                    in this subparagraph is the earlier of the date--
                                ``(i) on which the Secretary of Labor
                            certifies that the parties are at an impasse,
                            or
                                ``(ii) which is 180 days after the date on
                            which the collective bargaining agreement
                            described in subparagraph (A) expires.
                ``(8) Funding plan adoption period.--For purposes of this
            section, the term `funding plan adoption period' means the
            period beginning on the date of the certification under
            subsection (b)(3)(A) for the initial determination year and
            ending on the day before the first day of the funding
            improvement period.
        ``(d) Rules for Operation of Plan During Adoption and Improvement
    Periods.--
                ``(1) Special rules for plan adoption period.--During the
            funding plan adoption period--
                        ``(A) the plan sponsor may not accept a collective
                    bargaining agreement or participation agreement with
                    respect to the multiemployer plan that provides for--
                                ``(i) a reduction in the level of
                            contributions for any participants,
                                ``(ii) a suspension of contributions with
                            respect to any period of service, or
                                ``(iii) any new direct or indirect
                            exclusion of younger or newly hired employees
                            from plan participation,
                        ``(B) no amendment of the plan which increases the
                    liabilities of the plan by reason of any increase in
                    benefits, any change in the accrual of benefits, or any
                    change in the rate at which benefits become
                    nonforfeitable under the plan may be adopted unless the
                    amendment is required as a condition of qualification
                    under part I of subchapter D of chapter 1 or to comply
                    with other applicable law, and
                        ``(C) in the case of a plan in seriously endangered
                    status, the plan sponsor shall take all reasonable
                    actions which are consistent with the terms of the plan
                    and applicable law and which are expected, based on
                    reasonable assumptions, to achieve--
                                ``(i) an increase in the plan's funded
                            percentage, and
                                ``(ii) postponement of an accumulated
                            funding deficiency for at least 1 additional
                            plan year.
            Actions under subparagraph (C) include applications for
            extensions of amortization periods under section 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.
                ``(2) Compliance with funding improvement plan.--
                        ``(A) In general.--A plan may not be amended after
                    the date of the adoption of a funding improvement plan
                    so as to be inconsistent with the funding improvement
                    plan.
                        ``(B) No reduction in contributions.--A plan
                    sponsor may not during any funding improvement period
                    accept a collective bargaining agreement or
                    participation agreement with respect to the
                    multiemployer plan that provides for--
                                ``(i) a reduction in the level of
                            contributions for any participants,
                                ``(ii) a suspension of contributions with
                            respect to any period of service, or
                                ``(iii) any new direct or indirect
                            exclusion of younger or newly hired employees
                            from plan participation.
                        ``(C) Special rules for benefit increases.--A plan
                    may not be amended after the date of the adoption of a
                    funding improvement plan so as to increase benefits,
                    including future benefit accruals, unless the plan
                    actuary certifies that the benefit increase is
                    consistent with the funding improvement plan and is
                    paid for out of contributions not required by the
                    funding improvement plan to meet the applicable
                    benchmark in accordance with the schedule contemplated
                    in the funding improvement plan.
        ``(e) Rehabilitation Plan Must Be Adopted for Multiemployer Plans
    in Critical Status.--
                ``(1) In general.--In any case in which a multiemployer
            plan is in critical status for a plan year, the plan sponsor,
            in accordance with this subsection--
                        ``(A) shall adopt a rehabilitation plan not later
                    than 240 days following the required date for the
                    actuarial certification of critical status under
                    subsection (b)(3)(A), and
                        ``(B) within 30 days after the adoption of the
                    rehabilitation plan--
                                ``(i) shall provide to the bargaining
                            parties 1 or more schedules showing revised
                            benefit structures, revised contribution
                            structures, or both, which, if adopted, may
                            reasonably be expected to enable the
                            multiemployer plan to emerge from critical
                            status in accordance with the rehabilitation
                            plan, and
                                ``(ii) may, if the plan sponsor deems
                            appropriate, prepare and provide the bargaining
                            parties with additional information relating to
                            contribution rates or benefit reductions,
                            alternative schedules, or other information
                            relevant to emerging from critical status in
                            accordance with the rehabilitation plan.
            The schedule or schedules described in subparagraph (B)(i)
            shall reflect reductions in future benefit accruals and
            adjustable benefits, and increases in contributions, that the
            plan sponsor determines are reasonably necessary to emerge from
            critical status. One schedule shall be designated as the
            default schedule and such schedule shall assume that there are
            no increases in contributions under the plan other than the
            increases necessary to emerge from critical status after future
            benefit accruals and other benefits (other than benefits the
            reduction or elimination of which are not permitted under
            section 411(d)(6)) have been reduced to the maximum extent
            permitted by law.
                ``(2) Exception for years after process begins.--Paragraph
            (1) shall not apply to a plan year if such year is in a
            rehabilitation plan adoption period or rehabilitation period by
            reason of the plan being in critical status for a preceding
            plan year. For purposes of this section, such preceding plan
            year shall be the initial critical year with respect to the
            rehabilitation plan to which it relates.
                ``(3) Rehabilitation plan.--For purposes of this section--
                        ``(A) In general.--A rehabilitation plan is a plan
                    which consists of--
                                ``(i) actions, including options or a range
                            of options to be proposed to the bargaining
                            parties, formulated, based on reasonably
                            anticipated experience and reasonable actuarial
                            assumptions, to enable the plan to cease to be
                            in critical status by the end of the
                            rehabilitation period and may include
                            reductions in plan expenditures (including plan
                            mergers and consolidations), reductions in
                            future benefit accruals or increases in
                            contributions, if agreed to by the bargaining
                            parties, or any combination of such actions, or
                                ``(ii) if the plan sponsor determines that,
                            based on reasonable actuarial assumptions and
                            upon exhaustion of all reasonable measures, the
                            plan can not reasonably be expected to emerge
                            from critical status by the end of the
                            rehabilitation period, reasonable measures to
                            emerge from critical status at a later time or
                            to forestall possible insolvency (within the
                            meaning of section 4245 of the Employee
                            Retirement Income Security Act of 1974).
                    A rehabilitation plan must provide annual standards for
                    meeting the requirements of such rehabilitation plan.
                    Such plan shall also include the schedules required to
                    be provided under paragraph (1)(B)(i) and if clause
                    (ii) applies, shall set forth the alternatives
                    considered, explain why the plan is not reasonably
                    expected to emerge from critical status by the end of
                    the rehabilitation period, and specify when, if ever,
                    the plan is expected to emerge from critical status in
                    accordance with the rehabilitation plan.
                        ``(B) Updates to rehabilitation plan and
                    schedules.--
                                ``(i) Rehabilitation plan.--The plan
                            sponsor shall annually update the
                            rehabilitation plan and shall file the update
                            with the plan's annual report under section 104
                            of the Employee Retirement Income Security Act
                            of 1974.
                                ``(ii) Schedules.--The plan sponsor shall
                            annually update any schedule of contribution
                            rates provided under this subsection to reflect
                            the experience of the plan.
                                ``(iii) Duration of schedule.--A schedule
                            of contribution rates provided by the plan
                            sponsor and relied upon by bargaining parties
                            in negotiating a collective bargaining
                            agreement shall remain in effect for the
                            duration of that collective bargaining
                            agreement.
                        ``(C) Imposition of default schedule where failure
                    to adopt rehabilitation plan.--
                                ``(i) In general.--If--
                                        ``(I) a collective bargaining
                                    agreement providing for contributions
                                    under a multiemployer plan that was in
                                    effect at the time the plan entered
                                    critical status expires, and
                                        ``(II) after receiving one or more
                                    schedules from the plan sponsor under
                                    paragraph (1)(B), the bargaining
                                    parties with respect to such agreement
                                    fail to adopt a contribution or benefit
                                    schedules with terms consistent with
                                    the rehabilitation plan and the
                                    schedule from the plan sponsor under
                                    paragraph (1)(B)(i),
                            the plan sponsor shall implement the default
                            schedule described in the last sentence of
                            paragraph (1) beginning on the date specified
                            in clause (ii).
                                ``(ii) Date of implementation.--The date
                            specified in this clause is the earlier of the
                            date--
                                        ``(I) on which the Secretary of
                                    Labor certifies that the parties are at
                                    an impasse, or
                                        ``(II) which is 180 days after the
                                    date on which the collective bargaining
                                    agreement described in clause (i)
                                    expires.
                ``(4) Rehabilitation period.--For purposes of this
            section--
                        ``(A) In general.--The rehabilitation period for a
                    plan in critical status is the 10-year period beginning
                    on the first day of the first plan year of the
                    multiemployer plan following the earlier of--
                                ``(i) the second anniversary of the date of
                            the adoption of the rehabilitation plan, or
                                ``(ii) the expiration of the collective
                            bargaining agreements in effect on the date of
                            the due date for the actuarial certification of
                            critical status for the initial critical year
                            under subsection (a)(1) and covering, as of
                            such date at least 75 percent of the active
                            participants in such multiemployer plan.
                    If a plan emerges from critical status as provided
                    under subparagraph (B) before the end of such 10-year
                    period, the rehabilitation period shall end with the
                    plan year preceding the plan year for which the
                    determination under subparagraph (B) is made.
                        ``(B) Emergence.--A plan in critical status shall
                    remain in such status until a plan year for which the
                    plan actuary certifies, in accordance with subsection
                    (b)(3)(A), that the plan is not projected to have an
                    accumulated funding deficiency for the plan year or any
                    of the 9 succeeding plan years, without regard to the
                    use of the shortfall method and taking into account any
                    extension of amortization periods under section 431(d).
                ``(5) Rehabilitation plan adoption period.--For purposes of
            this section, the term `rehabilitation plan adoption period'
            means the period beginning on the date of the certification
            under subsection (b)(3)(A) for the initial critical year and
            ending on the day before the first day of the rehabilitation
            period.
                ``(6) Limitation on reduction in rates of future
            accruals.--Any reduction in the rate of future accruals under
            the default schedule described in paragraph (1)(B)(i) shall not
            reduce the rate of future accruals below--
                        ``(A) a monthly benefit (payable as a single life
                    annuity commencing at the participant's normal
                    retirement age) equal to 1 percent of the contributions
                    required to be made with respect to a participant, or
                    the equivalent standard accrual rate for a participant
                    or group of participants under the collective
                    bargaining agreements in effect as of the first day of
                    the initial critical year, or
                        ``(B) if lower, the accrual rate under the plan on
                    such first day.
            The equivalent standard accrual rate shall be determined by the
            plan sponsor based on the standard or average contribution base
            units which the plan sponsor determines to be representative
            for active participants and such other factors as the plan
            sponsor determines to be relevant. Nothing in this paragraph
            shall be construed as limiting the ability of the plan sponsor
            to prepare and provide the bargaining parties with alternative
            schedules to the default schedule that established lower or
            higher accrual and contribution rates than the rates otherwise
            described in this paragraph.
                ``(7) Automatic employer surcharge.--
                        ``(A) Imposition of surcharge.--Each employer
                    otherwise obligated to make a contribution for the
                    initial critical year shall be obligated to pay to the
                    plan for such year a surcharge equal to 5 percent of
                    the contribution otherwise required under the
                    applicable collective bargaining agreement (or other
                    agreement pursuant to which the employer contributes).
                    For each succeeding plan year in which the plan is in
                    critical status for a consecutive period of years
                    beginning with the initial critical year, the surcharge
                    shall be 10 percent of the contribution otherwise so
                    required.
                        ``(B) Enforcement of surcharge.--The surcharges
                    under subparagraph (A) shall be due and payable on the
                    same schedule as the contributions on which the
                    surcharges are based. Any failure to make a surcharge
                    payment shall be treated as a delinquent contribution
                    under section 515 of the Employee Retirement Income
                    Security Act of 1974 and shall be enforceable as such.
                        ``(C) Surcharge to terminate upon collective
                    bargaining agreement renegotiation.--The surcharge
                    under this paragraph shall cease to be effective with
                    respect to employees covered by a collective bargaining
                    agreement (or other agreement pursuant to which the
                    employer contributes), beginning on the effective date
                    of a collective bargaining agreement (or other such
                    agreement) that includes terms consistent with a
                    schedule presented by the plan sponsor under paragraph
                    (1)(B)(i), as modified under subparagraph (B) of
                    paragraph (3).
                        ``(D) Surcharge not to apply until employer
                    receives notice.--The surcharge under this paragraph
                    shall not apply to an employer until 30 days after the
                    employer has been notified by the plan sponsor that the
                    plan is in critical status and that the surcharge is in
                    effect.
                        ``(E) Surcharge not to generate increased benefit
                    accruals.--Notwithstanding any provision of a plan to
                    the contrary, the amount of any surcharge under this
                    paragraph shall not be the basis for any benefit
                    accrual under the plan.
                ``(8) Benefit adjustments.--
                        ``(A) Adjustable benefits.--
                                ``(i) In general.--Notwithstanding section
                            204(g), the plan sponsor shall, subject to the
                            notice requirement under subparagraph (C), make
                            any reductions to adjustable benefits which the
                            plan sponsor deems appropriate, based upon the
                            outcome of collective bargaining over the
                            schedule or schedules provided under paragraph
                            (1)(B)(i).
                                ``(ii) Exception for retirees.--Except in
                            the case of adjustable benefits described in
                            clause (iv)(III), the plan sponsor of a plan in
                            critical status shall not reduce adjustable
                            benefits of any participant or beneficiary
                            whose benefit commencement date is before the
                            date on which the plan provides notice to the
                            participant or beneficiary under subsection
                            (b)(3)(D) for the initial critical year.
                                ``(iii) Plan sponsor flexibility.--The plan
                            sponsor shall include in the schedules provided
                            to the bargaining parties an allowance for
                            funding the benefits of participants with
                            respect to whom contributions are not currently
                            required to be made, and shall reduce their
                            benefits to the extent permitted under this
                            title and considered appropriate by the plan
                            sponsor based on the plan's then current
                            overall funding status.
                                ``(iv) Adjustable benefit defined.--For
                            purposes of this paragraph, the term
                            `adjustable benefit' means--
                                        ``(I) benefits, rights, and
                                    features under the plan, including
                                    post-retirement death benefits, 60-
                                    month guarantees, disability benefits
                                    not yet in pay status, and similar
                                    benefits,
                                        ``(II) any early retirement benefit
                                    or retirement-type subsidy (within the
                                    meaning of section 411(d)(6)(B)(i)) and
                                    any benefit payment option (other than
                                    the qualified joint-and survivor
                                    annuity), and
                                        ``(III) benefit increases that
                                    would not be eligible for a guarantee
                                    under section 4022A of the Employee
                                    Retirement Income Security Act of 1974
                                    on the first day of initial critical
                                    year because the increases were adopted
                                    (or, if later, took effect) less than
                                    60 months before such first day.
                        ``(B) Normal retirement benefits protected.--Except
                    as provided in subparagraph (A)(iv)(III), nothing in
                    this paragraph shall be construed to permit a plan to
                    reduce the level of a participant's accrued benefit
                    payable at normal retirement age.
                        ``(C) Notice requirements.--
                                ``(i) In general.--No reduction may be made
                            to adjustable benefits under subparagraph (A)
                            unless notice of such reduction has been given
                            at least 30 days before the general effective
                            date of such reduction for all participants and
                            beneficiaries to--
                                        ``(I) plan participants and
                                    beneficiaries,
                                        ``(II) each employer who has an
                                    obligation to contribute (within the
                                    meaning of section 4212(a)) under the
                                    plan, and
                                        ``(III) each employee organization
                                    which, for purposes of collective
                                    bargaining, represents plan
                                    participants employed by such an
                                    employer.
                                ``(ii) Content of notice.--The notice under
                            clause (i) shall contain--
                                        ``(I) sufficient information to
                                    enable participants and beneficiaries
                                    to understand the effect of any
                                    reduction on their benefits, including
                                    an estimate (on an annual or monthly
                                    basis) of any affected adjustable
                                    benefit that a participant or
                                    beneficiary would otherwise have been
                                    eligible for as of the general
                                    effective date described in clause (i),
                                    and
                                        ``(II) information as to the rights
                                    and remedies of plan participants and
                                    beneficiaries as well as how to contact
                                    the Department of Labor for further
                                    information and assistance where
                                    appropriate.
                                ``(iii) Form and manner.--Any notice under
                            clause (i)--
                                        ``(I) shall be provided in a form
                                    and manner prescribed in regulations of
                                    the Secretary of Labor,
                                        ``(II) shall be written in a manner
                                    so as to be understood by the average
                                    plan participant, and
                                        ``(III) may be provided in written,
                                    electronic, or other appropriate form
                                    to the extent such form is reasonably
                                    accessible to persons to whom the
                                    notice is required to be provided.
                            The Secretary of Labor shall in the regulations
                            prescribed under subclause (I) establish a
                            model notice that a plan sponsor may use to
                            meet the requirements of this subparagraph.
                ``(9) Adjustments disregarded in withdrawal liability
            determination.--
                        ``(A) Benefit reductions.--Any benefit reductions
                    under this subsection shall be disregarded in
                    determining a plan's unfunded vested benefits for
                    purposes of determining an employer's withdrawal
                    liability under section 4201 of the Employee Retirement
                    Income Security Act of 1974.
                        ``(B) Surcharges.--Any surcharges under paragraph
                    (7) shall be disregarded in determining an employer's
                    withdrawal liability under section 4211 of such Act,
                    except for purposes of determining the unfunded vested
                    benefits attributable to an employer under section
                    4211(c)(4) of such Act or a comparable method approved
                    under section 4211(c)(5) of such Act.
                        ``(C) Simplified calculations.--The Pension Benefit
                    Guaranty Corporation shall prescribe simplified methods
                    for the application of this paragraph in determining
                    withdrawal liability.
        ``(f) Rules for Operation of Plan During Adoption and
    Rehabilitation Period.--
                ``(1) Compliance with rehabilitation plan.--
                        ``(A) In general.--A plan may not be amended after
                    the date of the adoption of a rehabilitation plan under
                    subsection (e) so as to be inconsistent with the
                    rehabilitation plan.
                        ``(B) Special rules for benefit increases.--A plan
                    may not be amended after the date of the adoption of a
                    rehabilitation plan under subsection (e) so as to
                    increase benefits, including future benefit accruals,
                    unless the plan actuary certifies that such increase is
                    paid for out of additional contributions not
                    contemplated by the rehabilitation plan, and, after
                    taking into account the benefit increase, the
                    multiemployer plan still is reasonably expected to
                    emerge from critical status by the end of the
                    rehabilitation period on the schedule contemplated in
                    the rehabilitation plan.
                ``(2) Restriction on lump sums and similar benefits.--
                        ``(A) In general.--Effective on the date the notice
                    of certification of the plan's critical status for the
                    initial critical year under subsection (b)(3)(D) is
                    sent, and notwithstanding section 411(d)(6), the plan
                    shall not pay--
                                ``(i) any payment, in excess of the monthly
                            amount paid under a single life annuity (plus
                            any social security supplements described in
                            the last sentence of section 411(b)(1)(A)),
                                ``(ii) any payment for the purchase of an
                            irrevocable commitment from an insurer to pay
                            benefits, and
                                ``(iii) any other payment specified by the
                            Secretary by regulations.
                        ``(B) Exception.--Subparagraph (A) shall not apply
                    to a benefit which under section 411(a)(11) may be
                    immediately distributed without the consent of the
                    participant or to any makeup payment in the case of a
                    retroactive annuity starting date or any similar
                    payment of benefits owed with respect to a prior
                    period.
                ``(3) Adjustments disregarded in withdrawal liability
            determination.--Any benefit reductions under this subsection
            shall be disregarded in determining a plan's unfunded vested
            benefits for purposes of determining an employer's withdrawal
            liability under section 4201 of the Employee Retirement Income
            Security Act of 1974.
                ``(4) Special rules for plan adoption period.--During the
            rehabilitation plan adoption period--
                        ``(A) the plan sponsor may not accept a collective
                    bargaining agreement or participation agreement with
                    respect to the multiemployer plan that provides for--
                                ``(i) a reduction in the level of
                            contributions for any participants,
                                ``(ii) a suspension of contributions with
                            respect to any period of service, or
                                ``(iii) any new direct or indirect
                            exclusion of younger or newly hired employees
                            from plan participation, and
                        ``(B) no amendment of the plan which increases the
                    liabilities of the plan by reason of any increase in
                    benefits, any change in the accrual of benefits, or any
                    change in the rate at which benefits become
                    nonforfeitable under the plan may be adopted unless the
                    amendment is required as a condition of qualification
                    under part I of subchapter D of chapter 1 or to comply
                    with other applicable law.
        ``(g) Expedited Resolution of Plan Sponsor Decisions.--If, within
    60 days of the due date for adoption of a funding improvement plan or a
    rehabilitation plan under subsection (e), the plan sponsor of a plan in
    endangered status or a plan in critical status has not agreed on a
    funding improvement plan or rehabilitation plan, then any member of the
    board or group that constitutes the plan sponsor may require that the
    plan sponsor enter into an expedited dispute resolution procedure for
    the development and adoption of a funding improvement plan or
    rehabilitation plan.
        ``(h) Nonbargained Participation.--
                ``(1) Both bargained and nonbargained employee-
            participants.--In the case of an employer that contributes to a
            multiemployer plan with respect to both employees who are
            covered by one or more collective bargaining agreements and
            employees who are not so covered, if the plan is in endangered
            status or in critical status, benefits of and contributions for
            the nonbargained employees, including surcharges on those
            contributions, shall be determined as if those nonbargained
            employees were covered under the first to expire of the
            employer's collective bargaining agreements in effect when the
            plan entered endangered or critical status.
                ``(2) Nonbargained employees only.--In the case of an
            employer that contributes to a multiemployer plan only with
            respect to employees who are not covered by a collective
            bargaining agreement, this section shall be applied as if the
            employer were the bargaining party, and its participation
            agreement with the plan were a collective bargaining agreement
            with a term ending on the first day of the plan year beginning
            after the employer is provided the schedule or schedules
            described in subsections (c) and (e).
        ``(i) Definitions; Actuarial Method.--For purposes of this
    section--
                ``(1) Bargaining party.--The term `bargaining party'
            means--
                        ``(A)(i) except as provided in clause (ii), an
                    employer who has an obligation to contribute under the
                    plan; or
                        ``(ii) in the case of a plan described under
                    section 404(c), or a continuation of such a plan, the
                    association of employers that is the employer settlor
                    of the plan; and
                        ``(B) an employee organization which, for purposes
                    of collective bargaining, represents plan participants
                    employed by an employer who has an obligation to
                    contribute under the plan.
                ``(2) Funded percentage.--The term `funded percentage'
            means the percentage equal to a fraction--
                        ``(A) the numerator of which is the value of the
                    plan's assets, as determined under section 431(c)(2),
                    and
                        ``(B) the denominator of which is the accrued
                    liability of the plan, determined using actuarial
                    assumptions described in section 431(c)(3).
                ``(3) Accumulated funding deficiency.--The term
            `accumulated funding deficiency' has the meaning given such
            term in section 412(a).
                ``(4) Active participant.--The term `active participant'
            means, in connection with a multiemployer plan, a participant
            who is in covered service under the plan.
                ``(5) Inactive participant.--The term `inactive
            participant' means, in connection with a multiemployer plan, a
            participant, or the beneficiary or alternate payee of a
            participant, who--
                        ``(A) is not in covered service under the plan, and
                        ``(B) is in pay status under the plan or has a
                    nonforfeitable right to benefits under the plan.
                ``(6) Pay status.--A person is in pay status under a
            multiemployer plan if--
                        ``(A) at any time during the current plan year,
                    such person is a participant or beneficiary under the
                    plan and is paid an early, late, normal, or disability
                    retirement benefit under the plan (or a death benefit
                    under the plan related to a retirement benefit), or
                        ``(B) to the extent provided in regulations of the
                    Secretary, such person is entitled to such a benefit
                    under the plan.
                ``(7) Obligation to contribute.--The term `obligation to
            contribute' has the meaning given such term under section
            4212(a) of the Employee Retirement Income Security Act of 1974.
                ``(8) Actuarial method.--Notwithstanding any other
            provision of this section, the actuary's determinations with
            respect to a plan's normal cost, actuarial accrued liability,
            and improvements in a plan's funded percentage under this
            section shall be based upon the unit credit funding method
            (whether or not that method is used for the plan's actuarial
            valuation).
                ``(9) Plan sponsor.--In the case of a plan described under
            section 404(c), or a continuation of such a plan, the term
            `plan sponsor' means the bargaining parties described under
            paragraph (1).
                ``(10) Benefit commencement date.--The term `benefit
            commencement date' means the annuity starting date (or in the
            case of a retroactive annuity starting date, the date on which
            benefit payments begin).''
        (b) Excise Taxes on Failures Relating to Multiemployer Plans in
    Endangered or Critical Status.--
                (1) In general.--Section 4971 of the Internal Revenue Code
            of 1986 is amended by redesignating subsection (g) as
            subsection (h) and by inserting after subsection (f) the
            following:
        ``(g) Multiemployer Plans in Endangered or Critical Status.--
                ``(1) In general.--Except as provided in this subsection--
                        ``(A) no tax shall be imposed under this section
                    for a taxable year with respect to a multiemployer plan
                    if, for the plan years ending with or within the
                    taxable year, the plan is in critical status pursuant
                    to section 432, and
                        ``(B) any tax imposed under this subsection for a
                    taxable year with respect to a multiemployer plan if,
                    for the plan years ending with or within the taxable
                    year, the plan is in endangered status pursuant to
                    section 432 shall be in addition to any other tax
                    imposed by this section.
                ``(2) Failure to comply with funding improvement or
            rehabilitation plan.--
                        ``(A) In general.--If any funding improvement plan
                    or rehabilitation plan in effect under section 432 with
                    respect to a multiemployer plan requires an employer to
                    make a contribution to the plan, there is hereby
                    imposed a tax on each failure of the employer to make
                    the required contribution within the time required
                    under such plan.
                        ``(B) Amount of tax.--The amount of the tax imposed
                    by subparagraph (A) shall be equal to the amount of the
                    required contribution the employer failed to make in a
                    timely manner.
                        ``(C) Liability for tax.--The tax imposed by
                    subparagraph (A) shall be paid by the employer
                    responsible for contributing to or under the
                    rehabilitation plan which fails to make the
                    contribution.
                ``(3) Failure to meet requirements for plans in endangered
            or critical status.--If--
                        ``(A) a plan which is in seriously endangered
                    status fails to meet the applicable benchmarks by the
                    end of the funding improvement period, or
                        ``(B) a plan which is in critical status either--
                                ``(i) fails to meet the requirements of
                            section 432(e) by the end of the rehabilitation
                            period, or
                                ``(ii) has received a certification under
                            section 432(b)(3)(A)(ii) for 3 consecutive plan
                            years that the plan is not making the scheduled
                            progress in meeting its requirements under the
                            rehabilitation plan,
                    the plan shall be treated as having an accumulated
                    funding deficiency for purposes of this section for the
                    last plan year in such funding improvement,
                    rehabilitation, or 3-consecutive year period (and each
                    succeeding plan year until such benchmarks or
                    requirements are met) in an amount equal to the greater
                    of the amount of the contributions necessary to meet
                    such benchmarks or requirements or the amount of such
                    accumulated funding deficiency without regard to this
                    paragraph.
                ``(4) Failure to adopt rehabilitation plan.--
                        ``(A) In general.--In the case of a multiemployer
                    plan which is in critical status, there is hereby
                    imposed a tax on the failure of such plan to adopt a
                    rehabilitation plan within the time prescribed under
                    section 432.
                        ``(B) Amount of tax.--The amount of the tax imposed
                    under subparagraph (A) with respect to any plan sponsor
                    for any taxable year shall be the greater of--
                                ``(i) the amount of tax imposed under
                            subsection (a) for the taxable year (determined
                            without regard to this subsection), or
                                ``(ii) the amount equal to $1,100
                            multiplied by the number of days during the
                            taxable year which are included in the period
                            beginning on the first day of the 240-day
                            period described in section 432(e)(1)(A) and
                            ending on the day on which the rehabilitation
                            plan is adopted.
                        ``(C) Liability for tax.--
                                ``(i) In general.--The tax imposed by
                            subparagraph (A) shall be paid by each plan
                            sponsor.
                                ``(ii) Plan sponsor.--For purposes of
                            clause (i), the term `plan sponsor' in the case
                            of a multiemployer plan means the association,
                            committee, joint board of trustees, or other
                            similar group of representatives of the parties
                            who establish or maintain the plan.
                ``(5) Waiver.--In the case of a failure described in
            paragraph (2) or (3) which is due to reasonable cause and not
            to willful neglect, the Secretary may waive part or all of the
            tax imposed by this subsection. For purposes of this paragraph,
            reasonable cause includes unanticipated and material market
            fluctuations, the loss of a significant contributing employer,
            or other factors to the extent that the payment of tax under
            this subsection with respect to the failure would be excessive
            or otherwise inequitable relative to the failure involved.
                ``(6) Terms used in section 432.--For purposes of this
            subsection, any term used in this subsection which is also used
            in section 432 shall have the meaning given such term by
            section 432.''.
                (2) Controlled groups.--Section 4971(c)(2) of such Code is
            amended--
                        (A) by striking ``In the case of a plan other than
                    a multiemployer plan, if the'' and inserting ``If an'',
                    and
                        (B) by striking ``or (f)'' and inserting ``(f), or
                    (g)''.
        (c) No Additional Contribution Required.--Section 412(b) of the
    Internal Revenue Code of 1986, as amended by this Act, is amended by
    adding at the end the following new paragraph:
                ``(3) Multiemployer plans in critical status.--Paragraph
            (1) shall not apply in the case of a multiemployer plan for any
            plan year in which the plan is in critical status pursuant to
            section 432. This paragraph shall only apply if the plan adopts
            a rehabilitation plan in accordance with section 432(e) and
            complies with such rehabilitation plan (and any modifications
            of the plan).''.
        (d) 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.''.
        (e) Effective Dates.--
                (1) In general.--The amendments made by this section shall
            apply with respect to plan years beginning after 2007.
                (2) Special rule for certain notices.--In any case in which
            a plan's actuary certifies that it is reasonably expected that
            a multiemployer plan will be in critical status under section
            305(b)(3) of the Employee Retirement Income Security Act of
            1974, as added by this section, with respect to the first plan
            year beginning after 2007, the notice required under
            subparagraph (D) of such section may be provided at any time
            after the date of enactment, so long as it is provided on or
            before the last date for providing the notice under such
            subparagraph.
                (3) Special rule for certain restored benefits.--In the
            case of a multiemployer plan--
                        (A) with respect to which benefits were reduced
                    pursuant to a plan amendment adopted on or after
                    January 1, 2002, and before June 30, 2005, and
                        (B) which, pursuant to the plan document, the trust
                    agreement, or a formal written communication from the
                    plan sponsor to participants provided before June 30,
                    2005, provided for the restoration of such benefits,
            the amendments made by this section shall not apply to such
            benefit restorations to the extent that any restriction on the
            providing or accrual of such benefits would otherwise apply by
            reason of such amendments.

    SEC. 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 the determinations made in plan years beginning
    after 2007.

    SEC. 214. EXEMPTION FROM EXCISE TAXES FOR CERTAIN MULTIEMPLOYER PENSION
                  PLANS.

        (a) In General.--Notwithstanding any other provision of law, no tax
    shall be imposed under subsection (a) or (b) of section 4971 of the
    Internal Revenue Code of 1986 with respect to any accumulated funding
    deficiency of a plan described in subsection (b) of this section for
    any taxable year beginning before the earlier of--
                (1) the taxable year in which the plan sponsor adopts a
            rehabilitation plan under section 305(e) of the Employee
            Retirement Income Security Act of 1974 and section 432(e) of
            such Code (as added by this Act); or
                (2) the taxable year that contains January 1, 2009.
        (b) Plan Described.--A plan described under this subsection is a
    multiemployer pension plan--
                (1) with less than 100 participants;
                (2) with respect to which the contributing employers
            participated in a Federal fishery capacity reduction program;
                (3) with respect to which employers under the plan
            participated in the Northeast Fisheries Assistance Program; and
                (4) with respect to which the annual normal cost is less
            than $100,000 and the plan is experiencing a funding deficiency
            on the date of enactment of this Act.

                 Subtitle C--Sunset of Additional Funding Rules

    SEC. 221. SUNSET OF ADDITIONAL FUNDING RULES.

        (a) Report.--Not later than December 31, 2011, the Secretary of
    Labor, the Secretary of the Treasury, and the Executive Director of the
    Pension Benefit Guaranty Corporation shall conduct a study of the
    effect of the amendments made by this subtitle on the operation and
    funding status of multiemployer plans and shall report the results of
    such study, including any recommendations for legislation, to the
    Congress.
        (b) Matters Included in Study.--The study required under subsection
    (a) shall include--
                (1) the effect of funding difficulties, funding rules in
            effect before the date of the enactment of this Act, and the
            amendments made by this subtitle on small businesses
            participating in multiemployer plans,
                (2) the effect on the financial status of small employers
            of--
                        (A) funding targets set in funding improvement and
                    rehabilitation plans and associated contribution
                    increases,
                        (B) funding deficiencies,
                        (C) excise taxes,
                        (D) withdrawal liability,
                        (E) the possibility of alternatives schedules and
                    procedures for financially-troubled employers, and
                        (F) other aspects of the multiemployer system, and
                (3) the role of the multiemployer pension plan system in
            helping small employers to offer pension benefits.
        (c) Sunset.--
                (1) In general.--Except as provided in this subsection,
            notwithstanding any other provision of this Act, the provisions
            of, and the amendments made by, sections 201(b), 202, and 212
            shall not apply to plan years beginning after December 31,
            2014.
                (2) Funding improvement and rehabilitation plans.--If a
            plan is operating under a funding improvement or rehabilitation
            plan under section 305 of such Act or 432 of such Code for its
            last year beginning before January 1, 2015, such plan shall
            continue to operate under such funding improvement or
            rehabilitation plan during any period after December 31, 2014,
            such funding improvement or rehabilitation plan is in effect
            and all provisions of such Act or Code relating to the
            operation of such funding improvement or rehabilitation plan
            shall continue in effect during such period.

                      TITLE III--INTEREST RATE ASSUMPTIONS

    SEC. 301. EXTENSION OF REPLACEMENT OF 30-YEAR TREASURY RATES.

        (a) Amendments of ERISA.--
                (1) Determination of range.--Subclause (II) of section
            302(b)(5)(B)(ii) of the Employee Retirement Income Security Act
            of 1974 is amended--
                        (A) by striking ``2006'' and inserting ``2008'',
                    and
                        (B) by striking ``and 2005'' in the heading and
                    inserting ``, 2005, 2006, and 2007''.
                (2) Determination of current liability.--Subclause (IV) of
            section 302(d)(7)(C)(i) of such Act is amended--
                        (A) by striking ``or 2005'' and inserting ``, 2005,
                    2006, or 2007'', and
                        (B) by striking ``and 2005'' in the heading and
                    inserting ``, 2005, 2006, and 2007''.
                (3)  PBGC premium rate.--Subclause (V) of section
            4006(a)(3)(E)(iii) of such Act is amended by striking ``2006''
            and inserting ``2008''.
        (b) Amendments of Internal Revenue Code.--
                (1) Determination of range.--Subclause (II) of section
            412(b)(5)(B)(ii) of the Internal Revenue Code of 1986 is
            amended--
                        (A) by striking ``2006'' and inserting ``2008'',
                    and
                        (B) by striking ``and 2005'' in the heading and
                    inserting ``, 2005, 2006, and 2007''.
                (2) Determination of current liability.--Subclause (IV) of
            section 412(l)(7)(C)(i) of such Code is amended--
                        (A) by striking ``or 2005'' and inserting ``, 2005,
                    2006, or 2007'', and
                        (B) by striking ``and 2005'' in the heading and
                    inserting ``, 2005, 2006, and 2007''.
        (c) Plan Amendments.--Clause (ii) of section 101(c)(2)(A) of the
    Pension Funding Equity Act of 2004 is amended by striking ``2006'' and
    inserting ``2008''.

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

        (a) Amendment 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 subparagraph (A) of section 303(h)(3) (without
            regard to subparagraph (C) or (D) of such section).
                ``(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) were applied by
                    substituting the average yields for the month described
                    in clause (ii) for the average yields for the 24-month
                    period described in such section,
                        ``(II) section 303(h)(2)(G)(i)(II) were applied by
                    substituting `section 205(g)(3)(B)(iii)(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:
      2008............................  20 percent
      2009............................  40 percent
      2010............................  60 percent
      2011............................  80 percent.''.

        (b) Amendment to Internal Revenue Code of 1986.--Paragraph (3) of
    section 417(e) of the Internal Revenue Code of 1986 is amended to read
    as follows:
                ``(3) Determination of present value.--
                        ``(A) In general.--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) Applicable mortality table.--For purposes of
                    subparagraph (A), 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 subparagraph (A) of section
                    430(h)(3) (without regard to subparagraph (C) or (D) of
                    such section).
                        ``(C) Applicable interest rate.--For purposes of
                    subparagraph (A), 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.
                        ``(D) Applicable segment rates.--For purposes of
                    subparagraph (C), 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) were applied by
                            substituting the average yields for the month
                            described in clause (ii) for the average yields
                            for the 24-month period described in such
                            section,
                                ``(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:
      2008............................  20 percent
      2009............................  40 percent
      2010............................  60 percent
      2011............................  80 percent.''.

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

    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 greatest 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.

                TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS

    SEC. 401. PBGC PREMIUMS.

        (a) Variable-Rate Premiums.--
                (1) Conforming amendments related to funding rules for
            single-employer plans.--Section 4006(a)(3)(E) of the Employee
            Retirement Income and Security Act of 1974 (29 U.S.C.
            1306(a)(3)(E)) is amended by striking clauses (iii) and (iv)
            and inserting the following:
        ``(iii) For purposes of clause (ii), the term `unfunded vested
    benefits' means, for a plan year, the excess (if any) of--
                ``(I) the funding target of the plan as determined under
            section 303(d) for the plan year by only taking into account
            vested benefits and by using the interest rate described in
            clause (iv), over
                ``(II) the fair market value of plan assets for the plan
            year which are held by the plan on the valuation date.
        ``(iv) The interest rate used in valuing benefits for purposes of
    subclause (I) of clause (iii) shall be equal to the first, second, or
    third segment rate for the month preceding the month in which the plan
    year begins, which would be determined under section 303(h)(2)(C) if
    section 303(h)(2)(D) were applied by using the monthly yields for the
    month preceding the month in which the plan year begins on investment
    grade corporate bonds with varying maturities and in the top 3 quality
    levels rather than the average of such yields for a 24-month period.''.
                (2) Effective date.--The amendments made by paragraph (1)
            shall apply with respect to plan years beginning after 2007.
        (b) Termination Premiums.--
                (1) Repeal of sunset provision.--Subparagraph (E) of
            section 4006(a)(7) of such Act is repealed.
                (2) Technical correction.--
                        (A) In general.--Section 4006(a)(7)(C)(ii) of such
                    Act is amended by striking ``subparagraph (B)(i)(I)''
                    and inserting ``subparagraph (B)''.
                        (B) Effective date.--The amendment made by this
                    paragraph shall take effect as if included in the
                    provision of the Deficit Reduction Act of 2005 to which
                    it relates.

    SEC. 402. SPECIAL FUNDING RULES FOR CERTAIN PLANS MAINTAINED BY
                  COMMERCIAL AIRLINES.

        (a) In General.--The plan sponsor of an eligible plan may elect to
    either--
                (1) have the rules of subsection (b) apply, or
                (2) have section 303 of the Employee Retirement Income
            Security Act of 1974 and section 430 of the Internal Revenue
            Code of 1986 applied to its first taxable year beginning in
            2008 by amortizing the shortfall amortization base for such
            taxable year over a period of 10 plan years (rather than 7 plan
            years) beginning with such plan year.
        (b) Alternative Funding Schedule.--
                (1) In general.--If an election is made under subsection
            (a)(1) to have this subsection apply to an eligible plan and
            the requirements of paragraphs (2) and (3) are met with respect
            to the plan--
                        (A) in the case of any applicable plan year
                    beginning before January 1, 2008, the plan shall not
                    have an accumulated funding deficiency for purposes of
                    section 302 of the Employee Retirement Income Security
                    Act of 1974 and sections 412 and 4971 of the Internal
                    Revenue Code of 1986 if contributions to the plan for
                    the plan year are not less than the minimum required
                    contribution determined under subsection (e) for the
                    plan for the plan year, and
                        (B) in the case of any applicable plan year
                    beginning on or after January 1, 2008, the minimum
                    required contribution determined under sections 303 of
                    such Act and 430 of such Code shall, for purposes of
                    sections 302 and 303 of such Act and sections 412, 430,
                    and 4971 of such Code, be equal to the minimum required
                    contribution determined under subsection (e) for the
                    plan for the plan year.
                (2) Accrual restrictions.--
                        (A) In general.--The requirements of this paragraph
                    are met if, effective as of the first day of the first
                    applicable plan year and at all times thereafter while
                    an election under this section is in effect, the plan
                    provides that--
                                (i) the accrued benefit, any death or
                            disability benefit, and any social security
                            supplement described in the last sentence of
                            section 411(a)(9) of such Code and section
                            204(b)(1)(G) of such Act, of each participant
                            are frozen at the amount of such benefit or
                            supplement immediately before such first day,
                            and
                                (ii) all other benefits under the plan are
                            eliminated,
                    but only to the extent the freezing or elimination of
                    such benefits would have been permitted under section
                    411(d)(6) of such Code and section 204(g) of such Act
                    if they had been implemented by a plan amendment
                    adopted immediately before such first day.
                        (B) Increases in section 415 limits.--If a plan
                    provides that an accrued benefit of a participant which
                    has been subject to any limitation under section 415 of
                    such Code will be increased if such limitation is
                    increased, the plan shall not be treated as meeting the
                    requirements of this section unless, effective as of
                    the first day of the first applicable plan year (or, if
                    later, the date of the enactment of this Act) and at
                    all times thereafter while an election under this
                    section is in effect, the plan provides that any such
                    increase shall not take effect. A plan shall not fail
                    to meet the requirements of section 411(d)(6) of such
                    Code and section 204(g) of such Act solely because the
                    plan is amended to meet the requirements of this
                    subparagraph.
                (3) Restriction on applicable benefit increases.--
                        (A) In general.--The requirements of this paragraph
                    are met if no applicable benefit increase takes effect
                    at any time during the period beginning on July 26,
                    2005, and ending on the day before the first day of the
                    first applicable plan year.
                        (B) Applicable benefit increase.--For purposes of
                    this paragraph, the term ``applicable benefit
                    increase'' means, with respect to any plan year, any
                    increase in liabilities of the plan by plan amendment
                    (or otherwise provided in regulations provided by the
                    Secretary) which, but for this paragraph, would occur
                    during the plan year by reason of--
                                (i) any increase in benefits,
                                (ii) any change in the accrual of benefits,
                            or
                                (iii) any change in the rate at which
                            benefits become nonforfeitable under the plan.
                (4) Exception for imputed disability service.--Paragraphs
            (2) and (3) shall not apply to any accrual or increase with
            respect to imputed service provided to a participant during any
            period of the participant's disability occurring on or after
            the effective date of the plan amendment providing the
            restrictions under paragraph (2) (or on or after July 26, 2005,
            in the case of the restrictions under paragraph (3)) if the
            participant--
                        (A) was receiving disability benefits as of such
                    date, or
                        (B) was receiving sick pay and subsequently
                    determined to be eligible for disability benefits as of
                    such date.
        (c) Definitions.--For purposes of this section--
                (1) Eligible plan.--The term ``eligible plan'' means a
            defined benefit plan (other than a multiemployer plan) to which
            sections 302 of such Act and 412 of such Code applies which is
            sponsored by an employer--
                        (A) which is a commercial airline passenger
                    airline, or
                        (B) the principal business of which is providing
                    catering services to a commercial passenger airline.
                (2) Applicable plan year.--The term ``applicable plan
            year'' means each plan year to which the election under
            subsection (a)(1) applies under subsection (d)(1)(A).
        (d) Elections and Related Terms.--
                (1) Years for which election made.--
                        (A) Alternative funding schedule.--If an election
                    under subsection (a)(1) was made with respect to an
                    eligible plan, the plan sponsor may select either a
                    plan year beginning in 2006 or a plan year beginning in
                    2007 as the first plan year to which such election
                    applies. The election shall apply to such plan year and
                    all subsequent years. The election shall be made--
                                (i) not later than December 31, 2006, in
                            the case of an election for a plan year
                            beginning in 2006, or
                                (ii) not later than December 31, 2007, in
                            the case of an election for a plan year
                            beginning in 2007.
                        (B) 10 year amortization.--An election under
                    subsection (a)(2) shall be made not later than December
                    31, 2007.
                        (C) Election of new plan year for alternative
                    funding schedule.--In the case of an election under
                    subsection (a)(1), the plan sponsor may specify a new
                    plan year in such election and the plan year of the
                    plan may be changed to such new plan year without the
                    approval of the Secretary of the Treasury.
                (2) Manner of election.--A plan sponsor shall make any
            election under subsection (a) in such manner as the Secretary
            of the Treasury may prescribe. Such election, once made, may be
            revoked only with the consent of such Secretary.
        (e) Minimum Required Contribution.--In the case of an eligible plan
    with respect to which an election is made under subsection (a)(1)--
                (1) In general.--In the case of any applicable plan year
            during the amortization period, the minimum required
            contribution shall be the amount necessary to amortize the
            unfunded liability of the plan, determined as of the first day
            of the plan year, in equal annual installments (until fully
            amortized) over the remainder of the amortization period. Such
            amount shall be separately determined for each applicable plan
            year.
                (2) Years after amortization period.--In the case of any
            plan year beginning after the end of the amortization period,
            section 302(a)(2)(A) of such Act and section 412(a)(2)(A) of
            such Code shall apply to such plan, but the prefunding balance
            and funding standard carryover balance as of the first day of
            the first of such years under section 303(f) of such Act and
            section 430(f) of such Code shall be zero.
                (3) Definitions.--For purposes of this section--
                        (A) Unfunded liability.--The term ``unfunded
                    liability'' means the unfunded accrued liability under
                    the plan, determined under the unit credit funding
                    method.
                        (B) Amortization period.--The term ``amortization
                    period'' means the 17-plan year period beginning with
                    the first applicable plan year.
                (4) Other rules.--In determining the minimum required
            contribution and amortization amount under this subsection--
                        (A) the provisions of section 302(c)(3) of such Act
                    and section 412(c)(3) of such Code, as in effect before
                    the date of enactment of this section, shall apply,
                        (B) a rate of interest of 8.85 percent shall be
                    used for all calculations requiring an interest rate,
                    and
                        (C) the value of plan assets shall be equal to
                    their fair market value.
                (5) Special rule for certain plan spinoffs.--For purposes
            of subsection (b), if, with respect to any eligible plan to
            which this subsection applies--
                        (A) any applicable plan year includes the date of
                    the enactment of this Act,
                        (B) a plan was spun off from the eligible plan
                    during the plan year but before such date of enactment,
            the minimum required contribution under paragraph (1) for the
            eligible plan for such applicable plan year shall be an
            aggregate amount determined as if the plans were a single plan
            for that plan year (based on the full 12-month plan year in
            effect prior to the spin-off). The employer shall designate the
            allocation of such aggregate amount between such plans for the
            applicable plan year.
        (f) Special Rules for Certain Balances and Waivers.--In the case of
    an eligible plan with respect to which an election is made under
    subsection (a)(1)--
                (1) Funding standard account and credit balances.--Any
            charge or credit in the funding standard account under section
            302 of such Act or section 412 of such Code, and any prefunding
            balance or funding standard carryover balance under section 303
            of such Act or section 430 of such Code, as of the day before
            the first day of the first applicable plan year, shall be
            reduced to zero.
                (2) Waived funding deficiencies.--Any waived funding
            deficiency under sections 302 and 303 of such Act or section
            412 of such Code, as in effect before the date of enactment of
            this section, shall be deemed satisfied as of the first day of
            the first applicable plan year and the amount of such waived
            funding deficiency shall be taken into account in determining
            the plan's unfunded liability under subsection (e)(3)(A). In
            the case of a plan amendment adopted to satisfy the
            requirements of subsection (b)(2), the plan shall not be deemed
            to violate section 304(b) of such Act or section 412(f) of such
            Code, as so in effect, by reason of such amendment or any
            increase in benefits provided to such plan's participants under
            a separate plan that is a defined contribution plan or a
            multiemployer plan.
        (g) Other Rules for Plans Making Election Under This Section.--
                (1) Successor plans to certain plans.--If--
                        (A) an election under paragraph (1) or (2) of
                    subsection (a) is in effect with respect to any
                    eligible plan, and
                        (B) the eligible plan is maintained by an employer
                    that establishes or maintains 1 or more other defined
                    benefit plans (other than any multiemployer plan), and
                    such other plans in combination provide benefit
                    accruals to any substantial number of successor
                    employees,
            the Secretary of the Treasury may, in the Secretary's
            discretion, determine that any trust of which any other such
            plan is a part does not constitute a qualified trust under
            section 401(a) of the Internal Revenue Code of 1986 unless all
            benefit obligations of the eligible plan have been satisfied.
            For purposes of this paragraph, the term ``successor employee''
            means any employee who is or was covered by the eligible plan
            and any employees who perform substantially the same type of
            work with respect to the same business operations as an
            employee covered by such eligible plan.
                (2) Special rules for terminations.--
                        (A) PBGC liability limited.--Section 4022 of the
                    Employee Retirement Income Security Act of 1974, as
                    amended by this Act, is amended by adding at the end
                    the following new subsection:
        ``(h) Special Rule for Plans Electing Certain Funding
    Requirements.--If any plan makes an election under section 402(a)(1) of
    the Pension Protection Act of 2006 and is terminated effective before
    the end of the 10-year period beginning on the first day of the first
    applicable plan year--
                ``(1) this section shall be applied--
                        ``(A) by treating the first day of the first
                    applicable plan year as the termination date of the
                    plan, and
                        ``(B) by determining the amount of guaranteed
                    benefits on the basis of plan assets and liabilities as
                    of such assumed termination date, and
                ``(2) notwithstanding section 4044(a), plan assets shall
            first be allocated to pay the amount, if any, by which--
                        ``(A) the amount of guaranteed benefits under this
                    section (determined without regard to paragraph (1) and
                    on the basis of plan assets and liabilities as of the
                    actual date of plan termination), exceeds
                        ``(B) the amount determined under paragraph (1).''.
                        (B) Termination premium.--In applying section
                    4006(a)(7)(A) of the Employee Retirement Income
                    Security Act of 1974 to an eligible plan during any
                    period in which an election under subsection (a)(1) is
                    in effect--
                                (i) ``$2,500'' shall be substituted for
                            ``$1,250'' in such section if such plan
                            terminates during the 5-year period beginning
                            on the first day of the first applicable plan
                            year with respect to such plan, and
                                (ii) such section shall be applied without
                            regard to subparagraph (B) of section
                            8101(d)(2) of the Deficit Reduction Act of 2005
                            (relating to special rule for plans terminated
                            in bankruptcy).
                    The substitution described in clause (i) shall not
                    apply with respect to any plan if the Secretary of
                    Labor determines that such plan terminated as a result
                    of extraordinary circumstances such as a terrorist
                    attack or other similar event.
                (3) Limitation on deductions under certain plans.--Section
            404(a)(7)(C)(iv) of the Internal Revenue Code of 1986, as added
            by this Act, shall not apply with respect to any taxable year
            of a plan sponsor of an eligible plan if any applicable plan
            year with respect to such plan ends with or within such taxable
            year.
                (4) Notice.--In the case of a plan amendment adopted in
            order to comply with this section, any notice required under
            section 204(h) of such Act or section 4980F(e) of such Code
            shall be provided within 15 days of the effective date of such
            plan amendment. This subsection shall not apply to any plan
            unless such plan is maintained pursuant to one or more
            collective bargaining agreements between employee
            representatives and 1 or more employers.
        (h) Exclusion of Certain Employees From Minimum Coverage
    Requirements.--
                (1) In general.--Section 410(b)(3) of such Code is amended
            by striking the last sentence and inserting the following:
            ``For purposes of subparagraph (B), management pilots who are
            not represented in accordance with title II of the Railway
            Labor Act shall be treated as covered by a collective
            bargaining agreement described in such subparagraph if the
            management pilots manage the flight operations of air pilots
            who are so represented and the management pilots are, pursuant
            to the terms of the agreement, included in the group of
            employees benefitting under the trust described in such
            subparagraph. Subparagraph (B) shall not apply in the case of a
            plan which provides contributions or benefits for employees
            whose principal duties are not customarily performed aboard an
            aircraft in flight (other than management pilots described in
            the preceding sentence).''
                (2) Effective date.--The amendment made by this subsection
            shall apply to years beginning before, on, or after the date of
            the enactment of this Act.
        (i) Extension of Special Rule for Additional Funding
    Requirements.--In the case of an employer which is a commercial
    passenger airline, section 302(d)(12) of the Employee Retirement Income
    Security Act of 1974 and section 412(l)(12) of the Internal Revenue
    Code of 1986, as in effect before the date of the enactment of this
    Act, shall each be applied--
                (1) by substituting ``December 28, 2007'' for ``December
            28, 2005'' in subparagraph (D)(i) thereof, and
                (2) without regard to subparagraph (D)(ii).
        (j) Effective Date.--Except as otherwise provided in this section,
    the provisions of and amendments made by this section shall apply to
    plan years ending after the date of the enactment of this Act.

    SEC. 403. LIMITATION ON PBGC GUARANTEE OF SHUTDOWN AND OTHER BENEFITS.

        (a) In General.--Section 4022(b) of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1322(b)) is amended by adding at the
    end the following:
                ``(8) If an unpredictable contingent event benefit (as
            defined in section 206(g)(1)) is payable by reason of the
            occurrence of any event, this section shall be applied as if a
            plan amendment had been adopted on the date such event
            occurred.''.
        (b) Effective Date.--The amendment made by this section shall apply
    to benefits that become payable as a result of an event which occurs
    after July 26, 2005.

    SEC. 404. RULES RELATING TO BANKRUPTCY OF EMPLOYER.

        (a) Guarantee.--Section 4022 of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1322) is amended by adding at the end
    the following:
        ``(g) Bankruptcy Filing Substituted for Termination Date.--If a
    contributing sponsor of a plan has filed or has had filed against such
    person a petition seeking liquidation or reorganization in a case under
    title 11, United States Code, or under any similar Federal law or law
    of a State or political subdivision, and the case has not been
    dismissed as of the termination date of the plan, then this section
    shall be applied by treating the date such petition was filed as the
    termination date of the plan.''.
        (b) Allocation of Assets Among Priority Groups in Bankruptcy
    Proceedings.--Section 4044 of the Employee Retirement Income Security
    Act of 1974 (29 U.S.C. 1344) is amended by adding at the end the
    following:
        ``(e) Bankruptcy Filing Substituted for Termination Date.--If a
    contributing sponsor of a plan has filed or has had filed against such
    person a petition seeking liquidation or reorganization in a case under
    title 11, United States Code, or under any similar Federal law or law
    of a State or political subdivision, and the case has not been
    dismissed as of the termination date of the plan, then subsection
    (a)(3) shall be applied by treating the date such petition was filed as
    the termination date of the plan.''.
        (c) Effective Date.--The amendments made this section shall apply
    with respect to proceedings initiated under title 11, United States
    Code, or under any similar Federal law or law of a State or political
    subdivision, on or after the date that is 30 days after the date of
    enactment of this Act.

    SEC. 405. PBGC PREMIUMS FOR SMALL PLANS.

        (a) Small Plans.--Paragraph (3) of section 4006(a) of the Employee
    Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)) is amended--
                (1) by striking ``The additional'' in subparagraph (E)(i)
            and inserting ``Except as provided in subparagraph (H), the
            additional'', and
                (2) by inserting after subparagraph (G) the following new
            subparagraph:
        ``(H)(i) In the case of an employer who has 25 or fewer employees
    on the first day of the plan year, the additional premium determined
    under subparagraph (E) for each participant shall not exceed $5
    multiplied by the number of participants in the plan as of the close of
    the preceding plan year.
        ``(ii) For purposes of clause (i), whether an employer has 25 or
    fewer employees on the first day of the plan year is determined by
    taking into consideration all of the employees of all members of the
    contributing sponsor's controlled group. In the case of a plan
    maintained by two or more contributing sponsors, the employees of all
    contributing sponsors and their controlled groups shall be aggregated
    for purposes of determining whether the 25-or-fewer-employees
    limitation has been satisfied.''
        (b) Effective Dates.--The amendment made by this section shall
    apply to plan years beginning after December 31, 2006.

    SEC. 406. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM OVERPAYMENT
                  REFUNDS.

        (a) In General.--Section 4007(b) of the Employment Retirement
    Income Security Act of 1974 (29 U.S.C. 1307(b)) is amended--
                (1) by striking ``(b)'' and inserting ``(b)(1)'', and
                (2) by inserting at the end the following new paragraph:
        ``(2) The corporation is authorized to pay, subject to regulations
    prescribed by the corporation, interest on the amount of any
    overpayment of premium refunded to a designated payor. Interest under
    this paragraph shall be calculated at the same rate and in the same
    manner as interest is calculated for underpayments under paragraph
    (1).''
        (b) Effective Date.--The amendments made by subsection (a) shall
    apply to interest accruing for periods beginning not earlier than the
    date of the enactment of this Act.

    SEC. 407. RULES FOR SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

        (a) Modification of Phase-In of Guarantee.--Section 4022(b)(5) of
    the Employee Retirement Income Security Act of 1974 (29 U.S.C.
    1322(b)(5)) is amended to read as follows:
        ``(5)(A) For purposes of this paragraph, the term `majority owner'
    means an individual who, at any time during the 60-month period ending
    on the date the determination is being made--
                ``(i) owns the entire interest in an unincorporated trade
            or business,
                ``(ii) in the case of a partnership, is a partner who owns,
            directly or indirectly, 50 percent or more of either the
            capital interest or the profits interest in such partnership,
            or
                ``(iii) in the case of a corporation, owns, directly or
            indirectly, 50 percent or more in value of either the voting
            stock of that corporation or all the stock of that corporation.
    For purposes of clause (iii), the constructive ownership rules of
    section 1563(e) of the Internal Revenue Code of 1986 (other than
    paragraph (3)(C) thereof) shall apply, including the application of
    such rules under section 414(c) of such Code.
        ``(B) In the case of a participant who is a majority owner, the
    amount of benefits guaranteed under this section shall equal the
    product of--
                ``(i) a fraction (not to exceed 1) the numerator of which
            is the number of years from the later of the effective date or
            the adoption date of the plan to the termination date, and the
            denominator of which is 10, and
                ``(ii) the amount of benefits that would be guaranteed
            under this section if the participant were not a majority
            owner.''
        (b) Modification of Allocation of Assets.--
                (1) Section 4044(a)(4)(B) of the Employee Retirement Income
            Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by
            striking ``section 4022(b)(5)'' and inserting ``section
            4022(b)(5)(B)''.
                (2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is
            amended--
                        (A) by striking ``(5)'' in paragraph (2) and
                    inserting ``(4), (5),'', and
                        (B) by redesignating paragraphs (3) through (6) as
                    paragraphs (4) through (7), respectively, and by
                    inserting after paragraph (2) the following new
                    paragraph:
                ``(3) If assets available for allocation under paragraph
            (4) of subsection (a) are insufficient to satisfy in full the
            benefits of all individuals who are described in that
            paragraph, the assets shall be allocated first to benefits
            described in subparagraph (A) of that paragraph. Any remaining
            assets shall then be allocated to benefits described in
            subparagraph (B) of that paragraph. If assets allocated to such
            subparagraph (B) are insufficient to satisfy in full the
            benefits described in that subparagraph, the assets shall be
            allocated pro rata among individuals on the basis of the
            present value (as of the termination date) of their respective
            benefits described in that subparagraph.''
        (c) Conforming Amendments.--
                (1) Section 4021 of the Employee Retirement Income Security
            Act of 1974 (29 U.S.C. 1321) is amended--
                        (A) in subsection (b)(9), by striking ``as defined
                    in section 4022(b)(6)'', and
                        (B) by adding at the end the following new
                    subsection:
        ``(d) For purposes of subsection (b)(9), the term `substantial
    owner' means an individual who, at any time during the 60-month period
    ending on the date the determination is being made--
                ``(1) owns the entire interest in an unincorporated trade
            or business,
                ``(2) in the case of a partnership, is a partner who owns,
            directly or indirectly, more than 10 percent of either the
            capital interest or the profits interest in such partnership,
            or
                ``(3) in the case of a corporation, owns, directly or
            indirectly, more than 10 percent in value of either the voting
            stock of that corporation or all the stock of that corporation.
    For purposes of paragraph (3), the constructive ownership rules of
    section 1563(e) of the Internal Revenue Code of 1986 (other than
    paragraph (3)(C) thereof) shall apply, including the application of
    such rules under section 414(c) of such Code.''
                (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7))
            is amended by striking ``section 4022(b)(6)'' and inserting
            ``section 4021(d)''.
        (d) Effective Dates.--
                (1) In general.--Except as provided in paragraph (2), the
            amendments made by this section shall apply to plan
            terminations--
                        (A) under section 4041(c) of the Employee
                    Retirement Income Security Act of 1974 (29 U.S.C.
                    1341(c)) with respect to which notices of intent to
                    terminate are provided under section 4041(a)(2) of such
                    Act (29 U.S.C. 1341(a)(2)) after December 31, 2005, and
                        (B) under section 4042 of such Act (29 U.S.C. 1342)
                    with respect to which notices of determination are
                    provided under such section after such date.
                (2) Conforming amendments.--The amendments made by
            subsection (c) shall take effect on January 1, 2006.

    SEC. 408. ACCELERATION OF PBGC COMPUTATION OF BENEFITS ATTRIBUTABLE TO
                  RECOVERIES FROM EMPLOYERS.

        (a) Modification of Average Recovery Percentage of Outstanding
    Amount of Benefit Liabilities Payable by Corporation to Participants
    and Beneficiaries.--Section 4022(c)(3)(B)(ii) of the Employee
    Retirement Income Security Act of 1974 (29 U.S.C. 1322(c)(3)(B)(ii)) is
    amended to read as follows:
                                ``(ii) notices of intent to terminate were
                            provided (or in the case of a termination by
                            the corporation, a notice of determination
                            under section 4042 was issued) during the 5-
                            Federal fiscal year period ending with the
                            third fiscal year preceding the fiscal year in
                            which occurs the date of the notice of intent
                            to terminate (or the notice of determination
                            under section 4042) with respect to the plan
                            termination for which the recovery ratio is
                            being determined.''
        (b) Valuation of Section 4062(c) Liability for Determining Amounts
    Payable by Corporation to Participants and Beneficiaries.--
                (1) Single-employer plan benefits guaranteed.--Section
            4022(c)(3)(A) of the Employee Retirement Income Security Act of
            1974 (29 U.S.C. 13) is amended to read as follows:
                        ``(A) In general.--Except as provided in
                    subparagraph (C), the term `recovery ratio' means the
                    ratio which--
                                ``(i) the sum of the values of all
                            recoveries under section 4062, 4063, or 4064,
                            determined by the corporation in connection
                            with plan terminations described under
                            subparagraph (B), bears to
                                ``(ii) the sum of all unfunded benefit
                            liabilities under such plans as of the
                            termination date in connection with any such
                            prior termination.''.
                (2) Allocation of assets.--Section 4044 of the Employee
            Retirement Income Security Act of 1974 (29 U.S.C. 1362) is
            amended by adding at the end the following new subsection:
        ``(e) Valuation of Section 4062(c) Liability for Determining
    Amounts Payable by Corporation to Participants and Beneficiaries.--
                ``(1) In general.--In the case of a terminated plan, the
            value of the recovery of liability under section 4062(c)
            allocable as a plan asset under this section for purposes of
            determining the amount of benefits payable by the corporation
            shall be determined by multiplying--
                        ``(A) the amount of liability under section 4062(c)
                    as of the termination date of the plan, by
                        ``(B) the applicable section 4062(c) recovery
                    ratio.
                ``(2) Section 4062(c) recovery ratio.--For purposes of this
            subsection--
                        ``(A) In general.--Except as provided in
                    subparagraph (C), the term `section 4062(c) recovery
                    ratio' means the ratio which--
                                ``(i) the sum of the values of all
                            recoveries under section 4062(c) determined by
                            the corporation in connection with plan
                            terminations described under subparagraph (B),
                            bears to
                                ``(ii) the sum of all the amounts of
                            liability under section 4062(c) with respect to
                            such plans as of the termination date in
                            connection with any such prior termination.
                        ``(B) Prior terminations.--A plan termination
                    described in this subparagraph is a termination with
                    respect to which--
                                ``(i) the value of recoveries under section
                            4062(c) have been determined by the
                            corporation, and
                                ``(ii) notices of intent to terminate were
                            provided (or in the case of a termination by
                            the corporation, a notice of determination
                            under section 4042 was issued) during the 5-
                            Federal fiscal year period ending with the
                            third fiscal year preceding the fiscal year in
                            which occurs the date of the notice of intent
                            to terminate (or the notice of determination
                            under section 4042) with respect to the plan
                            termination for which the recovery ratio is
                            being determined.
                        ``(C) Exception.--In the case of a terminated plan
                    with respect to which the outstanding amount of benefit
                    liabilities exceeds $20,000,000, the term `section
                    4062(c) recovery ratio' means, with respect to the
                    termination of such plan, the ratio of--
                                ``(i) the value of the recoveries on behalf
                            of the plan under section 4062(c), to
                                ``(ii) the amount of the liability owed
                            under section 4062(c) as of the date of plan
                            termination to the trustee appointed under
                            section 4042 (b) or (c).
                ``(3) Subsection not to apply.--This subsection shall not
            apply with respect to the determination of--
                        ``(A) whether the amount of outstanding benefit
                    liabilities exceeds $20,000,000, or
                        ``(B) the amount of any liability under section
                    4062 to the corporation or the trustee appointed under
                    section 4042 (b) or (c).
                ``(4) Determinations.--Determinations under this subsection
            shall be made by the corporation. Such determinations shall be
            binding unless shown by clear and convincing evidence to be
            unreasonable.''
        (c) Effective Date.--The amendments made by this section shall
    apply for any termination for which notices of intent to terminate are
    provided (or in the case of a termination by the corporation, a notice
    of determination under section 4042 under the Employee Retirement
    Income Security Act of 1974 is issued) on or after the date which is 30
    days after the date of enactment of this section.

    SEC. 409. TREATMENT OF CERTAIN PLANS WHERE CESSATION OR CHANGE IN
                  MEMBERSHIP OF A CONTROLLED GROUP.

        (a) In General.--Section 4041(b) of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1341(b)) is amended by adding at the
    end the following new paragraph:
                ``(5) Special rule for certain plans where cessation or
            change in membership of a controlled group.--
                        ``(A) In general.--Except as provided in
                    subparagraph (B), if--
                                ``(i) there is transaction or series of
                            transactions which result in a person ceasing
                            to be a member of a controlled group, and
                                ``(ii) such person immediately before the
                            transaction or series of transactions
                            maintained a single-employer plan which is a
                            defined benefit plan which is fully funded,
                    then the interest rate used in determining whether the
                    plan is sufficient for benefit liabilities or to
                    otherwise assess plan liabilities for purposes of this
                    subsection or section 4042(a)(4) shall be not less than
                    the interest rate used in determining whether the plan
                    is fully funded.
                        ``(B) Limitations.--Subparagraph (A) shall not
                    apply to any transaction or series of transactions
                    unless--
                                ``(i) any employer maintaining the plan
                            immediately before or after such transaction or
                            series of transactions--
                                        ``(I) has an outstanding senior
                                    unsecured debt instrument which is
                                    rated investment grade by each of the
                                    nationally recognized statistical
                                    rating organizations for corporate
                                    bonds that has issued a credit rating
                                    for such instrument, or
                                        ``(II) if no such debt instrument
                                    of such employer has been rated by such
                                    an organization but 1 or more of such
                                    organizations has made an issuer credit
                                    rating for such employer, all such
                                    organizations which have so rated the
                                    employer have rated such employer
                                    investment grade, and
                                ``(ii) the employer maintaining the plan
                            after the transaction or series of transactions
                            employs at least 20 percent of the employees
                            located in the United States who were employed
                            by such employer immediately before the
                            transaction or series of transactions.
                        ``(C) Fully funded.--For purposes of subparagraph
                    (A), a plan shall be treated as fully funded with
                    respect to any transaction or series of transactions
                    if--
                                ``(i) in the case of a transaction or
                            series of transactions which occur in a plan
                            year beginning before January 1, 2008, the
                            funded current liability percentage determined
                            under section 302(d) for the plan year is at
                            least 100 percent, and
                                ``(ii) in the case of a transaction or
                            series of transactions which occur in a plan
                            year beginning on or after such date, the
                            funding target attainment percentage determined
                            under section 303 is, as of the valuation date
                            for such plan year, at least 100 percent.
                        ``(D) 2 year limitation.--Subparagraph (A) shall
                    not apply to any transaction or series of transaction
                    if the plan referred to in subparagraph (A)(ii) is
                    terminated under section 4041(c) or 4042 after the
                    close of the 2-year period beginning on the date on
                    which the first such transaction occurs.''
        (b) Effective Date.--The amendments made by this section shall
    apply to any transaction or series of transactions occurring on and
    after the date of the enactment of this Act.

    SEC. 410. MISSING PARTICIPANTS.

        (a) In General.--Section 4050 of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1350) is amended by redesignating
    subsection (c) as subsection (e) and by inserting after subsection (b)
    the following new subsections:
        ``(c) Multiemployer Plans.--The corporation shall prescribe rules
    similar to the rules in subsection (a) for multiemployer plans covered
    by this title that terminate under section 4041A.
        ``(d) Plans Not Otherwise Subject to Title.--
                ``(1) Transfer to corporation.--The plan administrator of a
            plan described in paragraph (4) may elect to transfer a missing
            participant's benefits to the corporation upon termination of
            the plan.
                ``(2) Information to the corporation.--To the extent
            provided in regulations, the plan administrator of a plan
            described in paragraph (4) shall, upon termination of the plan,
            provide the corporation information with respect to benefits of
            a missing participant if the plan transfers such benefits--
                        ``(A) to the corporation, or
                        ``(B) to an entity other than the corporation or a
                    plan described in paragraph (4)(B)(ii).
                ``(3) Payment by the corporation.--If benefits of a missing
            participant were transferred to the corporation under paragraph
            (1), the corporation shall, upon location of the participant or
            beneficiary, pay to the participant or beneficiary the amount
            transferred (or the appropriate survivor benefit) either--
                        ``(A) in a single sum (plus interest), or
                        ``(B) in such other form as is specified in
                    regulations of the corporation.
                ``(4) Plans described.--A plan is described in this
            paragraph if--
                        ``(A) the plan is a pension plan (within the
                    meaning of section 3(2))--
                                ``(i) to which the provisions of this
                            section do not apply (without regard to this
                            subsection), and
                                ``(ii) which is not a plan described in
                            paragraphs (2) through (11) of section 4021(b),
                            and
                        ``(B) at the time the assets are to be distributed
                    upon termination, the plan--
                                ``(i) has missing participants, and
                                ``(ii) has not provided for the transfer of
                            assets to pay the benefits of all missing
                            participants to another pension plan (within
                            the meaning of section 3(2)).
                ``(5) Certain provisions not to apply.--Subsections (a)(1)
            and (a)(3) shall not apply to a plan described in paragraph
            (4).''.
        (b) Conforming Amendments.--Section 206(f) of such Act (29 U.S.C.
    1056(f)) is amended--
                (1) by striking ``title IV'' and inserting ``section
            4050''; and
                (2) by striking ``the plan shall provide that,''.
        (c) Effective Date.--The amendments made by this section shall
    apply to distributions made after final regulations implementing
    subsections (c) and (d) of section 4050 of the Employee Retirement
    Income Security Act of 1974 (as added by subsection (a)), respectively,
    are prescribed.

    SEC. 411. DIRECTOR OF THE PENSION BENEFIT GUARANTY CORPORATION.

        (a) In General.--Title IV of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1301 et seq.) is amended--
                (1) by striking the second sentence of section 4002(a) and
            inserting the following: ``In carrying out its functions under
            this title, the corporation shall be administered by a
            Director, who shall be appointed by the President, by and with
            the advice and consent of the Senate, and who shall act in
            accordance with the policies established by the board.''; and
                (2) in section 4003(b), by--
                        (A) striking ``under this title, any member'' and
                    inserting ``under this title, the Director, any
                    member''; and
                        (B) striking ``designated by the chairman'' and
                    inserting ``designated by the Director or chairman''.
        (b) Compensation of Director.--Section 5314 of title 5, United
    States Code, is amended by adding at the end the following new item:
            ``Director, Pension Benefit Guaranty Corporation.''.
        (c) Jurisdiction of Nomination.--
                (1) In general.--The Committee on Finance of the Senate and
            the Committee on Health, Education, Labor, and Pensions of the
            Senate shall have joint jurisdiction over the nomination of a
            person nominated by the President to fill the position of
            Director of the Pension Benefit Guaranty Corporation under
            section 4002 of the Employee Retirement Income Security Act of
            1974 (29 U.S.C. 1302) (as amended by this Act), and if one
            committee votes to order reported such a nomination, the other
            shall report within 30 calendar days, or be automatically
            discharged.
                (2) Rulemaking of the senate.--This subsection is enacted
            by Congress--
                        (A) as an exercise of rulemaking power of the
                    Senate, and as such it is deemed a part of the rules of
                    the Senate, but applicable only with respect to the
                    procedure to be followed in the Senate in the case of a
                    nomination described in such sentence, and it
                    supersedes other rules only to the extent that it is
                    inconsistent with such rules; and
                        (B) with full recognition of the constitutional
                    right of the Senate to change the rules (so far as
                    relating to the procedure of the Senate) at any time,
                    in the same manner and to the same extent as in the
                    case of any other rule of the Senate.
        (d) Transition.--The term of the individual serving as Executive
    Director of the Pension Benefit Guaranty Corporation on the date of
    enactment of this Act shall expire on such date of enactment. Such
    individual, or any other individual, may serve as interim Director of
    such Corporation until an individual is appointed as Director of such
    Corporation under section 4002 of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1302) (as amended by this Act).

    SEC. 412. INCLUSION OF INFORMATION IN THE PBGC ANNUAL REPORT.

        Section 4008 of the Employee Retirement Income Security Act of 1974
    (29 U.S.C. 1308) is amended by--
                (1) striking ``As soon as practicable'' and inserting ``(a)
            As soon as practicable''; and
                (2) adding at the end the following:
        ``(b) The report under subsection (a) shall include--
                ``(1) a summary of the Pension Insurance Modeling System
            microsimulation model, including the specific simulation
            parameters, specific initial values, temporal parameters, and
            policy parameters used to calculate the financial statements
            for the corporation;
                ``(2) a comparison of--
                        ``(A) the average return on investments earned with
                    respect to assets invested by the corporation for the
                    year to which the report relates; and
                        ``(B) an amount equal to 60 percent of the average
                    return on investment for such year in the Standard &
                    Poor's 500 Index, plus 40 percent of the average return
                    on investment for such year in the Lehman Aggregate
                    Bond Index (or in a similar fixed income index); and
                ``(3) a statement regarding the deficit or surplus for such
            year that the corporation would have had if the corporation had
            earned the return described in paragraph (2)(B) with respect to
            assets invested by the corporation.''.

                              TITLE V--DISCLOSURE

    SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICE.

        (a) In General.--Section 101(f) of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1021(f)) is amended to read as follows:
        ``(f) Defined Benefit Plan Funding Notices.--
                ``(1) In general.--The administrator of a defined benefit
            plan to which title IV applies shall for each plan year provide
            a plan funding notice to the Pension Benefit Guaranty
            Corporation, to each plan participant and beneficiary, to each
            labor organization representing such participants or
            beneficiaries, and, in the case of a multiemployer plan, to
            each employer that has an obligation to contribute to the plan.
                ``(2) Information contained in notices.--
                        ``(A) Identifying information.--Each notice
                    required under paragraph (1) shall contain identifying
                    information, including the name of the plan, the
                    address and phone number of the plan administrator and
                    the plan's principal administrative officer, each plan
                    sponsor's employer identification number, and the plan
                    number of the plan.
                        ``(B) Specific information.--A plan funding notice
                    under paragraph (1) shall include--
                                ``(i)(I) in the case of a single-employer
                            plan, a statement as to whether the plan's
                            funding target attainment percentage (as
                            defined in section 303(d)(2)) for the plan year
                            to which the notice relates, and for the 2
                            preceding plan years, is at least 100 percent
                            (and, if not, the actual percentages), or
                                ``(II) in the case of a multiemployer plan,
                            a statement as to whether the plan's funded
                            percentage (as defined in section 305(i)) for
                            the plan year to which the notice relates, and
                            for the 2 preceding plan years, is at least 100
                            percent (and, if not, the actual percentages),
                                ``(ii)(I) in the case of a single-employer
                            plan, a statement of--
                                        ``(aa) the total assets (separately
                                    stating the prefunding balance and the
                                    funding standard carryover balance) and
                                    liabilities of the plan, determined in
                                    the same manner as under section 303,
                                    for the plan year for which the latest
                                    annual report filed under section
                                    104(a) was filed and for the 2
                                    preceding plan years, as reported in
                                    the annual report for each such plan
                                    year, and
                                        ``(bb) the value of the plan's
                                    assets and liabilities for the plan
                                    year to which the notice relates as of
                                    the last day of the plan year to which
                                    the notice relates determined using the
                                    asset valuation under subclause (II) of
                                    section 4006(a)(3)(E)(iii) and the
                                    interest rate under section
                                    4006(a)(3)(E)(iv), and
                                ``(II) in the case of a multiemployer plan,
                            a statement of the value of the plan's assets
                            and liabilities for the plan year to which the
                            notice relates as the last day of such plan
                            year and the preceding 2 plan years,
                                ``(iii) a statement of the number of
                            participants who are--
                                        ``(I) retired or separated from
                                    service and are receiving benefits,
                                        ``(II) retired or separated
                                    participants entitled to future
                                    benefits, and
                                        ``(III) active participants under
                                    the plan,
                                ``(iv) 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,
                                ``(v) in the case of a multiemployer plan,
                            whether the plan was in critical or endangered
                            status under section 305 for such plan year
                            and, if so--
                                        ``(I) a statement describing how a
                                    person may obtain a copy of the plan's
                                    funding improvement or rehabilitation
                                    plan, as appropriate, adopted under
                                    section 305 and the actuarial and
                                    financial data that demonstrate any
                                    action taken by the plan toward fiscal
                                    improvement, and
                                        ``(II) 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,
                                ``(vi) in the case of any plan amendment,
                            scheduled benefit increase or reduction, or
                            other known event taking effect in the current
                            plan year and having a material effect on plan
                            liabilities or assets for the year (as defined
                            in regulations by the Secretary), an
                            explanation of the amendment, schedule increase
                            or reduction, or event, and a projection to the
                            end of such plan year of the effect of the
                            amendment, scheduled increase or reduction, or
                            event on plan liabilities,
                                ``(vii)(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 reorganization
                            or insolvency, including the limitations on
                            benefit payments,
                                ``(viii) a general description of the
                            benefits under the plan which are eligible to
                            be guaranteed by the Pension Benefit Guaranty
                            Corporation, along with an explanation of the
                            limitations on the guarantee and the
                            circumstances under which such limitations
                            apply,
                                ``(ix) a statement that a person may obtain
                            a copy of the annual report of the plan filed
                            under section 104(a) upon request, through the
                            Internet website of the Department of Labor, or
                            through an Intranet website maintained by the
                            applicable plan sponsor (or plan administrator
                            on behalf of the plan sponsor), and
                                ``(x) if applicable, a statement that each
                            contributing sponsor, and each member of the
                            contributing sponsor's controlled group, of the
                            single-employer plan was required to provide
                            the information under section 4010 for the plan
                            year to which the notice relates.
                        ``(C) Other information.--Each notice under
                    paragraph (1) shall include--
                                ``(i) in the case of a multiemployer plan,
                            a statement that the plan administrator shall
                            provide, upon written request, to any labor
                            organization representing plan participants and
                            beneficiaries and any employer that has an
                            obligation to contribute to the plan, a copy of
                            the annual report filed with the Secretary
                            under section 104(a), and
                                ``(ii) any additional information which the
                            plan administrator elects to include to the
                            extent not inconsistent with regulations
                            prescribed by the Secretary.
                ``(3) Time for providing notice.--
                        ``(A) In general.--Any notice under paragraph (1)
                    shall be provided not later than 120 days after the end
                    of the plan year to which the notice relates.
                        ``(B) Exception for small plans.--In the case of a
                    small plan (as such term is used under section
                    303(g)(2)(B)) any notice under paragraph (1) shall be
                    provided upon filing of the annual report under section
                    104(a).
                ``(4) Form and manner.--Any notice under paragraph (1)--
                        ``(A) shall be provided in a form and manner
                    prescribed in regulations of the Secretary,
                        ``(B) shall be written in a manner so as to be
                    understood by the average plan participant, and
                        ``(C) may be provided in written, electronic, or
                    other appropriate form to the extent such form is
                    reasonably accessible to persons to whom the notice is
                    required to be provided.''.
        (b) Repeal of Notice to Participants of Funding Status.--
                (1) In general.--Title IV of such Act (29 U.S.C. 1301 et
            seq.) is amended by striking section 4011.
                (2) Clerical amendment.--Section 1 of such Act is amended
            in the table of contents by striking the item relating to
            section 4011.
        (c) Model Notice.--Not later than 1 year 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. The Secretary of Labor may
    promulgate any interim final rules as the Secretary determines
    appropriate to carry out the provisions of this subsection.
        (d) Effective Date.--
                (1) In general.--The amendments made by this section shall
            apply to plan years beginning after December 31, 2007, except
            that the amendment made by subsection (b) shall apply to plan
            years beginning after December 31, 2006.
                (2) Transition rule.--Any requirement under section 101(f)
            of the Employee Retirement Income Security Act of 1974 (as
            amended by this section) to report the funding target
            attainment percentage or funded percentage of a plan with
            respect to any plan year beginning before January 1, 2008,
            shall be treated as met if the plan reports--
                        (A) in the case of a plan year beginning in 2006,
                    the funded current liability percentage (as defined in
                    section 302(d)(8) of such Act) of the plan for such
                    plan year, and
                        (B) in the case of a plan year beginning in 2007,
                    the funding target attainment percentage or funded
                    percentage as determined using such methods of
                    estimation as the Secretary of the Treasury may
                    provide.

    SEC. 502. ACCESS TO MULTIEMPLOYER PENSION PLAN INFORMATION.

        (a) Financial Information 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, is 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, upon written request, furnish to any plan
            participant or beneficiary, employee representative, or any
            employer that has an obligation to contribute to the plan--
                        ``(A) a copy of any periodic actuarial report
                    (including any sensitivity testing) received by the
                    plan for any plan year which has been in the plan's
                    possession for at least 30 days,
                        ``(B) a copy of any quarterly, semi-annual, or
                    annual financial report prepared for the plan by any
                    plan investment manager or advisor or other fiduciary
                    which has been in the plan's possession for at least 30
                    days, and
                        ``(C) a copy of any application filed with the
                    Secretary of the Treasury requesting an extension under
                    section 304 of this Act or section 431(d) of the
                    Internal Revenue Code of 1986 and the determination of
                    such Secretary pursuant to such application.
                ``(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,
                        ``(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, and
                        ``(C) shall not--
                                ``(i) include any individually identifiable
                            information regarding any plan participant,
                            beneficiary, employee, fiduciary, or
                            contributing employer, or
                                ``(ii) reveal any proprietary information
                            regarding the plan, any contributing employer,
                            or entity providing services to the plan.
                ``(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 or application
            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)) is amended by striking ``section 101(j)'' and
            inserting ``subsection (j) or (k) of section 101''.
                (3) Regulations.--The Secretary shall prescribe regulations
            under section 101(k)(2) of the Employee Retirement Income
            Security Act of 1974 (as added by paragraph (1)) not later than
            1 year after the date of the enactment of this Act.
        (b) Notice of Potential Withdrawal Liability to Multiemployer
    Plans.--
                (1) In general.--Section 101 of such Act (as amended by
            subsection (a)) is 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, upon written request, furnish to any
            employer who has an obligation to contribute to the plan a
            notice of--
                        ``(A) the estimated 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) an explanation of how such estimated
                    liability amount was determined, including the
                    actuarial assumptions and methods used to determine the
                    value of the plan liabilities and assets, the data
                    regarding employer contributions, unfunded vested
                    benefits, annual changes in the plan's unfunded vested
                    benefits, and the application of any relevant
                    limitations on the estimated withdrawal liability.
            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 in a form and manner
                    prescribed in regulations of the Secretary to the
                    requesting employer within--
                                ``(i) 180 days after the request, or
                                ``(ii) subject to regulations of the
                            Secretary, such longer time as may be necessary
                            in the case of a plan that determines
                            withdrawal liability based on any method
                            described under paragraph (4) or (5) of section
                            4211(c); 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)) is amended by striking ``section 101(j) or (k)''
            and inserting ``subsection (j), (k), or (l) of section 101''.
        (c) Notice of Amendment Reducing Future Accruals.--
                (1) Amendment of erisa.--Section 204(h)(1) of such Act (29
            U.S.C. 1054(h)(1)) is amended by inserting at the end before
            the period the following: ``and to each employer who has an
            obligation to contribute to the plan.''.
                (2) Amendment of internal revenue code.--Section
            4980F(e)(1) of such Code is amended by adding at the end before
            the period the following: ``and to each employer who has an
            obligation to contribute to the plan.''.
        (d) Effective Date.--The amendments made by this section shall
    apply to plan years beginning after December 31, 2007.

    SEC. 503. ADDITIONAL ANNUAL REPORTING REQUIREMENTS.

        (a) Additional Annual Reporting Requirements With Respect to
    Defined Benefit Plans.--
                (1) In general.--Section 103 of the Employee Retirement
            Income Security Act of 1974 (29 U.S.C. 1023) is amended--
                        (A) in subsection (a)(1)(B), by striking
                    ``subsections (d) and (e)'' and inserting ``subsections
                    (d), (e), and (f)''; and
                        (B) by adding at the end the following new
                    subsection:
        ``(f) Additional Information With Respect to Defined Benefit
    Plans.--
                ``(1) Liabilities under 2 or more plans.--
                        ``(A) In general.--In any case in which any
                    liabilities to participants or their beneficiaries
                    under a defined benefit plan as of the end of a plan
                    year consist (in whole or in part) of liabilities to
                    such participants and beneficiaries under 2 or more
                    pension plans as of immediately before such plan year,
                    an annual report under this section for such plan year
                    shall include the funded percentage of each of such 2
                    or more pension plans as of the last day of such plan
                    year and the funded percentage of the plan with respect
                    to which the annual report is filed as of the last day
                    of such plan year.
                        ``(B) Funded percentage.--For purposes of this
                    paragraph, the term `funded percentage'--
                                ``(i) in the case of a single-employer
                            plan, means the funding target attainment
                            percentage, as defined in section 303(d)(2),
                            and
                                ``(ii) in the case of a multiemployer plan,
                            has the meaning given such term in section
                            305(i)(2).
                ``(2) Additional information for multiemployer plans.--With
            respect to any defined benefit plan which is a multiemployer
            plan, an annual report under this section for a plan year shall
            include, in addition to the information required under
            paragraph (1), the following, as of the end of the plan year to
            which the report relates:
                        ``(A) The number of employers obligated to
                    contribute to the plan.
                        ``(B) A list of the employers that contributed more
                    than 5 percent of the total contributions to the plan
                    during such plan year.
                        ``(C) The number of participants under the plan on
                    whose behalf no contributions were made by an employer
                    as an employer of the participant for such plan year
                    and for each of the 2 preceding plan years.
                        ``(D) The ratios of--
                                ``(i) the number of participants under the
                            plan on whose behalf no employer had an
                            obligation to make an employer contribution
                            during the plan year, to
                                ``(ii) the number of participants under the
                            plan on whose behalf no employer had an
                            obligation to make an employer contribution
                            during each of the 2 preceding plan years.
                        ``(E) Whether the plan received an amortization
                    extension under section 304(d) of this Act or section
                    431(d) of the Internal Revenue Code of 1986 for such
                    plan year and, if so, the amount of the difference
                    between the minimum required contribution for the year
                    and the minimum required contribution which would have
                    been required without regard to the extension, and the
                    period of such extension.
                        ``(F) Whether the plan used the shortfall funding
                    method (as such term is used in section 305) for such
                    plan year and, if so, the amount of the difference
                    between the minimum required contribution for the year
                    and the minimum required contribution which would have
                    been required without regard to the use of such method,
                    and the period of use of such method.
                        ``(G) Whether the plan was in critical or
                    endangered status under section 305 for such plan year,
                    and if so, a summary of any funding improvement or
                    rehabilitation plan (or modification thereto) adopted
                    during the plan year, and the funded percentage of the
                    plan.
                        ``(H) The number of employers that withdrew from
                    the plan during the preceding plan year and the
                    aggregate amount of withdrawal liability assessed, or
                    estimated to be assessed, against such withdrawn
                    employers.
                        ``(I) In the case of a multiemployer plan that has
                    merged with another plan or to which assets and
                    liabilities have been transferred, the actuarial
                    valuation of the assets and liabilities of each
                    affected plan during the year preceding the effective
                    date of the merger or transfer, based upon the most
                    recent data available as of the day before the first
                    day of the plan year, or other valuation method
                    performed under standards and procedures as the
                    Secretary may prescribe by regulation.''.
                (2) Guidance by secretary of labor.--Not later than 1 year
            after the date of enactment of this Act, the Secretary of Labor
            shall publish guidance to assist multiemployer defined benefit
            plans to--
                        (A) identify and enumerate plan participants for
                    whom there is no employer with an obligation to make an
                    employer contribution under the plan; and
                        (B) report such information under section
                    103(f)(2)(D) of the Employee Retirement Income Security
                    Act of 1974 (as added by this section).
        (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) Repeal of Summary Annual Report Requirement for Defined Benefit
    Plans.--
                (1) In general.--Section 104(b)(3) of such Act (29 U.S.C.
            1024(b)(3)) is amended by inserting ``(other than an
            administrator of a defined benefit plan to which the
            requirements of section 103(f) applies)'' after ``the
            administrators''.
                (2) Conforming amendments.--Section 101(a)(2) of such Act
            (29 U.S.C. 1021(a)(2)) is amended by inserting ``subsection (f)
            and'' before ``sections 104(b)(3) and 105(a) and (c)''.
        (d) Furnishing Summary Plan Information to Employers and Employee
    Representatives of Multiemployer Plans.--Section 104 of such Act (29
    U.S.C. 1024) is amended--
                (1) in the header, by striking ``participants'' and
            inserting ``participants and certain employers'';
                (2) redesignating subsection (d) as subsection (e); and
                (3) inserting after subsection (c) the following:
        ``(d) Furnishing Summary Plan Information to Employers and Employee
    Representatives of Multiemployer Plans.--
                ``(1) In general.--With respect to a multiemployer plan
            subject to this section, within 30 days after the due date
            under subsection (a)(1) for the filing of the annual report for
            the fiscal year of the plan, the administrators shall furnish
            to each employee organization and to each employer with an
            obligation to contribute to the plan a report that contains--
                        ``(A) a description of the contribution schedules
                    and benefit formulas under the plan, and any
                    modification to such schedules and formulas, during
                    such plan year;
                        ``(B) the number of employers obligated to
                    contribute to the plan;
                        ``(C) a list of the employers that contributed more
                    than 5 percent of the total contributions to the plan
                    during such plan year;
                        ``(D) the number of participants under the plan on
                    whose behalf no contributions were made by an employer
                    as an employer of the participant for such plan year
                    and for each of the 2 preceding plan years;
                        ``(E) whether the plan was in critical or
                    endangered status under section 305 for such plan year
                    and, if so, include--
                                ``(i) a list of the actions taken by the
                            plan to improve its funding status; and
                                ``(ii) a statement describing how a person
                            may obtain a copy of the plan's improvement or
                            rehabilitation plan, as applicable, adopted
                            under section 305 and the actuarial and
                            financial data that demonstrate any action
                            taken by the plan toward fiscal improvement;
                        ``(F) the number of employers that withdrew from
                    the plan during the preceding plan year and the
                    aggregate amount of withdrawal liability assessed, or
                    estimated to be assessed, against such withdrawn
                    employers, as reported on the annual report for the
                    plan year to which the report under this subsection
                    relates;
                        ``(G) in the case of a multiemployer plan that has
                    merged with another plan or to which assets and
                    liabilities have been transferred, the actuarial
                    valuation of the assets and liabilities of each
                    affected plan during the year preceding the effective
                    date of the merger or transfer, based upon the most
                    recent data available as of the day before the first
                    day of the plan year, or other valuation method
                    performed under standards and procedures as the
                    Secretary may prescribe by regulation;
                        ``(H) a description as to whether the plan--
                                ``(i) sought or received an amortization
                            extension under section 304(d) of this Act or
                            section 431(d) of the Internal Revenue Code of
                            1986 for such plan year; or
                                ``(ii) used the shortfall funding method
                            (as such term is used in section 305) for such
                            plan year; and
                        ``(I) notification of the right under this section
                    of the recipient to a copy of the annual report filed
                    with the Secretary under subsection (a), summary plan
                    description, summary of any material modification of
                    the plan, upon written request, but that--
                                ``(i) in no case shall a recipient be
                            entitled to receive more than one copy of any
                            such document described during any one 12-month
                            period; and
                                ``(ii) the administrator may make a
                            reasonable charge to cover copying, mailing,
                            and other costs of furnishing copies of
                            information pursuant to this subparagraph.
                ``(2) Effect of subsection.--Nothing in this subsection
            waives any other provision under this title requiring plan
            administrators to provide, upon request, information to
            employers that have an obligation to contribute under the
            plan.''.
        (e) Model Form.--Not later than 1 year 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 101(f) of the Employee Retirement
    Income Security Act of 1974, as amended by this section. The Secretary
    of Labor may promulgate any interim final rules as the Secretary
    determines appropriate to carry out the provisions of this subsection.
        (f) Effective Date.--The amendments made by this section shall
    apply to plan years beginning after December 31, 2007.

    SEC. 504. ELECTRONIC DISPLAY OF ANNUAL REPORT INFORMATION.

        (a) Electronic 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 an Internet website
    maintained by the Secretary and other appropriate media. Such
    information shall also be displayed on any Intranet website maintained
    by the plan sponsor (or by the plan administrator on behalf of the plan
    sponsor) for the purpose of communicating with employees and not the
    public, in accordance with regulations which shall be prescribed by the
    Secretary.''.
        (b) Effective Date.--The amendments made by this section shall
    apply to plan years beginning after December 31, 2007.

    SEC. 505. 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)
    and inserting the following:
                ``(1) the funding target attainment percentage (as defined
            in subsection (d)) at the end of the preceding plan year of a
            plan maintained by the contributing sponsor or any member of
            its controlled group is less than 80 percent;''.
        (b) Additional Information Required.--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) Additional Information Required.--
                ``(1) In general.--The information submitted to the
            corporation under subsection (a) shall include--
                        ``(A) the amount of benefit liabilities under the
                    plan determined using the assumptions used by the
                    corporation in determining liabilities;
                        ``(B) the funding target of the plan determined as
                    if the plan has been in at-risk status for at least 5
                    plan years; and
                        ``(C) the funding target attainment percentage of
                    the plan.
                ``(2) Definitions.--For purposes of this subsection:
                        ``(A) Funding target.--The term `funding target'
                    has the meaning provided under section 303(d)(1).
                        ``(B) Funding target attainment percentage.--The
                    term `funding target attainment percentage' has the
                    meaning provided under section 302(d)(2).
                        ``(C) At-risk status.--The term `at-risk status'
                    has the meaning provided in section 303(i)(4).
        ``(e) Notice to Congress.--The corporation shall, on an annual
    basis, submit to the Committee on Health, Education, Labor, and
    Pensions and the Committee on Finance of the Senate and the Committee
    on Education and the Workforce and the Committee on Ways and Means of
    the House of Representatives, a summary report in the aggregate of the
    information submitted to the corporation under this section.''.
        (c) Effective Date.--The amendments made by this section shall
    apply with respect to years beginning after 2007.

    SEC. 506. DISCLOSURE OF TERMINATION INFORMATION TO PLAN PARTICIPANTS.

        (a) Distress Terminations.--
                (1) In general.--Section 4041(c)(2) of the Employee
            Retirement Income Security Act of 1974 (29 U.S.C. 1341(c)(2))
            is amended by adding at the end the following:
                        ``(D) Disclosure of termination information.--
                                ``(i) In general.--A plan administrator
                            that has filed a notice of intent to terminate
                            under subsection (a)(2) shall provide to an
                            affected party any information provided to the
                            corporation under subsection (a)(2) not later
                            than 15 days after--
                                        ``(I) receipt of a request from the
                                    affected party for the information; or
                                        ``(II) the provision of new
                                    information to the corporation relating
                                    to a previous request.
                                ``(ii) Confidentiality.--
                                        ``(I) In general.--The plan
                                    administrator shall not provide
                                    information under clause (i) in a form
                                    that includes any information that may
                                    directly or indirectly be associated
                                    with, or otherwise identify, an
                                    individual participant or beneficiary.
                                        ``(II) Limitation.--A court may
                                    limit disclosure under this
                                    subparagraph of confidential
                                    information described in section 552(b)
                                    of title 5, United States Code, to any
                                    authorized representative of the
                                    participants or beneficiaries that
                                    agrees to ensure the confidentiality of
                                    such information.
                                ``(iii) Form and manner of information;
                            charges.--
                                        ``(I) Form and manner.--The
                                    corporation may prescribe the form and
                                    manner of the provision of information
                                    under this subparagraph, which shall
                                    include delivery in written,
                                    electronic, or other appropriate form
                                    to the extent that such form is
                                    reasonably accessible to individuals to
                                    whom the information is required to be
                                    provided.
                                        ``(II) Reasonable charges.--A plan
                                    administrator may charge a reasonable
                                    fee for any information provided under
                                    this subparagraph in other than
                                    electronic form.
                                ``(iv) Authorized representative.--For
                            purposes of this subparagraph, the term
                            `authorized representative' means any employee
                            organization representing participants in the
                            pension plan.''.
                (2) Conforming amendment.--Section 4041(c)(1) of the
            Employee Retirement Income Security Act of 1974 (29 U.S.C.
            1341(c)(1)) is amended in subparagraph (C) by striking
            ``subparagraph (B)'' and inserting ``subparagraphs (B) and
            (D)''.
        (b) Involuntary Terminations.--
                (1) In general.--Section 4042(c) of the Employee Retirement
            Income Security Act of 1974 (29 U.S.C. 1342(c)) is amended by--
                        (A) striking ``(c) If the'' and inserting ``(c)(1)
                    If the'';
                        (B) redesignating paragraph (3) as paragraph (2);
                    and
                        (C) adding at the end the following:
                ``(3) Disclosure of termination information.--
                        ``(A) In general.--
                                ``(i) Information from plan sponsor or
                            administrator.--A plan sponsor or plan
                            administrator of a single-employer plan that
                            has received a notice from the corporation of a
                            determination that the plan should be
                            terminated under this section shall provide to
                            an affected party any information provided to
                            the corporation in connection with the plan
                            termination.
                                ``(ii) Information from corporation.--The
                            corporation shall provide a copy of the
                            administrative record, including the
                            trusteeship decision record of a termination of
                            a plan described under clause (i).
                        ``(B) Timing of disclosure.--The plan sponsor, plan
                    administrator, or the corporation, as applicable, shall
                    provide the information described in subparagraph (A)
                    not later than 15 days after--
                                ``(i) receipt of a request from an affected
                            party for such information; or
                                ``(ii) in the case of information described
                            under subparagraph (A)(i), the provision of any
                            new information to the corporation relating to
                            a previous request by an affected party.
                        ``(C) Confidentiality.--
                                ``(i) In general.--The plan administrator
                            and plan sponsor shall not provide information
                            under subparagraph (A)(i) in a form which
                            includes any information that may directly or
                            indirectly be associated with, or otherwise
                            identify, an individual participant or
                            beneficiary.
                                ``(ii) Limitation.--A court may limit
                            disclosure under this paragraph of confidential
                            information described in section 552(b) of
                            title 5, United States Code, to authorized
                            representatives (within the meaning of section
                            4041(c)(2)(D)(iv)) of the participants or
                            beneficiaries that agree to ensure the
                            confidentiality of such information.
                        ``(D) Form and manner of information; charges.--
                                ``(i) Form and manner.--The corporation may
                            prescribe the form and manner of the provision
                            of information under this paragraph, which
                            shall include delivery in written, electronic,
                            or other appropriate form to the extent that
                            such form is reasonably accessible to
                            individuals to whom the information is required
                            to be provided.
                                ``(ii) Reasonable charges.--A plan sponsor
                            may charge a reasonable fee for any information
                            provided under this paragraph in other than
                            electronic form.''.
        (c) Effective Date.--
                (1) In general.--The amendments made by this section shall
            apply to any plan termination under title IV of the Employee
            Retirement Income Security Act of 1974 (29 U.S.C. 1301 et seq.)
            with respect to which the notice of intent to terminate (or in
            the case of a termination by the Pension Benefit Guaranty
            Corporation, a notice of determination under section 4042 of
            such Act (29 U.S.C. 1342)) occurs after the date of enactment
            of this Act.
                (2) Transition rule.--If notice under section 4041(c)(2)(D)
            or 4042(c)(3) of the Employee Retirement Income Security Act of
            1974 (as added by this section) would otherwise be required to
            be provided before the 90th day after the date of the enactment
            of this Act, such notice shall not be required to be provided
            until such 90th day.

    SEC. 507. NOTICE OF FREEDOM TO DIVEST EMPLOYER SECURITIES.

        (a) In General.--Section 101 of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1021), as amended by this Act, is
    amended by redesignating subsection (m) as subsection (n) and by
    inserting after subsection (l) the following:
        ``(m) Notice of Right To Divest.--Not later than 30 days before the
    first date on which an applicable individual of an applicable
    individual account plan is eligible to exercise the right under section
    204(j) to direct the proceeds from the divestment of employer
    securities with respect to any type of contribution, the administrator
    shall provide to such individual a notice--
                ``(1) setting forth such right under such section, and
                ``(2) describing the importance of diversifying the
            investment of retirement account assets.
    The notice required by this subsection shall be written in a manner
    calculated to be understood by the average plan participant and may be
    delivered in written, electronic, or other appropriate form to the
    extent that such form is reasonably accessible to the recipient.''
        (b) Penalties.--Section 502(c)(7) of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1132(c)(7)) is amended by striking
    ``section 101(i)'' and inserting ``subsection (i) or (m) of section
    101''.
        (c) Model Notice.--The Secretary of the Treasury shall, within 180
    days after the date of the enactment of this subsection, prescribe a
    model notice for purposes of satisfying the requirements of the
    amendments made by this section.
        (d) Effective Dates.--
                (1) In general.--The amendments made by this section shall
            apply to plan years beginning after December 31, 2006.
                (2) Transition rule.--If notice under section 101(m) of the
            Employee Retirement Income Security Act of 1974 (as added by
            this section) would otherwise be required to be provided before
            the 90th day after the date of the enactment of this Act, such
            notice shall not be required to be provided until such 90th
            day.

    SEC. 508. PERIODIC PENSION BENEFIT STATEMENTS.

        (a) Amendments of ERISA.--
                (1) In general.--Section 105(a) of the Employee Retirement
            Income Security Act of 1974 (29 U.S.C. 1025(a)) is amended to
            read as follows:
        ``(a) Requirements To Provide Pension Benefit Statements.--
                ``(1) Requirements.--
                        ``(A) Individual account plan.--The administrator
                    of an individual account plan (other than a one-
                    participant retirement plan described in section
                    101(i)(8)(B)) shall furnish a pension benefit
                    statement--
                                ``(i) at least once each calendar quarter
                            to a participant or beneficiary who has the
                            right to direct the investment of assets in his
                            or her account under the plan,
                                ``(ii) at least once each calendar year to
                            a participant or beneficiary who has his or her
                            own account under the plan but does not have
                            the right to direct the investment of assets in
                            that account, and
                                ``(iii) upon written request to a plan
                            beneficiary not described in clause (i) or
                            (ii).
                        ``(B) Defined benefit plan.--The administrator of a
                    defined benefit plan (other than a one-participant
                    retirement plan described in section 101(i)(8)(B))
                    shall furnish a pension benefit statement--
                                ``(i) at least once every 3 years to each
                            participant with a nonforfeitable accrued
                            benefit and who is employed by the employer
                            maintaining the plan at the time the statement
                            is to be furnished, and
                                ``(ii) to a participant or beneficiary of
                            the plan upon written request.
                    Information furnished under clause (i) to a participant
                    may be based on reasonable estimates determined under
                    regulations prescribed by the Secretary, in
                    consultation with the Pension Benefit Guaranty
                    Corporation.
                ``(2) Statements.--
                        ``(A) In general.--A pension benefit statement
                    under paragraph (1)--
                                ``(i) shall indicate, on the basis of the
                            latest available information--
                                        ``(I) the total benefits accrued,
                                    and
                                        ``(II) the nonforfeitable pension
                                    benefits, if any, which have accrued,
                                    or the earliest date on which benefits
                                    will become nonforfeitable,
                                ``(ii) shall include an explanation of any
                            permitted disparity under section 401(l) of the
                            Internal Revenue Code of 1986 or any floor-
                            offset arrangement that may be applied in
                            determining any accrued benefits described in
                            clause (i),
                                ``(iii) shall be written in a manner
                            calculated to be understood by the average plan
                            participant, and
                                ``(iv) may be delivered in written,
                            electronic, or other appropriate form to the
                            extent such form is reasonably accessible to
                            the participant or beneficiary.
                        ``(B) Additional information.--In the case of an
                    individual account plan, any pension benefit statement
                    under clause (i) or (ii) of paragraph (1)(A) shall
                    include--
                                ``(i) the value of each investment to which
                            assets in the individual account have been
                            allocated, determined as of the most recent
                            valuation date under the plan, including the
                            value of any assets held in the form of
                            employer securities, without regard to whether
                            such securities were contributed by the plan
                            sponsor or acquired at the direction of the
                            plan or of the participant or beneficiary, and
                                ``(ii) in the case of a pension benefit
                            statement under paragraph (1)(A)(i)--
                                        ``(I) an explanation of any
                                    limitations or restrictions on any
                                    right of the participant or beneficiary
                                    under the plan to direct an investment,
                                        ``(II) an explanation, written in a
                                    manner calculated to be understood by
                                    the average plan participant, of the
                                    importance, for the long-term
                                    retirement security of participants and
                                    beneficiaries, of a well-balanced and
                                    diversified investment portfolio,
                                    including a statement of the risk that
                                    holding more than 20 percent of a
                                    portfolio in the security of one entity
                                    (such as employer securities) may not
                                    be adequately diversified, and
                                        ``(III) a notice directing the
                                    participant or beneficiary to the
                                    Internet website of the Department of
                                    Labor for sources of information on
                                    individual investing and
                                    diversification.
                        ``(C) Alternative notice.--The requirements of
                    subparagraph (A)(i)(II) are met if, at least annually
                    and in accordance with requirements of the Secretary,
                    the plan--
                                ``(i) updates the information described in
                            such paragraph which is provided in the pension
                            benefit statement, or
                                ``(ii) provides in a separate statement
                            such information as is necessary to enable a
                            participant or beneficiary to determine their
                            nonforfeitable vested benefits.
                ``(3) Defined benefit plans.--
                        ``(A) Alternative notice.--In the case of a defined
                    benefit plan, the requirements of paragraph (1)(B)(i)
                    shall be treated as met with respect to a participant
                    if at least once each year the administrator provides
                    to the participant notice of the availability of the
                    pension benefit statement and the ways in which the
                    participant may obtain such statement. Such notice may
                    be delivered in written, electronic, or other
                    appropriate form to the extent such form is reasonably
                    accessible to the participant.
                        ``(B) Years in which no benefits accrue.--The
                    Secretary may provide that years in which no employee
                    or former employee benefits (within the meaning of
                    section 410(b) of the Internal Revenue Code of 1986)
                    under the plan need not be taken into account in
                    determining the 3-year period under paragraph
                    (1)(B)(i).''
                (2) Conforming amendments.--
                        (A) Section 105 of the Employee Retirement Income
                    Security Act of 1974 (29 U.S.C. 1025) is amended by
                    striking subsection (d).
                        (B) Section 105(b) of such Act (29 U.S.C. 1025(b))
                    is amended to read as follows:
        ``(b) Limitation on Number of Statements.--In no case shall a
    participant or beneficiary of a plan be entitled to more than 1
    statement described in subparagraph (A)(iii) or (B)(ii) of subsection
    (a)(1), whichever is applicable, in any 12-month period.''
                        (C) Section 502(c)(1) of such Act (29 U.S.C.
                    1132(c)(1)) is amended by striking ``or section
                    101(f)'' and inserting ``section 101(f), or section
                    105(a)''.
        (b) Model Statements.--
                (1) In general.--The Secretary of Labor shall, within 1
            year after the date of the enactment of this section, develop 1
            or more model benefit statements that are written in a manner
            calculated to be understood by the average plan participant and
            that may be used by plan administrators in complying with the
            requirements of section 105 of the Employee Retirement Income
            Security Act of 1974.
                (2) Interim final rules.--The Secretary of Labor may
            promulgate any interim final rules as the Secretary determines
            appropriate to carry out the provisions of this subsection.
        (c) Effective Date.--
                (1) In general.--The amendments made by this section shall
            apply to plan years beginning after December 31, 2006.
                (2) Special rule for collectively bargained agreements.--In
            the case of a plan maintained pursuant to 1 or more collective
            bargaining agreements between employee representatives and 1 or
            more employers ratified on or before the date of the enactment
            of this Act, paragraph (1) shall be applied to benefits
            pursuant to, and individuals covered by, any such agreement by
            substituting for ``December 31, 2006'' the earlier of--
                        (A) the later of--
                                (i) December 31, 2007, or
                                (ii) the date on which the last of such
                            collective bargaining agreements terminates
                            (determined without regard to any extension
                            thereof after such date of enactment), or
                        (B) December 31, 2008.

    SEC. 509. NOTICE TO PARTICIPANTS OR BENEFICIARIES OF BLACKOUT PERIODS.

        (a) In General.--Section 101(i)(8)(B) of the Employee Retirement
    Income Security Act of 1974 (29 U.S.C. 1021(i)(8)(B)) is amended by
    striking clauses (i) through (iv), by redesignating clause (v) as
    clause (ii), and by inserting before clause (ii), as so redesignated,
    the following new clause:
                                ``(i) on the first day of the plan year--
                                        ``(I) covered only one individual
                                    (or the individual and the individual's
                                    spouse) and the individual (or the
                                    individual and the individual's spouse)
                                    owned 100 percent of the plan sponsor
                                    (whether or not incorporated), or
                                        ``(II) covered only one or more
                                    partners (or partners and their
                                    spouses) in the plan sponsor, and''.
        (b) Effective Date.--The amendments made by this subsection shall
    take effect as if included in the provisions of section 306 of Public
    Law 107-204 (116 Stat. 745 et seq.).

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

                         Subtitle A--Investment Advice

    SEC. 601. PROHIBITED TRANSACTION EXEMPTION FOR PROVISION OF INVESTMENT
                  ADVICE.

        (a) Amendments to the Employee Retirement Income Security Act of
    1974.--
                (1) 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) Any transaction in connection with the provision of
            investment advice described in section 3(21)(A)(ii) to a
            participant or beneficiary of an individual account plan that
            permits such participant or beneficiary to direct the
            investment of assets in their individual account, if--
                        ``(A) the transaction is--
                                ``(i) the provision of the investment
                            advice to the participant or beneficiary of the
                            plan with respect to a security or other
                            property available as an investment under the
                            plan,
                                ``(ii) the acquisition, holding, or sale of
                            a security or other property available as an
                            investment under the plan pursuant to the
                            investment advice, or
                                ``(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 an acquisition, holding, or
                            sale of a security or other property available
                            as an investment under the plan pursuant to the
                            investment advice; and
                        ``(B) the requirements of subsection (g) are
                    met.''.
                (2) Requirements.--Section 408 of such Act is amended
            further by adding at the end the following new subsection:
        ``(g) Provision of Investment Advice to Participant and
    Beneficiaries.--
                ``(1) In general.--The prohibitions provided in section 406
            shall not apply to transactions described in subsection (b)(14)
            if the investment advice provided by a fiduciary adviser is
            provided under an eligible investment advice arrangement.
                ``(2) Eligible investment advice arrangement.--For purposes
            of this subsection, the term `eligible investment advice
            arrangement' means an arrangement--
                        ``(A) which either--
                                ``(i) provides that any fees (including any
                            commission or other compensation) received by
                            the fiduciary adviser for investment advice or
                            with respect to the sale, holding, or
                            acquisition of any security or other property
                            for purposes of investment of plan assets do
                            not vary depending on the basis of any
                            investment option selected, or
                                ``(ii) uses a computer model under an
                            investment advice program meeting the
                            requirements of paragraph (3) in connection
                            with the provision of investment advice by a
                            fiduciary adviser to a participant or
                            beneficiary, and
                        ``(B) with respect to which the requirements of
                    paragraph (4), (5), (6), (7), (8), and (9) are met.
                ``(3) Investment advice program using computer model.--
                        ``(A) In general.--An investment advice program
                    meets the requirements of this paragraph if the
                    requirements of subparagraphs (B), (C), and (D) are
                    met.
                        ``(B) Computer model.--The requirements of this
                    subparagraph are met if the investment advice provided
                    under the investment advice program is provided
                    pursuant to a computer model that--
                                ``(i) applies generally accepted investment
                            theories that take into account the historic
                            returns of different asset classes over defined
                            periods of time,
                                ``(ii) utilizes relevant information about
                            the participant, which may include age, life
                            expectancy, retirement age, risk tolerance,
                            other assets or sources of income, and
                            preferences as to certain types of investments,
                                ``(iii) utilizes prescribed objective
                            criteria to provide asset allocation portfolios
                            comprised of investment options available under
                            the plan,
                                ``(iv) operates in a manner that is not
                            biased in favor of investments offered by the
                            fiduciary adviser or a person with a material
                            affiliation or contractual relationship with
                            the fiduciary adviser, and
                                ``(v) takes into account all investment
                            options under the plan in specifying how a
                            participant's account balance should be
                            invested and is not inappropriately weighted
                            with respect to any investment option.
                        ``(C) Certification.--
                                ``(i) In general.--The requirements of this
                            subparagraph are met with respect to any
                            investment advice program if an eligible
                            investment expert certifies, prior to the
                            utilization of the computer model and in
                            accordance with rules prescribed by the
                            Secretary, that the computer model meets the
                            requirements of subparagraph (B).
                                ``(ii) Renewal of certifications.--If, as
                            determined under regulations prescribed by the
                            Secretary, there are material modifications to
                            a computer model, the requirements of this
                            subparagraph are met only if a certification
                            described in clause (i) is obtained with
                            respect to the computer model as so modified.
                                ``(iii) Eligible investment expert.--The
                            term `eligible investment expert' means any
                            person--
                                        ``(I) which meets such requirements
                                    as the Secretary may provide, and
                                        ``(II) does not bear any material
                                    affiliation or contractual relationship
                                    with any investment adviser or a
                                    related person thereof (or any
                                    employee, agent, or registered
                                    representative of the investment
                                    adviser or related person).
                        ``(D) Exclusivity of recommendation.--The
                    requirements of this subparagraph are met with respect
                    to any investment advice program if--
                                ``(i) the only investment advice provided
                            under the program is the advice generated by
                            the computer model described in subparagraph
                            (B), and
                                ``(ii) any transaction described in
                            subsection (b)(14)(B)(ii) occurs solely at the
                            direction of the participant or beneficiary.
                    Nothing in the preceding sentence shall preclude the
                    participant or beneficiary from requesting investment
                    advice other than that described in subparagraph (A),
                    but only if such request has not been solicited by any
                    person connected with carrying out the arrangement.
                ``(4) Express authorization by separate fiduciary.--The
            requirements of this paragraph are met with respect to an
            arrangement if the arrangement is expressly authorized by a
            plan fiduciary other than the person offering the investment
            advice program, any person providing investment options under
            the plan, or any affiliate of either.
                ``(5) Annual audit.--The requirements of this paragraph are
            met if an independent auditor, who has appropriate technical
            training or experience and proficiency and so represents in
            writing--
                        ``(A) conducts an annual audit of the arrangement
                    for compliance with the requirements of this
                    subsection, and
                        ``(B) following completion of the annual audit,
                    issues a written report to the fiduciary who authorized
                    use of the arrangement which presents its specific
                    findings regarding compliance of the arrangement with
                    the requirements of this subsection.
            For purposes of this paragraph, an auditor is considered
            independent if it is not related to the person offering the
            arrangement to the plan and is not related to any person
            providing investment options under the plan.
                ``(6) Disclosure.--The requirements of this paragraph are
            met if--
                        ``(A) the fiduciary adviser provides to a
                    participant or a beneficiary before the initial
                    provision of the investment advice with regard to any
                    security or other property offered as an investment
                    option, a written notification (which may consist of
                    notification by means of electronic communication)--
                                ``(i) of the role of any party that has a
                            material affiliation or contractual
                            relationship with the financial adviser in the
                            development of the investment advice program
                            and in the selection of investment options
                            available under the plan,
                                ``(ii) of the past performance and
                            historical rates of return of the investment
                            options available under the plan,
                                ``(iii) 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,
                                ``(iv) of any material affiliation or
                            contractual relationship of the fiduciary
                            adviser or affiliates thereof in the security
                            or other property,
                                ``(v) the manner, and under what
                            circumstances, any participant or beneficiary
                            information provided under the arrangement will
                            be used or disclosed,
                                ``(vi) of the types of services provided by
                            the fiduciary adviser in connection with the
                            provision of investment advice by the fiduciary
                            adviser,
                                ``(vii) that the adviser is acting as a
                            fiduciary of the plan in connection with the
                            provision of the advice, and
                                ``(viii) 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, and
                        ``(B) at all times during the provision of advisory
                    services to the participant or beneficiary, the
                    fiduciary adviser--
                                ``(i) maintains the information described
                            in subparagraph (A) in accurate form and in the
                            manner described in paragraph (8),
                                ``(ii) provides, without charge, accurate
                            information to the recipient of the advice no
                            less frequently than annually,
                                ``(iii) provides, without charge, accurate
                            information to the recipient of the advice upon
                            request of the recipient, and
                                ``(iv) provides, without charge, accurate
                            information to the recipient of the advice
                            concerning any material change to the
                            information required to be provided to the
                            recipient of the advice at a time reasonably
                            contemporaneous to the change in information.
                ``(7) Other conditions.--The requirements of this paragraph
            are met if--
                        ``(A) 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,
                        ``(B) the sale, acquisition, or holding occurs
                    solely at the direction of the recipient of the advice,
                        ``(C) 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
                        ``(D) 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.
                ``(8) Standards for presentation of information.--
                        ``(A) In general.--The requirements of this
                    paragraph are met if the notification required to be
                    provided to participants and beneficiaries under
                    paragraph (6)(A) is written in a clear and conspicuous
                    manner and in a manner calculated to be understood by
                    the average plan participant and is 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 (6)(A)(iii) which meets the
                    requirements of subparagraph (A).
                ``(9) Maintenance for 6 years of evidence of compliance.--
            The requirements of this paragraph are met if a fiduciary
            adviser who has provided advice referred to in paragraph (1)
            maintains, for a period of not less than 6 years after the
            provision of the advice, 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.
                ``(10) 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 eligible investment
                            advice 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 eligible investment
                            advice arrangement require compliance by the
                            fiduciary adviser with the requirements of this
                            subsection, and
                                ``(iii) the terms of the eligible
                            investment advice 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 eligible investment advice
                    arrangement for the provision of investment 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).
                ``(11) 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 referred to in section 3(21)(A)(ii)
                    by the person to the participant or beneficiary of the
                    plan 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 clauses
                            (i) through (v) who satisfies the requirements
                            of applicable insurance, banking, and
                            securities laws relating to the provision of
                            the advice.
                    For purposes of this part, a person who develops the
                    computer model described in paragraph (3)(B) or markets
                    the investment advice program or computer model shall
                    be treated as a person who is a fiduciary of the plan
                    by reason of the provision of investment advice
                    referred to in section 3(21)(A)(ii) to the participant
                    or beneficiary and shall be treated as a fiduciary
                    adviser for purposes of this subsection and subsection
                    (b)(14), except that the Secretary may prescribe rules
                    under which only 1 fiduciary adviser may elect to be
                    treated as a fiduciary with respect to the plan.
                        ``(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).''.
                (3) Effective date.--The amendments made by this subsection
            shall apply with respect to advice referred to in section
            3(21)(A)(ii) of the Employee Retirement Income Security Act of
            1974 provided after December 31, 2006.
        (b) Amendments to Internal Revenue Code of 1986.--
                (1) Exemption from prohibited transactions.--Subsection (d)
            of section 4975 of the Internal Revenue Code of 1986 (relating
            to exemption from tax on prohibited transactions) is amended--
                        (A) in paragraph (15), by striking ``or'' at the
                    end;
                        (B) in paragraph (16), by striking the period at
                    the end and inserting ``;or''; and
                        (C) by adding at the end the following new
                    paragraph:
                ``(17) Any transaction in connection with the provision of
            investment advice described in subsection (e)(3)(B) to a
            participant or beneficiary in a plan and that permits such
            participant or beneficiary to direct the investment of plan
            assets in an individual account, if--
                        ``(A) the transaction is--
                                ``(i) the provision of the investment
                            advice to the participant or beneficiary of the
                            plan with respect to a security or other
                            property available as an investment under the
                            plan,
                                ``(ii) the acquisition, holding, or sale of
                            a security or other property available as an
                            investment under the plan pursuant to the
                            investment advice, or
                                ``(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 an acquisition, holding, or
                            sale of a security or other property available
                            as an investment under the plan pursuant to the
                            investment advice; and
                        ``(B) the requirements of subsection (f)(8) are
                    met.''.
                (2) 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) Provision of investment advice to participant and
            beneficiaries.--
                        ``(A) In general.--The prohibitions provided in
                    subsection (c) shall not apply to transactions
                    described in subsection (b)(14) if the investment
                    advice provided by a fiduciary adviser is provided
                    under an eligible investment advice arrangement.
                        ``(B) Eligible investment advice arrangement.--For
                    purposes of this paragraph, the term `eligible
                    investment advice arrangement' means an arrangement--
                                ``(i) which either--
                                        ``(I) provides that any fees
                                    (including any commission or other
                                    compensation) received by the fiduciary
                                    adviser for investment advice or with
                                    respect to the sale, holding, or
                                    acquisition of any security or other
                                    property for purposes of investment of
                                    plan assets do not vary depending on
                                    the basis of any investment option
                                    selected, or
                                        ``(II) uses a computer model under
                                    an investment advice program meeting
                                    the requirements of subparagraph (C) in
                                    connection with the provision of
                                    investment advice by a fiduciary
                                    adviser to a participant or
                                    beneficiary, and
                                ``(ii) with respect to which the
                            requirements of subparagraphs (D), (E), (F),
                            (G), (H), and (I) are met.
                        ``(C) Investment advice program using computer
                    model.--
                                ``(i) In general.--An investment advice
                            program meets the requirements of this
                            subparagraph if the requirements of clauses
                            (ii), (iii), and (iv) are met.
                                ``(ii) Computer model.--The requirements of
                            this clause are met if the investment advice
                            provided under the investment advice program is
                            provided pursuant to a computer model that--
                                        ``(I) applies generally accepted
                                    investment theories that take into
                                    account the historic returns of
                                    different asset classes over defined
                                    periods of time,
                                        ``(II) utilizes relevant
                                    information about the participant,
                                    which may include age, life expectancy,
                                    retirement age, risk tolerance, other
                                    assets or sources of income, and
                                    preferences as to certain types of
                                    investments,
                                        ``(III) utilizes prescribed
                                    objective criteria to provide asset
                                    allocation portfolios comprised of
                                    investment options available under the
                                    plan,
                                        ``(IV) operates in a manner that is
                                    not biased in favor of investments
                                    offered by the fiduciary adviser or a
                                    person with a material affiliation or
                                    contractual relationship with the
                                    fiduciary adviser, and
                                        ``(V) takes into account all
                                    investment options under the plan in
                                    specifying how a participant's account
                                    balance should be invested and is not
                                    inappropriately weighted with respect
                                    to any investment option.
                                ``(iii) Certification.--
                                        ``(I) In general.--The requirements
                                    of this clause are met with respect to
                                    any investment advice program if an
                                    eligible investment expert certifies,
                                    prior to the utilization of the
                                    computer model and in accordance with
                                    rules prescribed by the Secretary of
                                    Labor, that the computer model meets
                                    the requirements of clause (ii).
                                        ``(II) Renewal of certifications.--
                                    If, as determined under regulations
                                    prescribed by the Secretary of Labor,
                                    there are material modifications to a
                                    computer model, the requirements of
                                    this clause are met only if a
                                    certification described in subclause
                                    (I) is obtained with respect to the
                                    computer model as so modified.
                                        ``(III) Eligible investment
                                    expert.--The term `eligible investment
                                    expert' means any person which meets
                                    such requirements as the Secretary of
                                    Labor may provide and which does not
                                    bear any material affiliation or
                                    contractual relationship with any
                                    investment adviser or a related person
                                    thereof (or any employee, agent, or
                                    registered representative of the
                                    investment adviser or related person).
                                ``(iv) Exclusivity of recommendation.--The
                            requirements of this clause are met with
                            respect to any investment advice program if--
                                        ``(I) the only investment advice
                                    provided under the program is the
                                    advice generated by the computer model
                                    described in clause (ii), and
                                        ``(II) any transaction described in
                                    subsection (b)(14)(B)(ii) occurs solely
                                    at the direction of the participant or
                                    beneficiary.
                            Nothing in the preceding sentence shall
                            preclude the participant or beneficiary from
                            requesting investment advice other than that
                            described in clause (i), but only if such
                            request has not been solicited by any person
                            connected with carrying out the arrangement.
                        ``(D) Express authorization by separate
                    fiduciary.--The requirements of this subparagraph are
                    met with respect to an arrangement if the arrangement
                    is expressly authorized by a plan fiduciary other than
                    the person offering the investment advice program, any
                    person providing investment options under the plan, or
                    any affiliate of either.
                        ``(E) Audits.--
                                ``(i) In general.--The requirements of this
                            subparagraph are met if an independent auditor,
                            who has appropriate technical training or
                            experience and proficiency and so represents in
                            writing--
                                        ``(I) conducts an annual audit of
                                    the arrangement for compliance with the
                                    requirements of this paragraph, and
                                        ``(II) following completion of the
                                    annual audit, issues a written report
                                    to the fiduciary who authorized use of
                                    the arrangement which presents its
                                    specific findings regarding compliance
                                    of the arrangement with the
                                    requirements of this paragraph.
                                ``(ii) Special rule for individual
                            retirement and similar plans.--In the case of a
                            plan described in subparagraphs (B) through (F)
                            (and so much of subparagraph (G) as relates to
                            such subparagraphs) of subsection (e)(1), in
                            lieu of the requirements of clause (i), audits
                            of the arrangement shall be conducted at such
                            times and in such manner as the Secretary of
                            Labor may prescribe.
                                ``(iii) Independent auditor.--For purposes
                            of this subparagraph, an auditor is considered
                            independent if it is not related to the person
                            offering the arrangement to the plan and is not
                            related to any person providing investment
                            options under the plan.
                        ``(F) Disclosure.--The requirements of this
                    subparagraph are met if--
                                ``(i) the fiduciary adviser provides to a
                            participant or a beneficiary before the initial
                            provision of the investment advice with regard
                            to any security or other property offered as an
                            investment option, a written notification
                            (which may consist of notification by means of
                            electronic communication)--
                                        ``(I) of the role of any party that
                                    has a material affiliation or
                                    contractual relationship with the
                                    financial adviser in the development of
                                    the investment advice program and in
                                    the selection of investment options
                                    available under the plan,
                                        ``(II) of the past performance and
                                    historical rates of return of the
                                    investment options available under the
                                    plan,
                                        ``(III) 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,
                                        ``(IV) of any material affiliation
                                    or contractual relationship of the
                                    fiduciary adviser or affiliates thereof
                                    in the security or other property,
                                        ``(V) the manner, and under what
                                    circumstances, any participant or
                                    beneficiary information provided under
                                    the arrangement will be used or
                                    disclosed,
                                        ``(VI) of the types of services
                                    provided by the fiduciary adviser in
                                    connection with the provision of
                                    investment advice by the fiduciary
                                    adviser,
                                        ``(VII) that the adviser is acting
                                    as a fiduciary of the plan in
                                    connection with the provision of the
                                    advice, and
                                        ``(VIII) 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, and
                                ``(ii) at all times during the provision of
                            advisory services to the participant or
                            beneficiary, the fiduciary adviser--
                                        ``(I) maintains the information
                                    described in clause (i) in accurate
                                    form and in the manner described in
                                    subparagraph (H),
                                        ``(II) provides, without charge,
                                    accurate information to the recipient
                                    of the advice no less frequently than
                                    annually,
                                        ``(III) provides, without charge,
                                    accurate information to the recipient
                                    of the advice upon request of the
                                    recipient, and
                                        ``(IV) provides, without charge,
                                    accurate information to the recipient
                                    of the advice concerning any material
                                    change to the information required to
                                    be provided to the recipient of the
                                    advice at a time reasonably
                                    contemporaneous to the change in
                                    information.
                        ``(G) Other conditions.--The requirements of this
                    subparagraph are met if--
                                ``(i) 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,
                                ``(ii) the sale, acquisition, or holding
                            occurs solely at the direction of the recipient
                            of the advice,
                                ``(iii) 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
                                ``(iv) 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.
                        ``(H) Standards for presentation of information.--
                                ``(i) In general.--The requirements of this
                            subparagraph are met if the notification
                            required to be provided to participants and
                            beneficiaries under subparagraph (F)(i) is
                            written in a clear and conspicuous manner and
                            in a manner calculated to be understood by the
                            average plan participant and is sufficiently
                            accurate and comprehensive to reasonably
                            apprise such participants and beneficiaries of
                            the information required to be provided in the
                            notification.
                                ``(ii) Model form for disclosure of fees
                            and other compensation.--The Secretary of Labor
                            shall issue a model form for the disclosure of
                            fees and other compensation required in
                            subparagraph (F)(i)(III) which meets the
                            requirements of clause (i).
                        ``(I) Maintenance for 6 years of evidence of
                    compliance.--The requirements of this subparagraph are
                    met if a fiduciary adviser who has provided advice
                    referred to in subparagraph (A) maintains, for a period
                    of not less than 6 years after the provision of the
                    advice, 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 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.
                        ``(J) 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 participant or beneficiary
                            of the plan 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 subclauses (I)
                                    through (IV), or
                                        ``(VI) an employee, agent, or
                                    registered representative of a person
                                    described in subclauses (I) through (V)
                                    who satisfies the requirements of
                                    applicable insurance, banking, and
                                    securities laws relating to the
                                    provision of the advice.
                            For purposes of this title, a person who
                            develops the computer model described in
                            subparagraph (C)(ii) or markets the investment
                            advice program or computer model shall be
                            treated as a person who is a fiduciary of the
                            plan by reason of the provision of investment
                            advice referred to in subsection (e)(3)(B) to
                            the participant or beneficiary and shall be
                            treated as a fiduciary adviser for purposes of
                            this paragraph and subsection (d)(17), except
                            that the Secretary of Labor may prescribe rules
                            under which only 1 fiduciary adviser may elect
                            to be treated as a fiduciary with respect to
                            the plan.
                                ``(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).''.
                (3) Determination of feasibility of application of computer
            model investment advice programs for individual retirement and
            similar plans.--
                        (A) Solicitation of information.--As soon as
                    practicable after the date of the enactment of this
                    Act, the Secretary of Labor, in consultation with the
                    Secretary of the Treasury, shall--
                                (i) solicit information as to the
                            feasibility of the application of computer
                            model investment advice programs for plans
                            described in subparagraphs (B) through (F) (and
                            so much of subparagraph (G) as relates to such
                            subparagraphs) of section 4975(e)(1) of the
                            Internal Revenue Code of 1986, including
                            soliciting information from--
                                        (I) at least the top 50 trustees of
                                    such plans, determined on the basis of
                                    assets held by such trustees, and
                                        (II) other persons offering
                                    computer model investment advice
                                    programs based on nonproprietary
                                    products, and
                                (ii) shall on the basis of such information
                            make the determination under subparagraph (B).
                    The information solicited by the Secretary of Labor
                    under clause (i) from persons described in subclauses
                    (I) and (II) of clause (i) shall include information on
                    computer modeling capabilities of such persons with
                    respect to the current year and preceding year,
                    including such capabilities for investment accounts
                    maintained by such persons.
                        (B) Determination of feasibility.--The Secretary of
                    Labor, in consultation with the Secretary of the
                    Treasury, shall, on the basis of information received
                    under subparagraph (A), determine whether there is any
                    computer model investment advice program which may be
                    utilized by a plan described in subparagraph (A)(i) to
                    provide investment advice to the account beneficiary of
                    the plan which--
                                (i) utilizes relevant information about the
                            account beneficiary, which may include age,
                            life expectancy, retirement age, risk
                            tolerance, other assets or sources of income,
                            and preferences as to certain types of
                            investments,
                                (ii) takes into account the full range of
                            investments, including equities and bonds, in
                            determining the options for the investment
                            portfolio of the account beneficiary, and
                                (iii) allows the account beneficiary, in
                            directing the investment of assets, sufficient
                            flexibility in obtaining advice to evaluate and
                            select investment options.
                    The Secretary of Labor shall report the results of such
                    determination to the committees of Congress referred to
                    in subparagraph (D)(ii) not later than December 31,
                    2007.
                        (C) Application of computer model investment advice
                    program.--
                                (i) Certification required for use of
                            computer model.--
                                        (I) Restriction on use.--Subclause
                                    (II) of section 4975(f)(8)(B)(i) of the
                                    Internal Revenue Code of 1986 shall not
                                    apply to a plan described in
                                    subparagraph (A)(i).
                                        (II) Restriction lifted if model
                                    certified.--If the Secretary of Labor
                                    determines under subparagraph (B) or
                                    (D) that there is a computer model
                                    investment advice program described in
                                    subparagraph (B), subclause (I) shall
                                    cease to apply as of the date of such
                                    determination.
                                (ii) Class exemption if no initial
                            certification by secretary.--If the Secretary
                            of Labor determines under subparagraph (B) that
                            there is no computer model investment advice
                            program described in subparagraph (B), the
                            Secretary of Labor shall grant a class
                            exemption from treatment as a prohibited
                            transaction under section 4975(c) of the
                            Internal Revenue Code of 1986 to any
                            transaction described in section 4975(d)(17)(A)
                            of such Code with respect to plans described in
                            subparagraph (A)(i), subject to such conditions
                            as set forth in such exemption as are in the
                            interests of the plan and its account
                            beneficiary and protective of the rights of the
                            account beneficiary and as are necessary to--
                                        (I) ensure the requirements of
                                    sections 4975(d)(17) and 4975(f)(8)
                                    (other than subparagraph (C) thereof)
                                    of the Internal Revenue Code of 1986
                                    are met, and
                                        (II) ensure the investment advice
                                    provided under the investment advice
                                    program utilizes prescribed objective
                                    criteria to provide asset allocation
                                    portfolios comprised of securities or
                                    other property available as investments
                                    under the plan.
                            If the Secretary of Labor solicits any
                            information under subparagraph (A) from a
                            person and such person does not provide such
                            information within 60 days after the
                            solicitation, then, unless such failure was due
                            to reasonable cause and not wilful neglect,
                            such person shall not be entitled to utilize
                            the class exemption under this clause.
                        (D) Subsequent determination.--
                                (i) In general.--If the Secretary of Labor
                            initially makes a determination described in
                            subparagraph (C)(ii), the Secretary may
                            subsequently determine that there is a computer
                            model investment advice program described in
                            subparagraph (B). If the Secretary makes such
                            subsequent determination, then the class
                            exemption described in subparagraph (C)(ii)
                            shall cease to apply after the later of--
                                        (I) the date which is 2 years after
                                    such subsequent determination, or
                                        (II) the date which is 3 years
                                    after the first date on which such
                                    exemption took effect.
                                (ii) Requests for determination.--Any
                            person may request the Secretary of Labor to
                            make a determination under this subparagraph
                            with respect to any computer model investment
                            advice program, and the Secretary of Labor
                            shall make a determination with respect to such
                            request within 90 days. If the Secretary of
                            Labor makes a determination that such program
                            is not described in subparagraph (B), the
                            Secretary shall, within 10 days of such
                            determination, notify the Committee on Ways and
                            Means and the Committee on Education and the
                            Workforce of the House of Representatives and
                            the Committee on Finance and the Committee on
                            Health, Education, Labor, and Pensions of the
                            Senate of such determination and the reasons
                            for such determination.
                        (E) Effective date.--The provisions of this
                    paragraph shall take effect on the date of the
                    enactment of this Act.
                (4) Effective date.--Except as provided in this subsection,
            the amendments made by this subsection shall apply with respect
            to advice referred to in section 4975(c)(3)(B) of the Internal
            Revenue Code of 1986 provided after December 31, 2006.
        (c) Coordination With Existing Exemptions.--Any exemption under
    section 408(b) of the Employee Retirement Income Security Act of 1974
    and section 4975(d) of the Internal Revenue Code of 1986 provided by
    the amendments made by this section shall not in any manner alter
    existing individual or class exemptions, provided by statute or
    administrative action.

                      Subtitle B--Prohibited Transactions

    SEC. 611. PROHIBITED TRANSACTION RULES RELATING TO FINANCIAL
                  INVESTMENTS.

        (a) Exemption for Block Trading.--
                (1) Amendments to employee retirement income security act
            of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as
            amended by section 601, is amended by adding at the end the
            following new paragraph:
                ``(15)(A) Any transaction involving the purchase or sale of
            securities, or other property (as determined by the Secretary),
            between a plan and a party in interest (other than a fiduciary
            described in section 3(21)(A)) 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,
                        ``(iii) the terms of the transaction, including the
                    price, are at least as favorable to the plan as an
                    arm's length transaction, and
                        ``(iv) the compensation associated with the
                    purchase and sale is not greater than the compensation
                    associated with an arm's length transaction with an
                    unrelated party.
                ``(B) For purposes of this paragraph, the term `block
            trade' means any trade of at least 10,000 shares or with a
            market value of at least $200,000 which will be allocated
            across two or more unrelated client accounts of a fiduciary.''.
                (2) Amendments to internal revenue code of 1986.--
                        (A) In general.--Subsection (d) of section 4975 of
                    the Internal Revenue Code of 1986 (relating to
                    exemptions), as amended by section 601, is amended by
                    striking ``or'' at the end of paragraph (16), by
                    striking the period at the end of paragraph (17) and
                    inserting ``, or'', and by adding at the end the
                    following new paragraph:
                ``(18) any transaction involving the purchase or sale of
            securities, or other property (as determined by the Secretary
            of Labor), between a plan and a party in interest (other than a
            fiduciary described in subsection (e)(3)(B)) with respect to a
            plan if--
                        ``(A) the transaction involves a block trade,
                        ``(B) 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,
                        ``(C) the terms of the transaction, including the
                    price, are at least as favorable to the plan as an
                    arm's length transaction, and
                        ``(D) the compensation associated with the purchase
                    and sale is not greater than the compensation
                    associated with an arm's length transaction with an
                    unrelated party.''.
                        (B) Special rule relating to block trade.--
                    Subsection (f) of section 4975 of such Code (relating
                    to other definitions and special rules), as amended by
                    section 601, is amended by adding at the end the
                    following new paragraph:
                ``(9) Block trade.--The term `block trade' means any trade
            of at least 10,000 shares or with a market value of at least
            $200,000 which will be allocated across two or more unrelated
            client accounts of a fiduciary.''.
        (b) 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 any entity which is
            registered as a broker or a dealer under section 15(b) of the
            Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) if the
            broker or dealer is subject to the fidelity bond requirements
            of a self-regulatory organization (within the meaning of
            section 3(a)(26) of such Act (15 U.S.C. 78c(a)(26)).''.
        (c) Exemption for Electronic Communication Network.--
                (1) Amendments to employee retirement income security act
            of 1974.--Section 408(b) of such Act, as amended by subsection
            (a), is amended by adding at the end the following:
                ``(16) Any transaction involving the purchase or sale of
            securities, or other property (as determined by the Secretary),
            between a plan and a party in interest if--
                        ``(A) the transaction is executed through an
                    electronic communication network, alternative trading
                    system, or similar execution system or trading venue
                    subject to regulation and oversight by--
                                ``(i) the applicable Federal regulating
                            entity, or
                                ``(ii) such foreign regulatory entity as
                            the Secretary may determine by regulation,
                        ``(B) either--
                                ``(i) the transaction is effected pursuant
                            to rules designed to match purchases and sales
                            at the best price available through the
                            execution system in accordance with applicable
                            rules of the Securities and Exchange Commission
                            or other relevant governmental authority, or
                                ``(ii) 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 price and compensation associated with
                    the purchase and sale are not greater than the price
                    and compensation associated with an arm's length
                    transaction with an unrelated party,
                        ``(D) if the party in interest has an ownership
                    interest in the system or venue described in
                    subparagraph (A), the system or venue has been
                    authorized by the plan sponsor or other independent
                    fiduciary for transactions described in this paragraph,
                    and
                        ``(E) not less than 30 days prior to the initial
                    transaction described in this paragraph executed
                    through any system or venue described in subparagraph
                    (A), a plan fiduciary is provided written or electronic
                    notice of the execution of such transaction through
                    such system or venue.''.
                (2) Amendments to internal revenue code of 1986.--
            Subsection (d) of section 4975 of the Internal Revenue Code of
            1986 (relating to exemptions), as amended by subsection (a), is
            amended by striking ``or'' at the end of paragraph (17), by
            striking the period at the end of paragraph (18) and inserting
            ``, or'', and by adding at the end the following new paragraph:
                ``(19) any transaction involving the purchase or sale of
            securities, or other property (as determined by the Secretary
            of Labor), between a plan and a party in interest if--
                        ``(A) the transaction is executed through an
                    electronic communication network, alternative trading
                    system, or similar execution system or trading venue
                    subject to regulation and oversight by--
                                ``(i) the applicable Federal regulating
                            entity, or
                                ``(ii) such foreign regulatory entity as
                            the Secretary of Labor may determine by
                            regulation,
                        ``(B) either--
                                ``(i) the transaction is effected pursuant
                            to rules designed to match purchases and sales
                            at the best price available through the
                            execution system in accordance with applicable
                            rules of the Securities and Exchange Commission
                            or other relevant governmental authority, or
                                ``(ii) 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 price and compensation associated with
                    the purchase and sale are not greater than the price
                    and compensation associated with an arm's length
                    transaction with an unrelated party,
                        ``(D) if the party in interest has an ownership
                    interest in the system or venue described in
                    subparagraph (A), the system or venue has been
                    authorized by the plan sponsor or other independent
                    fiduciary for transactions described in this paragraph,
                    and
                        ``(E) not less than 30 days prior to the initial
                    transaction described in this paragraph executed
                    through any system or venue described in subparagraph
                    (A), a plan fiduciary is provided written or electronic
                    notice of the execution of such transaction through
                    such system or venue.''.
        (d) Exemption for Service Providers.--
                (1) Amendments to employee retirement income security act
            of 1974.--Section 408(b) of such Act (29 U.S.C. 1106), as
            amended by subsection (c), is 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 person that
            is a party in interest other than a fiduciary (or an affiliate)
            who has or exercises any discretionary authority or control
            with respect to the investment of the plan assets involved in
            the transaction or renders investment advice (within the
            meaning of section 3(21)(A)(ii)) with respect to those assets,
            solely by reason of providing services to the plan or solely by
            reason of a relationship to such a service provider described
            in subparagraph (F), (G), (H), or (I) of section 3(14), or
            both, 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.''.
                (2) Amendment to internal revenue code of 1986.--
                        (A) In general.--Subsection (d) of section 4975 of
                    the Internal Revenue Code of 1986 (relating to
                    exemptions), as amended by subsection (c), is amended
                    by striking ``or'' at the end of paragraph (18), by
                    striking the period at the end of paragraph (19) and
                    inserting ``, or'', and by adding at the end the
                    following new paragraph:
                ``(20) transactions described in subparagraphs (A), (B),
            and (D) of subsection (c)(1) between a plan and a person that
            is a party in interest other than a fiduciary (or an affiliate)
            who has or exercises any discretionary authority or control
            with respect to the investment of the plan assets involved in
            the transaction or renders investment advice (within the
            meaning of subsection (e)(3)(B)) with respect to those assets,
            solely by reason of providing services to the plan or solely by
            reason of a relationship to such a service provider described
            in subparagraph (F), (G), (H), or (I) of subsection (e)(2), or
            both, but only if in connection with such transaction the plan
            receives no less, nor pays no more, than adequate
            consideration.''.
                        (B) Special rule relating to service providers.--
                    Subsection (f) of section 4975 of such Code (relating
                    to other definitions and special rules), as amended by
                    subsection (a), is amended by adding at the end the
                    following new paragraph:
                ``(10) Adequate consideration.--The term `adequate
            consideration' means--
                        ``(A) 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
                        ``(B) 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 of Labor.''.
        (e) Relief for Foreign Exchange Transactions.--
                (1) Amendments to employee retirement income security act
            of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as
            amended by subsection (d), is amended by adding at the end the
            following new paragraph:
                ``(18) Foreign exchange transactions.--Any foreign exchange
            transactions, between a bank or broker-dealer (or any affiliate
            of either), and a plan (as defined in section 3(3)) with
            respect to which such bank or broker-dealer (or affiliate) is a
            trustee, custodian, fiduciary, or other party in interest, if--
                        ``(A) the transaction is in connection with the
                    purchase, holding, or sale of securities or other
                    investment assets (other than a foreign exchange
                    transaction unrelated to any other investment in
                    securities or other investment assets),
                        ``(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 broker-dealer (or any affiliate
                    of either) in comparable arm's-length foreign exchange
                    transactions involving unrelated parties,
                        ``(C) the exchange rate used by such bank or
                    broker-dealer (or affiliate) for a particular foreign
                    exchange transaction does not deviate by more or less
                    than 3 percent from the interbank bid and asked rates
                    for transactions of comparable size and maturity 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
                    of either) does not have investment discretion, or
                    provide investment advice, with respect to the
                    transaction.''.
                (2) Amendment to internal revenue code of 1986.--Subsection
            (d) of section 4975 of the Internal Revenue Code of 1986
            (relating to exemptions), as amended by subsection (d), is
            amended by striking ``or'' at the end of paragraph (19), by
            striking the period at the end of paragraph (20) and inserting
            ``, or'', and by adding at the end the following new paragraph:
                ``(21) any foreign exchange transactions, between a bank or
            broker-dealer (or any affiliate of either) and a plan (as
            defined in this section) with respect to which such bank or
            broker-dealer (or affiliate) is a trustee, custodian,
            fiduciary, or other party in interest person, if--
                        ``(A) the transaction is in connection with the
                    purchase, holding, or sale of securities or other
                    investment assets (other than a foreign exchange
                    transaction unrelated to any other investment in
                    securities or other investment assets),
                        ``(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 broker-dealer (or any affiliate
                    of either) in comparable arm's-length foreign exchange
                    transactions involving unrelated parties,
                        ``(C) the exchange rate used by such bank or
                    broker-dealer (or affiliate) for a particular foreign
                    exchange transaction does not deviate by more or less
                    than 3 percent from the interbank bid and asked rates
                    for transactions of comparable size and maturity 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
                    of either) does not have investment discretion, or
                    provide investment advice, with respect to the
                    transaction.''.
        (f) 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 25 percent of the total value of each
    class of equity interest in the entity is held by benefit plan
    investors. For purposes of determinations pursuant to this paragraph,
    the value of any equity interest held by a person (other than such a
    benefit plan investor) 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 25 percent threshold. An entity shall be
    considered to hold plan assets only to the extent of the percentage of
    the equity interest held by benefit plan investors. For purposes of
    this paragraph, the term `benefit plan investor' means an employee
    benefit plan subject to part 4, any plan to which section 4975 of the
    Internal Revenue Code of 1986 applies, and any entity whose underlying
    assets include plan assets by reason of a plan's investment in such
    entity.''.
        (g) Exemption for Cross Trading.--
                (1) Amendments to employee retirement income security act
            of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as
            amended by subsection (e), is amended by adding at the end the
            following new paragraph:
                ``(19) Cross trading.--Any transaction described in
            sections 406(a)(1)(A) and 406(b)(2) involving the purchase and
            sale of a security between a plan and any other account managed
            by the same investment manager, if--
                        ``(A) the transaction is a purchase or sale, for no
                    consideration other than cash payment against prompt
                    delivery of a security for which market quotations are
                    readily available,
                        ``(B) the transaction is effected at the
                    independent current market price of the security
                    (within the meaning of section 270.17a-7(b) of title
                    17, Code of Federal Regulations),
                        ``(C) no brokerage commission, fee (except for
                    customary transfer fees, the fact of which is disclosed
                    pursuant to subparagraph (D)), or other remuneration is
                    paid in connection with the transaction,
                        ``(D) a fiduciary (other than the investment
                    manager engaging in the cross-trades or any affiliate)
                    for each plan participating in the transaction
                    authorizes in advance of any cross-trades (in a
                    document that is separate from any other written
                    agreement of the parties) the investment manager to
                    engage in cross trades at the investment manager's
                    discretion, after such fiduciary has received
                    disclosure regarding the conditions under which cross
                    trades may take place (but only if such disclosure is
                    separate from any other agreement or disclosure
                    involving the asset management relationship), including
                    the written policies and procedures of the investment
                    manager described in subparagraph (H),
                        ``(E) each plan participating in the transaction
                    has assets of at least $100,000,000, except that if the
                    assets of a plan are invested in a master trust
                    containing the assets of plans maintained by employers
                    in the same controlled group (as defined in section
                    407(d)(7)), the master trust has assets of at least
                    $100,000,000,
                        ``(F) the investment manager provides to the plan
                    fiduciary who authorized cross trading under
                    subparagraph (D) a quarterly report detailing all cross
                    trades executed by the investment manager in which the
                    plan participated during such quarter, including the
                    following information, as applicable: (i) the identity
                    of each security bought or sold; (ii) the number of
                    shares or units traded, (iii) the parties involved in
                    the cross-trade; and (iv) trade price and the method
                    used to establish the trade price,
                        ``(G) the investment manager does not base its fee
                    schedule on the plan`s consent to cross trading, and no
                    other service (other than the investment opportunities
                    and cost savings available through a cross trade) is
                    conditioned on the plan's consent to cross trading,
                        ``(H) the investment manager has adopted, and
                    cross-trades are effected in accordance with, written
                    cross-trading policies and procedures that are fair and
                    equitable to all accounts participating in the cross-
                    trading program, and that include a description of the
                    manager's pricing policies and procedures, and the
                    manager's policies and procedures for allocating cross
                    trades in an objective manner among accounts
                    participating in the cross-trading program, and
                        ``(I) the investment manager has designated an
                    individual responsible for periodically reviewing such
                    purchases and sales to ensure compliance with the
                    written policies and procedures described in
                    subparagraph (H), and following such review, the
                    individual shall issue an annual written report no
                    later than 90 days following the period to which it
                    relates signed under penalty of perjury to the plan
                    fiduciary who authorized cross trading under
                    subparagraph (D) describing the steps performed during
                    the course of the review, the level of compliance, and
                    any specific instances of non-compliance.
            The written report under subparagraph (I) shall also notify the
            plan fiduciary of the plan's right to terminate participation
            in the investment manager's cross-trading program at any
            time.''.
                (2) Amendments of internal revenue code of 1986.--
            Subsection (d) of section 4975 of the Internal Revenue Code of
            1986 (relating to exemptions), as amended by subsection (e), is
            amended by striking ``or'' at the end of paragraph (20), by
            striking the period at the end of paragraph (21) and inserting
            ``, or'', and by adding at the end the following new paragraph:
                ``(22) any transaction described in subsection (c)(1)(A)
            involving the purchase and sale of a security between a plan
            and any other account managed by the same investment manager,
            if--
                        ``(A) the transaction is a purchase or sale, for no
                    consideration other than cash payment against prompt
                    delivery of a security for which market quotations are
                    readily available,
                        ``(B) the transaction is effected at the
                    independent current market price of the security
                    (within the meaning of section 270.17a-7(b) of title
                    17, Code of Federal Regulations),
                        ``(C) no brokerage commission, fee (except for
                    customary transfer fees, the fact of which is disclosed
                    pursuant to subparagraph (D)), or other remuneration is
                    paid in connection with the transaction,
                        ``(D) a fiduciary (other than the investment
                    manager engaging in the cross-trades or any affiliate)
                    for each plan participating in the transaction
                    authorizes in advance of any cross-trades (in a
                    document that is separate from any other written
                    agreement of the parties) the investment manager to
                    engage in cross trades at the investment manager's
                    discretion, after such fiduciary has received
                    disclosure regarding the conditions under which cross
                    trades may take place (but only if such disclosure is
                    separate from any other agreement or disclosure
                    involving the asset management relationship), including
                    the written policies and procedures of the investment
                    manager described in subparagraph (H),
                        ``(E) each plan participating in the transaction
                    has assets of at least $100,000,000, except that if the
                    assets of a plan are invested in a master trust
                    containing the assets of plans maintained by employers
                    in the same controlled group (as defined in section
                    407(d)(7) of the Employee Retirement Income Security
                    Act of 1974), the master trust has assets of at least
                    $100,000,000,
                        ``(F) the investment manager provides to the plan
                    fiduciary who authorized cross trading under
                    subparagraph (D) a quarterly report detailing all cross
                    trades executed by the investment manager in which the
                    plan participated during such quarter, including the
                    following information, as applicable: (i) the identity
                    of each security bought or sold; (ii) the number of
                    shares or units traded, (iii) the parties involved in
                    the cross-trade; and (iv) trade price and the method
                    used to establish the trade price,
                        ``(G) the investment manager does not base its fee
                    schedule on the plan`s consent to cross trading, and no
                    other service (other than the investment opportunities
                    and cost savings available through a cross trade) is
                    conditioned on the plan's consent to cross trading,
                        ``(H) the investment manager has adopted, and
                    cross-trades are effected in accordance with, written
                    cross-trading policies and procedures that are fair and
                    equitable to all accounts participating in the cross-
                    trading program, and that include a description of the
                    manager's pricing policies and procedures, and the
                    manager's policies and procedures for allocating cross
                    trades in an objective manner among accounts
                    participating in the cross-trading program, and
                        ``(I) the investment manager has designated an
                    individual responsible for periodically reviewing such
                    purchases and sales to ensure compliance with the
                    written policies and procedures described in
                    subparagraph (H), and following such review, the
                    individual shall issue an annual written report no
                    later than 90 days following the period to which it
                    relates signed under penalty of perjury to the plan
                    fiduciary who authorized cross trading under
                    subparagraph (D) describing the steps performed during
                    the course of the review, the level of compliance, and
                    any specific instances of non-compliance.
            The written report shall also notify the plan fiduciary of the
            plan's right to terminate participation in the investment
            manager's cross-trading program at any time.''.
                (3) Regulations.--No later than 180 days after the date of
            the enactment of this Act, the Secretary of Labor, after
            consultation with the Securities and Exchange Commission, shall
            issue regulations regarding the content of policies and
            procedures required to be adopted by an investment manager
            under section 408(b)(19) of the Employee Retirement Income
            Security Act of 1974.
        (h) Effective Dates.--
                (1) In general.--Except as provided in paragraph (2), the
            amendments made by this section shall apply to transactions
            occurring after the date of the enactment of this Act.
                (2) Bonding rule.--The amendments made by subsection (b)
            shall apply to plan years beginning after such date.

    SEC. 612. CORRECTION PERIOD FOR CERTAIN TRANSACTIONS INVOLVING
                  SECURITIES AND COMMODITIES.

        (a) Amendment of Employee Retirement Income Security Act of 1974.--
    Section 408(b) of the Employee Retirement Income Security Act of 1974
    (29 U.S.C. 1108(b)), as amended by sections 601 and 611, is further
    amended by adding at the end the following new paragraph:
                ``(20)(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
            transaction if, at the time the transaction occurs, such
            fiduciary or party in interest (or other person) knew (or
            reasonably should have known) 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--
                                ``(I) to undo the transaction to the extent
                            possible and in any case to make good to the
                            plan or affected account any losses resulting
                            from the transaction, and
                                ``(II) to restore to the plan or affected
                            account any profits made through the use of
                            assets of the plan.''.
        (b) Amendment of Internal Revenue Code of 1986.--
                (1) In general.--Subsection (d) of section 4975 of the
            Internal Revenue Code of 1986 (relating to exemptions), as
            amended by sections 601 and 611, is amended by striking ``or''
            at the end of paragraph (21), by striking the period at the end
            of paragraph (22) and inserting ``, or'', and by adding at the
            end the following new paragraph:
                ``(23) except as provided in subsection (f)(11), a
            transaction described in subparagraph (A), (B), (C), or (D) of
            subsection (c)(1) 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.''.
                (2) Special rules relating to correction period.--
            Subsection (f) of section 4975 of such Code (relating to other
            definitions and special rules), as amended by sections 601 and
            611, is amended by adding at the end the following new
            paragraph:
                ``(11) Correction period.--
                        ``(A) In general.--For purposes of subsection
                    (d)(23), the term `correction period' means the 14-day
                    period beginning on the date on which the disqualified
                    person discovers, or reasonably should have discovered,
                    that the transaction would (without regard to this
                    paragraph and subsection (d)(23)) constitute a
                    prohibited transaction.
                        ``(B) Exceptions.--
                                ``(i) Employer securities.--Subsection
                            (d)(23) 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)).
                                ``(ii) Knowing prohibited transaction.--In
                            the case of any disqualified person, subsection
                            (d)(23) does not apply to a transaction if, at
                            the time the transaction is entered into, the
                            disqualified person knew (or reasonably should
                            have known) that the transaction would (without
                            regard to this paragraph) constitute a
                            prohibited transaction.
                        ``(C) Abatement of tax where there is a
                    correction.--If a transaction is not treated as a
                    prohibited transaction by reason of subsection (d)(23),
                    then no tax under subsection (a) and (b) shall be
                    assessed with respect to such transaction, and if
                    assessed the assessment shall be abated, and if
                    collected shall be credited or refunded as an
                    overpayment.
                        ``(D) Definitions.--For purposes of this paragraph
                    and subsection (d)(23)--
                                ``(i) Security.--The term `security' has
                            the meaning given such term by section
                            475(c)(2) (without regard to subparagraph
                            (F)(iii) and the last sentence thereof).
                                ``(ii) Commodity.--The term `commodity' has
                            the meaning given such term by section
                            475(e)(2) (without regard to subparagraph
                            (D)(iii) thereof).
                                ``(iii) Correct.--The term `correct' means,
                            with respect to a transaction--
                                        ``(I) to undo the transaction to
                                    the extent possible and in any case to
                                    make good to the plan or affected
                                    account any losses resulting from the
                                    transaction, and
                                        ``(II) to restore to the plan or
                                    affected account any profits made
                                    through the use of assets of the
                                    plan.''.
        (c) 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.

                     Subtitle C--Fiduciary and Other Rules

    SEC. 621. INAPPLICABILITY OF RELIEF FROM FIDUCIARY LIABILITY DURING
                  SUSPENSION OF ABILITY OF PARTICIPANT OR BENEFICIARY TO
                  DIRECT INVESTMENTS.

        (a) In General.--Section 404(c) of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1104(c)) is amended--
                (1) in paragraph (1)--
                        (A) by redesignating subparagraphs (A) and (B) as
                    clauses (i) and (ii), respectively, and by inserting
                    ``(A)'' after ``(c)(1)'',
                        (B) in subparagraph (A)(ii) (as redesignated by
                    paragraph (1)), by inserting before the period the
                    following: ``, except that this clause shall not apply
                    in connection with such participant or beneficiary for
                    any blackout period during which the ability of such
                    participant or beneficiary to direct the investment of
                    the assets in his or her account is suspended by a plan
                    sponsor or fiduciary'', and
                        (C) by adding at the end the following new
                    subparagraphs:
        ``(B) If a person referred to in subparagraph (A)(ii) meets the
    requirements of this title in connection with authorizing and
    implementing the blackout period, any person who is otherwise a
    fiduciary shall not be liable under this title for any loss occurring
    during such period.
        ``(C) For purposes of this paragraph, the term `blackout period'
    has the meaning given such term by section 101(i)(7).''; and
                (2) by adding at the end the following:
                ``(4)(A) In any case in which a qualified change in
            investment options occurs in connection with an individual
            account plan, a participant or beneficiary shall not be treated
            for purposes of paragraph (1) as not exercising control over
            the assets in his account in connection with such change if the
            requirements of subparagraph (C) are met in connection with
            such change.
                ``(B) For purposes of subparagraph (A), the term `qualified
            change in investment options' means, in connection with an
            individual account plan, a change in the investment options
            offered to the participant or beneficiary under the terms of
            the plan, under which--
                        ``(i) the account of the participant or beneficiary
                    is reallocated among one or more remaining or new
                    investment options which are offered in lieu of one or
                    more investment options offered immediately prior to
                    the effective date of the change, and
                        ``(ii) the stated characteristics of the remaining
                    or new investment options provided under clause (i),
                    including characteristics relating to risk and rate of
                    return, are, as of immediately after the change,
                    reasonably similar to those of the existing investment
                    options as of immediately before the change.
                ``(C) The requirements of this subparagraph are met in
            connection with a qualified change in investment options if--
                        ``(i) at least 30 days and no more than 60 days
                    prior to the effective date of the change, the plan
                    administrator furnishes written notice of the change to
                    the participants and beneficiaries, including
                    information comparing the existing and new investment
                    options and an explanation that, in the absence of
                    affirmative investment instructions from the
                    participant or beneficiary to the contrary, the account
                    of the participant or beneficiary will be invested in
                    the manner described in subparagraph (B),
                        ``(ii) the participant or beneficiary has not
                    provided to the plan administrator, in advance of the
                    effective date of the change, affirmative investment
                    instructions contrary to the change, and
                        ``(iii) the investments under the plan of the
                    participant or beneficiary as in effect immediately
                    prior to the effective date of the change were the
                    product of the exercise by such participant or
                    beneficiary of control over the assets of the account
                    within the meaning of paragraph (1).''.
        (b) Effective Date.--
                (1) In general.--The amendments made by this section shall
            apply to plan years beginning after December 31, 2007.
                (2) Special rule for collectively bargained agreements.--In
            the case of a plan maintained pursuant to 1 or more collective
            bargaining agreements between employee representatives and 1 or
            more employers ratified on or before the date of the enactment
            of this Act, paragraph (1) shall be applied to benefits
            pursuant to, and individuals covered by, any such agreement by
            substituting for ``December 31, 2007'' the earlier of--
                        (A) the later of--
                                (i) December 31, 2008, or
                                (ii) the date on which the last of such
                            collective bargaining agreements terminates
                            (determined without regard to any extension
                            thereof after such date of enactment), or
                        (B) December 31, 2009.

    SEC. 622. INCREASE IN MAXIMUM BOND AMOUNT.

        (a) In General.--Section 412(a) of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1112), as amended by section 611(b), is
    amended by adding at the end the following: ``In the case of a plan
    that holds employer securities (within the meaning of section
    407(d)(1)), this subsection shall be applied by substituting
    `$1,000,000' for `$500,000' each place it appears.''
        (b) Effective Date.--The amendment made by this section shall apply
    to plan years beginning after December 31, 2007.

    SEC. 623. INCREASE IN PENALTIES FOR COERCIVE INTERFERENCE WITH EXERCISE
                  OF ERISA RIGHTS.

        (a) In General.--Section 511 of the Employment Retirement Income
    Security Act of 1974 (29 U.S.C. 1141) is amended--
                (1) by striking ``$10,000'' and inserting ``$100,000'', and
                (2) by striking ``one year'' and inserting ``10 years''.
        (b) Effective Date.--The amendments made by this section shall
    apply to violations occurring on and after the date of the enactment of
    this Act.

    SEC. 624. TREATMENT OF INVESTMENT OF ASSETS BY PLAN WHERE PARTICIPANT
                  FAILS TO EXERCISE INVESTMENT ELECTION.

        (a) In General.--Section 404(c) of the Employee Retirement Income
    Security Act of 1974 (29 U.S.C. 1104(c)), as amended by section 622, is
    amended by adding at the end the following new paragraph:
                ``(5) Default investment arrangements.--
                        ``(A) In general.--For purposes of paragraph (1), a
                    participant in an individual account plan meeting the
                    notice requirements of subparagraph (B) shall be
                    treated as exercising control over the assets in the
                    account with respect to the amount of contributions and
                    earnings which, in the absence of an investment
                    election by the participant, are invested by the plan
                    in accordance with regulations prescribed by the
                    Secretary. The regulations under this subparagraph
                    shall provide guidance on the appropriateness of
                    designating default investments that include a mix of
                    asset classes consistent with capital preservation or
                    long-term capital appreciation, or a blend of both.
                        ``(B) Notice requirements.--
                                ``(i) In general.--The requirements of this
                            subparagraph are met if each participant--
                                        ``(I) receives, within a reasonable
                                    period of time before each plan year, a
                                    notice explaining the employee's right
                                    under the plan to designate how
                                    contributions and earnings will be
                                    invested and explaining how, in the
                                    absence of any investment election by
                                    the participant, such contributions and
                                    earnings will be invested, and
                                        ``(II) has a reasonable period of
                                    time after receipt of such notice and
                                    before the beginning of the plan year
                                    to make such designation.
                                ``(ii) Form of notice.--The requirements of
                            clauses (i) and (ii) of section 401(k)(12)(D)
                            of the Internal Revenue Code of 1986 shall
                            apply with respect to the notices described in
                            this subparagraph.''.
        (b) Effective Date.--
                (1) In general.--The amendments made by this section shall
            apply to plan years beginning after December 31, 2006.
                (2) Regulations.--Final regulations under section
            404(c)(5)(A) of the Employee Retirement Income Security Act of
            1974 (as added by this section) shall be issued no later than 6
            months after the date of the enactment of this Act.

    SEC. 625. CLARIFICATION OF FIDUCIARY RULES.

        (a) In General.--Not later than 1 year after the date of the
    enactment of this Act, the Secretary of Labor shall issue final
    regulations clarifying that the selection of an annuity contract as an
    optional form of distribution from an individual account plan to a
    participant or beneficiary--
                (1) is not subject to the safest available annuity standard
            under Interpretive Bulletin 95-1 (29 C.F.R. 2509.95-1), and
                (2) is subject to all otherwise applicable fiduciary
            standards.
        (b) Effective Date.--This section shall take effect on the date of
    enactment of this Act.

                      TITLE VII--BENEFIT ACCRUAL STANDARDS

    SEC. 701. BENEFIT ACCRUAL STANDARDS.

        (a) Amendments to the Employee Retirement Income Security Act of
    1974.--
                (1) Rules relating to reduction in rate of benefit
            accrual.--Section 204(b) of the Employee Retirement Income
            Security Act of 1974 (29 U.S.C. 1054(b)) is amended by adding
            at the end the following new paragraph:
                ``(5) Special rules relating to age.--
                        ``(A) Comparison to similarly situated younger
                    individual.--
                                ``(i) In general.--A plan shall not be
                            treated as failing to meet the requirements of
                            paragraph (1)(H)(i) if a participant's accrued
                            benefit, as determined as of any date under the
                            terms of the plan, would be equal to or greater
                            than that of any similarly situated, younger
                            individual who is or could be a participant.
                                ``(ii) Similarly situated.--For purposes of
                            this subparagraph, a participant is similarly
                            situated to any other individual if such
                            participant is identical to such other
                            individual 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
                            accrued benefit as of any date for purposes of
                            this clause, the subsidized portion of any
                            early retirement benefit or retirement-type
                            subsidy shall be disregarded.
                                ``(iv) Accrued benefit.--For purposes of
                            this subparagraph, the accrued benefit may,
                            under the terms of the plan, be expressed as an
                            annuity payable at normal retirement age, the
                            balance of a hypothetical account, or the
                            current value of the accumulated percentage of
                            the employee's final average compensation.
                        ``(B) Applicable defined benefit plans.--
                                ``(i) Interest credits.--
                                        ``(I) In general.--An applicable
                                    defined benefit plan shall be treated
                                    as failing to meet the requirements of
                                    paragraph (1)(H) unless the terms of
                                    the plan provide that any interest
                                    credit (or an equivalent amount) for
                                    any plan year shall be at a rate which
                                    is not greater than a market rate of
                                    return. A plan shall not be treated as
                                    failing to meet the requirements of
                                    this subclause merely because the plan
                                    provides for a reasonable minimum
                                    guaranteed rate of return or for a rate
                                    of return that is equal to the greater
                                    of a fixed or variable rate of return.
                                        ``(II) Preservation of capital.--An
                                    interest credit (or an equivalent
                                    amount) of less than zero shall in no
                                    event result in the account balance or
                                    similar amount being less than the
                                    aggregate amount of contributions
                                    credited to the account.
                                        ``(III) Market rate of return.--The
                                    Secretary of the Treasury may provide
                                    by regulation for rules governing the
                                    calculation of a market rate of return
                                    for purposes of subclause (I) and for
                                    permissible methods of crediting
                                    interest to the account (including
                                    fixed or variable interest rates)
                                    resulting in effective rates of return
                                    meeting the requirements of subclause
                                    (I).
                                ``(ii) Special rule for plan conversions.--
                            If, after June 29, 2005, an applicable plan
                            amendment is adopted, the plan shall be treated
                            as failing to meet the requirements of
                            paragraph (1)(H) unless the requirements of
                            clause (iii) are met with respect to each
                            individual who was a participant in the plan
                            immediately before the adoption of the
                            amendment.
                                ``(iii) Rate of benefit accrual.--Subject
                            to clause (iv), the requirements of this clause
                            are met with respect to any participant if the
                            accrued benefit of the participant under the
                            terms of the plan as in effect after the
                            amendment is not less than the sum of--
                                        ``(I) the participant's accrued
                                    benefit for years of service before the
                                    effective date of the amendment,
                                    determined under the terms of the plan
                                    as in effect before the amendment, plus
                                        ``(II) the participant's accrued
                                    benefit for years of service after the
                                    effective date of the amendment,
                                    determined under the terms of the plan
                                    as in effect after the amendment.
                                ``(iv) Special rules for early retirement
                            subsidies.--For purposes of clause (iii)(I),
                            the plan shall credit the accumulation account
                            or similar amount with the amount of any early
                            retirement benefit or retirement-type subsidy
                            for the plan year in which the participant
                            retires if, as of such time, the participant
                            has met the age, years of service, and other
                            requirements under the plan for entitlement to
                            such benefit or subsidy.
                                ``(v) Applicable plan amendment.--For
                            purposes of this subparagraph--
                                        ``(I) In general.--The term
                                    `applicable plan amendment' means an
                                    amendment to a defined benefit plan
                                    which has the effect of converting the
                                    plan to an applicable defined benefit
                                    plan.
                                        ``(II) Special rule for coordinated
                                    benefits.--If the benefits of 2 or more
                                    defined benefit plans established or
                                    maintained by an employer are
                                    coordinated in such a manner as to have
                                    the effect of the adoption of an
                                    amendment described in subclause (I),
                                    the sponsor of the defined benefit plan
                                    or plans providing for such
                                    coordination shall be treated as having
                                    adopted such a plan amendment as of the
                                    date such coordination begins.
                                        ``(III) Multiple amendments.--The
                                    Secretary of the Treasury shall issue
                                    regulations to prevent the avoidance of
                                    the purposes of this subparagraph
                                    through the use of 2 or more plan
                                    amendments rather than a single
                                    amendment.
                                        ``(IV) Applicable defined benefit
                                    plan.--For purposes of this
                                    subparagraph, the term `applicable
                                    defined benefit plan' has the meaning
                                    given such term by section 203(f)(3).
                                ``(vi) Termination requirements.--An
                            applicable defined benefit plan shall not be
                            treated as meeting the requirements of clause
                            (i) unless the plan provides that, upon the
                            termination of the plan--
                                        ``(I) if the interest credit rate
                                    (or an equivalent amount) under the
                                    plan is a variable rate, the rate of
                                    interest used to determine accrued
                                    benefits under the plan shall be equal
                                    to the average of the rates of interest
                                    used under the plan during the 5-year
                                    period ending on the termination date,
                                    and
                                        ``(II) the interest rate and
                                    mortality table used to determine the
                                    amount of any benefit under the plan
                                    payable in the form of an annuity
                                    payable at normal retirement age shall
                                    be the rate and table specified under
                                    the plan for such purpose as of the
                                    termination date, except that if such
                                    interest rate is a variable rate, the
                                    interest rate shall be determined under
                                    the rules of subclause (I).
                        ``(C) Certain offsets permitted.--A plan shall not
                    be treated as failing to meet the requirements of
                    paragraph (1)(H)(i) solely because the plan provides
                    offsets against benefits under the plan to the extent
                    such offsets are allowable in applying the requirements
                    of section 401(a) of the Internal Revenue Code of 1986.
                        ``(D) Permitted disparities in plan contributions
                    or benefits.--A plan shall not be treated as failing to
                    meet the requirements of paragraph (1)(H) 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.
                        ``(E) Indexing permitted.--
                                ``(i) In general.--A plan shall not be
                            treated as failing to meet the requirements of
                            paragraph (1)(H) solely because the plan
                            provides for indexing of accrued benefits under
                            the plan.
                                ``(ii) Protection against loss.--Except in
                            the case of any benefit provided in the form of
                            a variable annuity, clause (i) shall not apply
                            with respect to any indexing which results in
                            an accrued benefit less than the accrued
                            benefit determined without regard to such
                            indexing.
                                ``(iii) Indexing.--For purposes of this
                            subparagraph, the term `indexing' means, in
                            connection with an accrued benefit, the
                            periodic adjustment of the accrued benefit by
                            means of the application of a recognized
                            investment index or methodology.
                        ``(F) Early retirement benefit or retirement-type
                    subsidy.--For purposes of this paragraph, the terms
                    `early retirement benefit' and `retirement-type
                    subsidy' have the meaning given such terms in
                    subsection (g)(2)(A).
                        ``(G) Benefit accrued to date.--For purposes of
                    this paragraph, any reference to the accrued benefit
                    shall be a reference to such benefit accrued to
                    date.''.
                (2) Determinations of accrued benefit as balance of benefit
            account or equivalent amounts.--Section 203 of such Act (29
            U.S.C. 1053) is amended by adding at the end the following new
            subsection:
        ``(f) Special Rules for Plans Computing Accrued Benefits by
    Reference to Hypothetical Account Balance or Equivalent Amounts.--
                ``(1) In general.--An applicable defined benefit plan shall
            not be treated as failing to meet--
                        ``(A) subject to paragraph (2), the requirements of
                    subsection (a)(2), or
                        ``(B) the requirements of section 204(c) or section
                    205(g) with respect to contributions other than
                    employee contributions,
            solely because the present value of the accrued benefit (or any
            portion thereof) of any participant is, under the terms of the
            plan, equal to the amount expressed as the balance in the
            hypothetical account described in paragraph (3) or as an
            accumulated percentage of the participant's final average
            compensation.
                ``(2) 3-year vesting.--In the case of an applicable defined
            benefit plan, such plan shall be treated as meeting the
            requirements of subsection (a)(2) only if an employee who has
            completed at least 3 years of service has a nonforfeitable
            right to 100 percent of the employee's accrued benefit derived
            from employer contributions.
                ``(3) Applicable defined benefit plan and related rules.--
            For purposes of this subsection--
                        ``(A) In general.--The term `applicable defined
                    benefit plan' means a defined benefit plan under which
                    the accrued benefit (or any portion thereof) is
                    calculated as the balance of a hypothetical account
                    maintained for the participant or as an accumulated
                    percentage of the participant's final average
                    compensation.
                        ``(B) Regulations to include similar plans.--The
                    Secretary of the Treasury shall issue regulations which
                    include in the definition of an applicable defined
                    benefit plan any defined benefit plan (or any portion
                    of such a plan) which has an effect similar to an
                    applicable defined benefit plan.''.
        (b) Amendments to the Internal Revenue Code of 1986.--
                (1) Rules relating to reduction in rate of benefit
            accrual.--Subsection (b) of section 411 of the Internal Revenue
            Code of 1986 is amended by adding at the end the following new
            paragraph:
                ``(5) Special rules relating to age.--
                        ``(A) Comparison to similarly situated younger
                    individual.--
                                ``(i) In general.--A plan shall not be
                            treated as failing to meet the requirements of
                            paragraph (1)(H)(i) if a participant's accrued
                            benefit, as determined as of any date under the
                            terms of the plan, would be equal to or greater
                            than that of any similarly situated, younger
                            individual who is or could be a participant.
                                ``(ii) Similarly situated.--For purposes of
                            this subparagraph, a participant is similarly
                            situated to any other individual if such
                            participant is identical to such other
                            individual 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
                            accrued benefit as of any date for purposes of
                            this clause, the subsidized portion of any
                            early retirement benefit or retirement-type
                            subsidy shall be disregarded.
                                ``(iv) Accrued benefit.--For purposes of
                            this subparagraph, the accrued benefit may,
                            under the terms of the plan, be expressed as an
                            annuity payable at normal retirement age, the
                            balance of a hypothetical account, or the
                            current value of the accumulated percentage of
                            the employee's final average compensation.
                        ``(B) Applicable defined benefit plans.--
                                ``(i) Interest credits.--
                                        ``(I) In general.--An applicable
                                    defined benefit plan shall be treated
                                    as failing to meet the requirements of
                                    paragraph (1)(H) unless the terms of
                                    the plan provide that any interest
                                    credit (or an equivalent amount) for
                                    any plan year shall be at a rate which
                                    is not greater than a market rate of
                                    return. A plan shall not be treated as
                                    failing to meet the requirements of
                                    this subclause merely because the plan
                                    provides for a reasonable minimum
                                    guaranteed rate of return or for a rate
                                    of return that is equal to the greater
                                    of a fixed or variable rate of return.
                                        ``(II) Preservation of capital.--An
                                    interest credit (or an equivalent
                                    amount) of less than zero shall in no
                                    event result in the account balance or
                                    similar amount being less than the
                                    aggregate amount of contributions
                                    credited to the account.
                                        ``(III) Market rate of return.--The
                                    Secretary may provide by regulation for
                                    rules governing the calculation of a
                                    market rate of return for purposes of
                                    subclause (I) and for permissible
                                    methods of crediting interest to the
                                    account (including fixed or variable
                                    interest rates) resulting in effective
                                    rates of return meeting the
                                    requirements of subclause (I).
                                ``(ii) Special rule for plan conversions.--
                            If, after June 29, 2005, an applicable plan
                            amendment is adopted, the plan shall be treated
                            as failing to meet the requirements of
                            paragraph (1)(H) unless the requirements of
                            clause (iii) are met with respect to each
                            individual who was a participant in the plan
                            immediately before the adoption of the
                            amendment.
                                ``(iii) Rate of benefit accrual.--Subject
                            to clause (iv), the requirements of this clause
                            are met with respect to any participant if the
                            accrued benefit of the participant under the
                            terms of the plan as in effect after the
                            amendment is not less than the sum of--
                                        ``(I) the participant's accrued
                                    benefit for years of service before the
                                    effective date of the amendment,
                                    determined under the terms of the plan
                                    as in effect before the amendment, plus
                                        ``(II) the participant's accrued
                                    benefit for years of service after the
                                    effective date of the amendment,
                                    determined under the terms of the plan
                                    as in effect after the amendment.
                                ``(iv) Special rules for early retirement
                            subsidies.--For purposes of clause (iii)(I),
                            the plan shall credit the accumulation account
                            or similar amount with the amount of any early
                            retirement benefit or retirement-type subsidy
                            for the plan year in which the participant
                            retires if, as of such time, the participant
                            has met the age, years of service, and other
                            requirements under the plan for entitlement to
                            such benefit or subsidy.
                                ``(v) Applicable plan amendment.--For
                            purposes of this subparagraph--
                                        ``(I) In general.--The term
                                    `applicable plan amendment' means an
                                    amendment to a defined benefit plan
                                    which has the effect of converting the
                                    plan to an applicable defined benefit
                                    plan.
                                        ``(II) Special rule for coordinated
                                    benefits.--If the benefits of 2 or more
                                    defined benefit plans established or
                                    maintained by an employer are
                                    coordinated in such a manner as to have
                                    the effect of the adoption of an
                                    amendment described in subclause (I),
                                    the sponsor of the defined benefit plan
                                    or plans providing for such
                                    coordination shall be treated as having
                                    adopted such a plan amendment as of the
                                    date such coordination begins.
                                        ``(III) Multiple amendments.--The
                                    Secretary shall issue regulations to
                                    prevent the avoidance of the purposes
                                    of this subparagraph through the use of
                                    2 or more plan amendments rather than a
                                    single amendment.
                                        ``(IV) Applicable defined benefit
                                    plan.--For purposes of this
                                    subparagraph, the term `applicable
                                    defined benefit plan' has the meaning
                                    given such term by section 411(a)(13).
                                ``(vi) Termination requirements.--An
                            applicable defined benefit plan shall not be
                            treated as meeting the requirements of clause
                            (i) unless the plan provides that, upon the
                            termination of the plan--
                                        ``(I) if the interest credit rate
                                    (or an equivalent amount) under the
                                    plan is a variable rate, the rate of
                                    interest used to determine accrued
                                    benefits under the plan shall be equal
                                    to the average of the rates of interest
                                    used under the plan during the 5-year
                                    period ending on the termination date,
                                    and
                                        ``(II) the interest rate and
                                    mortality table used to determine the
                                    amount of any benefit under the plan
                                    payable in the form of an annuity
                                    payable at normal retirement age shall
                                    be the rate and table specified under
                                    the plan for such purpose as of the
                                    termination date, except that if such
                                    interest rate is a variable rate, the
                                    interest rate shall be determined under
                                    the rules of subclause (I).
                        ``(C) Certain offsets permitted.--A plan shall not
                    be treated as failing to meet the requirements of
                    paragraph (1)(H)(i) solely because the plan provides
                    offsets against benefits under the plan to the extent
                    such offsets are allowable in applying the requirements
                    of section 401(a).
                        ``(D) Permitted disparities in plan contributions
                    or benefits.--A plan shall not be treated as failing to
                    meet the requirements of paragraph (1)(H) solely
                    because the plan provides a disparity in contributions
                    or benefits with respect to which the requirements of
                    section 401(l) are met.
                        ``(E) Indexing permitted.--
                                ``(i) In general.--A plan shall not be
                            treated as failing to meet the requirements of
                            paragraph (1)(H) solely because the plan
                            provides for indexing of accrued benefits under
                            the plan.
                                ``(ii) Protection against loss.--Except in
                            the case of any benefit provided in the form of
                            a variable annuity, clause (i) shall not apply
                            with respect to any indexing which results in
                            an accrued benefit less than the accrued
                            benefit determined without regard to such
                            indexing.
                                ``(iii) Indexing.--For purposes of this
                            subparagraph, the term `indexing' means, in
                            connection with an accrued benefit, the
                            periodic adjustment of the accrued benefit by
                            means of the application of a recognized
                            investment index or methodology.
                        ``(F) Early retirement benefit or retirement-type
                    subsidy.--For purposes of this paragraph, the terms
                    `early retirement benefit' and `retirement-type
                    subsidy' have the meaning given such terms in
                    subsection (d)(6)(B)(i).
                        ``(G) Benefit accrued to date.--For purposes of
                    this paragraph, any reference to the accrued benefit
                    shall be a reference to such benefit accrued to
                    date.''.
                (2) Determinations of accrued benefit as balance of benefit
            account or equivalent amounts.--Subsection (a) of section 411
            of such Code is amended by adding at the end the following new
            paragraph:
                ``(13) Special rules for plans computing accrued benefits
            by reference to hypothetical account balance or equivalent
            amounts.--
                        ``(A) In general.--An applicable defined benefit
                    plan shall not be treated as failing to meet--
                                ``(i) subject to paragraph (2), the
                            requirements of subsection (a)(2), or
                                ``(ii) the requirements of subsection (c)
                            or section 417(e) with respect to contributions
                            other than employee contributions,
                    solely because the present value of the accrued benefit
                    (or any portion thereof) of any participant is, under
                    the terms of the plan, equal to the amount expressed as
                    the balance in the hypothetical account described in
                    paragraph (3) or as an accumulated percentage of the
                    participant's final average compensation.
                        ``(B) 3-year vesting.--In the case of an applicable
                    defined benefit plan, such plan shall be treated as
                    meeting the requirements of subsection (a)(2) only if
                    an employee who has completed at least 3 years of
                    service has a nonforfeitable right to 100 percent of
                    the employee's accrued benefit derived from employer
                    contributions.
                        ``(C) Applicable defined benefit plan and related
                    rules.--For purposes of this subsection--
                                ``(i) In general.--The term `applicable
                            defined benefit plan' means a defined benefit
                            plan under which the accrued benefit (or any
                            portion thereof) is calculated as the balance
                            of a hypothetical account maintained for the
                            participant or as an accumulated percentage of
                            the participant's final average compensation.
                                ``(ii) Regulations to include similar
                            plans.--The Secretary shall issue regulations
                            which include in the definition of an
                            applicable defined benefit plan any defined
                            benefit plan (or any portion of such a plan)
                            which has an effect similar to an applicable
                            defined benefit plan.''.
        (c) Amendments to Age Discrimination in Employment Act.--Section
    4(i) of the Age Discrimination in Employment Act of 1967 (29 U.S.C.
    623(i)) is amended by adding at the end the following new paragraph:
                ``(10) Special rules relating to age.--
                        ``(A) Comparison to similarly situated younger
                    individual.--
                                ``(i) In general.--A plan shall not be
                            treated as failing to meet the requirements of
                            paragraph (1) if a participant's accrued
                            benefit, as determined as of any date under the
                            terms of the plan, would be equal to or greater
                            than that of any similarly situated, younger
                            individual who is or could be a participant.
                                ``(ii) Similarly situated.--For purposes of
                            this subparagraph, a participant is similarly
                            situated to any other individual if such
                            participant is identical to such other
                            individual 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
                            accrued benefit as of any date for purposes of
                            this clause, the subsidized portion of any
                            early retirement benefit or retirement-type
                            subsidy shall be disregarded.
                                ``(iv) Accrued benefit.--For purposes of
                            this subparagraph, the accrued benefit may,
                            under the terms of the plan, be expressed as an
                            annuity payable at normal retirement age, the
                            balance of a hypothetical account, or the
                            current value of the accumulated percentage of
                            the employee's final average compensation.
                        ``(B) Applicable defined benefit plans.--
                                ``(i) Interest credits.--
                                        ``(I) In general.--An applicable
                                    defined benefit plan shall be treated
                                    as failing to meet the requirements of
                                    paragraph (1) unless the terms of the
                                    plan provide that any interest credit
                                    (or an equivalent amount) for any plan
                                    year shall be at a rate which is not
                                    greater than a market rate of return. A
                                    plan shall not be treated as failing to
                                    meet the requirements of this subclause
                                    merely because the plan provides for a
                                    reasonable minimum guaranteed rate of
                                    return or for a rate of return that is
                                    equal to the greater of a fixed or
                                    variable rate of return.
                                        ``(II) Preservation of capital.--An
                                    interest credit (or an equivalent
                                    amount) of less than zero shall in no
                                    event result in the account balance or
                                    similar amount being less than the
                                    aggregate amount of contributions
                                    credited to the account.
                                        ``(III) Market rate of return.--The
                                    Secretary of the Treasury may provide
                                    by regulation for rules governing the
                                    calculation of a market rate of return
                                    for purposes of subclause (I) and for
                                    permissible methods of crediting
                                    interest to the account (including
                                    fixed or variable interest rates)
                                    resulting in effective rates of return
                                    meeting the requirements of subclause
                                    (I).
                                ``(ii) Special rule for plan conversions.--
                            If, after June 29, 2005, an applicable plan
                            amendment is adopted, the plan shall be treated
                            as failing to meet the requirements of
                            paragraph (1)(H) unless the requirements of
                            clause (iii) are met with respect to each
                            individual who was a participant in the plan
                            immediately before the adoption of the
                            amendment.
                                ``(iii) Rate of benefit accrual.--Subject
                            to clause (iv), the requirements of this clause
                            are met with respect to any participant if the
                            accrued benefit of the participant under the
                            terms of the plan as in effect after the
                            amendment is not less than the sum of--
                                        ``(I) the participant's accrued
                                    benefit for years of service before the
                                    effective date of the amendment,
                                    determined under the terms of the plan
                                    as in effect before the amendment, plus
                                        ``(II) the participant's accrued
                                    benefit for years of service after the
                                    effective date of the amendment,
                                    determined under the terms of the plan
                                    as in effect after the amendment.
                                ``(iv) Special rules for early retirement
                            subsidies.--For purposes of clause (iii)(I),
                            the plan shall credit the accumulation account
                            or similar amount with the amount of any early
                            retirement benefit or retirement-type subsidy
                            for the plan year in which the participant
                            retires if, as of such time, the participant
                            has met the age, years of service, and other
                            requirements under the plan for entitlement to
                            such benefit or subsidy.
                                ``(v) Applicable plan amendment.--For
                            purposes of this subparagraph--
                                        ``(I) In general.--The term
                                    `applicable plan amendment' means an
                                    amendment to a defined benefit plan
                                    which has the effect of converting the
                                    plan to an applicable defined benefit
                                    plan.
                                        ``(II) Special rule for coordinated
                                    benefits.--If the benefits of 2 or more
                                    defined benefit plans established or
                                    maintained by an employer are
                                    coordinated in such a manner as to have
                                    the effect of the adoption of an
                                    amendment described in subclause (I),
                                    the sponsor of the defined benefit plan
                                    or plans providing for such
                                    coordination shall be treated as having
                                    adopted such a plan amendment as of the
                                    date such coordination begins.
                                        ``(III) Multiple amendments.--The
                                    Secretary of the Treasury shall issue
                                    regulations to prevent the avoidance of
                                    the purposes of this subparagraph
                                    through the use of 2 or more plan
                                    amendments rather than a single
                                    amendment.
                                        ``(IV) Applicable defined benefit
                                    plan.--For purposes of this
                                    subparagraph, the term `applicable
                                    defined benefit plan' has the meaning
                                    given such term by section 203(f)(3) of
                                    the Employee Retirement Income Security
                                    Act of 1974.
                                ``(vi) Termination requirements.--An
                            applicable defined benefit plan shall not be
                            treated as meeting the requirements of clause
                            (i) unless the plan provides that, upon the
                            termination of the plan--
                                        ``(I) if the interest credit rate
                                    (or an equivalent amount) under the
                                    plan is a variable rate, the rate of
                                    interest used to determine accrued
                                    benefits under the plan shall be equal
                                    to the average of the rates of interest
                                    used under the plan during the 5-year
                                    period ending on the termination date,
                                    and
                                        ``(II) the interest rate and
                                    mortality table used to determine the
                                    amount of any benefit under the plan
                                    payable in the form of an annuity
                                    payable at normal retirement age shall
                                    be the rate and table specified under
                                    the plan for such purpose as of the
                                    termination date, except that if such
                                    interest rate is a variable rate, the
                                    interest rate shall be determined under
                                    the rules of subclause (I).
                        ``(C) Certain offsets permitted.--A plan shall not
                    be treated as failing to meet the requirements of
                    paragraph (1) solely because the plan provides offsets
                    against benefits under the plan to the extent such
                    offsets are allowable in applying the requirements of
                    section 401(a) of the Internal Revenue Code of 1986.
                        ``(D) Permitted disparities in plan contributions
                    or benefits.--A plan shall not be treated as failing to
                    meet the requirements of paragraph (1) 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.
                        ``(E) Indexing permitted.--
                                ``(i) In general.--A plan shall not be
                            treated as failing to meet the requirements of
                            paragraph (1) solely because the plan provides
                            for indexing of accrued benefits under the
                            plan.
                                ``(ii) Protection against loss.--Except in
                            the case of any benefit provided in the form of
                            a variable annuity, clause (i) shall not apply
                            with respect to any indexing which results in
                            an accrued benefit less than the accrued
                            benefit determined without regard to such
                            indexing.
                                ``(iii) Indexing.--For purposes of this
                            subparagraph, the term `indexing' means, in
                            connection with an accrued benefit, the
                            periodic adjustment of the accrued benefit by
                            means of the application of a recognized
                            investment index or methodology.
                        ``(F) Early retirement benefit or retirement-type
                    subsidy.--For purposes of this paragraph, the terms
                    `early retirement benefit' and `retirement-type
                    subsidy' have the meaning given such terms in section
                    203(g)(2)(A) of the Employee Retirement Income Security
                    Act of 1974.
                        ``(G) Benefit accrued to date.--For purposes of
                    this paragraph, any reference to the accrued benefit
                    shall be a reference to such benefit accrued to
                    date.''.
        (d) No Inference.--Nothing in the amendments made by this section
    shall be construed to create an inference with respect to--
                (1) the treatment of applicable defined benefit plans or
            conversions to applicable defined benefit plans under sections
            204(b)(1)(H) of the Employee Retirement Income Security Act of
            1974, 4(i)(1) of the Age Discrimination in Employment Act of
            1967, and 411(b)(1)(H) of the Internal Revenue Code of 1986, as
            in effect before such amendments, or
                (2) the determination of whether an applicable defined
            benefit plan fails to meet the requirements of sections
            203(a)(2), 204(c), or 204(g) of the Employee Retirement Income
            Security Act of 1974 or sections 411(a)(2), 411(c), or 417(e)
            of such Code, as in effect before such amendments, solely
            because the present value of the accrued benefit (or any
            portion thereof) of any participant is, under the terms of the
            plan, equal to the amount expressed as the balance in a
            hypothetical account or as an accumulated percentage of the
            participant's final average compensation.
    For purposes of this subsection, the term ``applicable defined benefit
    plan'' has the meaning given such term by section 203(f)(3) of the
    Employee Retirement Income Security Act of 1974 and section
    411(a)(13)(C) of such Code, as in effect after such amendments.
        (e) Effective Date.--
                (1) In general.--The amendments made by this section shall
            apply to periods beginning on or after June 29, 2005.
                (2) Present value of accrued benefit.--The amendments made
            by subsections (a)(2) and (b)(2) shall apply to distributions
            made after the date of the enactment of this Act.
                (3) Vesting and interest credit requirements.--In the case
            of a plan in existence on June 29, 2005, the requirements of
            clause (i) of section 411(b)(5)(B) of the Internal Revenue Code
            of 1986, clause (i) of section 204(b)(5)(B) of the Employee
            Retirement Income Security Act of 1974, and clause (i) of
            section 4(i)(10)(B) of the Age Discrimination in Employment Act
            of 1967 (as added by this Act) and the requirements of
            203(f)(2) of the Employee Retirement Income Security Act of
            1974 and section 411(a)(13)(B) of the Internal Revenue Code of
            1986 (as so added) shall, for purposes of applying the
            amendments made by subsections (a) and (b), apply to years
            beginning after December 31, 2007, unless the plan sponsor
            elects the application of such requirements for any period
            after June 29, 2005, and before the first year beginning after
            December 31, 2007.
                (4) Special rule for collectively bargained plans.--In the
            case of a plan maintained pursuant to 1 or more collective
            bargaining agreements between employee representatives and 1 or
            more employers ratified on or before the date of the enactment
            of this Act, the requirements described in paragraph (3) shall,
            for purposes of applying the amendments made by subsections (a)
            and (b), not apply to plan years beginning before--
                        (A) the earlier of--
                                (i) the date on which the last of such
                            collective bargaining agreements terminates
                            (determined without regard to any extension
                            thereof on or after such date of enactment), or
                                (ii) January 1, 2008, or
                        (B) January 1, 2010.
                (5) Conversions.--The requirements of clause (ii) of
            section 411(b)(5)(B) of the Internal Revenue Code of 1986,
            clause (ii) of section 204(b)(5)(B) of the Employee Retirement
            Income Security Act of 1974, and clause (ii) of section
            4(i)(10)(B) of the Age Discrimination in Employment Act of 1967
            (as added by this Act), shall apply to plan amendments adopted
            after, and taking effect after, June 29, 2005, except that the
            plan sponsor may elect to have such amendments apply to plan
            amendments adopted before, and taking effect after, such date.

    SEC. 702. REGULATIONS RELATING TO MERGERS AND ACQUISITIONS.

        The Secretary of the Treasury or his delegate shall, not later than
    12 months after the date of the enactment of this Act, prescribe
    regulations for the application of the amendments made by, and the
    provisions of, this title in cases where the conversion of a plan to an
    applicable defined benefit plan is made with respect to a group of
    employees who become employees by reason of a merger, acquisition, or
    similar transaction.

                 TITLE VIII--PENSION RELATED REVENUE PROVISIONS

                       Subtitle A--Deduction Limitations

    SEC. 801. INCREASE IN DEDUCTION LIMIT FOR SINGLE-EMPLOYER PLANS.

        (a) In General.--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 greater of--
                        ``(A) the sum of the amounts determined under
                    paragraph (2) with respect to each plan year ending
                    with or within the taxable year, or
                        ``(B) the sum of the minimum required contributions
                    under section 430 for such plan years.
                ``(2) Determination of amount.--
                        ``(A) In general.--The amount determined under this
                    paragraph for any plan year shall be equal to the
                    excess (if any) of--
                                ``(i) the sum of--
                                        ``(I) the funding target for the
                                    plan year,
                                        ``(II) the target normal cost for
                                    the plan year, and
                                        ``(III) the cushion amount for the
                                    plan year, over
                                ``(ii) the value (determined under section
                            430(g)(2)) of the assets of the plan which are
                            held by the plan as of the valuation date for
                            the plan year.
                        ``(B) Special rule for certain employers.--If
                    section 430(i) does not apply to a plan for a plan
                    year, the amount determined under subparagraph (A)(i)
                    for the plan year shall in no event be less than the
                    sum of--
                                ``(i) the funding target for the plan year
                            (determined as if section 430(i) applied to the
                            plan), plus
                                ``(ii) the target normal cost for the plan
                            year (as so determined).
                ``(3) Cushion amount.--For purposes of paragraph
            (2)(A)(i)(III)--
                        ``(A) In general.--The cushion amount for any plan
                    year is the sum of--
                                ``(i) 50 percent of the funding target for
                            the plan year, and
                                ``(ii) the amount by which the funding
                            target for the plan year would increase if the
                            plan were to take into account--
                                        ``(I) increases in compensation
                                    which are expected to occur in
                                    succeeding plan years, or
                                        ``(II) if the plan does not base
                                    benefits for service to date on
                                    compensation, increases in benefits
                                    which are expected to occur in
                                    succeeding plan years (determined on
                                    the basis of the average annual
                                    increase in benefits over the 6
                                    immediately preceding plan years).
                        ``(B) Limitations.--
                                ``(i) In general.--In making the
                            computation under subparagraph (A)(ii), the
                            plan's actuary shall assume that the
                            limitations under subsection (l) and section
                            415(b) shall apply.
                                ``(ii) Expected increases.--In the case of
                            a plan year during which a plan is covered
                            under section 4021 of the Employee Retirement
                            Income Security Act of 1974, the plan's actuary
                            may, notwithstanding subsection (l), take into
                            account increases in the limitations which are
                            expected to occur in succeeding plan years.
                ``(4) Special rules for plans with 100 or fewer
            participants.--
                        ``(A) In general.--For purposes of determining the
                    amount under paragraph (3) for any plan year, in the
                    case of a plan which has 100 or fewer participants for
                    the plan year, the liability of the plan attributable
                    to benefit increases for highly compensated employees
                    (as defined in section 414(q)) resulting from a plan
                    amendment which is made or becomes effective, whichever
                    is later, within the last 2 years shall not be taken
                    into account in determining the target liability.
                        ``(B) Rule for determining number of
                    participants.--For purposes of determining the number
                    of plan participants, all defined benefit plans
                    maintained by the same employer (or any member of such
                    employer's controlled group (within the meaning of
                    section 412(f)(4))) shall be treated as one plan, but
                    only participants of such member or employer shall be
                    taken into account.
                ``(5) 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 in no event be
            less than the amount required to make the plan sufficient for
            benefit liabilities (within the meaning of section 4041(d) of
            such Act).
                ``(6) Actuarial assumptions.--Any computation under this
            subsection for any plan year shall use the same actuarial
            assumptions which are used for the plan year under section 430.
                ``(7) 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) Exception From Limitation on Deduction Where Combination of
    Defined Contribution and Defined Benefit Plans.--Section 404(a)(7)(C)
    of such Code, as amended by this Act, is amended by adding at the end
    the following new clause:
                                ``(iv) Guaranteed plans.--In applying this
                            paragraph, any single-employer plan covered
                            under section 4021 of the Employee Retirement
                            Income Security Act of 1974 shall not be taken
                            into account.''.
        (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)(A)(ii)'',
                        (D) by striking ``section 412(c)(7)(A)'' and
                    inserting ``section 431(c)(6)(A)(i)'', and
                        (E) by striking ``section 412'' and inserting
                    ``section 431''.
                (3) Section 404(a)(7) of such Code, as amended by this Act,
            is amended--
                        (A) by adding at the end of subparagraph (A) the
                    following new sentence: ``In the case of a defined
                    benefit plan which is a single employer plan, the
                    amount necessary to satisfy the minimum funding
                    standard provided by section 412 shall not be less than
                    the plan's funding shortfall determined under section
                    430.'', and
                        (B) 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.''.
                (4) Section 404A(g)(3)(A) of such Code is amended by
            striking ``paragraphs (3) and (7) of section 412(c)'' and
            inserting ``paragraphs (3) and (6) of section 431(c)''.
        (d) Special Rule for 2006 and 2007.--
                (1) In general.--Clause (i) of section 404(a)(1)(D) of the
            Internal Revenue Code of 1986 (relating to special rule in case
            of certain plans) is amended by striking ``section 412(l)'' and
            inserting ``section 412(l)(8)(A), except that section
            412(l)(8)(A) shall be applied for purposes of this clause by
            substituting `150 percent (140 percent in the case of a
            multiemployer plan) of current liability' for `the current
            liability' in clause (i).''
                (2) Conforming amendment.--Section 404(a)(1) of the
            Internal Revenue Code of 1986 is amended by striking
            subparagraph (F).
        (e) Effective Dates.--
                (1) In general.--Except as provided in paragraph (2), the
            amendments made by this section shall apply to years beginning
            after December 31, 2007.
                (2) Special rules.--The amendments made by subsection (d)
            shall apply to years beginning after December 31, 2005.

    SEC. 802. DEDUCTION LIMITS FOR MULTIEMPLOYER PLANS.

        (a) Increase in Deduction.--Section 404(a)(1)(D) of the Internal
    Revenue Code of 1986, as amended by this Act, is amended to read as
    follows:
                        ``(D) Amount determined on basis of unfunded
                    current liability.--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)(C), over
                                ``(ii) the value of the plan's assets
                            determined under section 431(c)(2).''.
        (b) Effective Date.--The amendment made by subsection (a) shall
    apply to years beginning after December 31, 2007.

    SEC. 803. 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) Exception From Limitation on Deduction Where Combination of
    Defined Contribution and Defined Benefit Plans.--Section 404(a)(7)(C)
    of such Code, as amended by this Act, is amended by adding at the end
    the following new clause:
                                ``(v) Multiemployer plans.--In applying
                            this paragraph, any multiemployer plan shall
                            not be taken into account.''.
        (c) Conforming Amendment.--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''.
        (d) Effective Date.--The amendments made by this section shall
    apply to contributions for taxable years beginning after December 31,
    2005.

             Subtitle B--Certain Pension Provisions Made Permanent

    SEC. 811. PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS OF
                  ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001
                  MADE PERMANENT.

        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. 812. SAVER'S CREDIT.

        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).

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

    SEC. 821. CLARIFICATIONS REGARDING PURCHASE OF PERMISSIVE SERVICE
                  CREDIT.

        (a) In General.--Section 415(n) of the Internal Revenue Code of
    1986 (relating to special rules for the purchase of permissive service
    credit) is amended--
                (1) by striking ``an employee'' in paragraph (1) and
            inserting ``a participant'', and
                (2) by adding at the end of paragraph (3)(A) the following
            new flush sentence:
                    ``Such term may include service credit for periods for
                    which there is no performance of service, and,
                    notwithstanding clause (ii), may include service
                    credited in order to provide an increased benefit for
                    service credit which a participant is receiving under
                    the plan.''.
        (b) Special Rules for Trustee-to-Trustee Transfers.--Section
    415(n)(3) of such Code is amended by adding at the end the following
    new subparagraph:
                        ``(D) Special rules for trustee-to-trustee
                    transfers.--In the case of a trustee-to-trustee
                    transfer to which section 403(b)(13)(A) or
                    457(e)(17)(A) applies (without regard to whether the
                    transfer is made between plans maintained by the same
                    employer)--
                                ``(i) the limitations of subparagraph (B)
                            shall not apply in determining whether the
                            transfer is for the purchase of permissive
                            service credit, and
                                ``(ii) the distribution rules applicable
                            under this title to the defined benefit
                            governmental plan to which any amounts are so
                            transferred shall apply to such amounts and any
                            benefits attributable to such amounts.''.
        (c) Nonqualified Service.--Section 415(n)(3) of such Code is
    amended--
                (1) by striking ``permissive service credit attributable to
            nonqualified service'' each place it appears in subparagraph
            (B) and inserting ``nonqualified service credit'',
                (2) by striking so much of subparagraph (C) as precedes
            clause (i) and inserting:
                        ``(C) Nonqualified service credit.--For purposes of
                    subparagraph (B), the term `nonqualified service
                    credit' means permissive service credit other than that
                    allowed with respect to--'', and
                (3) by striking ``elementary or secondary education
            (through grade 12), as determined under State law'' in
            subparagraph (C)(ii) and inserting ``elementary or secondary
            education (through grade 12), or a comparable level of
            education, as determined under the applicable law of the
            jurisdiction in which the service was performed''.
        (d) Effective Dates.--
                (1) In general.--The amendments made by subsections (a) and
            (c) shall take effect as if included in the amendments made by
            section 1526 of the Taxpayer Relief Act of 1997.
                (2) Subsection (b).--The amendments made by subsection (b)
            shall take effect as if included in the amendments made by
            section 647 of the Economic Growth and Tax Relief
            Reconciliation Act of 2001.

    SEC. 822. ALLOW ROLLOVER OF AFTER-TAX AMOUNTS IN ANNUITY CONTRACTS.

        (a) In General.--Subparagraph (A) of section 402(c)(2) (relating to
    the maximum amount which may be rolled over) is amended--
                (1) by striking ``which is part of a plan which is a
            defined contribution plan and which agrees to separately
            account'' and inserting ``or to an annuity contract described
            in section 403(b) and such trust or contract provides for
            separate accounting''; and
                (2) by inserting ``(and earnings thereon)'' after ``so
            transferred''.
        (b) Effective Date.--The amendment made by subsection (a) shall
    apply to taxable years beginning after December 31, 2006.

    SEC. 823. CLARIFICATION OF MINIMUM DISTRIBUTION RULES FOR GOVERNMENTAL
                  PLANS.

        The Secretary of the Treasury shall issue regulations under which a
    governmental plan (as defined in section 414(d) of the Internal Revenue
    Code of 1986) shall, for all years to which section 401(a)(9) of such
    Code applies to such plan, be treated as having complied with such
    section 401(a)(9) if such plan complies with a reasonable good faith
    interpretation of such section 401(a)(9).

    SEC. 824. ALLOW DIRECT ROLLOVERS FROM RETIREMENT PLANS TO ROTH IRAS.

        (a) In General.--Subsection (e) of section 408A of the Internal
    Revenue Code of 1986 (defining qualified rollover contribution) is
    amended to read as follows:
        ``(e) Qualified Rollover Contribution.--For purposes of this
    section, the term `qualified rollover contribution' means a rollover
    contribution--
                ``(1) to a Roth IRA from another such account,
                ``(2) from an eligible retirement plan, but only if--
                        ``(A) in the case of an individual retirement plan,
                    such rollover contribution meets the requirements of
                    section 408(d)(3), and
                        ``(B) in the case of any eligible retirement plan
                    (as defined in section 402(c)(8)(B) other than clauses
                    (i) and (ii) thereof), such rollover contribution meets
                    the requirements of section 402(c), 403(b)(8), or
                    457(e)(16), as applicable.
    For purposes of section 408(d)(3)(B), there shall be disregarded any
    qualified rollover contribution from an individual retirement plan
    (other than a Roth IRA) to a Roth IRA.''.
        (b) Conforming Amendments.--
                (1) Section 408A(c)(3)(B) of such Code, as in effect before
            the Tax Increase Prevention and Reconciliation Act of 2005, is
            amended--
                        (A) in the text by striking ``individual retirement
                    plan'' and inserting ``an eligible retirement plan (as
                    defined by section 402(c)(8)(B))'', and
                        (B) in the heading by striking ``IRA'' the first
                    place it appears and inserting ``eligible retirement
                    plan''.
                (2) Section 408A(d)(3) of such Code is amended--
                        (A) in subparagraph (A), by striking ``section
                    408(d)(3)'' inserting ``sections 402(c), 403(b)(8),
                    408(d)(3), and 457(e)(16)'',
                        (B) in subparagraph (B), by striking ``individual
                    retirement plan'' and inserting ``eligible retirement
                    plan (as defined by section 402(c)(8)(B))'',
                        (C) in subparagraph (D), by inserting ``or 6047''
                    after ``408(i)'',
                        (D) in subparagraph (D), by striking ``or both''
                    and inserting ``persons subject to section 6047(d)(1),
                    or all of the foregoing persons'', and
                        (E) in the heading, by striking ``IRA'' the first
                    place it appears and inserting ``eligible retirement
                    plan''.
        (c) Effective Date.--The amendments made by this section shall
    apply to distributions after December 31, 2007.

    SEC. 825. ELIGIBILITY FOR PARTICIPATION IN RETIREMENT PLANS.

        An individual shall not be precluded from participating in an
    eligible deferred compensation plan by reason of having received a
    distribution under section 457(e)(9) of the Internal Revenue Code of
    1986, as in effect prior to the enactment of the Small Business Job
    Protection Act of 1996.

    SEC. 826. MODIFICATIONS OF RULES GOVERNING HARDSHIPS AND UNFORSEEN
                  FINANCIAL EMERGENCIES.

        Within 180 days after the date of the enactment of this Act, the
    Secretary of the Treasury shall modify the rules for determining
    whether a participant has had a hardship for purposes of section
    401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986 to provide
    that if an event (including the occurrence of a medical expense) would
    constitute a hardship under the plan if it occurred with respect to the
    participant's spouse or dependent (as defined in section 152 of such
    Code), such event shall, to the extent permitted under a plan,
    constitute a hardship if it occurs with respect to a person who is a
    beneficiary under the plan with respect to the participant. The
    Secretary of the Treasury shall issue similar rules for purposes of
    determining whether a participant has had--
                (1) a hardship for purposes of section 403(b)(11)(B) of
            such Code; or
                (2) an unforeseen financial emergency for purposes of
            sections 409A(a)(2)(A)(vi), 409A(a)(2)(B)(ii), and
            457(d)(1)(A)(iii) of such Code.

    SEC. 827. 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 December 31, 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. 828. WAIVER OF 10 PERCENT EARLY WITHDRAWAL PENALTY TAX ON CERTAIN
                  DISTRIBUTIONS OF PENSION PLANS FOR PUBLIC SAFETY
                  EMPLOYEES.

        (a) In General.--Section 72(t) of the Internal Revenue Code of 1986
    (relating to subsection not to apply to certain distributions) is
    amended by adding at the end the following new paragraph:
                ``(10) Distributions to qualified public safety employees
            in governmental plans.--
                        ``(A) In general.--In the case of a distribution to
                    a qualified public safety employee from a governmental
                    plan (within the meaning of section 414(d)) which is a
                    defined benefit plan, paragraph (2)(A)(v) shall be
                    applied by substituting `age 50' for `age 55'.
                        ``(B) Qualified public safety employee.--For
                    purposes of this paragraph, the term `qualified public
                    safety employee' means any employee of a State or
                    political subdivision of a State who provides police
                    protection, firefighting services, or emergency medical
                    services for any area within the jurisdiction of such
                    State or political subdivision.''
        (b) Effective Date.--The amendment made by this section shall apply
    to distributions after the date of the enactment of this Act.

    SEC. 829. 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, 2006.

    SEC. 830. 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. 831. ALLOWANCE OF ADDITIONAL IRA PAYMENTS IN CERTAIN BANKRUPTCY
                  CASES.

        (a) Allowance of Contributions.--Section 219(b)(5) of the Internal
    Revenue Code of 1986 (relating to deductible amount) is amended by
    redesignating subparagraph (C) as subparagraph (D) and by inserting
    after subparagraph (B) the following new subparagraph:
                        ``(C) Catchup contributions for certain
                    individuals.--
                                ``(i) In general.--In the case of an
                            applicable individual who elects to make a
                            qualified retirement contribution in addition
                            to the deductible amount determined under
                            subparagraph (A)--
                                        ``(I) the deductible amount for any
                                    taxable year shall be increased by an
                                    amount equal to 3 times the applicable
                                    amount determined under subparagraph
                                    (B) for such taxable year, and
                                        ``(II) subparagraph (B) shall not
                                    apply.
                                ``(ii) Applicable individual.--For purposes
                            of this subparagraph, the term `applicable
                            individual' means, with respect to any taxable
                            year, any individual who was a qualified
                            participant in a qualified cash or deferred
                            arrangement (as defined in section 401(k)) of
                            an employer described in clause (iii) under
                            which the employer matched at least 50 percent
                            of the employee's contributions to such
                            arrangement with stock of such employer.
                                ``(iii) Employer described.--An employer is
                            described in this clause if, in any taxable
                            year preceding the taxable year described in
                            clause (ii)--
                                        ``(I) such employer (or any
                                    controlling corporation of such
                                    employer) was a debtor in a case under
                                    title 11 of the United States Code, or
                                    similar Federal or State law, and
                                        ``(II) such employer (or any other
                                    person) was subject to an indictment or
                                    conviction resulting from business
                                    transactions related to such case.
                                ``(iv) Qualified participant.--For purposes
                            of clause (ii), the term `qualified
                            participant' means any applicable individual
                            who was a participant in the cash or deferred
                            arrangement described in such clause on the
                            date that is 6 months before the filing of the
                            case described in clause (iii).
                                ``(v) Termination.--This subparagraph shall
                            not apply to taxable years beginning after
                            December 31, 2009.''
        (b) Effective Date.--The amendments made by this section shall
    apply to taxable years beginning after December 31, 2006.

    SEC. 832. DETERMINATION OF AVERAGE COMPENSATION FOR SECTION 415 LIMITS.

        (a) In General.--Section 415(b)(3) of the Internal Revenue Code of
    1986 is amended by striking ``both was an active participant in the
    plan and''.
        (b) Effective Date.--The amendment made by this section shall apply
    to years beginning after December 31, 2005.

    SEC. 833. INFLATION INDEXING OF GROSS INCOME LIMITATIONS ON CERTAIN
                  RETIREMENT SAVINGS INCENTIVES.

        (a) Saver's Credit.--Subsection (b) of section 25B of the Internal
    Revenue Code of 1986 is amended to read as follows:
        ``(b) Applicable Percentage.--For purposes of this section--
                ``(1) Joint returns.--In the case of a joint return, the
            applicable percentage is--
                        ``(A) if the adjusted gross income of the taxpayer
                    is not over $30,000, 50 percent,
                        ``(B) if the adjusted gross income of the taxpayer
                    is over $30,000 but not over $32,500, 20 percent,
                        ``(C) if the adjusted gross income of the taxpayer
                    is over $32,500 but not over $50,000, 10 percent, and
                        ``(D) if the adjusted gross income of the taxpayer
                    is over $50,000, zero percent.
                ``(2) Other returns.--In the case of--
                        ``(A) a head of household, the applicable
                    percentage shall be determined under paragraph (1)
                    except that such paragraph shall be applied by
                    substituting for each dollar amount therein (as
                    adjusted under paragraph (3)) a dollar amount equal to
                    75 percent of such dollar amount, and
                        ``(B) any taxpayer not described in paragraph (1)
                    or subparagraph (A), the applicable percentage shall be
                    determined under paragraph (1) except that such
                    paragraph shall be applied by substituting for each
                    dollar amount therein (as adjusted under paragraph (3))
                    a dollar amount equal to 50 percent of such dollar
                    amount.
                ``(3) Inflation adjustment.--In the case of any taxable
            year beginning in a calendar year after 2006, each of the
            dollar amount in paragraph (1) shall be increased by an amount
            equal to--
                        ``(A) such dollar amount, multiplied by
                        ``(B) the cost-of-living adjustment determined
                    under section 1(f)(3) for the calendar year in which
                    the taxable year begins, determined by substituting
                    `calendar year 2005' for `calendar year 1992' in
                    subparagraph (B) thereof.
            Any increase determined under the preceding sentence shall be
            rounded to the nearest multiple of $500.''.
        (b) Deduction of Retirement Contributions for Active
    Participants.--Section 219(g) of such Code is amended by adding at the
    end the following new paragraph:
                ``(8) Inflation adjustment.--In the case of any taxable
            year beginning in a calendar year after 2006, the dollar amount
            in the last row of the table contained in paragraph (3)(B)(i),
            the dollar amount in the last row of the table contained in
            paragraph (3)(B)(ii), and the dollar amount contained in
            paragraph (7)(A), shall each be increased by an amount equal
            to--
                        ``(A) such dollar amount, multiplied by
                        ``(B) the cost-of-living adjustment determined
                    under section 1(f)(3) for the calendar year in which
                    the taxable year begins, determined by substituting
                    `calendar year 2005' for `calendar year 1992' in
                    subparagraph (B) thereof.
            Any increase determined under the preceding sentence shall be
            rounded to the nearest multiple of $1,000.''.
        (c) Contribution Limitation for Roth IRAs.--Section 408A(c)(3) of
    such Code is amended by adding at the end the following new
    subparagraph:
                        ``(C) Inflation adjustment.--In the case of any
                    taxable year beginning in a calendar year after 2006,
                    the dollar amounts in subclauses (I) and (II) of
                    subparagraph (C)(ii) shall each be increased by an
                    amount equal to--
                                ``(i) such dollar amount, multiplied by
                                ``(ii) the cost-of-living adjustment
                            determined under section 1(f)(3) for the
                            calendar year in which the taxable year begins,
                            determined by substituting `calendar year 2005'
                            for `calendar year 1992' in subparagraph (B)
                            thereof.
                    Any increase determined under the preceding sentence
                    shall be rounded to the nearest multiple of $1,000.''.
        (d) Effective Date.--The amendments made by this section shall
    apply to taxable years beginning after 2006.

                    Subtitle D--Health and Medical Benefits

    SEC. 841. USE OF EXCESS PENSION ASSETS FOR FUTURE RETIREE HEALTH
                  BENEFITS AND COLLECTIVELY BARGAINED RETIREE HEALTH
                  BENEFITS.

        (a) In General.--Section 420 of the Internal Revenue Code of 1986
    (relating to transfers of excess pension assets to retiree health
    accounts) is amended by adding at the end the following new subsection:
        ``(f) Qualified Transfers to Cover Future Retiree Health Costs and
    Collectively Bargained Retiree Health Benefits.--
                ``(1) In general.--An employer maintaining a defined
            benefit plan (other than a multiemployer plan) may, in lieu of
            a qualified transfer, elect for any taxable year to have the
            plan make--
                        ``(A) a qualified future transfer, or
                        ``(B) a collectively bargained transfer.
            Except as provided in this subsection, a qualified future
            transfer and a collectively bargained transfer shall be treated
            for purposes of this title and the Employee Retirement Income
            Security Act of 1974 as if it were a qualified transfer.
                ``(2) Qualified future and collectively bargained
            transfers.--For purposes of this subsection--
                        ``(A) In general.--The terms `qualified future
                    transfer' and `collectively bargained transfer' mean a
                    transfer which meets all of the requirements for a
                    qualified transfer, except that--
                                ``(i) the determination of excess pension
                            assets shall be made under subparagraph (B),
                                ``(ii) the limitation on the amount
                            transferred shall be determined under
                            subparagraph (C),
                                ``(iii) the minimum cost requirements of
                            subsection (c)(3) shall be modified as provided
                            under subparagraph (D), and
                                ``(iv) in the case of a collectively
                            bargained transfer, the requirements of
                            subparagraph (E) shall be met with respect to
                            the transfer.
                        ``(B) Excess pension assets.--
                                ``(i) In general.--In determining excess
                            pension assets for purposes of this subsection,
                            subsection (e)(2) shall be applied by
                            substituting `120 percent' for `125 percent'.
                                ``(ii) Requirement to maintain funded
                            status.--If, as of any valuation date of any
                            plan year in the transfer period, the amount
                            determined under subsection (e)(2)(B) (after
                            application of clause (i)) exceeds the amount
                            determined under subsection (e)(2)(A), either--
                                        ``(I) the employer maintaining the
                                    plan shall make contributions to the
                                    plan in an amount not less than the
                                    amount required to reduce such excess
                                    to zero as of such date, or
                                        ``(II) there is transferred from
                                    the health benefits account to the plan
                                    an amount not less than the amount
                                    required to reduce such excess to zero
                                    as of such date.
                        ``(C) Limitation on amount transferred.--
                    Notwithstanding subsection (b)(3), the amount of the
                    excess pension assets which may be transferred--
                                ``(i) in the case of a qualified future
                            transfer shall be equal to the sum of--
                                        ``(I) if the transfer period
                                    includes the taxable year of the
                                    transfer, the amount determined under
                                    subsection (b)(3) for such taxable
                                    year, plus
                                        ``(II) in the case of all other
                                    taxable years in the transfer period,
                                    the sum of the qualified current
                                    retiree health liabilities which the
                                    plan reasonably estimates, in
                                    accordance with guidance issued by the
                                    Secretary, will be incurred for each of
                                    such years, and
                                ``(ii) in the case of a collectively
                            bargained transfer, shall not exceed the amount
                            which is reasonably estimated, in accordance
                            with the provisions of the collective
                            bargaining agreement and generally accepted
                            accounting principles, to be the amount the
                            employer maintaining the plan will pay (whether
                            directly or through reimbursement) out of such
                            account during the collectively bargained cost
                            maintenance period for collectively bargained
                            retiree health liabilities.
                        ``(D) Minimum cost requirements.--
                                ``(i) In general.--The requirements of
                            subsection (c)(3) shall be treated as met if--
                                        ``(I) in the case of a qualified
                                    future transfer, each group health plan
                                    or arrangement under which applicable
                                    health benefits are provided provides
                                    applicable health benefits during the
                                    period beginning with the first year of
                                    the transfer period and ending with the
                                    last day of the 4th year following the
                                    transfer period such that the annual
                                    average amount of such the applicable
                                    employer cost during such period is not
                                    less than the applicable employer cost
                                    determined under subsection (c)(3)(A)
                                    with respect to the transfer, and
                                        ``(II) in the case of a
                                    collectively bargained transfer, each
                                    collectively bargained group health
                                    plan under which collectively bargained
                                    health benefits are provided provides
                                    that the collectively bargained
                                    employer cost for each taxable year
                                    during the collectively bargained cost
                                    maintenance period shall not be less
                                    than the amount specified by the
                                    collective bargaining agreement.
                                ``(ii) Election to maintain benefits for
                            future transfers.--An employer may elect, in
                            lieu of the requirements of clause (i)(I), to
                            meet the requirements of subsection (c)(3) by
                            meeting the requirements of such subsection (as
                            in effect before the amendments made by section
                            535 of the Tax Relief Extension Act of 1999)
                            for each of the years described in the period
                            under clause (i)(I).
                                ``(iii) Collectively bargained employer
                            cost.--For purposes of this subparagraph, the
                            term `collectively bargained employer cost'
                            means the average cost per covered individual
                            of providing collectively bargained retiree
                            health benefits as determined in accordance
                            with the applicable collective bargaining
                            agreement. Such agreement may provide for an
                            appropriate reduction in the collectively
                            bargained employer cost to take into account
                            any portion of the collectively bargained
                            retiree health benefits that is provided or
                            financed by a government program or other
                            source.
                        ``(E) Special rules for collectively bargained
                    transfers.--
                                ``(i) In general.--A collectively bargained
                            transfer shall only include a transfer which--
                                        ``(I) is made in accordance with a
                                    collective bargaining agreement,
                                        ``(II) before the transfer, the
                                    employer designates, in a written
                                    notice delivered to each employee
                                    organization that is a party to the
                                    collective bargaining agreement, as a
                                    collectively bargained transfer in
                                    accordance with this section, and
                                        ``(III) involves a plan maintained
                                    by an employer which, in its taxable
                                    year ending in 2005, provided health
                                    benefits or coverage to retirees and
                                    their spouses and dependents under all
                                    of the benefit plans maintained by the
                                    employer, but only if the aggregate
                                    cost (including administrative
                                    expenses) of such benefits or coverage
                                    which would have been allowable as a
                                    deduction to the employer (if such
                                    benefits or coverage had been provided
                                    directly by the employer and the
                                    employer used the cash receipts and
                                    disbursements method of accounting) is
                                    at least 5 percent of the gross
                                    receipts of the employer (determined in
                                    accordance with the last sentence of
                                    subsection (c)(2)(E)(ii)(II)) for such
                                    taxable year, or a plan maintained by a
                                    successor to such employer.
                                ``(ii) Use of assets.--Any assets
                            transferred to a health benefits account in a
                            collectively bargained transfer (and any income
                            allocable thereto) shall be used only to pay
                            collectively bargained retiree health
                            liabilities (other than liabilities of key
                            employees not taken into account under
                            paragraph (6)(B)(iii)) for the taxable year of
                            the transfer or for any subsequent taxable year
                            during the collectively bargained cost
                            maintenance period (whether directly or through
                            reimbursement).
                ``(3) Coordination with other transfers.--In applying
            subsection (b)(3) to any subsequent transfer during a taxable
            year in a transfer period or collectively bargained cost
            maintenance period, qualified current retiree health
            liabilities shall be reduced by any such liabilities taken into
            account with respect to the qualified future transfer or
            collectively bargained transfer to which such period relates.
                ``(4) Special deduction rules for collectively bargained
            transfers.--In the case of a collectively bargained transfer--
                        ``(A) the limitation under subsection (d)(1)(C)
                    shall not apply, and
                        ``(B) notwithstanding subsection (d)(2), an
                    employer may contribute an amount to a health benefits
                    account or welfare benefit fund (as defined in section
                    419(e)(1)) with respect to collectively bargained
                    retiree health liabilities for which transferred assets
                    are required to be used under subsection (c)(1)(B), and
                    the deductibility of any such contribution shall be
                    governed by the limits applicable to the deductibility
                    of contributions to a welfare benefit fund under a
                    collective bargaining agreement (as determined under
                    section 419A(f)(5)(A)) without regard to whether such
                    contributions are made to a health benefits account or
                    welfare benefit fund and without regard to the
                    provisions of section 404 or the other provisions of
                    this section.
            The Secretary shall provide rules to ensure that the
            application of this paragraph does not result in a deduction
            being allowed more than once for the same contribution or for 2
            or more contributions or expenditures relating to the same
            collectively bargained retiree health liabilities.
                ``(5) Transfer period.--For purposes of this subsection,
            the term `transfer period' means, with respect to any transfer,
            a period of consecutive taxable years (not less than 2)
            specified in the election under paragraph (1) which begins and
            ends during the 10-taxable-year period beginning with the
            taxable year of the transfer.
                ``(6) Terms relating to collectively bargained transfers.--
            For purposes of this subsection--
                        ``(A) Collectively bargained cost maintenance
                    period.--The term `collectively bargained cost
                    maintenance period' means, with respect to each covered
                    retiree and his covered spouse and dependents, the
                    shorter of--
                                ``(i) the remaining lifetime of such
                            covered retiree and his covered spouse and
                            dependents, or
                                ``(ii) the period of coverage provided by
                            the collectively bargained health plan
                            (determined as of the date of the collectively
                            bargained transfer) with respect to such
                            covered retiree and his covered spouse and
                            dependents.
                        ``(B) Collectively bargained retiree health
                    liabilities.--
                                ``(i) In general.--The term `collectively
                            bargained retiree health liabilities' means the
                            present value, as of the beginning of a taxable
                            year and determined in accordance with the
                            applicable collective bargaining agreement, of
                            all collectively bargained health benefits
                            (including administrative expenses) for such
                            taxable year and all subsequent taxable years
                            during the collectively bargained cost
                            maintenance period.
                                ``(ii) Reduction for amounts previously set
                            aside.--The amount determined under clause (i)
                            shall be reduced by the value (as of the close
                            of the plan year preceding the year of the
                            collectively bargained transfer) of the assets
                            in all health benefits accounts or welfare
                            benefit funds (as defined in section 419(e)(1))
                            set aside to pay for the collectively bargained
                            retiree health liabilities.
                                ``(iii) Key employees excluded.--If an
                            employee is a key employee (within the meaning
                            of section 416(I)(1)) with respect to any plan
                            year ending in a taxable year, such employee
                            shall not be taken into account in computing
                            collectively bargained retiree health
                            liabilities for such taxable year or in
                            calculating collectively bargained employer
                            cost under subsection (c)(3)(C).
                        ``(C) Collectively bargained health benefits.--The
                    term `collectively bargained health benefits' means
                    health benefits or coverage which are provided to--
                                ``(i) retired employees who, immediately
                            before the collectively bargained transfer, are
                            entitled to receive such benefits upon
                            retirement and who are entitled to pension
                            benefits under the plan, and their spouses and
                            dependents, and
                                ``(ii) if specified by the provisions of
                            the collective bargaining agreement governing
                            the collectively bargained transfer, active
                            employees who, following their retirement, are
                            entitled to receive such benefits and who are
                            entitled to pension benefits under the plan,
                            and their spouses and dependents.
                        ``(D) Collectively bargained health plan.--The term
                    `collectively bargained health plan' means a group
                    health plan or arrangement for retired employees and
                    their spouses and dependents that is maintained
                    pursuant to 1 or more collective bargaining
                    agreements.''.
        (b) Effective Date.--The amendments made by this section shall
    apply to transfers after the date of the enactment of this Act.

    SEC. 842. TRANSFER OF EXCESS PENSION ASSETS TO MULTIEMPLOYER HEALTH
                  PLAN.

        (a) In General.--Section 420 of the Internal Revenue Code of 1986
    is amended--
                (1) by striking ``(other than a multiemployer plan)'' in
            subsection (a), and
                (2) by adding at the end of subsection (e) the following
            new paragraph:
                ``(5) Application to multiemployer plans.--In the case of a
            multiemployer plan, this section shall be applied to any such
            plan--
                        ``(A) by treating any reference in this section to
                    an employer as a reference to all employers maintaining
                    the plan (or, if appropriate, the plan sponsor), and
                        ``(B) in accordance with such modifications of this
                    section (and the provisions of this title relating to
                    this section) as the Secretary determines appropriate
                    to reflect the fact the plan is not maintained by a
                    single employer.''
        (b) Effective Date.--The amendment made by this section shall apply
    to transfers made in taxable years beginning after December 31, 2006.

    SEC. 843. ALLOWANCE OF RESERVE FOR MEDICAL BENEFITS OF PLANS SPONSORED
                  BY BONA FIDE ASSOCIATIONS.

        (a) In General.--Section 419A(c) of the Internal Revenue Code of
    1986 (relating to account limit) is amended by adding at the end the
    following new paragraph:
                ``(6) Additional reserve for medical benefits of bona fide
            association plans.--
                        ``(A) In general.--An applicable account limit for
                    any taxable year may include a reserve in an amount not
                    to exceed 35 percent of the sum of--
                                ``(i) the qualified direct costs, and
                                ``(ii) the change in claims incurred but
                            unpaid,
                    for such taxable year with respect to medical benefits
                    (other than post-retirement medical benefits).
                        ``(B) Applicable account limit.--For purposes of
                    this subsection, the term `applicable account limit'
                    means an account limit for a qualified asset account
                    with respect to medical benefits provided through a
                    plan maintained by a bona fide association (as defined
                    in section 2791(d)(3) of the Public Health Service Act
                    (42 U.S.C. 300gg-91(d)(3))''.
        (b) Effective Date.--The amendment made by this section shall apply
    to taxable years beginning after December 31, 2006.

    SEC. 844. 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 inserting ``or for a
                    qualified long-term care insurance contract'' before
                    the semicolon at the end,
                        (B) in paragraph (2) by inserting ``, or (C) for a
                    qualified long-term care insurance contract'' before
                    the semicolon at the end, and
                        (C) in paragraph (3) by inserting ``or for a
                    qualified long-term care insurance contract'' before
                    the period at the end.
                (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.--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--
                ``(1) In general.--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 surrender
            value of a life insurance contract or the cash value of an
            annuity contract.
                ``(3) 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.
                ``(4) 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) Penalty for failure to file.--
                        (A) Return.--Subparagraph (B) of section 6724(d)(1)
                    of such Code is amended by striking ``or'' at the end
                    of clause (xvii), by striking ``and'' at the end of
                    clause (xviii) and inserting ``or'', and by adding at
                    the end the following new clause:
                                ``(xix) section 6050U (relating to charges
                            or payments for qualified long-term care
                            insurance contracts under combined
                            arrangements), and''.
                        (B) Statement.--Paragraph (2) of section 6724(d) of
                    such Code is amended by striking ``or'' at the end of
                    subparagraph (AA), by striking the period at the end of
                    subparagraph (BB), and by inserting after subparagraph
                    (BB) the following new subparagraph:
                        ``(CC) section 6050U (relating to charges or
                    payments for qualified long-term care insurance
                    contracts under combined arrangements).''.
                (3) 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) Technical Amendment.--Paragraph (1) of section 7702B(e) of such
    Code (as in effect before amendment by subsection (c)) is amended by
    striking ``section'' and inserting ``title''.
        (g) Effective Dates.--
                (1) In general.--Except as otherwise provided in this
            subsection, the amendments made by this section shall apply to
            contracts issued after December 31, 1996, but only with respect
            to taxable years beginning after December 31, 2009.
                (2) Tax-free exchanges.--The amendments made by subsection
            (b) shall apply with respect to exchanges occurring after
            December 31, 2009.
                (3) Information reporting.--The amendments made by
            subsection (d) shall apply to charges made after December 31,
            2009.
                (4) Policy acquisition expenses.--The amendment made by
            subsection (e) shall apply to specified policy acquisition
            expenses determined for taxable years beginning after December
            31, 2009.
                (5) Technical amendment.--The amendment made by subsection
            (f) shall take effect as if included in section 321(a) of the
            Health Insurance Portability and Accountability Act of 1996.

    SEC. 845. 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 $3,000.
                ``(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(9)(A) of the Omnibus Crime Control
                    and Safe Streets Act of 1968 (42 U.S.C. 3796b(9)(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,
    2006.

               Subtitle E--United States Tax Court Modernization

    SEC. 851. COST-OF-LIVING ADJUSTMENTS FOR TAX COURT JUDICIAL SURVIVOR
                  ANNUITIES.

        (a) In General.--Subsection (s) of section 7448 of the Internal
    Revenue Code of 1986 (relating to annuities to surviving spouses and
    dependent children of judges) is amended to read as follows:
        ``(s) Increases in Survivor Annuities.--Each time that an increase
    is made under section 8340(b) of title 5, United States Code, in
    annuities payable under subchapter III of chapter 83 of that title,
    each annuity payable from the survivors annuity fund under this section
    shall be increased at the same time by the same percentage by which
    annuities are increased under such section 8340(b).''.
        (b) Effective Date.--The amendment made by this section shall apply
    with respect to increases made under section 8340(b) of title 5, United
    States Code, in annuities payable under subchapter III of chapter 83 of
    that title, taking effect after the date of the enactment of this Act.

    SEC. 852. COST OF LIFE INSURANCE COVERAGE FOR TAX COURT JUDGES AGE 65
                  OR OVER.

        Section 7472 of the Internal Revenue Code of 1986 (relating to
    expenditures) is amended by inserting after the first sentence the
    following new sentence: ``Notwithstanding any other provision of law,
    the Tax Court is authorized to pay on behalf of its judges, age 65 or
    over, any increase in the cost of Federal Employees' Group Life
    Insurance imposed after the date of the enactment of the Pension
    Protection Act of 2006, including any expenses generated by such
    payments, as authorized by the chief judge in a manner consistent with
    such payments authorized by the Judicial Conference of the United
    States pursuant to section 604(a)(5) of title 28, United States Code.''

    SEC. 853. PARTICIPATION OF TAX COURT JUDGES IN THE THRIFT SAVINGS PLAN.

        (a) In General.--Section 7447 of the Internal Revenue Code of 1986
    (relating to retirement of judges) is amended by adding at the end the
    following new subsection:
        ``(j) Thrift Savings Plan.--
                ``(1) Election to contribute.--
                        ``(A) In general.--A judge of the Tax Court may
                    elect to contribute to the Thrift Savings Fund
                    established by section 8437 of title 5, United States
                    Code.
                        ``(B) Period of election.--An election may be made
                    under this paragraph only during a period provided
                    under section 8432(b) of title 5, United States Code,
                    for individuals subject to chapter 84 of such title.
                ``(2) Applicability of title 5 provisions.--Except as
            otherwise provided in this subsection, the provisions of
            subchapters III and VII of chapter 84 of title 5, United States
            Code, shall apply with respect to a judge who makes an election
            under paragraph (1).
                ``(3) Special rules.--
                        ``(A) Amount contributed.--The amount contributed
                    by a judge to the Thrift Savings Fund in any pay period
                    shall not exceed the maximum percentage of such judge's
                    basic pay for such period as allowable under section
                    8440f of title 5, United States Code. Basic pay does
                    not include any retired pay paid pursuant to this
                    section.
                        ``(B) Contributions for benefit of judge.--No
                    contributions may be made for the benefit of a judge
                    under section 8432(c) of title 5, United States Code.
                        ``(C) Applicability of section 8433(b) of title 5
                    whether or not judge retires.--Section 8433(b) of title
                    5, United States Code, applies with respect to a judge
                    who makes an election under paragraph (1) and who
                    either--
                                ``(i) retires under subsection (b), or
                                ``(ii) ceases to serve as a judge of the
                            Tax Court but does not retire under subsection
                            (b).
                    Retirement under subsection (b) is a separation from
                    service for purposes of subchapters III and VII of
                    chapter 84 of that title.
                        ``(D) Applicability of section 8351(b)(5) of title
                    5.--The provisions of section 8351(b)(5) of title 5,
                    United States Code, shall apply with respect to a judge
                    who makes an election under paragraph (1).
                        ``(E) Exception.--Notwithstanding subparagraph (C),
                    if any judge retires under this section, or resigns
                    without having met the age and service requirements set
                    forth under subsection (b)(2), and such judge's
                    nonforfeitable account balance is less than an amount
                    that the Executive Director of the Federal Retirement
                    Thrift Investment Board prescribes by regulation, the
                    Executive Director shall pay the nonforfeitable account
                    balance to the participant in a single payment.''.
        (b) Effective Date.--The amendment made by this section shall take
    effect on the date of the enactment of this Act, except that United
    States Tax Court judges may only begin to participate in the Thrift
    Savings Plan at the next open season beginning after such date.

    SEC. 854. ANNUITIES TO SURVIVING SPOUSES AND DEPENDENT CHILDREN OF
                  SPECIAL TRIAL JUDGES OF THE TAX COURT.

        (a) Definitions.--Section 7448(a) of the Internal Revenue Code of
    1986 (relating to definitions), as amended by this Act, is amended by
    redesignating paragraphs (5), (6), (7), and (8) as paragraphs (7), (8),
    (9), and (10), respectively, and by inserting after paragraph (4) the
    following new paragraphs:
                ``(5) The term `special trial judge' means a judicial
            officer appointed pursuant to section 7443A, including any
            individual receiving an annuity under chapters 83 or 84 of
            title 5, United States Code, whether or not performing judicial
            duties under section 7443B.
                ``(6) The term `special trial judge's salary' means the
            salary of a special trial judge received under section
            7443A(d), any amount received as an annuity under chapters 83
            or 84 of title 5, United States Code, and compensation received
            under section 7443B.''.
        (b) Election.--Subsection (b) of section 7448 of such Code
    (relating to annuities to surviving spouses and dependent children of
    judges) is amended--
                (1) by striking the subsection heading and inserting the
            following:
        ``(b) Election.--
                ``(1) Judges.--'',
                (2) by moving the text 2 ems to the right, and
                (3) by adding at the end the following new paragraph:
                ``(2) Special trial judges.--Any special trial judge may by
            written election filed with the chief judge bring himself or
            herself within the purview of this section. Such election shall
            be filed not later than the later of 6 months after--
                        ``(A) 6 months after the date of the enactment of
                    this paragraph,
                        ``(B) the date the judge takes office, or
                        ``(C) the date the judge marries.''.
        (c) Conforming Amendments.--
                (1) The heading of section 7448 of such Code is amended by
            inserting ``and special trial judges'' after ``judges''.
                (2) The item relating to section 7448 in the table of
            sections for part I of subchapter C of chapter 76 of such Code
            is amended by inserting ``and special trial judges'' after
            ``judges''.
                (3) Subsections (c)(1), (d), (f), (g), (h), (j), (m), (n),
            and (u) of section 7448 of such Code, as amended by this Act,
            are each amended--
                        (A) by inserting ``or special trial judge'' after
                    ``judge'' each place it appears other than in the
                    phrase ``chief judge'', and
                        (B) by inserting ``or special trial judge's'' after
                    ``judge's'' each place it appears.
                (4) Section 7448(c) of such Code is amended--
                        (A) in paragraph (1), by striking ``Tax Court
                    judges'' and inserting ``Tax Court judicial officers'',
                        (B) in paragraph (2)--
                                (i) in subparagraph (A), by inserting ``and
                            section 7443A(d)'' after ``(a)(4)'', and
                                (ii) in subparagraph (B), by striking
                            ``subsection (a)(4)'' and inserting
                            ``subsections (a)(4) and (a)(6)''.
                (5) Section 7448(j)(1) of such Code is amended--
                        (A) in subparagraph (A), by striking ``service or
                    retired'' and inserting ``service, retired'', and by
                    inserting ``, or receiving any annuity under chapters
                    83 or 84 of title 5, United States Code,'' after
                    ``section 7447'', and
                        (B) in the last sentence, by striking ``subsections
                    (a) (6) and (7)'' and inserting ``paragraphs (8) and
                    (9) of subsection (a)''.
                (6) Section 7448(m)(1) of such Code, as amended by this
            Act, is amended by inserting ``or any annuity under chapters 83
            or 84 of title 5, United States Code'' after ``7447(d)''.
                (7) Section 7448(n) of such Code is amended by inserting
            ``his years of service pursuant to any appointment under
            section 7443A,'' after ``of the Tax Court,''.
                (8) Section 3121(b)(5)(E) of such Code is amended by
            inserting ``or special trial judge'' before ``of the United
            States Tax Court''.
                (9) Section 210(a)(5)(E) of the Social Security Act is
            amended by inserting ``or special trial judge'' before ``of the
            United States Tax Court''.

    SEC. 855. JURISDICTION OF TAX COURT OVER COLLECTION DUE PROCESS CASES.

        (a) In General.--Paragraph (1) of section 6330(d) of the Internal
    Revenue Code of 1986 (relating to proceeding after hearing) is amended
    to read as follows:
                ``(1) Judicial review of determination.--The person may,
            within 30 days of a determination under this section, appeal
            such determination to the Tax Court (and the Tax Court shall
            have jurisdiction with respect to such matter).''.
        (b) Effective Date.--The amendment made by this section shall apply
    to determinations made after the date which is 60 days after the date
    of the enactment of this Act.

    SEC. 856. PROVISIONS FOR RECALL.

        (a) In General.--Part I of subchapter C of chapter 76 of the
    Internal Revenue Code of 1986 is amended by inserting after section
    7443A the following new section:

    ``SEC. 7443B. RECALL OF SPECIAL TRIAL JUDGES OF THE TAX COURT.

        ``(a) Recalling of Retired Special Trial Judges.--Any individual
    who has retired pursuant to the applicable provisions of title 5,
    United States Code, upon reaching the age and service requirements
    established therein, may at or after retirement be called upon by the
    chief judge of the Tax Court to perform such judicial duties with the
    Tax Court as may be requested of such individual for any period or
    periods specified by the chief judge; except that in the case of any
    such individual--
                ``(1) the aggregate of such periods in any 1 calendar year
            shall not (without such individual's consent) exceed 90
            calendar days, and
                ``(2) such individual shall be relieved of performing such
            duties during any period in which illness or disability
            precludes the performance of such duties.
    Any act, or failure to act, by an individual performing judicial duties
    pursuant to this subsection shall have the same force and effect as if
    it were the act (or failure to act) of a special trial judge of the Tax
    Court.
        ``(b) Compensation.--For the year in which a period of recall
    occurs, the special trial judge shall receive, in addition to the
    annuity provided under the applicable provisions of title 5, United
    States Code, an amount equal to the difference between that annuity and
    the current salary of the office to which the special trial judge is
    recalled.
        ``(c) Rulemaking Authority.--The provisions of this section may be
    implemented under such rules as may be promulgated by the Tax Court.''
        (b) Conforming Amendment.--The table of sections for part I of
    subchapter C of chapter 76 of such Code is amended by inserting after
    the item relating to section 7443A the following new item:

    ``Sec. 7443B. Recall of special trial judges of the Tax Court.''.

    SEC. 857. AUTHORITY FOR SPECIAL TRIAL JUDGES TO HEAR AND DECIDE CERTAIN
                  EMPLOYMENT STATUS CASES.

        (a) In General.--Section 7443A(b) of the Internal Revenue Code of
    1986 (relating to proceedings which may be assigned to special trial
    judges) is amended by striking ``and'' at the end of paragraph (4), by
    redesignating paragraph (5) as paragraph (6), and by inserting after
    paragraph (4) the following new paragraph:
                ``(5) any proceeding under section 7436(c), and''.
        (b) Conforming Amendment.--Section 7443A(c) of such Code is amended
    by striking ``or (4)'' and inserting ``(4), or (5)''.
        (c) Effective Date.--The amendments made by this section shall
    apply to any proceeding under section 7436(c) of the Internal Revenue
    Code of 1986 with respect to which a decision has not become final (as
    determined under section 7481 of such Code) before the date of the
    enactment of this Act.

    SEC. 858. CONFIRMATION OF AUTHORITY OF TAX COURT TO APPLY DOCTRINE OF
                  EQUITABLE RECOUPMENT.

        (a) Confirmation of Authority of Tax Court To Apply Doctrine of
    Equitable Recoupment.--Section 6214(b) of the Internal Revenue Code of
    1986 (relating to jurisdiction over other years and quarters) is
    amended by adding at the end the following new sentence:
    ``Notwithstanding the preceding sentence, the Tax Court may apply the
    doctrine of equitable recoupment to the same extent that it is
    available in civil tax cases before the district courts of the United
    States and the United States Court of Federal Claims.''.
        (b) Effective Date.--The amendment made by this section shall apply
    to any action or proceeding in the United States Tax Court with respect
    to which a decision has not become final (as determined under section
    7481 of the Internal Revenue Code of 1986) as of the date of the
    enactment of this Act.

    SEC. 859. TAX COURT FILING FEE IN ALL CASES COMMENCED BY FILING
                  PETITION.

        (a) In General.--Section 7451 of the Internal Revenue Code of 1986
    (relating to fee for filing a Tax Court petition) is amended by
    striking all that follows ``petition'' and inserting a period.
        (b) Effective Date.--The amendment made by this section shall take
    effect on the date of the enactment of this Act.

    SEC. 860. EXPANDED USE OF TAX COURT PRACTICE FEE FOR PRO SE TAXPAYERS.

        (a) In General.--Section 7475(b) of the Internal Revenue Code of
    1986 (relating to use of fees) is amended by inserting before the
    period at the end ``and to provide services to pro se taxpayers''.
        (b) Effective Date.--The amendment made by this section shall take
    effect on the date of the enactment of this Act.

                          Subtitle F--Other Provisions

    SEC. 861. EXTENSION TO ALL GOVERNMENTAL PLANS OF CURRENT MORATORIUM ON
                  APPLICATION OF CERTAIN NONDISCRIMINATION RULES APPLICABLE
                  TO STATE AND LOCAL PLANS.

        (a) In General.--
                (1) Subparagraph (G) of section 401(a)(5) and subparagraph
            (G) of section 401(a)(26) of the Internal Revenue Code of 1986
            are each amended by striking ``section 414(d))'' and all that
            follows and inserting ``section 414(d)).''.
                (2) Subparagraph (G) of section 401(k)(3) of such Code and
            paragraph (2) of section 1505(d) of the Taxpayer Relief Act of
            1997 (Public Law 105-34; 111 Stat. 1063) are each amended by
            striking ``maintained by a State or local government or
            political subdivision thereof (or agency or instrumentality
            thereof)''.
        (b) Conforming Amendments.--
                (1) The heading of subparagraph (G) of section 401(a)(5) of
            the Internal Revenue Code of 1986 is amended by striking
            ``State and local governmental'' and inserting
            ``Governmental''.
                (2) The heading of subparagraph (G) of section 401(a)(26)
            of such Code is amended by striking ``Exception for state and
            local'' and inserting ``Exception for''.
                (3) Section 401(k)(3)(G) of such Code is amended by
            inserting ``Governmental plan.--'' after ``(G)''.
        (c) Effective Date.--The amendments made by this section shall
    apply to any year beginning after the date of the enactment of this
    Act.

    SEC. 862. ELIMINATION OF AGGREGATE LIMIT FOR USAGE OF EXCESS FUNDS FROM
                  BLACK LUNG DISABILITY TRUSTS.

        (a) In General.--So much of section 501(c)(21)(C) of the Internal
    Revenue Code of 1986 (relating to black lung disability trusts) as
    precedes the last sentence is amended to read as follows:
                        ``(C) Payments described in subparagraph (A)(i)(IV)
                    may be made from such trust during a taxable year only
                    to the extent that the aggregate amount of such
                    payments during such taxable year does not exceed the
                    excess (if any), as of the close of the preceding
                    taxable year, of--
                                ``(i) the fair market value of the assets
                            of the trust, over
                                ``(ii) 110 percent of the present value of
                            the liability described in subparagraph
                            (A)(i)(I) of such person.''.
        (b) Effective Date.--The amendments made by this section shall
    apply to taxable years beginning after December 31, 2006.

    SEC. 863. TREATMENT OF DEATH BENEFITS FROM CORPORATE-OWNED LIFE
                  INSURANCE.

        (a) In General.--Section 101 of the Internal Revenue Code of 1986
    (relating to certain death benefits) is amended by adding at the end
    the following new subsection:
        ``(j) Treatment of Certain Employer-Owned Life Insurance
    Contracts.--
                ``(1) General rule.--In the case of an employer-owned life
            insurance contract, the amount excluded from gross income of an
            applicable policyholder by reason of paragraph (1) of
            subsection (a) shall not exceed an amount equal to the sum of
            the premiums and other amounts paid by the policyholder for the
            contract.
                ``(2) Exceptions.--In the case of an employer-owned life
            insurance contract with respect to which the notice and consent
            requirements of paragraph (4) are met, paragraph (1) shall not
            apply to any of the following:
                        ``(A) Exceptions based on insured's status.--Any
                    amount received by reason of the death of an insured
                    who, with respect to an applicable policyholder--
                                ``(i) was an employee at any time during
                            the 12-month period before the insured's death,
                            or
                                ``(ii) is, at the time the contract is
                            issued--
                                        ``(I) a director,
                                        ``(II) a highly compensated
                                    employee within the meaning of section
                                    414(q) (without regard to paragraph
                                    (1)(B)(ii) thereof), or
                                        ``(III) a highly compensated
                                    individual within the meaning of
                                    section 105(h)(5), except that `35
                                    percent' shall be substituted for `25
                                    percent' in subparagraph (C) thereof.
                        ``(B) Exception for amounts paid to insured's
                    heirs.--Any amount received by reason of the death of
                    an insured to the extent--
                                ``(i) the amount is paid to a member of the
                            family (within the meaning of section
                            267(c)(4)) of the insured, any individual who
                            is the designated beneficiary of the insured
                            under the contract (other than the applicable
                            policyholder), a trust established for the
                            benefit of any such member of the family or
                            designated beneficiary, or the estate of the
                            insured, or
                                ``(ii) the amount is used to purchase an
                            equity (or capital or profits) interest in the
                            applicable policyholder from any person
                            described in clause (i).
                ``(3) Employer-owned life insurance contract.--
                        ``(A) In general.--For purposes of this subsection,
                    the term `employer-owned life insurance contract' means
                    a life insurance contract which--
                                ``(i) is owned by a person engaged in a
                            trade or business and under which such person
                            (or a related person described in subparagraph
                            (B)(ii)) is directly or indirectly a
                            beneficiary under the contract, and
                                ``(ii) covers the life of an insured who is
                            an employee with respect to the trade or
                            business of the applicable policyholder on the
                            date the contract is issued.
                    For purposes of the preceding sentence, if coverage for
                    each insured under a master contract is treated as a
                    separate contract for purposes of sections 817(h),
                    7702, and 7702A, coverage for each such insured shall
                    be treated as a separate contract.
                        ``(B) Applicable policyholder.--For purposes of
                    this subsection--
                                ``(i) In general.--The term `applicable
                            policyholder' means, with respect to any
                            employer-owned life insurance contract, the
                            person described in subparagraph (A)(i) which
                            owns the contract.
                                ``(ii) Related persons.--The term
                            `applicable policyholder' includes any person
                            which--
                                        ``(I) bears a relationship to the
                                    person described in clause (i) which is
                                    specified in section 267(b) or
                                    707(b)(1), or
                                        ``(II) is engaged in trades or
                                    businesses with such person which are
                                    under common control (within the
                                    meaning of subsection (a) or (b) of
                                    section 52).
                ``(4) Notice and consent requirements.--The notice and
            consent requirements of this paragraph are met if, before the
            issuance of the contract, the employee--
                        ``(A) is notified in writing that the applicable
                    policyholder intends to insure the employee's life and
                    the maximum face amount for which the employee could be
                    insured at the time the contract was issued,
                        ``(B) provides written consent to being insured
                    under the contract and that such coverage may continue
                    after the insured terminates employment, and
                        ``(C) is informed in writing that an applicable
                    policyholder will be a beneficiary of any proceeds
                    payable upon the death of the employee.
                ``(5) Definitions.--For purposes of this subsection--
                        ``(A) Employee.--The term `employee' includes an
                    officer, director, and highly compensated employee
                    (within the meaning of section 414(q)).
                        ``(B) Insured.--The term `insured' means, with
                    respect to an employer-owned life insurance contract,
                    an individual covered by the contract who is a United
                    States citizen or resident. In the case of a contract
                    covering the joint lives of 2 individuals, references
                    to an insured include both of the individuals.''.
        (b) Reporting Requirements.--Subpart A of part III of subchapter A
    of chapter 61 of the Internal Revenue Code of 1986 (relating to
    information concerning persons subject to special provisions) is
    amended by inserting after section 6039H the following new section:

    ``SEC. 6039I. RETURNS AND RECORDS WITH RESPECT TO EMPLOYER-OWNED LIFE
                  INSURANCE CONTRACTS.

        ``(a) In General.--Every applicable policyholder owning 1 or more
    employer-owned life insurance contracts issued after the date of the
    enactment of this section shall file a return (at such time and in such
    manner as the Secretary shall by regulations prescribe) showing for
    each year such contracts are owned--
                ``(1) the number of employees of the applicable
            policyholder at the end of the year,
                ``(2) the number of such employees insured under such
            contracts at the end of the year,
                ``(3) the total amount of insurance in force at the end of
            the year under such contracts,
                ``(4) the name, address, and taxpayer identification number
            of the applicable policyholder and the type of business in
            which the policyholder is engaged, and
                ``(5) that the applicable policyholder has a valid consent
            for each insured employee (or, if all such consents are not
            obtained, the number of insured employees for whom such consent
            was not obtained).
        ``(b) Recordkeeping Requirement.--Each applicable policyholder
    owning 1 or more employer-owned life insurance contracts during any
    year shall keep such records as may be necessary for purposes of
    determining whether the requirements of this section and section 101(j)
    are met.
        ``(c) Definitions.--Any term used in this section which is used in
    section 101(j) shall have the same meaning given such term by section
    101(j).''.
        (c) Conforming Amendments.--
                (1) Paragraph (1) of section 101(a) of the Internal Revenue
            Code of 1986 is amended by striking ``and subsection (f)'' and
            inserting ``subsection (f), and subsection (j)''.
                (2) The table of sections for subpart A of part III of
            subchapter A of chapter 61 of such Code is amended by inserting
            after the item relating to section 6039H the following new
            item:

    ``Sec. 6039I. Returns and records with respect to employer-owned life
                                insurance contracts.''.
        (d) Effective Date.--The amendments made by this section shall
    apply to life insurance contracts issued after the date of the
    enactment of this Act, except for a contract issued after such date
    pursuant to an exchange described in section 1035 of the Internal
    Revenue Code of 1986 for a contract issued on or prior to that date.
    For purposes of the preceding sentence, any material increase in the
    death benefit or other material change shall cause the contract to be
    treated as a new contract except that, in the case of a master contract
    (within the meaning of section 264(f)(4)(E) of such Code), the addition
    of covered lives shall be treated as a new contract only with respect
    to such additional covered lives.

    SEC. 864. TREATMENT OF TEST ROOM SUPERVISORS AND PROCTORS WHO ASSIST IN
                  THE ADMINISTRATION OF COLLEGE ENTRANCE AND PLACEMENT
                  EXAMS.

        (a) In General.--Section 530 of the Revenue Reconciliation Act of
    1978 is amended by adding at the end the following new subsection:
        ``(f) Treatment of Test Room Supervisors and Proctors Who Assist in
    the Administration of College Entrance and Placement Exams.--
                ``(1) In general.--In the case of an individual described
            in paragraph (2) who is providing services as a test proctor or
            room supervisor by assisting in the administration of college
            entrance or placement examinations, this section shall be
            applied to such services performed after December 31, 2006 (and
            remuneration paid for such services) without regard to
            subsection (a)(3) thereof.
                ``(2) Applicability.--An individual is described in this
            paragraph if the individual--
                        ``(A) is providing the services described in
                    subsection (a) to an organization described in section
                    501(c), and exempt from tax under section 501(a), of
                    the Internal Revenue Code of 1986, and
                        ``(B) is not otherwise treated as an employee of
                    such organization for purposes of subtitle C of such
                    Code (relating to employment taxes).''.
        (b) Effective Date.--The amendment made by this section shall apply
    to remuneration for services performed after December 31, 2006.

    SEC. 865. GRANDFATHER RULE FOR CHURCH PLANS WHICH SELF-ANNUITIZE.

        (a) In General.--In the case of any plan year ending after the date
    of the enactment of this Act, annuity payments provided with respect to
    any account maintained for a participant or beneficiary under a
    qualified church plan shall not fail to satisfy the requirements of
    section 401(a)(9) of the Internal Revenue Code of 1986 merely because
    the payments are not made under an annuity contract purchased from an
    insurance company if such payments would not fail such requirements if
    provided with respect to a retirement income account described in
    section 403(b)(9) of such Code.
        (b) Qualified Church Plan.--For purposes of this section, the term
    ``qualified church plan'' means any money purchase pension plan
    described in section 401(a) of such Code which--
                (1) is a church plan (as defined in section 414(e) of such
            Code) with respect to which the election provided by section
            410(d) of such Code has not been made, and
                (2) was in existence on April 17, 2002.

    SEC. 866. EXEMPTION FOR INCOME FROM LEVERAGED REAL ESTATE HELD BY
                  CHURCH PLANS.

        (a) In General.--Section 514(c)(9)(C) of the Internal Revenue Code
    of 1986 is amended by striking ``or'' after clause (ii), by striking
    the period at the end of clause (iii) and inserting ``; or'', and by
    inserting after clause (iii) the following:
                                ``(iv) a retirement income account
                            described in section 403(b)(9).''.
        (b) Effective Date.--The amendment made by subsection (a) shall
    apply to taxable years beginning on or after the date of enactment of
    this Act.

    SEC. 867. CHURCH PLAN RULE.

        (a) In General.--Paragraph (11) of section 415(b) of the Internal
    Revenue Code of 1986 is amended by adding at the end the following:
    ``Subparagraph (B) of paragraph (1) shall not apply to a plan
    maintained by an organization described in section 3121(w)(3)(A) except
    with respect to highly compensated benefits. For purposes of this
    paragraph, the term `highly compensated benefits' means any benefits
    accrued for an employee in any year on or after the first year in which
    such employee is a highly compensated employee (as defined in section
    414(q)) of the organization described in section 3121(w)(3)(A). For
    purposes of applying paragraph (1)(B) to highly compensated benefits,
    all benefits of the employee otherwise taken into account (without
    regard to this paragraph) shall be taken into account.''.
        (b) Effective Date.--The amendment made by this section shall apply
    to years beginning after December 31, 2006.

    SEC. 868. GRATUITOUS TRANSFER FOR BENEFITS OF EMPLOYEES.

        (a) In General.--Subparagraph (E) of section 664(g)(3) of the
    Internal Revenue Code of 1986 is amended by inserting ``(determined on
    the basis of fair market value of securities when allocated to
    participants)'' after ``paragraph (7)''.
        (b) Effective Date.--The amendment made by this section shall take
    effect on the date of the enactment of this Act.

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

    SEC. 901. DEFINED CONTRIBUTION PLANS REQUIRED TO PROVIDE EMPLOYEES WITH
                  FREEDOM TO INVEST THEIR PLAN ASSETS.

        (a) Amendments of Internal Revenue Code.--
                (1) Qualification requirement.--Section 401(a) of the
            Internal Revenue Code of 1986 (relating to qualified pension,
            profit-sharing, and stock bonus plans) is amended by inserting
            after paragraph (34) the following new paragraph:
                ``(35) Diversification requirements for certain defined
            contribution plans.--
                        ``(A) In general.--A trust which is part of an
                    applicable defined contribution plan shall not be
                    treated as a qualified trust unless the plan meets the
                    diversification requirements of subparagraphs (B), (C),
                    and (D).
                        ``(B) Employee contributions and elective deferrals
                    invested in employer securities.--In the case of the
                    portion of an applicable individual's account
                    attributable to employee contributions and elective
                    deferrals which is invested in employer securities, a
                    plan meets the requirements of this subparagraph if the
                    applicable individual may elect to direct the plan to
                    divest any such securities and to reinvest an
                    equivalent amount in other investment options meeting
                    the requirements of subparagraph (D).
                        ``(C) Employer contributions invested in employer
                    securities.--In the case of the portion of the account
                    attributable to employer contributions other than
                    elective deferrals which is invested in employer
                    securities, a plan meets the requirements of this
                    subparagraph if each applicable individual who--
                                ``(i) is a participant who has completed at
                            least 3 years of service, or
                                ``(ii) is a beneficiary of a participant
                            described in clause (i) or of a deceased
                            participant,
                    may elect to direct the plan to divest any such
                    securities and to reinvest an equivalent amount in
                    other investment options meeting the requirements of
                    subparagraph (D).
                        ``(D) Investment options.--
                                ``(i) In general.--The requirements of this
                            subparagraph are met if the plan offers not
                            less than 3 investment options, other than
                            employer securities, to which an applicable
                            individual may direct the proceeds from the
                            divestment of employer securities pursuant to
                            this paragraph, each of which is diversified
                            and has materially different risk and return
                            characteristics.
                                ``(ii) Treatment of certain restrictions
                            and conditions.--
                                        ``(I) Time for making investment
                                    choices.--A plan shall not be treated
                                    as failing to meet the requirements of
                                    this subparagraph merely because the
                                    plan limits the time for divestment and
                                    reinvestment to periodic, reasonable
                                    opportunities occurring no less
                                    frequently than quarterly.
                                        ``(II) Certain restrictions and
                                    conditions not allowed.--Except as
                                    provided in regulations, a plan shall
                                    not meet the requirements of this
                                    subparagraph if the plan imposes
                                    restrictions or conditions with respect
                                    to the investment of employer
                                    securities which are not imposed on the
                                    investment of other assets of the plan.
                                    This subclause shall not apply to any
                                    restrictions or conditions imposed by
                                    reason of the application of securities
                                    laws.
                        ``(E) Applicable defined contribution plan.--For
                    purposes of this paragraph--
                                ``(i) In general.--The term `applicable
                            defined contribution plan' means any defined
                            contribution plan which holds any publicly
                            traded employer securities.
                                ``(ii) Exception for certain esops.--Such
                            term does not include an employee stock
                            ownership plan if--
                                        ``(I) there are no contributions to
                                    such plan (or earnings thereunder)
                                    which are held within such plan and are
                                    subject to subsection (k) or (m), and
                                        ``(II) such plan is a separate plan
                                    for purposes of section 414(l) with
                                    respect to any other defined benefit
                                    plan or defined contribution plan
                                    maintained by the same employer or
                                    employers.
                                ``(iii) Exception for one participant
                            plans.--Such term does not include a one-
                            participant retirement plan.
                                ``(iv) One-participant retirement plan.--
                            For purposes of clause (iii), the term `one-
                            participant retirement plan' means a retirement
                            plan that--
                                        ``(I) on the first day of the plan
                                    year covered only one individual (or
                                    the individual and the individual's
                                    spouse) and the individual owned 100
                                    percent of the plan sponsor (whether or
                                    not incorporated), or covered only one
                                    or more partners (or partners and their
                                    spouses) in the plan sponsor,
                                        ``(II) meets the minimum coverage
                                    requirements of section 410(b) without
                                    being combined with any other plan of
                                    the business that covers the employees
                                    of the business,
                                        ``(III) does not provide benefits
                                    to anyone except the individual (and
                                    the individual's spouse) or the
                                    partners (and their spouses),
                                        ``(IV) does not cover a business
                                    that is a member of an affiliated
                                    service group, a controlled group of
                                    corporations, or a group of businesses
                                    under common control, and
                                        ``(V) does not cover a business
                                    that uses the services of leased
                                    employees (within the meaning of
                                    section 414(n)).
                            For purposes of this clause, the term `partner'
                            includes a 2-percent shareholder (as defined in
                            section 1372(b)) of an S corporation.
                        ``(F) Certain plans treated as holding publicly
                    traded employer securities.--
                                ``(i) In general.--Except as provided in
                            regulations or in clause (ii), a plan holding
                            employer securities which are not publicly
                            traded employer securities shall be treated as
                            holding publicly traded employer securities if
                            any employer corporation, or any member of a
                            controlled group of corporations which includes
                            such employer corporation, has issued a class
                            of stock which is a publicly traded employer
                            security.
                                ``(ii) Exception for certain controlled
                            groups with publicly traded securities.--Clause
                            (i) shall not apply to a plan if--
                                        ``(I) no employer corporation, or
                                    parent corporation of an employer
                                    corporation, has issued any publicly
                                    traded employer security, and
                                        ``(II) no employer corporation, or
                                    parent corporation of an employer
                                    corporation, has issued any special
                                    class of stock which grants particular
                                    rights to, or bears particular risks
                                    for, the holder or issuer with respect
                                    to any corporation described in clause
                                    (i) which has issued any publicly
                                    traded employer security.
                                ``(iii) Definitions.--For purposes of this
                            subparagraph, the term--
                                        ``(I) `controlled group of
                                    corporations' has the meaning given
                                    such term by section 1563(a), except
                                    that `50 percent' shall be substituted
                                    for `80 percent' each place it appears,
                                        ``(II) `employer corporation' means
                                    a corporation which is an employer
                                    maintaining the plan, and
                                        ``(III) `parent corporation' has
                                    the meaning given such term by section
                                    424(e).
                        ``(G) Other definitions.--For purposes of this
                    paragraph--
                                ``(i) Applicable individual.--The term
                            `applicable individual' means--
                                        ``(I) any participant in the plan,
                                    and
                                        ``(II) any beneficiary who has an
                                    account under the plan with respect to
                                    which the beneficiary is entitled to
                                    exercise the rights of a participant.
                                ``(ii) Elective deferral.--The term
                            `elective deferral' means an employer
                            contribution described in section 402(g)(3)(A).
                                ``(iii) Employer security.--The term
                            `employer security' has the meaning given such
                            term by section 407(d)(1) of the Employee
                            Retirement Income Security Act of 1974.
                                ``(iv) Employee stock ownership plan.--The
                            term `employee stock ownership plan' has the
                            meaning given such term by section 4975(e)(7).
                                ``(v) Publicly traded employer
                            securities.--The term `publicly traded employer
                            securities' means employer securities which are
                            readily tradable on an established securities
                            market.
                                ``(vi) Year of service.--The term `year of
                            service' has the meaning given such term by
                            section 411(a)(5).
                        ``(H) Transition rule for securities attributable
                    to employer contributions.--
                                ``(i) Rules phased in over 3 years.--
                                        ``(I) In general.--In the case of
                                    the portion of an account to which
                                    subparagraph (C) applies and which
                                    consists of employer securities
                                    acquired in a plan year beginning
                                    before January 1, 2007, subparagraph
                                    (C) shall only apply to the applicable
                                    percentage of such securities. This
                                    subparagraph shall be applied
                                    separately with respect to each class
                                    of securities.
                                        ``(II) Exception for certain
                                    participants aged 55 or over.--
                                    Subclause (I) shall not apply to an
                                    applicable individual who is a
                                    participant who has attained age 55 and
                                    completed at least 3 years of service
                                    before the first plan year beginning
                                    after December 31, 2005.
                                ``(ii) Applicable percentage.--For purposes
                            of clause (i), the applicable percentage shall
                            be determined as follows:
    ``Plan year to which                                     The applicable
       subparagraph (C) applies:                             percentage is:
            1st....................................................     33
            2d.....................................................     66
            3d and following....................................... 100.''.
                (2) Conforming amendments.--
                        (A) Section 401(a)(28)(B) of such Code (relating to
                    additional requirements relating to employee stock
                    ownership plans) is amended by adding at the end the
                    following new clause:
                                ``(v) Exception.--This subparagraph shall
                            not apply to an applicable defined contribution
                            plan (as defined in paragraph (35)(E)).''
                        (B) Section 409(h)(7) of such Code is amended by
                    inserting ``or subparagraph (B) or (C) of section
                    401(a)(35)'' before the period at the end.
                        (C) Section 4980(c)(3)(A) of such Code is amended
                    by striking ``if--'' and all that follows and inserting
                    ``if the requirements of subparagraphs (B), (C), and
                    (D) are met.''
        (b) Amendments of ERISA.--
                (1) In general.--Section 204 of the Employee Retirement
            Income Security Act of 1974 (29 U.S.C. 1054) is amended by
            redesignating subsection (j) as subsection (k) and by inserting
            after subsection (i) the following new subsection:
        ``(j) Diversification Requirements for Certain Individual Account
    Plans.--
                ``(1) In general.--An applicable individual account plan
            shall meet the diversification requirements of paragraphs (2),
            (3), and (4).
                ``(2) Employee contributions and elective deferrals
            invested in employer securities.--In the case of the portion of
            an applicable individual's account attributable to employee
            contributions and elective deferrals which is invested in
            employer securities, a plan meets the requirements of this
            paragraph if the applicable individual may elect to direct the
            plan to divest any such securities and to reinvest an
            equivalent amount in other investment options meeting the
            requirements of paragraph (4).
                ``(3) Employer contributions invested in employer
            securities.--In the case of the portion of the account
            attributable to employer contributions other than elective
            deferrals which is invested in employer securities, a plan
            meets the requirements of this paragraph if each applicable
            individual who--
                        ``(A) is a participant who has completed at least 3
                    years of service, or
                        ``(B) is a beneficiary of a participant described
                    in subparagraph (A) or of a deceased participant,
            may elect to direct the plan to divest any such securities and
            to reinvest an equivalent amount in other investment options
            meeting the requirements of paragraph (4).
                ``(4) Investment options.--
                        ``(A) In general.--The requirements of this
                    paragraph are met if the plan offers not less than 3
                    investment options, other than employer securities, to
                    which an applicable individual may direct the proceeds
                    from the divestment of employer securities pursuant to
                    this subsection, each of which is diversified and has
                    materially different risk and return characteristics.
                        ``(B) Treatment of certain restrictions and
                    conditions.--
                                ``(i) Time for making investment choices.--
                            A plan shall not be treated as failing to meet
                            the requirements of this paragraph merely
                            because the plan limits the time for divestment
                            and reinvestment to periodic, reasonable
                            opportunities occurring no less frequently than
                            quarterly.
                                ``(ii) Certain restrictions and conditions
                            not allowed.--Except as provided in
                            regulations, a plan shall not meet the
                            requirements of this paragraph if the plan
                            imposes restrictions or conditions with respect
                            to the investment of employer securities which
                            are not imposed on the investment of other
                            assets of the plan. This subparagraph shall not
                            apply to any restrictions or conditions imposed
                            by reason of the application of securities
                            laws.
                ``(5) Applicable individual account plan.--For purposes of
            this subsection--
                        ``(A) In general.--The term `applicable individual
                    account plan' means any individual account plan (as
                    defined in section 3(34)) which holds any publicly
                    traded employer securities.
                        ``(B) Exception for certain esops.--Such term does
                    not include an employee stock ownership plan if--
                                ``(i) there are no contributions to such
                            plan (or earnings thereunder) which are held
                            within such plan and are subject to subsection
                            (k) or (m) of section 401 of the Internal
                            Revenue Code of 1986, and
                                ``(ii) such plan is a separate plan (for
                            purposes of section 414(l) of such Code) with
                            respect to any other defined benefit plan or
                            individual account plan maintained by the same
                            employer or employers.
                        ``(C) Exception for one participant plans.--Such
                    term shall not include a one-participant retirement
                    plan (as defined in section 101(i)(8)(B)).
                        ``(D) Certain plans treated as holding publicly
                    traded employer securities.--
                                ``(i) In general.--Except as provided in
                            regulations or in clause (ii), a plan holding
                            employer securities which are not publicly
                            traded employer securities shall be treated as
                            holding publicly traded employer securities if
                            any employer corporation, or any member of a
                            controlled group of corporations which includes
                            such employer corporation, has issued a class
                            of stock which is a publicly traded employer
                            security.
                                ``(ii) Exception for certain controlled
                            groups with publicly traded securities.--Clause
                            (i) shall not apply to a plan if--
                                        ``(I) no employer corporation, or
                                    parent corporation of an employer
                                    corporation, has issued any publicly
                                    traded employer security, and
                                        ``(II) no employer corporation, or
                                    parent corporation of an employer
                                    corporation, has issued any special
                                    class of stock which grants particular
                                    rights to, or bears particular risks
                                    for, the holder or issuer with respect
                                    to any corporation described in clause
                                    (i) which has issued any publicly
                                    traded employer security.
                                ``(iii) Definitions.--For purposes of this
                            subparagraph, the term--
                                        ``(I) `controlled group of
                                    corporations' has the meaning given
                                    such term by section 1563(a) of the
                                    Internal Revenue Code of 1986, except
                                    that `50 percent' shall be substituted
                                    for `80 percent' each place it appears,
                                        ``(II) `employer corporation' means
                                    a corporation which is an employer
                                    maintaining the plan, and
                                        ``(III) `parent corporation' has
                                    the meaning given such term by section
                                    424(e) of such Code.
                ``(6) Other definitions.--For purposes of this paragraph--
                        ``(A) Applicable individual.--The term `applicable
                    individual' means--
                                ``(i) any participant in the plan, and
                                ``(ii) any beneficiary who has an account
                            under the plan with respect to which the
                            beneficiary is entitled to exercise the rights
                            of a participant.
                        ``(B) Elective deferral.--The term `elective
                    deferral' means an employer contribution described in
                    section 402(g)(3)(A) of the Internal Revenue Code of
                    1986.
                        ``(C) Employer security.--The term `employer
                    security' has the meaning given such term by section
                    407(d)(1).
                        ``(D) Employee stock ownership plan.--The term
                    `employee stock ownership plan' has the meaning given
                    such term by section 4975(e)(7) of such Code.
                        ``(E) Publicly traded employer securities.--The
                    term `publicly traded employer securities' means
                    employer securities which are readily tradable on an
                    established securities market.
                        ``(F) Year of service.--The term `year of service'
                    has the meaning given such term by section 203(b)(2).
                ``(7) Transition rule for securities attributable to
            employer contributions.--
                        ``(A) Rules phased in over 3 years.--
                                ``(i) In general.--In the case of the
                            portion of an account to which paragraph (3)
                            applies and which consists of employer
                            securities acquired in a plan year beginning
                            before January 1, 2007, paragraph (3) shall
                            only apply to the applicable percentage of such
                            securities. This subparagraph shall be applied
                            separately with respect to each class of
                            securities.
                                ``(ii) Exception for certain participants
                            aged 55 or over.--Clause (i) shall not apply to
                            an applicable individual who is a participant
                            who has attained age 55 and completed at least
                            3 years of service before the first plan year
                            beginning after December 31, 2005.
                        ``(B) Applicable percentage.--For purposes of
                    subparagraph (A), the applicable percentage shall be
                    determined as follows:
    ``Plan year to which                                     The applicable
       paragraph (3) applies:                                percentage is:
            1st....................................................     33
            2d.....................................................     66
            3d..................................................... 100.''.
                (2) Conforming amendment.--Section 407(b)(3) of such Act
            (29 U.S.C. 1107(b)(3)) is amended by adding at the end the
            following:
                ``(D) For diversification requirements for qualifying
            employer securities held in certain individual account plans,
            see section 204(j).''.
        (c) Effective Dates.--
                (1) In general.--Except as provided in paragraphs (2) and
            (3), the amendments made by this section shall apply to plan
            years beginning after December 31, 2006.
                (2) Special rule for collectively bargained agreements.--In
            the case of a plan maintained pursuant to 1 or more collective
            bargaining agreements between employee representatives and 1 or
            more employers ratified on or before the date of the enactment
            of this Act, paragraph (1) shall be applied to benefits
            pursuant to, and individuals covered by, any such agreement by
            substituting for ``December 31, 2006'' the earlier of--
                        (A) the later of--
                                (i) December 31, 2007, or
                                (ii) the date on which the last of such
                            collective bargaining agreements terminates
                            (determined without regard to any extension
                            thereof after such date of enactment), or
                        (B) December 31, 2008.
                (3) Special rule for certain employer securities held in an
            esop.--
                        (A) In general.--In the case of employer securities
                    to which this paragraph applies, the amendments made by
                    this section shall apply to plan years beginning after
                    the earlier of--
                                (i) December 31, 2007, or
                                (ii) the first date on which the fair
                            market value of such securities exceeds the
                            guaranteed minimum value described in
                            subparagraph (B)(ii).
                        (B) Applicable securities.--This paragraph shall
                    apply to employer securities which are attributable to
                    employer contributions other than elective deferrals,
                    and which, on September 17, 2003--
                                (i) consist of preferred stock, and
                                (ii) are within an employee stock ownership
                            plan (as defined in section 4975(e)(7) of the
                            Internal Revenue Code of 1986), the terms of
                            which provide that the value of the securities
                            cannot be less than the guaranteed minimum
                            value specified by the plan on such date.
                        (C) Coordination with transition rule.--In applying
                    section 401(a)(35)(H) of the Internal Revenue Code of
                    1986 and section 204(j)(7) of the Employee Retirement
                    Income Security Act of 1974 (as added by this section)
                    to employer securities to which this paragraph applies,
                    the applicable percentage shall be determined without
                    regard to this paragraph.

    SEC. 902. 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 (E).
                        ``(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) may be
                            applied without taking into account any
                            employee who--
                                        ``(I) 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), and
                                        ``(II) had an election in effect on
                                    such date either to participate in the
                                    arrangement or to not participate in
                                    the arrangement.
                        ``(D) 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 the sum of 100 percent
                                    of the elective contributions of the
                                    employee to the extent that such
                                    contributions do not exceed 1 percent
                                    of compensation plus 50 percent of so
                                    much of such compensation as exceeds 1
                                    percent but does 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 3 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).
                        ``(E) 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) Treatment of Withdrawals of Contributions During First 90
    Days.--
                (1) In general.--Section 414 of the Internal Revenue Code
            of 1986 is amended by adding at the end the following new
            subsection:
        ``(w) Special Rules for Certain Withdrawals From Eligible Automatic
    Contribution Arrangements.--
                ``(1) In general.--If an eligible automatic contribution
            arrangement allows an employee to elect to make permissible
            withdrawals--
                        ``(A) the amount of any such withdrawal shall be
                    includible in the gross income of the employee for the
                    taxable year of the employee in which the distribution
                    is made,
                        ``(B) no tax shall be imposed under section 72(t)
                    with respect to the distribution, and
                        ``(C) the arrangement shall not be treated as
                    violating any restriction on distributions under this
                    title solely by reason of allowing the withdrawal.
            In the case of any distribution to an employee by reason of an
            election under this paragraph, employer matching contributions
            shall be forfeited or subject to such other treatment as the
            Secretary may prescribe.
                ``(2) Permissible withdrawal.--For purposes of this
            subsection--
                        ``(A) In general.--The term `permissible
                    withdrawal' means any withdrawal from an eligible
                    automatic contribution arrangement meeting the
                    requirements of this paragraph which--
                                ``(i) is made pursuant to an election by an
                            employee, and
                                ``(ii) consists of elective contributions
                            described in paragraph (3)(B) (and earnings
                            attributable thereto).
                        ``(B) Time for making election.--Subparagraph (A)
                    shall not apply to an election by an employee unless
                    the election is made no later than the date which is 90
                    days after the date of the first elective contribution
                    with respect to the employee under the arrangement.
                        ``(C) Amount of distribution.--Subparagraph (A)
                    shall not apply to any election by an employee unless
                    the amount of any distribution by reason of the
                    election is equal to the amount of elective
                    contributions made with respect to the first payroll
                    period to which the eligible automatic contribution
                    arrangement applies to the employee and any succeeding
                    payroll period beginning before the effective date of
                    the election (and earnings attributable thereto).
                ``(3) Eligible automatic contribution arrangement.--For
            purposes of this subsection, the term `eligible automatic
            contribution arrangement' means an arrangement under an
            applicable employer plan--
                        ``(A) under which a participant may elect to have
                    the employer make payments as contributions under the
                    plan on behalf of the participant, or to the
                    participant directly in cash,
                        ``(B) under which the participant is treated as
                    having elected to have the employer make such
                    contributions in an amount equal to a uniform
                    percentage of compensation provided under the plan
                    until the participant specifically elects not to have
                    such contributions made (or specifically elects to have
                    such contributions made at a different percentage),
                        ``(C) under which, in the absence of an investment
                    election by the participant, contributions described in
                    subparagraph (B) are invested in accordance with
                    regulations prescribed by the Secretary of Labor under
                    section 404(c)(5) of the Employee Retirement Income
                    Security Act of 1974, and
                        ``(D) which meets the requirements of paragraph
                    (4).
                ``(4) Notice requirements.--
                        ``(A) In general.--The administrator of a plan
                    containing an arrangement described in paragraph (3)
                    shall, within a reasonable period before each plan
                    year, give to each employee to whom an arrangement
                    described in paragraph (3) applies for such plan year
                    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.
                        ``(B) Time and form of notice.--A notice shall not
                    be treated as meeting the requirements of subparagraph
                    (A) with respect to an employee unless--
                                ``(i) the notice includes an explanation of
                            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) the employee has a reasonable period
                            of time after receipt of the notice described
                            in clause (i) and before the first elective
                            contribution is made to make such election, and
                                ``(iii) the notice explains how
                            contributions made under the arrangement will
                            be invested in the absence of any investment
                            election by the employee.
                ``(5) 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),
                        ``(B) a plan under which amounts are contributed by
                    an individual's employer for an annuity contract
                    described in section 403(b), and
                        ``(C) an eligible deferred compensation plan
                    described in section 457(b) which is maintained by an
                    eligible employer described in section 457(e)(1)(A).
                ``(6) Special rule.--A withdrawal described in paragraph
            (1) (subject to the limitation of paragraph (2)(C)) shall not
            be taken into account for purposes of section 401(k)(3).''.
                (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) Section 203(a)(3)(F) of the Employee Retirement
                    Income Security Act of 1974 (29 U.S.C. 1053(a)(3)(F))
                    is amended by inserting ``an erroneous automatic
                    contribution under section 414(w) of such Code,'' after
                    ``402(g)(2)(A) of such Code,''.
        (e) Excess Contributions.--
                (1) Expansion of corrective distribution period for
            automatic contribution arrangements.--Subsection (f) of section
            4979 of the Internal Revenue Code of 1986 is amended--
                        (A) by inserting ``(6 months in the case of an
                    excess contribution or excess aggregate contribution to
                    an eligible automatic contribution arrangement (as
                    defined in section 414(w)(3)))'' after ``2\1/2\
                    months'' in paragraph (1), and
                        (B) by striking ``2\1/2\ Months of'' in the heading
                    and inserting ``Specified Period After''.
                (2) Year of inclusion.--Paragraph (2) of section 4979(f) of
            such Code is amended to read as follows:
                ``(2) Year of inclusion.--Any amount distributed as
            provided in paragraph (1) shall be treated as earned and
            received by the recipient in the recipient's taxable year in
            which such distributions were made.''.
                (3) Simplification of allocable earnings.--
                        (A) Section 4979.--Paragraph (1) of section 4979(f)
                    of such Code is amended by adding ``through the end of
                    the plan year for which the contribution was made''
                    after ``thereto''.
                        (B) Section 401(k) and 401(m).--
                                (i) Clause (i) of section 401(k)(8)(A) of
                            such Code is amended by adding ``through the
                            end of such year'' after ``such
                            contributions''.
                                (ii) Subparagraph (A) of section 401(m)(6)
                            of such Code is amended by adding ``through the
                            end of such year'' after ``to such
                            contributions''.
        (f) Preemption of Conflicting State Regulation.--
                (1) In general.--Section 514 of the Employee Retirement
            Income Security Act of 1974 (29 U.S.C. 1144) is amended by
            adding at the end the following new subsection:
        ``(e)(1) Notwithstanding any other provision of this section, this
    title shall supersede any law of a State which would directly or
    indirectly prohibit or restrict the inclusion in any plan of an
    automatic contribution arrangement. The Secretary may prescribe
    regulations which would establish minimum standards that such an
    arrangement would be required to satisfy in order for this subsection
    to apply in the case of such arrangement.
        ``(2) For purposes of this subsection, the term `automatic
    contribution arrangement' means an arrangement----
                ``(A) under which a participant may elect to have the plan
            sponsor make payments as contributions under the plan on behalf
            of the participant, or to the participant directly in cash,
                ``(B) under which a participant is treated as having
            elected to have the plan sponsor make such contributions in an
            amount equal to a uniform percentage of compensation provided
            under the plan until the participant specifically elects not to
            have such contributions made (or specifically elects to have
            such contributions made at a different percentage), and
                ``(C) under which such contributions are invested in
            accordance with regulations prescribed by the Secretary under
            section 404(c)(5).
        ``(3)(A) The plan administrator of an automatic contribution
    arrangement shall, within a reasonable period before such plan year,
    provide to each participant to whom the arrangement applies for such
    plan year notice of the participant's rights and obligations under the
    arrangement which--
                ``(i) is sufficiently accurate and comprehensive to apprise
            the participant of such rights and obligations, and
                ``(ii) is written in a manner calculated to be understood
            by the average participant to whom the arrangement applies.
        ``(B) A notice shall not be treated as meeting the requirements of
    subparagraph (A) with respect to a participant unless--
                ``(i) the notice includes an explanation of the
            participant's right under the arrangement not to have elective
            contributions made on the participant's behalf (or to elect to
            have such contributions made at a different percentage),
                ``(ii) the participant has a reasonable period of time,
            after receipt of the notice described in clause (i) and before
            the first elective contribution is made, to make such election,
            and
                ``(iii) the notice explains how contributions made under
            the arrangement will be invested in the absence of any
            investment election by the participant.''.
                (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C.
            1132(c)(4)) is amended by striking ``or section
            302(b)(7)(F)(vi)'' inserting ``, section 302(b)(7)(F)(vi), or
            section 514(e)(3)''.
        (g) Effective Date.--The amendments made by this section shall
    apply to plan years beginning after December 31, 2007, except that the
    amendments made by subsection (f) shall take effect on the date of the
    enactment of this Act.

    SEC. 903. TREATMENT OF ELIGIBLE COMBINED DEFINED BENEFIT PLANS AND
                  QUALIFIED CASH OR DEFERRED ARRANGEMENTS.

        (a) Amendments of Internal Revenue Code.--Section 414 of the
    Internal Revenue Code of 1986, as amended by this Act, is amended by
    adding at the end the following new subsection:
        ``(x) Special Rules for Eligible Combined Defined Benefit Plans and
    Qualified Cash or Deferred Arrangements.--
                ``(1) General rule.--Except as provided in this subsection,
            the requirements of this title shall be applied to any defined
            benefit plan or applicable defined contribution plan which are
            part of an eligible combined plan in the same manner as if each
            such plan were not a part of the eligible combined plan.
                ``(2) Eligible combined plan.--For purposes of this
            subsection--
                        ``(A) In general.--The term `eligible combined
                    plan' means a plan--
                                ``(i) which is maintained by an employer
                            which, at the time the plan is established, is
                            a small employer,
                                ``(ii) which consists of a defined benefit
                            plan and an applicable defined contribution
                            plan,
                                ``(iii) the assets of which are held in a
                            single trust forming part of the plan and are
                            clearly identified and allocated to the defined
                            benefit plan and the applicable defined
                            contribution plan to the extent necessary for
                            the separate application of this title under
                            paragraph (1), and
                                ``(iv) with respect to which the benefit,
                            contribution, vesting, and nondiscrimination
                            requirements of subparagraphs (B), (C), (D),
                            (E), and (F) are met.
                    For purposes of this subparagraph, the term `small
                    employer' has the meaning given such term by section
                    4980D(d)(2), except that such section shall be applied
                    by substituting `500' for `50' each place it appears.
                        ``(B) Benefit requirements.--
                                ``(i) In general.--The benefit requirements
                            of this subparagraph are met with respect to
                            the defined benefit plan forming part of the
                            eligible combined plan if the accrued benefit
                            of each participant derived from employer
                            contributions, when expressed as an annual
                            retirement benefit, is not less than the
                            applicable percentage of the participant's
                            final average pay. For purposes of this clause,
                            final average pay shall be determined using the
                            period of consecutive years (not exceeding 5)
                            during which the participant had the greatest
                            aggregate compensation from the employer.
                                ``(ii) Applicable percentage.--For purposes
                            of clause (i), the applicable percentage is the
                            lesser of--
                                        ``(I) 1 percent multiplied by the
                                    number of years of service with the
                                    employer, or
                                        ``(II) 20 percent.
                                ``(iii) Special rule for applicable defined
                            benefit plans.--If the defined benefit plan
                            under clause (i) is an applicable defined
                            benefit plan as defined in section
                            411(a)(13)(B) which meets the interest credit
                            requirements of section 411(b)(5)(B)(i), the
                            plan shall be treated as meeting the
                            requirements of clause (i) with respect to any
                            plan year if each participant receives a pay
                            credit for the year which is not less than the
                            percentage of compensation determined in
                            accordance with the following table:
    ``If the participant's age as of
            the
       beginning of the year is--                       The percentage is--
            30 or less.............................................      2
            Over 30 but less than 40...............................      4
            40 or over but less than 50............................      6
            50 or over.............................................      8.
                                ``(iv) Years of service.--For purposes of
                            this subparagraph, years of service shall be
                            determined under the rules of paragraphs (4),
                            (5), and (6) of section 411(a), except that the
                            plan may not disregard any year of service
                            because of a participant making, or failing to
                            make, any elective deferral with respect to the
                            qualified cash or deferred arrangement to which
                            subparagraph (C) applies.
                        ``(C) Contribution requirements.--
                                ``(i) In general.--The contribution
                            requirements of this subparagraph with respect
                            to any applicable defined contribution plan
                            forming part of an eligible combined plan are
                            met if--
                                        ``(I) the qualified cash or
                                    deferred arrangement included in such
                                    plan constitutes an automatic
                                    contribution arrangement, and
                                        ``(II) the employer is required to
                                    make matching contributions on behalf
                                    of each employee eligible to
                                    participate in the arrangement in an
                                    amount equal to 50 percent of the
                                    elective contributions of the employee
                                    to the extent such elective
                                    contributions do not exceed 4 percent
                                    of compensation.
                            Rules similar to the rules of clauses (ii) and
                            (iii) of section 401(k)(12)(B) shall apply for
                            purposes of this clause.
                                ``(ii) Nonelective contributions.--An
                            applicable defined contribution plan shall not
                            be treated as failing to meet the requirements
                            of clause (i) because the employer makes
                            nonelective contributions under the plan but
                            such contributions shall not be taken into
                            account in determining whether the requirements
                            of clause (i)(II) are met.
                        ``(D) Vesting requirements.--The vesting
                    requirements of this subparagraph are met if--
                                ``(i) in the case of a defined benefit plan
                            forming part of an eligible combined plan an
                            employee who has completed at least 3 years of
                            service has a nonforfeitable right to 100
                            percent of the employee's accrued benefit under
                            the plan derived from employer contributions,
                            and
                                ``(ii) in the case of an applicable defined
                            contribution plan forming part of eligible
                            combined plan--
                                        ``(I) an employee has a
                                    nonforfeitable right to any matching
                                    contribution made under the qualified
                                    cash or deferred arrangement included
                                    in such plan by an employer with
                                    respect to any elective contribution,
                                    including matching contributions in
                                    excess of the contributions required
                                    under subparagraph (C)(i)(II), and
                                        ``(II) an employee who has
                                    completed at least 3 years of service
                                    has a nonforfeitable right to 100
                                    percent of the employee's accrued
                                    benefit derived under the arrangement
                                    from nonelective contributions of the
                                    employer.
                            For purposes of this subparagraph, the rules of
                            section 411 shall apply to the extent not
                            inconsistent with this subparagraph.
                        ``(E) Uniform provision of contributions and
                    benefits.--In the case of a defined benefit plan or
                    applicable defined contribution plan forming part of an
                    eligible combined plan, the requirements of this
                    subparagraph are met if all contributions and benefits
                    under each such plan, and all rights and features under
                    each such plan, must be provided uniformly to all
                    participants.
                        ``(F) Requirements must be met without taking into
                    account social security and similar contributions and
                    benefits or other plans.--
                                ``(i) In general.--The requirements of this
                            subparagraph are met if the requirements of
                            clauses (ii) and (iii) are met.
                                ``(ii) Social security and similar
                            contributions.--The requirements of this clause
                            are met if--
                                        ``(I) the requirements of
                                    subparagraphs (B) and (C) are met
                                    without regard to section 401(l), and
                                        ``(II) the requirements of sections
                                    401(a)(4) and 410(b) are met with
                                    respect to both the applicable defined
                                    contribution plan and defined benefit
                                    plan forming part of an eligible
                                    combined plan without regard to section
                                    401(l).
                                ``(iii) Other plans and arrangements.--The
                            requirements of this clause are met if the
                            applicable defined contribution plan and
                            defined benefit plan forming part of an
                            eligible combined plan meet the requirements of
                            sections 401(a)(4) and 410(b) without being
                            combined with any other plan.
                ``(3) Nondiscrimination requirements for qualified cash or
            deferred arrangement.--
                        ``(A) In general.--A qualified cash or deferred
                    arrangement which is included in an applicable defined
                    contribution plan forming part of an eligible combined
                    plan shall be treated as meeting the requirements of
                    section 401(k)(3)(A)(ii) if the requirements of
                    paragraph (2)(C) are met with respect to such
                    arrangement.
                        ``(B) Matching contributions.--In applying section
                    401(m)(11) to any matching contribution with respect to
                    a contribution to which paragraph (2)(C) applies, the
                    contribution requirement of paragraph (2)(C) and the
                    notice requirements of paragraph (5)(B) shall be
                    substituted for the requirements otherwise applicable
                    under clauses (i) and (ii) of section 401(m)(11)(A).
                ``(4) Satisfaction of top-heavy rules.--A defined benefit
            plan and applicable defined contribution plan forming part of
            an eligible combined plan for any plan year shall be treated as
            meeting the requirements of section 416 for the plan year.
                ``(5) Automatic contribution arrangement.--For purposes of
            this subsection--
                        ``(A) In general.--A qualified cash or deferred
                    arrangement shall be treated as an automatic
                    contribution arrangement if the arrangement--
                                ``(i) provides that 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 4
                            percent of the employee's compensation unless
                            the employee specifically elects not to have
                            such contributions made or to have such
                            contributions made at a different rate, and
                                ``(ii) meets the notice requirements under
                            subparagraph (B).
                        ``(B) Notice requirements.--
                                ``(i) In general.--The requirements of this
                            subparagraph are met if the requirements of
                            clauses (ii) and (iii) are met.
                                ``(ii) Reasonable period to make
                            election.--The requirements of this clause are
                            met if each employee to whom subparagraph
                            (A)(i) applies--
                                        ``(I) receives a notice explaining
                                    the employee's right under the
                                    arrangement to elect not to have
                                    elective contributions made on the
                                    employee's behalf or to have the
                                    contributions made at a different rate,
                                    and
                                        ``(II) has a reasonable period of
                                    time after receipt of such notice and
                                    before the first elective contribution
                                    is made to make such election.
                                ``(iii) Annual notice of rights and
                            obligations.--The requirements of this clause
                            are met if each employee eligible to
                            participate in the arrangement is, within a
                            reasonable period before any year, given notice
                            of the employee's rights and obligations under
                            the arrangement.
                    The requirements of clauses (i) and (ii) of section
                    401(k)(12)(D) shall be met with respect to the notices
                    described in clauses (ii) and (iii) of this
                    subparagraph.
                ``(6) Coordination with other requirements.--
                        ``(A) Treatment of separate plans.--Section 414(k)
                    shall not apply to an eligible combined plan.
                        ``(B) Reporting.--An eligible combined plan shall
                    be treated as a single plan for purposes of sections
                    6058 and 6059.
                ``(7) Applicable defined contribution plan.--For purposes
            of this subsection--
                        ``(A) In general.--The term `applicable defined
                    contribution plan' means a defined contribution plan
                    which includes a qualified cash or deferred
                    arrangement.
                        ``(B) Qualified cash or deferred arrangement.--The
                    term `qualified cash or deferred arrangement' has the
                    meaning given such term by section 401(k)(2).''.
        (b) Amendments to the Employee Retirement Income Security Act of
    1974.--
                (1) In general.--Section 210 of the Employee Retirement
            Income Security Act of 1974 is amended by adding at the end the
            following new subsection:
        ``(e) Special Rules for Eligible Combined Defined Benefit Plans and
    Qualified Cash or Deferred Arrangements.--
                ``(1) General rule.--Except as provided in this subsection,
            this Act shall be applied to any defined benefit plan or
            applicable individual account plan which are part of an
            eligible combined plan in the same manner as if each such plan
            were not a part of the eligible combined plan.
                ``(2) Eligible combined plan.--For purposes of this
            subsection--
                        ``(A) In general.--The term `eligible combined
                    plan' means a plan--
                                ``(i) which is maintained by an employer
                            which, at the time the plan is established, is
                            a small employer,
                                ``(ii) which consists of a defined benefit
                            plan and an applicable individual account plan
                            each of which qualifies under section 401(a) of
                            the Internal Revenue Code of 1986,
                                ``(iii) the assets of which are held in a
                            single trust forming part of the plan and are
                            clearly identified and allocated to the defined
                            benefit plan and the applicable individual
                            account plan to the extent necessary for the
                            separate application of this Act under
                            paragraph (1), and
                                ``(iv) with respect to which the benefit,
                            contribution, vesting, and nondiscrimination
                            requirements of subparagraphs (B), (C), (D),
                            (E), and (F) are met.
                    For purposes of this subparagraph, the term `small
                    employer' has the meaning given such term by section
                    4980D(d)(2) of the Internal Revenue Code of 1986,
                    except that such section shall be applied by
                    substituting `500' for `50' each place it appears.
                        ``(B) Benefit requirements.--
                                ``(i) In general.--The benefit requirements
                            of this subparagraph are met with respect to
                            the defined benefit plan forming part of the
                            eligible combined plan if the accrued benefit
                            of each participant derived from employer
                            contributions, when expressed as an annual
                            retirement benefit, is not less than the
                            applicable percentage of the participant's
                            final average pay. For purposes of this clause,
                            final average pay shall be determined using the
                            period of consecutive years (not exceeding 5)
                            during which the participant had the greatest
                            aggregate compensation from the employer.
                                ``(ii) Applicable percentage.--For purposes
                            of clause (i), the applicable percentage is the
                            lesser of--
                                        ``(I) 1 percent multiplied by the
                                    number of years of service with the
                                    employer, or
                                        ``(II) 20 percent.
                                ``(iii) Special rule for applicable defined
                            benefit plans.--If the defined benefit plan
                            under clause (i) is an applicable defined
                            benefit plan as defined in section 203(f)(3)(B)
                            which meets the interest credit requirements of
                            section 204(b)(5)(B)(i), the plan shall be
                            treated as meeting the requirements of clause
                            (i) with respect to any plan year if each
                            participant receives pay credit for the year
                            which is not less than the percentage of
                            compensation determined in accordance with the
                            following table:

    ``If the participant's age as of
            the
       beginning of the year is--                       The percentage is--
            30 or less.............................................      2
            Over 30 but less than 40...............................      4
            40 or over but less than 50............................      6
            50 or over.............................................      8.
                                ``(iv) Years of service.--For purposes of
                            this subparagraph, years of service shall be
                            determined under the rules of paragraphs (1),
                            (2), and (3) of section 203(b), except that the
                            plan may not disregard any year of service
                            because of a participant making, or failing to
                            make, any elective deferral with respect to the
                            qualified cash or deferred arrangement to which
                            subparagraph (C) applies.
                        ``(C) Contribution requirements.--
                                ``(i) In general.--The contribution
                            requirements of this subparagraph with respect
                            to any applicable individual account plan
                            forming part of an eligible combined plan are
                            met if--
                                        ``(I) the qualified cash or
                                    deferred arrangement included in such
                                    plan constitutes an automatic
                                    contribution arrangement, and
                                        ``(II) the employer is required to
                                    make matching contributions on behalf
                                    of each employee eligible to
                                    participate in the arrangement in an
                                    amount equal to 50 percent of the
                                    elective contributions of the employee
                                    to the extent such elective
                                    contributions do not exceed 4 percent
                                    of compensation.
                            Rules similar to the rules of clauses (ii) and
                            (iii) of section 401(k)(12)(B) of the Internal
                            Revenue Code of 1986 shall apply for purposes
                            of this clause.
                                ``(ii) Nonelective contributions.--An
                            applicable individual account plan shall not be
                            treated as failing to meet the requirements of
                            clause (i) because the employer makes
                            nonelective contributions under the plan but
                            such contributions shall not be taken into
                            account in determining whether the requirements
                            of clause (i)(II) are met.
                        ``(D) Vesting requirements.--The vesting
                    requirements of this subparagraph are met if--
                                ``(i) in the case of a defined benefit plan
                            forming part of an eligible combined plan an
                            employee who has completed at least 3 years of
                            service has a nonforfeitable right to 100
                            percent of the employee's accrued benefit under
                            the plan derived from employer contributions,
                            and
                                ``(ii) in the case of an applicable
                            individual account plan forming part of
                            eligible combined plan--
                                        ``(I) an employee has a
                                    nonforfeitable right to any matching
                                    contribution made under the qualified
                                    cash or deferred arrangement included
                                    in such plan by an employer with
                                    respect to any elective contribution,
                                    including matching contributions in
                                    excess of the contributions required
                                    under subparagraph (C)(i)(II), and
                                        ``(II) an employee who has
                                    completed at least 3 years of service
                                    has a nonforfeitable right to 100
                                    percent of the employee's accrued
                                    benefit derived under the arrangement
                                    from nonelective contributions of the
                                    employer.
                            For purposes of this subparagraph, the rules of
                            section 203 shall apply to the extent not
                            inconsistent with this subparagraph.
                        ``(E) Uniform provision of contributions and
                    benefits.--In the case of a defined benefit plan or
                    applicable individual account plan forming part of an
                    eligible combined plan, the requirements of this
                    subparagraph are met if all contributions and benefits
                    under each such plan, and all rights and features under
                    each such plan, must be provided uniformly to all
                    participants.
                        ``(F) Requirements must be met without taking into
                    account social security and similar contributions and
                    benefits or other plans.--
                                ``(i) In general.--The requirements of this
                            subparagraph are met if the requirements of
                            clauses (ii) and (iii) are met.
                                ``(ii) Social security and similar
                            contributions.--The requirements of this clause
                            are met if--
                                        ``(I) the requirements of
                                    subparagraphs (B) and (C) are met
                                    without regard to section 401(l) of the
                                    Internal Revenue Code of 1986, and
                                        ``(II) the requirements of sections
                                    401(a)(4) and 410(b) of the Internal
                                    Revenue Code of 1986 are met with
                                    respect to both the applicable defined
                                    contribution plan and defined benefit
                                    plan forming part of an eligible
                                    combined plan without regard to section
                                    401(l) of the Internal Revenue Code of
                                    1986.
                                ``(iii) Other plans and arrangements.--The
                            requirements of this clause are met if the
                            applicable defined contribution plan and
                            defined benefit plan forming part of an
                            eligible combined plan meet the requirements of
                            sections 401(a)(4) and 410(b) of the Internal
                            Revenue Code of 1986 without being combined
                            with any other plan.
                ``(3) Nondiscrimination requirements for qualified cash or
            deferred arrangement.--
                        ``(A) In general.--A qualified cash or deferred
                    arrangement which is included in an applicable
                    individual account plan forming part of an eligible
                    combined plan shall be treated as meeting the
                    requirements of section 401(k)(3)(A)(ii) of the
                    Internal Revenue Code of 1986 if the requirements of
                    paragraph (2) are met with respect to such arrangement.
                        ``(B) Matching contributions.--In applying section
                    401(m)(11) of such Code to any matching contribution
                    with respect to a contribution to which paragraph
                    (2)(C) applies, the contribution requirement of
                    paragraph (2)(C) and the notice requirements of
                    paragraph (5)(B) shall be substituted for the
                    requirements otherwise applicable under clauses (i) and
                    (ii) of section 401(m)(11)(A) of such Code.
                ``(4) Automatic contribution arrangement.--For purposes of
            this subsection--
                        ``(A) In general.--A qualified cash or deferred
                    arrangement shall be treated as an automatic
                    contribution arrangement if the arrangement--
                                ``(i) provides that 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 4
                            percent of the employee's compensation unless
                            the employee specifically elects not to have
                            such contributions made or to have such
                            contributions made at a different rate, and
                                ``(ii) meets the notice requirements under
                            subparagraph (B).
                        ``(B) Notice requirements.--
                                ``(i) In general.--The requirements of this
                            subparagraph are met if the requirements of
                            clauses (ii) and (iii) are met.
                                ``(ii) Reasonable period to make
                            election.--The requirements of this clause are
                            met if each employee to whom subparagraph
                            (A)(i) applies--
                                        ``(I) receives a notice explaining
                                    the employee's right under the
                                    arrangement to elect not to have
                                    elective contributions made on the
                                    employee's behalf or to have the
                                    contributions made at a different rate,
                                    and
                                        ``(II) has a reasonable period of
                                    time after receipt of such notice and
                                    before the first elective contribution
                                    is made to make such election.
                                ``(iii) Annual notice of rights and
                            obligations.--The requirements of this clause
                            are met if each employee eligible to
                            participate in the arrangement is, within a
                            reasonable period before any year, given notice
                            of the employee's rights and obligations under
                            the arrangement.
                    The requirements of this subparagraph shall not be
                    treated as met unless the requirements of clauses (i)
                    and (ii) of section 401(k)(12)(D) of the Internal
                    Revenue Code of 1986 are met with respect to the
                    notices described in clauses (ii) and (iii) of this
                    subparagraph.
                ``(5) Coordination with other requirements.--
                        ``(A) Treatment of separate plans.--The except
                    clause in section 3(35) shall not apply to an eligible
                    combined plan.
                        ``(B) Reporting.--An eligible combined plan shall
                    be treated as a single plan for purposes of section
                    103.
                ``(6) Applicable individual account plan.--For purposes of
            this subsection--
                        ``(A) In general.--The term `applicable individual
                    account plan' means an individual account plan which
                    includes a qualified cash or deferred arrangement.
                        ``(B) Qualified cash or deferred arrangement.--The
                    term `qualified cash or deferred arrangement' has the
                    meaning given such term by section 401(k)(2) of the
                    Internal Revenue Code of 1986.''.
                (2) Conforming changes.--
                        (A) The heading for section 210 of such Act is
                    amended to read as follows:

    ``SEC. 210. MULTIPLE EMPLOYER PLANS AND OTHER SPECIAL RULES.''.

                        (B) The table of contents in section 1 of such Act
                    is amended by striking the item relating to section 210
                    and inserting the following new item:

    ``Sec. 210. Multiple employer plans and other special rules.''.
        (c) Effective Date.--The amendments made by this section shall
    apply to plan years beginning after December 31, 2009.

    SEC. 904. FASTER VESTING OF EMPLOYER NONELECTIVE CONTRIBUTIONS.

        (a) Amendments to the Internal Revenue Code of 1986.--
                (1) In general.--Paragraph (2) of section 411(a) of the
            Internal Revenue Code of 1986 (relating to employer
            contributions) is amended to read as follows:
                ``(2) Employer contributions.--
                        ``(A) Defined benefit plans.--
                                ``(i) In general.--In the case of a defined
                            benefit plan, a plan satisfies the requirements
                            of this paragraph if it satisfies the
                            requirements of clause (ii) or (iii).
                                ``(ii) 5-year vesting.--A plan satisfies
                            the requirements of this clause if an employee
                            who has completed at least 5 years of service
                            has a nonforfeitable right to 100 percent of
                            the employee's accrued benefit derived from
                            employer contributions.
                                ``(iii) 3 to 7 year vesting.--A plan
                            satisfies the requirements of this clause if an
                            employee has a nonforfeitable right to a
                            percentage of the employee's accrued benefit
                            derived from employer contributions determined
                            under the following table:
                                                         The nonforfeitable
    `` Years of service:                                     percentage is:
            3......................................................     20
            4......................................................     40
            5......................................................     60
            6......................................................     80
            7 or more..............................................    100.
                        ``(B) Defined contribution plans.--
                                ``(i) In general.--In the case of a defined
                            contribution plan, a plan satisfies the
                            requirements of this paragraph if it satisfies
                            the requirements of clause (ii) or (iii).
                                ``(ii) 3-year vesting.--A plan satisfies
                            the requirements of this clause if an employee
                            who has completed at least 3 years of service
                            has a nonforfeitable right to 100 percent of
                            the employee's accrued benefit derived from
                            employer contributions.
                                ``(iii) 2 to 6 year vesting.--A plan
                            satisfies the requirements of this clause if an
                            employee has a nonforfeitable right to a
                            percentage of the employee's accrued benefit
                            derived from employer contributions determined
                            under the following table:
                                                         The nonforfeitable
    `` Years of service:                                     percentage is:
            2......................................................     20
            3......................................................     40
            4......................................................     60
            5......................................................     80
            6 or more.............................................. 100.''.
                (2) Conforming amendment.--Section 411(a) of such Code
            (relating to general rule for minimum vesting standards) is
            amended by striking paragraph (12).
        (b) Amendments to the Employee Retirement Income Security Act of
    1974.--
                (1) In general.--Paragraph (2) of section 203(a) of the
            Employee Retirement Income Security Act of 1974 (29 U.S.C.
            1053(a)(2)) is amended to read as follows:
                ``(2)(A)(i) In the case of a defined benefit plan, a plan
            satisfies the requirements of this paragraph if it satisfies
            the requirements of clause (ii) or (iii).
                ``(ii) A plan satisfies the requirements of this clause if
            an employee who has completed at least 5 years of service has a
            nonforfeitable right to 100 percent of the employee's accrued
            benefit derived from employer contributions.
                ``(iii) A plan satisfies the requirements of this clause if
            an employee has a nonforfeitable right to a percentage of the
            employee's accrued benefit derived from employer contributions
            determined under the following table:
                                                         The nonforfeitable
    `` Years of service:                                     percentage is:
            3......................................................     20
            4......................................................     40
            5......................................................     60
            6......................................................     80
            7 or more..............................................    100.
                ``(B)(i) In the case of an individual account plan, a plan
            satisfies the requirements of this paragraph if it satisfies
            the requirements of clause (ii) or (iii).
                ``(ii) A plan satisfies the requirements of this clause if
            an employee who has completed at least 3 years of service has a
            nonforfeitable right to 100 percent of the employee's accrued
            benefit derived from employer contributions.
                ``(iii) A plan satisfies the requirements of this clause if
            an employee has a nonforfeitable right to a percentage of the
            employee's accrued benefit derived from employer contributions
            determined under the following table:
                                                         The nonforfeitable
    `` Years of service:                                     percentage is:
            2......................................................     20
            3......................................................     40
            4......................................................     60
            5......................................................     80
            6 or more.............................................. 100.''.
                (2) Conforming amendment.--Section 203(a) of such Act is
            amended by striking paragraph (4).
        (c) Effective Dates.--
                (1) In general.--Except as provided in paragraphs (2) and
            (4), the amendments made by this section shall apply to
            contributions for plan years beginning after December 31, 2006.
                (2) Collective bargaining agreements.--In the case of a
            plan maintained pursuant to one or more collective bargaining
            agreements between employee representatives and one or more
            employers ratified before the date of the enactment of this
            Act, the amendments made by this section shall not apply to
            contributions on behalf of employees covered by any such
            agreement for plan years beginning before the earlier of--
                        (A) the later of--
                                (i) the date on which the last of such
                            collective bargaining agreements terminates
                            (determined without regard to any extension
                            thereof on or after such date of the
                            enactment); or
                                (ii) January 1, 2007; or
                        (B) January 1, 2009.
                (3) Service required.--With respect to any plan, the
            amendments made by this section shall not apply to any employee
            before the date that such employee has 1 hour of service under
            such plan in any plan year to which the amendments made by this
            section apply.
                (4) Special rule for stock ownership plans.--
            Notwithstanding paragraph (1) or (2), in the case of an
            employee stock ownership plan (as defined in section 4975(e)(7)
            of the Internal Revenue Code of 1986) which had outstanding on
            September 26, 2005, a loan incurred for the purpose of
            acquiring qualifying employer securities (as defined in section
            4975(e)(8) of such Code), the amendments made by this section
            shall not apply to any plan year beginning before the earlier
            of--
                        (A) the date on which the loan is fully repaid, or
                        (B) the date on which the loan was, as of September
                    26, 2005, scheduled to be fully repaid.

    SEC. 905. DISTRIBUTIONS DURING WORKING RETIREMENT.

        (a) Amendment to the Employee Retirement Income Security Act of
    1974.--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) Amendment to the Internal Revenue Code of 1986.--Subsection (a)
    of section 401 of the Internal Revenue Code of 1986 (as amended by this
    Act) is amended by inserting after paragraph (35) the following new
    paragraph:
                ``(36) 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 the plan provides that a distribution may be 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, 2006.

    SEC. 906. TREATMENT OF CERTAIN PENSION PLANS OF INDIAN TRIBAL
                  GOVERNMENTS.

        (a) Definition of Government Plan to Include Certain Pension Plans
    of Indian Tribal Governments.--
                (1) Amendment to internal revenue code of 1986.--Section
            414(d) of the Internal Revenue Code of 1986 (defining
            governmental plan) is amended by adding at the end the
            following: ``The term `governmental plan' includes a plan which
            is established and maintained by an Indian tribal government
            (as defined in section 7701(a)(40)), a subdivision of an Indian
            tribal government (determined in accordance with section
            7871(d)), or an agency or instrumentality of either, and all of
            the participants of which are employees of such entity
            substantially all of whose services as such an employee are in
            the performance of essential governmental functions but not in
            the performance of commercial activities (whether or not an
            essential government function).''.
                (2) Amendment to employee retirement income security act of
            1974.--
                        (A) Section 3(32) of the Employee Retirement Income
                    Security Act of 1974 (29 U.S.C. 1002(32)) is amended by
                    adding at the end the following: ``The term
                    `governmental plan' includes a plan which is
                    established and maintained by an Indian tribal
                    government (as defined in section 7701(a)(40) of the
                    Internal Revenue Code of 1986), a subdivision of an
                    Indian tribal government (determined in accordance with
                    section 7871(d) of such Code), or an agency or
                    instrumentality of either, and all of the participants
                    of which are employees of such entity substantially all
                    of whose services as such an employee are in the
                    performance of essential governmental functions but not
                    in the performance of commercial activities (whether or
                    not an essential government function)''.
                        (B) Section 4021(b)(2) of such Act is amended by
                    adding at the end the following: ``or which is
                    described in the last sentence of section 3(32)''.
        (b) Clarification That Tribal Governments Are Subject to the Same
    Pension Plan Rules and Regulations Applied to State and Other Local
    Governments and Their Police and Firefighters.--
                (1) Amendments to internal revenue code of 1986.--
                        (A) Police and firefighters.--Subparagraph (H)
                    section 415(b)(2) of the Internal Revenue Code of 1986
                    (defining participant) is amended--
                                (i) in clause (i), by striking ``State or
                            political subdivision'' and inserting ``State,
                            Indian tribal government (as defined in section
                            7701(a)(40)), or any political subdivision'';
                            and
                                (ii) in clause (ii)(I), by striking ``State
                            or political subdivision'' each place it
                            appears and inserting ``State, Indian tribal
                            government (as so defined), or any political
                            subdivision''.
                        (B) State and local government plans.--
                                (i) In general.--Subparagraph (A) of
                            section 415(b)(10) of such Code (relating to
                            limitation to equal accrued benefit) is amended
                            by inserting ``or a governmental plan described
                            in the last sentence of section 414(d)
                            (relating to plans of Indian tribal
                            governments),'' after ``foregoing,''.
                                (ii) Conforming amendment.--The heading of
                            paragraph (1) of section 415(b) of such Code is
                            amended by striking ``Special rule for state
                            and'' and inserting ``Special rule for state,
                            indian tribal, and''.
                        (C) Government pick up contributions.--Paragraph
                    (2) of section 414(h) of such Code (relating to
                    designation by units of government) is amended by
                    inserting ``or a governmental plan described in the
                    last sentence of section 414(d) (relating to plans of
                    Indian tribal governments),'' after ``foregoing,''.
                (2) Amendments to employee retirement income security act
            of 1974.--Section 4021(b) of the Employee Retirement Income
            Security Act of 1974 (29 U.S.C. 1321(b)) is amended--
                        (A) in paragraph (12), by striking ``or'' at the
                    end;
                        (B) in paragraph (13), by striking ``plan.'' and
                    inserting ``plan; or''; and
                        (C) by adding at the end the following:
                ``(14) established and maintained by an Indian tribal
            government (as defined in section 7701(a)(40) of the Internal
            Revenue Code of 1986), a subdivision of an Indian tribal
            government (determined in accordance with section 7871(d) of
            such Code), or an agency or instrumentality of either, and all
            of the participants of which are employees of such entity
            substantially all of whose services as such an employee are in
            the performance of essential governmental functions but not in
            the performance of commercial activities (whether or not an
            essential government function).''.
        (c) Effective Date.--The amendments made by this section shall
    apply to any year beginning on or after the date of the enactment of
    this Act.

           TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION

    SEC. 1001. REGULATIONS ON TIME AND ORDER OF ISSUANCE OF DOMESTIC
                  RELATIONS ORDERS.

        Not later than 1 year after the date of the enactment of this Act,
    the Secretary of Labor shall issue regulations under section 206(d)(3)
    of the Employee Retirement Security Act of 1974 and section 414(p) of
    the Internal Revenue Code of 1986 which clarify that--
                (1) a domestic relations order otherwise meeting the
            requirements to be a qualified domestic relations order,
            including the requirements of section 206(d)(3)(D) of such Act
            and section 414(p)(3) of such Code, shall not fail to be
            treated as a qualified domestic relations order solely
            because--
                        (A) the order is issued after, or revises, another
                    domestic relations order or qualified domestic
                    relations order; or
                        (B) of the time at which it is issued; and
                (2) any order described in paragraph (1) shall be subject
            to the same requirements and protections which apply to
            qualified domestic relations orders, including the provisions
            of section 206(d)(3)(H) of such Act and section 414(p)(7) of
            such Code.

    SEC. 1002. ENTITLEMENT OF DIVORCED SPOUSES TO RAILROAD RETIREMENT
                  ANNUITIES INDEPENDENT OF ACTUAL ENTITLEMENT OF EMPLOYEE.

        (a) In General.--Section 2 of the Railroad Retirement Act of 1974
    (45 U.S.C. 231a) is amended--
                (1) in subsection (c)(4)(i), by striking ``(A) is entitled
            to an annuity under subsection (a)(1) and (B)''; and
                (2) in subsection (e)(5), by striking ``or divorced wife''
            the second place it appears.
        (b) Effective Date.--The amendments made by this section shall take
    effect 1 year after the date of the enactment of this Act.

    SEC. 1003. EXTENSION OF TIER II RAILROAD RETIREMENT BENEFITS TO
                  SURVIVING FORMER SPOUSES PURSUANT TO DIVORCE AGREEMENTS.

        (a) In General.--Section 5 of the Railroad Retirement Act of 1974
    (45 U.S.C. 231d) is amended by adding at the end the following:
        ``(d) Notwithstanding any other provision of law, the payment of
    any portion of an annuity computed under section 3(b) to a surviving
    former spouse in accordance with a court decree of divorce, annulment,
    or legal separation or the terms of any court-approved property
    settlement incident to any such court decree shall not be terminated
    upon the death of the individual who performed the service with respect
    to which such annuity is so computed unless such termination is
    otherwise required by the terms of such court decree.''
        (b) Effective Date.--The amendment made by this section shall take
    effect 1 year after the date of the enactment of this Act.

    SEC. 1004. REQUIREMENT FOR ADDITIONAL SURVIVOR ANNUITY OPTION.

        (a) Amendments to Internal Revenue Code.--
                (1) Election of survivor annuity.--Section 417(a)(1)(A) of
            the Internal Revenue Code of 1986 is amended--
                        (A) in clause (i), by striking ``, and'' and
                    inserting a comma;
                        (B) by redesignating clause (ii) as clause (iii);
                    and
                        (C) by inserting after clause (i) the following:
                        ``(ii) if the participant elects a waiver under
                    clause (i), may elect the qualified optional survivor
                    annuity at any time during the applicable election
                    period, and''.
                (2) Definition.--Section 417 of such Code is amended by
            adding at the end the following:
        ``(g) Definition of Qualified Optional Survivor Annuity.--
                ``(1) In general.--For purposes of this section, the term
            `qualified optional survivor annuity' means an annuity--
                        ``(A) for the life of the participant with a
                    survivor annuity for the life of the spouse which is
                    equal to the applicable percentage of the amount of the
                    annuity which is payable during the joint lives of the
                    participant and the spouse, and
                        ``(B) which is the actuarial equivalent of a single
                    annuity for the life of the participant.
            Such term also includes any annuity in a form having the effect
            of an annuity described in the preceding sentence.
                ``(2) Applicable percentage.--
                        ``(A) In general.--For purposes of paragraph (1),
                    if the survivor annuity percentage--
                                ``(i) is less than 75 percent, the
                            applicable percentage is 75 percent, and
                                ``(ii) is greater than or equal to 75
                            percent, the applicable percentage is 50
                            percent.
                        ``(B) Survivor annuity percentage.--For purposes of
                    subparagraph (A), the term `survivor annuity
                    percentage' means the percentage which the survivor
                    annuity under the plan's qualified joint and survivor
                    annuity bears to the annuity payable during the joint
                    lives of the participant and the spouse.''.
                (3) Notice.--Section 417(a)(3)(A)(i) of such Code is
            amended by inserting ``and of the qualified optional survivor
            annuity'' after ``annuity''.
        (b) Amendments to ERISA.--
                (1) Election of survivor annuity.--Section 205(c)(1)(A) of
            the Employee Retirement Income Security Act of 1974 (29 U.S.C.
            1055(c)(1)(A)) is amended--
                        (A) in clause (i), by striking ``, and'' and
                    inserting a comma;
                        (B) by redesignating clause (ii) as clause (iii);
                    and
                        (C) by inserting after clause (i) the following:
                        ``(ii) if the participant elects a waiver under
                    clause (i), may elect the qualified optional survivor
                    annuity at any time during the applicable election
                    period, and''.
                (2) Definition.--Section 205(d) of such Act (29 U.S.C.
            1055(d)) is amended--
                        (A) by inserting ``(1)'' after ``(d)'';
                        (B) by redesignating paragraphs (1) and (2) as
                    subparagraphs (A) and (B), respectively; and
                        (C) by adding at the end the following:
        ``(2)(A) For purposes of this section, the term `qualified optional
    survivor annuity' means an annuity--
                ``(i) for the life of the participant with a survivor
            annuity for the life of the spouse which is equal to the
            applicable percentage of the amount of the annuity which is
            payable during the joint lives of the participant and the
            spouse, and
                ``(ii) which is the actuarial equivalent of a single
            annuity for the life of the participant.
    Such term also includes any annuity in a form having the effect of an
    annuity described in the preceding sentence.
        ``(B)(i) For purposes of subparagraph (A), if the survivor annuity
    percentage--
                ``(I) is less than 75 percent, the applicable percentage is
            75 percent, and
                ``(II) is greater than or equal to 75 percent, the
            applicable percentage is 50 percent.
        ``(ii) For purposes of clause (i), the term `survivor annuity
    percentage' means the percentage which the survivor annuity under the
    plan's qualified joint and survivor annuity bears to the annuity
    payable during the joint lives of the participant and the spouse.''.
                (3) Notice.--Section 205(c)(3)(A)(i) of such Act (29 U.S.C.
            1055(c)(3)(A)(i)) is amended by inserting ``and of the
            qualified optional survivor annuity'' after ``annuity''.
        (c) Effective Dates.--
                (1) In general.--The amendments made by this section shall
            apply to plan years beginning after December 31, 2007.
                (2) Special rule for collectively bargained plans.--In the
            case of a plan maintained pursuant to 1 or more collective
            bargaining agreements between employee representatives and 1 or
            more employers ratified on or before the date of the enactment
            of this Act, the amendments made by this section shall not
            apply to plan years beginning before the earlier of--
                        (A) the later of--
                                (i) January 1, 2008, or
                                (ii) the date on which the last collective
                            bargaining agreement related to the plan
                            terminates (determined without regard to any
                            extension thereof after the date of enactment
                            of this Act), or
                        (B) January 1, 2009.

                      TITLE XI--ADMINISTRATIVE PROVISIONS

    SEC. 1101. EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.

        (a) In General.--The Secretary of the Treasury shall have full
    authority to establish and implement the Employee Plans Compliance
    Resolution System (or any successor program) and any other employee
    plans correction policies, including the authority to waive income,
    excise, or other taxes to ensure that any tax, penalty, or sanction is
    not excessive and bears a reasonable relationship to the nature,
    extent, and severity of the failure.
        (b) Improvements.--The Secretary of the Treasury shall continue to
    update and improve the Employee Plans Compliance Resolution System (or
    any successor program), giving special attention to--
                (1) increasing the awareness and knowledge of small
            employers concerning the availability and use of the program;
                (2) taking into account special concerns and circumstances
            that small employers face with respect to compliance and
            correction of compliance failures;
                (3) extending the duration of the self-correction period
            under the Self-Correction Program for significant compliance
            failures;
                (4) expanding the availability to correct insignificant
            compliance failures under the Self-Correction Program during
            audit; and
                (5) assuring that any tax, penalty, or sanction that is
            imposed by reason of a compliance failure is not excessive and
            bears a reasonable relationship to the nature, extent, and
            severity of the failure.

    SEC. 1102. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

        (a) Expansion of Period.--
                (1) Amendment of internal revenue code.--
                        (A) In general.--Section 417(a)(6)(A) of the
                    Internal Revenue Code of 1986 is amended by striking
                    ``90-day'' and inserting ``180-day''.
                        (B) Modification of regulations.--The Secretary of
                    the Treasury shall modify the regulations under
                    sections 402(f), 411(a)(11), and 417 of the Internal
                    Revenue Code of 1986 by substituting ``180 days'' for
                    ``90 days'' each place it appears in Treasury
                    Regulations sections 1.402(f)-1, 1.411(a)-11(c), and
                    1.417(e)-1(b).
                (2) Amendment of erisa.--
                        (A) In general.--Section 205(c)(7)(A) of the
                    Employee Retirement Income Security Act of 1974 (29
                    U.S.C. 1055(c)(7)(A)) is amended by striking ``90-day''
                    and inserting ``180-day''.
                        (B) Modification of regulations.--The Secretary of
                    the Treasury shall modify the regulations under part 2
                    of subtitle B of title I of the Employee Retirement
                    Income Security Act of 1974 relating to sections 203(e)
                    and 205 of such Act by substituting ``180 days'' for
                    ``90 days'' each place it appears.
                (3) Effective date.--The amendments and modifications made
            or required by this subsection shall apply to years beginning
            after December 31, 2006.
        (b) Notification of Right To Defer.--
                (1) In general.--The Secretary of the Treasury shall modify
            the regulations under section 411(a)(11) of the Internal
            Revenue Code of 1986 and under section 205 of the Employee
            Retirement Income Security Act of 1974 to provide that the
            description of a participant's right, if any, to defer receipt
            of a distribution shall also describe the consequences of
            failing to defer such receipt.
                (2) Effective date.--
                        (A) In general.--The modifications required by
                    paragraph (1) shall apply to years beginning after
                    December 31, 2006.
                        (B) Reasonable notice.--A plan shall not be treated
                    as failing to meet the requirements of section
                    411(a)(11) of such Code or section 205 of such Act with
                    respect to any description of consequences described in
                    paragraph (1) made within 90 days after the Secretary
                    of the Treasury issues the modifications required by
                    paragraph (1) if the plan administrator makes a
                    reasonable attempt to comply with such requirements.

    SEC. 1103. REPORTING SIMPLIFICATION.

        (a) Simplified Annual Filing Requirement for Owners and Their
    Spouses.--
                (1) In general.--The Secretary of the Treasury shall modify
            the requirements for filing annual returns with respect to one-
            participant retirement plans to ensure that such plans with
            assets of $250,000 or less as of the close of the plan year
            need not file a return for that year.
                (2) One-participant retirement plan defined.--For purposes
            of this subsection, the term ``one-participant retirement
            plan'' means a retirement plan with respect to which the
            following requirements are met:
                        (A) on the first day of the plan year--
                                (i) the plan covered only one individual
                            (or the individual and the individual's spouse)
                            and the individual owned 100 percent of the
                            plan sponsor (whether or not incorporated), or
                                (ii) the plan covered only one or more
                            partners (or partners and their spouses) in the
                            plan sponsor;
                        (B) the plan meets the minimum coverage
                    requirements of section 410(b) of the Internal Revenue
                    Code of 1986 without being combined with any other plan
                    of the business that covers the employees of the
                    business;
                        (C) the plan does not provide benefits to anyone
                    except the individual (and the individual's spouse) or
                    the partners (and their spouses);
                        (D) the plan does not cover a business that is a
                    member of an affiliated service group, a controlled
                    group of corporations, or a group of businesses under
                    common control; and
                        (E) the plan does not cover a business that uses
                    the services of leased employees (within the meaning of
                    section 414(n) of such Code).
            For purposes of this paragraph, the term ``partner'' includes a
            2-percent shareholder (as defined in section 1372(b) of such
            Code) of an S corporation.
                (3) Other definitions.--Terms used in paragraph (2) which
            are also used in section 414 of the Internal Revenue Code of
            1986 shall have the respective meanings given such terms by
            such section.
                (4) Effective date.--The provisions of this subsection
            shall apply to plan years beginning on or after January 1,
            2007.
        (b) Simplified Annual Filing Requirement for Plans With Fewer Than
    25 Participants.--In the case of plan years beginning after December
    31, 2006, the Secretary of the Treasury and the Secretary of Labor
    shall provide for the filing of a simplified annual return for any
    retirement plan which covers less than 25 participants on the first day
    of a plan year and which meets the requirements described in
    subparagraphs (B), (D), and (E) of subsection (a)(2).

    SEC. 1104. VOLUNTARY EARLY RETIREMENT INCENTIVE AND EMPLOYMENT
                  RETENTION PLANS MAINTAINED BY LOCAL EDUCATIONAL AGENCIES
                  AND OTHER ENTITIES.

        (a) Voluntary Early Retirement Incentive Plans.--
                (1) Treatment as plan providing severance pay.--Section
            457(e)(11) of the Internal Revenue Code of 1986 (relating to
            certain plans excluded) is amended by adding at the end the
            following new subparagraph:
                        ``(D) Certain voluntary early retirement incentive
                    plans.--
                                ``(i) In general.--If an applicable
                            voluntary early retirement incentive plan--
                                        ``(I) makes payments or supplements
                                    as an early retirement benefit, a
                                    retirement-type subsidy, or a benefit
                                    described in the last sentence of
                                    section 411(a)(9), and
                                        ``(II) such payments or supplements
                                    are made in coordination with a defined
                                    benefit plan which is described in
                                    section 401(a) and includes a trust
                                    exempt from tax under section 501(a)
                                    and which is maintained by an eligible
                                    employer described in paragraph (1)(A)
                                    or by an education association
                                    described in clause (ii)(II),
                            such applicable plan shall be treated for
                            purposes of subparagraph (A)(i) as a bona fide
                            severance pay plan with respect to such
                            payments or supplements to the extent such
                            payments or supplements could otherwise have
                            been provided under such defined benefit plan
                            (determined as if section 411 applied to such
                            defined benefit plan).
                                ``(ii) Applicable voluntary early
                            retirement incentive plan.--For purposes of
                            this subparagraph, the term `applicable
                            voluntary early retirement incentive plan'
                            means a voluntary early retirement incentive
                            plan maintained by--
                                        ``(I) a local educational agency
                                    (as defined in section 9101 of the
                                    Elementary and Secondary Education Act
                                    of 1965 (20 U.S.C. 7801)), or
                                        ``(II) an education association
                                    which principally represents employees
                                    of 1 or more agencies described in
                                    subclause (I) and which is described in
                                    section 501(c) (5) or (6) and exempt
                                    from tax under section 501(a).''
                (2) Age discrimination in employment act.--Section 4(l)(1)
            of the Age Discrimination in Employment Act of 1967 (29 U.S.C.
            623(l)(1)) is amended--
                        (A) by inserting ``(A)'' after ``(1)'',
                        (B) by redesignating subparagraphs (A) and (B) as
                    clauses (i) and (ii), respectively,
                        (C) by redesignating clauses (i) and (ii) of
                    subparagraph (B) (as in effect before the amendments
                    made by subparagraph (B)) as subclauses (I) and (II),
                    respectively, and
                        (D) by adding at the end the following:
                ``(B) A voluntary early retirement incentive plan that--
                        ``(i) is maintained by--
                                ``(I) a local educational agency (as
                            defined in section 9101 of the Elementary and
                            Secondary Education Act of 1965 (20 U.S.C.
                            7801), or
                                ``(II) an education association which
                            principally represents employees of 1 or more
                            agencies described in subclause (I) and which
                            is described in section 501(c) (5) or (6) of
                            the Internal Revenue Code of 1986 and exempt
                            from taxation under section 501(a) of such
                            Code, and
                        ``(ii) makes payments or supplements described in
                    subclauses (I) and (II) of subparagraph (A)(ii) in
                    coordination with a defined benefit plan (as so
                    defined) maintained by an eligible employer described
                    in section 457(e)(1)(A) of such Code or by an education
                    association described in clause (i)(II),
            shall be treated solely for purposes of subparagraph (A)(ii) as
            if it were a part of the defined benefit plan with respect to
            such payments or supplements. Payments or supplements under
            such a voluntary early retirement incentive plan shall not
            constitute severance pay for purposes of paragraph (2).''.
        (b) Employment Retention Plans.--
                (1) In general.--Section 457(f)(2) of the Internal Revenue
            Code of 1986 (relating to exceptions) is amended by striking
            ``and'' at the end of subparagraph (D), by striking the period
            at the end of subparagraph (E) and inserting ``, and'', and by
            adding at the end the following:
                        ``(F) that portion of any applicable employment
                    retention plan described in paragraph (4) with respect
                    to any participant.''
                (2) Definitions and rules relating to employment retention
            plans.--Section 457(f) of such Code is amended by adding at the
            end the following new paragraph:
                ``(4) Employment retention plans.--For purposes of
            paragraph (2)(F)--
                        ``(A) In general.--The portion of an applicable
                    employment retention plan described in this paragraph
                    with respect to any participant is that portion of the
                    plan which provides benefits payable to the participant
                    not in excess of twice the applicable dollar limit
                    determined under subsection (e)(15).
                        ``(B) Other rules.--
                                ``(i) Limitation.--Paragraph (2)(F) shall
                            only apply to the portion of the plan described
                            in subparagraph (A) for years preceding the
                            year in which such portion is paid or otherwise
                            made available to the participant.
                                ``(ii) Treatment.--A plan shall not be
                            treated for purposes of this title as providing
                            for the deferral of compensation for any year
                            with respect to the portion of the plan
                            described in subparagraph (A).
                        ``(C) Applicable employment retention plan.--The
                    term `applicable employment retention plan' means an
                    employment retention plan maintained by--
                                ``(i) a local educational agency (as
                            defined in section 9101 of the Elementary and
                            Secondary Education Act of 1965 (20 U.S.C.
                            7801), or
                                ``(ii) an education association which
                            principally represents employees of 1 or more
                            agencies described in clause (i) and which is
                            described in section 501(c) (5) or (6) and
                            exempt from taxation under section 501(a).
                        ``(D) Employment retention plan.--The term
                    `employment retention plan' means a plan to pay, upon
                    termination of employment, compensation to an employee
                    of a local educational agency or education association
                    described in subparagraph (C) for purposes of--
                                ``(i) retaining the services of the
                            employee, or
                                ``(ii) rewarding such employee for the
                            employee's service with 1 or more such agencies
                            or associations.''.
        (c) Coordination With ERISA.--Section 3(2)(B) of the Employee
    Retirement Income Security Act of 1974 (29 U.S.C. 1002(2)(B)) is
    amended by adding at the end the following: ``An applicable voluntary
    early retirement incentive plan (as defined in section
    457(e)(11)(D)(ii) of the Internal Revenue Code of 1986) making payments
    or supplements described in section 457(e)(11)(D)(i) of such Code, and
    an applicable employment retention plan (as defined in section
    457(f)(4)(C) of such Code) making payments of benefits described in
    section 457(f)(4)(A) of such Code, shall, for purposes of this title,
    be treated as a welfare plan (and not a pension plan) with respect to
    such payments and supplements.''
        (d) Effective Dates.--
                (1) In general.--The amendments made by this Act shall take
            effect on the date of the enactment of this Act.
                (2) Tax amendments.--The amendments made by subsections
            (a)(1) and (b) shall apply to taxable years ending after the
            date of the enactment of this Act.
                (3) ERISA amendments.--The amendment made by subsection (c)
            shall apply to plan years ending after the date of the
            enactment of this Act.
                (4) Construction.--Nothing in the amendments made by this
            section shall alter or affect the construction of the Internal
            Revenue Code of 1986, the Employee Retirement Income Security
            Act of 1974, or the Age Discrimination in Employment Act of
            1967 as applied to any plan, arrangement, or conduct to which
            such amendments do not apply.

    SEC. 1105. NO REDUCTION IN UNEMPLOYMENT COMPENSATION AS A RESULT OF
                  PENSION ROLLOVERS.

        (a) In General.--Section 3304(a) of the Internal Revenue Code of
    1986 (relating to requirements for State unemployment laws) is amended
    by adding at the end the following new flush sentence:
    ``Compensation shall not be reduced under paragraph (15) for any
    pension, retirement or retired pay, annuity, or similar payment which
    is not includible in gross income of the individual for the taxable
    year in which paid because it was part of a rollover distribution.''.
        (b) Effective Date.--The amendment made by this section shall apply
    to weeks beginning on or after the date of the enactment of this Act.

    SEC. 1106. REVOCATION OF ELECTION RELATING TO TREATMENT AS
                  MULTIEMPLOYER PLAN.

        (a) Amendment to ERISA.--Section 3(37) of the Employee Retirement
    Income Security Act of 1974 is amended by adding at the end the
    following new subparagraph (G):
                ``(G)(i) Within 1 year after the enactment of the Pension
            Protection Act of 2006--
                        ``(I) an election under subparagraph (E) may be
                    revoked, pursuant to procedures prescribed by the
                    Pension Benefit Guaranty Corporation, if, for each of
                    the 3 plan years prior to the date of the enactment of
                    that Act, the plan would have been a multiemployer plan
                    but for the election under subparagraph (E), and
                        ``(II) a plan that meets the criteria in clauses
                    (i) and (ii) of subparagraph (A) of this paragraph or
                    that is described in clause (vi) may, pursuant to
                    procedures prescribed by the Pension Benefit Guaranty
                    Corporation, elect to be a multiemployer plan, if--
                                ``(aa) for each of the 3 plan years
                            immediately before the date of the enactment of
                            the Pension Protection Act of 2006, the plan
                            has met those criteria or is so described,
                                ``(bb) substantially all of the plan's
                            employer contributions for each of those plan
                            years were made or required to be made by
                            organizations that were exempt from tax under
                            section 501 of the Internal Revenue Code of
                            1986, and
                                ``(cc) the plan was established prior to
                            September 2, 1974.
                ``(ii) An election under this paragraph shall be effective
            for all purposes under this Act and under the Internal Revenue
            Code of 1986, starting with the first plan year ending after
            the date of the enactment of the Pension Protection Act of
            2006.
                ``(iii) Once made, an election under this paragraph shall
            be irrevocable, except that a plan described in subclause
            (i)(II) shall cease to be a multiemployer plan as of the plan
            year beginning immediately after the first plan year for which
            the majority of its employer contributions were made or
            required to be made by organizations that were not exempt from
            tax under section 501 of the Internal Revenue Code of 1986.
                ``(iv) The fact that a plan makes an election under clause
            (i)(II) does not imply that the plan was not a multiemployer
            plan prior to the date of the election or would not be a
            multiemployer plan without regard to the election.
                ``(v)(I) No later than 30 days before an election is made
            under this paragraph, the plan administrator shall provide
            notice of the pending election to each plan participant and
            beneficiary, each labor organization representing such
            participants or beneficiaries, and each employer that has an
            obligation to contribute to the plan, describing the principal
            differences between the guarantee programs under title IV and
            the benefit restrictions under this title for single employer
            and multiemployer plans, along with such other information as
            the plan administrator chooses to include.
                ``(II) Within 180 days after the date of enactment of the
            Pension Protection Act of 2006, the Secretary shall prescribe a
            model notice under this subparagraph.
                ``(III) A plan administrator's failure to provide the
            notice required under this subparagraph shall be treated for
            purposes of section 502(c)(2) as a failure or refusal by the
            plan administrator to file the annual report required to be
            filed with the Secretary under section 101(b)(4).
                ``(vi) A plan is described in this clause if it is a plan--
                        ``(I) that was established in Chicago, Illinois, on
                    August 12, 1881; and
                        ``(II) sponsored by an organization described in
                    section 501(c)(5) of the Internal Revenue Code of 1986
                    and exempt from tax under section 501(a) of such
                    Code.''.
        (b) Amendment to Internal Revenue Code.--Subsection (f) of section
    414 of the Internal Revenue Code of 1986 is amended by adding at the
    end the following new paragraph (6):
                ``(6) Election with regard to multiemployer status.--
                        ``(A) Within 1 year after the enactment of the
                    Pension Protection Act of 2006--
                                ``(i) An election under paragraph (5) may
                            be revoked, pursuant to procedures prescribed
                            by the Pension Benefit Guaranty Corporation,
                            if, for each of the 3 plan years prior to the
                            date of the enactment of that Act, the plan
                            would have been a multiemployer plan but for
                            the election under paragraph (5), and
                                ``(ii) a plan that meets the criteria in
                            subparagraph (A) and (B) of paragraph (1) of
                            this subsection or that is described in
                            subparagraph (E) may, pursuant to procedures
                            prescribed by the Pension Benefit Guaranty
                            Corporation, elect to be a multiemployer plan,
                            if--
                                        ``(I) for each of the 3 plan years
                                    immediately before the date of
                                    enactment of the Pension Protection Act
                                    of 2006, the plan has met those
                                    criteria or is so described,
                                        ``(II) substantially all of the
                                    plan's employer contributions for each
                                    of those plan years were made or
                                    required to be made by organizations
                                    that were exempt from tax under section
                                    501, and
                                        ``(III) the plan was established
                                    prior to September 2, 1974.
                        ``(B) An election under this paragraph shall be
                    effective for all purposes under this Act and under the
                    Employee Retirement Income Security Act of 1974,
                    starting with the first plan year ending after the date
                    of the enactment of the Pension Protection Act of 2006.
                        ``(C) Once made, an election under this paragraph
                    shall be irrevocable, except that a plan described in
                    subparagraph (A)(ii) shall cease to be a multiemployer
                    plan as of the plan year beginning immediately after
                    the first plan year for which the majority of its
                    employer contributions were made or required to be made
                    by organizations that were not exempt from tax under
                    section 501.
                        ``(D) The fact that a plan makes an election under
                    subparagraph (A)(ii) does not imply that the plan was
                    not a multiemployer plan prior to the date of the
                    election or would not be a multiemployer plan without
                    regard to the election.
                        ``(E) A plan is described in this subparagraph if
                    it is a plan--
                                ``(i) that was established in Chicago,
                            Illinois, on August 12, 1881; and
                                ``(ii) sponsored by an organization
                            described in section 501(c)(5) and exempt from
                            tax under section 501(a).''.

    SEC. 1107. PROVISIONS RELATING TO PLAN AMENDMENTS.

        (a) In General.--If this section applies to any pension plan or
    contract amendment--
                (1) such pension plan or contract shall be treated as being
            operated in accordance with the terms of the plan during the
            period described in subsection (b)(2)(A), and
                (2) except as provided by the Secretary of the Treasury,
            such pension plan shall not fail to meet the requirements of
            section 411(d)(6) of the Internal Revenue Code of 1986 and
            section 204(g) of the Employee Retirement Income Security Act
            of 1974 by reason of such amendment.
        (b) Amendments to Which Section Applies.--
                (1) In general.--This section shall apply to any amendment
            to any pension plan or annuity contract which is made--
                        (A) pursuant to any amendment made by this Act or
                    pursuant to any regulation issued by the Secretary of
                    the Treasury or the Secretary of Labor under this Act,
                    and
                        (B) on or before the last day of the first plan
                    year beginning on or after January 1, 2009.
            In the case of a governmental plan (as defined in section
            414(d) of the Internal Revenue Code of 1986), this paragraph
            shall be applied by substituting ``2011'' for ``2009''.
                (2) Conditions.--This section shall not apply to any
            amendment unless--
                        (A) during the period--
                                (i) beginning on the date the legislative
                            or regulatory amendment described in paragraph
                            (1)(A) takes effect (or in the case of a plan
                            or contract amendment not required by such
                            legislative or regulatory amendment, the
                            effective date specified by the plan), and
                                (ii) ending on the date described in
                            paragraph (1)(B) (or, if earlier, the date the
                            plan or contract amendment is adopted), the
                            plan or contract is operated as if such plan or
                            contract amendment were in effect; and
                        (B) such plan or contract amendment applies
                    retroactively for such period.

             TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS

                    Subtitle A--Charitable Giving Incentives

    SEC. 1201. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR
                  CHARITABLE PURPOSES.

        (a) In General.--Subsection (d) of section 408 (relating to
    individual retirement accounts) is amended by adding at the end the
    following new paragraph:
                ``(8) Distributions for charitable purposes.--
                        ``(A) In general.--So much of the aggregate amount
                    of qualified charitable distributions with respect to a
                    taxpayer made during any taxable year which does not
                    exceed $100,000 shall not be includible in gross income
                    of such taxpayer for such taxable year.
                        ``(B) Qualified charitable distribution.--For
                    purposes of this paragraph, the term `qualified
                    charitable distribution' means any distribution from an
                    individual retirement plan (other than a plan described
                    in subsection (k) or (p))--
                                ``(i) which is made directly by the trustee
                            to an organization described in section
                            170(b)(1)(A) (other than any organization
                            described in section 509(a)(3) or any fund or
                            account described in section 4966(d)(2)), and
                                ``(ii) which is made on or after the date
                            that the individual for whose benefit the plan
                            is maintained has attained age 70\1/2\.
                    A distribution shall be treated as a qualified
                    charitable distribution only to the extent that the
                    distribution would be includible in gross income
                    without regard to subparagraph (A).
                        ``(C) Contributions must be otherwise deductible.--
                    For purposes of this paragraph, a distribution to an
                    organization described in subparagraph (B)(i) shall be
                    treated as a qualified charitable distribution only if
                    a deduction for the entire distribution would be
                    allowable under section 170 (determined without regard
                    to subsection (b) thereof and this paragraph).
                        ``(D) Application of section 72.--Notwithstanding
                    section 72, in determining the extent to which a
                    distribution is a qualified charitable distribution,
                    the entire amount of the distribution 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
                    individual retirement plans were treated as 1 contract
                    under paragraph (2)(A) 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.
                        ``(E) Denial of deduction.--Qualified charitable
                    distributions which are not includible in gross income
                    pursuant to subparagraph (A) shall not be taken into
                    account in determining the deduction under section 170.
                        ``(F) Termination.--This paragraph shall not apply
                    to distributions made in taxable years beginning after
                    December 31, 2007.''.
        (b) Modifications Relating to Information Returns by Certain
    Trusts.--
                (1) Returns.--Section 6034 (relating to returns by trusts
            described in section 4947(a)(2) or claiming charitable
            deductions under section 642(c)) is amended to read as follows:

    ``SEC. 6034. RETURNS BY CERTAIN TRUSTS.

        ``(a) Split-Interest Trusts.--Every trust described in section
    4947(a)(2) shall furnish such information with respect to the taxable
    year as the Secretary may by forms or regulations require.
        ``(b) Trusts Claiming Certain Charitable Deductions.--
                ``(1) In general.--Every trust not required to file a
            return under subsection (a) but claiming a deduction under
            section 642(c) for the taxable year shall furnish such
            information with respect to such taxable year as the Secretary
            may by forms or regulations prescribe, including--
                        ``(A) the amount of the deduction taken under
                    section 642(c) within such year,
                        ``(B) the amount paid out within such year which
                    represents amounts for which deductions under section
                    642(c) have been taken in prior years,
                        ``(C) the amount for which such deductions have
                    been taken in prior years but which has not been paid
                    out at the beginning of such year,
                        ``(D) the amount paid out of principal in the
                    current and prior years for the purposes described in
                    section 642(c),
                        ``(E) the total income of the trust within such
                    year and the expenses attributable thereto, and
                        ``(F) a balance sheet showing the assets,
                    liabilities, and net worth of the trust as of the
                    beginning of such year.
                ``(2) Exceptions.--Paragraph (1) shall not apply to a trust
            for any taxable year if--
                        ``(A) all the net income for such year, determined
                    under the applicable principles of the law of trusts,
                    is required to be distributed currently to the
                    beneficiaries, or
                        ``(B) the trust is described in section
                    4947(a)(1).''.
                (2) Increase in penalty relating to filing of information
            return by split-interest trusts.--Paragraph (2) of section
            6652(c) (relating to returns by exempt organizations and by
            certain trusts) is amended by adding at the end the following
            new subparagraph:
                        ``(C) Split-interest trusts.--In the case of a
                    trust which is required to file a return under section
                    6034(a), subparagraphs (A) and (B) of this paragraph
                    shall not apply and paragraph (1) shall apply in the
                    same manner as if such return were required under
                    section 6033, except that--
                                ``(i) the 5 percent limitation in the
                            second sentence of paragraph (1)(A) shall not
                            apply,
                                ``(ii) in the case of any trust with gross
                            income in excess of $250,000, the first
                            sentence of paragraph (1)(A) shall be applied
                            by substituting `$100' for `$20', and the
                            second sentence thereof shall be applied by
                            substituting `$50,000' for `$10,000', and
                                ``(iii) the third sentence of paragraph
                            (1)(A) shall be disregarded.
                    In addition to any penalty imposed on the trust
                    pursuant to this subparagraph, if the person required
                    to file such return knowingly fails to file the return,
                    such penalty shall also be imposed on such person who
                    shall be personally liable for such penalty.''.
                (3) Confidentiality of noncharitable beneficiaries.--
            Subsection (b) of section 6104 (relating to inspection of
            annual information returns) is amended by adding at the end the
            following new sentence: ``In the case of a trust which is
            required to file a return under section 6034(a), this
            subsection shall not apply to information regarding
            beneficiaries which are not organizations described in section
            170(c).''.
                (4) Clerical amendment.--The item in the table of sections
            for subpart A of part III of subchapter A of chapter 61
            relating to section 6034 is amended to read as follows:

    ``Sec. 6034. Returns by certain trusts.''.
        (c) Effective Dates.--
                (1) Subsection (a).--The amendment made by subsection (a)
            shall apply to distributions made in taxable years beginning
            after December 31, 2005.
                (2) Subsection (b).--The amendments made by subsection (b)
            shall apply to returns for taxable years beginning after
            December 31, 2006.

    SEC. 1202. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION FOR
                  CONTRIBUTIONS OF FOOD INVENTORY.

        (a) In General.--Section 170(e)(3)(C)(iv) (relating to termination)
    is amended by striking ``2005'' and inserting ``2007''.
        (b) Effective Date.--The amendment made by this section shall apply
    to contributions made after December 31, 2005.

    SEC. 1203. BASIS ADJUSTMENT TO STOCK OF S CORPORATION CONTRIBUTING
                  PROPERTY.

        (a) In General.--Paragraph (2) of section 1367(a) (relating to
    adjustments to basis of stock of shareholders, etc.) is amended by
    adding at the end the following new flush sentence:
            ``The decrease under subparagraph (B) by reason of a charitable
            contribution (as defined in section 170(c)) of property shall
            be the amount equal to the shareholder's pro rata share of the
            adjusted basis of such property. The preceding sentence shall
            not apply to contributions made in taxable years beginning
            after December 31, 2007.''.
        (b) Effective Date.--The amendment made by this section shall apply
    to contributions made in taxable years beginning after December 31,
    2005.

    SEC. 1204. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION FOR
                  CONTRIBUTIONS OF BOOK INVENTORY.

        (a) In General.--Section 170(e)(3)(D)(iv) (relating to termination)
    is amended by striking ``2005'' and inserting ``2007''.
        (b) Effective Date.--The amendment made by this section shall apply
    to contributions made after December 31, 2005.

    SEC. 1205. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS TO
                  CONTROLLING EXEMPT ORGANIZATIONS.

        (a) In General.--Paragraph (13) of section 512(b) (relating to
    special rules for certain amounts received from controlled entities) is
    amended by redesignating subparagraph (E) as subparagraph (F) and by
    inserting after subparagraph (D) the following new subparagraph:
                        ``(E) Paragraph to apply only to certain excess
                    payments.--
                                ``(i) In general.--Subparagraph (A) shall
                            apply only to the portion of a qualifying
                            specified payment received or accrued by the
                            controlling organization that exceeds the
                            amount which would have been paid or accrued if
                            such payment met the requirements prescribed
                            under section 482.
                                ``(ii) Addition to tax for valuation
                            misstatements.--The tax imposed by this chapter
                            on the controlling organization shall be
                            increased by an amount equal to 20 percent of
                            the larger of--
                                        ``(I) such excess determined
                                    without regard to any amendment or
                                    supplement to a return of tax, or
                                        ``(II) such excess determined with
                                    regard to all such amendments and
                                    supplements.
                                ``(iii) Qualifying specified payment.--The
                            term `qualifying specified payment' means a
                            specified payment which is made pursuant to--
                                        ``(I) a binding written contract in
                                    effect on the date of the enactment of
                                    this subparagraph, or
                                        ``(II) a contract which is a
                                    renewal, under substantially similar
                                    terms, of a contract described in
                                    subclause (I).
                                ``(iv) Termination.--This subparagraph
                            shall not apply to payments received or accrued
                            after December 31, 2007.''.
        (b) Reporting.--
                (1) In general.--Section 6033 (relating to returns by
            exempt organizations) is amended by redesignating subsection
            (h) as subsection (i) and by inserting after subsection (g) the
            following new subsection:
        ``(h) Controlling Organizations.--Each controlling organization
    (within the meaning of section 512(b)(13)) which is subject to the
    requirements of subsection (a) shall include on the return required
    under subsection (a)--
                ``(1) any interest, annuities, royalties, or rents received
            from each controlled entity (within the meaning of section
            512(b)(13)),
                ``(2) any loans made to each such controlled entity, and
                ``(3) any transfers of funds between such controlling
            organization and each such controlled entity.''.
                (2) Report to congress.--Not later than January 1, 2009,
            the Secretary of the Treasury shall submit to the Committee on
            Finance of the Senate and the Committee on Ways and Means of
            the House of Representatives a report on the effectiveness of
            the Internal Revenue Service in administering the amendments
            made by subsection (a) and on the extent to which payments by
            controlled entities (within the meaning of section 512(b)(13)
            of the Internal Revenue Code of 1986) to controlling
            organizations (within the meaning of section 512(b)(13) of such
            Code) meet the requirements under section 482 of such Code.
            Such report shall include the results of any audit of any
            controlling organization or controlled entity and
            recommendations relating to the tax treatment of payments from
            controlled entities to controlling organizations.
        (c) Effective Date.--
                (1) Subsection (a).--The amendments made by subsection (a)
            shall apply to payments received or accrued after December 31,
            2005.
                (2) Subsection (b).--The amendments made by subsection (b)
            shall apply to returns the due date (determined without regard
            to extensions) of which is after the date of the enactment of
            this Act.

    SEC. 1206. ENCOURAGEMENT OF CONTRIBUTIONS OF CAPITAL GAIN REAL PROPERTY
                  MADE FOR CONSERVATION PURPOSES.

        (a) In General.--
                (1) Individuals.--Paragraph (1) of section 170(b) (relating
            to percentage limitations) is amended by redesignating
            subparagraphs (E) and (F) as subparagraphs (F) and (G),
            respectively, and by inserting after subparagraph (D) the
            following new subparagraph:
                        ``(E) Contributions of qualified conservation
                    contributions.--
                                ``(i) In general.--Any qualified
                            conservation contribution (as defined in
                            subsection (h)(1)) shall be allowed to the
                            extent the aggregate of such contributions does
                            not exceed the excess of 50 percent of the
                            taxpayer's contribution base over the amount of
                            all other charitable contributions allowable
                            under this paragraph.
                                ``(ii) Carryover.--If the aggregate amount
                            of contributions described in clause (i)
                            exceeds the limitation of clause (i), such
                            excess shall be treated (in a manner consistent
                            with the rules of subsection (d)(1)) as a
                            charitable contribution to which clause (i)
                            applies in each of the 15 succeeding years in
                            order of time.
                                ``(iii) Coordination with other
                            subparagraphs.--For purposes of applying this
                            subsection and subsection (d)(1), contributions
                            described in clause (i) shall not be treated as
                            described in subparagraph (A), (B), (C), or (D)
                            and such subparagraphs shall apply without
                            regard to such contributions.
                                ``(iv) Special rule for contribution of
                            property used in agriculture or livestock
                            production.--
                                        ``(I) In general.--If the
                                    individual is a qualified farmer or
                                    rancher for the taxable year for which
                                    the contribution is made, clause (i)
                                    shall be applied by substituting `100
                                    percent' for `50 percent'.
                                        ``(II) Exception.--Subclause (I)
                                    shall not apply to any contribution of
                                    property made after the date of the
                                    enactment of this subparagraph which is
                                    used in agriculture or livestock
                                    production (or available for such
                                    production) unless such contribution is
                                    subject to a restriction that such
                                    property remain available for such
                                    production. This subparagraph shall be
                                    applied separately with respect to
                                    property to which subclause (I) does
                                    not apply by reason of the preceding
                                    sentence prior to its application to
                                    property to which subclause (I) does
                                    apply.
                                ``(v) Definition.--For purposes of clause
                            (iv), the term `qualified farmer or rancher'
                            means a taxpayer whose gross income from the
                            trade or business of farming (within the
                            meaning of section 2032A(e)(5)) is greater than
                            50 percent of the taxpayer's gross income for
                            the taxable year.
                                ``(vi) Termination.--This subparagraph
                            shall not apply to any contribution made in
                            taxable years beginning after December 31,
                            2007.''.
                (2) Corporations.--Paragraph (2) of section 170(b) is
            amended to read as follows:
                ``(2) Corporations.--In the case of a corporation--
                        ``(A) In general.--The total deductions under
                    subsection (a) for any taxable year (other than for
                    contributions to which subparagraph (B) applies) shall
                    not exceed 10 percent of the taxpayer's taxable income.
                        ``(B) Qualified conservation contributions by
                    certain corporate farmers and ranchers.--
                                ``(i) In general.--Any qualified
                            conservation contribution (as defined in
                            subsection (h)(1))--
                                        ``(I) which is made by a
                                    corporation which, for the taxable year
                                    during which the contribution is made,
                                    is a qualified farmer or rancher (as
                                    defined in paragraph (1)(E)(v)) and the
                                    stock of which is not readily tradable
                                    on an established securities market at
                                    any time during such year, and
                                        ``(II) which, in the case of
                                    contributions made after the date of
                                    the enactment of this subparagraph, is
                                    a contribution of property which is
                                    used in agriculture or livestock
                                    production (or available for such
                                    production) and which is subject to a
                                    restriction that such property remain
                                    available for such production,
                            shall be allowed to the extent the aggregate of
                            such contributions does not exceed the excess
                            of the taxpayer's taxable income over the
                            amount of charitable contributions allowable
                            under subparagraph (A).
                                ``(ii) Carryover.--If the aggregate amount
                            of contributions described in clause (i)
                            exceeds the limitation of clause (i), such
                            excess shall be treated (in a manner consistent
                            with the rules of subsection (d)(2)) as a
                            charitable contribution to which clause (i)
                            applies in each of the 15 succeeding years in
                            order of time.
                                ``(iii) Termination.--This subparagraph
                            shall not apply to any contribution made in
                            taxable years beginning after December 31,
                            2007.
                        ``(C) Taxable income.--For purposes of this
                    paragraph, taxable income shall be computed without
                    regard to--
                                ``(i) this section,
                                ``(ii) part VIII (except section 248),
                                ``(iii) any net operating loss carryback to
                            the taxable year under section 172,
                                ``(iv) section 199, and
                                ``(v) any capital loss carryback to the
                            taxable year under section 1212(a)(1).''.
        (b) Conforming Amendments.--
                (1) Paragraph (2) of section 170(d) is amended by striking
            ``subsection (b)(2)'' each place it appears and inserting
            ``subsection (b)(2)(A)''.
                (2) Section 545(b)(2) is amended by striking ``and (D)''
            and inserting ``(D), and (E)''.
        (c) Effective Date.--The amendments made by this section shall
    apply to contributions made in taxable years beginning after December
    31, 2005.

    SEC. 1207. EXCISE TAXES EXEMPTION FOR BLOOD COLLECTOR ORGANIZATIONS.

        (a) Exemption From Imposition of Special Fuels Tax.--Section
    4041(g) (relating to other exemptions) is amended by striking ``and''
    at the end of paragraph (3), by striking the period in paragraph (4)
    and inserting ``; and'', and by inserting after paragraph (4) the
    following new paragraph:
                ``(5) with respect to the sale of any liquid to a qualified
            blood collector organization (as defined in section
            7701(a)(49)) for such organization's exclusive use in the
            collection, storage, or transportation of blood.''.
        (b) Exemption From Manufacturers Excise Tax.--
                (1) In general.--Section 4221(a) (relating to certain tax-
            free sales) is amended by striking ``or'' at the end of
            paragraph (4), by adding ``or'' at the end of paragraph (5),
            and by inserting after paragraph (5) the following new
            paragraph:
                ``(6) to a qualified blood collector organization (as
            defined in section 7701(a)(49)) for such organization's
            exclusive use in the collection, storage, or transportation of
            blood,''.
                (2) No exemption with respect to vaccines and recreational
            equipment.--Section 4221(a) is amended by adding at the end the
            following new sentence: ``In the case of taxes imposed by
            subchapter C or D, paragraph (6) shall not apply.''.
                (3) Conforming amendments.--
                        (A) The second sentence of section 4221(a) is
                    amended by striking ``Paragraphs (4) and (5)'' and
                    inserting ``Paragraphs (4), (5), and (6)''.
                        (B) Section 6421(c) is amended by striking ``or
                    (5)'' and inserting ``(5), or (6)''.
        (c) Exemption From Communication Excise Tax.--
                (1) In general.--Section 4253 (relating to exemptions) is
            amended by redesignating subsection (k) as subsection (l) and
            inserting after subsection (j) the following new subsection:
        ``(k) Exemption for Qualified Blood Collector Organizations.--Under
    regulations provided by the Secretary, no tax shall be imposed under
    section 4251 on any amount paid by a qualified blood collector
    organization (as defined in section 7701(a)(49)) for services or
    facilities furnished to such organization.''.
                (2) Conforming amendment.--Section 4253(l), as redesignated
            by paragraph (1), is amended by striking ``or (j)'' and
            inserting ``(j), or (k)''.
        (d) Exemption From Tax on Heavy Vehicles.--Section 4483 is amended
    by redesignating subsection (h) as subsection (i) and by inserting
    after subsection (g) the following new subsection:
        ``(h) Exemption for Vehicles Used in Blood Collection.--
                ``(1) In general.--No tax shall be imposed by section 4481
            on the use of any qualified blood collector vehicle by a
            qualified blood collector organization.
                ``(2) Qualified blood collector vehicle.--For purposes of
            this subsection, the term `qualified blood collector vehicle'
            means a vehicle at least 80 percent of the use of which during
            the prior taxable period was by a qualified blood collector
            organization in the collection, storage, or transportation of
            blood.
                ``(3) Special rule for vehicles first placed in service in
            a taxable period.--In the case of a vehicle first placed in
            service in a taxable period, a vehicle shall be treated as a
            qualified blood collector vehicle for such taxable period if
            such qualified blood collector organization certifies to the
            Secretary that the organization reasonably expects at least 80
            percent of the use of such vehicle by the organization during
            such taxable period will be in the collection, storage, or
            transportation of blood.
                ``(4) Qualified blood collector organization.--The term
            `qualified blood collector organization' has the meaning given
            such term by section 7701(a)(49).''.
        (e) Credit or Refund for Certain Taxes on Sales and Services.--
                (1) Deemed overpayment.--
                        (A) In general.--Section 6416(b)(2) is amended by
                    redesignating subparagraphs (E) and (F) as
                    subparagraphs (F) and (G), respectively, and by
                    inserting after subparagraph (D) the following new
                    subparagraph:
                        ``(E) sold to a qualified blood collector
                    organization (as defined in section 7701(a)(49)) for
                    such organization's exclusive use in the collection,
                    storage, or transportation of blood;''.
                        (B) No credit or refund for vaccines or
                    recreational equipment.--Section 6416(b)(2) is amended
                    by adding at the end the following new sentence: ``In
                    the case of taxes imposed by subchapter C or D of
                    chapter 32, subparagraph (E) shall not apply.''.
                        (C) Conforming amendments.--Section 6416(b)(2) is
                    amended--
                                (i) by striking ``Subparagraphs (C) and
                            (D)'' in the second sentence and inserting
                            ``Subparagraphs (C), (D), and (E)''.
                                (ii) by striking ``(B), (C), and (D)'' and
                            inserting ``(B), (C), (D), and (E)''.
                (2) Sales of tires.--Section 6416(b)(4)(B) is amended by
            striking ``or'' at the end of clause (i), by striking the
            period at the end of clause (ii) and inserting ``, or'', and by
            adding after clause (ii) the following:
                                ``(iii) sold to a qualified blood collector
                            organization for its exclusive use in
                            connection with a vehicle the organization
                            certifies will be primarily used in the
                            collection, storage, or transportation of
                            blood.''.
        (f) Definition of Qualified Blood Collector Organization.--Section
    7701(a) is amended by inserting at the end the following new paragraph:
                ``(49) Qualified blood collector organization.--The term
            `qualified blood collector organization' means an organization
            which is--
                        ``(A) described in section 501(c)(3) and exempt
                    from tax under section 501(a),
                        ``(B) primarily engaged in the activity of the
                    collection of human blood,
                        ``(C) registered with the Secretary for purposes of
                    excise tax exemptions, and
                        ``(D) registered by the Food and Drug
                    Administration to collect blood.''.
        (g) Effective Date.--
                (1) In general.--The amendments made by this section shall
            take effect on January 1, 2007.
                (2) Subsection (d).--The amendment made by subsection (d)
            shall apply to taxable periods beginning on or after July 1,
            2007.

                   Subtitle B--Reforming Exempt Organizations

                            PART 1--GENERAL REFORMS

    SEC. 1211. REPORTING ON CERTAIN ACQUISITIONS OF INTERESTS IN INSURANCE
                  CONTRACTS IN WHICH CERTAIN EXEMPT ORGANIZATIONS HOLD AN
                  INTEREST.

        (a) Reporting Requirements.--
                (1) In general.--Subpart B of part III of subchapter A of
            chapter 61 (relating to information concerning transactions
            with other persons), as amended by this Act, is amended by
            adding at the end the following new section:

    ``SEC. 6050V. RETURNS RELATING TO APPLICABLE INSURANCE CONTRACTS IN
                  WHICH CERTAIN EXEMPT ORGANIZATIONS HOLD INTERESTS.

        ``(a) In General.--Each applicable exempt organization which makes
    a reportable acquisition shall make the return described in subsection
    (c).
        ``(b) Time for Making Return.--Any applicable exempt organization
    required to make a return under subsection (a) shall file such return
    at such time as may be established by the Secretary.
        ``(c) Form and Manner of Returns.--A return is described in this
    subsection if such return--
                ``(1) is in such form as the Secretary prescribes,
                ``(2) contains the name, address, and taxpayer
            identification number of the applicable exempt organization and
            the issuer of the applicable insurance contract, and
                ``(3) contains such other information as the Secretary may
            prescribe.
        ``(d) Definitions.--For purposes of this section--
                ``(1) Reportable acquisition.--The term `reportable
            acquisition' means the acquisition by an applicable exempt
            organization of a direct or indirect interest in any applicable
            insurance contract in any case in which such acquisition is a
            part of a structured transaction involving a pool of such
            contracts.
                ``(2) Applicable insurance contract.--
                        ``(A) In general.--The term `applicable insurance
                    contract' means any life insurance, annuity, or
                    endowment contract with respect to which both an
                    applicable exempt organization and a person other than
                    an applicable exempt organization have directly or
                    indirectly held an interest in the contract (whether or
                    not at the same time).
                        ``(B) Exceptions.--Such term shall not include a
                    life insurance, annuity, or endowment contract if--
                                ``(i) all persons directly or indirectly
                            holding any interest in the contract (other
                            than applicable exempt organizations) have an
                            insurable interest in the insured under the
                            contract independent of any interest of an
                            applicable exempt organization in the contract,
                                ``(ii) the sole interest in the contract of
                            an applicable exempt organization or each
                            person other than an applicable exempt
                            organization is as a named beneficiary, or
                                ``(iii) the sole interest in the contract
                            of each person other than an applicable exempt
                            organization is--
                                        ``(I) as a beneficiary of a trust
                                    holding an interest in the contract,
                                    but only if the person's designation as
                                    such beneficiary was made without
                                    consideration and solely on a purely
                                    gratuitous basis, or
                                        ``(II) as a trustee who holds an
                                    interest in the contract in a fiduciary
                                    capacity solely for the benefit of
                                    applicable exempt organizations or
                                    persons otherwise described in
                                    subclause (I) or clause (i) or (ii).
                ``(3) Applicable exempt organization.--The term `applicable
            exempt organization' means--
                        ``(A) an organization described in section 170(c),
                        ``(B) an organization described in section
                    168(h)(2)(A)(iv), or
                        ``(C) an organization not described in paragraph
                    (1) or (2) which is described in section 2055(a) or
                    section 2522(a).
        ``(e) Termination.--This section shall not apply to reportable
    acquisitions occurring after the date which is 2 years after the date
    of the enactment of this section.''.
                (2) Conforming amendment.--The table of sections for
            subpart B of part III of subchapter A of chapter 61 is amended
            by adding at the end the following new item:

    ``Sec. 6050V. Returns relating to applicable insurance contracts in
                                which certain exempt organizations hold
                                interests.''.
        (b) Penalties.--
                (1) In general.--Subparagraph (B) of section 6724(d)(1), as
            amended by this Act, is amended by redesignating clauses (xiv)
            through (xix) as clauses (xv) through (xx) and by inserting
            after clause (xiii) the following new clause:
                                ``(xiv) section 6050V (relating to returns
                            relating to applicable insurance contracts in
                            which certain exempt organizations hold
                            interests),''.
                (2) Intentional disregard.--Section 6721(e)(2) is amended
            by striking ``or'' at the end of subparagraph (B), by striking
            ``and'' at the end of subparagraph (C) and inserting ``or'',
            and by adding at the end the following new subparagraph:
                        ``(D) in the case of a return required to be filed
                    under section 6050V, 10 percent of the value of the
                    benefit of any contract with respect to which
                    information is required to be included on the return,
                    and''.
        (c) Study.--
                (1) In general.--The Secretary of the Treasury shall
            undertake a study on--
                        (A) the use by tax exempt organizations of
                    applicable insurance contracts (as defined under
                    section 6050V(d)(2) of the Internal Revenue Code of
                    1986, as added by subsection (a)) for the purpose of
                    sharing the benefits of the organization's insurable
                    interest in individuals insured under such contracts
                    with investors, and
                        (B) whether such activities are consistent with the
                    tax exempt status of such organizations.
                (2) Report.--Not later than 30 months after the date of the
            enactment of this Act, the Secretary of the Treasury shall
            report on the study conducted under paragraph (1) to the
            Committee on Finance of the Senate and the Committee on Ways
            and Means of the House of Representatives.
        (d) Effective Date.--The amendments made by this section shall
    apply to acquisitions of contracts after the date of enactment of this
    Act.

    SEC. 1212. INCREASE IN PENALTY EXCISE TAXES RELATING TO PUBLIC
                  CHARITIES, SOCIAL WELFARE ORGANIZATIONS, AND PRIVATE
                  FOUNDATIONS.

        (a) Taxes on Self-Dealing and Excess Benefit Transactions.--
                (1) In general.--Section 4941(a) (relating to initial
            taxes) is amended--
                        (A) in paragraph (1), by striking ``5 percent'' and
                    inserting ``10 percent'', and
                        (B) in paragraph (2), by striking ``2\1/2\
                    percent'' and inserting ``5 percent''.
                (2) Increased limitation for managers on self-dealing.--
            Section 4941(c)(2) is amended by striking ``$10,000'' each
            place it appears in the text and heading thereof and inserting
            ``$20,000''.
                (3) Increased limitation for managers on excess benefit
            transactions.--Section 4958(d)(2) is amended by striking
            ``$10,000'' and inserting ``$20,000''.
        (b) Taxes on Failure to Distribute Income.--Section 4942(a)
    (relating to initial tax) is amended by striking ``15 percent'' and
    inserting ``30 percent''.
        (c) Taxes on Excess Business Holdings.--Section 4943(a)(1)
    (relating to imposition) is amended by striking ``5 percent'' and
    inserting ``10 percent''.
        (d) Taxes on Investments Which Jeopardize Charitable Purpose.--
                (1) In general.--Section 4944(a) (relating to initial
            taxes) is amended by striking ``5 percent'' both places it
            appears and inserting ``10 percent''.
                (2) Increased limitation for managers.--Section 4944(d)(2)
            is amended--
                        (A) by striking ``$5,000,'' and inserting
                    ``$10,000,'', and
                        (B) by striking ``$10,000.'' and inserting
                    ``$20,000.''.
        (e) Taxes on Taxable Expenditures.--
                (1) In general.--Section 4945(a) (relating to initial
            taxes) is amended--
                        (A) in paragraph (1), by striking ``10 percent''
                    and inserting ``20 percent'', and
                        (B) in paragraph (2), by striking ``2\1/2\
                    percent'' and inserting ``5 percent''.
                (2) Increased limitation for managers.--Section 4945(c)(2)
            is amended--
                        (A) by striking ``$5,000,'' and inserting
                    ``$10,000,'', and
                        (B) by striking ``$10,000.'' and inserting
                    ``$20,000.''.
        (f) Effective Date.--The amendments made by this section shall
    apply to taxable years beginning after the date of the enactment of
    this Act.

    SEC. 1213. REFORM OF CHARITABLE CONTRIBUTIONS OF CERTAIN EASEMENTS IN
                  REGISTERED HISTORIC DISTRICTS AND REDUCED DEDUCTION FOR
                  PORTION OF QUALIFIED CONSERVATION CONTRIBUTION
                  ATTRIBUTABLE TO REHABILITATION CREDIT.

        (a) Special Rules With Respect to Buildings in Registered Historic
    Districts.--
                (1) In general.--Paragraph (4) of section 170(h) (relating
            to definition of conservation purpose) is amended by
            redesignating subparagraph (B) as subparagraph (C) and by
            inserting after subparagraph (A) the following new
            subparagraph:
                        ``(B) Special rules with respect to buildings in
                    registered historic districts.--In the case of any
                    contribution of a qualified real property interest
                    which is a restriction with respect to the exterior of
                    a building described in subparagraph (C)(ii), such
                    contribution shall not be considered to be exclusively
                    for conservation purposes unless--
                                ``(i) such interest--
                                        ``(I) includes a restriction which
                                    preserves the entire exterior of the
                                    building (including the front, sides,
                                    rear, and height of the building), and
                                        ``(II) prohibits any change in the
                                    exterior of the building which is
                                    inconsistent with the historical
                                    character of such exterior,
                                ``(ii) the donor and donee enter into a
                            written agreement certifying, under penalty of
                            perjury, that the donee--
                                        ``(I) is a qualified organization
                                    (as defined in paragraph (3)) with a
                                    purpose of environmental protection,
                                    land conservation, open space
                                    preservation, or historic preservation,
                                    and
                                        ``(II) has the resources to manage
                                    and enforce the restriction and a
                                    commitment to do so, and
                                ``(iii) in the case of any contribution
                            made in a taxable year beginning after the date
                            of the enactment of this subparagraph, the
                            taxpayer includes with the taxpayer's return
                            for the taxable year of the contribution--
                                        ``(I) a qualified appraisal (within
                                    the meaning of subsection (f)(11)(E))
                                    of the qualified property interest,
                                        ``(II) photographs of the entire
                                    exterior of the building, and
                                        ``(III) a description of all
                                    restrictions on the development of the
                                    building.''.
        (b) Disallowance of Deduction for Structures and Land in Registered
    Historic Districts.--Subparagraph (C) of section 170(h)(4), as
    redesignated by subsection (a), is amended--
                (1) by striking ``any building, structure, or land area
            which'',
                (2) by inserting ``any building, structure, or land area
            which'' before ``is listed'' in clause (i), and
                (3) by inserting ``any building which'' before ``is
            located'' in clause (ii).
        (c) Filing Fee for Certain Contributions.--Subsection (f) of
    section 170 (relating to disallowance of deduction in certain cases and
    special rules) is amended by adding at the end the following new
    paragraph:
                ``(13) Contributions of certain interests in buildings
            located in registered historic districts.--
                        ``(A) In general.--No deduction shall be allowed
                    with respect to any contribution described in
                    subparagraph (B) unless the taxpayer includes with the
                    return for the taxable year of the contribution a $500
                    filing fee.
                        ``(B) Contribution described.--A contribution is
                    described in this subparagraph if such contribution is
                    a qualified conservation contribution (as defined in
                    subsection (h)) which is a restriction with respect to
                    the exterior of a building described in subsection
                    (h)(4)(C)(ii) and for which a deduction is claimed in
                    excess of $10,000.
                        ``(C) Dedication of fee.--Any fee collected under
                    this paragraph shall be used for the enforcement of the
                    provisions of subsection (h).''.
        (d) Reduced Deduction for Portion of Qualified Conservation
    Contribution Attributable to the Rehabilitation Credit.--Subsection (f)
    of section 170, as amended by subsection (c), is amended by adding at
    the end the following new paragraph:
                ``(14) Reduction for amounts attributable to rehabilitation
            credit.--In the case of any qualified conservation contribution
            (as defined in subsection (h)), the amount of the deduction
            allowed under this section shall be reduced by an amount which
            bears the same ratio to the fair market value of the
            contribution as--
                        ``(A) the sum of the credits allowed to the
                    taxpayer under section 47 for the 5 preceding taxable
                    years with respect to any building which is a part of
                    such contribution, bears to
                        ``(B) the fair market value of the building on the
                    date of the contribution.''.
        (e) Effective Dates.--
                (1) Special rules for buildings in registered historic
            districts.--The amendments made by subsection (a) shall apply
            to contributions made after July 25, 2006.
                (2) Disallowance of deduction for structures and land;
            reduction for rehabilitation credit.--The amendments made by
            subsections (b) and (d) shall apply to contributions made after
            the date of the enactment of this Act.
                (3) Filing fee.--The amendment made by subsection (c) shall
            apply to contributions made 180 days after the date of the
            enactment of this Act.

    SEC. 1214. CHARITABLE CONTRIBUTIONS OF TAXIDERMY PROPERTY.

        (a) Denial of Long-Term Capital Gain.--Subparagraph (B) of section
    170(e)(1) is amended by striking ``or'' at the end of clause (ii), by
    inserting ``or'' at the end of clause (iii), and by inserting after
    clause (iii) the following new clause:
                                ``(iv) of any taxidermy property which is
                            contributed by the person who prepared,
                            stuffed, or mounted the property or by any
                            person who paid or incurred the cost of such
                            preparation, stuffing, or mounting,''.
        (b) Treatment of Basis.--Subsection (f) of section 170, as amended
    by this Act, is amended by adding at the end the following new
    paragraph:
                ``(15) Special rule for taxidermy property.--
                        ``(A) Basis.--For purposes of this section and
                    notwithstanding section 1012, in the case of a
                    charitable contribution of taxidermy property which is
                    made by the person who prepared, stuffed, or mounted
                    the property or by any person who paid or incurred the
                    cost of such preparation, stuffing, or mounting, only
                    the cost of the preparing, stuffing, or mounting shall
                    be included in the basis of such property.
                        ``(B) Taxidermy property.--For purposes of this
                    section, the term `taxidermy property' means any work
                    of art which--
                                ``(i) is the reproduction or preservation
                            of an animal, in whole or in part,
                                ``(ii) is prepared, stuffed, or mounted for
                            purposes of recreating one or more
                            characteristics of such animal, and
                                ``(iii) contains a part of the body of the
                            dead animal.''.
        (c) Effective Date.--The amendment made by this section shall apply
    to contributions made after July 25, 2006.

    SEC. 1215. RECAPTURE OF TAX BENEFIT FOR CHARITABLE CONTRIBUTIONS OF
                  EXEMPT USE PROPERTY NOT USED FOR AN EXEMPT USE.

        (a) Recapture of Deduction on Certain Sales of Exempt Use
    Property.--
                (1) In general.--Clause (i) of section 170(e)(1)(B)
            (related to certain contributions of ordinary income and
            capital gain property) is amended to read as follows:
                                ``(i) of tangible personal property--
                                        ``(I) if the use by the donee is
                                    unrelated to the purpose or function
                                    constituting the basis for its
                                    exemption under section 501 (or, in the
                                    case of a governmental unit, to any
                                    purpose or function described in
                                    subsection (c)), or
                                        ``(II) which is applicable property
                                    (as defined in paragraph (7)(C)) which
                                    is sold, exchanged, or otherwise
                                    disposed of by the donee before the
                                    last day of the taxable year in which
                                    the contribution was made and with
                                    respect to which the donee has not made
                                    a certification in accordance with
                                    paragraph (7)(D),''.
                (2) Dispositions after close of taxable year.--Section
            170(e) is amended by adding at the end the following new
            paragraph:
                ``(7) Recapture of deduction on certain dispositions of
            exempt use property.--
                        ``(A) In general.--In the case of an applicable
                    disposition of applicable property, there shall be
                    included in the income of the donor of such property
                    for the taxable year of such donor in which the
                    applicable disposition occurs an amount equal to the
                    excess (if any) of--
                                ``(i) the amount of the deduction allowed
                            to the donor under this section with respect to
                            such property, over
                                ``(ii) the donor's basis in such property
                            at the time such property was contributed.
                        ``(B) Applicable disposition.--For purposes of this
                    paragraph, the term `applicable disposition' means any
                    sale, exchange, or other disposition by the donee of
                    applicable property--
                                ``(i) after the last day of the taxable
                            year of the donor in which such property was
                            contributed, and
                                ``(ii) before the last day of the 3-year
                            period beginning on the date of the
                            contribution of such property,
                    unless the donee makes a certification in accordance
                    with subparagraph (D).
                        ``(C) Applicable property.--For purposes of this
                    paragraph, the term `applicable property' means
                    charitable deduction property (as defined in section
                    6050L(a)(2)(A))--
                                ``(i) which is tangible personal property
                            the use of which is identified by the donee as
                            related to the purpose or function constituting
                            the basis of the donee's exemption under
                            section 501, and
                                ``(ii) for which a deduction in excess of
                            the donor's basis is allowed.
                        ``(D) Certification.--A certification meets the
                    requirements of this subparagraph if it is a written
                    statement which is signed under penalty of perjury by
                    an officer of the donee organization and--
                                ``(i) which--
                                        ``(I) certifies that the use of the
                                    property by the donee was related to
                                    the purpose or function constituting
                                    the basis for the donee's exemption
                                    under section 501, and
                                        ``(II) describes how the property
                                    was used and how such use furthered
                                    such purpose or function, or
                                ``(ii) which--
                                        ``(I) states the intended use of
                                    the property by the donee at the time
                                    of the contribution, and
                                        ``(II) certifies that such intended
                                    use has become impossible or infeasible
                                    to implement.''.
        (b) Reporting Requirements.--Paragraph (1) of section 6050L(a)
    (relating to returns relating to certain dispositions of donated
    property) is amended--
                (1) by striking ``2 years'' and inserting ``3 years'', and
                (2) by striking ``and'' at the end of subparagraph (D), by
            striking the period at the end of subparagraph (E) and
            inserting a comma, and by inserting at the end the following:
                        ``(F) a description of the donee's use of the
                    property, and
                        ``(G) a statement indicating whether the use of the
                    property was related to the purpose or function
                    constituting the basis for the donee's exemption under
                    section 501.
            In any case in which the donee indicates that the use of
            applicable property (as defined in section 170(e)(7)(C)) was
            related to the purpose or function constituting the basis for
            the exemption of the donee under section 501 under subparagraph
            (G), the donee shall include with the return the certification
            described in section 170(e)(7)(D) if such certification is made
            under section 170(e)(7).''.
        (c) Penalty.--
                (1) In general.--Part I of subchapter B of chapter 68
            (relating to assessable penalties) is amended by inserting
            after section 6720A the following new section:

    ``SEC. 6720B. FRAUDULENT IDENTIFICATION OF EXEMPT USE PROPERTY.

        ``In addition to any criminal penalty provided by law, any person
    who identifies applicable property (as defined in section 170(e)(7)(C))
    as having a use which is related to a purpose or function constituting
    the basis for the donee's exemption under section 501 and who knows
    that such property is not intended for such a use shall pay a penalty
    of $10,000.''.
                (2) Clerical amendment.--The table of sections for part I
            of subchapter B of chapter 68 is amended by adding after the
            item relating to section 6720A the following new item:

    ``Sec. 6720B. Fraudulent identification of exempt use property.''.
        (d) Effective Date.--
                (1) Recapture.--The amendments made by subsection (a) shall
            apply to contributions after September 1, 2006.
                (2) Reporting.--The amendments made by subsection (b) shall
            apply to returns filed after September 1, 2006.
                (3) Penalty.--The amendments made by subsection (c) shall
            apply to identifications made after the date of the enactment
            of this Act.

    SEC. 1216. LIMITATION OF DEDUCTION FOR CHARITABLE CONTRIBUTIONS OF
                  CLOTHING AND HOUSEHOLD ITEMS.

        (a) In General.--Subsection (f) of section 170, as amended by this
    Act, is amended by adding at the end the following new paragraph:
                ``(16) Contributions of clothing and household items.--
                        ``(A) In general.--In the case of an individual,
                    partnership, or corporation, no deduction shall be
                    allowed under subsection (a) for any contribution of
                    clothing or a household item unless such clothing or
                    household item is in good used condition or better.
                        ``(B) Items of minimal value.--Notwithstanding
                    subparagraph (A), the Secretary may by regulation deny
                    a deduction under subsection (a) for any contribution
                    of clothing or a household item which has minimal
                    monetary value.
                        ``(C) Exception for certain property.--
                    Subparagraphs (A) and (B) shall not apply to any
                    contribution of a single item of clothing or a
                    household item for which a deduction of more than $500
                    is claimed if the taxpayer includes with the taxpayer's
                    return a qualified appraisal with respect to the
                    property.
                        ``(D) Household items.--For purposes of this
                    paragraph--
                                ``(i) In general.--The term `household
                            items' includes furniture, furnishings,
                            electronics, appliances, linens, and other
                            similar items.
                                ``(ii) Excluded items.--Such term does not
                            include--
                                        ``(I) food,
                                        ``(II) paintings, antiques, and
                                    other objects of art,
                                        ``(III) jewelry and gems, and
                                        ``(IV) collections.
                        ``(E) Special rule for pass-thru entities.--In the
                    case of a partnership or S corporation, this paragraph
                    shall be applied at the entity level, except that the
                    deduction shall be denied at the partner or shareholder
                    level.''.
        (b) Effective Date.--The amendment made by this section shall apply
    to contributions made after the date of enactment of this Act.

    SEC. 1217. MODIFICATION OF RECORDKEEPING REQUIREMENTS FOR CERTAIN
                  CHARITABLE CONTRIBUTIONS.

        (a) Recordkeeping Requirement.--Subsection (f) of section 170, as
    amended by this Act, is amended by adding at the end the following new
    paragraph:
                ``(17) Recordkeeping.--No deduction shall be allowed under
            subsection (a) for any contribution of a cash, check, or other
            monetary gift unless the donor maintains as a record of such
            contribution a bank record or a written communication from the
            donee showing the name of the donee organization, the date of
            the contribution, and the amount of the contribution.''.
        (b) Effective Date.--The amendment made by this section shall apply
    to contributions made in taxable years beginning after the date of the
    enactment of this Act.

    SEC. 1218. CONTRIBUTIONS OF FRACTIONAL INTERESTS IN TANGIBLE PERSONAL
                  PROPERTY.

        (a) Income Tax.--Section 170 (relating to charitable, etc.,
    contributions and gifts) is amended by redesignating subsection (o) as
    subsection (p) and by inserting after subsection (n) the following new
    subsection:
        ``(o) Special Rules for Fractional Gifts.--
                ``(1) Denial of deduction in certain cases.--
                        ``(A) In general.--No deduction shall be allowed
                    for a contribution of an undivided portion of a
                    taxpayer's entire interest in tangible personal
                    property unless all interest in the property is held
                    immediately before such contribution by--
                                ``(i) the taxpayer, or
                                ``(ii) the taxpayer and the donee.
                        ``(B) Exceptions.--The Secretary may, by
                    regulation, provide for exceptions to subparagraph (A)
                    in cases where all persons who hold an interest in the
                    property make proportional contributions of an
                    undivided portion of the entire interest held by such
                    persons.
                ``(2) Valuation of subsequent gifts.--In the case of any
            additional contribution, the fair market value of such
            contribution shall be determined by using the lesser of--
                        ``(A) the fair market value of the property at the
                    time of the initial fractional contribution, or
                        ``(B) the fair market value of the property at the
                    time of the additional contribution.
                ``(3) Recapture of deduction in certain cases; addition to
            tax.--
                        ``(A) Recapture.--The Secretary shall provide for
                    the recapture of the amount of any deduction allowed
                    under this section (plus interest) with respect to any
                    contribution of an undivided portion of a taxpayer's
                    entire interest in tangible personal property--
                                ``(i) in any case in which the donor does
                            not contribute all of the remaining interest in
                            such property to the donee (or, if such donee
                            is no longer in existence, to any person
                            described in section 170(c)) before the earlier
                            of--
                                        ``(I) the date that is 10 years
                                    after the date of the initial
                                    fractional contribution, or
                                        ``(II) the date of the death of the
                                    donor, and
                                ``(ii) in any case in which the donee has
                            not, during the period beginning on the date of
                            the initial fractional contribution and ending
                            on the date described in clause (i)--
                                        ``(I) had substantial physical
                                    possession of the property, and
                                        ``(II) used the property in a use
                                    which is related to a purpose or
                                    function constituting the basis for the
                                    organizations' exemption under section
                                    501.
                        ``(B) Addition to tax.--The tax imposed under this
                    chapter for any taxable year for which there is a
                    recapture under subparagraph (A) shall be increased by
                    10 percent of the amount so recaptured.
                ``(4) Definitions.--For purposes of this subsection--
                        ``(A) Additional contribution.--The term
                    `additional contribution' means any charitable
                    contribution by the taxpayer of any interest in
                    property with respect to which the taxpayer has
                    previously made an initial fractional contribution.
                        ``(B) Initial fractional contribution.--The term
                    `initial fractional contribution' means, with respect
                    to any taxpayer, the first charitable contribution of
                    an undivided portion of the taxpayer's entire interest
                    in any tangible personal property.''.
        (b) Estate Tax.--Section 2055 (relating to transfers for public,
    charitable, and religious uses) is amended by redesignating subsection
    (g) as subsection (h) and by inserting after subsection (f) the
    following new subsection:
        ``(g) Valuation of Subsequent Gifts.--
                ``(1) In general.--In the case of any additional
            contribution, the fair market value of such contribution shall
            be determined by using the lesser of--
                        ``(A) the fair market value of the property at the
                    time of the initial fractional contribution, or
                        ``(B) the fair market value of the property at the
                    time of the additional contribution.
                ``(2) Definitions.--For purposes of this paragraph--
                        ``(A) Additional contribution.--The term
                    `additional contribution' means a bequest, legacy,
                    devise, or transfer described in subsection (a) of any
                    interest in a property with respect to which the
                    decedent had previously made an initial fractional
                    contribution.
                        ``(B) Initial fractional contribution.--The term
                    `initial fractional contribution' means, with respect
                    to any decedent, any charitable contribution of an
                    undivided portion of the decedent's entire interest in
                    any tangible personal property for which a deduction
                    was allowed under section 170.''.
        (c) Gift Tax.--Section 2522 (relating to charitable and similar
    gifts) is amended by redesignating subsection (e) as subsection (f) and
    by inserting after subsection (d) the following new subsection:
        ``(e) Special Rules for Fractional Gifts.--
                ``(1) Denial of deduction in certain cases.--
                        ``(A) In general.--No deduction shall be allowed
                    for a contribution of an undivided portion of a
                    taxpayer's entire interest in tangible personal
                    property unless all interest in the property is held
                    immediately before such contribution by--
                                ``(i) the taxpayer, or
                                ``(ii) the taxpayer and the donee.
                        ``(B) Exceptions.--The Secretary may, by
                    regulation, provide for exceptions to subparagraph (A)
                    in cases where all persons who hold an interest in the
                    property make proportional contributions of an
                    undivided portion of the entire interest held by such
                    persons.
                ``(2) Valuation of subsequent gifts.--In the case of any
            additional contribution, the fair market value of such
            contribution shall be determined by using the lesser of--
                        ``(A) the fair market value of the property at the
                    time of the initial fractional contribution, or
                        ``(B) the fair market value of the property at the
                    time of the additional contribution.
                ``(3) Recapture of deduction in certain cases; addition to
            tax.--
                        ``(A) In general.--The Secretary shall provide for
                    the recapture of an amount equal to any deduction
                    allowed under this section (plus interest) with respect
                    to any contribution of an undivided portion of a
                    taxpayer's entire interest in tangible personal
                    property--
                                ``(i) in any case in which the donor does
                            not contribute all of the remaining interest in
                            such property to the donee (or, if such donee
                            is no longer in existence, to any person
                            described in section 170(c)) before the earlier
                            of--
                                        ``(I) the date that is 10 years
                                    after the date of the initial
                                    fractional contribution, or
                                        ``(II) the date of the death of the
                                    donor, and
                                ``(ii) in any case in which the donee has
                            not, during the period beginning on the date of
                            the initial fractional contribution and ending
                            on the date described in clause (i)--
                                        ``(I) had substantial physical
                                    possession of the property, and
                                        ``(II) used the property in a use
                                    which is related to a purpose or
                                    function constituting the basis for the
                                    organizations' exemption under section
                                    501.
                        ``(B) Addition to tax.--The tax imposed under this
                    chapter for any taxable year for which there is a
                    recapture under subparagraph (A) shall be increased by
                    10 percent of the amount so recaptured.
                ``(4) Definitions.--For purposes of this subsection--
                        ``(A) Additional contribution.--The term
                    `additional contribution' means any gift for which a
                    deduction is allowed under subsection (a) or (b) of any
                    interest in a property with respect to which the donor
                    has previously made an initial fractional contribution.
                        ``(B) Initial fractional contribution.--The term
                    `initial fractional contribution' means, with respect
                    to any donor, the first gift of an undivided portion of
                    the donor's entire interest in any tangible personal
                    property for which a deduction is allowed under
                    subsection (a) or (b).''.
        (d) Effective Date.--The amendments made by this section shall
    apply to contributions, bequests, and gifts made after the date of the
    enactment of this Act.

    SEC. 1219. PROVISIONS RELATING TO SUBSTANTIAL AND GROSS OVERSTATEMENTS
                  OF VALUATIONS.

        (a) Modification of Thresholds for Substantial and Gross Valuation
    Misstatements.--
                (1) Substantial valuation misstatement.--
                        (A) Income taxes.--Subparagraph (A) of section
                    6662(e)(1) (relating to substantial valuation
                    misstatement under chapter 1) is amended by striking
                    ``200 percent'' and inserting ``150 percent''.
                        (B) Estate and gift taxes.--Paragraph (1) of
                    section 6662(g) is amended by striking ``50 percent''
                    and inserting ``65 percent''.
                (2) Gross valuation misstatement.--
                        (A) Income taxes.--Clauses (i) and (ii) of section
                    6662(h)(2)(A) (relating to increase in penalty in case
                    of gross valuation misstatements) are amended to read
                    as follows:
                                ``(i) in paragraph (1)(A), `200 percent'
                            for `150 percent',
                                ``(ii) in paragraph (1)(B)(i)--
                                        ``(I) `400 percent' for `200
                                    percent', and
                                        ``(II) `25 percent' for `50
                                    percent', and''.
                        (B) Estate and gift taxes.--Subparagraph (C) of
                    section 6662(h)(2) is amended by striking ```25
                    percent' for `50 percent''' and inserting ```40
                    percent' for `65 percent'''.
                (3) Elimination of reasonable cause exception for gross
            misstatements.--Section 6664(c)(2) (relating to reasonable
            cause exception for underpayments) is amended by striking
            ``paragraph (1) shall not apply unless'' and inserting
            ``paragraph (1) shall not apply. The preceding sentence shall
            not apply to a substantial valuation overstatement under
            chapter 1 if''.
        (b) Penalty on Appraisers Whose Appraisals Result in Substantial or
    Gross Valuation Misstatements.--
                (1) In general.--Part I of subchapter B of chapter 68
            (relating to assessable penalties) is amended by inserting
            after section 6695 the following new section:

    ``SEC. 6695A. SUBSTANTIAL AND GROSS VALUATION MISSTATEMENTS
                  ATTRIBUTABLE TO INCORRECT APPRAISALS.

        ``(a) Imposition of Penalty.--If--
                ``(1) a person prepares an appraisal of the value of
            property and such person knows, or reasonably should have
            known, that the appraisal would be used in connection with a
            return or a claim for refund, and
                ``(2) the claimed value of the property on a return or
            claim for refund which is based on such appraisal results in a
            substantial valuation misstatement under chapter 1 (within the
            meaning of section 6662(e)), or a gross valuation misstatement
            (within the meaning of section 6662(h)), with respect to such
            property, then such person shall pay a penalty in the amount
            determined under subsection (b).
        ``(b) Amount of Penalty.--The amount of the penalty imposed under
    subsection (a) on any person with respect to an appraisal shall be
    equal to the lesser of--
                ``(1) the greater of--
                        ``(A) 10 percent of the amount of the underpayment
                    (as defined in section 6664(a)) attributable to the
                    misstatement described in subsection (a)(2), or
                        ``(B) $1,000, or
                ``(2) 125 percent of the gross income received by the
            person described in subsection (a)(1) from the preparation of
            the appraisal.
        ``(c) Exception.--No penalty shall be imposed under subsection (a)
    if the person establishes to the satisfaction of the Secretary that the
    value established in the appraisal was more likely than not the proper
    value.''.
                (2) Rules applicable to penalty.--Section 6696 (relating to
            rules applicable with respect to sections 6694 and 6695) is
            amended--
                        (A) by striking ``6694 and 6695'' each place it
                    appears in the text and heading thereof and inserting
                    ``6694, 6695, and 6695A'', and
                        (B) by striking ``6694 or 6695'' each place it
                    appears in the text and inserting ``6694, 6695, or
                    6695A''.
                (3) Conforming amendment.--The table of sections for part I
            of subchapter B of chapter 68 is amended by striking the item
            relating to section 6696 and inserting the following new items:

    ``Sec. 6695A. Substantial and gross valuation misstatements
                                attributable to incorrect appraisals.
    ``Sec. 6696. Rules applicable with respect to sections 6694, 6695, and
                                6695A.''.
        (c) Qualified Appraisers and Appraisals.--
                (1) In general.--Subparagraph (E) of section 170(f)(11) is
            amended to read as follows:
                        ``(E) Qualified appraisal and appraiser.--For
                    purposes of this paragraph--
                                ``(i) Qualified appraisal.--The term
                            `qualified appraisal' means, with respect to
                            any property, an appraisal of such property
                            which--
                                        ``(I) is treated for purposes of
                                    this paragraph as a qualified appraisal
                                    under regulations or other guidance
                                    prescribed by the Secretary, and
                                        ``(II) is conducted by a qualified
                                    appraiser in accordance with generally
                                    accepted appraisal standards and any
                                    regulations or other guidance
                                    prescribed under subclause (I).
                                ``(ii) Qualified appraiser.--Except as
                            provided in clause (iii), the term `qualified
                            appraiser' means an individual who--
                                        ``(I) has earned an appraisal
                                    designation from a recognized
                                    professional appraiser organization or
                                    has otherwise met minimum education and
                                    experience requirements set forth in
                                    regulations prescribed by the
                                    Secretary,
                                        ``(II) regularly performs
                                    appraisals for which the individual
                                    receives compensation, and
                                        ``(III) meets such other
                                    requirements as may be prescribed by
                                    the Secretary in regulations or other
                                    guidance.
                                ``(iii) Specific appraisals.--An individual
                            shall not be treated as a qualified appraiser
                            with respect to any specific appraisal unless--
                                        ``(I) the individual demonstrates
                                    verifiable education and experience in
                                    valuing the type of property subject to
                                    the appraisal, and
                                        ``(II) the individual has not been
                                    prohibited from practicing before the
                                    Internal Revenue Service by the
                                    Secretary under section 330(c) of title
                                    31, United States Code, at any time
                                    during the 3-year period ending on the
                                    date of the appraisal.''.
                (2) Reasonable cause exception.--Subparagraphs (B) and (C)
            of section 6664(c)(3) are amended to read as follows:
                        ``(B) Qualified appraisal.--The term `qualified
                    appraisal' has the meaning given such term by section
                    170(f)(11)(E)(i).
                        ``(C) Qualified appraiser.--The term `qualified
                    appraiser' has the meaning given such term by section
                    170(f)(11)(E)(ii).''.
        (d) Disciplinary Actions Against Appraisers.--Section 330(c) of
    title 31, United States Code, is amended by striking ``with respect to
    whom a penalty has been assessed under section 6701(a) of the Internal
    Revenue Code of 1986''.
        (e) Effective Dates.--
                (1) Misstatement penalties.--Except as provided in
            paragraph (3), the amendments made by subsection (a) shall
            apply to returns filed after the date of the enactment of this
            Act.
                (2) Appraiser provisions.--Except as provided in paragraph
            (3), the amendments made by subsections (b), (c), and (d) shall
            apply to appraisals prepared with respect to returns or
            submissions filed after the date of the enactment of this Act.
                (3) Special rule for certain easements.--In the case of a
            contribution of a qualified real property interest which is a
            restriction with respect to the exterior of a building
            described in section 170(h)(4)(C)(ii) of the Internal Revenue
            Code of 1986, and an appraisal with respect to the
            contribution, the amendments made by subsections (a) and (b)
            shall apply to returns filed after July 25, 2006.

    SEC. 1220. ADDITIONAL STANDARDS FOR CREDIT COUNSELING ORGANIZATIONS.

        (a) In General.--Section 501 (relating to exemption from tax on
    corporations, certain trusts, etc.) is amended by redesignating
    subsection (q) as subsection (r) and by inserting after subsection (p)
    the following new subsection:
        ``(q) Special Rules for Credit Counseling Organizations.--
                ``(1) In general.--An organization with respect to which
            the provision of credit counseling services is a substantial
            purpose shall not be exempt from tax under subsection (a)
            unless such organization is described in paragraph (3) or (4)
            of subsection (c) and such organization is organized and
            operated in accordance with the following requirements:
                        ``(A) The organization--
                                ``(i) provides credit counseling services
                            tailored to the specific needs and
                            circumstances of consumers,
                                ``(ii) makes no loans to debtors (other
                            than loans with no fees or interest) and does
                            not negotiate the making of loans on behalf of
                            debtors,
                                ``(iii) provides services for the purpose
                            of improving a consumer's credit record, credit
                            history, or credit rating only to the extent
                            that such services are incidental to providing
                            credit counseling services, and
                                ``(iv) does not charge any separately
                            stated fee for services for the purpose of
                            improving any consumer's credit record, credit
                            history, or credit rating.
                        ``(B) The organization does not refuse to provide
                    credit counseling services to a consumer due to the
                    inability of the consumer to pay, the ineligibility of
                    the consumer for debt management plan enrollment, or
                    the unwillingness of the consumer to enroll in a debt
                    management plan.
                        ``(C) The organization establishes and implements a
                    fee policy which--
                                ``(i) requires that any fees charged to a
                            consumer for services are reasonable,
                                ``(ii) allows for the waiver of fees if the
                            consumer is unable to pay, and
                                ``(iii) except to the extent allowed by
                            State law, prohibits charging any fee based in
                            whole or in part on a percentage of the
                            consumer's debt, the consumer's payments to be
                            made pursuant to a debt management plan, or the
                            projected or actual savings to the consumer
                            resulting from enrolling in a debt management
                            plan.
                        ``(D) At all times the organization has a board of
                    directors or other governing body--
                                ``(i) which is controlled by persons who
                            represent the broad interests of the public,
                            such as public officials acting in their
                            capacities as such, persons having special
                            knowledge or expertise in credit or financial
                            education, and community leaders,
                                ``(ii) not more than 20 percent of the
                            voting power of which is vested in persons who
                            are employed by the organization or who will
                            benefit financially, directly or indirectly,
                            from the organization's activities (other than
                            through the receipt of reasonable directors'
                            fees or the repayment of consumer debt to
                            creditors other than the credit counseling
                            organization or its affiliates), and
                                ``(iii) not more than 49 percent of the
                            voting power of which is vested in persons who
                            are employed by the organization or who will
                            benefit financially, directly or indirectly,
                            from the organization's activities (other than
                            through the receipt of reasonable directors'
                            fees).
                        ``(E) The organization does not own more than 35
                    percent of--
                                ``(i) the total combined voting power of
                            any corporation (other than a corporation which
                            is an organization described in subsection
                            (c)(3) and exempt from tax under subsection
                            (a)) which is in the trade or business of
                            lending money, repairing credit, or providing
                            debt management plan services, payment
                            processing, or similar services,
                                ``(ii) the profits interest of any
                            partnership (other than a partnership which is
                            an organization described in subsection (c)(3)
                            and exempt from tax under subsection (a)) which
                            is in the trade or business of lending money,
                            repairing credit, or providing debt management
                            plan services, payment processing, or similar
                            services, and
                                ``(iii) the beneficial interest of any
                            trust or estate (other than a trust which is an
                            organization described in subsection (c)(3) and
                            exempt from tax under subsection (a)) which is
                            in the trade or business of lending money,
                            repairing credit, or providing debt management
                            plan services, payment processing, or similar
                            services.
                        ``(F) The organization receives no amount for
                    providing referrals to others for debt management plan
                    services, and pays no amount to others for obtaining
                    referrals of consumers.
                ``(2) Additional requirements for organizations described
            in subsection (c)(3).--
                        ``(A) In general.--In addition to the requirements
                    under paragraph (1), an organization with respect to
                    which the provision of credit counseling services is a
                    substantial purpose and which is described in paragraph
                    (3) of subsection (c) shall not be exempt from tax
                    under subsection (a) unless such organization is
                    organized and operated in accordance with the following
                    requirements:
                                ``(i) The organization does not solicit
                            contributions from consumers during the initial
                            counseling process or while the consumer is
                            receiving services from the organization.
                                ``(ii) The aggregate revenues of the
                            organization which are from payments of
                            creditors of consumers of the organization and
                            which are attributable to debt management plan
                            services do not exceed the applicable
                            percentage of the total revenues of the
                            organization.
                        ``(B) Applicable percentage.--
                                ``(i) In general.--For purposes of
                            subparagraph (A)(ii), the applicable percentage
                            is 50 percent.
                                ``(ii) Transition rule.--Notwithstanding
                            clause (i), in the case of an organization with
                            respect to which the provision of credit
                            counseling services is a substantial purpose
                            and which is described in paragraph (3) of
                            subsection (c) and exempt from tax under
                            subsection (a) on the date of the enactment of
                            this subsection, the applicable percentage is--
                                        ``(I) 80 percent for the first
                                    taxable year of such organization
                                    beginning after the date which is 1
                                    year after the date of the enactment of
                                    this subsection, and
                                        ``(II) 70 percent for the second
                                    such taxable year beginning after such
                                    date, and
                                        ``(III) 60 percent for the third
                                    such taxable year beginning after such
                                    date.
                ``(3) Additional requirement for organizations described in
            subsection (c)(4).--In addition to the requirements under
            paragraph (1), an organization with respect to which the
            provision of credit counseling services is a substantial
            purpose and which is described in paragraph (4) of subsection
            (c) shall not be exempt from tax under subsection (a) unless
            such organization notifies the Secretary, in such manner as the
            Secretary may by regulations prescribe, that it is applying for
            recognition as a credit counseling organization.
                ``(4) Credit counseling services; debt management plan
            services.--For purposes of this subsection--
                        ``(A) Credit counseling services.--The term `credit
                    counseling services' means--
                                ``(i) the providing of educational
                            information to the general public on budgeting,
                            personal finance, financial literacy, saving
                            and spending practices, and the sound use of
                            consumer credit,
                                ``(ii) the assisting of individuals and
                            families with financial problems by providing
                            them with counseling, or
                                ``(iii) a combination of the activities
                            described in clauses (i) and (ii).
                        ``(B) Debt management plan services.--The term
                    `debt management plan services' means services related
                    to the repayment, consolidation, or restructuring of a
                    consumer's debt, and includes the negotiation with
                    creditors of lower interest rates, the waiver or
                    reduction of fees, and the marketing and processing of
                    debt management plans.''.
        (b) Debt Management Plan Services Treated as an Unrelated
    Business.--Section 513 (relating to unrelated trade or business) is
    amended by adding at the end the following:
        ``(j) Debt Management Plan Services.--The term `unrelated trade or
    business' includes the provision of debt management plan services (as
    defined in section 501(q)(4)(B)) by any organization other than an
    organization which meets the requirements of section 501(q).''.
        (c) Effective Date.--
                (1) In general.--Except as provided in paragraph (2), the
            amendments made by this section shall apply to taxable years
            beginning after the date of the enactment of this Act.
                (2) Transition rule for existing organizations.--In the
            case of any organization described in paragraph (3) or (4)
            section 501(c) of the Internal Revenue Code of 1986 and with
            respect to which the provision of credit counseling services is
            a substantial purpose on the date of the enactment of this Act,
            the amendments made by this section shall apply to taxable
            years beginning after the date which is 1 year after the date
            of the enactment of this Act.

    SEC. 1221. EXPANSION OF THE BASE OF TAX ON PRIVATE FOUNDATION NET
                  INVESTMENT INCOME.

        (a) Gross Investment Income.--
                (1) In general.--Paragraph (2) of section 4940(c) (relating
            to gross investment income) is amended by adding at the end the
            following new sentence: ``Such term shall also include income
            from sources similar to those in the preceding sentence.''.
                (2) Conforming amendment.--Subsection (e) of section 509
            (relating to gross investment income) is amended by adding at
            the end the following new sentence: ``Such term shall also
            include income from sources similar to those in the preceding
            sentence.''.
        (b) Capital Gain Net Income.--Paragraph (4) of section 4940(c)
    (relating to capital gains and losses) is amended--
                (1) in subparagraph (A), by striking ``used for the
            production of interest, dividends, rents, and royalties'' and
            inserting ``used for the production of gross investment income
            (as defined in paragraph (2))'',
                (2) in subparagraph (C), by inserting ``or carrybacks''
            after ``carryovers'', and
                (3) by adding at the end the following new subparagraph:
                        ``(D) Except to the extent provided by regulation,
                    under rules similar to the rules of section 1031
                    (including the exception under subsection (a)(2)
                    thereof), no gain or loss shall be taken into account
                    with respect to any portion of property used for a
                    period of not less than 1 year for a purpose or
                    function constituting the basis of the private
                    foundation's exemption if the entire property is
                    exchanged immediately following such period solely for
                    property of like kind which is to be used primarily for
                    a purpose or function constituting the basis for such
                    foundation's exemption.''.
        (c) Effective Date.--The amendments made by this section shall
    apply to taxable years beginning after the date of the enactment of
    this Act.

    SEC. 1222. DEFINITION OF CONVENTION OR ASSOCIATION OF CHURCHES.

        Section 7701 (relating to definitions) is amended by redesignating
    subsection (o) as subsection (p) and by inserting after subsection (n)
    the following new subsection:
        ``(o) Convention or Association of Churches.--For purposes of this
    title, any organization which is otherwise a convention or association
    of churches shall not fail to so qualify merely because the membership
    of such organization includes individuals as well as churches or
    because individuals have voting rights in such organization.''.

    SEC. 1223. NOTIFICATION REQUIREMENT FOR ENTITIES NOT CURRENTLY REQUIRED
                  TO FILE.

        (a) In General.--Section 6033 (relating to returns by exempt
    organizations), as amended by this Act, is amended by redesignating
    subsection (i) as subsection (j) and by inserting after subsection (h)
    the following new subsection:
        ``(i) Additional Notification Requirements.--Any organization the
    gross receipts of which in any taxable year result in such organization
    being referred to in subsection (a)(3)(A)(ii) or (a)(3)(B)--
                ``(1) shall furnish annually, in electronic form, and at
            such time and in such manner as the Secretary may by
            regulations prescribe, information setting forth--
                        ``(A) the legal name of the organization,
                        ``(B) any name under which such organization
                    operates or does business,
                        ``(C) the organization's mailing address and
                    Internet web site address (if any),
                        ``(D) the organization's taxpayer identification
                    number,
                        ``(E) the name and address of a principal officer,
                    and
                        ``(F) evidence of the continuing basis for the
                    organization's exemption from the filing requirements
                    under subsection (a)(1), and
                ``(2) upon the termination of the existence of the
            organization, shall furnish notice of such termination.''.
        (b) Loss of Exempt Status for Failure to File Return or Notice.--
    Section 6033 (relating to returns by exempt organizations), as amended
    by subsection (a), is amended by redesignating subsection (j) as
    subsection (k) and by inserting after subsection (i) the following new
    subsection:
        ``(j) Loss of Exempt Status for Failure to File Return or Notice.--
                ``(1) In general.--If an organization described in
            subsection (a)(1) or (i) fails to file an annual return or
            notice required under either subsection for 3 consecutive
            years, such organization's status as an organization exempt
            from tax under section 501(a) shall be considered revoked on
            and after the date set by the Secretary for the filing of the
            third annual return or notice. The Secretary shall publish and
            maintain a list of any organization the status of which is so
            revoked.
                ``(2) Application necessary for reinstatement.--Any
            organization the tax-exempt status of which is revoked under
            paragraph (1) must apply in order to obtain reinstatement of
            such status regardless of whether such organization was
            originally required to make such an application.
                ``(3) Retroactive reinstatement if reasonable cause shown
            for failure.--If, upon application for reinstatement of status
            as an organization exempt from tax under section 501(a), an
            organization described in paragraph (1) can show to the
            satisfaction of the Secretary evidence of reasonable cause for
            the failure described in such paragraph, the organization's
            exempt status may, in the discretion of the Secretary, be
            reinstated effective from the date of the revocation under such
            paragraph.''.
        (c) No Declaratory Judgment Relief.--Section 7428(b) (relating to
    limitations) is amended by adding at the end the following new
    paragraph:
                ``(4) Nonapplication for certain revocations.--No action
            may be brought under this section with respect to any
            revocation of status described in section 6033(j)(1).''.
        (d) No Monetary Penalty for Failure to Notify.--Section 6652(c)(1)
    (relating to annual returns under section 6033 or 6012(a)(6)) is
    amended by adding at the end the following new subparagraph:
                        ``(E) No penalty for certain annual notices.--This
                    paragraph shall not apply with respect to any notice
                    required under section 6033(i).''.
        (e) Secretarial Outreach Requirements.--
                (1) Notice requirement.--The Secretary of the Treasury
            shall notify in a timely manner every organization described in
            section 6033(i) of the Internal Revenue Code of 1986 (as added
            by this section) of the requirement under such section 6033(i)
            and of the penalty established under section 6033(j) of such
            Code--
                        (A) by mail, in the case of any organization the
                    identity and address of which is included in the list
                    of exempt organizations maintained by the Secretary,
                    and
                        (B) by Internet or other means of outreach, in the
                    case of any other organization.
                (2) Loss of status penalty for failure to file return.--The
            Secretary of the Treasury shall publicize, in a timely manner
            in appropriate forms and instructions and through other
            appropriate means, the penalty established under section
            6033(j) of such Code for the failure to file a return under
            subsection (a)(1) or (i) of section 6033 of such Code.
        (f) Effective Date.--The amendments made by this section shall
    apply to notices and returns with respect to annual periods beginning
    after 2006.

    SEC. 1224. DISCLOSURE TO STATE OFFICIALS RELATING TO EXEMPT
                  ORGANIZATIONS.

        (a) In General.--Subsection (c) of section 6104 is amended by
    striking paragraph (2) and inserting the following new paragraphs:
                ``(2) Disclosure of proposed actions related to charitable
            organizations.--
                        ``(A) Specific notifications.--In the case of an
                    organization to which paragraph (1) applies, the
                    Secretary may disclose to the appropriate State
                    officer--
                                ``(i) a notice of proposed refusal to
                            recognize such organization as an organization
                            described in section 501(c)(3) or a notice of
                            proposed revocation of such organization's
                            recognition as an organization exempt from
                            taxation,
                                ``(ii) the issuance of a letter of proposed
                            deficiency of tax imposed under section 507 or
                            chapter 41 or 42, and
                                ``(iii) the names, addresses, and taxpayer
                            identification numbers of organizations which
                            have applied for recognition as organizations
                            described in section 501(c)(3).
                        ``(B) Additional disclosures.--Returns and return
                    information of organizations with respect to which
                    information is disclosed under subparagraph (A) may be
                    made available for inspection by or disclosed to an
                    appropriate State officer.
                        ``(C) Procedures for disclosure.--Information may
                    be inspected or disclosed under subparagraph (A) or (B)
                    only--
                                ``(i) upon written request by an
                            appropriate State officer, and
                                ``(ii) for the purpose of, and only to the
                            extent necessary in, the administration of
                            State laws regulating such organizations.
                    Such information may only be inspected by or disclosed
                    to a person other than the appropriate State officer if
                    such person is an officer or employee of the State and
                    is designated by the appropriate State officer to
                    receive the returns or return information under this
                    paragraph on behalf of the appropriate State officer.
                        ``(D) Disclosures other than by request.--The
                    Secretary may make available for inspection or disclose
                    returns and return information of an organization to
                    which paragraph (1) applies to an appropriate State
                    officer of any State if the Secretary determines that
                    such returns or return information may constitute
                    evidence of noncompliance under the laws within the
                    jurisdiction of the appropriate State officer.
                ``(3) Disclosure with respect to certain other exempt
            organizations.--Upon written request by an appropriate State
            officer, the Secretary may make available for inspection or
            disclosure returns and return information of any organization
            described in section 501(c) (other than organizations described
            in paragraph (1) or (3) thereof) for the purpose of, and only
            to the extent necessary in, the administration of State laws
            regulating the solicitation or administration of the charitable
            funds or charitable assets of such organizations. Such
            information may only be inspected by or disclosed to a person
            other than the appropriate State officer if such person is an
            officer or employee of the State and is designated by the
            appropriate State officer to receive the returns or return
            information under this paragraph on behalf of the appropriate
            State officer.
                ``(4) Use in civil judicial and administrative
            proceedings.--Returns and return information disclosed pursuant
            to this subsection may be disclosed in civil administrative and
            civil judicial proceedings pertaining to the enforcement of
            State laws regulating such organizations in a manner prescribed
            by the Secretary similar to that for tax administration
            proceedings under section 6103(h)(4).
                ``(5) No disclosure if impairment.--Returns and return
            information shall not be disclosed under this subsection, or in
            any proceeding described in paragraph (4), to the extent that
            the Secretary determines that such disclosure would seriously
            impair Federal tax administration.
                ``(6) Definitions.--For purposes of this subsection--
                        ``(A) Return and return information.--The terms
                    `return' and `return information' have the respective
                    meanings given to such terms by section 6103(b).
                        ``(B) Appropriate state officer.--The term
                    `appropriate State officer' means--
                                ``(i) the State attorney general,
                                ``(ii) the State tax officer,
                                ``(iii) in the case of an organization to
                            which paragraph (1) applies, any other State
                            official charged with overseeing organizations
                            of the type described in section 501(c)(3), and
                                ``(iv) in the case of an organization to
                            which paragraph (3) applies, the head of an
                            agency designated by the State attorney general
                            as having primary responsibility for overseeing
                            the solicitation of funds for charitable
                            purposes.''.
        (b) Conforming Amendments.--
                (1) Paragraph (2) of section 6103(a) is amended by
            inserting ``or section 6104(c)'' after ``this section''.
                (2) Subparagraph (A) of section 6103(p)(3) is amended by
            inserting ``and section 6104(c)'' after ``section'' in the
            first sentence.
                (3) Paragraph (4) of section 6103(p) is amended--
                        (A) in the matter preceding subparagraph (A), by
                    inserting ``, any appropriate State officer (as defined
                    in section 6104(c)),'' before ``or any other person'',
                        (B) in subparagraph (F)(i), by inserting ``any
                    appropriate State officer (as defined in section
                    6104(c)),'' before ``or any other person'', and
                        (C) in the matter following subparagraph (F), by
                    inserting ``, an appropriate State officer (as defined
                    in section 6104(c)),'' after ``including an agency''
                    each place it appears.
                (4) The heading for paragraph (1) of section 6104(c) is
            amended by inserting ``for charitable organizations'' after
            ``rule''.
                (5) Paragraph (2) of section 7213(a) is amended by
            inserting ``or under section 6104(c)'' after ``6103''.
                (6) Paragraph (2) of section 7213A(a) is amended by
            inserting ``or under section 6104(c)'' after ``7213(a)(2)''.
                (7) Paragraph (2) of section 7431(a) is amended by
            inserting `` or in violation of section 6104(c)'' after
            ``6103''.
        (c) Effective Date.--The amendments made by this section shall take
    effect on the date of the enactment of this Act but shall not apply to
    requests made before such date.

    SEC. 1225. PUBLIC DISCLOSURE OF INFORMATION RELATING TO UNRELATED
                  BUSINESS INCOME TAX RETURNS.

        (a) In General.--Subparagraph (A) of section 6104(d)(1) is amended
    by redesignating clauses (ii) and (iii) as clauses (iii) and (iv),
    respectively, and by inserting after clause (i) the following new
    clause:
                                ``(ii) any annual return filed under
                            section 6011 which relates to any tax imposed
                            by section 511 (relating to imposition of tax
                            on unrelated business income of charitable,
                            etc., organizations) by such organization, but
                            only if such organization is described in
                            section 501(c)(3),''.
        (b) Effective Date.--The amendments made by this section shall
    apply to returns filed after the date of the enactment of this Act.

    SEC. 1226. STUDY ON DONOR ADVISED FUNDS AND SUPPORTING ORGANIZATIONS.

        (a) Study.--The Secretary of the Treasury shall undertake a study
    on the organization and operation of donor advised funds (as defined in
    section 4966(d)(2) of the Internal Revenue Code of 1986, as added by
    this Act) and of organizations described in section 509(a)(3) of such
    Code. The study shall specifically consider--
                (1) whether the deductions allowed for the income, gift, or
            estate taxes for charitable contributions to sponsoring
            organizations (as defined in section 4966(d)(1) of such Code,
            as added by this Act) of donor advised funds or to
            organizations described in section 509(a)(3) of such Code are
            appropriate in consideration of--
                        (A) the use of contributed assets (including the
                    type, extent, and timing of such use), or
                        (B) the use of the assets of such organizations for
                    the benefit of the person making the charitable
                    contribution (or a person related to such person),
                (2) whether donor advised funds should be required to
            distribute for charitable purposes a specified amount (whether
            based on the income or assets of the fund) in order to ensure
            that the sponsoring organization with respect to such donor
            advised fund is operating consistent with the purposes or
            functions constituting the basis for its exemption under
            section 501, or its status as an organization described in
            section 509(a), of such Code,
                (3) whether the retention by donors to organizations
            described in paragraph (1) of rights or privileges with respect
            to amounts transferred to such organizations (including
            advisory rights or privileges with respect to the making of
            grants or the investment of assets) is consistent with the
            treatment of such transfers as completed gifts that qualify for
            a deduction for income, gift, or estate taxes, and
                (4) whether the issues raised by paragraphs (1), (2), and
            (3) are also issues with respect to other forms of charities or
            charitable donations.
        (b) Report.--Not later than 1 year after the date of the enactment
    of this Act, the Secretary of the Treasury shall submit to the
    Committee on Finance of the Senate and the Committee on Ways and Means
    of the House of Representatives a report on the study conducted under
    subsection (a) and make such recommendations as the Secretary of the
    Treasury considers appropriate.

             PART 2--IMPROVED ACCOUNTABILITY OF DONOR ADVISED FUNDS

    SEC. 1231. EXCISE TAXES RELATING TO DONOR ADVISED FUNDS.

        (a) In General.--Chapter 42 (relating to private foundations and
    certain other tax-exempt organizations), as amended by the Tax Increase
    Prevention and Reconciliation Act of 2005, is amended by adding at the
    end the following new subchapter:

                      ``Subchapter G--Donor Advised Funds

    ``Sec. 4966. Taxes on taxable distributions.
    ``Sec. 4967. Taxes on prohibited benefits.

    ``SEC. 4966. TAXES ON TAXABLE DISTRIBUTIONS.

        ``(a) Imposition of Taxes.--
                ``(1) On the sponsoring organization.--There is hereby
            imposed on each taxable distribution a tax equal to 20 percent
            of the amount thereof. The tax imposed by this paragraph shall
            be paid by the sponsoring organization with respect to the
            donor advised fund.
                ``(2) On the fund management.--There is hereby imposed on
            the agreement of any fund manager to the making of a
            distribution, knowing that it is a taxable distribution, a tax
            equal to 5 percent of the amount thereof. The tax imposed by
            this paragraph shall be paid by any fund manager who agreed to
            the making of the distribution.
        ``(b) Special Rules.--For purposes of subsection (a)--
                ``(1) Joint and several liability.--If more than one person
            is liable under subsection (a)(2) with respect to the making of
            a taxable distribution, all such persons shall be jointly and
            severally liable under such paragraph with respect to such
            distribution.
                ``(2) Limit for management.--With respect to any one
            taxable distribution, the maximum amount of the tax imposed by
            subsection (a)(2) shall not exceed $10,000.
        ``(c) Taxable Distribution.--For purposes of this section--
                ``(1) In general.--The term `taxable distribution' means
            any distribution from a donor advised fund--
                        ``(A) to any natural person, or
                        ``(B) to any other person if--
                                ``(i) such distribution is for any purpose
                            other than one specified in section
                            170(c)(2)(B), or
                                ``(ii) the sponsoring organization does not
                            exercise expenditure responsibility with
                            respect to such distribution in accordance with
                            section 4945(h).
                ``(2) Exceptions.--Such term shall not include any
            distribution from a donor advised fund--
                        ``(A) to any organization described in section
                    170(b)(1)(A) (other than a disqualified supporting
                    organization),
                        ``(B) to the sponsoring organization of such donor
                    advised fund, or
                        ``(C) to any other donor advised fund.
        ``(d) Definitions.--For purposes of this subchapter--
                ``(1) Sponsoring organization.--The term `sponsoring
            organization' means any organization which--
                        ``(A) is described in section 170(c) (other than in
                    paragraph (1) thereof, and without regard to paragraph
                    (2)(A) thereof),
                        ``(B) is not a private foundation (as defined in
                    section 509(a)), and
                        ``(C) maintains 1 or more donor advised funds.
                ``(2) Donor advised fund.--
                        ``(A) In general.--Except as provided in
                    subparagraph (B) or (C), the term `donor advised fund'
                    means a fund or account--
                                ``(i) which is separately identified by
                            reference to contributions of a donor or
                            donors,
                                ``(ii) which is owned and controlled by a
                            sponsoring organization, and
                                ``(iii) with respect to which a donor (or
                            any person appointed or designated by such
                            donor) has, or reasonably expects to have,
                            advisory privileges with respect to the
                            distribution or investment of amounts held in
                            such fund or account by reason of the donor's
                            status as a donor.
                        ``(B) Exceptions.--The term `donor advised fund'
                    shall not include any fund or account--
                                ``(i) which makes distributions only to a
                            single identified organization or governmental
                            entity, or
                                ``(ii) with respect to which a person
                            described in subparagraph (A)(iii) advises as
                            to which individuals receive grants for travel,
                            study, or other similar purposes, if--
                                        ``(I) such person's advisory
                                    privileges are performed exclusively by
                                    such person in the person's capacity as
                                    a member of a committee all of the
                                    members of which are appointed by the
                                    sponsoring organization,
                                        ``(II) no combination of persons
                                    described in subparagraph (A)(iii) (or
                                    persons related to such persons)
                                    control, directly or indirectly, such
                                    committee, and
                                        ``(III) all grants from such fund
                                    or account are awarded on an objective
                                    and nondiscriminatory basis pursuant to
                                    a procedure approved in advance by the
                                    board of directors of the sponsoring
                                    organization, and such procedure is
                                    designed to ensure that all such grants
                                    meet the requirements of paragraphs
                                    (1), (2), or (3) of section 4945(g).
                        ``(C) Secretarial authority.--The Secretary may
                    exempt a fund or account not described in subparagraph
                    (B) from treatment as a donor advised fund--
                                ``(i) if such fund or account is advised by
                            a committee not directly or indirectly
                            controlled by the donor or any person appointed
                            or designated by the donor for the purpose of
                            advising with respect to distributions from
                            such fund (and any related parties), or
                                ``(ii) if such fund benefits a single
                            identified charitable purpose.
                ``(3) Fund manager.--The term `fund manager' means, with
            respect to any sponsoring organization--
                        ``(A) an officer, director, or trustee of such
                    sponsoring organization (or an individual having powers
                    or responsibilities similar to those of officers,
                    directors, or trustees of the sponsoring organization),
                    and
                        ``(B) with respect to any act (or failure to act),
                    the employees of the sponsoring organization having
                    authority or responsibility with respect to such act
                    (or failure to act).
                ``(4) Disqualified supporting organization.--
                        ``(A) In general.--The term `disqualified
                    supporting organization' means, with respect to any
                    distribution--
                                ``(i) any type III supporting organization
                            (as defined in section 4943(f)(5)(A)) which is
                            not a functionally integrated type III
                            supporting organization (as defined in section
                            4943(f)(5)(B)), and
                                ``(ii) any organization which is described
                            in subparagraph (B) or (C) if--
                                        ``(I) the donor or any person
                                    designated by the donor for the purpose
                                    of advising with respect to
                                    distributions from a donor advised fund
                                    (and any related parties) directly or
                                    indirectly controls a supported
                                    organization (as defined in section
                                    509(f)(3)) of such organization, or
                                        ``(II) the Secretary determines by
                                    regulations that a distribution to such
                                    organization otherwise is
                                    inappropriate.
                        ``(B) Type i and type ii supporting
                    organizations.--An organization is described in this
                    subparagraph if the organization meets the requirements
                    of subparagraphs (A) and (C) of section 509(a)(3) and
                    is--
                                ``(i) operated, supervised, or controlled
                            by one or more organizations described in
                            paragraph (1) or (2) of section 509(a), or
                                ``(ii) supervised or controlled in
                            connection with one or more such organizations.
                        ``(C) Functionally integrated type iii supporting
                    organizations.--An organization is described in this
                    subparagraph if the organization is a functionally
                    integrated type III supporting organization (as defined
                    under section 4943(f)(5)(B)).

    ``SEC. 4967. TAXES ON PROHIBITED BENEFITS.

        ``(a) Imposition of Taxes.--
                ``(1) On the donor, donor advisor, or related person.--
            There is hereby imposed on the advice of any person described
            in subsection (d) to have a sponsoring organization make a
            distribution from a donor advised fund which results in such
            person or any other person described in subsection (d)
            receiving, directly or indirectly, a more than incidental
            benefit as a result of such distribution, a tax equal to 125
            percent of such benefit. The tax imposed by this paragraph
            shall be paid by any person described in subsection (d) who
            advises as to the distribution or who receives such a benefit
            as a result of the distribution.
                ``(2) On the fund management.--There is hereby imposed on
            the agreement of any fund manager to the making of a
            distribution, knowing that such distribution would confer a
            benefit described in paragraph (1), a tax equal to 10 percent
            of the amount of such benefit. The tax imposed by this
            paragraph shall be paid by any fund manager who agreed to the
            making of the distribution.
        ``(b) Exception.--No tax shall be imposed under this section with
    respect to any distribution if a tax has been imposed with respect to
    such distribution under section 4958.
        ``(c) Special Rules.--For purposes of subsection (a)--
                ``(1) Joint and several liability.--If more than one person
            is liable under paragraph (1) or (2) of subsection (a) with
            respect to a distribution described in subsection (a), all such
            persons shall be jointly and severally liable under such
            paragraph with respect to such distribution.
                ``(2) Limit for management.--With respect to any one
            distribution described in subsection (a), the maximum amount of
            the tax imposed by subsection (a)(2) shall not exceed $10,000.
        ``(d) Person Described.--A person is described in this subsection
    if such person is described in section 4958(f)(7) with respect to a
    donor advised fund.''.
        (b) Conforming Amendments.--
                (1) Section 4963 is amended by inserting ``4966, 4967,''
            after ``4958,'' each place it appears in subsections (a) and
            (c).
                (2) The table of subchapters for chapter 42 is amended by
            adding at the end the following new item:
                     ``subchapter g. donor advised funds''.
        (c) Effective Date.--The amendments made by this section shall
    apply to taxable years beginning after the date of the enactment of
    this Act.

    SEC. 1232. EXCESS BENEFIT TRANSACTIONS INVOLVING DONOR ADVISED FUNDS
                  AND SPONSORING ORGANIZATIONS.

        (a) Disqualified Persons.--
                (1) In general.--Paragraph (1) of section 4958(f) is
            amended by striking ``and'' at the end of subparagraph (B), by
            striking the period at the end of subparagraph (C) and
            inserting a comma, and by adding after subparagraph (C) the
            following new subparagraphs:
                        ``(D) which involves a donor advised fund (as
                    defined in section 4966(d)(2)), any person who is
                    described in paragraph (7) with respect to such donor
                    advised fund (as so defined), and
                        ``(E) which involves a sponsoring organization (as
                    defined in section 4966(d)(1)), any person who is
                    described in paragraph (8) with respect to such
                    sponsoring organization (as so defined).''.
                (2) Donors, donor advisors, and investment advisors treated
            as disqualified persons.--Section 4958(f) is amended by adding
            at the end the following new paragraphs:
                ``(7) Donors and donor advisors.--For purposes of paragraph
            (1)(E), a person is described in this paragraph if such
            person--
                        ``(A) is described in section 4966(d)(2)(A)(iii),
                        ``(B) is a member of the family of an individual
                    described in subparagraph (A), or
                        ``(C) is a 35-percent controlled entity (as defined
                    in paragraph (3) by substituting `persons described in
                    subparagraph (A) or (B) of paragraph (7)' for `persons
                    described in subparagraph (A) or (B) of paragraph (1)'
                    in subparagraph (A)(i) thereof).
                ``(8) Investment advisors.--For purposes of paragraph
            (1)(F)--
                        ``(A) In general.--A person is described in this
                    paragraph if such person--
                                ``(i) is an investment advisor,
                                ``(ii) is a member of the family of an
                            individual described in clause (i), or
                                ``(iii) is a 35-percent controlled entity
                            (as defined in paragraph (3) by substituting
                            `persons described in clause (i) or (ii) of
                            paragraph (8)(A)' for `persons described in
                            subparagraph (A) or (B) of paragraph (1)' in
                            subparagraph (A)(i) thereof).
                        ``(B) Investment advisor defined.--For purposes of
                    subparagraph (A), the term `investment advisor' means,
                    with respect to any sponsoring organization (as defined
                    in section 4966(d)(1)), any person (other than an
                    employee of such organization) compensated by such
                    organization for managing the investment of, or
                    providing investment advice with respect to, assets
                    maintained in donor advised funds (as defined in
                    section 4966(d)(2)) owned by such organization.''.
        (b) Certain Transactions Treated as Excess Benefit Transactions.--
                (1) In general.--Section 4958(c) is amended by
            redesignating paragraph (2) as paragraph (3) and by inserting
            after paragraph (1) the following new paragraph:
                ``(2) Special rules for donor advised funds.--In the case
            of any donor advised fund (as defined in section 4966(d)(2))--
                        ``(A) the term `excess benefit transaction'
                    includes any grant, loan, compensation, or other
                    similar payment from such fund to a person described in
                    subsection (f)(7) with respect to such fund, and
                        ``(B) the term `excess benefit' includes, with
                    respect to any transaction described in subparagraph
                    (A), the amount of any such grant, loan, compensation,
                    or other similar payment.''.
                (2) Special rule for correction of transaction.--Section
            4958(f)(6) is amended by inserting ``, except that in the case
            of any correction of an excess benefit transaction described in
            subsection (c)(2), no amount repaid in a manner prescribed by
            the Secretary may be held in any donor advised fund'' after
            ``standards''.
        (c) Effective Date.--The amendments made by this section shall
    apply to transactions occurring after the date of the enactment of this
    Act.

    SEC. 1233. EXCESS BUSINESS HOLDINGS OF DONOR ADVISED FUNDS.

        (a) In General.--Section 4943 is amended by adding at the end the
    following new subsection:
        ``(e) Application of Tax to Donor Advised Funds.--
                ``(1) In general.--For purposes of this section, a donor
            advised fund (as defined in section 4966(d)(2)) shall be
            treated as a private foundation.
                ``(2) Disqualified person.--In applying this section to any
            donor advised fund (as so defined), the term `disqualified
            person' means, with respect to the donor advised fund, any
            person who is--
                        ``(A) described in section 4966(d)(2)(A)(iii),
                        ``(B) a member of the family of an individual
                    described in subparagraph (A), or
                        ``(C) a 35-percent controlled entity (as defined in
                    section 4958(f)(3) by substituting `persons described
                    in subparagraph (A) or (B) of section 4943(e)(2)' for
                    `persons described in subparagraph (A) or (B) of
                    paragraph (1)' in subparagraph (A)(i) thereof).
                ``(3) Present holdings.--For purposes of this subsection,
            rules similar to the rules of paragraphs (4), (5), and (6) of
            subsection (c) shall apply to donor advised funds (as so
            defined), except that--
                        ``(A) `the date of the enactment of this
                    subsection' shall be substituted for `May 26, 1969'
                    each place it appears in paragraphs (4), (5), and (6),
                    and
                        ``(B) `January 1, 2007' shall be substituted for
                    `January 1, 1970' in paragraph (4)(E).''.
        (b) Effective Date.--The amendment made by this section shall apply
    to taxable years beginning after the date of the enactment of this Act.

    SEC. 1234. TREATMENT OF CHARITABLE CONTRIBUTION DEDUCTIONS TO DONOR
                  ADVISED FUNDS.

        (a) Income.--Section 170(f) (relating to disallowance of deduction
    in certain cases and special rules), as amended by this Act, is amended
    by adding at the end the following new paragraph:
                ``(18) Contributions to donor advised funds.--A deduction
            otherwise allowed under subsection (a) for any contribution to
            a donor advised fund (as defined in section 4966(d)(2)) shall
            only be allowed if--
                        ``(A) the sponsoring organization (as defined in
                    section 4966(d)(1)) with respect to such donor advised
                    fund is not--
                                ``(i) described in paragraph (3), (4), or
                            (5) of subsection (c), or
                                ``(ii) a type III supporting organization
                            (as defined in section 4943(f)(5)(A)) which is
                            not a functionally integrated type III
                            supporting organization (as defined in section
                            4943(f)(5)(B)), and
                        ``(B) the taxpayer obtains a contemporaneous
                    written acknowledgment (determined under rules similar
                    to the rules of paragraph (8)(C)) from the sponsoring
                    organization (as so defined) of such donor advised fund
                    that such organization has exclusive legal control over
                    the assets contributed.''.
        (b) Estate.--Section 2055(e) is amended by adding at the end the
    following new paragraph:
                ``(5) Contributions to donor advised funds.--A deduction
            otherwise allowed under subsection (a) for any contribution to
            a donor advised fund (as defined in section 4966(d)(2)) shall
            only be allowed if--
                        ``(A) the sponsoring organization (as defined in
                    section 4966(d)(1)) with respect to such donor advised
                    fund is not--
                                ``(i) described in paragraph (3) or (4) of
                            subsection (a), or
                                ``(ii) a type III supporting organization
                            (as defined in section 4943(f)(5)(A)) which is
                            not a functionally integrated type III
                            supporting organization (as defined in section
                            4943(f)(5)(B)), and
                        ``(B) the taxpayer obtains a contemporaneous
                    written acknowledgment (determined under rules similar
                    to the rules of section 170(f)(8)(C)) from the
                    sponsoring organization (as so defined) of such donor
                    advised fund that such organization has exclusive legal
                    control over the assets contributed.''.
        (c) Gift.--Section 2522(c) is amended by adding at the end the
    following new paragraph:
                ``(5) Contributions to donor advised funds.--A deduction
            otherwise allowed under subsection (a) for any contribution to
            a donor advised fund (as defined in section 4966(d)(2)) shall
            only be allowed if--
                        ``(A) the sponsoring organization (as defined in
                    section 4966(d)(1)) with respect to such donor advised
                    fund is not--
                                ``(i) described in paragraph (3) or (4) of
                            subsection (a), or
                                ``(ii) a type III supporting organization
                            (as defined in section 4943(f)(5)(A)) which is
                            not a functionally integrated type III
                            supporting organization (as defined in section
                            4943(f)(5)(B)), and
                        ``(B) the taxpayer obtains a contemporaneous
                    written acknowledgment (determined under rules similar
                    to the rules of section 170(f)(8)(C)) from the
                    sponsoring organization (as so defined) of such donor
                    advised fund that such organization has exclusive legal
                    control over the assets contributed.''.
        (d) Effective Date.--The amendments made by this section shall
    apply to contributions made after the date which is 180 days after the
    date of the enactment of this Act.

    SEC. 1235. RETURNS OF, AND APPLICATIONS FOR RECOGNITION BY, SPONSORING
                  ORGANIZATIONS.

        (a) Matters Included on Returns.--
                (1) In general.--Section 6033, as amended by this Act, is
            amended by redesignating subsection (k) as subsection (l) and
            by inserting after subsection (j) the following new subsection:
        ``(k) Additional Provisions Relating to Sponsoring Organizations.--
    Every organization described in section 4966(d)(1) shall, on the return
    required under subsection (a) for the taxable year--
                ``(1) list the total number of donor advised funds (as
            defined in section 4966(d)(2)) it owns at the end of such
            taxable year,
                ``(2) indicate the aggregate value of assets held in such
            funds at the end of such taxable year, and
                ``(3) indicate the aggregate contributions to and grants
            made from such funds during such taxable year.''.
                (2) Effective date.--The amendments made by this subsection
            shall apply to returns filed for taxable years ending after the
            date of the enactment of this Act.
        (b) Matters Included on Exempt Status Application.--
                (1) In general.--Section 508 is amended by adding at the
            end the following new subsection:
        ``(f) Additional Provisions Relating to Sponsoring Organizations.--
    A sponsoring organization (as defined in section 4966(d)(1)) shall give
    notice to the Secretary (in such manner as the Secretary may provide)
    whether such organization maintains or intends to maintain donor
    advised funds (as defined in section 4966(d)(2)) and the manner in
    which such organization plans to operate such funds.''.
                (2) Effective date.--The amendment made by this subsection
            shall apply to organizations applying for tax-exempt status
            after the date of the enactment of this Act.

          PART 3--IMPROVED ACCOUNTABILITY OF SUPPORTING ORGANIZATIONS

    SEC. 1241. REQUIREMENTS FOR SUPPORTING ORGANIZATIONS.

        (a) Types of Supporting Organizations.--Subparagraph (B) of section
    509(a)(3) is amended to read as follows:
                        ``(B) is--
                                ``(i) operated, supervised, or controlled
                            by one or more organizations described in
                            paragraph (1) or (2),
                                ``(ii) supervised or controlled in
                            connection with one or more such organizations,
                            or
                                ``(iii) operated in connection with one or
                            more such organizations, and''.
        (b) Requirements for Supporting Organizations.--Section 509
    (relating to private foundation defined) is amended by adding at the
    end the following new subsection:
        ``(f) Requirements for Supporting Organizations.--
                ``(1) Type iii supporting organizations.--For purposes of
            subsection (a)(3)(B)(iii), an organization shall not be
            considered to be operated in connection with any organization
            described in paragraph (1) or (2) of subsection (a) unless such
            organization meets the following requirements:
                        ``(A) Responsiveness.--For each taxable year
                    beginning after the date of the enactment of this
                    subsection, the organization provides to each supported
                    organization such information as the Secretary may
                    require to ensure that such organization is responsive
                    to the needs or demands of the supported organization.
                        ``(B) Foreign supported organizations.--
                                ``(i) In general.--The organization is not
                            operated in connection with any supported
                            organization that is not organized in the
                            United States.
                                ``(ii) Transition rule for existing
                            organizations.--If the organization is operated
                            in connection with an organization that is not
                            organized in the United States on the date of
                            the enactment of this subsection, clause (i)
                            shall not apply until the first day of the
                            third taxable year of the organization
                            beginning after the date of the enactment of
                            this subsection.
                ``(2) Organizations controlled by donors.--
                        ``(A) In general.--For purposes of subsection
                    (a)(3)(B), an organization shall not be considered to
                    be--
                                ``(i) operated, supervised, or controlled
                            by any organization described in paragraph (1)
                            or (2) of subsection (a), or
                                ``(ii) operated in connection with any
                            organization described in paragraph (1) or (2)
                            of subsection (a),
                    if such organization accepts any gift or contribution
                    from any person described in subparagraph (B).
                        ``(B) Person described.--A person is described in
                    this subparagraph if, with respect to a supported
                    organization of an organization described in
                    subparagraph (A), such person is--
                                ``(i) a person (other than an organization
                            described in paragraph (1), (2), or (4) of
                            section 509(a)) who directly or indirectly
                            controls, either alone or together with persons
                            described in clauses (ii) and (iii), the
                            governing body of such supported organization,
                                ``(ii) a member of the family (determined
                            under section 4958(f)(4)) of an individual
                            described in clause (i), or
                                ``(iii) a 35-percent controlled entity (as
                            defined in section 4958(f)(3) by substituting
                            `persons described in clause (i) or (ii) of
                            section 509(f)(2)(B)' for `persons described in
                            subparagraph (A) or (B) of paragraph (1)' in
                            subparagraph (A)(i) thereof).
                ``(3) Supported organization.--For purposes of this
            subsection, the term `supported organization' means, with
            respect to an organization described in subsection (a)(3), an
            organization described in paragraph (1) or (2) of subsection
            (a)--
                        ``(A) for whose benefit the organization described
                    in subsection (a)(3) is organized and operated, or
                        ``(B) with respect to which the organization
                    performs the functions of, or carries out the purposes
                    of.''.
        (c) Charitable Trusts Which Are Type III Supporting
    Organizations.--For purposes of section 509(a)(3)(B)(iii) of the
    Internal Revenue Code of 1986, an organization which is a trust shall
    not be considered to be operated in connection with any organization
    described in paragraph (1) or (2) of section 509(a) of such Code solely
    because--
                (1) it is a charitable trust under State law,
                (2) the supported organization (as defined in section
            509(f)(3) of such Code) is a beneficiary of such trust, and
                (3) the supported organization (as so defined) has the
            power to enforce the trust and compel an accounting.
        (d) Payout Requirements for Type III Supporting Organizations.--
                (1) In general.--The Secretary of the Treasury shall
            promulgate new regulations under section 509 of the Internal
            Revenue Code of 1986 on payments required by type III
            supporting organizations which are not functionally integrated
            type III supporting organizations. Such regulations shall
            require such organizations to make distributions of a
            percentage of either income or assets to supported
            organizations (as defined in section 509(f)(3) of such Code) in
            order to ensure that a significant amount is paid to such
            organizations.
                (2) Type iii supporting organization; functionally
            integrated type iii supporting organization.--For purposes of
            paragraph (1), the terms ``type III supporting organization''
            and ``functionally integrated type III supporting
            organization'' have the meanings given such terms under
            subparagraphs (A) and (B) section 4943(f)(5) of the Internal
            Revenue Code of 1986 (as added by this Act), respectively.
        (e) Effective Dates.--
                (1) In general.--The amendments made by subsections (a) and
            (b) shall take effect on the date of the enactment of this Act.
                (2) Charitable trusts which are type iii supporting
            organizations.--Subsection (c) shall take effect--
                        (A) in the case of trusts operated in connection
                    with an organization described in paragraph (1) or (2)
                    of section 509(a) of the Internal Revenue Code of 1986
                    on the date of the enactment of this Act, on the date
                    that is one year after the date of the enactment of
                    this Act, and
                        (B) in the case of any other trust, on the date of
                    the enactment of this Act.

    SEC. 1242. EXCESS BENEFIT TRANSACTIONS INVOLVING SUPPORTING
                  ORGANIZATIONS.

        (a) Disqualified Persons.--Paragraph (1) of section 4958(f), as
    amended by this Act, is amended by redesignating subparagraphs (D) and
    (E) as subparagraphs (E) and (F), respectively, and by adding after
    subparagraph (C) the following new subparagraph:
                        ``(D) any person who is described in subparagraph
                    (A), (B), or (C) with respect to an organization
                    described in section 509(a)(3) and organized and
                    operated exclusively for the benefit of, to perform the
                    functions of, or to carry out the purposes of the
                    applicable tax-exempt organization.''.
        (b) Certain Transactions Treated as Excess Benefit Transactions.--
    Section 4958(c), as amended by this Act, is amended by redesignating
    paragraph (3) as paragraph (4) and by inserting after paragraph (2) the
    following new paragraph:
                ``(3) Special rules for supporting organizations.--
                        ``(A) In general.--In the case of any organization
                    described in section 509(a)(3)--
                                ``(i) the term `excess benefit transaction'
                            includes--
                                        ``(I) any grant, loan,
                                    compensation, or other similar payment
                                    provided by such organization to a
                                    person described in subparagraph (B),
                                    and
                                        ``(II) any loan provided by such
                                    organization to a disqualified person
                                    (other than an organization described
                                    in paragraph (1), (2), or (4) of
                                    section 509(a)), and
                                ``(ii) the term `excess benefit' includes,
                            with respect to any transaction described in
                            clause (i), the amount of any such grant, loan,
                            compensation, or other similar payment.
                        ``(B) Person described.--A person is described in
                    this subparagraph if such person is--
                                ``(i) a substantial contributor to such
                            organization,
                                ``(ii) a member of the family (determined
                            under section 4958(f)(4)) of an individual
                            described in clause (i), or
                                ``(iii) a 35-percent controlled entity (as
                            defined in section 4958(f)(3) by substituting
                            `persons described in clause (i) or (ii) of
                            section 4958(c)(3)(B)' for `persons described
                            in subparagraph (A) or (B) of paragraph (1)' in
                            subparagraph (A)(i) thereof).
                        ``(C) Substantial contributor.--For purposes of
                    this paragraph--
                                ``(i) In general.--The term `substantial
                            contributor' means any person who contributed
                            or bequeathed an aggregate amount of more than
                            $5,000 to the organization, if such amount is
                            more than 2 percent of the total contributions
                            and bequests received by the organization
                            before the close of the taxable year of the
                            organization in which the contribution or
                            bequest is received by the organization from
                            such person. In the case of a trust, such term
                            also means the creator of the trust. Rules
                            similar to the rules of subparagraphs (B) and
                            (C) of section 507(d)(2) shall apply for
                            purposes of this subparagraph.
                                ``(ii) Exception.--Such term shall not
                            include any organization described in paragraph
                            (1), (2), or (4) of section 509(a).''.
        (c) Effective Dates.--
                (1) Subsection (a).--The amendments made by subsection (a)
            shall apply to transactions occurring after the date of the
            enactment of this Act.
                (2) Subsection (b).--The amendments made by subsection (a)
            shall apply to transactions occurring after July 25, 2006.

    SEC. 1243. EXCESS BUSINESS HOLDINGS OF SUPPORTING ORGANIZATIONS.

        (a) In General.--Section 4943, as amended by this Act, is amended
    by adding at the end the following new subsection:
        ``(f) Application of Tax to Supporting Organizations.--
                ``(1) In general.--For purposes of this section, an
            organization which is described in paragraph (3) shall be
            treated as a private foundation.
                ``(2) Exception.--The Secretary may exempt the excess
            business holdings of any organization from the application of
            this subsection if the Secretary determines that such holdings
            are consistent with the purpose or function constituting the
            basis for its exemption under section 501.
                ``(3) Organizations described.--An organization is
            described in this paragraph if such organization is--
                        ``(A) a type III supporting organization (other
                    than a functionally integrated type III supporting
                    organization), or
                        ``(B) an organization which meets the requirements
                    of subparagraphs (A) and (C) of section 509(a)(3) and
                    which is supervised or controlled in connection with or
                    one or more organizations described in paragraph (1) or
                    (2) of section 509(a), but only if such organization
                    accepts any gift or contribution from any person
                    described in section 509(f)(2)(B).
                ``(4) Disqualified person.--
                        ``(A) In general.--In applying this section to any
                    organization described in paragraph (3), the term
                    `disqualified person' means, with respect to the
                    organization--
                                ``(i) any person who was, at any time
                            during the 5-year period ending on the date
                            described in subsection (a)(2)(A), in a
                            position to exercise substantial influence over
                            the affairs of the organization,
                                ``(ii) any member of the family (determined
                            under section 4958(f)(4)) of an individual
                            described in clause (i),
                                ``(iii) any 35-percent controlled entity
                            (as defined in section 4958(f)(3) by
                            substituting `persons described in clause (i)
                            or (ii) of section 4943(f)(4)(A)' for `persons
                            described in subparagraph (A) or (B) of
                            paragraph (1)' in subparagraph (A)(i) thereof),
                                ``(iv) any person described in section
                            4958(c)(3)(B), and
                                ``(v) any organization--
                                        ``(I) which is effectively
                                    controlled (directly or indirectly) by
                                    the same person or persons who control
                                    the organization in question, or
                                        ``(II) substantially all of the
                                    contributions to which were made
                                    (directly or indirectly) by the same
                                    person or persons described in
                                    subparagraph (B) or a member of the
                                    family (within the meaning of section
                                    4946(d)) of such a person.
                        ``(B) Persons described.--A person is described in
                    this subparagraph if such person is--
                                ``(i) a substantial contributor to the
                            organization (as defined in section
                            4958(c)(3)(C)),
                                ``(ii) an officer, director, or trustee of
                            the organization (or an individual having
                            powers or responsibilities similar to those of
                            the officers, directors, or trustees of the
                            organization), or
                                ``(iii) an owner of more than 20 percent
                            of--
                                        ``(I) the total combined voting
                                    power of a corporation,
                                        ``(II) the profits interest of a
                                    partnership, or
                                        ``(III) the beneficial interest of
                                    a trust or unincorporated enterprise,
                            which is a substantial contributor (as so
                            defined) to the organization.
                ``(5) Type iii supporting organization; functionally
            integrated type iii supporting organization.--For purposes of
            this subsection--
                        ``(A) Type iii supporting organization.--The term
                    `type III supporting organization' means an
                    organization which meets the requirements of
                    subparagraphs (A) and (C) of section 509(a)(3) and
                    which is operated in connection with one or more
                    organizations described in paragraph (1) or (2) of
                    section 509(a).
                        ``(B) Functionally integrated type iii supporting
                    organization.--The term `functionally integrated type
                    III supporting organization' means a type III
                    supporting organization which is not required under
                    regulations established by the Secretary to make
                    payments to supported organizations (as defined under
                    section 509(f)(3)) due to the activities of the
                    organization related to performing the functions of, or
                    carrying out the purposes of, such supported
                    organizations.
                ``(6) Special rule for certain holdings of type iii
            supporting organizations.--For purposes of this subsection, the
            term `excess business holdings' shall not include any holdings
            of a type III supporting organization in any business
            enterprise if, as of November 18, 2005, the holdings were held
            (and at all times thereafter, are held) for the benefit of the
            community pursuant to the direction of a State attorney general
            or a State official with jurisdiction over such organization.
                ``(7) Present holdings.--For purposes of this subsection,
            rules similar to the rules of paragraphs (4), (5), and (6) of
            subsection (c) shall apply to organizations described in
            section 509(a)(3), except that--
                        ``(A) `the date of the enactment of this
                    subsection' shall be substituted for `May 26, 1969'
                    each place it appears in paragraphs (4), (5), and (6),
                    and
                        ``(B) `January 1, 2007' shall be substituted for
                    `January 1, 1970' in paragraph (4)(E).''.
        (b) Effective Date.--The amendment made by this section shall apply
    to taxable years beginning after the date of the enactment of this Act.

    SEC. 1244. TREATMENT OF AMOUNTS PAID TO SUPPORTING ORGANIZATIONS BY
                  PRIVATE FOUNDATIONS.

        (a) Qualifying Distributions.--Paragraph (4) of section 4942(g) is
    amended to read as follows:
                ``(4) Limitation on distributions by nonoperating private
            foundations to supporting organizations.--
                        ``(A) In general.--For purposes of this section,
                    the term `qualifying distribution' shall not include
                    any amount paid by a private foundation which is not an
                    operating foundation to--
                                ``(i) any type III supporting organization
                            (as defined in section 4943(f)(5)(A)) which is
                            not a functionally integrated type III
                            supporting organization (as defined in section
                            4943(f)(5)(B)), and
                                ``(ii) any organization which is described
                            in subparagraph (B) or (C) if--
                                        ``(I) a disqualified person of the
                                    private foundation directly or
                                    indirectly controls such organization
                                    or a supported organization (as defined
                                    in section 509(f)(3)) of such
                                    organization, or
                                        ``(II) the Secretary determines by
                                    regulations that a distribution to such
                                    organization otherwise is
                                    inappropriate.
                        ``(B) Type i and type ii supporting
                    organizations.--An organization is described in this
                    subparagraph if the organization meets the requirements
                    of subparagraphs (A) and (C) of section 509(a)(3) and
                    is--
                                ``(i) operated, supervised, or controlled
                            by one or more organizations described in
                            paragraph (1) or (2) of section 509(a), or
                                ``(ii) supervised or controlled in
                            connection with one or more such organizations.
                        ``(C) Functionally integrated type iii supporting
                    organizations.--An organization is described in this
                    subparagraph if the organization is a functionally
                    integrated type III supporting organization (as defined
                    under section 4943(f)(5)(B)).''.
        (b) Taxable Expenditures.--Subparagraph (A) of section 4945(d)(4)
    is amended to read as follows:
                        ``(A) such organization--
                                ``(i) is described in paragraph (1) or (2)
                            of section 509(a),
                                ``(ii) is an organization described in
                            section 509(a)(3) (other than an organization
                            described in clause (i) or (ii) of section
                            4942(g)(4)(A)), or
                                ``(iii) is an exempt operating foundation
                            (as defined in section 4940(d)(2)), or''.
        (c) Effective Date.--The amendments made by this section shall
    apply to distributions and expenditures after the date of the enactment
    of this Act.

    SEC. 1245. RETURNS OF SUPPORTING ORGANIZATIONS.

        (a) Requirement to File Return.--Subparagraph (B) of section
    6033(a)(3) is amended by inserting ``(other than an organization
    described in section 509(a)(3))'' after ``paragraph (1)''.
        (b) Matters Included on Returns.--Section 6033, as amended by this
    Act, is amended by redesignating subsection (l) as subsection (m) and
    by inserting after subsection (k) the following new subsection:
        ``(l) Additional Provisions Relating to Supporting Organizations.--
    Every organization described in section 509(a)(3) shall, on the return
    required under subsection (a)--
                ``(1) list the supported organizations (as defined in
            section 509(f)(3)) with respect to which such organization
            provides support,
                ``(2) indicate whether the organization meets the
            requirements of clause (i), (ii), or (iii) of section
            509(a)(3)(B), and
                ``(3) certify that the organization meets the requirements
            of section 509(a)(3)(C).''.
        (c) Effective Date.--The amendments made by this section shall
    apply to returns filed for taxable years ending after the date of the
    enactment of this Act.

                          TITLE XIII--OTHER PROVISIONS

    SEC. 1301. TECHNICAL CORRECTIONS RELATING TO MINE SAFETY.

        Section 110 of the Federal Mine Safety and Health Act of 1977 (30
    U.S.C. 820), as amended by the Mine Improvement and New Emergency
    Response Act of 2006 (Public Law 109-236), is amended--
                (1) by striking subsection (d); and
                (2) in subsection (a)--
                        (A) by striking ``(1)(1) The operator'' and
                    inserting ``(1) The operator'';
                        (B) in the paragraph (2) added by section
                    8(a)(1)(B) of the Mine Improvement and New Emergency
                    Response Act of 2006 (Public Law 109-236)--
                                (i) by striking ``paragraph (1)'' and
                            inserting ``subsection (a)(1)''; and
                                (ii) by redesignating such paragraph as
                            subsection (d) and transferring such subsection
                            so as to appear after subsection (c); and
                (3) in subsection (b)--
                        (A) by striking ``Any operator'' and inserting
                    ``(1) Any operator''; and
                        (B) in the second sentence, as added by section
                    8(a)(2) of the Mine Improvement and New Emergency
                    Response Act of 2006 (Public Law 109-236), by striking
                    ``Violations'' and inserting the following:
        ``(2) Violations''.

    SEC. 1302. GOING-TO-THE-SUN ROAD.

        (a) In General.--Section 1940 of the Safe, Accountable, Flexible,
    Efficient Transportation Equity Act: A Legacy for Users (119 Stat.
    1511) is amended--
                (1) in subsection (a)--
                        (A) by striking paragraphs (1) and (2);
                        (B) by redesignating paragraphs (3) through (5) as
                    paragraphs (1) through (3), respectively; and
                        (C) by striking ``$10,000,000'' each place that it
                    appears and inserting ``$16,666,666''; and
                (2) by adding at the end the following:
        ``(c) Contract Authority.--Except as otherwise provided in this
    section, funds authorized to be appropriated under this section shall
    be available for obligation in the same manner as if the funds were
    apportioned under chapter 1 of title 23, United States Code.''.
        (b) Rescission.--Section 10212 of the Safe, Accountable, Flexible,
    Efficient Transportation Equity Act: A Legacy for Users (119 Stat.
    1937) is amended by striking ``$8,543,000,000'' each place it appears
    and inserting ``$8,593,000,000''.

    SEC. 1303. EXCEPTION TO THE LOCAL FURNISHING REQUIREMENT OF THE TAX-
                  EXEMPT BOND RULES.

        (a) Snettisham Hydroelectric Facility.--For purposes of determining
    whether any private activity bond issued before May 31, 2006, and used
    to finance the acquisition of the Snettisham hydroelectric facility is
    a qualified bond for purposes of section 142(a)(8) of the Internal
    Revenue Code of 1986, the electricity furnished by such facility to the
    City of Hoonah, Alaska, shall not be taken into account for purposes of
    section 142(f)(1) of such Code.
        (b) Lake Dorothy Hydroelectric Facility.--For purposes of
    determining whether any private activity bond issued before May 31,
    2006, and used to finance the Lake Dorothy hydroelectric facility is a
    qualified bond for purposes of section 142(a)(8) of the Internal
    Revenue Code of 1986, the electricity furnished by such facility to the
    City of Hoonah, Alaska, shall not be taken into account for purposes of
    paragraphs (1) and (3) of section 142(f) of such Code.
        (c) Definitions.--For purposes of this section--
                (1) Lake dorothy hydroelectric facility.--The term ``Lake
            Dorothy hydroelectric facility'' means the hydroelectric
            facility located approximately 10 miles south of Juneau,
            Alaska, and commonly referred to as the ``Lake Dorothy
            project''.
                (2) Snettisham hydroelectric facility.--The term
            ``Snettisham hydroelectric facility'' means the hydroelectric
            project described in section 1804 of the Small Business Job
            Protection Act of 1996.

    SEC. 1304. QUALIFIED TUITION PROGRAMS.

        (a) Permanent Extension of Modifications.--Section 901 of the
    Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to
    sunset provisions) shall not apply to section 402 of such Act (relating
    to modifications to qualified tuition programs).
        (b) Regulatory Authority to Prevent Abuse.--Section 529 (relating
    to qualified tuition programs) is amended by adding at the end the
    following new subsection:
        ``(f) Regulations.--Notwithstanding any other provision of this
    section, the Secretary shall prescribe such regulations as may be
    necessary or appropriate to carry out the purposes of this section and
    to prevent abuse of such purposes, including regulations under chapters
    11, 12, and 13 of this title.''.

                          TITLE XIV--TARIFF PROVISIONS

    SEC. 1401. SHORT TITLE; TABLE OF CONTENTS.

        (a) Short Title.--This title may be cited as the ``Miscellaneous
    Trade and Technical Corrections Act of 2006''.
        (b) Table of contents.--The table of contents of this title is as
    follows:

                          TITLE XIV--TARIFF PROVISIONS

    Sec. 1401. Short title; table of contents.
    Sec. 1402. Reference.
             Subtitle A--Temporary Duty Suspensions and Reductions

                 Chapter 1--New Duty Suspensions and Reductions

    Sec. 1411. Certain non-knit gloves designed for use by auto mechanics.
    Sec. 1412. Certain microphones for use in automotive interiors.
    Sec. 1413. Acrylic or modacrylic synthetic filament tow.
    Sec. 1414. Acrylic or modacrylic synthetic staple fibers, carded,
                                combed, or otherwise processed for
                                spinning.
    Sec. 1415. Nitrocellulose.
    Sec. 1416. Potassium sorbate.
    Sec. 1417. Sorbic acid.
    Sec. 1418. Certain capers.
    Sec. 1419. Certain pepperoncini prepared or preserved otherwise than by
                                vinegar or acetic acid.
    Sec. 1420. Certain capers.
    Sec. 1421. Certain pepperoncini prepared or preserved by vinegar or
                                acetic acid in concentrations at 0.5
                                percent or greater.
    Sec. 1422. Certain pepperoncini prepared or preserved otherwise than by
                                vinegar or acetic acid in concentrations
                                less than 0.5 percent.
    Sec. 1423. Chloral.
    Sec. 1424. Imidacloprid technical (imidacloprid).
    Sec. 1425. Triadimefon.
    Sec. 1426. Polyethylene HE1878.
    Sec. 1427. Thiacloprid.
    Sec. 1428. Pyrimethanil.
    Sec. 1429. Foramsulfuron.
    Sec. 1430. Fenamidone.
    Sec. 1431. Cyclanilide technical.
    Sec. 1432. Para-benzoquinone.
    Sec. 1433. O-Anisidine.
    Sec. 1434. 2,4-Xylidine.
    Sec. 1435. Crotonaldehyde.
    Sec. 1436. Butanedioic acid, dimethyl ester, polymer with 4-hydroxy-
                                2,2,6,6,-tetramethyl-1-piperidineethanol.
    Sec. 1437. Mixtures of CAS Nos. 106990-43-6 and 65447-77-0.
    Sec. 1438. MCPA.
    Sec. 1439. Bronate advanced.
    Sec. 1440. Bromoxynil octanoate tech.
    Sec. 1441. Bromoxynil meo.
    Sec. 1442. Hydraulic control units.
    Sec. 1443. Shield asy-steering gear.
    Sec. 1444. 2,4-Dichloroaniline.
    Sec. 1445. 2-Acetylbutyrolactone.
    Sec. 1446. Alkylketone.
    Sec. 1447. Cyfluthrin (baythroid).
    Sec. 1448. Beta-cyfluthrin.
    Sec. 1449. Cyclopropane-1,1-dicarboxylic acid, dimethyl ester.
    Sec. 1450. Spiroxamine.
    Sec. 1451. Spiromesifen.
    Sec. 1452. 4-Chlorobenzaldehyde.
    Sec. 1453. Oxadiazon.
    Sec. 1454. NAHP.
    Sec. 1455. Phosphorus thiochloride.
    Sec. 1456. Trifloxystrobin.
    Sec. 1457. Phosphoric acid, lanthanum salt, cerium terbium-doped.
    Sec. 1458. Lutetium oxide.
    Sec. 1459. ACM.
    Sec. 1460. Permethrin.
    Sec. 1461. Thidiazuron.
    Sec. 1462. Flutolanil.
    Sec. 1463. Resmethrin.
    Sec. 1464. Clothianidin.
    Sec. 1465. Certain master cylinder assembles.
    Sec. 1466. Certain transaxles.
    Sec. 1467. Converter asy.
    Sec. 1468. Module and bracket asy-power steering.
    Sec. 1469. Unit asy-battery hi volt.
    Sec. 1470. Certain articles of natural cork.
    Sec. 1471. Glyoxylic acid.
    Sec. 1472. Cyclopentanone.
    Sec. 1473. Mesotrione technical.
    Sec. 1474. Malonic acid-dinitrile 50% NMP.
    Sec. 1475. Formulations of NOA 446510.
    Sec. 1476. DEMBB distilled-ISO tank.
    Sec. 1477. Methylionone.
    Sec. 1478. Certain acrylic fiber tow.
    Sec. 1479. Certain acrylic fiber tow.
    Sec. 1480. MKH 6561 isocyanate.
    Sec. 1481. Endosulfan.
    Sec. 1482. Tetraconazole.
    Sec. 1483. M-alcohol.
    Sec. 1484. Certain machines for use in the assembly of motorcycle
                                wheels.
    Sec. 1485. Deltamethrin.
    Sec. 1486. Palm fatty acid distillate.
    Sec. 1487. 4-Methoxy-2-methyldiphenylamine.
    Sec. 1488. 2-Methylhydroquinone.
    Sec. 1489. 1-Fluoro-2-nitrobenzene.
    Sec. 1490. Cosmetic bags with a flexible outer surface of reinforced or
                                laminated polyvinyl chloride (PVC).
    Sec. 1491. Mixtures of methyl 4-iodo-2-[3-(4-methoxy-6-methyl-1,3,5-
                                triazin-2-yl)ureidosulfonyl]benzoate,
                                sodium salt (iodosulfuron methyl, sodium
                                salt).
    Sec. 1492. Ethyl 4,5-dihydro-5,5-diphenyl-1,2-oxazole-3-carboxylate
                                (isoxadifen-ethyl).
    Sec. 1493. (5-cyclopropyl-4-isoxazolyl)[2-(methylsulfonyl)-4-
                                (trifluoromethyl)phenyl]methanone
                                (isoxaflutole).
    Sec. 1494. Methyl 2-[(4,6-dimethoxypyrimidin-2-ylcarbamoyl)sulfamoyl]-
                                a-(methanesulfonamido)-p-toluate
                                (mesosulfuron-methyl) whether or not mixed
                                with application adjuvants.
    Sec. 1495. Mixtures of foramsulfuron and iodosulfuron-methyl-sodium.
    Sec. 1496. Vulcuren UPKA 1988.
    Sec. 1497. Vullcanox 41010 NA/LG.
    Sec. 1498. Vulkazon AFS/LG.
    Sec. 1499. P-Anisaldehyde.
    Sec. 1500. 1,2-Pentanediol.
    Sec. 1501. Agrumex.
    Sec. 1502. Cohedur RL.
    Sec. 1503. Formulations of prosulfuron.
    Sec. 1504. Lewatit.
    Sec. 1505. Para-Chlorophenol.
    Sec. 1506. Cypermethrin.
    Sec. 1507. Ion-exchange resin powder.
    Sec. 1508. Ion-exchange resin powder.
    Sec. 1509. Desmodur E 14.
    Sec. 1510. Desmodur VP LS 2253.
    Sec. 1511. Desmodur R-E.
    Sec. 1512. Walocel MW 3000 PFV.
    Sec. 1513. TSME.
    Sec. 1514. Walocel VP-M 20660.
    Sec. 1515. Xama 2.
    Sec. 1516. Xama 7.
    Sec. 1517. Certain cases for toys.
    Sec. 1518. Certain cases for toys.
    Sec. 1519. Aniline 2.5-disulfonic acid.
    Sec. 1520. 1,4-benzenedicarboxylic acid, polymer with n,n,-bis(2-
                                aminoethyl)-1,2-ethanediamine, cyclized,
                                methosulfate.
    Sec. 1521. Sulfur blue 7.
    Sec. 1522. Formaldehyde, reaction products with 1,4-benzenediol and m-
                                phenylenediamine, sulfurized.
    Sec. 1523. Isocyanatosulfonyl.
    Sec. 1524. Isocyanatosulfonyl.
    Sec. 1525. Gemifloxacin, gemifloxacin mesylate, and gemifloxacin
                                mesylate sesquihydrate.
    Sec. 1526. Butralin.
    Sec. 1527. Spirodiclofen.
    Sec. 1528. Propamocarb HCL (PREVICUR).
    Sec. 1529. Desmodur IL.
    Sec. 1530. Chloroacetone.
    Sec. 1531. IPN (isophthalonitrile).
    Sec. 1532. NOA 446510 technical.
    Sec. 1533. Hexythiazox technical.
    Sec. 1534. Crelan (self-blocked cycloaliphatic polyuretdione).
    Sec. 1535. Aspirin.
    Sec. 1536. Desmodur BL XP 2468.
    Sec. 1537. Desmodur RF-E.
    Sec. 1538. Desmodur HL.
    Sec. 1539. D-Mannose.
    Sec. 1540. Certain camel hair.
    Sec. 1541. Waste of camel hair.
    Sec. 1542. Certain camel hair.
    Sec. 1543. Woven fabric of vicuna hair.
    Sec. 1544. Certain camel hair.
    Sec. 1545. Noils of camel hair.
    Sec. 1546. Chloroacetic acid, ethyl ester.
    Sec. 1547. Chloroacetic acid, sodium salt.
    Sec. 1548. Low expansion laboratory glass.
    Sec. 1549. Stoppers, lids, and other closures.
    Sec. 1550. Pigment yellow 213.
    Sec. 1551. Indoxacarb.
    Sec. 1552. Dimethyl carbonate.
    Sec. 1553. 5-Chloro-1-indanone (EK179).
    Sec. 1554. Mixtures of famoxadone and cymoxanil.
    Sec. 1555. Decanedioic acid, bis(2,2,6,6-tetramethyl-4-piperidinyl)
                                ester.
    Sec. 1556. Acid blue 80.
    Sec. 1557. Pigment brown 25.
    Sec. 1558. Formulations of azoxystrobin.
    Sec. 1559. Formulations of pinoxaden/cloquintocet.
    Sec. 1560. Mixtures of difenoconazole/mefenoxam.
    Sec. 1561. Fludioxinil technical.
    Sec. 1562. Mixtures of clodinafop-propargyl.
    Sec. 1563. Avermectin b, 1,4"-deoxy-4"-methylamino-, (4"r)-, benzoate.
    Sec. 1564. Cloquintocet-mexyl.
    Sec. 1565. Metalaxyl-M technical.
    Sec. 1566. Cyproconazole technical.
    Sec. 1567. Pinoxaden technical.
    Sec. 1568. Mixtures of tralkoxydim.
    Sec. 1569. Certain chemicals.
    Sec. 1570. Mixtures of (<plus-minus>)-(cis and trans)-1-[[2-(2,4-
                                dichlorophenyl)-4-propyl-1,3-dioxolan-2-
                                yl]-methyl]-1h-1,2,4-triazole.
    sec. 1571. Paraquat dichloride.
    Sec. 1572. Certain basketballs.
    Sec. 1573. Certain leather basketballs.
    Sec. 1574. Certain rubber basketballs.
    Sec. 1575. Certain volleyballs.
    Sec. 1576. 4-Chloro-3-[[3-(4-methoxyphenyl)-1,3-dioxopropyl]-amino]-
                                dodecyl ester.
    Sec. 1577. Linuron.
    Sec. 1578. N,N-Dimethylpiperidinium chloride (mepiquat chloride).
    Sec. 1579. Diuron.
    Sec. 1580. Formulated product Krovar I DF.
    Sec. 1581. Triasulfuron technical.
    Sec. 1582. Brodifacoum technical.
    Sec. 1583. Pymetrozine technical.
    Sec. 1584. Formulations of thiamethoxam, difenoconazole, fludioxinil,
                                and mefenoxam.
    Sec. 1585. Trifloxysulfuron-sodium technical.
    Sec. 1586. 2 Benzylthio-3-ethyl sulfonyl pyridine.
    Sec. 1587. 2-Amino-4-methoxy-6-methyl-1,3,5-triazine.
    Sec. 1588. Formulated products containing mixtures of the active
                                ingredient 2-chloro-n-[[(4-methoxy-6-
                                methyl-1,3,5-triazin-2yl) amino]carbonyl]
                                benzenesulfonamide and application
                                adjuvants.
    Sec. 1589. 2-methyl-4-methoxy-6-methylamino-1,3,5-triazine.
    Sec. 1590. Mixtures of sodium-2-chloro-6-[(4,6 dimethoxypyrimidin-2-
                                yl)thio]benzoate and application adjuvants
                                (pyrithiobac-sodium).
    Sec. 1591. Certain decorative plates, decorative sculptures, decorative
                                plaques, and architectural miniatures.
    Sec. 1592. Certain music boxes.
    Sec. 1593. 2-Methyl-4-chlorophenoxyacetic acid.
    Sec. 1594. Phenmedipham.
    Sec. 1595. Desmedipham.
    Sec. 1596. Certain footwear with open toes or heels.
    Sec. 1597. Certain work footwear.
    Sec. 1598. Certain refracting and reflecting telescopes.
    Sec. 1600. Certain work footwear.
    Sec. 1601. Certain footwear for men.
    Sec. 1602. Certain rubber or plastic footwear.
    Sec. 1604. Zinc dimethyldithiocarbamate.
    Sec. 1605. Certain liquid crystal device (LCD) panel assemblies.
    Sec. 1606. Certain watertube boilers and reactor vessel heads.
              Chapter 2--Existing Duty Suspensions and Reductions

    Sec. 1611. Extension of certain existing duty suspensions and
                                reductions.
                      Subtitle B--Other Tariff Provisions

           Chapter 1--Liquidation Or Reliquidation of Certain Entries

    Sec. 1621. Certain tramway cars and associated spare parts.
    Sec. 1622. Reliquidation of certain entries of candles.
    Sec. 1623. Certain entries of roller chain.
    Sec. 1624. Certain entries of soundspa clock radios.
                      Chapter 2--Miscellaneous Provisions

    Sec. 1631. Vessel repair duties.
    Sec. 1632. Suspension of new shipper review provision.
    Sec. 1633. Extension and modification of duty suspension on wool
                                products; wool research fund; wool duty
                                refunds.
    Sec. 1634. Authorities relating to DR-CAFTA Agreement.
    Sec. 1635. Technical amendments to Customs modernization.
                           Subtitle C--Effective Date

    Sec. 1641. Effective date.

    SEC. 1402. REFERENCE.

        Except as otherwise expressly provided, whenever in this title an
    amendment or repeal is expressed in terms of an amendment to, or repeal
    of, a chapter, subchapter, note, additional U.S. note, heading,
    subheading, or other provision, the reference shall be considered to be
    made to a chapter, subchapter, note, additional U.S. note, heading,
    subheading, or other provision of the Harmonized Tariff Schedule of the
    United States (19 U.S.C. 3007).

             Subtitle A--Temporary Duty Suspensions and Reductions

                 CHAPTER 1--NEW DUTY SUSPENSIONS AND REDUCTIONS

    SEC. 1411. CERTAIN NON-KNIT GLOVES DESIGNED FOR USE BY AUTO MECHANICS.

        (a) In General.--Subchapter II of chapter 99 is amended by
    inserting in numerical sequence the following new headings:

    ``      9902.14.01      Mechanics' work     2.8%         No change        No change        On or before 12/
                             gloves, valued                                                     31/2009
                             not over $3.50
                             per pair
                             (provided for in
                             subheading
                             6216.00.58)......
            9902.14.02      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                             gloves, valued                                                     31/2009
                             over $3.50 but
                             not over $3.70
                             per pair
                             (provided for in
                             subheading
                             6216.00.58)......
            9902.14.03      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                             gloves, valued                                                     31/2009
                             over $3.70 but
                             not over $4.99
                             per pair
                             (provided for in
                             subheading
                             6216.00.58)......
            9902.14.04      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                             gloves, valued                                                     31/2009
                             over $4.99 but
                             not over $7.72
                             per pair
                             (provided for in
                             subheading
                             6216.00.58)......
            9902.14.05      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                             gloves, valued                                                     31/2009
                             over $7.72 per
                             pair (provided
                             for in subheading
                             6216.00.58)......

        (b) Amendment to U.S. Notes.--Subchapter II of chapter 99 is
    amended by adding at the end of the U.S. Notes to such subchapter the
    following new U.S. Note:
        ``18. For purposes of headings 9902.14.01, 9902.14.02, 9902.14.03,
    9902.14.04, and 9902.14.05, the term `mechanics' work gloves' means
    gloves, of man-made fibers, having synthetic leather palms and fingers;
    fourchettes of synthetic leather or of fabric of nylon or elastomeric
    yarn; backs comprising either one layer of knitted fabric of
    elastomeric yarn or three layers, with the outer layer of knitted
    fabric of elastomeric yarn, the center layer of foam and the inner
    layer of tricot fabric; the foregoing, whether or not including an
    thermoplastic rubber logo or pad on the back; and elastic wrist straps
    with molded thermoplastic rubber hook-and-loop enclosures.''.

    SEC. 1412. CERTAIN MICROPHONES FOR USE IN AUTOMOTIVE INTERIORS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.17      Unidirectional      Free         No change        No change        On or before 12/  ''.
                             (cardioid)                                                         31/2009
                             electret
                             condenser
                             microphone
                             modules for use
                             in motor vehicles
                             provided for in
                             headings 8701
                             through 8705
                             (other than such
                             modules designed
                             for handheld,
                             microphone stand,
                             or lapel use),
                             the foregoing
                             each including
                             wire leads for
                             external
                             connection,
                             whether or not
                             including a multi-
                             pin board level
                             type connector
                             but not including
                             a battery
                             compartment;
                             having a typical
                             frequency
                             response of 250
                             Hertz through
                             7,000 Hertz with
                             no more than a 20
                             decibel deviation
                             in that frequency
                             range and an
                             electrostatic
                             discharge
                             immunity of 4,000
                             V (contact) and
                             8,000 V (air);
                             and capable of
                             operation and
                             storage in the
                             temperature range
                             of -40C through
                             85C and a
                             humidity of not
                             over 95 percent
                             (provided for in
                             subheading
                             8518.10.80)......

    SEC. 1413. ACRYLIC OR MODACRYLIC SYNTHETIC FILAMENT TOW.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.21       Synthetic          6.8%         No change        No change        On or before 12/  ''.
                             filament tow:                                                      31/2009
                             acrylic or
                             modacrylic
                             (provided for in
                             subheading
                             5501.30.00)......

    SEC. 1414. ACRYLIC OR MODACRYLIC SYNTHETIC STAPLE FIBERS, CARDED,
                  COMBED, OR OTHERWISE PROCESSED FOR SPINNING.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.22       Synthetic staple   Free         No change        No change        On or before 12/  ''.
                             fibers, carded,                                                    31/2009
                             combed, or
                             otherwise
                             processed for
                             spinning: acrylic
                             or modacrylic
                             (provided for in
                             subheading
                             5506.30.00)......

    SEC. 1415. NITROCELLULOSE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.23      Cellulose nitrates  4.4%         No change        No change        On or before 12/  ''.
                             (nitrocellulose,                                                   31/2009
                             including
                             collodions) (CAS
                             9004-70-0)
                             (provided for in
                             subheading
                             3912.20.00)......

    SEC. 1416. POTASSIUM SORBATE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.24      Potassium sorbate   1.4%         No change        No change        On or before 12/  ''.
                             (CAS No. 24634-61-                                                 31/2009
                             5) (provided for
                             in subheading
                             2916.19.10)......

    SEC. 1417. SORBIC ACID.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.25      Sorbic acid (CAS    1.9%         No change        No change        On or before 12/  ''.
                             No. 110-44-1)                                                      31/2009
                             (provided for in
                             subheading
                             2916.19.20)......

    SEC. 1418. CERTAIN CAPERS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.26       Capers, prepared   Free         No change        No change        On or before 12/  ''.
                             or preserved by                                                    31/2009
                             vinegar other
                             than such goods
                             in immediate
                             containers each
                             holding 3.4 kg or
                             less (provided
                             for in subheading
                             2001.90.20)......

    SEC. 1419. CERTAIN PEPPERONCINI PREPARED OR PRESERVED OTHERWISE THAN BY
                  VINEGAR OR ACETIC ACID.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.27       Pepperoncini,      Free         No change        No change        On or before 12/  ''.
                             prepared or                                                        31/2009
                             preserved
                             otherwise than by
                             vinegar, not
                             frozen (provided
                             for in subheading
                             2005.90.55)......

    SEC. 1420. CERTAIN CAPERS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.28       Capers, prepared   Free         No change        No change        On or before 12/  ''.
                             or preserved by                                                    31/2009
                             vinegar in
                             immediate
                             containers each
                             holding more than
                             3.4 kg (provided
                             for in subheading
                             2001.90.10)......

    SEC. 1421. CERTAIN PEPPERONCINI PREPARED OR PRESERVED BY VINEGAR OR
                  ACETIC ACID IN CONCENTRATIONS AT 0.5 PERCENT OR GREATER.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.29       Pepperoncini,      2.2%         No change        No change        On or before 12/  ''.
                             prepared or                                                        31/2009
                             preserved by
                             vinegar (provided
                             for in subheading
                             2001.90.38)......

    SEC. 1422. CERTAIN PEPPERONCINI PREPARED OR PRESERVED OTHERWISE THAN BY
                  VINEGAR OR ACETIC ACID IN CONCENTRATIONS LESS THAN 0.5
                  PERCENT.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.30      Giardiniera,        Free         No change        No change        On or before 12/  ''.
                             prepared or                                                        31/2009
                             preserved
                             otherwise than by
                             vinegar, not
                             frozen (provided
                             for in subheading
                             2005.90.55)......

    SEC. 1423. CHLORAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.31      Trichloroacetaldeh  Free         No change        No change        On or before 12/  ''.
                             yde (CAS No. 75-                                                   31/2009
                             87-6) (provided
                             for in subheading
                             2913.00.50)......

    SEC. 1424. IMIDACLOPRID TECHNICAL (IMIDACLOPRID).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.32      1-[(6-Chloro-3-     Free         No change        No change        On or before 12/  ''.
                             pyrdinyl)methyl]-                                                  31/2009
                             N-nitro-2-
                             imidazolidinimine
                             (Imidacloprid)
                             (CAS No. 138261-
                             41-3) (provided
                             for in subheading
                             2933.39.27)......

    SEC. 1425. TRIADIMEFON.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.33      1-(4-               Free         No change        No change        On or before 12/  ''.
                             Chlorophenoxy)-3,                                                  31/2009
                             3-dimethyl-1-(1H-
                             1,2,4-triazol-1-
                             y1)-2-butanone
                             (CAS No. 43121-43-
                             3) (Triadimefon)
                             (provided for in
                             subheading
                             2933.99.22)......

    SEC. 1426. POLYETHYLENE HE1878.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.34      Polyethylene        3.6%         No change        No change        On or before 12/  ''.
                             HE1878 (CAS No.                                                    31/2009
                             25087-34-7), with
                             l-butene as
                             comonomer
                             (provided for in
                             subheading
                             3901.20.50)......

    SEC. 1427. THIACLOPRID.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.35      (Z)-[3-[(6-chloro-  Free         No change        No change        On or before 12/  ''.
                             3-                                                                 31/2009
                             pyridinyl)methyl]-
                             2-
                             thiazolidinyliden
                             e]cyanamide
                             (thiacloprid)
                             (CAS No. 111988-
                             49-9) (provided
                             for in subheading
                             2934.10.10)......

    SEC. 1428. PYRIMETHANIL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.36      4,6-Dimethyl-N-     Free         No change        No change        On or before 12/  ''.
                             phenyl-2-                                                          31/2009
                             pyrimidinamine
                             (pyrimethanil)
                             (CAS No. 53112-28-
                             0) (provided for
                             in subheading
                             2933.59.15)......

    SEC. 1429. FORAMSULFURON.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.37      Foramsulfuron       2.6%         No change        No change        On or before 12/  ''.
                             (Benzamide, 2-                                                     31/2009
                             (((((4,6-
                             dimethoxy-2-
                             pyrimidinyl)amino
                             )
                             carbonyl)amino)su
                             lfonyl)-4-
                             (formylamino)-
                             N,N-dimethyl-,)
                             (CAS No. 173159-
                             57-4), in bulk or
                             put up in forms
                             or packaging for
                             retail sale
                             (provided for in
                             subheading
                             2935.00.75 or
                             3808.30.15)......

    SEC. 1430. FENAMIDONE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.38      (5S)-3,5-Dihydro-5- Free         No change        No change        On or before 12/  ''.
                              methyl-2-                                                         31/2009
                             (methylthio)- 5-
                             phenyl-3-
                             (phenylamino)- 4H-
                             imidazol-4-one
                             (Fenamidone) (CAS
                             No. 161326-34-7)
                             (provided for in
                             subheading
                             2933.29.35)......

    SEC. 1431. CYCLANILIDE TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.39      1-(2,4-             Free         No change        No change        On or before 12/  ''.
                             Dichlorophenylami                                                  31/2009
                             nocarbonyl)cyclop
                             ropanecarboxylic
                             acid
                             (Cyclanilide)
                             (CAS No. 113136-
                             77-9) (provided
                             for in subheading
                             2924.29.47)......

    SEC. 1432. PARA-BENZOQUINONE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.40      1,4-Benzoquinone    Free         No change        No change        On or before 12/  ''.
                             (CAS No. 106-51-                                                   31/2009
                             4) (provided for
                             in subheading
                             2914.69.90)......

    SEC. 1433. O-ANISIDINE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.41       o-Anisidine (CAS   Free         No change        No change        On or before 12/  ''.
                             No. 90-04-4)                                                       31/2009
                             (provided for in
                             subheading
                             2922.22.10)......

    SEC. 1434. 2,4-XYLIDINE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.43       2,4-Xylidine (CAS  Free         No change        No change        On or before 12/  ''.
                             No. 95-68-1)                                                       31/2009
                             (provided for in
                             subheading
                             2921.49.10)......

    SEC. 1435. CROTONALDEHYDE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.44       Crotonaldehyde (2- Free         No change        No change        On or before 12/  ''.
                             butenaldehyde)                                                     31/2009
                             (CAS No. 4170-30-
                             3) (provided for
                             in subheading
                             2912.19.50)......

    SEC. 1436. BUTANEDIOIC ACID, DIMETHYL ESTER, POLYMER WITH 4-HYDROXY-
                  2,2,6,6,-TETRAMETHYL-1-PIPERIDINEETHANOL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.47      Butanedioic acid,   Free         No change        No change        On or before 12/  ''.
                             dimethyl ester,                                                    31/2009
                             polymer with 4-
                             hydroxy-2,2,6,6,-
                             tetramethyl-1-
                             piperidineethanol
                             (CAS No. 65447-77-
                             0) (provided for
                             in subheading
                             3907.99.00)......

    SEC. 1437. MIXTURES OF CAS NOS. 106990-43-6 AND 65447-77-0.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.48       1,3,5-Triazine-    Free         No change        No change        On or before 12/  ''.
                             2,4,6-triamine,                                                    31/2009
                             N,N-[1,2-
                             ethanediylbis[[[4
                             ,6-bis[butyl
                             (1,2,2,6,6-
                             pentamethyl-4-
                             piperidinyl)amino
                             ]-1,3,5-triazine-
                             2-yl]imino]-3,1-
                             propanediyl]]bis[
                             N,N-dibutyl-N,N-
                             bis(1,2,2,6,6-
                             pentamethyl-4-
                             piperidinyl)-
                             (CAS No. 106990-
                             43-6) and
                             Butanedioic acid,
                             dimethylester
                             polymer with 4-
                             hyroxy-2,2,6,6-
                             tetramethyl-1-
                             piperdine ethanol
                             (CAS No. 65447-77-
                             0) (Provided for
                             in subheading
                             3812.30.90)......

    SEC. 1438. MCPA.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.54      2-Ethylhexyl (4-    Free         No change        No change        On or before 12/  ''.
                             chloro-2-                                                          31/2009
                             methylphenoxy)ace
                             tate (CAS No.
                             29450-45-1)
                             (provided for in
                             subheading
                             2918.90.20)......

    SEC. 1439. BRONATE ADVANCED.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.55      Formulations of     2.8%         No change        No change        On or before 12/  ''.
                             2,6-dibromo-4-                                                     31/2009
                             cyanophenyl
                             octanoate (CAS
                             No. 1689-99-2),
                             2, 6-dibromo-4-
                             cyanophenyl
                             heptanoate (CAS
                             No. 56634-95-8),
                             and 2-ethylhexyl
                             (4-chloro-2-
                             methylphenoxy)ace
                             tate (CAS No.
                             29450-45-1)
                             (provided for in
                             subheading
                             3808.30.15)......

    SEC. 1440. BROMOXYNIL OCTANOATE TECH.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.56      2,6-dibromo-4-      Free         No change        No change        On or before 12/  ''.
                             cyanophenyl                                                        31/2009
                             octanoate (CAS
                             No. 1689-99-2)
                             (provided for in
                             subheading
                             2926.90.25)......

    SEC. 1441. BROMOXYNIL MEO.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.57      2,6-Dibromo-4-      Free         No change        No change        On or before 12/  ''.
                             cyanophenyl                                                        31/2009
                             octanoate/
                             heptanoate (CAS
                             Nos.1689-99-2 and
                             56634-95-8)
                             (provided for in
                             subheading
                             3808.30.15)......

    SEC. 1442. HYDRAULIC CONTROL UNITS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.62      Hydraulic control   Free         No change        No change        On or before 12/  ''.
                             units designed                                                     31/2009
                             for use in
                             braking systems
                             of hybrid motor
                             vehicles of
                             heading 8703
                             (provided for in
                             subheading
                             9032.89.60)......

    SEC. 1443. SHIELD ASY-STEERING GEAR.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.63      Steering gear       Free         No change        No change        On or before 12/  ''.
                             assemblies for                                                     31/2009
                             single-pinion
                             constant-ratio
                             electronic power
                             assisted steering
                             systems rated at
                             80 amperes at
                             12V, the
                             foregoing
                             designed for use
                             in hybrid motor
                             vehicles of
                             heading 8703
                             (provided for in
                             subheading
                             8708.99.73)......

    SEC. 1444. 2,4-DICHLOROANILINE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.64      2,4-                Free         No change        No change        On or before 12/  ''.
                             Dichloroaniline                                                    31/2009
                             (CAS No. 554-00-
                             7) (provided for
                             in subheading
                             2921.42.18)......

    SEC. 1445. 2-ACETYLBUTYROLACTONE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.65      2-                  Free         No change        No change        On or before 12/  ''.
                             Acetylbutyrolacto                                                  31/2009
                             ne (CAS No. 517-
                             23-7) (provided
                             for in subheading
                             2932.29.50)......

    SEC. 1446. ALKYLKETONE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.66      1-(4-Chlorophenyl)- Free         No change        No change        On or before 12/  ''.
                             4, 4-dimethyl-3-                                                   31/2009
                             pentanone (CAS
                             No. 66346-01-8)
                             (provided for in
                             subheading
                             2914.70.40)......

    SEC. 1447. CYFLUTHRIN (BAYTHROID).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.67      Cyano(4-fluoro-3-   3.5%         No change        No change        On or before 12/  ''.
                             phenoxyphenyl)met                                                  31/2009
                             hyl 3-(2,2-
                             dichloroethenyl)-
                             2,2-
                             dimethylcycloprop
                             anecarboxylate
                             (Cyfluthrin,
                             excluding b-
                             Cyfluthrin) (CAS
                             No. 68359-37-5)
                             (provided for in
                             subheading
                             2926.90.30)......

    SEC. 1448. BETA-CYFLUTHRIN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.68      Reaction mixture    Free         No change        No change        On or before 12/  ''.
                             comprising the                                                     31/2009
                             enantiomeric pair
                             (R)-a-cyano-4-
                             fluoro-3-
                             phenoxybenzyl
                             (1S,3S)-3-(2,2-
                             dichlorovinyl)-2,
                             2-
                             dimethylcycloprop
                             anecarboxylate
                             and (S)-a-cyano-4-
                             fluoro-3-
                             phenoxybenzyl
                             (1R,3R)-3-(2,2-
                             dichlorovinyl)-2,
                             2-
                             dimethylcycloprop
                             anecarboxylate in
                             ratio 1:2 with
                             the enantiomeric
                             pair (R)-a-cyano-
                             4-fluoro-3-
                             phenoxybenzyl
                             (1S,3R)-3-(2,2-
                             dichlorovinyl)-2,
                             2-
                             dimethylcycloprop
                             anecarboxylate
                             and (S)-a-cyano-4-
                             fluoro-3-
                             phenoxybenzyl
                             (1R,3S)-3-(2,2-
                             dichlorovinyl)-2,
                             2-
                             dimethylcycloprop
                             anecarboxylate (b-
                             Cyfluthrin) (CAS
                             No. 68359-37-5)
                             (provided for in
                             subheading
                             2926.90.30)......

    SEC. 1449. CYCLOPROPANE-1,1-DICARBOXYLIC ACID, DIMETHYL ESTER.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.69      Cyclopropane-1,1-   1.8%         No change        No change        On or before 12/  ''.
                             dicarboxylic                                                       31/2009
                             acid, dimethyl
                             ester (CAS No.
                             6914-71-2)
                             (provided for in
                             subheading
                             2917.20.00)......

    SEC. 1450. SPIROXAMINE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.70      8-(1,1-             Free         No change        No change        On or before 12/  ''.
                             Dimethylethyl)-N-                                                  31/2009
                             ethyl-N-propyl-
                             1,4-
                             dioxaspiro[4,5]de
                             cane-2-
                             methanamine (CAS
                             118134-30-8)
                             (provided for in
                             subheading
                             2932.99.90)......

    SEC. 1451. SPIROMESIFEN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.71      3,3-                Free         No change        No change        On or before 12/  ''.
                             Dimethylbutanoic                                                   31/2009
                             acid, 2-oxo-3-
                             (2,4,6-
                             trimethylphenyl)-
                             1-
                             oxaspiro[4.4]non-
                             3-en-yl ester
                             (CAS 283594-90-1)
                             (provided for in
                             subheading
                             2932.29.10)......

    SEC. 1452. 4-CHLOROBENZALDEHYDE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.72      4-                  Free         No change        No change        On or before 12/  ''.
                             Chlorobenzaldehyd                                                  31/2009
                             e (CAS No. 104-88-
                             1) (provided for
                             in subheading
                             2913.00.40)......

    SEC. 1453. OXADIAZON.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.73      5-tert-butyl-3-     Free         No change        No change        On or before 12/  ''.
                             (2,4-dichloro-5-                                                   31/2009
                             isopropoxyphenyl)
                             -1,3,4-oxadiazol-
                             2(3H)-one
                             (Oxadiazon) (CAS
                             No. 19666-30-9)
                             (provided for in
                             subheading
                             2934.99.11)......

    SEC. 1454. NAHP.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.74      2-(1,1-             Free         No change        No change        On or before 12/  ''.
                             Dimethylethyl)-5-                                                  31/2009
                             hydroxypyrimidine
                             , sodium salt
                             (CAS No. 146237-
                             62-9) (provided
                             for in subheading
                             2933.59.70)......

    SEC. 1455. PHOSPHORUS THIOCHLORIDE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.75      Phosphorus          Free         No change        No change        On or before 12/  ''.
                             Thiochloride (CAS                                                  31/2009
                             No. 3982-91-0)
                             (provided for in
                             subheading
                             2851.00.00)......

    SEC. 1456. TRIFLOXYSTROBIN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.76.     Methyl (E)-         2.4%         No change        No change        On or before 12/  ''.
                             methoxyimino-{(E)-                                                 31/2009
                             a-[1-(a,a,a-
                             trifluoro-m-
                             tolyl)ethylidenea
                             minooxy]-o-
                             tolyl}acetate
                             (Trifloxystrobin)
                             (CAS No. 141517-
                             21-7) (provided
                             for in subheading
                             2929.90.20)......

    SEC. 1457. PHOSPHORIC ACID, LANTHANUM SALT, CERIUM TERBIUM-DOPED.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.77       Phosphoric acid,   Free         No change        No change        On or before 12/  ''.
                             lanthanum salt,                                                    31/2009
                             cerium terbium-
                             doped (CAS No.
                             95823-34-0)
                             (provided for in
                             subheading
                             2846.90.80)......

    SEC. 1458. LUTETIUM OXIDE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.78       Lutetium oxide     Free         No change        No change        On or before 12/  ''.
                             (CAS No. 12032-20-                                                 31/2009
                             1) (provided for
                             in subheading
                             2846.90.80)......

    SEC. 1459. ACM.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.79       (3-Acetoxy-3-      0.7%         No change        No change        On or before 12/  ''.
                             cyanopropyl)                                                       31/2009
                             methylphosphinic
                             acid, butyl ester
                             (CAS No. 167004-
                             78-6) (provided
                             for in subheading
                             2931.00.90)......

    SEC. 1460. PERMETHRIN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.80       (3-                Free         No change        No change        On or before 12/  ''.
                             Phenoxyphenyl)met                                                  31/2009
                             hyl 3-(2,2-
                             dichloroethenyl)-
                             2,2-
                             dimethylcycloprop
                             anecarboxylate
                             (Permethrin) (CAS
                             No. 52645-53-1)
                             (provided for in
                             subheading
                             2916.20.50)......

    SEC. 1461. THIDIAZURON.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.81       N-Phenyl-N -       Free         No change        No change        On or before 12/  ''.
                             (1,2,3-thiadiazol-                                                 31/2009
                             5-yl)urea
                             (Thidiazuron) CAS
                             No. 51707-55-2),
                             whether or not
                             mixed with
                             application
                             adjuvants
                             (provided for in
                             subheading
                             2934.99.15 or
                             3808.30.15)......

    SEC. 1462. FLUTOLANIL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.82       N-[3-(1-           Free         No change        No change        On or before 12/  ''.
                             Methylethoxy)phen                                                  31/2009
                             yl]-2-
                             (trifluoromethyl)
                             benzamide
                             (Flutolanil) (CAS
                             No. 66332-96-5)
                             (provided for in
                             subheading
                             2924.29.47)......

    SEC. 1463. RESMETHRIN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.83       [5-(Phenylmethyl)- Free         No change        No change        On or before 12/  ''.
                             3-furanyl]methyl                                                   31/2009
                             2,2-dimethyl-3-(2-
                             methyl-1-
                             propenyl)
                             cyclopropanecarbo
                             xylate
                             (Resmethrin) (CAS
                             No. 10453-86-8)
                             (provided for in
                             subheading
                             2932.19.10)......

    SEC. 1464. CLOTHIANIDIN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.84       (E)-1-(2-Chloro-   5.4%         No change        No change        On or before 12/  ''.
                             1,3-thiazol-5-                                                     31/2009
                             ylmethyl)-3-
                             methyl-2-
                             nitroguanidine
                             (Clothianidin)
                             (CAS No. 210880-
                             92-5) (provided
                             for in subheading
                             2934.10.90)......

    SEC. 1465. CERTAIN MASTER CYLINDER ASSEMBLES.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.92      Master cylinder     Free         No change        No change        On or before 12/  ''.
                             assemblies for                                                     31/2009
                             braking systems,
                             not incorporating
                             a vacuum booster,
                             the foregoing
                             designed for use
                             in hybrid motor
                             vehicles of
                             heading 8703
                             (provided for in
                             subheading
                             8708.39.50)......

    SEC. 1466. CERTAIN TRANSAXLES.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.93      Transaxles, each    1.5%         No change        No change        On or before 12/  ''.
                             incorporating an                                                   31/2009
                             integral
                             electronic
                             controller, the
                             foregoing
                             designed for use
                             in hybrid motor
                             vehicles of
                             heading 8703
                             (provided for in
                             subheading
                             8708.40.20)......

    SEC. 1467. CONVERTER ASY.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.94       Static converters  Free         No change        No change        On or before 12/  ''.
                             capable of                                                         31/2009
                             converting 300 V
                             direct current to
                             12 V direct
                             current, designed
                             for use in hybrid
                             motor vehicles of
                             heading 8703
                             (provided for in
                             subheading
                             8504.40.95)......

    SEC. 1468. MODULE AND BRACKET ASY-POWER STEERING.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.95      Controllers for     Free         No change        No change        On or before 12/  ''.
                             electronic power                                                   31/2009
                             assisted steering
                             systems, rated at
                             80 amperes at 12
                             V, designed for
                             use in hybrid
                             motor vehicles of
                             heading 8703
                             (provided for in
                             subheading
                             8537.10.90)......

    SEC. 1469. UNIT ASY-BATTERY HI VOLT.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.96      Nickel metal-       2.8%         No change        No change        On or before 12/  ''.
                             hydride storage                                                    31/2009
                             batteries,
                             exceeding 300 V,
                             the foregoing
                             designed for use
                             in hybrid motor
                             vehicles of
                             heading 8703
                             (provided for in
                             subheading
                             8507.80.80)......

    SEC. 1470. CERTAIN ARTICLES OF NATURAL CORK.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.10.99      Articles of         6%           No change        No change        On or before 12/  ''.
                             natural cork, not                                                  31/2009
                             elsewhere
                             specified or
                             included
                             (provided for in
                             subheading
                             4503.90.60)......

    SEC. 1471. GLYOXYLIC ACID.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.01       Glyoxylic acid     1.6%         No change        No change        On or before 12/  ''.
                             (CAS No. 298-12-                                                   31/2009
                             4) (provided for
                             in subheading
                             2918.30.90)......

    SEC. 1472. CYCLOPENTANONE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.02       Cyclopentanone     Free         No change        No change        On or before 12/  ''.
                             (CAS No. 120-92-                                                   31/2009
                             3) (provided for
                             in subheading
                             2914.29.50)......

    SEC. 1473. MESOTRIONE TECHNICAL.

        (a) Calendar Year 2006.--Subchapter II of chapter 99 is amended by
    inserting in numerical sequence the following new heading:

    ``      9902.11.03       2-[4-              6.04%        No change        No change        On or before 12/  ''.
                             (Methylsulfonyl)-                                                  31/2006
                             2-nitrobenzoyl]-
                             1,3-
                             cyclohexanedione
                             (Mesotrione) (CAS
                             No. 104206-82-8)
                             (provided for in
                             subheading
                             2930.90.10)......

        (b) Calendar Year 2007.--
                (1) In general.--Heading 9902.11.03, as added by subsection
            (a), is amended--
                        (A) by striking ``6.04%'' and inserting ``6.08%'';
                    and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2007''.
                (2) Effective date.--The amendments made by paragraph (1)
            shall take effect on January 1, 2007.
        (c) Calendar Years 2008 and 2009.--
                (1) In general.--Heading 9902.11.03, as added by subsection
            (a) and amended by subsection (b), is further amended--
                        (A) by striking ``6.08%'' and inserting ``6.11%'';
                    and
                        (B) by striking ``12/31/2007'' and inserting ``12/
                    31/2009''.
                (2) Effective date.--The amendments made by paragraph (1)
            shall take effect on January 1, 2008.

    SEC. 1474. MALONIC ACID-DINITRILE 50% NMP.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.04       50% solution of    Free         No change        No change        On or before 12/  ''.
                             malononitrile in                                                   31/2009
                             methyl-2-
                             pyrrolidone
                             solvent (CAS Nos.
                             109-77-3 and 872-
                             50-4) (provided
                             for in subheading
                             3824.90.9190)....

    SEC. 1475. FORMULATIONS OF NOA 446510.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.05       Formulations of    Free         No change        No change        On or before 12/  ''.
                             NOA 446510 which                                                   31/2009
                             include NOA
                             446510 Technical,
                             2-(4-chloro-
                             phenyl)-N-[2-(3-
                             methoxy-4-prop-2-
                             ynyloxy-
                             phenyl)ethyl]-2-
                             prop-2-
                             ynyloxyacetamide
                             (CAS No. 374726-
                             62-2) (provided
                             for in subheading
                             3808.20.15)......

    SEC. 1476. DEMBB DISTILLED-ISO TANK.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.06      2-Bromo-1,3-        Free         No change        No change        On or before 12/  ''.
                             diethyl-5-                                                         31/2009
                             methylbenzene
                             (CAS No. 314084-
                             61-2) (DEMBB)
                             (provided for in
                             subheading
                             2903.69.80)......

    SEC. 1477. METHYLIONONE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.10       3-Methyl-4-(2,6,6- Free         No change        No change        On or before 12/  ''.
                             trimethylcyclohex-                                                 31/2009
                             2-enyl)but-3-en-2-
                             one
                             (Methylionone)
                             (CAS No. 1335-46-
                             2) (provided for
                             in subheading
                             2914.23.00.......

    SEC. 1478. CERTAIN ACRYLIC FIBER TOW.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.11       Acrylic fiber tow  Free         No change        No change        On or before 12/  ''.
                             (polyacrylonitril                                                  31/2009
                             e tow) containing
                             by weight a
                             minimum of 92
                             percent
                             acrylonitrile,
                             not more than 0.1
                             percent zinc and
                             from 4 to 8
                             percent water,
                             imported in the
                             form of from 1 to
                             12 sub-bundles
                             crimped together,
                             each containing
                             24,000 filaments
                             (plus or minus
                             0.06 percent) and
                             with average
                             filament denier
                             of 1.5 decitex
                             (plus or minus
                             0.08 percent)
                             (provided for in
                             subheading
                             5501.30.00)......

    SEC. 1479. CERTAIN ACRYLIC FIBER TOW.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.12       Acrylic fiber tow  Free         No change        No change        On or before 12/  ''.
                             (polyacrylonitril                                                  31/2009
                             e tow) containing
                             by weight a
                             minimum of 92
                             percent
                             acrylonitrile,
                             not more than 0.1
                             percent zinc and
                             from 2 to 8
                             percent water,
                             imported in the
                             form of 6 sub-
                             bundles crimped
                             together, each
                             containing 45,000
                             filaments (plus
                             or minus 0.06
                             percent) and with
                             average filament
                             denier of either
                             1.48 decitex
                             (plus or minus
                             0.08 percent) or
                             1.32 decitex
                             (plus or minus
                             0.09 percent)
                             (provided for in
                             subheading
                             5501.30.00)......

    SEC. 1480. MKH 6561 ISOCYANATE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.13       2-(Carbomethoxy)   Free         No change        No change        On or before 12/  ''.
                             benzenesulfonyl                                                    31/2009
                             isocyanate (CAS
                             No. 74222-95-0)
                             (provided for in
                             subheading
                             2930.90.29)......

    SEC. 1481. ENDOSULFAN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.14      6,7,8,9,10,10-      Free         No change        No change        On or before 12/  ''.
                             Hexachlorohexahyd                                                  31/2009
                             romethano-2,4,3-
                             benzodioxathiepin-
                             3-oxide
                             (Endosulfan) (CAS
                             No. 115-29-7)
                             (provided for in
                             subheading
                             2920.90.50 or
                             3808.10.50)......

    SEC. 1482. TETRACONAZOLE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.15       1-[2-(2,4-         Free         No change        No change        On or before 12/  ''.
                             dichlorophenyl)-3-                                                 31/2009
                             (1,1,2,2-
                             tetrafluoroethoxy
                             )propyl]-1H-1,2,4-
                             triazole
                             (Tetraconazole)
                             (CAS No. 112281-
                             77-3) (provided
                             for in subheading
                             2933.99.22)......

    SEC. 1483. M-ALCOHOL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.16       2-(2,4-            1%           No change        No change        On or before 12/  ''.
                             Dichlorophenyl)-3-                                                 31/2009
                             (1H-1,2,4-triazol-
                             1-yl)propanol
                             (CAS No. 112281-
                             82-0) (provided
                             for in subheading
                             2933.99.82)......

    SEC. 1484. CERTAIN MACHINES FOR USE IN THE ASSEMBLY OF MOTORCYCLE
                  WHEELS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.17      Wheel spoke         Free         No change        No change        On or before 12/  ''.
                             tightening                                                         31/2009
                             machines
                             (provided for in
                             subheading
                             8479.89.98), for
                             use with wheels
                             of vehicles of
                             heading 8711.....

    SEC. 1485. DELTAMETHRIN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.26       (S)-a-Cyano-3-     Free         No change        No change        On or before 12/  ''.
                             phenoxybenzyl                                                      31/2009
                             (1R,3R)-3-(2,2-
                             dibromovinyl)-2,2-
                             dimethylcycloprop
                             anecarboxylate
                             (Deltamethrin)
                             (CAS No. 52918-63-
                             5) (provided for
                             in subheading
                             2926.90.30)......

    SEC. 1486. PALM FATTY ACID DISTILLATE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.32      Monocarboxylic      1%           No change        No change        On or before 12/  ''.
                             fatty acids                                                        31/2009
                             derived from palm
                             oil (provided for
                             in subheading
                             3823.19.20)......

    SEC. 1487. 4-METHOXY-2-METHYLDIPHENYLAMINE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.35      4-Methoxy-2-        1.1%         No change        No change        On or before 12/  ''.
                             methyldiphenylami                                                  31/2009
                             ne (CAS No. 41317-
                             15-1) (provided
                             for in subheading
                             2922.29.60)......

    SEC. 1488. 2-METHYLHYDROQUINONE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.36       2-                 Free         No change        No change        On or before 12/  ''.
                             Methylhydroquinon                                                  31/2009
                             e (CAS No. 95-71-
                             6) (provided for
                             in subheading
                             2907.29.90)......

    SEC. 1489. 1-FLUORO-2-NITROBENZENE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.37       1-Fluoro-2-        Free         No change        No change        On or before 12/  ''.
                             nitrobenzene (CAS                                                  31/2009
                             No. 1493-27-2)
                             (provided for in
                             subheading
                             2904.90.30)......

    SEC. 1490. COSMETIC BAGS WITH A FLEXIBLE OUTER SURFACE OF REINFORCED OR
                  LAMINATED POLYVINYL CHLORIDE (PVC).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.43      Vanity cases that   13.3%        No change        No change        On or before 12/  ''.
                             are of a soft                                                      31/2009
                             sided
                             construction, of
                             reinforced or
                             laminated
                             polyvinyl
                             chloride
                             plastics, and are
                             of a kind
                             normally carried
                             in the pocket or
                             in the handbag
                             and used to
                             contain and apply
                             cosmetic
                             preparations
                             (provided for in
                             subheading
                             4202.12.20)......

    SEC. 1491. MIXTURES OF METHYL 4-IODO-2-[3-(4-METHOXY-6-METHYL-1,3,5-
                  TRIAZIN-2-YL)UREIDOSULFONYL]BENZOATE, SODIUM SALT
                  (IODOSULFURON METHYL, SODIUM SALT).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.44       Mixtures of        Free         No change        No change        On or before 12/  ''.
                             methyl 4-iodo-2-                                                   31/2009
                             [3-(4-methoxy-6-
                             methyl-1,3,5-
                             triazin-2-
                             yl)ureidosulfonyl
                             ]benzoate, sodium
                             salt
                             (Iodosulfuron
                             methyl, sodium
                             salt) (CAS No.
                             144550-36-7) and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.30.15)......

    SEC. 1492. ETHYL 4,5-DIHYDRO-5,5-DIPHENYL-1,2-OXAZOLE-3-CARBOXYLATE
                  (ISOXADIFEN-ETHYL).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.45       Ethyl 4,5-dihydro- Free         No change        No change        On or before 12/  ''.
                             5,5-diphenyl-1,2-                                                  31/2009
                             oxazole-3-
                             carboxylate
                             (Isoxadifen-
                             ethyl) (CAS No.
                             163520-33-0)
                             (provided for in
                             subheading
                             2934.99.39)......

    SEC. 1493. (5-CYCLOPROPYL-4-ISOXAZOLYL)[2-(METHYLSULFONYL)-4-
                  (TRIFLUOROMETHYL)PHENYL]METHANONE (ISOXAFLUTOLE).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.46       (5-cyclopropyl-4-  4.8%         No change        No change        On or before 12/  ''.
                             isoxazolyl)[2-                                                     31/2009
                             (methylsulfonyl)-
                             4-
                             (trifluoromethyl)
                             phenyl]methanone
                             (Isoxaflutole)
                             (CAS No. 141112-
                             29-0) (provided
                             for in subheading
                             2934.99.15)......

    SEC. 1494. METHYL 2-[(4,6-DIMETHOXYPYRIMIDIN-2-YLCARBAMOYL)SULFAMOYL]-
                  A-(METHANESULFONAMIDO)-P-TOLUATE (MESOSULFURON-METHYL)
                  WHETHER OR NOT MIXED WITH APPLICATION ADJUVANTS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.48       Methyl 2-[(4,6-    Free         No change        No change        On or before 12/  ''.
                             dimethoxypyrimidi                                                  31/2009
                             n-2-
                             ylcarbamoyl)sulfa
                             moyl]-a-
                             (methanesulfonami
                             do)-p-toluate
                             (Mesosulfuron-
                             methyl) (CAS No.
                             208465-21-8)
                             whether or not
                             mixed with
                             application
                             adjuvants
                             (provided for in
                             subheading
                             2935.00.75 or
                             3808.30.15)......

    SEC. 1495. MIXTURES OF FORAMSULFURON AND IODOSULFURON-METHYL-SODIUM.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.49       Mixtures of N,N-   Free         No change        No change        On or before 12/  ''.
                             dimethyl-2[3-(4,6-                                                 31/2009
                             dimethoxypyrimidi
                             n-2-
                             yl)ureidosulfonyl
                             ]-4-
                             formylaminobenzam
                             ide
                             (Foramsulfuron)
                             (CAS No. 173159-
                             57-4), methyl 4-
                             iodo-2-[3-(4-
                             methoxy-6-methyl-
                             1,3,5-triazin-2-
                             yl)ureidosulfonyl
                             ]benzoate, sodium
                             salt
                             (Iodosulfuron-
                             methyl-sodium)
                             (CAS No. 144550-
                             36-7) and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.30.15)......

    SEC. 1496. VULCUREN UPKA 1988.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.54       1,6-Bis(N,N'-      Free         No change        No change        On or before 12/  ''.
                             dibenzylthiocarba                                                  31/2009
                             moyldithio)hexane
                             (CAS No. 151900-
                             44-6) (provided
                             for in subheading
                             2930.20.20)......

    SEC. 1497. VULLCANOX 41010 NA/LG.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.55      N-Isopropyl-N'-     Free         No change        No change        On or before 12/  ''.
                             phenyl-p-                                                          31/2009
                             phenylenediamine
                             (CAS No. 101-72-
                             4) (provided for
                             in subheading
                             2921.51.50)......

    SEC. 1498. VULKAZON AFS/LG.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.56       Pentaerythritolbi  Free         No change        No change        On or before 12/  ''.
                             s(tetrahydrobenza                                                  31/2009
                             ldehyde acetal)
                             (CAS No. 6600-31-
                             3) (provided for
                             in subheading
                             2932.99.90)......

    SEC. 1499. P-ANISALDEHYDE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.57      P-Anisaldehyde      Free         No change        No change        On or before 12/  ''.
                             (CAS No. 123-11-                                                   31/2009
                             5) (Benzoldehyde,
                             4-methoxy-)
                             (provided for in
                             subheading
                             2912.49.10)......

    SEC. 1500. 1,2-PENTANEDIOL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.60       1,2-Pentanediol    Free         No change        No change        On or before 12/  ''.
                             (CAS No. 5343-92-                                                  31/2009
                             0) (provided for
                             in subheading
                             2905.39.90)......

    SEC. 1501. AGRUMEX.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following:

    ``      9902.11.62      o-tert-             Free         No change        No change        On or before 12/  ''.
                             Butylcyclohexyl                                                    31/2009
                             acetate, cis form
                             (CAS No. 20298-69-
                             9) (Agrumex)
                             (Cyclohexanol, 2-
                             (1,1-dimethyl-)
                             (provided for in
                             subheading
                             2915.39.45)......

    SEC. 1502. COHEDUR RL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.63       Mixtures of        Free         No change        No change        On or before 12/  ''.
                             resorcinol (CAS                                                    31/2009
                             No. 108-46-3),
                             hexamethylolmelam
                             ine ether (CAS
                             No. 3089-11-0)
                             and dibutyl
                             phthalate (CAS
                             No. 84-74-2)
                             (provided for in
                             subheading
                             3824.90.28)......

    SEC. 1503. FORMULATIONS OF PROSULFURON.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.64       Mixtures of        Free         No change        No change        On or before 12/  ''.
                             Prosulfuron (1-(4-                                                 31/2009
                             methoxy-6-methyl-
                             1,3,5-triazin-2-
                             yl)-3-[2-(3,3,3-
                             trifluoropropyl)-
                             phenylsulfonyl]ur
                             ea ) (CAS No.
                             94125-34-5) and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.30.15)......

    SEC. 1504. LEWATIT.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.71      Ion-exchange        Free         No change        No change        On or before 12/  ''.
                             resins (cationic                                                   31/2009
                             H form),
                             consisting of
                             copolymers of
                             acrylic acid and
                             diethylene glycol
                             divinyl ether
                             (CAS No. 359785-
                             58-3) (provided
                             for in subheading
                             3914.00.60)......

    SEC. 1505. PARA-CHLOROPHENOL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.72      para-Chlorophenol   Free         No change        No change        On or before 12/  ''.
                             (CAS No. 106-48-                                                   31/2009
                             9) (provided for
                             in subheading
                             2908.10.60)......

    SEC. 1506. CYPERMETHRIN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.74      Cyano(3-            Free         No change        No change        On or before 12/  ''.
                             phenoxyphenyl)met                                                  31/2009
                             hyl 3-(2,2-
                             dichloroethenyl)-
                             2,2-
                             dimethylcycloprop
                             anecarboxylate
                             (Cypermethrin)
                             (CAS No. 52315-07-
                             8) (provided for
                             in subheading
                             2926.90.30)......

    SEC. 1507. ION-EXCHANGE RESIN POWDER.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.78       Ion-exchange       Free         No change        No change        On or before 12/  ''.
                             resin powder                                                       31/2009
                             comprised of a
                             copolymer of
                             methacrylic acid
                             cross-linked with
                             divinylbenzene,
                             in the hydrogen
                             ionic form, of a
                             nominal partical
                             size between
                             0.025mm and 0.150
                             mm, dried to less
                             than 5% moisture
                             (CAS No. 50602-21-
                             6)(provided for
                             in subheading
                             3914.00.60)......

    SEC. 1508. ION-EXCHANGE RESIN POWDER.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.79       Ion-exchange       Free         No change        No change        On or before 12/  ''.
                             resin powder                                                       31/2009
                             comprised of a
                             copolymer of
                             methacrylic acid
                             cross-linked with
                             divinylbenzene,
                             in the potassium
                             ionic form, of a
                             nominal particle
                             size between
                             0.025mm and 0.150
                             mm, dried to less
                             than 10% moisture
                             (CAS No. 65405-55-
                             2) (provided for
                             in subheading
                             3914.00.60)......

    SEC. 1509. DESMODUR E 14.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.80      1,2,3-              Free         No change        No change        On or before 12/  ''.
                             Propanetriol,                                                      31/2009
                             polymer with 2,4-
                             diisocyanato-1-
                             methylbenzene, 2-
                             ethyl-2-
                             (hydroxymethyl)-1
                             ,3-propanediol,
                             methyloxirane and
                             oxirane (CAS No.
                             127821-00-5)
                             (provided for in
                             subheading
                             3909.50.50)......

    SEC. 1510. DESMODUR VP LS 2253.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.82      Hexane, 1,6-        Free         No change        No change        On or before 12/  ''.
                             diisocyanato-,                                                     31/2009
                             homopolymer, 3,5-
                             dimethyl-1H-
                             pyrazole-blocked
                             (CAS No. 163206-
                             31-3) (provided
                             for in subheading
                             3911.90.90)......

    SEC. 1511. DESMODUR R-E.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.83      4,4, 4-TT Desmodur  Free         No change        No change        On or before 12/  ''.
                             R-E in solvent                                                     31/2009
                             (CAS No. 2422-91-
                             5) in solvent
                             (provided for in
                             subheading
                             3824.90.28)......

    SEC. 1512. WALOCEL MW 3000 PFV.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.84      Methyl              Free         No change        No change        On or before 12/  ''.
                             hydroxyethyl                                                       31/2009
                             cellulose
                             products
                             containing 30% or
                             greater content
                             of 2-hydroxyethyl
                             methyl ether
                             cellulose
                             (``MHEC'' )
                             reaction products
                             with glyoxal (CAS
                             No. 68441-63-4)
                             (provided for in
                             subheading
                             3912.39.00)......

    SEC. 1513. TSME.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.85      ortho/para-         Free         No change        No change        On or before 12/  ''.
                             Toluenesulfonic                                                    31/2009
                             acid, methyl
                             ester (TSME) (CAS
                             Nos. 23373-38-8
                             and 80-48-8)
                             (provided for in
                             subheading
                             2904.10.32)......

    SEC. 1514. WALOCEL VP-M 20660.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.86      Methyl              Free         No change        No change        On or before 12/  ''.
                             Hydroxyethyl                                                       31/2009
                             Cellulose with a
                             77% or greater
                             content of 2-
                             hydroxyethyl
                             methyl ether
                             cellulose (CAS
                             No. 9032-42-2)
                             (provided for in
                             subheading
                             3912.39.00)......

    SEC. 1515. XAMA 2.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.87      Trimethylopropane   Free         No change        No change        On or before 12/  ''.
                             tris(3-                                                            31/2009
                             aziridinylpropano
                             ate) (CAS No.
                             52234-82-9)
                             (provided for in
                             subheading
                             2933.99.97)......

    SEC. 1516. XAMA 7.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.88      Polyfunctional      Free         No change        No change        On or before 12/  ''.
                             aziridine (CAS                                                     31/2009
                             No. 57116-45-7)
                             (provided for in
                             subheading
                             2933.99.97)......

    SEC. 1517. CERTAIN CASES FOR TOYS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.90      Cases or            Free         No change        No change        On or before 12/  ''.
                             containers                                                         31/2009
                             (provided for in
                             subheading
                             4202.92.90 and
                             not including
                             goods described
                             in heading
                             9902.01.81),
                             specially shaped
                             or fitted for,
                             and with
                             labeling, logo or
                             other descriptive
                             information on
                             the exterior of
                             the case or
                             container
                             indicating its
                             intention to be
                             used for,
                             electronic
                             drawing toys or
                             electronic games
                             of heading 9503
                             or 9504..........

    SEC. 1518. CERTAIN CASES FOR TOYS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.91      Cases or            Free         No change        No change        On or before 12/  ''.
                             containers                                                         31/2009
                             (provided for in
                             subheadings
                             4402.12.80 or
                             4202.92.90),
                             having one or
                             more molded
                             plastic holders,
                             clips or
                             fasteners, for
                             holding a doll or
                             dolls, whether or
                             not the case or
                             container is also
                             capable of
                             holding other
                             goods............

    SEC. 1519. ANILINE 2.5-DISULFONIC ACID.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.92      Aniline 2,5-        Free         No change        No change        On or before 12/  ''.
                             disulfonic acid                                                    31/2009
                             (CAS No. 98-44-2)
                             (1,4-
                             Benzenedisnlfonic
                             acid, 2-amino-)
                             (provided for in
                             subheading
                             2921.42.90)......

    SEC. 1520. 1,4-BENZENEDICARBOXYLIC ACID, POLYMER WITH N,N'-BIS(2-
                  AMINOETHYL)-1,2-ETHANEDIAMINE, CYCLIZED, METHOSULFATE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.93       1,4-               Free         No change        No change        On or before 12/  ''.
                             Benzenedicarboxyl                                                  31/2009
                             ic acid, polymer
                             With N,N-Bis(2-
                             aminoethyl)-1,2-
                             ethanediamine,
                             cyclized,
                             methosulfate (CAS
                             No. 68187-22-4)
                             (provided for in
                             subheading
                             3908.90.70)......

    SEC. 1521. SULFUR BLUE 7.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.94      4-[(4-Amino-3-      Free         No change        No change        On or before 12/  ''.
                             methylphenyl)amin                                                  31/2009
                             o]phenol,
                             reaction products
                             with sodium
                             sulfide (Sulfur
                             Blue 7) (CAS No.
                             1327-57-7)
                             (provided for in
                             subheading
                             3204.19.50)......

    SEC. 1522. FORMALDEHYDE, REACTION PRODUCTS WITH 1,4-BENZENEDIOL AND M-
                  PHENYLENEDIAMINE, SULFURIZED.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.95       Formaldehyde,      Free         No change        No change        On or before 12/  ''.
                             reaction products                                                  31/2009
                             with 1,4-
                             benzenediol and m-
                             phenylenediamine,
                             sulfurized (CAS
                             No. 110392-46-6)
                             (provided for in
                             subheading
                             3204.19.50)......

    SEC. 1523. ISOCYANATOSULFONYL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.96      2-                  Free         No change        No change        On or before 12/  ''.
                             (Isocyanatosulfon                                                  31/2009
                             yl)benzoic acid,
                             ethyl ester (CAS
                             No. 77375-79-2)
                             (provided for in
                             subheading
                             2930.90.29)......

    SEC. 1524. ISOCYANATOSULFONYL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.97      2-                  Free         No change        No change        On or before 12/  ''.
                             (Isocyanatosulfon                                                  31/2009
                             yl)benzoic acid,
                             methyl ester (CAS
                             No. 74222-95-0)
                             (provided for in
                             subheading
                             2930.90.29)......

    SEC. 1525. GEMIFLOXACIN, GEMIFLOXACIN MESYLATE, AND GEMIFLOXACIN
                  MESYLATE SESQUIHYDRATE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.11.99      Gemifloxacin (CAS   Free         No change        No change        On or before 12/  ''.
                             No. 175463-14-6);                                                  31/2009
                             gemifloxacin
                             mesylate (CAS No.
                             210353-53-0 or
                             204519-65-3); and
                             gemifloxacin
                             mesylate
                             sesquihydrate
                             (CAS No. 210353-
                             56-3 ) (the
                             foregoing
                             provided for in
                             subheading
                             2933.99.46)......

    SEC. 1526. BUTRALIN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.01      Butralin (CAS No.   Free         No change        No change        On or before 12/  ''.
                             33629-47-9)                                                        31/2009
                             (Benzenamine, 4-
                             (1,1-
                             dimethylethyl)-N-
                             (1-methylpropyl)-
                             2,6-dintro-)
                             (provided for in
                             subheading
                             2921.43.90)......

    SEC. 1527. SPIRODICLOFEN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.02      2,2-                Free         No change        No change        On or before 12/  ''.
                             Dimethylbutanoic                                                   31/2009
                             acid, 3-(2,4-
                             dichlorophenyl)-2-
                             oxo-1-
                             oxaspiro(4.5)dec-
                             3-en-4-yl ester
                             (Spirodiclofen)
                             (CAS No. 148477-
                             71-8) (provided
                             for in subheading
                             2932.29.10)......

    SEC. 1528. PROPAMOCARB HCL (PREVICUR).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.03      Mixtures of propyl  Free         No change        No change        On or before 12/  ''.
                             3-(dimethylamino)                                                  31/2009
                             propylcarbamate
                             monohydrochloride
                             (Propamocarb
                             hydrochloride)
                             (CAS No. 25606-41-
                             1) and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.20.50)......

    SEC. 1529. DESMODUR IL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.04      Poly(toluene        Free         No change        No change        On or before 12/  ''.
                             diisocyanate)                                                      31/2009
                             (CAS No. 26006-20-
                             2) dissolved in
                             organic solvents
                             (provided for in
                             subheading
                             3911.90.45)......

    SEC. 1530. CHLOROACETONE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.05      1-Chloro-2-         Free         No change        No change        On or before 12/  ''.
                             propanone (CAS                                                     31/2009
                             No. 78-95-5)
                             (provided for in
                             subheading
                             2914.70.90)......

    SEC. 1531. IPN (ISOPHTHALONITRILE).

        (a) Calendar Year 2006.--Subchapter II of chapter 99 is amended by
    inserting in numerical sequence the following new heading:

    ``      9902.12.06      1,3-                3.04%        No change        No change        On or before 12/  ''.
                             Benzenedicarbonit                                                  31/2006
                             rile (CAS No. 626-
                             17-5) (provided
                             for in subheading
                             2926.90.48)......

        (b) Calendar Year 2007.--
                (1) In general.--Heading 9902.12.06, as added by subsection
            (a), is amended--
                        (A) by striking ``3.04%'' and inserting ``3.23%'';
                    and
                        (B) by striking ``On or before 12/31/2006'' and
                    inserting ``On or before 12/31/2007''.
                (2) Effective date.--The amendments made by paragraph (1)
            shall take effect on January 1, 2007.
        (c) Calendar Years 2008 and 2009.--
                (1) In general.--Heading 9902.12.06, as added by subsection
            (a) and amended by subsection (b), is further amended--
                        (A) by striking ``3.23%'' and inserting ``3.4%'';
                    and
                        (B) by striking ``On or before 12/31/2007'' and
                    inserting ``On or before 12/31/2009''.
                (2) Effective date.--The amendments made by paragraph (1)
            shall take effect on January 1, 2008.

    SEC. 1532. NOA 446510 TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.07      4-Chloro-N-[2-[3-   1.2%         No change        No change        On or before 12/  ''.
                             methoxy-4-(2-                                                      31/2009
                             propynyloxy)pheny
                             l]ethyl]-a-(2-
                             propynyloxy)benze
                             neacetamide
                             (Mandipropamid)
                             (CAS No. 374726-
                             62-2) (provided
                             for in subheading
                             2924.29.47)......

    SEC. 1533. HEXYTHIAZOX TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.08      trans-5-(4-         Free         No change        No change        On or before 12/  ''.
                             Chlorophenyl)-N-                                                   31/2009
                             cyclohexyl-4-
                             methyl-2-
                             oxothiazolidine-3-
                             carboxamide
                             (Hexythiazox
                             Technical) (CAS
                             No. 78587-05-0)
                             (provided for in
                             subheading
                             2934.10.10)......

    SEC. 1534. CRELAN (SELF-BLOCKED CYCLOALIPHATIC POLYURETDIONE).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.10      2-Oxepanone         Free         No change        No change        On or before 12/  ''.
                             polymer with 1,4-                                                  31/2009
                             butanediol and 5-
                             isocyanato-1-
                             (isocyanatomethyl
                             )-1,3,3-
                             trimethylcyclohex
                             ane, 2-ethyl-1-
                             hexanol-blocked
                             (CAS No. 189020-
                             69-7) (provided
                             for in subheading
                             3909.50.50)......

    SEC. 1535. ASPIRIN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.11      o-Acetylsalicylic   3.0%         No change        No change        On or before 12/  ''.
                             acid (aspirin)                                                     31/2009
                             (CAS No. 50-78-2)
                             (provided for in
                             subheading
                             2918.22.10)......

    SEC. 1536. DESMODUR BL XP 2468.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.12      Copolymer of        Free         No change        No change        On or before 12/  ''.
                             methyl ethyl                                                       31/2009
                             ketoxime and
                             toluenediisocyana
                             te (CAS No.
                             352462-03-4)
                             (provided for in
                             subheading
                             3911.90.45)......

    SEC. 1537. DESMODUR RF-E.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.17      Mixtures of tris(4- Free         No change        No change        On or before 12/  ''.
                             isocyanatophenyl)                                                  31/2009
                             thiophosphate
                             (CAS No. 4151-51-
                             3) and ethyl
                             acetate and
                             monochlorobenzene
                             as solvents
                             (provided for in
                             subheading
                             3824.90.28)......

    SEC. 1538. DESMODUR HL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.18      Benzene, 1,3-       Free         No change        No change        On or before 12/  ''.
                             diisocyanatomethy                                                  31/2009
                             l-, polymer with
                             1,6-
                             diisocyanatohexan
                             e (CAS No. 63368-
                             95-6) dissolved
                             in n-butyl
                             acetate (provided
                             for in subheading
                             3911.90.45)......

    SEC. 1539. D-MANNOSE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.19      D-Mannose (CAS No.  Free         No change        No change        On or before 12/  ''.
                             3458-28-4)                                                         31/2009
                             (provided for in
                             subheading
                             2940.00.60)......

    SEC. 1540. CERTAIN CAMEL HAIR.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.20       Camel hair,        Free         No change        No change        On or before 12/  ''.
                             processed beyond                                                   31/2009
                             the degreased or
                             carbonized
                             condition
                             (provided for in
                             subheading
                             5102.19.90)......

    SEC. 1541. WASTE OF CAMEL HAIR.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.21       Waste of camel     Free         No change        No change        On or before 12/  ''.
                             hair (provided                                                     31/2009
                             for in subheading
                             5103.20.00)......

    SEC. 1542. CERTAIN CAMEL HAIR.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.22       Camel hair carded  Free         No change        No change        On or before 12/  ''.
                             or combed                                                          31/2009
                             (provided for in
                             subheading
                             5105.39.00)......

    SEC. 1543. WOVEN FABRIC OF VICUNA HAIR.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.23       Woven fabrics      Free         No change        No change        On or before 12/  ''.
                             containing 85                                                      31/2009
                             percent or more
                             by weight of
                             vicuna hair
                             (provided for in
                             subheadings
                             5111.11.70,
                             5111.19.60,
                             5112.11.60, or
                             5112.19.95)......

    SEC. 1544. CERTAIN CAMEL HAIR.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.24       Camel hair, not    Free         No change        No change        On or before 12/  ''.
                             processed in any                                                   31/2009
                             manner beyond the
                             degreased or
                             carbonized
                             condition
                             (provided for in
                             subheading
                             5102.19.20)......

    SEC. 1545. NOILS OF CAMEL HAIR.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.25       Noils of camel     Free         No change        No change        On or before 12/  ''.
                             hair (provided                                                     31/2009
                             for in subheading
                             5103.10.00)......

    SEC. 1546. CHLOROACETIC ACID, ETHYL ESTER.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.33      Chloroacetic acid,  Free         No change        No change        On or before 12/  ''.
                             ethyl ester (CAS                                                   31/2009
                             No. 105-39-5)
                             (provided for in
                             subheading
                             2915.40.50)......

    SEC. 1547. CHLOROACETIC ACID, SODIUM SALT.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.34      Chloroacetic acid,  Free         No change        No change        On or before 12/  ''.
                             sodium salt (CAS                                                   31/2009
                             No. 3926-62-3)
                             (provided for in
                             subheading
                             2915.40.50)......

    SEC. 1548. LOW EXPANSION LABORATORY GLASS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.39       Laboratory,        3.6%         No change        No change        On or before 12/  ''.
                             hygienic, or                                                       31/2009
                             pharmaceutical
                             glassware,
                             whether or not
                             graduated or
                             calibrated, of
                             low expansion
                             borosilicate
                             glass or alumino-
                             borosilicate
                             glass, having a
                             linear
                             coefficient of
                             expansion not
                             exceeding 3.3 x
                             10\7\ per Kelvin
                             within a
                             temperature range
                             of 0 to 300 C
                             (provided for in
                             subheading
                             7017.20.00)......

    SEC. 1549. STOPPERS, LIDS, AND OTHER CLOSURES.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.40       Stoppers, lids,    Free         No change        No change        On or before 12/  ''.
                             and other                                                          31/2009
                             closures of low
                             expansion
                             borosilicate
                             glass or alumino-
                             borosilicate
                             glass, having a
                             linear
                             coefficient of
                             expansion not
                             exceeding 3.3 x
                             10\7\ per Kelvin
                             within a
                             temperature range
                             of 0 to 300 C,
                             produced by
                             automatic machine
                             (provided for in
                             subheading
                             7010.20.20) or
                             produced by hand
                             (provided for in
                             subheading
                             7010.20.30)......

    SEC. 1550. PIGMENT YELLOW 213.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.41      1,4-                Free         No change        No change        On or before 12/  ''.
                             Benzenedicarboxyl                                                  31/2009
                             ic acid, 2-[[2-
                             oxo-1-[[1,2,3,4-
                             tetrahydro-7-
                             methoxy-2,3-dioxo-
                             6-quinoxalinyl)
                             amino]carbonyl]pr
                             opyl]azo]-,
                             dimethyl ester
                             (Pigment Yellow
                             213) (CAS No.
                             220198-21-0)
                             (provided for in
                             subheading
                             3204.17.60)......

    SEC. 1551. INDOXACARB.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.42      (4aS) -7-Chloro-2,  Free         No change        No change        On or before 12/  ''.
                             5-dihydro-2-                                                       31/2009
                             [[(methoxycarbony
                             l)[4-
                             (trifluoromethoxy
                             ) phenyl] amino]
                             carbonyl]-indeno
                             [1,2-e][1,3,4]
                             oxadiazine-4a
                             (3H)-carboxylic
                             acid methyl ester
                             (CAS No. 173584-
                             44-6) (provided
                             for in subheading
                             2934.99.16)......

    SEC. 1552. DIMETHYL CARBONATE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.43      Dimethyl carbonate  Free         No change        No change        On or before 12/  ''.
                             (CAS No. 616-38-                                                   31/2009
                             6) (provided for
                             in subheading
                             2920.90.50)......

    SEC. 1553. 5-CHLORO-1-INDANONE (EK179).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.44      5-Chloro-1-         Free         No change        No change        On or before 12/  ''.
                             indanone (CAS No.                                                  31/2009
                             42348-86-7)
                             (provided for in
                             subheading
                             2914.39.90)......

    SEC. 1554. MIXTURES OF FAMOXADONE AND CYMOXANIL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.45      Mixtures of 5-      Free         No change        No change        On or before 12/  ''.
                             methyl-5-(4-                                                       31/2009
                             phenoxyphenyl)-3-
                             (phenylamino)-2,4-
                             oxazolidinedione]
                             (famoxadone) (CAS
                             No. 131807-57-3),
                             2-cyano-N-
                             [(ethylamino)carb
                             onyl]-2-
                             (methoxyimino)ace
                             tamide
                             (Cymoxanil) (CAS
                             No. 57966-95-7)
                             and application
                             adjuvants
                             (provided for in
                             subheading
                             3808.20.15)......

    SEC. 1555. DECANEDIOIC ACID, BIS(2,2,6,6-TETRAMETHYL-4-PIPERIDINYL)
                  ESTER.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.47       Decanedioic acid,  Free         No change        No change        On or Before 12/  ''.
                             bis(2,2,6,6-                                                       31/2009
                             tetramethyl-4-
                             piperidinyl)
                             ester (CAS No.
                             52829-07-9)
                             (provided for in
                             subheading
                             2933.39.91)......

    SEC. 1556. ACID BLUE 80.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.49      Acid Blue 80 (CAS   Free         No change        No change        On or before 12/  ''.
                             No. 4474-24-2)                                                     31/2009
                             (provided for in
                             subheading
                             3204.12.50)......

    SEC. 1557. PIGMENT BROWN 25.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.50      Pigment Brown 25    Free         No change        No change        On or before 12/  ''.
                             (CAS No. 6992-11-                                                  31/2009
                             6) (provided for
                             in subheading
                             3204.17.04)......

    SEC. 1558. FORMULATIONS OF AZOXYSTROBIN.

        (a) Calendar Year 2006.--Subchapter II of chapter 99 is amended by
    inserting in numerical sequence the following new heading:

    ``      9902.12.51       Mixtures of        6.14%        No change        No change        On or before 12/  ''.
                             benzeneacetic                                                      31/2006
                             acid, (a E)- 2-
                             [[6-(2-
                             cyanophenoxy)-4-
                             pyrimidinyl]oxy]-
                             a-
                             (methoxymethylene
                             )-, methyl ester
                             (Azoxystrobin)
                             (CAS No. 131860-
                             33-8) and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.20.15)......

        (b) Calendar Year 2007.--
                (1) In general.--Heading 9902.12.51, as added by subsection
            (a), is amended--
                        (A) by striking ``6.14%'' and inserting ``6.15%'';
                    and
                        (B) by striking ``On or before 12/31/2006'' and
                    inserting ``On or before 12/31/2007''.
                (2) Effective date.--The amendments made by paragraph (1)
            shall take effect on January 1, 2007.
        (c) Calendar Years 2008 and 2009.--
                (1) In general.--Heading 9902.12.51, as added by subsection
            (a) and amended by subsection (b), is further amended--
                        (A) by striking ``6.15%'' and inserting ``6.17%'';
                    and
                        (B) by striking ``On or before 12/31/2007'' and
                    inserting ``On or before 12/31/2009''.
                (2) Effective date.--The amendments made by paragraph (1)
            shall take effect on January 1, 2008.

    SEC. 1559. FORMULATIONS OF PINOXADEN/CLOQUINTOCET.

        (a) Calendar Years 2006 and 2007.--Subchapter II of chapter 99 is
    amended by inserting in numerical sequence the following new heading:

    ``      9902.12.52       Mixtures of 8(2,6- Free         No change        No change        On or before 12/  ''.
                             diethyl-p-tolyl)-                                                  31/2007
                             1,2,4,5-
                             tetrahydro-7-oxo-
                             7H-pyrazolo[[1,2-
                             d][1,4,5]
                             oxadiazepin-9-yl
                             2,2-
                             dimethylpropionat
                             e (Pinoxaden)
                             (CAS No. 243973-
                             20-8), acetic
                             acid, [5-chloro-8-
                             quinolinyl]oxy]-,
                             1-methylhexyl
                             ester
                             (Cloquintocet)
                             (CAS No. 99607-70-
                             2) and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.30.15)......

        (b) Calendar Years 2008 and 2009.--
                (1) In general.--Heading 9902.12.52, as added by subsection
            (a), is further amended--
                        (A) by striking ``Free'' and inserting ``1.74%'';
                    and
                        (B) by striking ``On or before 12/31/2007'' and
                    inserting ``On or before 12/31/2009''.
                (2) Effective date.--The amendments made by paragraph (1)
            shall take effect on January 1, 2008.

    SEC. 1560. MIXTURES OF DIFENOCONAZOLE/MEFENOXAM.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.53      Mixtures of 1H-     Free         No change        No change        On or before 12/  ''.
                             1,2,4-triazole, 1-                                                 31/2009
                             ((2-
                             chlorophenoxy)phe
                             nyl)-4-methyl-1,3-
                             dioxolan-2-
                             yl)methyl)-
                             (Difenoconazole)
                             (CAS No. 119446-
                             68-3), (R,S)-2-
                             ((2,6-
                             dimethylphenyl)
                             methoxyacetylamin
                             o) propionic
                             acid, methyl
                             ester (Mefenoxam)
                             (CAS Nos. 70630-
                             17-0, and 69516-
                             34-3) and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.20.15)......

    SEC. 1561. FLUDIOXINIL TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.54       1H-Pyrrole-3-      1.6%         No change        No change        On or before 12/  ''.
                             carbonitrile, 4-                                                   31/2009
                             (2,2-difluoro-1,3-
                             benzodioxol-4-yl)-
                              (fludioxinil)
                             (CAS No. 131341-
                             86-1) (provided
                             for in subheading
                             2934.99.12)......

    SEC. 1562. MIXTURES OF CLODINAFOP-PROPARGYL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.55       Mixtures of        1.7%         No change        No change        On or before 12/  ''.
                             propionic acid, 2-                                                 31/2009
                             (4-((5-chloro-3-
                             fluoro-2-
                             pyridynyl)oxy)phe
                             noxy-2-propynyl
                             ester,
                             (clodinafop-
                             propargyl) (CAS
                             No. 105512-06-9)
                             (provided for in
                             subheading
                             3808.30.15)......

    SEC. 1563. AVERMECTIN B, 1,4"-DEOXY-4"-METHYLAMINO-, (4"R)-, BENZOATE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.56      Avermectin B, 1,4"- Free         No change        No change        On or before 12/  ''.
                             deoxy-4"-                                                          31/2009
                             methylamino-,
                             (4"R)-, benzoate
                             (CAS No. 155569-
                             91-8) (provided
                             for in subheading
                             3824.90.91 or
                             2932.29.50)......

    SEC. 1564. CLOQUINTOCET-MEXYL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.57       Acetic acid, 5-    Free         No change        No change        On or before 12/  ''.
                             chloro-8-                                                          31/2009
                             quinolinoxy-, 1-
                             methylhexyl ester
                             (Cloquintocet-
                             mexyl) (CAS No.
                             99607-70-2)
                             (provided for in
                             subheading
                             2933.49.30)......

    SEC. 1565. METALAXYL-M TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.58      (R,S)-2-((2,6-      Free         No change        No change        On or before 12/  ''.
                             Dimethylphenyl)                                                    31/2009
                             methoxyacetylamin
                             o) propionic
                             acid, methyl
                             ester (Metalaxyl-
                             M and L-
                             Metalaxylfenoxam)
                             (CAS Nos. 70630-
                             17-0 and 69516-34-
                             3) (provided for
                             in subheading
                             2924.29.47)......

    SEC. 1566. CYPROCONAZOLE TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.59      [a-(4-              Free         No change        No change        On or before 12/  ''.
                             Chlorophenyl)-a-                                                   31/2009
                             (1-
                             cyclopropylethyl)
                             -1H-1-1,2,4-
                             triazole-1-
                             ethanol
                             (Cyproconazole)
                             (CAS No. 94361-06-
                             5) (provided for
                             in subheading
                             2934.99.12)......

    SEC. 1567. PINOXADEN TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.60      8-(2,6-Diethyl-4-   1.8%         No change        No change        On or before 12/  ''.
                             methylphenyl)-1,2                                                  31/2009
                             ,4,5-tetrahydro-7-
                             oxo-7H-
                             pyrazolo[1,2-
                             d][1,4,5]oxadiaze
                             pin-9-yl 2,2-
                             dimethylpropanoat
                             e (Pinoxaden)
                             (CAS No. 243973-
                             20-8) (provided
                             for in subheading
                             2934.99.15)......

    SEC. 1568. MIXTURES OF TRALKOXYDIM.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.12.61       Mixtures of 2-[1-  Free         No change        No change        On or before 12/  ''.
                             (ethoxyimino)prop                                                  31/2009
                             yl]-3-hydroxy-5-
                             (2,4,6-
                             trimethylphenyl)-
                             2-cyclohexen-1-
                             one (Tralkoxydim)
                             (CAS No. 87820-88-
                             0) as the active
                             ingredient and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.30.15)......

    SEC. 1569. CERTAIN CHEMICALS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new headings:

    ``      9902.12.72      Mixtures of zinc    Free         No change        No change        On or before 12/  ...
                             dialkyldithiophos                                                  31/2009
                             phate (CAS No.
                             6990-43-8) with
                             an elastomer
                             binder of
                             ethylene-
                             propylene-diene
                             monomer and ethyl
                             vinyl acetate,
                             dispersing agents
                             and silica
                             (provided for in
                             subheading
                             3812.10.50)......
            9902.12.73      Mixtures of         Free         No change        No change        On or before 12/  ...
                             dithiocarbamate,                                                   31/2009
                             thiazole, thiuram
                             and thiourea with
                             an elastomer
                             binder of
                             ethylene-
                             propylene-diene
                             monomer and ethyl
                             vinyl acetate,
                             and dispersing
                             agents (provided
                             for in subheading
                             3812.10.50)......
            9902.12.74      Mixtures of         Free         No change        No change        On or before 12/  ...
                             caprolactam                                                        31/2009
                             disulfide (CAS
                             No. 23847-08-7)
                             with an elastomer
                             binder of
                             ethylene-
                             propylene-diene
                             monomer and ethyl
                             vinyl acetate,
                             and dispersing
                             agents (provided
                             for in subheading
                             3812.10.50)......
            9902.12.75      Mixtures of N-(3,4- Free         No change        No change        On or before 12/  ...
                             dichloro-phenyl)-                                                  31/2009
                             N,N-dimethylurea
                             (CAS No. 330-54-
                             1) with acrylate
                             rubber (provided
                             for in subheading
                             3812.10.50)......
            9902.12.76      Mixtures of zinc    Free         No change        No change        On or before 12/  ...
                             dicyanato diamine                                                  31/2009
                             (CAS No. 122012-
                             52-6) with an
                             elastomer binder
                             of ethylene-
                             propylene-diene
                             monomer and ethyl
                             vinyl acetate,
                             and dispersing
                             agents (provided
                             for in subheading
                             3812.10.50)......
            9902.12.77      4,8-Dicyclohexyl -  Free         No change        No change        On or before 12/  ...
                             6-2,10-dimethyl -                                                  31/2009
                             12H-dibenzo
                             [d,g][1,3,2]dioxa
                             phosphocin (CAS
                             No. 73912-21-7)
                             (provided for in
                             subheading
                             2920.90.50)......
            9902.12.78      Mixtures of         Free         No change        No change        On or before 12/  ...
                             benzenesulfonic                                                    31/2009
                             acid, dodecyl-,
                             with 2-
                             aminoethanol (CAS
                             No. 26836-07-7)
                             and Poly (oxy-1,2-
                             ethanediyl), a-[1-
                             oxo-9-
                             octadecenyl]-w-
                             hydroxy-, (9Z)
                             (CAS No. 9004-96-
                             0) (provided for
                             in subheading
                             3402.90.50)......
            9902.12.79      1,3-Dihydro-3,3-    Free         No change        No change        On or before 12/  ''.
                             bis (4-hydroxy-m-                                                  31/2009
                             tolyl)-2H-indol-2-
                             one (CAS No.
                             47465-97-4)
                             (provided for in
                             subheading
                             2933.79.08)......

    SEC. 1570. MIXTURES OF (<plus-minus>)-(CIS AND TRANS)-1-[[2-(2,4-
                  DICHLOROPHENYL)-4-PROPYL-1,3-DIOXOLAN-2-YL]-METHYL]-1H-
                  1,2,4-TRIAZOLE.

        (a) In General.--Subchapter II of chapter 99 is amended by
    inserting in numerical sequence the following new heading:

    ``      9902.12.80       Mixtures of        1.1%         No change        No change        On or before 12/  ''.
                             (<plus-minus>)-(c                                                  31/2009
                             is and trans)-1-
                             [[2-(2,4-
                             Dichlorophenyl)-4-
                             propyl-1,3-
                             dioxolan-2-yl]-
                             methyl]-1H-1,2,4-
                             triazole (CAS No.
                             60207-90-1) and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.20.15)......

        (b) Conforming amendment.--Subchapter II of chapter 99 is amended
    by striking heading 9902.32.04.

    SEC. 1571. PARAQUAT DICHLORIDE.

        (a) In General.--Subchapter II of chapter 99 is amended by
    inserting in numerical sequence the following new heading:

    ``      9902.13.06      Paraquat            3.59%        No change        No change        On or before 12/  ''.
                             dichloride                                                         31/2006
                             (1,1'dimethyl-
                             4,4'-bipyridinium
                             dichloride) (CAS
                             No. 1910-42-5)
                             (provided for in
                             subheading
                             2933.39.23)......

        (b) Calendar Year 2007.--
                (1) In general.--Heading 9902.13.06, as added by subsection
            (a), is amended--
                        (A) by striking ``3.59%'' and inserting ``4.02%'';
                    and
                        (B) by striking ``On or before 12/31/2006'' and
                    inserting ``On or before 12/31/2007''.
                (2) Effective date.--The amendments made by paragraph (1)
            shall take effect on January 1, 2007.
        (c) Calendar Years 2008 and 2009.--
                (1) In general.--Heading 9902.13.06, as added by subsection
            (a) and amended by subsection (b), is further amended--
                        (A) by striking ``4.02%'' and inserting ``4.41%'';
                    and
                        (B) by striking ``On or before 12/31/2007'' and
                    inserting ``On or before 12/31/2009''.
                (2) Effective date.--The amendments made by paragraph (1)
            shall take effect on January 1, 2008.

    SEC. 1572. CERTAIN BASKETBALLS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.07      Basketballs,        0.9%         No change        No change        On or before 12/  ''.
                             having an                                                          31/2009
                             external surface
                             other than
                             leather, rubber,
                             or synthetic
                             (provided for in
                             subheading
                             9506.62.80)......

    SEC. 1573. CERTAIN LEATHER BASKETBALLS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.08       Leather            Free         No change        No change        On or before 12/  ''.
                             basketballs                                                        31/2009
                             (provided for in
                             subheading
                             9506.62.80)......

    SEC. 1574. CERTAIN RUBBER BASKETBALLS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.09       Rubber             1.5%         No change        No change        On or before 12/  ''.
                             basketballs                                                        31/2009
                             (provided for in
                             subheading
                             9506.62.80)......

    SEC. 1575. CERTAIN VOLLEYBALLS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.10       Volleyballs        Free         No change        No change        On or before 12/  ''.
                             (provided for in                                                   31/2009
                             subheading
                             9506.62.80)......

    SEC. 1576. 4-CHLORO-3-[[3-(4-METHOXYPHENYL)-1,3-DIOXOPROPYL]-AMINO]-
                  DODECYL ESTER.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.11      4-Chloro-3-[[3-(4-  Free         No change        No change        On or before 12/  ''.
                             methoxyphenyl)-1,                                                  31/2009
                             3-dioxopropyl]-
                             amino]-dodecyl
                             ester (CAS No.
                             33942-96-0)
                             (provided for in
                             subheading
                             2924.29.71)......

    SEC. 1577. LINURON.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.24       3-(3,4-            Free         No change        No change        On or before 12/  ''.
                             Dichlorophenyl)-1-                                                 31/2009
                             methoxy-1-
                             methylurea (CAS
                             No. 330-55-2)
                             (Linuron)
                             (provided for in
                             subheading
                             2924.21.16)......

    SEC. 1578. N,N-DIMETHYLPIPERIDINIUM CHLORIDE (MEPIQUAT CHLORIDE).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.25      N,N-                Free         No change        No change        On or before 12/  ''.
                             Dimethylpiperidin                                                  31/2009
                             ium chloride
                             (Mepiquat
                             chloride) (CAS
                             No. 24307-26-4)
                             (provided for in
                             subheading
                             2933.39.25)......

    SEC. 1579. DIURON.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.26       Formulations of 3- Free         No change        No change        On or before 12/  ''.
                             (3,4-                                                              31/2009
                             dichlorophenyl)-1
                             ,1-dimethylurea
                             (CAS No. 330-54-
                             1) (Diuron) and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.30.15)......

    SEC. 1580. FORMULATED PRODUCT KROVAR I DF.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.27      Formulations        2.5%         No change        No change        On or before 12/  ''.
                             containing 5-                                                      31/2009
                             bromo-3-sec-butyl-
                             6-methyluracil
                             (Bromacil) (CAS
                             No. 314-40-9), 3-
                             (3,4-
                             Dichlorophenyl)-1
                             ,1-dimethylurea
                             (Diuron) (CAS No.
                             330-54-1), and
                             application
                             adjuvants
                             (provided for in
                             subheading
                             3808.30.15)......

    SEC. 1581. TRIASULFURON TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.28      3-(6-Methoxy-4-     Free         No change        No change        On or before 12/  ''.
                             methyl-1,3,5-                                                      31/2009
                             triazin-2-yl)-1-
                             [2-(2-
                             chloroethoxy)
                             phenylsulfonyl]ur
                             ea (Triasulfuron)
                             (CAS No. 82097-50-
                             5) (provided for
                             in subheading
                             2935.00.75)......

    SEC. 1582. BRODIFACOUM TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.29      3-[3-(4'-           Free         No change        No change        On or before 12/  ''.
                             Bromo[1,1'-                                                        31/2009
                             biphenyl]-4-yl)-
                             1,2,3,4-
                             tetrahydro-1-
                             naphthalenyl]-4-
                             hydroxy-2H-1-
                             benzopyran- 2-one
                             (Brodifacoum)
                             (CAS No. 56073-10-
                             0) (provided for
                             in subheading
                             2932.29.10)......

    SEC. 1583. PYMETROZINE TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.30      1,2,4-Triazin-      Free         No change        No change        On or before 12/  ''.
                             3(2H)-one, 4,5-                                                    31/2009
                             dihydro-6-methyl-
                             4-[(3-
                             pyridinylmethylen
                             e)amino]-
                             (Pymetrozine)
                             (CAS No. 123312-
                             89-0) (provided
                             for in subheading
                             2933.69.60)......

    SEC. 1584. FORMULATIONS OF THIAMETHOXAM, DIFENOCONAZOLE, FLUDIOXINIL,
                  AND MEFENOXAM.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.31      Formulations of 3-  Free         No change        No change        On or before 12/  ''.
                             [(2-chloro-5-                                                      31/2009
                             thiazolyl)methyl]
                             tetrahydro-5-
                             methyl-N-nitro-
                             1,3,5-oxadiazin-4-
                             imine)
                             (Thiamethoxam)
                             (CAS No. 153719-
                             23-4 ); 1H-1,2,4-
                             triazole, 1-[[2-
                             [2-chloro-4-(4-
                             chlorophenoxy)phe
                             nyl]-4-methyl-
                             1,3-dioxolan-2-
                             yl]methyl]-
                             (Difenoconazole)
                             (CAS No. 119446-
                             68-3); 1H-Pyrrole-
                             3-carbonitrile, 4-
                             (2,2-difluoro-1,3-
                             benzodioxol-4-yl)-
                              (Fludioxinil)
                             (CAS No. 131341-
                             86-1); and (R,S)-
                             2-[(2,6-
                             dimethylphenylmet
                             hoxy)acetylamino]-
                             propionic acid
                             methyl ester
                             (Mefenoxam) (CAS
                             Nos. 70630-17-0
                             and 69516-34-3)
                             (provided for in
                             subheading
                             3808.20.15)......

    SEC. 1585. TRIFLOXYSULFURON-SODIUM TECHNICAL.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.32       N-[[(4,6-          Free         No change        No change        On or before 12/  ''.
                             Dimethoxy-2-                                                       31/2009
                             pyrimidinyl)amino
                             ]carbonyl]-3-
                             (2,2,2-
                             trifluoroethoxy)-
                             2-
                             pyridinesulfonami
                             de monosodium
                             salt (CAS No.
                             199119-58-9)
                             (trifloxysulfuron-
                             sodium) (provided
                             for in subheading
                             2935.00.75)......

    SEC. 1586. 2 BENZYLTHIO-3-ETHYL SULFONYL PYRIDINE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.41      2-Benzylthio-3-     Free         No change        No change        On or before 12/  ''.
                             ethyl sulfonyl                                                     31/2009
                             pyridine (CAS No.
                             175729-82-5)
                             (provided for in
                             subheading
                             2933.39.61)......

    SEC. 1587. 2-AMINO-4-METHOXY-6-METHYL-1,3,5-TRIAZINE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.42      2-Amino-4-methoxy-  Free         No change        No change        On or before 12/  ''.
                             6-methyl-1,3,5-                                                    31/2009
                             triazine (CAS No.
                             1668-54-8)
                             (provided for in
                             subheading
                             2933.69.60)......

    SEC. 1588. FORMULATED PRODUCTS CONTAINING MIXTURES OF THE ACTIVE
                  INGREDIENT 2-CHLORO-N-[[(4-METHOXY-6-METHYL-1,3,5-
                  TRIAZIN-2YL) AMINO]CARBONYL] BENZENESULFONAMIDE AND
                  APPLICATION ADJUVANTS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.43      Formulated          Free         No change        No change        On or before 12/  ''.
                             products                                                           31/2009
                             containing
                             mixtures of the
                             active ingredient
                             2-chloro-N-[[(4-
                             methoxy-6-methyl-
                             1,3,5-triazin-
                             2yl)
                             amino]carbonyl]
                             benzenesulfonamid
                             e and application
                             adjuvants
                             (Chlorosulfuon)
                             (CAS No. 64902-72-
                             3) (provided for
                             in subheading
                             3808.30.15)......

    SEC. 1589. 2-METHYL-4-METHOXY-6-METHYLAMINO-1,3,5-TRIAZINE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.44      2-Methyl-4-methoxy- Free         No change        No change        On or before 12/  ''.
                             6-methylamino-                                                     31/2009
                             1,3,5-triazine
                             (CAS No. 5248-39-
                             5) (provided for
                             in subheading
                             2933.69.60)......

    SEC. 1590. MIXTURES OF SODIUM-2-CHLORO-6-[(4,6 DIMETHOXYPYRIMIDIN-2-
                  YL)THIO]BENZOATE AND APPLICATION ADJUVANTS (PYRITHIOBAC-
                  SODIUM).

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.45       Mixtures of        3.5%         No change        No change        On or before 12/  ''.
                             sodium-2-chloro-6-                                                 31/2009
                             [(4,6
                             dimethoxypyrimidi
                             n-2-
                             yl)thio]benzoate
                             (CAS No. 123343-
                             16-8) and
                             application
                             adjuvants
                             (Pyrithiobac-
                             sodium) (provided
                             for in subheading
                             3808.30.15)......

    SEC. 1591. CERTAIN DECORATIVE PLATES, DECORATIVE SCULPTURES, DECORATIVE
                  PLAQUES, AND ARCHITECTURAL MINIATURES.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.46      Decorative plates,  Free         No change        No change        12/31/2009        ''.
                             whether or not
                             with decorative
                             rim or attached
                             sculpture;
                             decorative
                             sculptures, each
                             with plate or
                             plaque attached,
                             and decorative
                             plaques each not
                             over 7.65 cm in
                             thickness;
                             architectural
                             miniatures,
                             whether or not
                             put up in sets;
                             all the foregoing
                             of resin
                             materials and
                             containing
                             agglomerated
                             stone, put up for
                             mail order retail
                             sale, whether for
                             wall or tabletop
                             display and each
                             weighing not over
                             1.36 kg together
                             with their retail
                             packaging
                             (provided for in
                             subheading
                             3926.40.00)......

    SEC. 1592. CERTAIN MUSIC BOXES.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.47      Music boxes with    Free         No change        No change        On or before 12/  ''.
                             mechanical                                                         31/2009
                             musical
                             movements,
                             presented in the
                             immediate
                             packaging for
                             shipment to the
                             ultimate
                             purchaser, and
                             each weighing not
                             over 6 kg
                             together with
                             retail packaging
                             (provided for in
                             subheading
                             9208.10.00)......

    SEC. 1593. 2-METHYL-4-CHLOROPHENOXYACETIC ACID.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.60       2-Methyl-4-        Free         No change        No change        On or before 12/  ''.
                             chlorophenoxyacet                                                  31/2009
                             ic acid (CAS No.
                             94-74-6)
                             (provided for in
                             subheading
                             2918.90.20)......

    SEC. 1594. PHENMEDIPHAM.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.76      3-                  Free         No change        No change        On or before 12/  ''.
                             Methylcarbonylami                                                  31/2009
                             nophenyl-3-methyl-
                             carbanilate
                             (Phenmedipham)
                             (CAS No. 13684-63-
                             4) in bulk or
                             mixed with
                             application
                             adjuvants
                             (provided for in
                             subheadings
                             2924.29.47 and
                             3808.30.15)......

    SEC. 1595. DESMEDIPHAM.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.77      3-                  Free         No change        No change        On or before 12/  ''.
                             Ethoxycarbonylami                                                  31/2009
                             nophenyl-N-
                             phenylcarbamate
                             (Desmedipham)
                             (CAS No. 13684-56-
                             5) in bulk or
                             mixed with
                             application
                             adjuvants
                             (provided for in
                             subheadings
                             2924.29.43 and
                             3808.30.15)......

    SEC. 1596. CERTAIN FOOTWEAR WITH OPEN TOES OR HEELS.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.78      Footwear with       Free         No change        No change        On or before 12/  ''.
                             outer soles of                                                     31/2009
                             rubber or
                             plastics and
                             uppers of
                             vegetable fibers,
                             with open toes or
                             open heels, other
                             than house
                             slippers
                             (provided for in
                             subheading
                             6404.19.25)......

    SEC. 1597. CERTAIN WORK FOOTWEAR.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.85      House slippers      Free         No change        No change        On or before 12/  ''.
                             with outer soles                                                   31/2009
                             of rubber,
                             plastics, leather
                             or composition
                             leather and
                             uppers of
                             leather, valued
                             not over $2.50/
                             pair (provided
                             for in subheading
                             6403.99.75);
                             Sports footwear;
                             tennis shoes,
                             basketball shoes,
                             gym shoes,
                             training shoes
                             and the like, all
                             the foregoing
                             with outer soles
                             of rubber or
                             plastics and
                             uppers of textile
                             materials for
                             women (provided
                             for in subheading
                             6404.11.20)......

    SEC. 1598. CERTAIN REFRACTING AND REFLECTING TELESCOPES.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.86      Refracting          Free         No change        No change        On or before 12/  ''.
                             telescopes with                                                    31/2009
                             50 mm or smaller
                             objective lenses
                             and reflecting
                             telescopes with
                             76 mm or smaller
                             mirrors, and
                             parts and
                             accessories
                             thereof (provided
                             for in subheading
                             9005.80.40 or
                             9005.90.80)......

    SEC. 1600. CERTAIN WORK FOOTWEAR.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.90      Welt footwear with  Free         No change        No change        On or before 12/  ''.
                             outer soles of                                                     31/2009
                             rubber, plastics,
                             leather or
                             composition
                             leather and
                             uppers of
                             pigskin,
                             incorporating a
                             protective metal
                             toe-cap (provided
                             for in subheading
                             6403.40.30)......

    SEC. 1601. CERTAIN FOOTWEAR FOR MEN.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.91      Other footwear      4.5%         No change        No change        On or before 12/  ''.
                             with uppers of                                                     31/2009
                             vegetable fibers,
                             for men (provided
                             for in subheading
                             6405.20.30)......

    SEC. 1602. CERTAIN RUBBER OR PLASTIC FOOTWEAR.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.92      Other footwear      6.5%         No change        No change        On or before 12/  ''.
                             with uppers of                                                     31/2009
                             vegetable fibers,
                             other than such
                             footwear for men
                             or women
                             (provided for in
                             subheading
                             6405.20.30)......

    SEC. 1604. ZINC DIMETHYLDITHIOCARBAMATE.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.13.97      Zinc                Free         No change        No change        On or before 12/  ''.
                             dimethyldithiocar                                                  31/2009
                             bamate (Ziram)
                             (CAS No. 137-30-
                             4) (provided for
                             in subheading
                             3808.20.28)......

    SEC. 1605. CERTAIN LIQUID CRYSTAL DEVICE (LCD) PANEL ASSEMBLIES.

        Subchapter II of chapter 99 is amended by inserting in numerical
    sequence the following new heading:

    ``      9902.85.21      Liquid Crystal      Free         No change        No change        On or before 12/  ''.
                             Device (LCD)                                                       31/2009
                             panel assemblies
                             for use in LCD
                             direct view
                             televisions
                             (provided for in
                             subheading
                             9013.80.90)......

    SEC. 1606. CERTAIN WATERTUBE BOILERS AND REACTOR VESSEL HEADS.

        (a) Watertube Boilers.--Subchapter II of chapter 99 is amended by
    inserting in numerical sequence the following new heading:

    ``      9902.84.01      Watertube boilers   Free         No change        No change        On or before 12/  ''.
                             with a steam                                                       31/2010
                             production
                             exceeding 45 t
                             per hour, for use
                             in nuclear
                             facilities
                             entered after 12/
                             31/2008 and on or
                             before 12/31/2010
                             if the contract
                             for the purchase
                             of such watertube
                             boilers was
                             entered into on
                             or before 7/31/
                             2006 (provided
                             for in subheading
                             8402.11.00)......

        (b) Reactor Vessel Heads.--Subchapter II of chapter 99 is amended
    by inserting in numerical sequence the following new heading:

    ``      9902.84.04      Reactor vessel      Free         No change        No change        On or before 12/  ''.
                             heads and                                                          31/2010
                             pressurizers for
                             nuclear reactors
                             entered after 12/
                             31/2008 and on or
                             before 12/31/2010
                             if the contract
                             for the purchase
                             of such heads and
                             pressurizers was
                             entered into on
                             or before 7/31/
                             2006 (provided
                             for in subheading
                             8401.40.00)......

              CHAPTER 2--EXISTING DUTY SUSPENSIONS AND REDUCTIONS

    SEC. 1611. EXTENSION OF CERTAIN EXISTING DUTY SUSPENSIONS AND
                  REDUCTIONS.

        (a) Existing Duty Suspensions and Reduction.--Each of the following
    headings is amended by striking the date in the effective period column
    and inserting ``12/31/2009'':
                (1) Heading 9902.39.08 (relating to ORGASOL polyamide
            powders).
                (2) Heading 9902.30.90 (relating to 3-amino-2'-(sulfato-
            ethyl sulfonyl) ethyl benzamide).
                (3) Heading 9902.32.91 (relating to MUB 738 INT).
                (4) Heading 9902.30.31 (relating to 5-amino-N-(2-
            hydroxyethyl)-2,3-xylenesulfonamide).
                (5) Heading 9902.01.83 (relating to Ethoprop).
                (6) Heading 9902.01.73 (relating to Fosetyl-Al).
                (7) Heading 9902.03.38 (relating to Flufenacet (FOE
            hydroxy)).
                (8) Heading 9902.02.02 (relating to Methidathion
            Technical).
                (9) Heading 9902.02.12 (relating to difenoconazole).
                (10) Heading 9902.02.09 (relating to Lambda-Cyhalothrin).
                (11) Heading 9902.02.08 (relating to cyprodinil).
                (12) Heading 9902.02.04 (relating to Wakil XL).
                (13) Heading 9902.02.06 (relating to Azoxystrobin
            Technical).
                (14) Heading 9902.02.05 (relating to mucochloric acid).
                (15) Heading 9902.03.06 (relating to high tenacity multiple
            (folded) or cabled yarn of viscose rayon).
                (16) Heading 9902.05.07 (relating to high tenacity single
            yarn of viscose rayon with a decitex equal to or greater than
            1,000).
                (17) Heading 9902.38.31 (relating to Vulkalent E/C).
                (18) Heading 9902.01.71 (relating to hexanedioic acid,
            polymer with 1,3-benzenedimethanamine).
                (19) Heading 9902.29.93 (relating to Trinexapac-ethyl).
                (20) Heading 9902.38.52 (relating to formulations of
            triasulfuron).
                (21) Heading 9902.39.30 (relating to certain ion-exchange
            resins).
                (22) Heading 9902.32.82 (relating to 2,6 Dichlorotoluene).
                (23) Heading 9902.02.33 (relating to Ion exchange resin
            comprising a compolymer of styrene crosslinked with
            ethenylbenzene, aminophosphonic acid sodium form).
                (24) Heading 9902.02.32 (relating toIon exchange resin
            comprising a copolymer of styrene crosslinked with
            divinylbenzene, iminodiacetic acid, sodium form)).
                (25) Heading 9902.01.78 (relating to certain bags for
            toys).
                (26) Heading 9902.01.81 (relating to cases for certain
            children's products).
                (27) Heading 9902.01.80 (relating to certain children's
            products).
                (28) Heading 9902.29.34 (relating to certain light
            absorbing photo dyes).
                (29) Heading 9902.85.04 (relating to certain R-core
            transformers).
                (30) Heading 9902.03.04 (relating to reduced vat blue 43).
                (31) Heading 9902.03.03 (relating to sulfur black 1).
                (32) Heading 9902.01.22 (relating to DMSIP).
                (33) Heading 9902.29.35 (relating to 2-
            (Methoxycarbonyl)benzylsulfonamide).
                (34) Heading 9902.02.52 (relating to Imidacloprid
            pesticides).
                (35) Heading 9902.38.15 (relating to Baytron C-R).
                (36) Heading 9902.29.87 (relating to 3,4-
            Ethylenedioxythiophene).
                (37) Heading 9902.01.90 (relating to certain filament
            yarns).
                (38) Heading 9902.01.91 (relating to certain filament
            yarns).
                (39) Heading 9902.71.08 (relating to certain semi-
            manufactured forms of gold).
                (40) Heading 9902.04.10 (relating to Crotonic Acid).
                (41) Heading 9902.04.09 (relating to 3,6,9-
            Trioxaundecanedioic acid).
                (42) Heading 9902.02.51 (relating to benzoic acid, 2-amino-
            4-[[(2,5-dichlorophenyl)amino]carbonyl]-, methyl ester).
                (43) Heading 9902.32.73 (relating to Solvent blue 124).
                (44) Heading 9902.32.55 (relating to Methyl thioglycolate
            (MTG)).
                (45) Heading 9902.01.48 (relating to Ethyl pyruvate).
                (46) Heading 9902.04.11 (relating to 1,3-
            Benzenedicarboxamide, N, N'-Bis (2,2,6,6-tetramethyl-4-
            piperidinyl)-).
                (47) Heading 9902.04.07 (relating to reaction products of
            phosphorus trichloride with 1,1'-biphenyl and 2,4-bis(1,1-
            dimethylethyl)phenol).
                (48) Heading 9902.04.05 (relating to preparations based on
            ethanediamide, N-(2-ethoxyphenyl)-N'-(4-isodecylphenyl)-).
                (49) Heading 9902.04.06 (relating to 1-Acetyl-4-(3-dodecyl-
            2,5-dioxo-1-pyrrolidinyl)-2,2,6,6-tetramethylpiperidine).
                (50) Heading 9902.04.12 (relating to 3-Dodecyl-1-(2,2,6,6-
            tetramethyl-4-piperidinyl)-2,5-pyrrolidinedione).
                (51) Heading 9902.29.70 (relating to
            Tetraacetylethylenediamine).
                (52) Heading 9902.34.01 (relating to sodium petroleum
            sulfonate).
                (53) Heading 9902.02.75 (relating to esters and sodium
            esters of parahydroxybenzoic acid).
                (54) Heading 9902.30.16 (relating to Diclofop methyl).
                (55) Heading 9902.33.61 (relating to ((3-
            ((Dimethylamino)carbonyl)-2-pyridinyl)sulfonyl) carbamic acid,
            phenyl ester).
                (56) Heading 9902.01.45 (relating to Esfenvalerate).
                (57) Heading 9902.05.01 (relating to Methyl 2-[[[[[4-
            (dimethylamino)-6- (2,2,2-trifluoroethoxy)-1,3,5-triazin-2-yl]-
            amino]carbonyl]amino]sulfonyl]-3-methylbenzoate and application
            adjuvants).
                (58) Heading 9902.01.44 (relating to Benzyl carbazate).
                (59) Heading 9902.05.14 (relating to Pyromellitic
            Dianhydride).
                (60) Heading 9902.05.13 (relating to 4,4'-Oxydiphthalic
            Anhydride).
                (61) Heading 9902.05.12 (relating to 4,4'-Oxydianiline).
                (62) Heading 9902.05.11 (relating to 3,3',4,4'-
            Biphenyltetracarboxylic Dianhydride).
                (63) Heading 9902.29.80 (relating to 1-[[2-(2,4-
            dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl]-methyl]-1H-1,2,4-
            triazole).
                (64) Heading 9902.05.19 (relating to ethofumesate).
                (65) Heading 9902.02.60 (relating to Nemacur VL).
                (66) Heading 9902.03.77 (relating to thiophanate methyl).
                (67) Heading 9902.84.14 (relating to ceiling fans).
        (b) Other Modifications.--
                (1) 2-Chlorobenzyl chloride.--Heading 9902.01.56 is
            amended--
                        (A) by striking ``2903.69.70'' and inserting
                    ``2903.69.80''; and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2009''.
                (2) Triethylene glycol bis[3-(3-tert-butyl-4-hydroxy-5-
            methylphenyl)propionate] .--Heading 9902.01.88 is amended--
                        (A) by striking ``Free'' and inserting ``4.1%'';
                    and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2009''.
                (3) Formulations of triasulfuron and dicamba.--Heading
            9902.38.21 is amended--
                        (A) in the article description column--
                                (i) by inserting ``(Triasulfuron)'' before
                            ``(CAS No. 82097-50-5)''; and
                                (ii) by inserting ``(Dicamba)'' before
                            ``(CAS No. 1918-00-9)''; and
                        (B) by striking ``12/31/2003'' and inserting ``12/
                    31/2009''.
                (4) 11-Aminoundecanoic acid.--Heading 9902.32.49 is
            amended--
                        (A) by striking ``Free'' and inserting ``2.3%'';
                    and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2009''.
                (5) PHBA.--Heading 9902.29.03 is amended--
                        (A) by striking ``Free'' and inserting ``3.1%'';
                    and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2009''.
                (6) Acetamiprid Technical.--Heading 9902.03.92 is amended--
                        (A) by striking ``Free'' and inserting ``2.5%'';
                    and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2009''.
                (7) Baytron and baytron p.--Heading 9902.39.15 is amended--
                        (A) by inserting ``, whether or not containing
                    binder resin and organic solvent'' before ``(CAS No.'';
                    and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2009''.
                (8) Iprodione.--Heading 9902.01.51 is amended--
                        (A) by striking ``4.1%'' and inserting ``2.0%'';
                    and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2009''.
                (9) Ethanediamide, N-(2-ethoxyphenyl)-N'-(2-ethylphenyl)-
            ).--Heading 9902.04.13 is amended--
                        (A) by striking ``2924.29.76'' and inserting
                    ``2924.29.71''; and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2009''.
                (10) Thiamethoxam technical.--Heading 9902.03.11 is
            amended--
                        (A) by striking ``3.2%'' and inserting ``3.0%'';
                    and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2009''.
                (11) 1,3-Bis(4-aminophenoxy)benzene (RODA).--Heading
            9902.05.15 is amended--
                        (A) by inserting ``(RODA)'' after ``benzene''; and
                        (B) by striking ``12/31/2006'' and inserting ``12/
                    31/2009''.
                (12) Mixtures of n-[[(4,6-dimethoxypyrimidin-2-
            yl)amino]carbonyl]-3-(ethylsulfonyl)-2-pyridinesulfonamide and
            application adjuvants.--Heading 9902.33.60 is amended--
                        (A) by striking the article description and
                    inserting the following: ``Mixtures of N-[[(4,6-
                    dimethoxypyrimidin-2-yl)amino]carbonyl]-3-
                    (ethylsulfonyl)-2-pyridinesulfonamide and application
                    adjuvants (CAS No. 122931-48-0) (provided for in
                    subheading 3808.30.15)''; and
                        (B) by striking ``12/31/2003'' and inserting ``12/
                    31/2009''.

                      Subtitle B--Other Tariff Provisions

           CHAPTER 1--LIQUIDATION OR RELIQUIDATION OF CERTAIN ENTRIES

    SEC. 1621. CERTAIN TRAMWAY CARS AND ASSOCIATED SPARE PARTS.

        (a) In General.--The Commissioner of the Bureau of Customs and
    Border Protection of the Department of Homeland Security shall admit
    free of duty 3 tramway cars (provided for in subheading 8603.10.00 of
    the Harmonized Tariff Schedule of the United States) manufactured in
    Ostrava, Czech Republic, for the use by the city of Portland, Oregon,
    and imported pursuant to a contract with the city of Portland, Oregon,
    and associated spare parts for such tramway cars (provided for in
    applicable subheadings of heading 8607 or other headings of the
    Harmonized Tariff Schedule of the United States) imported pursuant to
    such contract, the foregoing to be entered into the customs territory
    of the United States by not later than December 31, 2006.
        (b) Reliquidation; Refund of Amounts Owed.--If the liquidation of
    the entry of any of the tramway cars or associated spare parts
    described in subsection (a) becomes final before the date of the
    enactment of this Act, the Commissioner of the Bureau of Customs and
    Border Protection, notwithstanding any other provision of law, shall--
                (1) within 15 days after such date, reliquidate the entry
            in accordance with the provisions of this section; and
                (2) at the time of such reliquidation, make the appropriate
            refund of any duty paid with respect to the entry.

    SEC. 1622. RELIQUIDATION OF CERTAIN ENTRIES OF CANDLES.

        (a) Reliquidation of Entries.--Notwithstanding sections 514 and 520
    of the Tariff Act of 1930 (19 U.S.C. 1514 and 1520) or any other
    provision of law, the Bureau of Customs and Border Protection shall,
    not later than 90 days after the date of the enactment of this Act--
                (1) reliquidate the entries listed in subsection (b)
            without assessment of antidumping duties or interest; and
                (2) refund any antidumping duties and interest which were
            previously paid on such entries.
        (b) Affected Entries.--The entries referred to in subsection (a)
    are the following:

                         Entry number                                    Date of entry                     Port

    110-3447557-3                                           03/18/00                                    Los Angeles
    110-3447591-2                                           03/19/00                                    Los Angeles
    110-3447595-3                                           03/19/00                                    Los Angeles
    110-1201638-1                                           03/21/00                                        Detroit
    110-1201639-9                                           03/21/00                                        Detroit
    110-1201640-7                                           03/21/00                                        Detroit
    110-3447613-4                                           03/21/00                                    Los Angeles
    110-1201697-7                                           03/23/00                                        Detroit
    110-1201695-1                                           03/23/00                                        Detroit
    110-1201696-9                                           03/23/00                                        Detroit
    110-1201756-1                                           03/27/00                                        Detroit
    110-1201757-9                                           03/27/00                                        Detroit
    110-1201758-7                                           03/27/00                                        Detroit
    110-1740905-2                                           03/30/00                                    Los Angeles
    110-1740943-3                                           03/30/00                                    Los Angeles
    110-1201845-2                                           03/31/00                                        Detroit
    110-1201813-0                                           04/03/00                                        Detroit
    110-1201814-8                                           04/03/00                                        Detroit
    110-1201815-5                                           04/03/00                                        Detroit
    110-1201875-9                                           04/04/00                                        Detroit
    110-1201868-4                                           04/04/00                                        Detroit
    110-1201858-5                                           04/04/00                                        Detroit
    110-3447959-1                                           04/11/00                                    Los Angeles
    110-3447958-3                                           04/11/00                                    Los Angeles
    110-3759536-9                                           04/12/00                                        Detroit
    110-3759561-7                                           04/12/00                                        Detroit
    110-3759542-7                                           04/12/00                                        Detroit
    110-3759540-1                                           04/12/00                                        Detroit
    110-3447977-3                                           04/12/00                                    Los Angeles
    110-3759539-3                                           04/12/00                                        Detroit
    110-3448045-8                                           04/14/00                                    Los Angeles
    110-3448046-6                                           04/14/00                                    Los Angeles
    110-3448110-0                                           04/20/00                                    Los Angeles
    110-3759670-6                                           04/25/00                                        Detroit
    110-3759673-0                                           04/25/00                                        Detroit
    110-3759669-8                                           04/25/00                                        Detroit
    110-3759667-2                                           04/25/00                                        Detroit
    110-3759671-4                                           04/25/00                                        Detroit
    110-3759668-0                                           04/25/00                                        Detroit
    110-3448241-3                                           04/27/00                                    Los Angeles
    110-3448247-0                                           04/27/00                                    Los Angeles
    110-3448276-9                                           04/28/00                                        Memphis
    110-3448274-4                                           04/28/00                                        Memphis
    110-3448282-7                                           05/04/00                                        Memphis
    101-4081779-1                                           05/07/00                                        Memphis
    101-4088945-1                                           05/23/00                                        Memphis
    101-4089954-3                                           05/23/00                                        Memphis
    101-4088960-0                                           05/23/00                                        Memphis
    101-4092192-4                                           05/25/00                                        Memphis
    101-4089312-3                                           05/26/00                                        Detroit
    101-4089942-7                                           05/26/00                                        Detroit
    101-4089893-2                                           05/26/00                                        Detroit
    101-4092221-1                                           05/26/00                                        Memphis
    101-4089697-7                                           05/26/00                                    Los Angeles
    101-4092215-3                                           05/26/00                                        Memphis
    101-4086053-6                                           05/26/00                                    Los Angeles
    101-4122700-8                                           07/27/00                                    Los Angeles
    101-4122707-3                                           07/27/00                                    Los Angeles
    101-4122712-3                                           07/27/00                                    Los Angeles
    101-4127147-7                                           08/03/00                                    Los Angeles
    101-4132485-4                                           08/09/00                                        Norfolk
    101-4129989-0                                           08/11/00                                        Detroit
    101-4130345-2                                           08/17/00                                        Detroit
    101-4129976-7                                           08/23/00                                        Detroit
    101-4149476-4                                           09/06/00                                    Los Angeles
    101-4149483-0                                           09/06/00                                    Los Angeles
    101-4149493-9                                           09/06/00                                    Los Angeles
    101-4148595-2                                           09/08/00                                        Detroit
    101-4153301-7                                           09/18/00                                        Detroit
    101-4154523-5                                           09/14/00                                    Los Angeles
    101-4153389-2                                           09/18/00                                        Detroit
    101-4157161-1                                           09/20/00                                        Norfolk
    101-4153333-0                                           09/21/00                                        Detroit
    101-4155542-4                                           09/26/00                                        Detroit
    101-4166291-5                                           10/07/00                                    Los Angeles
    101-4167325-0                                           10/09/00                                        Detroit
    101-4167363-1                                           10/12/00                                        Detroit
    101-4164567-0                                           10/13/00                                        Norfolk
    101-4168049-5                                           10/14/00                                    Los Angeles
    101-4172904-5                                           10/21/00                                    Los Angeles
    101-4175579-2                                           10/30/00                                    Los Angeles
    101-4183996-8                                           11/07/00                                        Detroit
    101-4183234-4                                           11/09/00                                        Detroit
    101-4183251-8                                           11/09/00                                        Detroit
    101-4183253-4                                           11/09/00                                        Detroit
    101-4183257-5                                           11/09/00                                        Detroit
    101-4183264-1                                           11/09/00                                        Detroit
    101-4183264-1                                           11/09/00                                        Detroit
    101-4184811-8                                           11/13/00                                    Los Angeles
    101-4184819-1                                           11/13/00                                    Los Angeles
    101-4189001-1                                           11/14/00                                          Tampa
    101-4185526-1                                           11/16/00                                        Detroit
    101-4185535-2                                           11/16/00                                        Detroit
    101-4186580-7                                           11/20/00                                        Detroit
    101-4189830-3                                           11/20/00                                        Detroit
    101-4189774-3                                           11/21/00                                        Detroit
    101-4191183-3                                           11/24/00                                    Los Angeles
    101-4191188-2                                           11/24/00                                    Los Angeles
    101-4191193-2                                           11/24/00                                    Los Angeles
    101-4194796-9                                           11/29/00                                        Detroit
    101-4194801-7                                           11/29/00                                        Detroit
    101-4196383-4                                           12/01/00                                    Los Angeles
    101-4196389-1                                           12/01/00                                    Los Angeles
    101-4199308-8                                           12/13/00                                        Detroit

    SEC. 1623. CERTAIN ENTRIES OF ROLLER CHAIN.

        (a) Liquidation or Reliquidation of Entries.--Notwithstanding
    sections 514 and 520 of the Tariff Act of 1930 (19 U.S.C. 1514 and
    1520) or any other provision of law, the Bureau of Customs and Border
    Protection shall, not later than 90 days after the date of enactment of
    this Act, liquidate or reliquidate the entries listed in subsection (b)
    without assessment of interest and shall refund any interest which was
    previously paid.
        (b) Affected Entries.--The entries referred to in subsections (a)
    and (b) are the following:

                         Entry number                                    Date of entry                     Port

    858442975                                               08/21/85                                               Chicago
    868558147                                               01/28/86                                               Chicago
    868565499                                               03/14/86                                               Chicago
    858440922                                               07/31/85                                               Chicago
    868565499                                               03/14/86                                               Chicago
    868558147                                               01/28/86                                               Chicago
    858442975                                               08/21/85                                               Chicago
    858440922                                               07/31/85                                               Chicago
    847648353                                               06/18/84                                               Chicago
    858268324                                               01/04/85                                               Chicago
    858264302                                               11/08/84                                               Chicago
    858265107                                               11/19/84                                               Chicago
    847650150                                               07/18/84                                               Chicago
    847412877                                               05/09/84                                               Chicago
    837078386                                               03/21/83                                               Chicago
    837077691                                               02/07/83                                               Chicago
    837077701                                               02/07/83                                               Chicago
    826735834                                               01/13/82                                               Chicago
    826736309                                               01/18/82                                               Chicago
    821020081                                               02/12/82                                               Chicago
    821020052                                               02/17/82                                               Chicago
    821026768                                               04/13/82                                               Chicago
    827119569                                               06/18/82                                               Chicago
    837075114                                               10/06/82                                               Chicago
    826727088                                               10/14/81                                               Chicago
    837124777                                               05/19/83                                               Chicago
    847405240                                               11/28/83                                               Chicago
    837127606                                               08/18/83                                               Chicago
    837125132                                               06/08/83                                               Chicago
    847406100                                               12/22/83                                               Chicago
    847404034                                               11/02/83                                               Chicago
    837128090                                               09/07/83                                               Chicago
    837126762                                               08/05/83                                               Chicago
    837125569                                               06/22/83                                               Chicago
    837078991                                               04/12/83                                               Chicago
    837129222                                               10/03/83                                               Chicago
    847406414                                               12/29/83                                               Chicago
    847408014                                               01/31/84                                               Chicago
    868569204                                               07/03/86                                               Chicago
    868730813                                               08/14/86                                               Chicago

    SEC. 1624. CERTAIN ENTRIES OF SOUNDSPA CLOCK RADIOS.

        (a) In General.--Notwithstanding section 514 of the Tariff Act of
    1930 (19 U.S.C. 1514) or any other provision of law, the Bureau of
    Customs and Border Protection shall, not later than 90 days after the
    date of the enactment of this Act--
                (1) reliquidate each entry described in subsection (c)
            containing any merchandise which, on the date of original
            liquidation, was classified under subheading 8527.19.50 of the
            Harmonized Tariff Schedule of the United States; and
                (2) make such reliquidation at the rate of duty that would
            have been applicable to such merchandise if the merchandise had
            been liquidated under subheading 8527.19.10 of such Schedule on
            the date of entry of the merchandise.
        (b) Refund of Amounts Owed.--Any amounts owed by the United States
    under subsection (a) shall be refunded with interest.
        (c) Affected Entries.--The entries referred to in subsection (a)
    are as follows:

                                  Entry number

    110-1199345-7
    110-1199542-9
    110-1199558-5
    110-1201694-4
    110-3759754-8
    110-3759785-2
    101-4082299-9
    101-4088073-2
    101-4089053-3
    101-4120875-0
    101-4133671-8
    101-4138302-5
    101-4145092-3
    101-4148477-3
    101-4153108-6
    101-4159322-7
    101-4158601-5
    101-4163243-9
    101-4164448-3
    101-4168318-4
    101-4172197-6
    101-4172489-7
    101-4193123-7
    101-4264820-2
    101-4271724-7
    101-4277850-4
    101-4287672-0
    101-4301588-0
    101-4306238-7
    101-4306235-3
    101-6011727-0
    101-6012796-4
    101-6015492-7
    101-6021099-2
    101-6026903-0
    101-6024120-3
    101-6028079-7
    101-6027052-5
    101-6036728-9
    101-6048069-4
    101-6079830-1
    101-6082949-4
    101-6115954-5
    101-6119379-1
    101-6127048-2
    101-6150035-9
    101-6148556-9
    101-6172630-1
    101-6172406-6
    101-6186497-9
    101-4208407-7
    101-6035939-3

                      CHAPTER 2--MISCELLANEOUS PROVISIONS

    SEC. 1631. VESSEL REPAIR DUTIES.

        (a) Exemption.--Section 466(h) of the Tariff Act of 1930 (19 U.S.C.
    1466(h)) is amended by striking paragraph (4) and inserting the
    following:
                ``(4) the cost of equipment, repair parts, and materials
            that are installed on a vessel documented under the laws of the
            United States and engaged in the foreign or coasting trade, if
            the installation is done by members of the regular crew of such
            vessel while the vessel is on the high seas, in foreign waters,
            or in a foreign port, and does not involve foreign shipyard
            repairs by foreign labor.''.
        (b) Amendment to HTS.--The U.S. Notes to subchapter XVIII of
    chapter 98 of the Harmonized Tariff Schedule of the United States are
    amended by amending U.S. Note 2 to read as follows:
        ``2. Notwithstanding the provisions of subheadings 9818.00.03
    through 9818.00.07, no duty shall apply to the cost of equipment,
    repair parts, and materials that are installed in a vessel documented
    under the laws of the United States and engaged in the foreign or
    coasting trade, if the installation is done by members of the regular
    crew of such vessel while the vessel is on the high seas, in foreign
    waters, or in a foreign port and does not involve foreign shipyard
    repairs by foreign labor. Declaration and entry shall not be required
    with respect to such installation, equipment, parts, and materials.''.
        (c) Effective Date.--The amendments made by this section apply to
    vessel equipment, repair parts, and materials installed on or after
    April 25, 2001.

    SEC. 1632. SUSPENSION OF NEW SHIPPER REVIEW PROVISION.

        (a) Suspension of the Availability of Bonds to New Shippers.--
    Clause (iii) of section 751(a)(2)(B) of the Tariff Act of 1930 (19
    U.S.C. 1675(a)(2)(B)(iii)) shall not be effective during the period
    beginning on April 1, 2006, and ending on June 30, 2009.
        (b) Report on the Impact of the Suspension.--Not later than
    December 31, 2008, the Secretary of the Treasury, in consultation with
    the Secretary of Commerce, the United States Trade Representative, and
    the Secretary of Homeland Security, shall submit to the Committee on
    Ways and Means of the House of Representatives and the Committee on
    Finance of the Senate a report containing--
                (1) recommendations on whether the suspension of section
            751(a)(2)(B)(iii) of the Tariff Act of 1930 should be extended
            beyond the date provided in subsection (a); and
                (2) an assessment of the effectiveness of any
            administrative measure that was implemented to address the
            difficulties that necessitated the suspension under subsection
            (a), including--
                        (A) any problem in the collection of antidumping
                    duties on imports from new shippers; and
                        (B) any burden imposed on legitimate trade and
                    commerce by the suspension of bonds to new shippers.
        (c) Report on Collection Problems and Analysis of Proposed
    Solutions.--
                (1) Report.--Not later than 180 days after the date of the
            enactment of this Act, the Secretary of the Treasury, in
            consultation with the Secretary of Homeland Security and the
            Secretary of Commerce, shall submit to the Committee on Ways
            and Means of the House of Representatives and the Committee on
            Finance of the Senate a report describing--
                        (A) any major problem experienced in the collection
                    of duties during the 4 most recent fiscal years for
                    which data are available, including any fraudulent
                    activity intended to avoid payment of duties; and
                        (B) an estimate of the total amount of duties that
                    were uncollected during the most recent fiscal year for
                    which data are available, including, with respect to
                    each product, a description of why the duties were
                    uncollected.
                (2) Recommendations.--The report shall include--
                        (A) recommendations on any additional action needed
                    to address problems related to the collection of
                    duties; and
                        (B) for each recommendation--
                                (i) an analysis of how the recommendation
                            would address the specific problem; and
                                (ii) an assessment of the impact that
                            implementing the recommendation would have on
                            international trade and commerce (including any
                            additional costs imposed on United States
                            businesses).

    SEC. 1633. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON WOOL
                  PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY REFUNDS.

        (a) Extension of Temporary Duty Reductions.--Each of the following
    headings of the Harmonized Tariff Schedule of the United States is
    amended by striking the date in the effective period column and
    inserting ``12/31/2009'':
                (1) Heading 9902.51.11 (relating to fabrics of worsted
            wool).
                (2) Heading 9902.51.13 (relating to yarn of combed wool).
                (3) Heading 9902.51.14 (relating to wool fiber, waste,
            garnetted stock, combed wool, or wool top).
                (4) Heading 9902.51.15 (relating to fabrics of combed
            wool).
                (5) Heading 9902.51.16 (relating to fabrics of combed
            wool).
        (b) Extension of Duty Refunds and Wool Research Trust Fund.--
                (1) In general.--Section 4002(c) of the Wool Suit and
            Textile Trade Extension Act of 2004 (Public Law 108-429; 118
            Stat. 2603 (7 U.S.C. 7101 note)) is amended--
                        (A) in paragraph (3)--
                                (i) by striking ``2 additional payments''
                            and inserting ``annual additional payments'';
                            and
                                (ii) by adding at the end the following:
                        ``(C) Each subsequent annual payment to be made
                    after January 1 of each subsequent year, but on or
                    before April 15 of such year through calendar year
                    2010.''; and
                        (B) in paragraph (6)--
                                (i) in subparagraph (A), by striking
                            ``through 2007'' and inserting ``through
                            2009''; and
                                (ii) by adding at the end the following:
                        ``(C) Eligible manufacturers.--Only manufacturers
                    who weave worsted wool fabric in the United States
                    shall be eligible for a grant under this paragraph.''.
                (2) Sunset.--Section 506(f) of the Trade and Development
            Act of 2000 (Public 106-200; 114 Stat. 303), as amended by
            section 4002(c)(5) of the Wool Suit and Textile Trade Extension
            Act of 2004 (Public 108-429; 118 Stat. 2603), is amended by
            striking ``2008'' and inserting ``2010''.

    SEC. 1634. AUTHORITIES RELATING TO DR-CAFTA AGREEMENT.

        (a) Authority to Implement Certain Amendments to DR-CAFTA Agreement
    With Nicaragua, El Salvador, Honduras, and Guatemala.--
                (1) Proclamation authority.--The President is authorized to
            proclaim modifications to the Harmonized Tariff Schedule of the
            United States as necessary to carry out amendments proposed by
            the United States and the CAFTA-DR countries to the Agreement,
            the terms of which are contained in the letters of
            understanding described in paragraph (2).
                (2) Letters of understanding.--The letters of understanding
            referred to in paragraph (1) are the following:
                        (A) The letter of March 24, 2006, from Nicaraguan
                    Vice Minister of Trade Julio Teran to United States
                    Special Textile Negotiator Scott Quesenberry.
                        (B) The letter of March 27, 2006, from United
                    States Special Textile Negotiator Scott Quesenberry to
                    Nicaraguan Vice Minister of Trade Julio Teran.
                        (C) The letter of January 27, 2006, from El
                    Salvadoran Vice Minister of Economy Eduardo Ayala to
                    United States Special Textile Negotiator Scott
                    Quesenberry.
                        (D) The letter of January 27, 2006, from United
                    States Special Textile Negotiator Scott Quesenberry to
                    El Salvadoran Vice Minister of Economy Eduardo Ayala.
                        (E) The letter of March 7, 2006, from Honduran Vice
                    Minister of Foreign Trade Jorge Rosa to United States
                    Special Textile Negotiator Scott Quesenberry.
                        (F) The letter of March 7, 2006, from United States
                    Special Textile Negotiator Scott Quesenberry to
                    Honduran Vice Minister of Foreign Trade Jorge Rosa.
                        (G) The letter of June 23, 2006, from Guatemalan
                    Minister of Economy Marcio Cuevas Quezada to United
                    States Special Textile Negotiator Scott Quesenberry.
                        (H) The letter of June 23, 2006, from United States
                    Special Textile Negotiator Scott Quesenberry to
                    Guatemalan Minister of Economy Marcio Cuevas Quezada.
                (3) Sunset.--The authority of the President to proclaim
            modifications pursuant to paragraph (1) expires on December 31,
            2007.
        (b) Authority to Implement Certain Amendments to DR-CAFTA Agreement
    With Costa Rica and the Dominican Republic.--
                (1) Proclamation authority.--The President is authorized to
            proclaim modifications to the Harmonized Tariff Schedule of the
            United States as necessary to carry out amendments proposed by
            the United States, Costa Rica, and the Dominican Republic to
            the Agreement, the terms of which are contained in the letters
            of understanding described in paragraph (2).
                (2) Letters of understanding.--
                        (A) In general.--The letters of understanding
                    referred to in paragraph (1) are letters of
                    understanding exchanged between the countries described
                    in paragraph (1) relating to the rules of origin for
                    articles containing pocket bag fabric described in
                    subparagraph (B).
                        (B) Pocket bag fabric described.--For purposes of
                    subparagraph (A), the term ``pocket bag fabric'' means
                    pocket bag fabric used in an apparel article
                    classifiable under chapter 61 or 62 of the Harmonized
                    Tariff Schedule of the United States that contains a
                    pocket or pockets.
                (3) Consultation and layover requirements.--Any
            modification proclaimed by the President pursuant to paragraph
            (1) shall be subject to the consultation and layover provisions
            of section 104 of the Dominican Republic-Central America-United
            States Free Trade Agreement Implementation Act (Public Law 109-
            53; 19 U.S.C. 4014).
                (4) Congressional disapproval.--
                        (A) In general.--Any modification proclaimed by the
                    President pursuant to paragraph (1) shall not be
                    effective if a joint resolution described in
                    subparagraph (B) is enacted into law.
                        (B) Joint resolution described.--For purposes of
                    subparagraph (A), the term ``joint resolution'' means a
                    joint resolution of Congress, the sole matter after the
                    resolving clause of which is as follows: ``That the
                    Congress disapproves the modification proclaimed by the
                    President contained in the report submitted to the
                    Committee on Finance of the Senate and the Committee on
                    Ways and Means of the House of Representatives pursuant
                    to section 104(2) of the Dominican Republic-Central
                    America-United States Free Trade Agreement
                    Implementation Act (Public Law 109-53; 19 U.S.C.
                    4014(2)) on __________.'', with the blank space being
                    filled with the appropriate date.
                (5) Sunset.--The authority of the President to proclaim
            modifications pursuant to paragraph (1) expires on December 31,
            2007.
        (c) Authority Relating to Nicaraguan Tariff Preference Level Under
    DR-CAFTA Agreement.--
                (1) Certificate of eligibility.--The Commissioner of
            Customs may require an importer to submit at the time the
            importer files a claim for preferential tariff treatment under
            Annex 3.28 of the Agreement a certificate of eligibility,
            properly completed and signed, or transmitted pursuant to an
            authorized electronic data interchange system, by an authorized
            official of the Government of Nicaragua for purposes of
            implementing the tariff preference level for Nicaragua provided
            in Annex 3.28 of the Agreement.
                (2) Enforcement of commitments.--The President is
            authorized to proclaim a reduction in the overall limit in the
            tariff preference level for Nicaragua provided in Annex 3.28 of
            the Agreement if the President determines that Nicaragua has
            failed to comply with a commitment under an agreement between
            the United States and Nicaragua with regard to the
            administration of such tariff preference level.
                (3) Effective date.--Paragraph (1) applies with respect to
            entries made on or after April 1, 2006.
        (d) Technical Correction Relating to Co-Production of Certain
    Textile and Apparel Goods.--Section 205(a)(2) of the Dominican
    Republic-Central America-United States Free Trade Agreement
    Implementation Act (19 U.S.C. 4034(a)(2)) is amended by inserting after
    ``with respect to that country'' the following: ``or any other CAFTA-DR
    country''.
        (e) Reporting Requirements on Certain Negotiations and Amendments
    to DR-CAFTA Agreement.--
                (1) In general.--Not later than 30 days after the date of
            the enactment of this Act, and at least quarterly thereafter,
            the United States Trade Representative shall submit to the
            appropriate congressional committees a report on the status of
            negotiations and amendments proposed by the United States,
            Nicaragua, El Salvador, Honduras, Guatemala, Costa Rica, and
            the Dominican Republic to the Agreement regarding any change to
            the rule of origin or alteration of the tariff treatment of
            socks described in paragraph (2) or any technical correction
            described in paragraph (3). In addition, the United States
            Trade Representative shall provide to the appropriate
            congressional committees copies of any amendments to be
            proposed by the United States before the amendments are offered
            and copies of any amendments received by the United States
            relating to such negotiations.
                (2) Socks described.--For purposes of paragraph (1), the
            term ``socks'' means articles classifiable under subheading
            6111.20.6050, 6111.30.5050, 6111.90.5050, 6115.91.00,
            6115.92.60, 6115.92.90, 6115.93.60, 6115.93.90, 6115.99.14, or
            6115.99.18 of the Harmonized Tariff Schedule of the United
            States.
                (3) Technical corrections described.--Technical corrections
            referred to in paragraph (1) are the following:
                        (A) Clarification of references to ``elastomeric
                    yarns'' contained in the notes, subheading notes,
                    additional U.S. notes, and statistical notes to
                    chapters 50 to 63 (section XI) of the Harmonized Tariff
                    Schedule of the United States.
                        (B) Clarification of the ability to apply short
                    supply provisions to sewing thread, narrow elastics,
                    and visible linings.
                        (C) Treatment of women's and girls' woven sleep
                    bottoms under Annex 4.1 of the Agreement.
                        (D) Addition of a rule of origin for women's and
                    girls' woven sleep bottoms to reflect the rule of
                    origin provided for in subheading 6207.11.00 of the
                    Harmonized Tariff Schedule of the United States and
                    contained in Annex 4.1 of the Agreement.
                        (E) Provision of women's and girls sleep bottoms
                    under Annex 4.1-A of the Agreement.
                (4) Definition.--In this subsection, the term ``appropriate
            congressional committees'' means the Committee on Ways and
            Means of the House of Representatives and the Committee on
            Finance of the Senate
                (5) Sunset.--The requirements of paragraph (1) expire on
            the date on which any change is made to the rule of origin
            pursuant to article 3.25 of the Agreement for any good
            described in paragraph (2), or December 31, 2007, whichever
            occurs later.
        (f) Definitions.--In this section:
                (1) Agreement.--The term ``Agreement'' has the meaning
            given the term in section 3(1) of the Dominican Republic-
            Central America-United States Free Trade Agreement
            Implementation Act (Public Law 109-53; 19 U.S.C. 4002(1)).
                (2) CAFTA-dr country.--The term ``CAFTA-DR country'' has
            the meaning given the term in section 3(2) of the Dominican
            Republic-Central America-United States Free Trade Agreement
            Implementation Act (Public Law 109-53; 19 U.S.C. 4002(2)).

    SEC. 1635. TECHNICAL AMENDMENTS TO CUSTOMS MODERNIZATION.

        (a) Entry of Merchandise.--Section 484(a) of the Tariff Act of 1930
    (19 U.S.C. 1484(a)) is amended--
                (1) in paragraph (1), by amending subparagraph (A) to read
            as follows:
                        ``(A) make entry therefor by filing with the Bureau
                    of Customs and Border Protection such documentation or,
                    pursuant to an authorized electronic data interchange
                    system, such information as is necessary to enable the
                    Bureau of Customs and Border Protection to determine
                    whether the merchandise may be released from custody of
                    the Bureau of Customs and Border Protection;''; and
                (2) in paragraph (2)(A), in the second sentence, by
            inserting after ``covering'' the following: ``merchandise
            released under a special delivery permit pursuant to section
            448(b) and''.
        (b) Refunds and Errors.--Section 520(a) of the Tariff Act of 1930
    (19 U.S.C. 1520(a)) is amended--
                (1) in paragraph (1), by striking the semicolon at the end
            and inserting a period;
                (2) in paragraph (2), by striking ``; and'' at the end and
            inserting a period; and
                (3) in paragraph (4)--
                        (A) by inserting ``an importer of record declares
                    or'' before ``it is ascertained''; and
                        (B) by striking ``by reason of clerical error''.
        (c) Entry From Warehouse.--Section 557(a) of the Tariff Act of 1930
    (19 U.S.C. 1557(a)) is amended--
                (1) in paragraph (1)--
                        (A) in the second sentence, by inserting after
                    ``the date of importation'' the following: ``, or such
                    longer period of time as the Bureau of Customs and
                    Border Protection may at its discretion permit upon
                    proper request being filed and good cause shown''; and
                        (B) in subparagraph (A), by inserting after ``the
                    date of importation'' the following: ``or such longer
                    period of time as the Bureau of Customs and Border
                    Protection may at its discretion permit upon proper
                    request being filed and good cause shown''; and
                (2) in paragraph (2), by inserting after ``the date of
            importation'' the following: ``, or such longer period of time
            as the Bureau of Customs and Border Protection may at its
            discretion permit upon proper request being filed and good
            cause shown,''.
        (d) Abandoned Goods.--Section 559 of the Tariff Act of 1930 (19
    U.S.C. 1559) is amended by inserting after ``the date of importation''
    each place it appears the following: ``, or such longer period of time
    as the Bureau of Customs and Border Protection may at its discretion
    permit upon proper request being filed and good cause shown''.
        (e) Manipulation in Warehouse.--Section 562 of the Tariff Act of
    1930 (19 U.S.C. 1562) is amended--
                (1) by amending the first sentence to read as follows:
            ``Merchandise shall only be withdrawn from a bonded warehouse
            in such quantity and in such condition as the Secretary of the
            Treasury shall by regulation prescribe.''; and
                (2) in the second sentence, by striking ``All merchandise
            so withdrawn'' and all that follows through ``except that upon
            permission therefor'' and inserting ``Upon permission''.
        (f) Other Technical Amendments.--(1) Section 629(e) of the Tariff
    Act of 1930 (19 U.S.C. 1629(e)) is amended by striking ``insuring'' and
    inserting ``ensuring''.
        (2) Section 135(f)(2)(B) of the Trade Act of 1974, as amended by
    section 2004(i)(1) of the Miscellaneous Trade and Technical Corrections
    Act of 2004, is amended by striking ``their establishment'' and insert
    ``its establishment''.
        (3) Section 245(a) of the Trade Act of 1974 (19 U.S.C. 2317(a)) is
    amended by striking ``, other than subchapter D''.
        (4) Section 291(2) of the Trade Act of 1974 (19 U.S.C. 2401(2)) is
    amended--
                (A) by striking ``1001(5)'' and inserting ``1001(e)''; and
                (B) by striking ``1308(5)'' and inserting ``1308(e)''.
        (5) Section 13031(e)(6)(C)(i) of the Consolidated Omnibus Budget
    Reconciliation Act of 1985 (19 U.S.C. 58c(e)(6)(C)(i)) is amended by
    striking ``commonly know'' and inserting ``commonly known''.
        (6) Section 2107(a)(4) of the Bipartisan Trade Promotion Authority
    Act of 2002 (19 U.S.C. 3807(a)(4)) is amended--
                (A) by striking ``paragraph (2)(A)'' and inserting
            ``paragraphs (2)(A)''; and
                (B) by striking ``paragraph (2)(B)'' and inserting
            ``paragraphs (2)(B)''.
        (7) Section 514(c)(3) of the Tariff Act of 1930 (19 U.S.C.
    1514(c)(3)) is amended by moving the last 2 sentences 2 ems to the left
    as flush left text.

                           Subtitle C--Effective Date

    SEC. 1641. EFFECTIVE DATE.

        Except as otherwise provided in this title, the amendments made by
    this title shall apply with respect to goods entered, or withdrawn from
    warehouse for consumption, on or after the 15th day after the date of
    the enactment of this Act.

                Passed the House of Representatives July 28, 2006.

                Attest:

                                                                     Clerk.
    109th CONGRESS

      2d Session

                                    H. R. 4

    _______________________________________________________________________

                                     AN ACT

    To provide economic security for all Americans, and for other purposes.