    [Congressional Bills 109th Congress]
    [From the U.S. Government Publishing Office]
    [H.R. 4 Enrolled Bill (ENR)]

            H.R.4

                           One Hundred Ninth Congress

                                     of the

                            United States of America

                              AT THE SECOND SESSION

              Begun and held at the City of Washington on Tuesday,
                 the third day of January, two thousand and six

                                     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
     required installment:
                                        The due date is:
      1st.............................  April 15
      2nd.............................  July 15
      3rd.............................  October 15
      4th.............................  January 15 of the  following year.

                ``(D) Amount of required installment.--For purposes of this
            paragraph--
                    ``(i) In general.--The amount of any required
                installment shall be 25 percent of the required annual
                payment.
                    ``(ii) Required annual payment.--For purposes of clause
                (i), the term `required annual payment' means the lesser
                of--

                        ``(I) 90 percent of the minimum required
                    contribution (determined without regard to this
                    subsection) to the plan for the plan year under this
                    section, or
                        ``(II) 100 percent of the minimum required
                    contribution (determined without regard to this
                    subsection or to any waiver under section 302(c)) to
                    the plan for the preceding plan year.

                Subclause (II) shall not apply if the preceding plan year
                referred to in such clause was not a year of 12 months.
                ``(E) Fiscal years and short years.--
                    ``(i) Fiscal years.--In applying this paragraph to a
                plan year beginning on any date other than January 1, there
                shall be substituted for the months specified in this
                paragraph, the months which correspond thereto.
                    ``(ii) Short plan year.--This subparagraph shall be
                applied to plan years of less than 12 months in accordance
                with regulations prescribed by the Secretary of the
                Treasury.
            ``(4) Liquidity requirement in connection with quarterly
        contributions.--
                ``(A) In general.--A plan to which this paragraph applies
            shall be treated as failing to pay the full amount of any
            required installment under paragraph (3) to the extent that the
            value of the liquid assets paid in such installment is less
            than the liquidity shortfall (whether or not such liquidity
            shortfall exceeds the amount of such installment required to be
            paid but for this paragraph).
                ``(B) Plans to which paragraph applies.--This paragraph
            shall apply to a plan (other than a plan described in
            subsection (g)(2)(B)) which--
                    ``(i) is required to pay installments under paragraph
                (3) for a plan year, and
                    ``(ii) has a liquidity shortfall for any quarter during
                such plan year.
                ``(C) Period of underpayment.--For purposes of paragraph
            (3)(A), any portion of an installment that is treated as not
            paid under subparagraph (A) shall continue to be treated as
            unpaid until the close of the quarter in which the due date for
            such installment occurs.
                ``(D) Limitation on increase.--If the amount of any
            required installment is increased by reason of subparagraph
            (A), in no event shall such increase exceed the amount which,
            when added to prior installments for the plan year, is
            necessary to increase the funding target attainment percentage
            of the plan for the plan year (taking into account the expected
            increase in funding target due to benefits accruing or earned
            during the plan year) to 100 percent.
                ``(E) Definitions.--For purposes of this paragraph--
                    ``(i) Liquidity shortfall.--The term `liquidity
                shortfall' means, with respect to any required installment,
                an amount equal to the excess (as of the last day of the
                quarter for which such installment is made) of--

                        ``(I) the base amount with respect to such quarter,
                    over
                        ``(II) the value (as of such last day) of the
                    plan's liquid assets.

                    ``(ii) Base amount.--

                        ``(I) In general.--The term `base amount' means,
                    with respect to any quarter, an amount equal to 3 times
                    the sum of the adjusted disbursements from the plan for
                    the 12 months ending on the last day of such quarter.
                        ``(II) Special rule.--If the amount determined
                    under subclause (I) exceeds an amount equal to 2 times
                    the sum of the adjusted disbursements from the plan for
                    the 36 months ending on the last day of the quarter and
                    an enrolled actuary certifies to the satisfaction of
                    the Secretary of the Treasury that such excess is the
                    result of nonrecurring circumstances, the base amount
                    with respect to such quarter shall be determined
                    without regard to amounts related to those nonrecurring
                    circumstances.

                    ``(iii) Disbursements from the plan.--The term
                `disbursements from the plan' means all disbursements from
                the trust, including purchases of annuities, payments of
                single sums and other benefits, and administrative
                expenses.
                    ``(iv) Adjusted disbursements.--The term `adjusted
                disbursements' means disbursements from the plan reduced by
                the product of--

                        ``(I) the plan's funding target attainment
                    percentage for the plan year, and
                        ``(II) the sum of the purchases of annuities,
                    payments of single sums, and such other disbursements
                    as the Secretary of the Treasury shall provide in
                    regulations.

                    ``(v) Liquid assets.--The term `liquid assets' means
                cash, marketable securities, and such other assets as
                specified by the Secretary of the Treasury in regulations.
                    ``(vi) Quarter.--The term `quarter' means, with respect
                to any required installment, the 3-month period preceding
                the month in which the due date for such installment
                occurs.
                ``(F) Regulations.--The Secretary of the Treasury may
            prescribe such regulations as are necessary to carry out this
            paragraph.
        ``(k) Imposition of Lien Where Failure to Make Required
    Contributions.--
            ``(1) In general.--In the case of a plan to which this
        subsection applies (as provided under paragraph (2)), if--
                ``(A) any person fails to make a contribution payment
            required by section 302 and this section before the due date
            for such payment, and
                ``(B) the unpaid balance of such payment (including
            interest), when added to the aggregate unpaid balance of all
            preceding such payments for which payment was not made before
            the due date (including interest), exceeds $1,000,000,
        then there shall be a lien in favor of the plan in the amount
        determined under paragraph (3) upon all property and rights to
        property, whether real or personal, belonging to such person and
        any other person who is a member of the same controlled group of
        which such person is a member.
            ``(2) Plans to which subsection applies.--This subsection shall
        apply to a single-employer plan covered under section 4021 for any
        plan year for which the funding target attainment percentage (as
        defined in subsection (d)(2)) of such plan is less than 100
        percent.
            ``(3) Amount of lien.--For purposes of paragraph (1), the
        amount of the lien shall be equal to the aggregate unpaid balance
        of contribution payments required under this section and section
        302 for which payment has not been made before the due date.
            ``(4) Notice of failure; lien.--
                ``(A) Notice of failure.--A person committing a failure
            described in paragraph (1) shall notify the Pension Benefit
            Guaranty Corporation of such failure within 10 days of the due
            date for the required contribution payment.
                ``(B) Period of lien.--The lien imposed by paragraph (1)
            shall arise on the due date for the required contribution
            payment and shall continue until the last day of the first plan
            year in which the plan ceases to be described in paragraph
            (1)(B). Such lien shall continue to run without regard to
            whether such plan continues to be described in paragraph (2)
            during the period referred to in the preceding sentence.
                ``(C) Certain rules to apply.--Any amount with respect to
            which a lien is imposed under paragraph (1) shall be treated as
            taxes due and owing the United States and rules similar to the
            rules of subsections (c), (d), and (e) of section 4068 shall
            apply with respect to a lien imposed by subsection (a) and the
            amount with respect to such lien.
            ``(5) Enforcement.--Any lien created under paragraph (1) may be
        perfected and enforced only by the Pension Benefit Guaranty
        Corporation, or at the direction of the Pension Benefit Guaranty
        Corporation, by the contributing sponsor (or any member of the
        controlled group of the contributing sponsor).
            ``(6) Definitions.--For purposes of this subsection--
                ``(A) Contribution payment.--The term `contribution
            payment' means, in connection with a plan, a contribution
            payment required to be made to the plan, including any required
            installment under paragraphs (3) and (4) of subsection (j).
                ``(B) Due date; required installment.--The terms `due date'
            and `required installment' have the meanings given such terms
            by subsection (j), except that in the case of a payment other
            than a required installment, the due date shall be the date
            such payment is required to be made under section 303.
                ``(C) Controlled group.--The term `controlled group' means
            any group treated as a single employer under subsections (b),
            (c), (m), and (o) of section 414 of the Internal Revenue Code
            of 1986.
        ``(l) Qualified Transfers to Health Benefit Accounts.--In the case
    of a qualified transfer (as defined in section 420 of the Internal
    Revenue Code of 1986), any assets so transferred shall not, for
    purposes of this section, be treated as assets in the plan.''.
        (b) Clerical Amendment.--The table of sections in section 1 of such
    Act (as amended by section 101) is amended by inserting after the item
    relating to section 302 the following new item:

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

        (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,
    CFR) and that are also subject to the Defense Federal Acquisition
    Regulation Supplement (chapter 2 of title 48, CFR), and whose revenue
    derived from such business in the previous fiscal year exceeded
    $5,000,000,000, and whose pension plan costs that are assignable under
    those contracts are subject to sections 412 and 413 of the Cost
    Accounting Standards (48 CFR 9904.412 and 9904.413).
        (d) Cost Accounting Standards Pension Harmonization Rule.--The Cost
    Accounting Standards Board shall review and revise sections 412 and 413
    of the Cost Accounting Standards (48 CFR 9904.412 and 9904.413) to
    harmonize the minimum required contribution under the Employee
    Retirement Income Security Act of 1974 of eligible government
    contractor plans and government reimbursable pension plan costs not
    later than January 1, 2010. Any final rule adopted by the Cost
    Accounting Standards Board shall be deemed the Cost Accounting
    Standards Pension Harmonization Rule.

    SEC. 107. TECHNICAL AND CONFORMING AMENDMENTS.

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

            Subtitle B--Amendments to Internal Revenue Code of 1986

    SEC. 111. MINIMUM FUNDING STANDARDS.

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

    ``SEC. 412. MINIMUM FUNDING STANDARDS.

        ``(a) Requirement to Meet Minimum Funding Standard.--
            ``(1) In general.--A plan to which this section applies shall
        satisfy the minimum funding standard applicable to the plan for any
        plan year.
            ``(2) Minimum funding standard.--For purposes of paragraph (1),
        a plan shall be treated as satisfying the minimum funding standard
        for a plan year if--
                ``(A) in the case of a defined benefit plan which is not a
            multiemployer plan, the employer makes contributions to or
            under the plan for the plan year which, in the aggregate, are
            not less than the minimum required contribution determined
            under section 430 for the plan for the plan year,
                ``(B) in the case of a money purchase plan which is not a
            multiemployer plan, the employer makes contributions to or
            under the plan for the plan year which are required under the
            terms of the plan, and
                ``(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 CFR 1.412(c)(1)-2).
            (4) Benefit restrictions to apply.--The benefit restrictions
        under section 302(c)(7) of such Act and section 412(c)(7) of such
        Code shall apply during any period a multiemployer plan is on the
        shortfall funding method pursuant to this subsection.
            (5) Use of shortfall method not to preclude other options.--
        Nothing in this subsection shall be construed to affect a
        multiemployer plan's ability to adopt the shortfall funding method
        with the Secretary's permission under otherwise applicable
        regulations or to affect a multiemployer plan's right to change
        funding methods, with or without the Secretary's consent, as
        provided in applicable rules and regulations.
        (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           The portion is--
               or exchange is--
    ------------------------------------------------------------------------
    Not more than $5,000,000.............  30 percent of the amount.
    More than $5,000,000, but not more     $1,500,000, plus 35 percent of
     than $10,000,000.                      the amount in excess of
                                            $5,000,000.
    More than $10,000,000, but not more    $3,250,000, plus 40 percent of
     than $15,000,000.                      the amount in excess of
                                            $10,000,000.
    More than $15,000,000, but not more    $5,250,000, plus 45 percent of
     than $17,500,000.                      the amount in excess of
                                            $15,000,000.
    More than $17,500,000, but not more    $6,375,000, plus 50 percent of
     than $20,000,000.                      the amount in excess of
                                            $17,500,000.
    More than $20,000,000, but not more    $7,625,000, plus 60 percent of
     than $22,500,000.                      the amount in excess of
                                            $20,000,000.
    More than $22,500,000, but not more    $9,125,000, plus 70 percent of
     than $25,000,000.                      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 the Employee Retirement Income
        Security Act of 1974 (29 U.S.C. 1401) is amended by adding at the
        end the following:
        ``(g) Procedures Applicable to Certain Disputes.--
            ``(1) In general.--If--
                ``(A) a plan sponsor of a plan determines that--
                    ``(i) a complete or partial withdrawal of an employer
                has occurred, or
                    ``(ii) an employer is liable for withdrawal liability
                payments with respect to such complete or partial
                withdrawal, and
                ``(B) such determination is based in whole or in part on a
            finding by the plan sponsor under section 4212(c) that a
            principal purpose of any transaction which occurred after
            December 31, 1998, and at least 5 years (2 years in the case of
            a small employer) before the date of the complete or partial
            withdrawal was to evade or avoid withdrawal liability under
            this subtitle,
        then the person against which the withdrawal liability is assessed
        based solely on the application of section 4212(c) may elect to use
        the special rule under paragraph (2) in applying subsection (d) of
        this section and section 4219(c) to such person.
            ``(2) Special rule.--Notwithstanding subsection (d) and section
        4219(c), if an electing person contests the plan sponsor's
        determination with respect to withdrawal liability payments under
        paragraph (1) through an arbitration proceeding pursuant to
        subsection (a), through an action brought in a court of competent
        jurisdiction for review of such an arbitration decision, or as
        otherwise permitted by law, the electing person shall not be
        obligated to make the withdrawal liability payments until a final
        decision in the arbitration proceeding, or in court, upholds the
        plan sponsor's determination, but only if the electing person--
                ``(A) provides notice to the plan sponsor of its election
            to apply the special rule in this paragraph within 90 days
            after the plan sponsor notifies the electing person of its
            liability by reason of the application of section 4212(c); and
                ``(B) if a final decision in the arbitration proceeding, or
            in court, of the withdrawal liability dispute has not been
            rendered within 12 months from the date of such notice, the
            electing person provides to the plan, effective as of the first
            day following the 12-month period, a bond issued by a corporate
            surety company that is an acceptable surety for purposes of
            section 412 of this Act, or an amount held in escrow by a bank
            or similar financial institution satisfactory to the plan, in
            an amount equal to the sum of the withdrawal liability payments
            that would otherwise be due under subsection (d) and section
            4219(c) for the 12-month period beginning with the first
            anniversary of such notice. Such bond or escrow shall remain in
            effect until there is a final decision in the arbitration
            proceeding, or in court, of the withdrawal liability dispute,
            at which time such bond or escrow shall be paid to the plan if
            such final decision upholds the plan sponsor's determination.
            ``(3) Definition of small employer.--For purposes of this
        subsection--
                ``(A) In general.--The term `small employer' means any
            employer which, for the calendar year in which the transaction
            referred to in paragraph (1)(B) occurred and for each of the 3
            preceding years, on average--
                    ``(i) employs not more than 500 employees, and
                    ``(ii) is required to make contributions to the plan
                for not more than 250 employees.
                ``(B) Controlled group.--Any group treated as a single
            employer under subsection (b)(1) of section 4001, without
            regard to any transaction that was a basis for the plan's
            finding under section 4212, shall be treated as a single
            employer for purposes of this subparagraph.
            ``(4) Additional security pending resolution of dispute.--If a
        withdrawal liability dispute to which this subsection applies is
        not concluded by 12 months after the electing person posts the bond
        or escrow described in paragraph (2), the electing person shall, at
        the start of each succeeding 12-month period, provide an additional
        bond or amount held in escrow equal to the sum of the withdrawal
        liability payments that would otherwise be payable to the plan
        during that period.
            ``(5) The liability of the party furnishing a bond or escrow
        under this subsection shall be reduced, upon the payment of the
        bond or escrow to the plan, by the amount thereof.''.
            (2) Effective date.--The amendments made by this subsection
        shall apply to any person that receives a notification under
        section 4219(b)(1) of the Employee Retirement Income Security Act
        of 1974 on or after the date of enactment of this Act with respect
        to a transaction that occurred after December 31, 1998.

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

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

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

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

            Subtitle B--Amendments to Internal Revenue Code of 1986

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

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

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

        ``(a) In General.--For purposes of section 412, the accumulated
    funding deficiency of a multiemployer plan for any plan year is--
            ``(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. I22    ``(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 alternative 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 transactions 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 amendment.--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) by redesignating subsection (d) as subsection (e); and
            (3) by 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 amendment 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.-- I24    ``(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 subsections (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 CFR 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 amounts
        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 chapter 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 chapter 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'', and
                (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 ``subsection (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 chapter 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 chapter 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:

                  ``Years of service:
                                                          The nonforfeitable

                                                              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:

                  ``Years of service:
                                                         The nonforfeitable

                                                              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:

                  ``Years of service:
                                                          The nonforfeitable

                                                              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:

                  ``Years of service:
                                                         The nonforfeitable

                                                              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) of 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 paragraph (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 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
                                 gloves, valued                                            12/31/2009
                                 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       ''.
                                 gloves, valued                                            12/31/2009
                                 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       ''.
                                 gloves, valued                                            12/31/2009
                                 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       ''.
                                 gloves, valued                                            12/31/2009
                                 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       ''.
                                 gloves, valued                                            12/31/2009
                                 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       ''.
                                 (cardioid)                                                12/31/2009
                                 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       ''.
                                 filament tow:                                             12/31/2009
                                 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       Free         No change     No change     On or before       ''.
                                 staple fibers,                                            12/31/2009
                                 carded,
                                 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        4.4%         No change     No change     On or before       ''.
                                 nitrates                                                  12/31/2009
                                 (nitrocellulos
                                 e, 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        1.4%         No change     No change     On or before       ''.
                                 sorbate (CAS                                              12/31/2009
                                 No. 24634-61-
                                 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      1.9%         No change     No change     On or before       ''.
                                 (CAS No. 110-                                             12/31/2009
                                 44-1)
                                 (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,         Free         No change     No change     On or before       ''.
                                 prepared or                                               12/31/2009
                                 preserved by
                                 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       ''.
                                 prepared or                                               12/31/2009
                                 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,         Free         No change     No change     On or before       ''.
                                 prepared or                                               12/31/2009
                                 preserved by
                                 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       ''.
                                 prepared or                                               12/31/2009
                                 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       ''.
                                 prepared or                                               12/31/2009
                                 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    Trichloroacetal  Free         No change     No change     On or before       ''.
                                 dehyde (CAS                                               12/31/2009
                                 No. 75-87-6)
                                 (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       ''.
                                 pyrdinyl)methy                                            12/31/2009
                                 l]-N-nitro-2-
                                 imidazolidinim
                                 ine
                                 (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       ''.
                                 Chlorophenoxy)                                            12/31/2009
                                 -3,3-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       ''.
                                 HE1878 (CAS                                               12/31/2009
                                 No. 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-      Free         No change     No change     On or before       ''.
                                 chloro-3-                                                 12/31/2009
                                 pyridinyl)meth
                                 yl]-2-
                                 thiazolidinyli
                                 dene]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       ''.
                                 phenyl-2-                                                 12/31/2009
                                 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       ''.
                                 (Benzamide, 2-                                            12/31/2009
                                 (((((4,6-
                                 dimethoxy-2-
                                 pyrimidinyl)am
                                 ino)
                                 carbonyl)amino
                                 )sulfonyl)-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-        Free         No change     No change     On or before       ''.
                                 Dihydro-5-                                                12/31/2009
                                 methyl-2-
                                 (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       ''.
                                 Dichlorophenyl                                            12/31/2009
                                 aminocarbonyl)
                                 cyclopropane-
                                 carboxylic
                                 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-             Free         No change     No change     On or before       ''.
                                 Benzoquinone                                              12/31/2009
                                 (CAS No. 106-
                                 51-4)
                                 (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     Free         No change     No change     On or before       ''.
                                 (CAS No. 90-04-                                           12/31/2009
                                 4) (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    Free         No change     No change     On or before       ''.
                                 (CAS No. 95-68-                                           12/31/2009
                                 1) (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  Free         No change     No change     On or before       ''.
                                 (2-                                                       12/31/2009
                                 butenaldehyde)
                                 (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      Free         No change     No change     On or before       ''.
                                 acid, dimethyl                                            12/31/2009
                                 ester, polymer
                                 with 4-hydroxy-
                                 2,2,6,6,-
                                 tetramethyl-1-
                                 piperidineetha
                                 nol (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       ''.
                                 2,4,6-                                                    12/31/2009
                                 triamine, N,N-
                                 [1,2-
                                 ethanediylbis[
                                 [[4,6-
                                 bis[butyl
                                 (1,2,2,6,6-
                                 pentamethyl-4-
                                 piperidinyl)am
                                 ino]-1,3,5-
                                 triazine-2-
                                 yl]imino]-3,1-
                                 propanediyl]]b
                                 is[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       ''.
                                 chloro-2-                                                 12/31/2009
                                 methylphenoxy)
                                 acetate (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       ''.
                                 2,6-dibromo-4-                                            12/31/2009
                                 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)
                                 acetate (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       ''.
                                 cyanophenyl                                               12/31/2009
                                 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       ''.
                                 cyanophenyl                                               12/31/2009
                                 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        Free         No change     No change     On or before       ''.
                                 control units                                             12/31/2009
                                 designed 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       ''.
                                 assemblies for                                            12/31/2009
                                 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       ''.
                                 Dichloroanilin                                            12/31/2009
                                 e (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       ''.
                                 Acetylbutyrola                                            12/31/2009
                                 ctone (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-            Free         No change     No change     On or before       ''.
                                 Chlorophenyl)-                                            12/31/2009
                                 4, 4-dimethyl-
                                 3-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-  3.5%         No change     No change     On or before       ''.
                                 3-                                                        12/31/2009
                                 phenoxyphenyl)
                                 methyl 3-(2,2-
                                 dichloroetheny
                                 l)-2,2-
                                 dimethylcyclop
                                 ropanecarboxyl
                                 ate
                                 (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         Free         No change     No change     On or before       ''.
                                 mixture                                                   12/31/2009
                                 comprising the
                                 enantiomeric
                                 pair (R)-a-
                                 cyano-4-fluoro-
                                 3-
                                 phenoxybenzyl
                                 (1S,3S)-3-(2,2-
                                 dichlorovinyl)
                                 -2,2-
                                 dimethylcyclop
                                 ropanecarboxyl
                                 ate and (S)-a-
                                 cyano-4-fluoro-
                                 3-
                                 phenoxybenzyl
                                 (1R,3R)-3-(2,2-
                                 dichlorovinyl)
                                 -2,2-
                                 dimethylcyclop
                                 ropanecarboxyl
                                 ate in ratio
                                 1:2 with the
                                 enantiomeric
                                 pair (R)-a-
                                 cyano-4-fluoro-
                                 3-
                                 phenoxybenzyl
                                 (1S,3R)-3-(2,2-
                                 dichlorovinyl)
                                 -2,2-
                                 dimethylcyclop
                                 ropanecarboxyl
                                 ate and (S)-a-
                                 cyano-4-fluoro-
                                 3-
                                 phenoxybenzyl
                                 (1R,3S)-3-(2,2-
                                 dichlorovinyl)
                                 -2,2-
                                 dimethylcyclop
                                 ropanecarboxyl
                                 ate (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-    1.8%         No change     No change     On or before       ''.
                                 1,1-                                                      12/31/2009
                                 dicarboxylic
                                 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       ''.
                                 Dimethylethyl)-                                           12/31/2009
                                 N-ethyl-N-
                                 propyl-1,4-
                                 dioxaspiro[4,5
                                 ]decane-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       ''.
                                 Dimethylbutano                                            12/31/2009
                                 ic acid, 2-oxo-
                                 3-(2,4,6-
                                 trimethylpheny
                                 l)-1-
                                 oxaspiro[4.4]n
                                 on-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       ''.
                                 Chlorobenzalde                                            12/31/2009
                                 hyde (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       ''.
                                 (2,4-dichloro-                                            12/31/2009
                                 5-
                                 isopropoxyphen
                                 yl)-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       ''.
                                 Dimethylethyl)                                            12/31/2009
                                 -5-
                                 hydroxypyrimid
                                 ine, 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       ''.
                                 Thiochloride                                              12/31/2009
                                 (CAS 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       ''.
                                 methoxyimino-                                             12/31/2009
                                 ((E)-a-[1-
                                 (a,a,a-
                                 trifluoro-m-
                                 tolyl)ethylide
                                 neaminooxy]-o-
                                 tolyl)acetate
                                 (Trifloxystrob
                                 in) (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      Free         No change     No change     On or before       ''.
                                 acid,                                                     12/31/2009
                                 lanthanum
                                 salt, 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       ''.
                                 (CAS No. 12032-                                           12/31/2009
                                 20-1)
                                 (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       ''.
                                 cyanopropyl)                                              12/31/2009
                                 methylphosphin
                                 ic 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       ''.
                                 Phenoxyphenyl)                                            12/31/2009
                                 methyl 3-(2,2-
                                 dichloroetheny
                                 l)-2,2-
                                 dimethylcyclop
                                 ropanecarboxyl
                                 ate
                                 (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       ''.
                                 (1,2,3-                                                   12/31/2009
                                 thiadiazol-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       ''.
                                 Methylethoxy)p                                            12/31/2009
                                 henyl]-2-
                                 (trifluorometh
                                 yl)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-             Free         No change     No change     On or before       ''.
                                 (Phenylmethyl)                                            12/31/2009
                                 -3-
                                 furanyl]methyl
                                 2,2-dimethyl-3-
                                 (2-methyl-1-
                                 propenyl)
                                 cyclopropaneca
                                 rboxylate
                                 (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-       5.4%         No change     No change     On or before       ''.
                                 Chloro-1,3-                                               12/31/2009
                                 thiazol-5-
                                 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       ''.
                                 assemblies for                                            12/31/2009
                                 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,      1.5%         No change     No change     On or before       ''.
                                 each                                                      12/31/2009
                                 incorporating
                                 an 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          Free         No change     No change     On or before       ''.
                                 converters                                                12/31/2009
                                 capable of
                                 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       ''.
                                 electronic                                                12/31/2009
                                 power 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       ''.
                                 hydride                                                   12/31/2009
                                 storage
                                 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       ''.
                                 natural cork,                                             12/31/2009
                                 not 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       ''.
                                 (CAS No. 298-                                             12/31/2009
                                 12-4)
                                 (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       ''.
                                 (CAS No. 120-                                             12/31/2009
                                 92-3)
                                 (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       ''.
                                 (Methylsulfony                                            12/31/2006
                                 l)-2-
                                 nitrobenzoyl]-
                                 1,3-
                                 cyclohexanedio
                                 ne
                                 (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    Free         No change     No change     On or before       ''.
                                 of                                                        12/31/2009
                                 malononitrile
                                 in 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    Free         No change     No change     On or before       ''.
                                 of NOA 446510                                             12/31/2009
                                 which include
                                 NOA 446510
                                 Technical, 2-
                                 (4-chloro-
                                 phenyl)-N-[2-
                                 (3-methoxy-4-
                                 prop-2-ynyloxy-
                                 phenyl)ethyl]-
                                 2-prop-2-
                                 ynyloxyacetami
                                 de (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       ''.
                                 diethyl-5-                                                12/31/2009
                                 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-     Free         No change     No change     On or before       ''.
                                 (2,6,6-                                                   12/31/2009
                                 trimethylcyclo
                                 hex-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   Free         No change     No change     On or before       ''.
                                 tow                                                       12/31/2009
                                 (polyacrylonit
                                 rile 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   Free         No change     No change     On or before       ''.
                                 tow                                                       12/31/2009
                                 (polyacrylonit
                                 rile 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-              Free         No change     No change     On or before       ''.
                                 (Carbomethoxy)                                            12/31/2009
                                 benzenesulfony
                                 l 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       ''.
                                 Hexachlorohexa                                            12/31/2009
                                 hydromethano-
                                 2,4,3-
                                 benzodioxathie
                                 pin-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       ''.
                                 dichlorophenyl                                            12/31/2009
                                 )-3-(1,1,2,2-
                                 tetrafluoroeth
                                 oxy)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       ''.
                                 Dichlorophenyl                                            12/31/2009
                                 )-3-(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       ''.
                                 tightening                                                12/31/2009
                                 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       ''.
                                 phenoxybenzyl                                             12/31/2009
                                 (1R,3R)-3-(2,2-
                                 dibromovinyl)-
                                 2,2-
                                 dimethylcyclop
                                 ropanecarboxyl
                                 ate
                                 (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       ''.
                                 fatty acids                                               12/31/2009
                                 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       ''.
                                 methyldiphenyl                                            12/31/2009
                                 amine (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       ''.
                                 Methylhydroqui                                            12/31/2009
                                 none (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       ''.
                                 nitrobenzene                                              12/31/2009
                                 (CAS 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     13.3%        No change     No change     On or before       ''.
                                 that are of a                                             12/31/2009
                                 soft 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       ''.
                                 methyl 4-iodo-                                            12/31/2009
                                 2-[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-      Free         No change     No change     On or before       ''.
                                 dihydro-5,5-                                              12/31/2009
                                 diphenyl-1,2-
                                 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- 4.8%         No change     No change     On or before       ''.
                                 4-                                                        12/31/2009
                                 isoxazolyl)[2-
                                 (methylsulfony
                                 l)-4-
                                 (trifluorometh
                                 yl)
                                 phenyl]methano
                                 ne
                                 (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       ''.
                                 dimethoxypyrim                                            12/31/2009
                                 idin-2-
                                 ylcarbamoyl)su
                                 lfamoyl]-a-
                                 (methanesulfon
                                 amido)-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       ''.
                                 dimethyl-2[3-                                             12/31/2009
                                 (4,6-
                                 dimethoxypyrimi
                                 din-2-yl)
                                 ureidosulfonyl]-
                                 4-
                                 formylaminobenz
                                 amide
                                 (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       ''.
                                 dibenzylthioca                                            12/31/2009
                                 rbamoyldithio)
                                 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       ''.
                                 phenyl-p-                                                 12/31/2009
                                 phenylenediami
                                 ne (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     Pentaerythrito  Free         No change     No change     On or before       ''.
                                 lbis(tetrahydr                                            12/31/2009
                                 obenzaldehyde
                                 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       ''.
                                 (CAS No. 123-                                             12/31/2009
                                 11-5)
                                 (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-            Free         No change     No change     On or before       ''.
                                 Pentanediol                                               12/31/2009
                                 (CAS No. 5343-
                                 92-0)
                                 (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       ''.
                                 Butylcyclohexy                                            12/31/2009
                                 l 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       ''.
                                 resorcinol                                                12/31/2009
                                 (CAS No. 108-
                                 46-3),
                                 hexamethylolme
                                 lamine 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       ''.
                                 Prosulfuron (1-                                           12/31/2009
                                 (4-methoxy-6-
                                 methyl-1,3,5-
                                 triazin-2-yl)-
                                 3-[2-(3,3,3-
                                 trifluoropropy
                                 l)-
                                 phenylsulfonyl
                                 ]urea ) (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       ''.
                                 resins                                                    12/31/2009
                                 (cationic 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-            Free         No change     No change     On or before       ''.
                                 Chlorophenol                                              12/31/2009
                                 (CAS No. 106-
                                 48-9)
                                 (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       ''.
                                 phenoxyphenyl)                                            12/31/2009
                                 methyl 3-(2,2-
                                 dichloroetheny
                                 l)-2,2-
                                 dimethylcyclop
                                 ropanecarboxyl
                                 ate
                                 (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       ''.
                                 resin powder                                              12/31/2009
                                 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       ''.
                                 resin powder                                              12/31/2009
                                 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       ''.
                                 Propanetriol,                                             12/31/2009
                                 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       ''.
                                 diisocyanato-,                                            12/31/2009
                                 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        Free         No change     No change     On or before       ''.
                                 Desmodur R-E                                              12/31/2009
                                 in solvent
                                 (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       ''.
                                 hydroxyethyl                                              12/31/2009
                                 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       ''.
                                 Toluenesulfoni                                            12/31/2009
                                 c 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       ''.
                                 Hydroxyethyl                                              12/31/2009
                                 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    Trimethylopropa  Free         No change     No change     On or before       ''.
                                 ne tris(3-                                                12/31/2009
                                 aziridinylprop
                                 anoate) (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       ''.
                                 aziridine (CAS                                            12/31/2009
                                 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       ''.
                                 containers                                                12/31/2009
                                 (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       ''.
                                 containers                                                12/31/2009
                                 (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       ''.
                                 disulfonic                                                12/31/2009
                                 acid (CAS No.
                                 98-44-2) (1,4-
                                 Benzenedisnlfo
                                 nic 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       ''.
                                 Benzenedicarbo                                            12/31/2009
                                 xylic 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       ''.
                                 methylphenyl)a                                            12/31/2009
                                 mino]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       ''.
                                 reaction                                                  12/31/2009
                                 products with
                                 1,4-
                                 benzenediol
                                 and m-
                                 phenylenediami
                                 ne, 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       ''.
                                 (Isocyanatosul                                            12/31/2009
                                 fonyl)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       ''.
                                 (Isocyanatosul                                            12/31/2009
                                 fonyl)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     Free         No change     No change     On or before       ''.
                                 (CAS No.                                                  12/31/2009
                                 175463-14-6);
                                 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    Free         No change     No change     On or before       ''.
                                 No. 33629-47-                                             12/31/2009
                                 9)
                                 (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       ''.
                                 Dimethylbutano                                            12/31/2009
                                 ic acid, 3-
                                 (2,4-
                                 dichlorophenyl
                                 )-2-oxo-1-
                                 oxaspiro(4.5)d
                                 ec-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      Free         No change     No change     On or before       ''.
                                 propyl 3-                                                 12/31/2009
                                 (dimethylamino
                                 )
                                 propylcarbamat
                                 e
                                 monohydrochlor
                                 ide
                                 (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       ''.
                                 diisocyanate)                                             12/31/2009
                                 (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       ''.
                                 propanone (CAS                                            12/31/2009
                                 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       ''.
                                 Benzenedicarbo                                            12/31/2006
                                 nitrile (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-   1.2%         No change     No change     On or before       ''.
                                 [3-methoxy-4-                                             12/31/2009
                                 (2-
                                 propynyloxy)ph
                                 enyl]ethyl]-a-
                                 (2-
                                 propynyloxy)be
                                 nzeneacetamide
                                 (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       ''.
                                 Chlorophenyl)-                                            12/31/2009
                                 N-cyclohexyl-4-
                                 methyl-2-
                                 oxothiazolidin
                                 e-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       ''.
                                 polymer with                                              12/31/2009
                                 1,4-butanediol
                                 and 5-
                                 isocyanato-1-
                                 (isocyanatomet
                                 hyl)-1,3,3-
                                 trimethylcyclo
                                 hexane, 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-               3.0%         No change     No change     On or before       ''.
                                 Acetylsalicyli                                            12/31/2009
                                 c acid
                                 (aspirin) (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       ''.
                                 methyl ethyl                                              12/31/2009
                                 ketoxime and
                                 toluenediisocy
                                 anate (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      Free         No change     No change     On or before       ''.
                                 tris(4-                                                   12/31/2009
                                 isocyanatophen
                                 yl)thiophospha
                                 te (CAS No.
                                 4151-51-3) and
                                 ethyl acetate
                                 and
                                 monochlorobenz
                                 ene 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       ''.
                                 diisocyanatome                                            12/31/2009
                                 thyl-, polymer
                                 with 1,6-
                                 diisocyanatohe
                                 xane (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   Free         No change     No change     On or before       ''.
                                 No. 3458-28-4)                                            12/31/2009
                                 (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       ''.
                                 processed                                                 12/31/2009
                                 beyond 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       ''.
                                 hair (provided                                            12/31/2009
                                 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      Free         No change     No change     On or before       ''.
                                 carded or                                                 12/31/2009
                                 combed
                                 (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       ''.
                                 containing 85                                             12/31/2009
                                 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,     Free         No change     No change     On or before       ''.
                                 not processed                                             12/31/2009
                                 in any 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       ''.
                                 hair (provided                                            12/31/2009
                                 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     Free         No change     No change     On or before       ''.
                                 acid, ethyl                                               12/31/2009
                                 ester (CAS 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     Free         No change     No change     On or before       ''.
                                 acid, sodium                                              12/31/2009
                                 salt (CAS 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       ''.
                                 hygienic, or                                              12/31/2009
                                 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,       Free         No change     No change     On or before       ''.
                                 lids, and                                                 12/31/2009
                                 other 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       ''.
                                 Benzenedicarbo                                            12/31/2009
                                 xylic acid, 2-
                                 [[2-oxo-1-
                                 [[1,2,3,4-
                                 tetrahydro-7-
                                 methoxy-2,3-
                                 dioxo-6-
                                 quinoxalinyl)
                                 amino]carbonyl
                                 ] propyl]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- Free         No change     No change     On or before       ''.
                                 2, 5-dihydro-2-                                           12/31/2009
                                  [[(methoxycar
                                 bonyl)[4-
                                 (trifluorometh
                                 oxy) 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         Free         No change     No change     On or before       ''.
                                 carbonate (CAS                                            12/31/2009
                                 No. 616-38-6)
                                 (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       ''.
                                 indanone (CAS                                             12/31/2009
                                 No. 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       ''.
                                 methyl-5-(4-                                              12/31/2009
                                 phenoxyphenyl)
                                 -3-
                                 (phenylamino)-
                                 2,4-
                                 oxazolidinedio
                                 ne]
                                 (famoxadone)
                                 (CAS No.
                                 131807-57-3),
                                 2-cyano-N-
                                 [(ethylamino)c
                                 arbonyl]-2-
                                 (methoxyimino)
                                 acetamide
                                 (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     Free         No change     No change     On or Before       ''.
                                 acid,                                                     12/31/2009
                                 bis(2,2,6,6-
                                 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     Free         No change     No change     On or before       ''.
                                 (CAS No. 4474-                                            12/31/2009
                                 24-2)
                                 (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    Free         No change     No change     On or before       ''.
                                 25 (CAS No.                                               12/31/2009
                                 6992-11-6)
                                 (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       ''.
                                 benzeneacetic                                             12/31/2006
                                 acid, (a E)- 2-
                                 [[6-(2-
                                 cyanophenoxy)-
                                 4-
                                 pyrimidinyl]ox
                                 y]-a-
                                 (methoxymethyl
                                 ene)-, 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     Free         No change     No change     On or before       ''.
                                 8(2,6-diethyl-                                            12/31/2007
                                 p-tolyl)-
                                 1,2,4,5-
                                 tetrahydro-7-
                                 oxo-7H-
                                 pyrazolo[[1,2-
                                 d][1,4,5]
                                 oxadiazepin-9-
                                 yl 2,2-
                                 dimethylpropio
                                 nate
                                 (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       ''.
                                 1,2,4-                                                    12/31/2009
                                 triazole, 1-
                                 ((2-
                                 chlorophenoxy)
                                 phenyl)-4-
                                 methyl-1,3-
                                 dioxolan-2-
                                 yl)methyl)-
                                 (Difenoconazol
                                 e) (CAS No.
                                 119446-68-3),
                                 (R,S)-2-((2,6-
                                 dimethylphenyl
                                 )
                                 methoxyacetyla
                                 mino)
                                 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       ''.
                                 carbonitrile,                                             12/31/2009
                                 4-(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       ''.
                                 propionic                                                 12/31/2009
                                 acid, 2-(4-((5-
                                 chloro-3-
                                 fluoro-2-
                                 pyridynyl)oxy)
                                 phenoxy-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,    Free         No change     No change     On or before       ''.
                                 1,4"-deoxy-4"-                                            12/31/2009
                                 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       ''.
                                 chloro-8-                                                 12/31/2009
                                 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       ''.
                                 Dimethylphenyl                                            12/31/2009
                                 )
                                 methoxyacetyla
                                 mino)
                                 propionic
                                 acid, methyl
                                 ester
                                 (Metalaxyl-M
                                 and L-
                                 Metalaxylfenox
                                 am) (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       ''.
                                 Chlorophenyl)-                                            12/31/2009
                                 a-(1-
                                 cyclopropyleth
                                 yl)-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-  1.8%         No change     No change     On or before       ''.
                                 4-                                                        12/31/2009
                                 methylphenyl)-
                                 1,2,4,5-
                                 tetrahydro-7-
                                 oxo-7H-
                                 pyrazolo[1,2-
                                 d][1,4,5]oxadi
                                 azepin-9-yl
                                 2,2-
                                 dimethylpropan
                                 oate
                                 (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-  Free         No change     No change     On or before       ''.
                                 [1-                                                       12/31/2009
                                 (ethoxyimino)p
                                 ropyl]-3-
                                 hydroxy-5-
                                 (2,4,6-
                                 trimethylpheny
                                 l)-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 12/31/   ...........
                                            dialkyldithiophosph                                                             2009
                                            ate (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 12/31/   ...........
                                            dithiocarbamate,                                                                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 12/31/   ...........
                                            caprolactam                                                                     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 12/31/   ...........
                                            dichloro-phenyl)-                                                               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 12/31/   ...........
                                            dicyanato diamine                                                               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 -6-  Free              No change           No change           On or before 12/31/   ...........
                                            2,10-dimethyl -12H-                                                             2009
                                            dibenzo
                                            [d,g][1,3,2]
                                            dioxaphosphocin
                                            (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 12/31/   ...........
                                            benzenesulfonic                                                                 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-bis  Free              No change           No change           On or before 12/31/       ''.
                                            (4-hydroxy-m-tolyl)                                                             2009
                                            -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       ''.
                                 (<plus-minus>)                                            12/31/2009
                                 -(cis 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       ''.
                                 dichloride                                                12/31/2006
                                 (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       ''.
                                 having an                                                 12/31/2009
                                 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       ''.
                                 basketballs                                               12/31/2009
                                 (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       ''.
                                 basketballs                                               12/31/2009
                                 (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       ''.
                                 (provided for                                             12/31/2009
                                 in 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-  Free         No change     No change     On or before       ''.
                                 (4-                                                       12/31/2009
                                 methoxyphenyl)
                                 -1,3-
                                 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       ''.
                                 Dichlorophenyl                                            12/31/2009
                                 )-1-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       ''.
                                 Dimethylpiperi                                            12/31/2009
                                 dinium
                                 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    Free         No change     No change     On or before       ''.
                                 of 3-(3,4-                                                12/31/2009
                                 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       ''.
                                 containing 5-                                             12/31/2009
                                 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       ''.
                                 methyl-1,3,5-                                             12/31/2009
                                 triazin-2-yl)-
                                 1-[2-(2-
                                 chloroethoxy)
                                 phenylsulfonyl
                                 ]urea
                                 (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       ''.
                                 Bromo[1,1'-                                               12/31/2009
                                 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       ''.
                                 3(2H)-one, 4,5-                                           12/31/2009
                                 dihydro-6-
                                 methyl-4-[(3-
                                 pyridinylmethy
                                 lene)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  Free         No change     No change     On or before       ''.
                                 3-[(2-chloro-5-                                           12/31/2009
                                 thiazolyl)meth
                                 yl]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)
                                 phenyl]-4-
                                 methyl- 1,3-
                                 dioxolan-2-
                                 yl]methyl]-
                                 (Difenoconazol
                                 e) (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-
                                 dimethylphenyl
                                 methoxy)acetyl
                                 amino]-
                                 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       ''.
                                 Dimethoxy-2-                                              12/31/2009
                                 pyrimidinyl)am
                                 ino]carbonyl]-
                                 3-(2,2,2-
                                 trifluoroethox
                                 y)-2-
                                 pyridinesulfon
                                 amide
                                 monosodium
                                 salt (CAS No.
                                 199119-58-9)
                                 (trifloxysulfu
                                 ron-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       ''.
                                 ethyl sulfonyl                                            12/31/2009
                                 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-       Free         No change     No change     On or before       ''.
                                 methoxy-6-                                                12/31/2009
                                 methyl-1,3,5-
                                 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       ''.
                                 products                                                  12/31/2009
                                 containing
                                 mixtures of
                                 the active
                                 ingredient 2-
                                 chloro-N-[[(4-
                                 methoxy-6-
                                 methyl-1,3,5-
                                 triazin-2yl)
                                 amino]carbonyl
                                 ]
                                 benzenesulfona
                                 mide 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-      Free         No change     No change     On or before       ''.
                                 methoxy-6-                                                12/31/2009
                                 methylamino-
                                 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       ''.
                                 sodium-2-                                                 12/31/2009
                                 chloro-6-[(4,6
                                 dimethoxypyrim
                                 idin-2-
                                 yl)thio]benzoa
                                 te (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       Free         No change     No change     On or before       ''.
                                 plates,                                                   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      Free         No change     No change     On or before       ''.
                                 with                                                      12/31/2009
                                 mechanical
                                 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       ''.
                                 chlorophenoxya                                            12/31/2009
                                 cetic 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       ''.
                                 Methylcarbonyl                                            12/31/2009
                                 aminophenyl-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       ''.
                                 Ethoxycarbonyl                                            12/31/2009
                                 aminophenyl-N-
                                 phenylcarbamat
                                 e
                                 (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       ''.
                                 outer soles of                                            12/31/2009
                                 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       ''.
                                 with outer                                                12/31/2009
                                 soles 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       ''.
                                 telescopes                                                12/31/2009
                                 with 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    Free         No change     No change     On or before       ''.
                                 with outer                                                12/31/2009
                                 soles of
                                 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       ''.
                                 with uppers of                                            12/31/2009
                                 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       ''.
                                 with uppers of                                            12/31/2009
                                 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       ''.
                                 dimethyldithio                                            12/31/2009
                                 carbamate
                                 (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       ''.
                                 Device (LCD)                                              12/31/2009
                                 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        Free         No change     No change     On or before       ''.
                                 boilers with a                                            12/31/2010
                                 steam
                                 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       ''.
                                 heads and                                                 12/31/2010
                                 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.

                                   Speaker of the House of Representatives.

                                Vice President of the United States and
                                                   President of the Senate.