[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.