[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.