[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4 Placed on Calendar Senate (PCS)]
Calendar No. 561
109th CONGRESS
2d Session
H. R. 4
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 31, 2006
Received; deemed read the first time on July 28 (legislative day, July
26), 2006, pursuant to the order of July 28, 2006
July 31, 2006
Read the second time and placed on the calendar
_______________________________________________________________________
AN ACT
To provide economic security for all Americans, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Pension Protection
Act of 2006''.
(b) Table of Contents.--The table of contents for this Act (other
than so much of title XIV as follows section 1401) is as follows:
Sec. 1. Short title and table of contents.
TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT
PENSION PLANS
Subtitle A--Amendments to Employee Retirement Income Security Act of
1974
Sec. 101. Minimum funding standards.
Sec. 102. Funding rules for single-employer defined benefit pension
plans.
Sec. 103. Benefit limitations under single-employer plans.
Sec. 104. Special rules for multiple employer plans of certain
cooperatives.
Sec. 105. Temporary relief for certain PBGC settlement plans.
Sec. 106. Special rules for plans of certain government contractors.
Sec. 107. Technical and conforming amendments.
Subtitle B--Amendments to Internal Revenue Code of 1986
Sec. 111. Minimum funding standards.
Sec. 112. Funding rules for single-employer defined benefit pension
plans.
Sec. 113. Benefit limitations under single-employer plans.
Sec. 114. Technical and conforming amendments.
Sec. 115. Modification of transition rule to pension funding
requirements.
Sec. 116. Restrictions on funding of nonqualified deferred compensation
plans by employers maintaining underfunded
or terminated single-employer plans.
TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS AND
RELATED PROVISIONS
Subtitle A--Amendments to Employee Retirement Income Security Act of
1974
Sec. 201. Funding rules for multiemployer defined benefit plans.
Sec. 202. Additional funding rules for multiemployer plans in
endangered or critical status.
Sec. 203. Measures to forestall insolvency of multiemployer plans.
Sec. 204. Withdrawal liability reforms.
Sec. 205. Prohibition on retaliation against employers exercising their
rights to petition the Federal government.
Sec. 206. Special rule for certain benefits funded under an agreement
approved by the Pension Benefit Guaranty
Corporation.
Subtitle B--Amendments to Internal Revenue Code of 1986
Sec. 211. Funding rules for multiemployer defined benefit plans.
Sec. 212. Additional funding rules for multiemployer plans in
endangered or critical status.
Sec. 213. Measures to forestall insolvency of multiemployer plans.
Sec. 214. Exemption from excise taxes for certain multiemployer pension
plans.
Subtitle C--Sunset of Additional Funding Rules
Sec. 221. Sunset of additional funding rules.
TITLE III--INTEREST RATE ASSUMPTIONS
Sec. 301. Extension of replacement of 30-year Treasury rates.
Sec. 302. Interest rate assumption for determination of lump sum
distributions.
Sec. 303. Interest rate assumption for applying benefit limitations to
lump sum distributions.
TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS
Sec. 401. PBGC premiums.
Sec. 402. Special funding rules for certain plans maintained by
commercial airlines.
Sec. 403. Limitation on PBGC guarantee of shutdown and other benefits.
Sec. 404. Rules relating to bankruptcy of employer.
Sec. 405. PBGC premiums for small plans.
Sec. 406. Authorization for PBGC to pay interest on premium overpayment
refunds.
Sec. 407. Rules for substantial owner benefits in terminated plans.
Sec. 408. Acceleration of PBGC computation of benefits attributable to
recoveries from employers.
Sec. 409. Treatment of certain plans where cessation or change in
membership of a controlled group.
Sec. 410. Missing participants.
Sec. 411. Director of the Pension Benefit Guaranty Corporation.
Sec. 412. Inclusion of information in the PBGC annual report.
TITLE V--DISCLOSURE
Sec. 501. Defined benefit plan funding notice.
Sec. 502. Access to multiemployer pension plan information.
Sec. 503. Additional annual reporting requirements.
Sec. 504. Electronic display of annual report information.
Sec. 505. Section 4010 filings with the PBGC.
Sec. 506. Disclosure of termination information to plan participants.
Sec. 507. Notice of freedom to divest employer securities.
Sec. 508. Periodic pension benefit statements.
Sec. 509. Notice to participants or beneficiaries of blackout periods.
TITLE VI--INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND FIDUCIARY
RULES
Subtitle A--Investment Advice
Sec. 601. Prohibited transaction exemption for provision of investment
advice.
Subtitle B--Prohibited Transactions
Sec. 611. Prohibited transaction rules relating to financial
investments.
Sec. 612. Correction period for certain transactions involving
securities and commodities.
Subtitle C--Fiduciary and Other Rules
Sec. 621. Inapplicability of relief from fiduciary liability during
suspension of ability of participant or
beneficiary to direct investments.
Sec. 622. Increase in maximum bond amount.
Sec. 623. Increase in penalties for coercive interference with exercise
of ERISA rights.
Sec. 624. Treatment of investment of assets by plan where participant
fails to exercise investment election.
Sec. 625. Clarification of fiduciary rules.
TITLE VII--BENEFIT ACCRUAL STANDARDS
Sec. 701. Benefit accrual standards.
Sec. 702. Regulations relating to mergers and acquisitions.
TITLE VIII--PENSION RELATED REVENUE PROVISIONS
Subtitle A--Deduction Limitations
Sec. 801. Increase in deduction limit for single-employer plans.
Sec. 802. Deduction limits for multiemployer plans.
Sec. 803. Updating deduction rules for combination of plans.
Subtitle B--Certain Pension Provisions Made Permanent
Sec. 811. Pensions and individual retirement arrangement provisions of
Economic Growth and Tax Relief
Reconciliation Act of 2001 made permanent.
Sec. 812. Saver's credit.
Subtitle C--Improvements in Portability, Distribution, and Contribution
Rules
Sec. 821. Clarifications regarding purchase of permissive service
credit.
Sec. 822. Allow rollover of after-tax amounts in annuity contracts.
Sec. 823. Clarification of minimum distribution rules for governmental
plans.
Sec. 824. Allow direct rollovers from retirement plans to Roth IRAs.
Sec. 825. Eligibility for participation in retirement plans.
Sec. 826. Modifications of rules governing hardships and unforseen
financial emergencies.
Sec. 827. Penalty-free withdrawals from retirement plans for
individuals called to active duty for at
least 179 days.
Sec. 828. Waiver of 10 percent early withdrawal penalty tax on certain
distributions of pension plans for public
safety employees.
Sec. 829. Allow rollovers by nonspouse beneficiaries of certain
retirement plan distributions.
Sec. 830. Direct payment of tax refunds to individual retirement plans.
Sec. 831. Allowance of additional IRA payments in certain bankruptcy
cases.
Sec. 832. Determination of average compensation for section 415 limits.
Sec. 833. Inflation indexing of gross income limitations on certain
retirement savings incentives.
Subtitle D--Health and Medical Benefits
Sec. 841. Use of excess pension assets for future retiree health
benefits and collectively bargained retiree
health benefits.
Sec. 842. Transfer of excess pension assets to multiemployer health
plan.
Sec. 843. Allowance of reserve for medical benefits of plans sponsored
by bona fide associations.
Sec. 844. Treatment of annuity and life insurance contracts with a
long-term care insurance feature.
Sec. 845. Distributions from governmental retirement plans for health
and Long-Term care insurance for public
safety officers.
Subtitle E--United States Tax Court Modernization
Sec. 851. Cost-of-living adjustments for Tax Court judicial survivor
annuities.
Sec. 852. Cost of life insurance coverage for Tax Court judges age 65
or over.
Sec. 853. Participation of Tax Court judges in the Thrift Savings Plan.
Sec. 854. Annuities to surviving spouses and dependent children of
special trial judges of the Tax Court.
Sec. 855. Jurisdiction of Tax Court over collection due process cases.
Sec. 856. Provisions for recall.
Sec. 857. Authority for special trial judges to hear and decide certain
employment status cases.
Sec. 858. Confirmation of authority of Tax Court to apply doctrine of
equitable recoupment.
Sec. 859. Tax Court filing fee in all cases commenced by filing
petition.
Sec. 860. Expanded use of Tax Court practice fee for pro se taxpayers.
Subtitle F--Other Provisions
Sec. 861. Extension to all governmental plans of current moratorium on
application of certain nondiscrimination
rules applicable to State and local plans.
Sec. 862. Elimination of aggregate limit for usage of excess funds from
black lung disability trusts.
Sec. 863. Treatment of death benefits from corporate-owned life
insurance.
Sec. 864. Treatment of test room supervisors and proctors who assist in
the administration of college entrance and
placement exams.
Sec. 865. Grandfather rule for church plans which self-annuitize.
Sec. 866. Exemption for income from leveraged real estate held by
church plans.
Sec. 867. Church plan rule.
Sec. 868. Gratuitous transfer for benefits of employees.
TITLE IX--INCREASE IN PENSION PLAN DIVERSIFICATION AND PARTICIPATION
AND OTHER PENSION PROVISIONS
Sec. 901. Defined contribution plans required to provide employees with
freedom to invest their plan assets.
Sec. 902. Increasing participation through automatic contribution
arrangements.
Sec. 903. Treatment of eligible combined defined benefit plans and
qualified cash or deferred arrangements.
Sec. 904. Faster vesting of employer nonelective contributions.
Sec. 905. Distributions during working retirement.
Sec. 906. Treatment of certain pension plans of Indian tribal
governments.
TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION
Sec. 1001. Regulations on time and order of issuance of domestic
relations orders.
Sec. 1002. Entitlement of divorced spouses to railroad retirement
annuities independent of actual entitlement
of employee.
Sec. 1003. Extension of tier II railroad retirement benefits to
surviving former spouses pursuant to
divorce agreements.
Sec. 1004. Requirement for additional survivor annuity option.
TITLE XI--ADMINISTRATIVE PROVISIONS
Sec. 1101. Employee plans compliance resolution system.
Sec. 1102. Notice and consent period regarding distributions.
Sec. 1103. Reporting simplification.
Sec. 1104. Voluntary early retirement incentive and employment
retention plans maintained by local
educational agencies and other entities.
Sec. 1105. No reduction in unemployment compensation as a result of
pension rollovers.
Sec. 1106. Revocation of election relating to treatment as
multiemployer plan.
Sec. 1107. Provisions relating to plan amendments.
TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS
Subtitle A--Charitable Giving Incentives
Sec. 1201. Tax-free distributions from individual retirement plans for
charitable purposes.
Sec. 1202. Extension of modification of charitable deduction for
contributions of food inventory.
Sec. 1203. Basis adjustment to stock of S corporation contributing
property.
Sec. 1204. Extension of modification of charitable deduction for
contributions of book inventory.
Sec. 1205. Modification of tax treatment of certain payments to
controlling exempt organizations.
Sec. 1206. Encouragement of contributions of capital gain real property
made for conservation purposes.
Sec. 1207. Excise taxes exemption for blood collector organizations.
Subtitle B--Reforming Exempt Organizations
Part 1--General Reforms
Sec. 1211. Reporting on certain acquisitions of interests in insurance
contracts in which certain exempt
organizations hold an interest.
Sec. 1212. Increase in penalty excise taxes relating to public
charities, social welfare organizations,
and private foundations.
Sec. 1213. Reform of charitable contributions of certain easements in
registered historic districts and reduced
deduction for portion of qualified
conservation contribution attributable to
rehabilitation credit.
Sec. 1214. Charitable contributions of taxidermy property.
Sec. 1215. Recapture of tax benefit for charitable contributions of
exempt use property not used for an exempt
use.
Sec. 1216. Limitation of deduction for charitable contributions of
clothing and household items.
Sec. 1217. Modification of recordkeeping requirements for certain
charitable contributions.
Sec. 1218. Contributions of fractional interests in tangible personal
property.
Sec. 1219. Provisions relating to substantial and gross overstatements
of valuations.
Sec. 1220. Additional standards for credit counseling organizations.
Sec. 1221. Expansion of the base of tax on private foundation net
investment income.
Sec. 1222. Definition of convention or association of churches.
Sec. 1223. Notification requirement for entities not currently required
to file.
Sec. 1224. Disclosure to State officials relating to exempt
organizations.
Sec. 1225. Public disclosure of information relating to unrelated
business income tax returns.
Sec. 1226. Study on donor advised funds and supporting organizations.
Part 2--Improved Accountability of Donor Advised Funds
Sec. 1231. Excise taxes relating to donor advised funds.
Sec. 1232. Excess benefit transactions involving donor advised funds
and sponsoring organizations.
Sec. 1233. Excess business holdings of donor advised funds.
Sec. 1234. Treatment of charitable contribution deductions to donor
advised funds.
Sec. 1235. Returns of, and applications for recognition by, sponsoring
organizations.
Part 3--Improved Accountability of Supporting Organizations
Sec. 1241. Requirements for supporting organizations.
Sec. 1242. Excess benefit transactions involving supporting
organizations.
Sec. 1243. Excess business holdings of supporting organizations.
Sec. 1244. Treatment of amounts paid to supporting organizations by
private foundations.
Sec. 1245. Returns of supporting organizations.
TITLE XIII--OTHER PROVISIONS
Sec. 1301. Technical corrections relating to mine safety.
Sec. 1302. Going-to-the-sun road.
Sec. 1303. Exception to the local furnishing requirement of the tax-
exempt bond rules.
Sec. 1304. Qualified tuition programs.
TITLE XIV--TARIFF PROVISIONS
Sec. 1401. Short title; table of contents.
TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT
PENSION PLANS
Subtitle A--Amendments to Employee Retirement Income Security Act of
1974
SEC. 101. MINIMUM FUNDING STANDARDS.
(a) Repeal of Existing Funding Rules.--Sections 302 through 308 of
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082
through 1086) are repealed.
(b) New Minimum Funding Standards.--Part 3 of subtitle B of title I
of such Act (as amended by subsection (a)) is amended by inserting
after section 301 the following new section:
``SEC. 302. MINIMUM FUNDING STANDARDS.
``(a) Requirement to Meet Minimum Funding Standard.--
``(1) In general.--A plan to which this part applies shall
satisfy the minimum funding standard applicable to the plan for
any plan year.
``(2) Minimum funding standard.--For purposes of paragraph
(1), a plan shall be treated as satisfying the minimum funding
standard for a plan year if--
``(A) in the case of a defined benefit plan which
is a single-employer plan, the employer makes
contributions to or under the plan for the plan year
which, in the aggregate, are not less than the minimum
required contribution determined under section 303 for
the plan for the plan year,
``(B) in the case of a money purchase plan which is
a single-employer plan, the employer makes
contributions to or under the plan for the plan year
which are required under the terms of the plan, and
``(C) in the case of a multiemployer plan, the
employers make contributions to or under the plan for
any plan year which, in the aggregate, are sufficient
to ensure that the plan does not have an accumulated
funding deficiency under section 304 as of the end of
the plan year.
``(b) Liability for Contributions.--
``(1) In general.--Except as provided in paragraph (2), the
amount of any contribution required by this section (including
any required installments under paragraphs (3) and (4) of
section 303(j)) shall be paid by the employer responsible for
making contributions to or under the plan.
``(2) Joint and several liability where employer member of
controlled group.--If the employer referred to in paragraph (1)
is a member of a controlled group, each member of such group
shall be jointly and severally liable for payment of such
contributions.
``(c) Variance From Minimum Funding Standards.--
``(1) Waiver in case of business hardship.--
``(A) In general.--If--
``(i) an employer is (or in the case of a
multiemployer plan, 10 percent or more of the
number of employers contributing to or under
the plan is) unable to satisfy the minimum
funding standard for a plan year without
temporary substantial business hardship
(substantial business hardship in the case of a
multiemployer plan), and
``(ii) application of the standard would be
adverse to the interests of plan participants
in the aggregate,
the Secretary of the Treasury may, subject to
subparagraph (C), waive the requirements of subsection
(a) for such year with respect to all or any portion of
the minimum funding standard. The Secretary of the
Treasury shall not waive the minimum funding standard
with respect to a plan for more than 3 of any 15 (5 of
any 15 in the case of a multiemployer plan) consecutive
plan years.
``(B) Effects of waiver.--If a waiver is granted
under subparagraph (A) for any plan year--
``(i) in the case of a single-employer
plan, the minimum required contribution under
section 303 for the plan year shall be reduced
by the amount of the waived funding deficiency
and such amount shall be amortized as required
under section 303(e), and
``(ii) in the case of a multiemployer plan,
the funding standard account shall be credited
under section 304(b)(3)(C) with the amount of
the waived funding deficiency and such amount
shall be amortized as required under section
304(b)(2)(C).
``(C) Waiver of amortized portion not allowed.--The
Secretary of the Treasury may not waive under
subparagraph (A) any portion of the minimum funding
standard under subsection (a) for a plan year which is
attributable to any waived funding deficiency for any
preceding plan year.
``(2) Determination of business hardship.--For purposes of
this subsection, the factors taken into account in determining
temporary substantial business hardship (substantial business
hardship in the case of a multiemployer plan) shall include
(but shall not be limited to) whether or not--
``(A) the employer is operating at an economic
loss,
``(B) there is substantial unemployment or
underemployment in the trade or business and in the
industry concerned,
``(C) the sales and profits of the industry
concerned are depressed or declining, and
``(D) it is reasonable to expect that the plan will
be continued only if the waiver is granted.
``(3) Waived funding deficiency.--For purposes of this
part, the term `waived funding deficiency' means the portion of
the minimum funding standard under subsection (a) (determined
without regard to the waiver) for a plan year waived by the
Secretary of the Treasury and not satisfied by employer
contributions.
``(4) Security for waivers for single-employer plans,
consultations.--
``(A) Security may be required.--
``(i) In general.--Except as provided in
subparagraph (C), the Secretary of the Treasury
may require an employer maintaining a defined
benefit plan which is a single-employer plan
(within the meaning of section 4001(a)(15)) to
provide security to such plan as a condition
for granting or modifying a waiver under
paragraph (1).
``(ii) Special rules.--Any security
provided under clause (i) may be perfected and
enforced only by the Pension Benefit Guaranty
Corporation, or at the direction of the
Corporation, by a contributing sponsor (within
the meaning of section 4001(a)(13)), or a
member of such sponsor's controlled group
(within the meaning of section 4001(a)(14)).
``(B) Consultation with the pension benefit
guaranty corporation.--Except as provided in
subparagraph (C), the Secretary of the Treasury shall,
before granting or modifying a waiver under this
subsection with respect to a plan described in
subparagraph (A)(i)--
``(i) provide the Pension Benefit Guaranty
Corporation with--
``(I) notice of the completed
application for any waiver or
modification, and
``(II) an opportunity to comment on
such application within 30 days after
receipt of such notice, and
``(ii) consider--
``(I) any comments of the
Corporation under clause (i)(II), and
``(II) any views of any employee
organization (within the meaning of
section 3(4)) representing participants
in the plan which are submitted in
writing to the Secretary of the
Treasury in connection with such
application.
Information provided to the Corporation under this
subparagraph shall be considered tax return information
and subject to the safeguarding and reporting
requirements of section 6103(p) of the Internal Revenue
Code of 1986.
``(C) Exception for certain waivers.--
``(i) In general.--The preceding provisions
of this paragraph shall not apply to any plan
with respect to which the sum of--
``(I) the aggregate unpaid minimum
required contributions for the plan
year and all preceding plan years, and
``(II) the present value of all
waiver amortization installments
determined for the plan year and
succeeding plan years under section
303(e)(2),
is less than $1,000,000.
``(ii) Treatment of waivers for which
applications are pending.--The amount described
in clause (i)(I) shall include any increase in
such amount which would result if all
applications for waivers of the minimum funding
standard under this subsection which are
pending with respect to such plan were denied.
``(iii) Unpaid minimum required
contribution.--For purposes of this
subparagraph--
``(I) In general.--The term `unpaid
minimum required contribution' means,
with respect to any plan year, any
minimum required contribution under
section 303 for the plan year which is
not paid on or before the due date (as
determined under section 303(j)(1)) for
the plan year.
``(II) Ordering rule.--For purposes
of subclause (I), any payment to or
under a plan for any plan year shall be
allocated first to unpaid minimum
required contributions for all
preceding plan years on a first-in,
first-out basis and then to the minimum
required contribution under section 303
for the plan year.
``(5) Special rules for single-employer plans.--
``(A) Application must be submitted before date
2\1/2\ months after close of year.--In the case of a
single-employer plan, no waiver may be granted under
this subsection with respect to any plan for any plan
year unless an application therefor is submitted to the
Secretary of the Treasury not later than the 15th day
of the 3rd month beginning after the close of such plan
year.
``(B) Special rule if employer is member of
controlled group.--In the case of a single-employer
plan, if an employer is a member of a controlled group,
the temporary substantial business hardship
requirements of paragraph (1) shall be treated as met
only if such requirements are met--
``(i) with respect to such employer, and
``(ii) with respect to the controlled group
of which such employer is a member (determined
by treating all members of such group as a
single employer).
The Secretary of the Treasury may provide that an
analysis of a trade or business or industry of a member
need not be conducted if such Secretary determines such
analysis is not necessary because the taking into
account of such member would not significantly affect
the determination under this paragraph.
``(6) Advance notice.--
``(A) In general.--The Secretary of the Treasury
shall, before granting a waiver under this subsection,
require each applicant to provide evidence satisfactory
to such Secretary that the applicant has provided
notice of the filing of the application for such waiver
to each affected party (as defined in section
4001(a)(21)). Such notice shall include a description
of the extent to which the plan is funded for benefits
which are guaranteed under title IV and for benefit
liabilities.
``(B) Consideration of relevant information.--The
Secretary of the Treasury shall consider any relevant
information provided by a person to whom notice was
given under subparagraph (A).
``(7) Restriction on plan amendments.--
``(A) In general.--No amendment of a plan which
increases the liabilities of the plan by reason of any
increase in benefits, any change in the accrual of
benefits, or any change in the rate at which benefits
become nonforfeitable under the plan shall be adopted
if a waiver under this subsection or an extension of
time under section 304(d) is in effect with respect to
the plan, or if a plan amendment described in
subsection (d)(2) has been made at any time in the
preceding 12 months (24 months in the case of a
multiemployer plan). If a plan is amended in violation
of the preceding sentence, any such waiver, or
extension of time, shall not apply to any plan year
ending on or after the date on which such amendment is
adopted.
``(B) Exception.--Subparagraph (A) shall not apply
to any plan amendment which--
``(i) the Secretary of the Treasury
determines to be reasonable and which provides
for only de minimis increases in the
liabilities of the plan,
``(ii) only repeals an amendment described
in subsection (d)(2), or
``(iii) is required as a condition of
qualification under part I of subchapter D of
chapter 1 of the Internal Revenue Code of 1986.
``(8) Cross reference.--For corresponding duties of the
Secretary of the Treasury with regard to implementation of the
Internal Revenue Code of 1986, see section 412(c) of such Code.
``(d) Miscellaneous Rules.--
``(1) Change in method or year.--If the funding method, the
valuation date, or a plan year for a plan is changed, the
change shall take effect only if approved by the Secretary of
the Treasury.
``(2) Certain retroactive plan amendments.--For purposes of
this section, any amendment applying to a plan year which--
``(A) is adopted after the close of such plan year
but no later than 2\1/2\ months after the close of the
plan year (or, in the case of a multiemployer plan, no
later than 2 years after the close of such plan year),
``(B) does not reduce the accrued benefit of any
participant determined as of the beginning of the first
plan year to which the amendment applies, and
``(C) does not reduce the accrued benefit of any
participant determined as of the time of adoption
except to the extent required by the circumstances,
shall, at the election of the plan administrator, be deemed to
have been made on the first day of such plan year. No amendment
described in this paragraph which reduces the accrued benefits
of any participant shall take effect unless the plan
administrator files a notice with the Secretary of the Treasury
notifying him of such amendment and such Secretary has approved
such amendment, or within 90 days after the date on which such
notice was filed, failed to disapprove such amendment. No
amendment described in this subsection shall be approved by the
Secretary of the Treasury unless such Secretary determines that
such amendment is necessary because of a temporary substantial
business hardship (as determined under subsection (c)(2)) or a
substantial business hardship (as so determined) in the case of
a multiemployer plan and that a waiver under subsection (c)
(or, in the case of a multiemployer plan, any extension of the
amortization period under section 304(d)) is unavailable or
inadequate.
``(3) Controlled group.--For purposes of this section, the
term `controlled group' means any group treated as a single
employer under subsection (b), (c), (m), or (o) of section 414
of the Internal Revenue Code of 1986.''.
(c) Clerical Amendment.--The table of contents in section 1 of such
Act is amended by striking the items relating to sections 302 through
308 and inserting the following new item:
``Sec. 302. Minimum funding standards.''.
(d) Effective Date.--The amendments made by this section shall
apply to plan years beginning after 2007.
SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION
PLANS.
(a) In General.--Part 3 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (as amended by section 101 of
this Act) is amended by inserting after section 302 the following new
section:
``SEC. 303. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED
BENEFIT PENSION PLANS.
``(a) Minimum Required Contribution.--For purposes of this section
and section 302(a)(2)(A), except as provided in subsection (f), the
term `minimum required contribution' means, with respect to any plan
year of a single-employer plan--
``(1) in any case in which the value of plan assets of the
plan (as reduced under subsection (f)(4)(B)) is less than the
funding target of the plan for the plan year, the sum of--
``(A) the target normal cost of the plan for the
plan year,
``(B) the shortfall amortization charge (if any)
for the plan for the plan year determined under
subsection (c), and
``(C) the waiver amortization charge (if any) for
the plan for the plan year as determined under
subsection (e); or
``(2) in any case in which the value of plan assets of the
plan (as reduced under subsection (f)(4)(B)) equals or exceeds
the funding target of the plan for the plan year, the target
normal cost of the plan for the plan year reduced (but not
below zero) by such excess.
``(b) Target Normal Cost.--For purposes of this section, except as
provided in subsection (i)(2) with respect to plans in at-risk status,
the term `target normal cost' means, for any plan year, the present
value of all benefits which are expected to accrue or to be earned
under the plan during the plan year. For purposes of this subsection,
if any benefit attributable to services performed in a preceding plan
year is increased by reason of any increase in compensation during the
current plan year, the increase in such benefit shall be treated as
having accrued during the current plan year.
``(c) Shortfall Amortization Charge.--
``(1) In general.--For purposes of this section, the
shortfall amortization charge for a plan for any plan year is
the aggregate total (not less than zero) of the shortfall
amortization installments for such plan year with respect to
the shortfall amortization bases for such plan year and each of
the 6 preceding plan years.
``(2) Shortfall amortization installment.--For purposes of
paragraph (1)--
``(A) Determination.--The shortfall amortization
installments are the amounts necessary to amortize the
shortfall amortization base of the plan for any plan
year in level annual installments over the 7-plan-year
period beginning with such plan year.
``(B) Shortfall installment.--The shortfall
amortization installment for any plan year in the 7-
plan-year period under subparagraph (A) with respect to
any shortfall amortization base is the annual
installment determined under subparagraph (A) for that
year for that base.
``(C) Segment rates.--In determining any shortfall
amortization installment under this paragraph, the plan
sponsor shall use the segment rates determined under
subparagraph (C) of subsection (h)(2), applied under
rules similar to the rules of subparagraph (B) of
subsection (h)(2).
``(3) Shortfall amortization base.--For purposes of this
section, the shortfall amortization base of a plan for a plan
year is--
``(A) the funding shortfall of such plan for such
plan year, minus
``(B) the present value (determined using the
segment rates determined under subparagraph (C) of
subsection (h)(2), applied under rules similar to the
rules of subparagraph (B) of subsection (h)(2)) of the
aggregate total of the shortfall amortization
installments and waiver amortization installments which
have been determined for such plan year and any
succeeding plan year with respect to the shortfall
amortization bases and waiver amortization bases of the
plan for any plan year preceding such plan year.
``(4) Funding shortfall.--For purposes of this section, the
funding shortfall of a plan for any plan year is the excess (if
any) of--
``(A) the funding target of the plan for the plan
year, over
``(B) the value of plan assets of the plan (as
reduced under subsection (f)(4)(B)) for the plan year
which are held by the plan on the valuation date.
``(5) Exemption from new shortfall amortization base.--
``(A) In general.--In any case in which the value
of plan assets of the plan (as reduced under subsection
(f)(4)(A)) is equal to or greater than the funding
target of the plan for the plan year, the shortfall
amortization base of the plan for such plan year shall
be zero.
``(B) Transition rule.--
``(i) In general.--Except as provided in
clauses (iii) and (iv), in the case of plan
years beginning after 2007 and before 2011,
only the applicable percentage of the funding
target shall be taken into account under
paragraph (3)(A) in determining the funding
shortfall for the plan year for purposes of
subparagraph (A).
``(ii) Applicable percentage.--For purposes
of subparagraph (A), the applicable percentage
shall be determined in accordance with the
following table:
``In the case of a plan year The applicable
beginning in calendar year: percentage is
2008................................................... 92
2009................................................... 94
2010................................................... 96.
``(iii) Limitation.--Clause (i) shall not
apply with respect to any plan year after 2008
unless the shortfall amortization base for each
of the preceding years beginning after 2007 was
zero (determined after application of this
subparagraph).
``(iv) Transition relief not available for
new or deficit reduction plans.--Clause (i)
shall not apply to a plan--
``(I) which was not in effect for a
plan year beginning in 2007, or
``(II) which was in effect for a
plan year beginning in 2007 and which
was subject to section 302(d) (as in
effect for plan years beginning in
2007), determined after the application
of paragraphs (6) and (9) thereof.
``(6) Early deemed amortization upon attainment of funding
target.--In any case in which the funding shortfall of a plan
for a plan year is zero, for purposes of determining the
shortfall amortization charge for such plan year and succeeding
plan years, the shortfall amortization bases for all preceding
plan years (and all shortfall amortization installments
determined with respect to such bases) shall be reduced to
zero.
``(d) Rules Relating to Funding Target.--For purposes of this
section--
``(1) Funding target.--Except as provided in subsection
(i)(1) with respect to plans in at-risk status, the funding
target of a plan for a plan year is the present value of all
benefits accrued or earned under the plan as of the beginning
of the plan year.
``(2) Funding target attainment percentage.--The `funding
target attainment percentage' of a plan for a plan year is the
ratio (expressed as a percentage) which--
``(A) the value of plan assets for the plan year
(as reduced under subsection (f)(4)(B)), bears to
``(B) the funding target of the plan for the plan
year (determined without regard to subsection (i)(1)).
``(e) Waiver Amortization Charge.--
``(1) Determination of waiver amortization charge.--The
waiver amortization charge (if any) for a plan for any plan
year is the aggregate total of the waiver amortization
installments for such plan year with respect to the waiver
amortization bases for each of the 5 preceding plan years.
``(2) Waiver amortization installment.--For purposes of
paragraph (1)--
``(A) Determination.--The waiver amortization
installments are the amounts necessary to amortize the
waiver amortization base of the plan for any plan year
in level annual installments over a period of 5 plan
years beginning with the succeeding plan year.
``(B) Waiver installment.--The waiver amortization
installment for any plan year in the 5-year period
under subparagraph (A) with respect to any waiver
amortization base is the annual installment determined
under subparagraph (A) for that year for that base.
``(3) Interest rate.--In determining any waiver
amortization installment under this subsection, the plan
sponsor shall use the segment rates determined under
subparagraph (C) of subsection (h)(2), applied under rules
similar to the rules of subparagraph (B) of subsection (h)(2).
``(4) Waiver amortization base.--The waiver amortization
base of a plan for a plan year is the amount of the waived
funding deficiency (if any) for such plan year under section
302(c).
``(5) Early deemed amortization upon attainment of funding
target.--In any case in which the funding shortfall of a plan
for a plan year is zero, for purposes of determining the waiver
amortization charge for such plan year and succeeding plan
years, the waiver amortization bases for all preceding plan
years (and all waiver amortization installments determined with
respect to such bases) shall be reduced to zero.
``(f) Reduction of Minimum Required Contribution by Prefunding
Balance and Funding Standard Carryover Balance.--
``(1) Election to maintain balances.--
``(A) Prefunding balance.--The plan sponsor of a
single-employer plan may elect to maintain a prefunding
balance.
``(B) Funding standard carryover balance.--
``(i) In general.--In the case of a single-
employer plan described in clause (ii), the
plan sponsor may elect to maintain a funding
standard carryover balance, until such balance
is reduced to zero.
``(ii) Plans maintaining funding standard
account in 2007.--A plan is described in this
clause if the plan--
``(I) was in effect for a plan year
beginning in 2007, and
``(II) had a positive balance in
the funding standard account under
section 302(b) as in effect for such
plan year and determined as of the end
of such plan year.
``(2) Application of balances.--A prefunding balance and a
funding standard carryover balance maintained pursuant to this
paragraph--
``(A) shall be available for crediting against the
minimum required contribution, pursuant to an election
under paragraph (3),
``(B) shall be applied as a reduction in the amount
treated as the value of plan assets for purposes of
this section, to the extent provided in paragraph (4),
and
``(C) may be reduced at any time, pursuant to an
election under paragraph (5).
``(3) Election to apply balances against minimum required
contribution.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), in the case of any plan year
in which the plan sponsor elects to credit against the
minimum required contribution for the current plan year
all or a portion of the prefunding balance or the
funding standard carryover balance for the current plan
year (not in excess of such minimum required
contribution), the minimum required contribution for
the plan year shall be reduced as of the first day of
the plan year by the amount so credited by the plan
sponsor. For purposes of the preceding sentence, the
minimum required contribution shall be determined after
taking into account any waiver under section 302(c).
``(B) Coordination with funding standard carryover
balance.--To the extent that any plan has a funding
standard carryover balance greater than zero, no amount
of the prefunding balance of such plan may be credited
under this paragraph in reducing the minimum required
contribution.
``(C) Limitation for underfunded plans.--The
preceding provisions of this paragraph shall not apply
for any plan year if the ratio (expressed as a
percentage) which--
``(i) the value of plan assets for the
preceding plan year (as reduced under paragraph
(4)(C)), bears to
``(ii) the funding target of the plan for
the preceding plan year (determined without
regard to subsection (i)(1)),
is less than 80 percent. In the case of plan years
beginning in 2008, the ratio under this subparagraph
may be determined using such methods of estimation as
the Secretary of the Treasury may prescribe.
``(4) Effect of balances on amounts treated as value of
plan assets.--In the case of any plan maintaining a prefunding
balance or a funding standard carryover balance pursuant to
this subsection, the amount treated as the value of plan assets
shall be deemed to be such amount, reduced as provided in the
following subparagraphs:
``(A) Applicability of shortfall amortization
base.--For purposes of subsection (c)(5), the value of
plan assets is deemed to be such amount, reduced by the
amount of the prefunding balance, but only if an
election under paragraph (2) applying any portion of
the prefunding balance in reducing the minimum required
contribution is in effect for the plan year.
``(B) Determination of excess assets, funding
shortfall, and funding target attainment percentage.--
``(i) In general.--For purposes of
subsections (a), (c)(4)(B), and (d)(2)(A), the
value of plan assets is deemed to be such
amount, reduced by the amount of the prefunding
balance and the funding standard carryover
balance.
``(ii) Special rule for certain binding
agreements with pbgc.--For purposes of
subsection (c)(4)(B), the value of plan assets
shall not be deemed to be reduced for a plan
year by the amount of the specified balance if,
with respect to such balance, there is in
effect for a plan year a binding written
agreement with the Pension Benefit Guaranty
Corporation which provides that such balance is
not available to reduce the minimum required
contribution for the plan year. For purposes of
the preceding sentence, the term `specified
balance' means the prefunding balance or the
funding standard carryover balance, as the case
may be.
``(C) Availability of balances in plan year for
crediting against minimum required contribution.--For
purposes of paragraph (3)(C)(i) of this subsection, the
value of plan assets is deemed to be such amount,
reduced by the amount of the prefunding balance.
``(5) Election to reduce balance prior to determinations of
value of plan assets and crediting against minimum required
contribution.--
``(A) In general.--The plan sponsor may elect to
reduce by any amount the balance of the prefunding
balance and the funding standard carryover balance for
any plan year (but not below zero). Such reduction
shall be effective prior to any determination of the
value of plan assets for such plan year under this
section and application of the balance in reducing the
minimum required contribution for such plan for such
plan year pursuant to an election under paragraph (2).
``(B) Coordination between prefunding balance and
funding standard carryover balance.--To the extent that
any plan has a funding standard carryover balance
greater than zero, no election may be made under
subparagraph (A) with respect to the prefunding
balance.
``(6) Prefunding balance.--
``(A) In general.--A prefunding balance maintained
by a plan shall consist of a beginning balance of zero,
increased and decreased to the extent provided in
subparagraphs (B) and (C), and adjusted further as
provided in paragraph (8).
``(B) Increases.--
``(i) In general.--As of the first day of
each plan year beginning after 2008, the
prefunding balance of a plan shall be increased
by the amount elected by the plan sponsor for
the plan year. Such amount shall not exceed the
excess (if any) of--
``(I) the aggregate total of
employer contributions to the plan for
the preceding plan year, over--
``(II) the minimum required
contribution for such preceding plan
year.
``(ii) Adjustments for interest.--Any
excess contributions under clause (i) shall be
properly adjusted for interest accruing for the
periods between the first day of the current
plan year and the dates on which the excess
contributions were made, determined by using
the effective interest rate for the preceding
plan year and by treating contributions as
being first used to satisfy the minimum
required contribution.
``(iii) Certain contributions necessary to
avoid benefit limitations disregarded.--The
excess described in clause (i) with respect to
any preceding plan year shall be reduced (but
not below zero) by the amount of contributions
an employer would be required to make under
paragraph (1), (2), or (4) of section 206(g) to
avoid a benefit limitation which would
otherwise be imposed under such paragraph for
the preceding plan year. Any contribution which
may be taken into account in satisfying the
requirements of more than 1 of such paragraphs
shall be taken into account only once for
purposes of this clause.
``(C) Decrease.--The prefunding balance of a plan
shall be decreased (but not below zero) by--
``(i) as of the first day of each plan year
after 2008, the amount of such balance credited
under paragraph (2) (if any) in reducing the
minimum required contribution of the plan for
the preceding plan year, and
``(ii) as of the time specified in
paragraph (5))(A), any reduction in such
balance elected under paragraph (5).
``(7) Funding standard carryover balance.--
``(A) In general.--A funding standard carryover
balance maintained by a plan shall consist of a
beginning balance determined under subparagraph (B),
decreased to the extent provided in subparagraph (C),
and adjusted further as provided in paragraph (8).
``(B) Beginning balance.--The beginning balance of
the funding standard carryover balance shall be the
positive balance described in paragraph (1)(B)(ii)(II).
``(C) Decreases.--The funding standard carryover
balance of a plan shall be decreased (but not below
zero) by--
``(i) as of the first day of each plan year
after 2008, the amount of such balance credited
under paragraph (2) (if any) in reducing the
minimum required contribution of the plan for
the preceding plan year, and
``(ii) as of the time specified in
paragraph (5))(A), any reduction in such
balance elected under paragraph (5).
``(8) Adjustments for investment experience.--In
determining the prefunding balance or the funding standard
carryover balance of a plan as of the first day of the plan
year, the plan sponsor shall, in accordance with regulations
prescribed by the Secretary of the Treasury, adjust such
balance to reflect the rate of return on plan assets for the
preceding plan year. Notwithstanding subsection (g)(3), such
rate of return shall be determined on the basis of fair market
value and shall properly take into account, in accordance with
such regulations, all contributions, distributions, and other
plan payments made during such period.
``(9) Elections.--Elections under this subsection shall be
made at such times, and in such form and manner, as shall be
prescribed in regulations of the Secretary of the Treasury.
``(g) Valuation of Plan Assets and Liabilities.--
``(1) Timing of determinations.--Except as otherwise
provided under this subsection, all determinations under this
section for a plan year shall be made as of the valuation date
of the plan for such plan year.
``(2) Valuation date.--For purposes of this section--
``(A) In general.--Except as provided in
subparagraph (B), the valuation date of a plan for any
plan year shall be the first day of the plan year.
``(B) Exception for small plans.--If, on each day
during the preceding plan year, a plan had 100 or fewer
participants, the plan may designate any day during the
plan year as its valuation date for such plan year and
succeeding plan years. For purposes of this
subparagraph, all defined benefit plans which are
single-employer plans and are maintained by the same
employer (or any member of such employer's controlled
group) shall be treated as 1 plan, but only
participants with respect to such employer or member
shall be taken into account.
``(C) Application of certain rules in determination
of plan size.--For purposes of this paragraph--
``(i) Plans not in existence in preceding
year.--In the case of the first plan year of
any plan, subparagraph (B) shall apply to such
plan by taking into account the number of
participants that the plan is reasonably
expected to have on days during such first plan
year.
``(ii) Predecessors.--Any reference in
subparagraph (B) to an employer shall include a
reference to any predecessor of such employer.
``(3) Determination of value of plan assets.--For purposes
of this section--
``(A) In general.--Except as provided in
subparagraph (B), the value of plan assets shall be the
fair market value of the assets.
``(B) Averaging allowed.--A plan may determine the
value of plan assets on the basis of the averaging of
fair market values, but only if such method--
``(i) is permitted under regulations
prescribed by the Secretary of the Treasury,
``(ii) does not provide for averaging of
such values over more than the period beginning
on the last day of the 25th month preceding the
month in which the valuation date occurs and
ending on the valuation date (or a similar
period in the case of a valuation date which is
not the 1st day of a month), and
``(iii) does not result in a determination
of the value of plan assets which, at any time,
is lower than 90 percent or greater than 110
percent of the fair market value of such assets
at such time.
Any such averaging shall be adjusted for contributions
and distributions (as provided by the Secretary of the
Treasury).
``(4) Accounting for contribution receipts.--For purposes
of determining the value of assets under paragraph (3)--
``(A) Prior year contributions.--If--
``(i) an employer makes any contribution to
the plan after the valuation date for the plan
year in which the contribution is made, and
``(ii) the contribution is for a preceding
plan year,
the contribution shall be taken into account as an
asset of the plan as of the valuation date, except that
in the case of any plan year beginning after 2008, only
the present value (determined as of the valuation date)
of such contribution may be taken into account. For
purposes of the preceding sentence, present value shall
be determined using the effective interest rate for the
preceding plan year to which the contribution is
properly allocable.
``(B) Special rule for current year contributions
made before valuation date.--If any contributions for
any plan year are made to or under the plan during the
plan year but before the valuation date for the plan
year, the assets of the plan as of the valuation date
shall not include--
``(i) such contributions, and
``(ii) interest on such contributions for
the period between the date of the
contributions and the valuation date,
determined by using the effective interest rate
for the plan year.
``(h) Actuarial Assumptions and Methods.--
``(1) In general.--Subject to this subsection, the
determination of any present value or other computation under
this section shall be made on the basis of actuarial
assumptions and methods--
``(A) each of which is reasonable (taking into
account the experience of the plan and reasonable
expectations), and
``(B) which, in combination, offer the actuary's
best estimate of anticipated experience under the plan.
``(2) Interest rates.--
``(A) Effective interest rate.--For purposes of
this section, the term `effective interest rate' means,
with respect to any plan for any plan year, the single
rate of interest which, if used to determine the
present value of the plan's accrued or earned benefits
referred to in subsection (d)(1), would result in an
amount equal to the funding target of the plan for such
plan year.
``(B) Interest rates for determining funding
target.--For purposes of determining the funding target
and normal cost of a plan for any plan year, the
interest rate used in determining the present value of
the benefits of the plan shall be--
``(i) in the case of benefits reasonably
determined to be payable during the 5-year
period beginning on the first day of the plan
year, the first segment rate with respect to
the applicable month,
``(ii) in the case of benefits reasonably
determined to be payable during the 15-year
period beginning at the end of the period
described in clause (i), the second segment
rate with respect to the applicable month, and
``(iii) in the case of benefits reasonably
determined to be payable after the period
described in clause (ii), the third segment
rate with respect to the applicable month.
``(C) Segment rates.--For purposes of this
paragraph--
``(i) First segment rate.--The term `first
segment rate' means, with respect to any month,
the single rate of interest which shall be
determined by the Secretary of the Treasury for
such month on the basis of the corporate bond
yield curve for such month, taking into account
only that portion of such yield curve which is
based on bonds maturing during the 5-year
period commencing with such month.
``(ii) Second segment rate.--The term
`second segment rate' means, with respect to
any month, the single rate of interest which
shall be determined by the Secretary of the
Treasury for such month on the basis of the
corporate bond yield curve for such month,
taking into account only that portion of such
yield curve which is based on bonds maturing
during the 15-year period beginning at the end
of the period described in clause (i).
``(iii) Third segment rate.--The term
`third segment rate' means, with respect to any
month, the single rate of interest which shall
be determined by the Secretary of the Treasury
for such month on the basis of the corporate
bond yield curve for such month, taking into
account only that portion of such yield curve
which is based on bonds maturing during periods
beginning after the period described in clause
(ii).
``(D) Corporate bond yield curve.--For purposes of
this paragraph--
``(i) In general.--The term `corporate bond
yield curve' means, with respect to any month,
a yield curve which is prescribed by the
Secretary of the Treasury for such month and
which reflects the average, for the 24-month
period ending with the month preceding such
month, of monthly yields on investment grade
corporate bonds with varying maturities and
that are in the top 3 quality levels available.
``(ii) Election to use yield curve.--Solely
for purposes of determining the minimum
required contribution under this section, the
plan sponsor may, in lieu of the segment rates
determined under subparagraph (C), elect to use
interest rates under the corporate bond yield
curve. For purposes of the preceding sentence
such curve shall be determined without regard
to the 24-month averaging described in clause
(i). Such election, once made, may be revoked
only with the consent of the Secretary of the
Treasury.
``(E) Applicable month.--For purposes of this
paragraph, the term `applicable month' means, with
respect to any plan for any plan year, the month which
includes the valuation date of such plan for such plan
year or, at the election of the plan sponsor, any of
the 4 months which precede such month. Any election
made under this subparagraph shall apply to the plan
year for which the election is made and all succeeding
plan years, unless the election is revoked with the
consent of the Secretary of the Treasury.
``(F) Publication requirements.--The Secretary of
the Treasury shall publish for each month the corporate
bond yield curve (and the corporate bond yield curve
reflecting the modification described in section
205(g)(3)(B)(iii)(I)) for such month and each of the
rates determined under subparagraph (B) for such month.
The Secretary of the Treasury shall also publish a
description of the methodology used to determine such
yield curve and such rates which is sufficiently
detailed to enable plans to make reasonable projections
regarding the yield curve and such rates for future
months based on the plan's projection of future
interest rates.
``(G) Transition rule.--
``(i) In general.--Notwithstanding the
preceding provisions of this paragraph, for
plan years beginning in 2008 or 2009, the
first, second, or third segment rate for a plan
with respect to any month shall be equal to the
sum of--
``(I) the product of such rate for
such month determined without regard to
this subparagraph, multiplied by the
applicable percentage, and
``(II) the product of the rate
determined under the rules of section
302(b)(5)(B)(ii)(II) (as in effect for
plan years beginning in 2007),
multiplied by a percentage equal to 100
percent minus the applicable
percentage.
``(ii) Applicable percentage.--For purposes
of clause (i), the applicable percentage is
33\1/3\ percent for plan years beginning in
2008 and 66\2/3\ percent for plan years
beginning in 2009.
``(iii) New plans ineligible.--Clause (i)
shall not apply to any plan if the first plan
year of the plan begins after December 31,
2007.
``(iv) Election.--The plan sponsor may
elect not to have this subparagraph apply. Such
election, once made, may be revoked only with
the consent of the Secretary of the Treasury.
``(3) Mortality tables.--
``(A) In general.--Except as provided in
subparagraph (C) or (D), the Secretary of the Treasury
shall by regulation prescribe mortality tables to be
used in determining any present value or making any
computation under this section. Such tables shall be
based on the actual experience of pension plans and
projected trends in such experience. In prescribing
such tables, the Secretary of the Treasury shall take
into account results of available independent studies
of mortality of individuals covered by pension plans.
``(B) Periodic revision.--The Secretary of the
Treasury shall (at least every 10 years) make revisions
in any table in effect under subparagraph (A) to
reflect the actual experience of pension plans and
projected trends in such experience.
``(C) Substitute mortality table.--
``(i) In general.--Upon request by the plan
sponsor and approval by the Secretary of the
Treasury, a mortality table which meets the
requirements of clause (iii) shall be used in
determining any present value or making any
computation under this section during the
period of consecutive plan years (not to exceed
10) specified in the request.
``(ii) Early termination of period.--
Notwithstanding clause (i), a mortality table
described in clause (i) shall cease to be in
effect as of the earliest of--
``(I) the date on which there is a
significant change in the participants
in the plan by reason of a plan spinoff
or merger or otherwise, or
``(II) the date on which the plan
actuary determines that such table does
not meet the requirements of clause
(iii).
``(iii) Requirements.--A mortality table
meets the requirements of this clause if--
``(I) there is a sufficient number
of plan participants, and the pension
plans have been maintained for a
sufficient period of time, to have
credible information necessary for
purposes of subclause (II), and
``(II) such table reflects the
actual experience of the pension plans
maintained by the sponsor and projected
trends in general mortality experience.
``(iv) All plans in controlled group must
use separate table.--Except as provided by the
Secretary of the Treasury, a plan sponsor may
not use a mortality table under this
subparagraph for any plan maintained by the
plan sponsor unless--
``(I) a separate mortality table is
established and used under this
subparagraph for each other plan
maintained by the plan sponsor and if
the plan sponsor is a member of a
controlled group, each member of the
controlled group, and
``(II) the requirements of clause
(iii) are met separately with respect
to the table so established for each
such plan, determined by only taking
into account the participants of such
plan, the time such plan has been in
existence, and the actual experience of
such plan.
``(v) Deadline for submission and
disposition of application.--
``(I) Submission.--The plan sponsor
shall submit a mortality table to the
Secretary of the Treasury for approval
under this subparagraph at least 7
months before the 1st day of the period
described in clause (i).
``(II) Disposition.--Any mortality
table submitted to the Secretary of the
Treasury for approval under this
subparagraph shall be treated as in
effect as of the 1st day of the period
described in clause (i) unless the
Secretary of the Treasury, during the
180-day period beginning on the date of
such submission, disapproves of such
table and provides the reasons that
such table fails to meet the
requirements of clause (iii). The 180-
day period shall be extended upon
mutual agreement of the Secretary of
the Treasury and the plan sponsor.
``(D) Separate mortality tables for the disabled.--
Notwithstanding subparagraph (A)--
``(i) In general.--The Secretary of the
Treasury shall establish mortality tables which
may be used (in lieu of the tables under
subparagraph (A)) under this subsection for
individuals who are entitled to benefits under
the plan on account of disability. The
Secretary of the Treasury shall establish
separate tables for individuals whose
disabilities occur in plan years beginning
before January 1, 1995, and for individuals
whose disabilities occur in plan years
beginning on or after such date.
``(ii) Special rule for disabilities
occurring after 1994.--In the case of
disabilities occurring in plan years beginning
after December 31, 1994, the tables under
clause (i) shall apply only with respect to
individuals described in such subclause who are
disabled within the meaning of title II of the
Social Security Act and the regulations
thereunder.
``(iii) Periodic revision.--The Secretary
of the Treasury shall (at least every 10 years)
make revisions in any table in effect under
clause (i) to reflect the actual experience of
pension plans and projected trends in such
experience.
``(4) Probability of benefit payments in the form of lump
sums or other optional forms.--For purposes of determining any
present value or making any computation under this section,
there shall be taken into account--
``(A) the probability that future benefit payments
under the plan will be made in the form of optional
forms of benefits provided under the plan (including
lump sum distributions, determined on the basis of the
plan's experience and other related assumptions), and
``(B) any difference in the present value of such
future benefit payments resulting from the use of
actuarial assumptions, in determining benefit payments
in any such optional form of benefits, which are
different from those specified in this subsection.
``(5) Approval of large changes in actuarial assumptions.--
``(A) In general.--No actuarial assumption used to
determine the funding target for a plan to which this
paragraph applies may be changed without the approval
of the Secretary of the Treasury.
``(B) Plans to which paragraph applies.--This
paragraph shall apply to a plan only if--
``(i) the plan is a single-employer plan to
which title IV applies,
``(ii) the aggregate unfunded vested
benefits as of the close of the preceding plan
year (as determined under section
4006(a)(3)(E)(iii)) of such plan and all other
plans maintained by the contributing sponsors
(as defined in section 4001(a)(13)) and members
of such sponsors' controlled groups (as defined
in section 4001(a)(14)) which are covered by
title IV (disregarding plans with no unfunded
vested benefits) exceed $50,000,000, and
``(iii) the change in assumptions
(determined after taking into account any
changes in interest rate and mortality table)
results in a decrease in the funding shortfall
of the plan for the current plan year that
exceeds $50,000,000, or that exceeds $5,000,000
and that is 5 percent or more of the funding
target of the plan before such change.
``(i) Special Rules for At-Risk Plans.--
``(1) Funding target for plans in at-risk status.--
``(A) In general.--In the case of a plan which is
in at-risk status for a plan year, the funding target
of the plan for the plan year shall be equal to the sum
of--
``(i) the present value of all benefits
accrued or earned under the plan as of the
beginning of the plan year, as determined by
using the additional actuarial assumptions
described in subparagraph (B), and
``(ii) in the case of a plan which also has
been in at-risk status for at least 2 of the 4
preceding plan years, a loading factor
determined under subparagraph (C).
``(B) Additional actuarial assumptions.--The
actuarial assumptions described in this subparagraph
are as follows:
``(i) All employees who are not otherwise
assumed to retire as of the valuation date but
who will be eligible to elect benefits during
the plan year and the 10 succeeding plan years
shall be assumed to retire at the earliest
retirement date under the plan but not before
the end of the plan year for which the at-risk
funding target and at-risk target normal cost
are being determined.
``(ii) All employees shall be assumed to
elect the retirement benefit available under
the plan at the assumed retirement age
(determined after application of clause (i))
which would result in the highest present value
of benefits.
``(C) Loading factor.--The loading factor applied
with respect to a plan under this paragraph for any
plan year is the sum of--
``(i) $700, times the number of
participants in the plan, plus
``(ii) 4 percent of the funding target
(determined without regard to this paragraph)
of the plan for the plan year.
``(2) Target normal cost of at-risk plans.--In the case of
a plan which is in at-risk status for a plan year, the target
normal cost of the plan for such plan year shall be equal to
the sum of--
``(A) the present value of all benefits which are
expected to accrue or be earned under the plan during
the plan year, determined using the additional
actuarial assumptions described in paragraph (1)(B),
plus
``(B) in the case of a plan which also has been in
at-risk status for at least 2 of the 4 preceding plan
years, a loading factor equal to 4 percent of the
target normal cost (determined without regard to this
paragraph) of the plan for the plan year.
``(3) Minimum amount.--In no event shall--
``(A) the at-risk funding target be less than the
funding target, as determined without regard to this
subsection, or
``(B) the at-risk target normal cost be less than
the target normal cost, as determined without regard to
this subsection.
``(4) Determination of at-risk status.--For purposes of
this subsection--
``(A) In general.--A plan is in at-risk status for
a plan year if--
``(i) the funding target attainment
percentage for the preceding plan year
(determined under this section without regard
to this subsection) is less than 80 percent,
and
``(ii) the funding target attainment
percentage for the preceding plan year
(determined under this section by using the
additional actuarial assumptions described in
paragraph (1)(B) in computing the funding
target) is less than 70 percent.
``(B) Transition rule.--In the case of plan years
beginning in 2008, 2009, and 2010, subparagraph (A)(i)
shall be applied by substituting the following
percentages for `80 percent':
``(i) 65 percent in the case of 2008.
``(ii) 70 percent in the case of 2009.
``(iii) 75 percent in the case of 2010.
In the case of plan years beginning in 2008, the
funding target attainment percentage for the preceding
plan year under subparagraph (A)(ii) may be determined
using such methods of estimation as the Secretary of
the Treasury may provide.
``(C) Special rule for employees offered early
retirement in 2006.--
``(i) In general.--For purposes of
subparagraph (A)(ii), the additional actuarial
assumptions described in paragraph (1)(B) shall
not be taken into account with respect to any
employee if--
``(I) such employee is employed by
a specified automobile manufacturer,
``(II) such employee is offered a
substantial amount of additional cash
compensation, substantially enhanced
retirement benefits under the plan, or
materially reduced employment duties on
the condition that by a specified date
(not later than December 31, 2010) the
employee retires (as defined under the
terms of the plan),
``(III) such offer is made during
2006 and pursuant to a bona fide
retirement incentive program and
requires, by the terms of the offer,
that such offer can be accepted not
later than a specified date (not later
than December 31, 2006), and
``(IV) such employee does not elect
to accept such offer before the
specified date on which the offer
expires.
``(ii) Specified automobile manufacturer.--
For purposes of clause (i), the term `specified
automobile manufacturer' means--
``(I) any manufacturer of
automobiles, and
``(II) any manufacturer of
automobile parts which supplies such
parts directly to a manufacturer of
automobiles and which, after a
transaction or series of transactions
ending in 1999, ceased to be a member
of a controlled group which included
such manufacturer of automobiles.
``(5) Transition between applicable funding targets and
between applicable target normal costs.--
``(A) In general.--In any case in which a plan
which is in at-risk status for a plan year has been in
such status for a consecutive period of fewer than 5
plan years, the applicable amount of the funding target
and of the target normal cost shall be, in lieu of the
amount determined without regard to this paragraph, the
sum of--
``(i) the amount determined under this
section without regard to this subsection, plus
``(ii) the transition percentage for such
plan year of the excess of the amount
determined under this subsection (without
regard to this paragraph) over the amount
determined under this section without regard to
this subsection.
``(B) Transition percentage.--For purposes of
subparagraph (A), the transition percentage shall be
determined in accordance with the following table:
``If the consecutive number of
years (including the plan year) The transition
the plan is in at-risk status is-- percentage is--
1...................................................... 20
2...................................................... 40
3...................................................... 60
4...................................................... 80.
``(C) Years before effective date.--For purposes of
this paragraph, plan years beginning before 2008 shall
not be taken into account.
``(6) Small plan exception.--If, on each day during the
preceding plan year, a plan had 500 or fewer participants, the
plan shall not be treated as in at-risk status for the plan
year. For purposes of this paragraph, all defined benefit plans
(other than multiemployer plans) maintained by the same
employer (or any member of such employer's controlled group)
shall be treated as 1 plan, but only participants with respect
to such employer or member shall be taken into account and the
rules of subsection (g)(2)(C) shall apply.
``(j) Payment of Minimum Required Contributions.--
``(1) In general.--For purposes of this section, the due
date for any payment of any minimum required contribution for
any plan year shall be 8\1/2\ months after the close of the
plan year.
``(2) Interest.--Any payment required under paragraph (1)
for a plan year that is made on a date other than the valuation
date for such plan year shall be adjusted for interest accruing
for the period between the valuation date and the payment date,
at the effective rate of interest for the plan for such plan
year.
``(3) Accelerated quarterly contribution schedule for
underfunded plans.--
``(A) Failure to timely make required
installment.--In any case in which the plan has a
funding shortfall for the preceding plan year, the
employer maintaining the plan shall make the required
installments under this paragraph and if the employer
fails to pay the full amount of a required installment
for the plan year, then the amount of interest charged
under paragraph (2) on the underpayment for the period
of underpayment shall be determined by using a rate of
interest equal to the rate otherwise used under
paragraph (2) plus 5 percentage points.
``(B) Amount of underpayment, period of
underpayment.--For purposes of subparagraph (A)--
``(i) Amount.--The amount of the
underpayment shall be the excess of--
``(I) the required installment,
over
``(II) the amount (if any) of the
installment contributed to or under the
plan on or before the due date for the
installment.
``(ii) Period of underpayment.--The period
for which any interest is charged under this
paragraph with respect to any portion of the
underpayment shall run from the due date for
the installment to the date on which such
portion is contributed to or under the plan.
``(iii) Order of crediting contributions.--
For purposes of clause (i)(II), contributions
shall be credited against unpaid required
installments in the order in which such
installments are required to be paid.
``(C) Number of required installments; due dates.--
For purposes of this paragraph--
``(i) Payable in 4 installments.--There
shall be 4 required installments for each plan
year.
``(ii) Time for payment of installments.--
The due dates for required installments are set
forth in the following table:
In the case of the following The due date is:
required installment:
1st............................. April 15
2nd............................. July 15
3rd............................. October 15
4th............................. January 15 of the following year.
``(D) Amount of required installment.--For purposes
of this paragraph--
``(i) In general.--The amount of any
required installment shall be 25 percent of the
required annual payment.
``(ii) Required annual payment.--For
purposes of clause (i), the term `required
annual payment' means the lesser of--
``(I) 90 percent of the minimum
required contribution (determined
without regard to this subsection) to
the plan for the plan year under this
section, or
``(II) 100 percent of the minimum
required contribution (determined
without regard to this subsection or to
any waiver under section 302(c)) to the
plan for the preceding plan year.
Subclause (II) shall not apply if the preceding
plan year referred to in such clause was not a
year of 12 months.
``(E) Fiscal years and short years.--
``(i) Fiscal years.--In applying this
paragraph to a plan year beginning on any date
other than January 1, there shall be
substituted for the months specified in this
paragraph, the months which correspond thereto.
``(ii) Short plan year.--This subparagraph
shall be applied to plan years of less than 12
months in accordance with regulations
prescribed by the Secretary of the Treasury.
``(4) Liquidity requirement in connection with quarterly
contributions.--
``(A) In general.--A plan to which this paragraph
applies shall be treated as failing to pay the full
amount of any required installment under paragraph (3)
to the extent that the value of the liquid assets paid
in such installment is less than the liquidity
shortfall (whether or not such liquidity shortfall
exceeds the amount of such installment required to be
paid but for this paragraph).
``(B) Plans to which paragraph applies.--This
paragraph shall apply to a plan (other than a plan
described in subsection (g)(2)(B)) which--
``(i) is required to pay installments under
paragraph (3) for a plan year, and
``(ii) has a liquidity shortfall for any
quarter during such plan year.
``(C) Period of underpayment.--For purposes of
paragraph (3)(A), any portion of an installment that is
treated as not paid under subparagraph (A) shall
continue to be treated as unpaid until the close of the
quarter in which the due date for such installment
occurs.
``(D) Limitation on increase.--If the amount of any
required installment is increased by reason of
subparagraph (A), in no event shall such increase
exceed the amount which, when added to prior
installments for the plan year, is necessary to
increase the funding target attainment percentage of
the plan for the plan year (taking into account the
expected increase in funding target due to benefits
accruing or earned during the plan year) to 100
percent.
``(E) Definitions.--For purposes of this
paragraph--
``(i) Liquidity shortfall.--The term
`liquidity shortfall' means, with respect to
any required installment, an amount equal to
the excess (as of the last day of the quarter
for which such installment is made) of--
``(I) the base amount with respect
to such quarter, over
``(II) the value (as of such last
day) of the plan's liquid assets.
``(ii) Base amount.--
``(I) In general.--The term `base
amount' means, with respect to any
quarter, an amount equal to 3 times the
sum of the adjusted disbursements from
the plan for the 12 months ending on
the last day of such quarter.
``(II) Special rule.--If the amount
determined under subclause (I) exceeds
an amount equal to 2 times the sum of
the adjusted disbursements from the
plan for the 36 months ending on the
last day of the quarter and an enrolled
actuary certifies to the satisfaction
of the Secretary of the Treasury that
such excess is the result of
nonrecurring circumstances, the base
amount with respect to such quarter
shall be determined without regard to
amounts related to those nonrecurring
circumstances.
``(iii) Disbursements from the plan.--The
term `disbursements from the plan' means all
disbursements from the trust, including
purchases of annuities, payments of single sums
and other benefits, and administrative
expenses.
``(iv) Adjusted disbursements.--The term
`adjusted disbursements' means disbursements
from the plan reduced by the product of--
``(I) the plan's funding target
attainment percentage for the plan
year, and
``(II) the sum of the purchases of
annuities, payments of single sums, and
such other disbursements as the
Secretary of the Treasury shall provide
in regulations.
``(v) Liquid assets.--The term `liquid
assets' means cash, marketable securities, and
such other assets as specified by the Secretary
of the Treasury in regulations.
``(vi) Quarter.--The term `quarter' means,
with respect to any required installment, the
3-month period preceding the month in which the
due date for such installment occurs.
``(F) Regulations.--The Secretary of the Treasury
may prescribe such regulations as are necessary to
carry out this paragraph.
``(k) Imposition of Lien Where Failure to Make Required
Contributions.--
``(1) In general.--In the case of a plan to which this
subsection applies (as provided under paragraph (2)), if--
``(A) any person fails to make a contribution
payment required by section 302 and this section before
the due date for such payment, and
``(B) the unpaid balance of such payment (including
interest), when added to the aggregate unpaid balance
of all preceding such payments for which payment was
not made before the due date (including interest),
exceeds $1,000,000,
then there shall be a lien in favor of the plan in the amount
determined under paragraph (3) upon all property and rights to
property, whether real or personal, belonging to such person
and any other person who is a member of the same controlled
group of which such person is a member.
``(2) Plans to which subsection applies.--This subsection
shall apply to a single-employer plan covered under section
4021 for any plan year for which the funding target attainment
percentage (as defined in subsection (d)(2)) of such plan is
less than 100 percent.
``(3) Amount of lien.--For purposes of paragraph (1), the
amount of the lien shall be equal to the aggregate unpaid
balance of contribution payments required under this section
and section 302 for which payment has not been made before the
due date.
``(4) Notice of failure; lien.--
``(A) Notice of failure.--A person committing a
failure described in paragraph (1) shall notify the
Pension Benefit Guaranty Corporation of such failure
within 10 days of the due date for the required
contribution payment.
``(B) Period of lien.--The lien imposed by
paragraph (1) shall arise on the due date for the
required contribution payment and shall continue until
the last day of the first plan year in which the plan
ceases to be described in paragraph (1)(B). Such lien
shall continue to run without regard to whether such
plan continues to be described in paragraph (2) during
the period referred to in the preceding sentence.
``(C) Certain rules to apply.--Any amount with
respect to which a lien is imposed under paragraph (1)
shall be treated as taxes due and owing the United
States and rules similar to the rules of subsections
(c), (d), and (e) of section 4068 shall apply with
respect to a lien imposed by subsection (a) and the
amount with respect to such lien.
``(5) Enforcement.--Any lien created under paragraph (1)
may be perfected and enforced only by the Pension Benefit
Guaranty Corporation, or at the direction of the Pension
Benefit Guaranty Corporation, by the contributing sponsor (or
any member of the controlled group of the contributing
sponsor).
``(6) Definitions.--For purposes of this subsection--
``(A) Contribution payment.--The term `contribution
payment' means, in connection with a plan, a
contribution payment required to be made to the plan,
including any required installment under paragraphs (3)
and (4) of subsection (j).
``(B) Due date; required installment.--The terms
`due date' and `required installment' have the meanings
given such terms by subsection (j), except that in the
case of a payment other than a required installment,
the due date shall be the date such payment is required
to be made under section 303.
``(C) Controlled group.--The term `controlled
group' means any group treated as a single employer
under subsections (b), (c), (m), and (o) of section 414
of the Internal Revenue Code of 1986.
``(l) Qualified Transfers to Health Benefit Accounts.--In the case
of a qualified transfer (as defined in section 420 of the Internal
Revenue Code of 1986), any assets so transferred shall not, for
purposes of this section, be treated as assets in the plan.''.
(b) Clerical Amendment.--The table of sections in section 1 of such
Act (as amended by section 101) is amended by inserting after the item
relating to section 302 the following new item:
``Sec. 303. Minimum funding standards for single-employer defined
benefit pension plans.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning after 2007.
SEC. 103. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.
(a) Funding-Based Limits on Benefits and Benefit Accruals Under
Single-Employer Plans.--Section 206 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1056) is amended by adding at the end
the following new subsection:
``(g) Funding-Based Limits on Benefits and Benefit Accruals Under
Single-Employer Plans.--
``(1) Funding-based limitation on shutdown benefits and
other unpredictable contingent event benefits under single-
employer plans.--
``(A) In general.--If a participant of a defined
benefit plan which is a single-employer plan is
entitled to an unpredictable contingent event benefit
payable with respect to any event occurring during any
plan year, the plan shall provide that such benefit may
not be provided if the adjusted funding target
attainment percentage for such plan year--
``(i) is less than 60 percent, or
``(ii) would be less than 60 percent taking
into account such occurrence.
``(B) Exemption.--Subparagraph (A) shall cease to
apply with respect to any plan year, effective as of
the first day of the plan year, upon payment by the
plan sponsor of a contribution (in addition to any
minimum required contribution under section 303) equal
to--
``(i) in the case of subparagraph (A)(i),
the amount of the increase in the funding
target of the plan (under section 303) for the
plan year attributable to the occurrence
referred to in subparagraph (A), and
``(ii) in the case of subparagraph (A)(ii),
the amount sufficient to result in a funding
target attainment percentage of 60 percent.
``(C) Unpredictable contingent event.--For purposes
of this paragraph, the term `unpredictable contingent
event benefit' means any benefit payable solely by
reason of--
``(i) a plant shutdown (or similar event,
as determined by the Secretary of the
Treasury), or
``(ii) an event other than the attainment
of any age, performance of any service, receipt
or derivation of any compensation, or
occurrence of death or disability.
``(2) Limitations on plan amendments increasing liability
for benefits.--
``(A) In general.--No amendment to a defined
benefit plan which is a single-employer plan which has
the effect of increasing liabilities of the plan by
reason of increases in benefits, establishment of new
benefits, changing the rate of benefit accrual, or
changing the rate at which benefits become
nonforfeitable may take effect during any plan year if
the adjusted funding target attainment percentage for
such plan year is--
``(i) less than 80 percent, or
``(ii) would be less than 80 percent taking
into account such amendment.
``(B) Exemption.--Subparagraph (A) shall cease to
apply with respect to any plan year, effective as of
the first day of the plan year (or if later, the
effective date of the amendment), upon payment by the
plan sponsor of a contribution (in addition to any
minimum required contribution under section 303) equal
to--
``(i) in the case of subparagraph (A)(i),
the amount of the increase in the funding
target of the plan (under section 303) for the
plan year attributable to the amendment, and
``(ii) in the case of subparagraph (A)(ii),
the amount sufficient to result in an adjusted
funding target attainment percentage of 80
percent.
``(C) Exception for certain benefit increases.--
Subparagraph (A) shall not apply to any amendment which
provides for an increase in benefits under a formula
which is not based on a participant's compensation, but
only if the rate of such increase is not in excess of
the contemporaneous rate of increase in average wages
of participants covered by the amendment.
``(3) Limitations on accelerated benefit distributions.--
``(A) Funding percentage less than 60 percent.--A
defined benefit plan which is a single-employer plan
shall provide that, in any case in which the plan's
adjusted funding target attainment percentage for a
plan year is less than 60 percent, the plan may not pay
any prohibited payment after the valuation date for the
plan year.
``(B) Bankruptcy.--A defined benefit plan which is
a single-employer plan shall provide that, during any
period in which the plan sponsor is a debtor in a case
under title 11, United States Code, or similar Federal
or State law, the plan may not pay any prohibited
payment. The preceding sentence shall not apply on or
after the date on which the enrolled actuary of the
plan certifies that the adjusted funding target
attainment percentage of such plan is not less than 100
percent.
``(C) Limited payment if percentage at least 60
percent but less than 80 percent.--
``(i) In general.--A defined benefit plan
which is a single-employer plan shall provide
that, in any case in which the plan's adjusted
funding target attainment percentage for a plan
year is 60 percent or greater but less than 80
percent, the plan may not pay any prohibited
payment after the valuation date for the plan
year to the extent the amount of the payment
exceeds the lesser of--
``(I) 50 percent of the amount of
the payment which could be made without
regard to this subsection, or
``(II) the present value
(determined under guidance prescribed
by the Pension Benefit Guaranty
Corporation, using the interest and
mortality assumptions under section
205(g)) of the maximum guarantee with
respect to the participant under
section 4022.
``(ii) One-time application.--
``(I) In general.--The plan shall
also provide that only 1 prohibited
payment meeting the requirements of
clause (i) may be made with respect to
any participant during any period of
consecutive plan years to which the
limitations under either subparagraph
(A) or (B) or this subparagraph
applies.
``(II) Treatment of
beneficiaries.--For purposes of this
clause, a participant and any
beneficiary on his behalf (including an
alternate payee, as defined in section
206(d)(3)(K)) shall be treated as 1
participant. If the accrued benefit of
a participant is allocated to such an
alternate payee and 1 or more other
persons, the amount under clause (i)
shall be allocated among such persons
in the same manner as the accrued
benefit is allocated unless the
qualified domestic relations order (as
defined in section 206(d)(3)(B)(i))
provides otherwise.
``(D) Exception.--This paragraph shall not apply to
any plan for any plan year if the terms of such plan
(as in effect for the period beginning on September 1,
2005, and ending with such plan year) provide for no
benefit accruals with respect to any participant during
such period.
``(E) Prohibited payment.--For purpose of this
paragraph, the term `prohibited payment' means--
``(i) any payment, in excess of the monthly
amount paid under a single life annuity (plus
any social security supplements described in
the last sentence of section 204(b)(1)(G)), to
a participant or beneficiary whose annuity
starting date (as defined in section 205(h)(2))
occurs during any period a limitation under
subparagraph (A) or (B) is in effect,
``(ii) any payment for the purchase of an
irrevocable commitment from an insurer to pay
benefits, and
``(iii) any other payment specified by the
Secretary of the Treasury by regulations.
``(4) Limitation on benefit accruals for plans with severe
funding shortfalls.--
``(A) In general.--A defined benefit plan which is
a single-employer plan shall provide that, in any case
in which the plan's adjusted funding target attainment
percentage for a plan year is less than 60 percent,
benefit accruals under the plan shall cease as of the
valuation date for the plan year.
``(B) Exemption.--Subparagraph (A) shall cease to
apply with respect to any plan year, effective as of
the first day of the plan year, upon payment by the
plan sponsor of a contribution (in addition to any
minimum required contribution under section 303) equal
to the amount sufficient to result in an adjusted
funding target attainment percentage of 60 percent.
``(5) Rules relating to contributions required to avoid
benefit limitations.--
``(A) Security may be provided.--
``(i) In general.--For purposes of this
subsection, the adjusted funding target
attainment percentage shall be determined by
treating as an asset of the plan any security
provided by a plan sponsor in a form meeting
the requirements of clause (ii).
``(ii) Form of security.--The security
required under clause (i) shall consist of--
``(I) a bond issued by a corporate
surety company that is an acceptable
surety for purposes of section 412 of
this Act,
``(II) cash, or United States
obligations which mature in 3 years or
less, held in escrow by a bank or
similar financial institution, or
``(III) such other form of security
as is satisfactory to the Secretary of
the Treasury and the parties involved.
``(iii) Enforcement.--Any security provided
under clause (i) may be perfected and enforced
at any time after the earlier of--
``(I) the date on which the plan
terminates,
``(II) if there is a failure to
make a payment of the minimum required
contribution for any plan year
beginning after the security is
provided, the due date for the payment
under section 303(j), or
``(III) if the adjusted funding
target attainment percentage is less
than 60 percent for a consecutive
period of 7 years, the valuation date
for the last year in the period.
``(iv) Release of security.--The security
shall be released (and any amounts thereunder
shall be refunded together with any interest
accrued thereon) at such time as the Secretary
of the Treasury may prescribe in regulations,
including regulations for partial releases of
the security by reason of increases in the
funding target attainment percentage.
``(B) Prefunding balance or funding standard
carryover balance may not be used.--No prefunding
balance or funding standard carryover balance under
section 303(f) may be used under paragraph (1), (2), or
(4) to satisfy any payment an employer may make under
any such paragraph to avoid or terminate the
application of any limitation under such paragraph.
``(C) Deemed reduction of funding balances.--
``(i) In general.--Subject to clause (iii),
in any case in which a benefit limitation under
paragraph (1), (2), (3), or (4) would (but for
this subparagraph and determined without regard
to paragraph (1)(B), (2)(B), or (4)(B)) apply
to such plan for the plan year, the plan
sponsor of such plan shall be treated for
purposes of this Act as having made an election
under section 303(f) to reduce the prefunding
balance or funding standard carryover balance
by such amount as is necessary for such benefit
limitation to not apply to the plan for such
plan year.
``(ii) Exception for insufficient funding
balances.--Clause (i) shall not apply with
respect to a benefit limitation for any plan
year if the application of clause (i) would not
result in the benefit limitation not applying
for such plan year.
``(iii) Restrictions of certain rules to
collectively bargained plans.--With respect to
any benefit limitation under paragraph (1),
(2), or (4), clause (i) shall only apply in the
case of a plan maintained pursuant to 1 or more
collective bargaining agreements between
employee representatives and 1 or more
employers.
``(6) New plans.--Paragraphs (1), (2) and (4) shall not
apply to a plan for the first 5 plan years of the plan. For
purposes of this paragraph, the reference in this paragraph to
a plan shall include a reference to any predecessor plan.
``(7) Presumed underfunding for purposes of benefit
limitations.--
``(A) Presumption of continued underfunding.--In
any case in which a benefit limitation under paragraph
(1), (2), (3), or (4) has been applied to a plan with
respect to the plan year preceding the current plan
year, the adjusted funding target attainment percentage
of the plan for the current plan year shall be presumed
to be equal to the adjusted funding target attainment
percentage of the plan for the preceding plan year
until the enrolled actuary of the plan certifies the
actual adjusted funding target attainment percentage of
the plan for the current plan year.
``(B) Presumption of underfunding after 10th
month.--In any case in which no certification of the
adjusted funding target attainment percentage for the
current plan year is made with respect to the plan
before the first day of the 10th month of such year,
for purposes of paragraphs (1), (2), (3), and (4), such
first day shall be deemed, for purposes of such
paragraph, to be the valuation date of the plan for the
current plan year and the plan's adjusted funding
target attainment percentage shall be conclusively
presumed to be less than 60 percent as of such first
day.
``(C) Presumption of underfunding after 4th month
for nearly underfunded plans.--In any case in which--
``(i) a benefit limitation under paragraph
(1), (2), (3), or (4) did not apply to a plan
with respect to the plan year preceding the
current plan year, but the adjusted funding
target attainment percentage of the plan for
such preceding plan year was not more than 10
percentage points greater than the percentage
which would have caused such paragraph to apply
to the plan with respect to such preceding plan
year, and
``(ii) as of the first day of the 4th month
of the current plan year, the enrolled actuary
of the plan has not certified the actual
adjusted funding target attainment percentage
of the plan for the current plan year,
until the enrolled actuary so certifies, such first day
shall be deemed, for purposes of such paragraph, to be
the valuation date of the plan for the current plan
year and the adjusted funding target attainment
percentage of the plan as of such first day shall, for
purposes of such paragraph, be presumed to be equal to
10 percentage points less than the adjusted funding
target attainment percentage of the plan for such
preceding plan year.
``(8) Treatment of plan as of close of prohibited or
cessation period.--For purposes of applying this part--
``(A) Operation of plan after period.--Unless the
plan provides otherwise, payments and accruals will
resume effective as of the day following the close of
the period for which any limitation of payment or
accrual of benefits under paragraph (3) or (4) applies.
``(B) Treatment of affected benefits.--Nothing in
this paragraph shall be construed as affecting the
plan's treatment of benefits which would have been paid
or accrued but for this subsection.
``(9) Terms relating to funding target attainment
percentage.--For purposes of this subsection--
``(A) In general.--The term `funding target
attainment percentage' has the same meaning given such
term by section 303(d)(2).
``(B) Adjusted funding target attainment
percentage.--The term `adjusted funding target
attainment percentage' means the funding target
attainment percentage which is determined under
subparagraph (A) by increasing each of the amounts
under subparagraphs (A) and (B) of section 303(d)(2) by
the aggregate amount of purchases of annuities for
employees other than highly compensated employees (as
defined in section 414(q) of the Internal Revenue Code
of 1986) which were made by the plan during the
preceding 2 plan years.
``(C) Application to plans which are fully funded
without regard to reductions for funding balances.--
``(i) In general.--In the case of a plan
for any plan year, if the funding target
attainment percentage is 100 percent or more
(determined without regard to this subparagraph
and without regard to the reduction in the
value of assets under section 303(f)(4)), the
funding target attainment percentage for
purposes of subparagraphs (A) and (B) shall be
determined without regard to such reduction.
``(ii) Transition rule.--Clause (i) shall
be applied to plan years beginning after 2007
and before 2011 by substituting for `100
percent' the applicable percentage determined
in accordance with the following table:
``In the case of a plan year The applicable
beginning in calendar year: percentage is
2008................................................... 92
2009................................................... 94
2010................................................... 96.
``(iii) Limitation.--Clause (ii) shall not
apply with respect to any plan year after 2008
unless the funding target attainment percentage
(determined without regard to this
subparagraph) of the plan for each preceding
plan year after 2007 was not less than the
applicable percentage with respect to such
preceding plan year determined under clause
(ii).
``(10) Special rule for 2008.--For purposes of this
subsection, in the case of plan years beginning in 2008, the
funding target attainment percentage for the preceding plan
year may be determined using such methods of estimation as the
Secretary of the Treasury may provide.''.
(b) Notice Requirement.--
(1) In general.--Section 101 of such Act (29 U.S.C. 1021)
is amended--
(A) by redesignating subsection (j) as subsection
(k); and
(B) by inserting after subsection (i) the following
new subsection:
``(j) Notice of Funding-Based Limitation on Certain Forms of
Distribution.--The plan administrator of a single-employer plan shall
provide a written notice to plan participants and beneficiaries within
30 days--
``(1) after the plan has become subject to a restriction
described in paragraph (1) or (3) of section 206(g)),
``(2) in the case of a plan to which section 206(g)(4)
applies, after the valuation date for the plan year described
in section 206(g)(4)(B) for which the plan's adjusted funding
target attainment percentage for the plan year is less than 60
percent (or, if earlier, the date such percentage is deemed to
be less than 60 percent under section 206(g)(7)), and
``(3) at such other time as may be determined by the
Secretary of the Treasury.
The notice required to be provided under this subsection shall be in
writing, except that such notice may be in electronic or other form to
the extent that such form is reasonably accessible to the recipient.''.
(2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended by striking ``section 302(b)(7)(F)(iv)''
and inserting ``section 101(j) or 302(b)(7)(F)(iv)''.
(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
(2) Collective bargaining exception.--In the case of a plan
maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more
employers ratified before January 1, 2008, the amendments made
by this section shall not apply to plan years beginning before
the earlier of--
(A) the later of--
(i) the date on which the last collective
bargaining agreement relating to the plan
terminates (determined without regard to any
extension thereof agreed to after the date of
the enactment of this Act), or
(ii) the first day of the first plan year
to which the amendments made by this subsection
would (but for this subparagraph) apply, or
(B) January 1, 2010.
For purposes of subparagraph (A)(i), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any requirement
added by this section shall not be treated as a termination of
such collective bargaining agreement.
SEC. 104. SPECIAL RULES FOR MULTIPLE EMPLOYER PLANS OF CERTAIN
COOPERATIVES.
(a) General Rule.--Except as provided in this section, if a plan in
existence on July 26, 2005, was an eligible cooperative plan for its
plan year which includes such date, the amendments made by this
subtitle and subtitle B shall not apply to plan years beginning before
the earlier of--
(1) the first plan year for which the plan ceases to be an
eligible cooperative plan, or
(2) January 1, 2017.
(b) Interest Rate.--In applying section 302(b)(5)(B) of the
Employee Retirement Income Security Act of 1974 and section
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before
the amendments made by this subtitle and subtitle B) to an eligible
cooperative plan for plan years beginning after December 31, 2007, and
before the first plan year to which such amendments apply, the third
segment rate determined under section 303(h)(2)(C)(iii) of such Act and
section 430(h)(2)(C)(iii) of such Code (as added by such amendments)
shall be used in lieu of the interest rate otherwise used.
(c) Eligible Cooperative Plan Defined.--For purposes of this
section, a plan shall be treated as an eligible cooperative plan for a
plan year if the plan is maintained by more than 1 employer and at
least 85 percent of the employers are--
(1) rural cooperatives (as defined in section 401(k)(7)(B)
of such Code without regard to clause (iv) thereof), or
(2) organizations which are--
(A) cooperative organizations described in section
1381(a) of such Code which are more than 50-percent
owned by agricultural producers or by cooperatives
owned by agricultural producers, or
(B) more than 50-percent owned, or controlled by,
one or more cooperative organizations described in
subparagraph (A).
A plan shall also be treated as an eligible cooperative plan for any
plan year for which it is described in section 210(a) of the Employee
Retirement Income Security Act of 1974 and is maintained by a rural
telephone cooperative association described in section 3(40)(B)(v) of
such Act.
SEC. 105. TEMPORARY RELIEF FOR CERTAIN PBGC SETTLEMENT PLANS.
(a) General Rule.--Except as provided in this section, if a plan in
existence on July 26, 2005, was a PBGC settlement plan as of such date,
the amendments made by this subtitle and subtitle B shall not apply to
plan years beginning before January 1, 2014.
(b) Interest Rate.--In applying section 302(b)(5)(B) of the
Employee Retirement Income Security Act of 1974 and section
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before
the amendments made by this subtitle and subtitle B), to a PBGC
settlement plan for plan years beginning after December 31, 2007, and
before January 1, 2014, the third segment rate determined under section
303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii) of such
Code (as added by such amendments) shall be used in lieu of the
interest rate otherwise used.
(c) PBGC Settlement Plan.--For purposes of this section, the term
``PBGC settlement plan'' means a defined benefit plan (other than a
multiemployer plan) to which section 302 of such Act and section 412 of
such Code apply and--
(1) which was sponsored by an employer which was in
bankruptcy, giving rise to a claim by the Pension Benefit
Guaranty Corporation of not greater than $150,000,000, and the
sponsorship of which was assumed by another employer that was
not a member of the same controlled group as the bankrupt
sponsor and the claim of the Pension Benefit Guaranty
Corporation was settled or withdrawn in connection with the
assumption of the sponsorship, or
(2) which, by agreement with the Pension Benefit Guaranty
Corporation, was spun off from a plan subsequently terminated
by such Corporation under section 4042 of the Employee
Retirement Income Security Act of 1974.
SEC. 106. SPECIAL RULES FOR PLANS OF CERTAIN GOVERNMENT CONTRACTORS.
(a) General Rule.--Except as provided in this section, if a plan is
an eligible government contractor plan, this subtitle and subtitle B
shall not apply to plan years beginning before the earliest of--
(1) the first plan year for which the plan ceases to be an
eligible government contractor plan,
(2) the effective date of the Cost Accounting Standards
Pension Harmonization Rule, or
(3) January 1, 2011.
(b) Interest Rate.--In applying section 302(b)(5)(B) of the
Employee Retirement Income Security Act of 1974 and section
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before
the amendments made by this subtitle and subtitle B) to an eligible
government contractor plan for plan years beginning after December 31,
2007, and before the first plan year to which such amendments apply,
the third segment rate determined under section 303(h)(2)(C)(iii) of
such Act and section 430(h)(2)(C)(iii) of such Code (as added by such
amendments) shall be used in lieu of the interest rate otherwise used.
(c) Eligible Government Contractor Plan Defined.--For purposes of
this section, a plan shall be treated as an eligible government
contractor plan if it is maintained by a corporation or a member of the
same affiliated group (as defined by section 1504(a) of the Internal
Revenue Code of 1986), whose primary source of revenue is derived from
business performed under contracts with the United States that are
subject to the Federal Acquisition Regulations (Chapter 1 of Title 48,
C.F.R.) and that are also subject to the Defense Federal Acquisition
Regulation Supplement (Chapter 2 of Title 48, C.F.R.), and whose
revenue derived from such business in the previous fiscal year exceeded
$5,000,000,000, and whose pension plan costs that are assignable under
those contracts are subject to sections 412 and 413 of the Cost
Accounting Standards (48 C.F.R. 9904.412 and 9904.413).
(d) Cost Accounting Standards Pension Harmonization Rule.--The Cost
Accounting Standards Board shall review and revise sections 412 and 413
of the Cost Accounting Standards (48 C.F.R. 9904.412 and 9904.413) to
harmonize the minimum required contribution under the Employee
Retirement Income Security Act of 1974 of eligible government
contractor plans and government reimbursable pension plan costs not
later than January 1, 2010. Any final rule adopted by the Cost
Accounting Standards Board shall be deemed the Cost Accounting
Standards Pension Harmonization Rule.
SEC. 107. TECHNICAL AND CONFORMING AMENDMENTS.
(a) Miscellaneous Amendments to Title I.--Subtitle B of title I of
such Act (29 U.S.C. 1021 et seq.) is amended--
(1) in section 101(d)(3), by striking ``section 302(e)''
and inserting ``section 303(j)'';
(2) in section 103(d)(8)(B), by striking ``the requirements
of section 302(c)(3)'' and inserting ``the applicable
requirements of sections 303(h) and 304(c)(3)'';
(3) in section 103(d), by striking paragraph (11) and
inserting the following:
``(11) If the current value of the assets of the plan is
less than 70 percent of--
``(A) in the case of a single-employer plan, the
funding target (as defined in section 303(d)(1)) of the
plan, or
``(B) in the case of a multiemployer plan, the
current liability (as defined in section 304(c)(6)(D))
under the plan,
the percentage which such value is of the amount described in
subparagraph (A) or (B).'';
(4) in section 203(a)(3)(C), by striking ``section
302(c)(8)'' and inserting ``section 302(d)(2)'';
(5) in section 204(g)(1), by striking ``section 302(c)(8)''
and inserting ``section 302(d)(2)'';
(6) in section 204(i)(2)(B), by striking ``section
302(c)(8)'' and inserting ``section 302(d)(2)'';
(7) in section 204(i)(3), by striking ``funded current
liability percentage (within the meaning of section 302(d)(8)
of this Act)'' and inserting ``funding target attainment
percentage (as defined in section 303(d)(2))'';
(8) in section 204(i)(4), by striking ``section
302(c)(11)(A), without regard to section 302(c)(11)(B)'' and
inserting ``section 302(b)(1), without regard to section
302(b)(2)'';
(9) in section 206(e)(1), by striking ``section 302(d)''
and inserting ``section 303(j)(4)'', and by striking ``section
302(e)(5)'' and inserting ``section 303(j)(4)(E)(i)'';
(10) in section 206(e)(3), by striking ``section 302(e) by
reason of paragraph (5)(A) thereof'' and inserting ``section
303(j)(3) by reason of section 303(j)(4)(A)''; and
(11) in sections 101(e)(3), 403(c)(1), and 408(b)(13), by
striking ``American Jobs Creation Act of 2004'' and inserting
``Pension Protection Act of 2006''.
(b) Miscellaneous Amendments to Title IV.--Title IV of such Act is
amended--
(1) in section 4001(a)(13) (29 U.S.C. 1301(a)(13)), by
striking ``302(c)(11)(A)'' and inserting ``302(b)(1)'', by
striking ``412(c)(11)(A)'' and inserting ``412(b)(1)'', by
striking ``302(c)(11)(B)'' and inserting ``302(b)(2)'', and by
striking ``412(c)(11)(B)'' and inserting ``412(b)(2)'';
(2) in section 4003(e)(1) (29 U.S.C. 1303(e)(1)), by
striking ``302(f)(1)(A) and (B)'' and inserting ``303(k)(1)(A)
and (B)'', and by striking ``412(n)(1)(A) and (B)'' and
inserting ``430(k)(1)(A) and (B)'';
(3) in section 4010(b)(2) (29 U.S.C. 1310(b)(2)), by
striking ``302(f)(1)(A) and (B)'' and inserting ``303(k)(1)(A)
and (B)'', and by striking ``412(n)(1)(A) and (B)'' and
inserting ``430(k)(1)(A) and (B)'';
(4) in section 4062(c) (29 U.S.C. 1362(c)), by striking
paragraphs (1), (2), and (3) and inserting the following:
``(1) the sum of the shortfall amortization charge (within
the meaning of section 303(c)(1) of this Act and 430(d)(1) of
the Internal Revenue Code of 1986) with respect to the plan (if
any) for the plan year in which the termination date occurs,
plus the aggregate total of shortfall amortization installments
(if any) determined for succeeding plan years under section
303(c)(2) of this Act and section 430(d)(2) of such Code
(which, for purposes of this subparagraph, shall include any
increase in such sum which would result if all applications for
waivers of the minimum funding standard under section 302(c) of
this Act and section 412(c) of such Code which are pending with
respect to such plan were denied and if no additional
contributions (other than those already made by the termination
date) were made for the plan year in which the termination date
occurs or for any previous plan year), and
``(2) the sum of the waiver amortization charge (within the
meaning of section 303(e)(1) of this Act and 430(e)(1) of the
Internal Revenue Code of 1986) with respect to the plan (if
any) for the plan year in which the termination date occurs,
plus the aggregate total of waiver amortization installments
(if any) determined for succeeding plan years under section
303(e)(2) of this Act and section 430(e)(2) of such Code,'';
(5) in section 4071 (29 U.S.C. 1371), by striking
``302(f)(4)'' and inserting ``303(k)(4)'';
(6) in section 4243(a)(1)(B) (29 U.S.C. 1423(a)(1)(B)), by
striking ``302(a)'' and inserting ``304(a)'', and, in clause
(i), by striking ``302(a)'' and inserting ``304(a)'';
(7) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)), by
striking ``303(a)'' and inserting ``302(c)'';
(8) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)), by
striking ``303(c)'' and inserting ``302(c)(3)''; and
(9) in section 4243(g) (29 U.S.C. 1423(g)), by striking
``302(c)(3)'' and inserting ``304(c)(3)''.
(c) Amendments to Reorganization Plan No. 4 of 1978.--Section
106(b)(ii) of Reorganization Plan No. 4 of 1978 (ratified and affirmed
as law by Public Law 98-532 (98 Stat. 2705)) is amended by striking
``302(c)(8)'' and inserting ``302(d)(2)'', by striking ``304(a) and
(b)(2)(A)'' and inserting ``304(d)(1), (d)(2), and (e)(2)(A)'', and by
striking ``412(c)(8), (e), and (f)(2)(A)'' and inserting ``412(c)(2)
and 431(d)(1), (d)(2), and (e)(2)(A)''.
(d) Repeal of Expired Authority for Temporary Variances.--Section
207 of such Act (29 U.S.C. 1057) is repealed.
(e) Effective Date.--The amendments made by this section shall
apply to plan years beginning after 2007.
Subtitle B--Amendments to Internal Revenue Code of 1986
SEC. 111. MINIMUM FUNDING STANDARDS.
(a) New Minimum Funding Standards.--Section 412 of the Internal
Revenue Code of 1986 (relating to minimum funding standards) is amended
to read as follows:
``SEC. 412. MINIMUM FUNDING STANDARDS.
``(a) Requirement to Meet Minimum Funding Standard.--
``(1) In general.--A plan to which this section applies
shall satisfy the minimum funding standard applicable to the
plan for any plan year.
``(2) Minimum funding standard.--For purposes of paragraph
(1), a plan shall be treated as satisfying the minimum funding
standard for a plan year if--
``(A) in the case of a defined benefit plan which
is not a multiemployer plan, the employer makes
contributions to or under the plan for the plan year
which, in the aggregate, are not less than the minimum
required contribution determined under section 430 for
the plan for the plan year,
``(B) in the case of a money purchase plan which is
not a multiemployer plan, the employer makes
contributions to or under the plan for the plan year
which are required under the terms of the plan, and
``(C) in the case of a multiemployer plan, the
employers make contributions to or under the plan for
any plan year which, in the aggregate, are sufficient
to ensure that the plan does not have an accumulated
funding deficiency under section 431 as of the end of
the plan year.
``(b) Liability for Contributions.--
``(1) In general.--Except as provided in paragraph (2), the
amount of any contribution required by this section (including
any required installments under paragraphs (3) and (4) of
section 430(j)) shall be paid by the employer responsible for
making contributions to or under the plan.
``(2) Joint and several liability where employer member of
controlled group.--If the employer referred to in paragraph (1)
is a member of a controlled group, each member of such group
shall be jointly and severally liable for payment of such
contributions.
``(c) Variance From Minimum Funding Standards.--
``(1) Waiver in case of business hardship.--
``(A) In general.--If--
``(i) an employer is (or in the case of a
multiemployer plan, 10 percent or more of the
number of employers contributing to or under
the plan is) unable to satisfy the minimum
funding standard for a plan year without
temporary substantial business hardship
(substantial business hardship in the case of a
multiemployer plan), and
``(ii) application of the standard would be
adverse to the interests of plan participants
in the aggregate,
the Secretary may, subject to subparagraph (C), waive
the requirements of subsection (a) for such year with
respect to all or any portion of the minimum funding
standard. The Secretary shall not waive the minimum
funding standard with respect to a plan for more than 3
of any 15 (5 of any 15 in the case of a multiemployer
plan) consecutive plan years
``(B) Effects of waiver.--If a waiver is granted
under subparagraph (A) for any plan year--
``(i) in the case of a defined benefit plan
which is not a multiemployer plan, the minimum
required contribution under section 430 for the
plan year shall be reduced by the amount of the
waived funding deficiency and such amount shall
be amortized as required under section 430(e),
and
``(ii) in the case of a multiemployer plan,
the funding standard account shall be credited
under section 431(b)(3)(C) with the amount of
the waived funding deficiency and such amount
shall be amortized as required under section
431(b)(2)(C).
``(C) Waiver of amortized portion not allowed.--The
Secretary may not waive under subparagraph (A) any
portion of the minimum funding standard under
subsection (a) for a plan year which is attributable to
any waived funding deficiency for any preceding plan
year.
``(2) Determination of business hardship.--For purposes of
this subsection, the factors taken into account in determining
temporary substantial business hardship (substantial business
hardship in the case of a multiemployer plan) shall include
(but shall not be limited to) whether or not--
``(A) the employer is operating at an economic
loss,
``(B) there is substantial unemployment or
underemployment in the trade or business and in the
industry concerned,
``(C) the sales and profits of the industry
concerned are depressed or declining, and
``(D) it is reasonable to expect that the plan will
be continued only if the waiver is granted.
``(3) Waived funding deficiency.--For purposes of this
section and part III of this subchapter, the term `waived
funding deficiency' means the portion of the minimum funding
standard under subsection (a) (determined without regard to the
waiver) for a plan year waived by the Secretary and not
satisfied by employer contributions.
``(4) Security for waivers for single-employer plans,
consultations.--
``(A) Security may be required.--
``(i) In general.--Except as provided in
subparagraph (C), the Secretary may require an
employer maintaining a defined benefit plan
which is a single-employer plan (within the
meaning of section 4001(a)(15) of the Employee
Retirement Income Security Act of 1974) to
provide security to such plan as a condition
for granting or modifying a waiver under
paragraph (1).
``(ii) Special rules.--Any security
provided under clause (i) may be perfected and
enforced only by the Pension Benefit Guaranty
Corporation, or at the direction of the
Corporation, by a contributing sponsor (within
the meaning of section 4001(a)(13) of the
Employee Retirement Income Security Act of
1974), or a member of such sponsor's controlled
group (within the meaning of section
4001(a)(14) of such Act).
``(B) Consultation with the pension benefit
guaranty corporation.--Except as provided in
subparagraph (C), the Secretary shall, before granting
or modifying a waiver under this subsection with
respect to a plan described in subparagraph (A)(i)--
``(i) provide the Pension Benefit Guaranty
Corporation with--
``(I) notice of the completed
application for any waiver or
modification, and
``(II) an opportunity to comment on
such application within 30 days after
receipt of such notice, and
``(ii) consider--
``(I) any comments of the
Corporation under clause (i)(II), and
``(II) any views of any employee
organization (within the meaning of
section 3(4) of the Employee Retirement
Income Security Act of 1974)
representing participants in the plan
which are submitted in writing to the
Secretary in connection with such
application.
Information provided to the Corporation under this
subparagraph shall be considered tax return information
and subject to the safeguarding and reporting
requirements of section 6103(p).
``(C) Exception for certain waivers.--
``(i) In general.--The preceding provisions
of this paragraph shall not apply to any plan
with respect to which the sum of--
``(I) the aggregate unpaid minimum
required contributions (within the
meaning of section 4971(c)(4)) for the
plan year and all preceding plan years,
and
``(II) the present value of all
waiver amortization installments
determined for the plan year and
succeeding plan years under section
430(e)(2),
is less than $1,000,000.
``(ii) Treatment of waivers for which
applications are pending.--The amount described
in clause (i)(I) shall include any increase in
such amount which would result if all
applications for waivers of the minimum funding
standard under this subsection which are
pending with respect to such plan were denied.
``(5) Special rules for single-employer plans.--
``(A) Application must be submitted before date
2\1/2\ months after close of year.--In the case of a
defined benefit plan which is not a multiemployer plan,
no waiver may be granted under this subsection with
respect to any plan for any plan year unless an
application therefor is submitted to the Secretary not
later than the 15th day of the 3rd month beginning
after the close of such plan year.
``(B) Special rule if employer is member of
controlled group.--In the case of a defined benefit
plan which is not a multiemployer plan, if an employer
is a member of a controlled group, the temporary
substantial business hardship requirements of paragraph
(1) shall be treated as met only if such requirements
are met--
``(i) with respect to such employer, and
``(ii) with respect to the controlled group
of which such employer is a member (determined
by treating all members of such group as a
single employer).
The Secretary may provide that an analysis of a trade
or business or industry of a member need not be
conducted if the Secretary determines such analysis is
not necessary because the taking into account of such
member would not significantly affect the determination
under this paragraph.
``(6) Advance notice.--
``(A) In general.--The Secretary shall, before
granting a waiver under this subsection, require each
applicant to provide evidence satisfactory to the
Secretary that the applicant has provided notice of the
filing of the application for such waiver to each
affected party (as defined in section 4001(a)(21) of
the Employee Retirement Income Security Act of 1974).
Such notice shall include a description of the extent
to which the plan is funded for benefits which are
guaranteed under title IV of the Employee Retirement
Income Security Act of 1974 and for benefit
liabilities.
``(B) Consideration of relevant information.--The
Secretary shall consider any relevant information
provided by a person to whom notice was given under
subparagraph (A).
``(7) Restriction on plan amendments.--
``(A) In general.--No amendment of a plan which
increases the liabilities of the plan by reason of any
increase in benefits, any change in the accrual of
benefits, or any change in the rate at which benefits
become nonforfeitable under the plan shall be adopted
if a waiver under this subsection or an extension of
time under section 431(d) is in effect with respect to
the plan, or if a plan amendment described in
subsection (d)(2) has been made at any time in the
preceding 12 months (24 months in the case of a
multiemployer plan). If a plan is amended in violation
of the preceding sentence, any such waiver, or
extension of time, shall not apply to any plan year
ending on or after the date on which such amendment is
adopted.
``(B) Exception.--Subparagraph (A) shall not apply
to any plan amendment which--
``(i) the Secretary determines to be
reasonable and which provides for only de
minimis increases in the liabilities of the
plan,
``(ii) only repeals an amendment described
in subsection (d)(2), or
``(iii) is required as a condition of
qualification under part I of subchapter D, of
chapter 1.
``(d) Miscellaneous Rules.--
``(1) Change in method or year.--If the funding method, the
valuation date, or a plan year for a plan is changed, the
change shall take effect only if approved by the Secretary.
``(2) Certain retroactive plan amendments.--For purposes of
this section, any amendment applying to a plan year which--
``(A) is adopted after the close of such plan year
but no later than 2\1/2\ months after the close of the
plan year (or, in the case of a multiemployer plan, no
later than 2 years after the close of such plan year),
``(B) does not reduce the accrued benefit of any
participant determined as of the beginning of the first
plan year to which the amendment applies, and
``(C) does not reduce the accrued benefit of any
participant determined as of the time of adoption
except to the extent required by the circumstances,
shall, at the election of the plan administrator, be deemed to
have been made on the first day of such plan year. No amendment
described in this paragraph which reduces the accrued benefits
of any participant shall take effect unless the plan
administrator files a notice with the Secretary notifying him
of such amendment and the Secretary has approved such
amendment, or within 90 days after the date on which such
notice was filed, failed to disapprove such amendment. No
amendment described in this subsection shall be approved by the
Secretary unless the Secretary determines that such amendment
is necessary because of a temporary substantial business
hardship (as determined under subsection (c)(2)) or a
substantial business hardship (as so determined) in the case of
a multiemployer plan and that a waiver under subsection (c)
(or, in the case of a multiemployer plan, any extension of the
amortization period under section 431(d)) is unavailable or
inadequate.
``(3) Controlled group.--For purposes of this section, the
term `controlled group' means any group treated as a single
employer under subsection (b), (c), (m), or (o) of section 414.
``(e) Plans to Which Section Applies.--
``(1) In general.--Except as provided in paragraphs (2) and
(4), this section applies to a plan if, for any plan year
beginning on or after the effective date of this section for
such plan under the Employee Retirement Income Security Act of
1974--
``(A) such plan included a trust which qualified
(or was determined by the Secretary to have qualified)
under section 401(a), or
``(B) such plan satisfied (or was determined by the
Secretary to have satisfied) the requirements of
section 403(a).
``(2) Exceptions.--This section shall not apply to--
``(A) any profit-sharing or stock bonus plan,
``(B) any insurance contract plan described in
paragraph (3),
``(C) any governmental plan (within the meaning of
section 414(d)),
``(D) any church plan (within the meaning of
section 414(e)) with respect to which the election
provided by section 410(d) has not been made,
``(E) any plan which has not, at any time after
September 2, 1974, provided for employer contributions,
or
``(F) any plan established and maintained by a
society, order, or association described in section
501(c)(8) or (9), if no part of the contributions to or
under such plan are made by employers of participants
in such plan.
No plan described in subparagraph (C), (D), or (F) shall be
treated as a qualified plan for purposes of section 401(a)
unless such plan meets the requirements of section 401(a)(7) as
in effect on September 1, 1974.
``(3) Certain insurance contract plans.--A plan is
described in this paragraph if--
``(A) the plan is funded exclusively by the
purchase of individual insurance contracts,
``(B) such contracts provide for level annual
premium payments to be paid extending not later than
the retirement age for each individual participating in
the plan, and commencing with the date the individual
became a participant in the plan (or, in the case of an
increase in benefits, commencing at the time such
increase becomes effective),
``(C) benefits provided by the plan are equal to
the benefits provided under each contract at normal
retirement age under the plan and are guaranteed by an
insurance carrier (licensed under the laws of a State
to do business with the plan) to the extent premiums
have been paid,
``(D) premiums payable for the plan year, and all
prior plan years, under such contracts have been paid
before lapse or there is reinstatement of the policy,
``(E) no rights under such contracts have been
subject to a security interest at any time during the
plan year, and
``(F) no policy loans are outstanding at any time
during the plan year.
A plan funded exclusively by the purchase of group insurance
contracts which is determined under regulations prescribed by
the Secretary to have the same characteristics as contracts
described in the preceding sentence shall be treated as a plan
described in this paragraph.
``(4) Certain terminated multiemployer plans.--This section
applies with respect to a terminated multiemployer plan to
which section 4021 of the Employee Retirement Income Security
Act of 1974 applies until the last day of the plan year in
which the plan terminates (within the meaning of section
4041A(a)(2) of such Act).''.
(b) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
SEC. 112. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION
PLANS.
(a) In General.--Subchapter D of chapter 1 of the Internal Revenue
Code of 1986 (relating to deferred compensation, etc.) is amended by
adding at the end the following new part:
``PART III--MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED
BENEFIT PENSION PLANS
``SEC. 430. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED
BENEFIT PENSION PLANS.
``(a) Minimum Required Contribution.--For purposes of this section
and section 412(a)(2)(A), except as provided in subsection (f), the
term `minimum required contribution' means, with respect to any plan
year of a defined benefit plan which is not a multiemployer plan--
``(1) in any case in which the value of plan assets of the
plan (as reduced under subsection (f)(4)(B)) is less than the
funding target of the plan for the plan year, the sum of--
``(A) the target normal cost of the plan for the
plan year,
``(B) the shortfall amortization charge (if any)
for the plan for the plan year determined under
subsection (c), and
``(C) the waiver amortization charge (if any) for
the plan for the plan year as determined under
subsection (e);
``(2) in any case in which the value of plan assets of the
plan (as reduced under subsection (f)(4)(B)) equals or exceeds
the funding target of the plan for the plan year, the target
normal cost of the plan for the plan year reduced (but not
below zero) by such excess.
``(b) Target Normal Cost.--For purposes of this section, except as
provided in subsection (i)(2) with respect to plans in at-risk status,
the term `target normal cost' means, for any plan year, the present
value of all benefits which are expected to accrue or to be earned
under the plan during the plan year. For purposes of this subsection,
if any benefit attributable to services performed in a preceding plan
year is increased by reason of any increase in compensation during the
current plan year, the increase in such benefit shall be treated as
having accrued during the current plan year.
``(c) Shortfall Amortization Charge.--
``(1) In general.--For purposes of this section, the
shortfall amortization charge for a plan for any plan year is
the aggregate total (not less than zero) of the shortfall
amortization installments for such plan year with respect to
the shortfall amortization bases for such plan year and each of
the 6 preceding plan years.
``(2) Shortfall amortization installment.--For purposes of
paragraph (1)--
``(A) Determination.--The shortfall amortization
installments are the amounts necessary to amortize the
shortfall amortization base of the plan for any plan
year in level annual installments over the 7-plan-year
period beginning with such plan year.
``(B) Shortfall installment.--The shortfall
amortization installment for any plan year in the 7-
plan-year period under subparagraph (A) with respect to
any shortfall amortization base is the annual
installment determined under subparagraph (A) for that
year for that base.
``(C) Segment rates.--In determining any shortfall
amortization installment under this paragraph, the plan
sponsor shall use the segment rates determined under
subparagraph (C) of subsection (h)(2), applied under
rules similar to the rules of subparagraph (B) of
subsection (h)(2).
``(3) Shortfall amortization base.--For purposes of this
section, the shortfall amortization base of a plan for a plan
year is--
``(A) the funding shortfall of such plan for such
plan year, minus
``(B) the present value (determined using the
segment rates determined under subparagraph (C) of
subsection (h)(2), applied under rules similar to the
rules of subparagraph (B) of subsection (h)(2)) of the
aggregate total of the shortfall amortization
installments and waiver amortization installments which
have been determined for such plan year and any
succeeding plan year with respect to the shortfall
amortization bases and waiver amortization bases of the
plan for any plan year preceding such plan year.
``(4) Funding shortfall.--For purposes of this section, the
funding shortfall of a plan for any plan year is the excess (if
any) of--
``(A) the funding target of the plan for the plan
year, over
``(B) the value of plan assets of the plan (as
reduced under subsection (f)(4)(B)) for the plan year
which are held by the plan on the valuation date.
``(5) Exemption from new shortfall amortization base.--
``(A) In general.--In any case in which the value
of plan assets of the plan (as reduced under subsection
(f)(4)(A)) is equal to or greater than the funding
target of the plan for the plan year, the shortfall
amortization base of the plan for such plan year shall
be zero.
``(B) Transition rule.--
``(i) In general.--Except as provided in
clauses (iii) and (iv), in the case of plan
years beginning after 2007 and before 2011,
only the applicable percentage of the funding
target shall be taken into account under
paragraph (3)(A) in determining the funding
shortfall for the plan year for purposes of
subparagraph (A).
``(ii) Applicable percentage.--For purposes
of subparagraph (A), the applicable percentage
shall be determined in accordance with the
following table:
``In the case of a plan year The applicable
beginning in calendar year: percentage is
2008................................................... 92
2009................................................... 94
2010................................................... 96.
``(iii) Limitation.--Clause (i) shall not
apply with respect to any plan year after 2008
unless the shortfall amortization base for each
of the preceding years beginning after 2007 was
zero (determined after application of this
subparagraph).
``(iv) Transition relief not available for
new or deficit reduction plans.--Clause (i)
shall not apply to a plan--
``(I) which was not in effect for a
plan year beginning in 2007, or
``(II) which was in effect for a
plan year beginning in 2007 and which
was subject to section 412(l) (as in
effect for plan years beginning in
2007), determined after the application
of paragraphs (6) and (9) thereof.
``(6) Early deemed amortization upon attainment of funding
target.--In any case in which the funding shortfall of a plan
for a plan year is zero, for purposes of determining the
shortfall amortization charge for such plan year and succeeding
plan years, the shortfall amortization bases for all preceding
plan years (and all shortfall amortization installments
determined with respect to such bases) shall be reduced to
zero.
``(d) Rules Relating to Funding Target.--For purposes of this
section--
``(1) Funding target.--Except as provided in subsection
(i)(1) with respect to plans in at-risk status, the funding
target of a plan for a plan year is the present value of all
benefits accrued or earned under the plan as of the beginning
of the plan year.
``(2) Funding target attainment percentage.--The `funding
target attainment percentage' of a plan for a plan year is the
ratio (expressed as a percentage) which--
``(A) the value of plan assets for the plan year
(as reduced under subsection (f)(4)(B)), bears to
``(B) the funding target of the plan for the plan
year (determined without regard to subsection (i)(1)).
``(e) Waiver Amortization Charge.--
``(1) Determination of waiver amortization charge.--The
waiver amortization charge (if any) for a plan for any plan
year is the aggregate total of the waiver amortization
installments for such plan year with respect to the waiver
amortization bases for each of the 5 preceding plan years.
``(2) Waiver amortization installment.--For purposes of
paragraph (1)--
``(A) Determination.--The waiver amortization
installments are the amounts necessary to amortize the
waiver amortization base of the plan for any plan year
in level annual installments over a period of 5 plan
years beginning with the succeeding plan year.
``(B) Waiver installment.--The waiver amortization
installment for any plan year in the 5-year period
under subparagraph (A) with respect to any waiver
amortization base is the annual installment determined
under subparagraph (A) for that year for that base.
``(3) Interest rate.--In determining any waiver
amortization installment under this subsection, the plan
sponsor shall use the segment rates determined under
subparagraph (C) of subsection (h)(2), applied under rules
similar to the rules of subparagraph (B) of subsection (h)(2).
``(4) Waiver amortization base.--The waiver amortization
base of a plan for a plan year is the amount of the waived
funding deficiency (if any) for such plan year under section
412(c).
``(5) Early deemed amortization upon attainment of funding
target.--In any case in which the funding shortfall of a plan
for a plan year is zero, for purposes of determining the waiver
amortization charge for such plan year and succeeding plan
years, the waiver amortization bases for all preceding plan
years (and all waiver amortization installments determined with
respect to such bases) shall be reduced to zero.
``(f) Reduction of Minimum Required Contribution by Prefunding
Balance and Funding Standard Carryover Balance.--
``(1) Election to maintain balances.--
``(A) Prefunding balance.--The plan sponsor of a
defined benefit plan which is not a multiemployer plan
may elect to maintain a prefunding balance.
``(B) Funding standard carryover balance.--
``(i) In general.--In the case of a defined
benefit plan (other than a multiemployer plan)
described in clause (ii), the plan sponsor may
elect to maintain a funding standard carryover
balance, until such balance is reduced to zero.
``(ii) Plans maintaining funding standard
account in 2007.--A plan is described in this
clause if the plan--
``(I) was in effect for a plan year
beginning in 2007, and
``(II) had a positive balance in
the funding standard account under
section 412(b) as in effect for such
plan year and determined as of the end
of such plan year.
``(2) Application of balances.--A prefunding balance and a
funding standard carryover balance maintained pursuant to this
paragraph--
``(A) shall be available for crediting against the
minimum required contribution, pursuant to an election
under paragraph (3),
``(B) shall be applied as a reduction in the amount
treated as the value of plan assets for purposes of
this section, to the extent provided in paragraph (4),
and
``(C) may be reduced at any time, pursuant to an
election under paragraph (5).
``(3) Election to apply balances against minimum required
contribution.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), in the case of any plan year
in which the plan sponsor elects to credit against the
minimum required contribution for the current plan year
all or a portion of the prefunding balance or the
funding standard carryover balance for the current plan
year (not in excess of such minimum required
contribution), the minimum required contribution for
the plan year shall be reduced as of the first day of
the plan year by the amount so credited by the plan
sponsor as of the first day of the plan year. For
purposes of the preceding sentence, the minimum
required contribution shall be determined after taking
into account any waiver under section 412(c).
``(B) Coordination with funding standard carryover
balance.--To the extent that any plan has a funding
standard carryover balance greater than zero, no amount
of the prefunding balance of such plan may be credited
under this paragraph in reducing the minimum required
contribution.
``(C) Limitation for underfunded plans.--The
preceding provisions of this paragraph shall not apply
for any plan year if the ratio (expressed as a
percentage) which--
``(i) the value of plan assets for the
preceding plan year (as reduced under paragraph
(4)(C)), bears to
``(ii) the funding target of the plan for
the preceding plan year (determined without
regard to subsection (i)(1)),
is less than 80 percent. In the case of plan years
beginning in 2008, the ratio under this subparagraph
may be determined using such methods of estimation as
the Secretary may prescribe.
``(4) Effect of balances on amounts treated as value of
plan assets.--In the case of any plan maintaining a prefunding
balance or a funding standard carryover balance pursuant to
this subsection, the amount treated as the value of plan assets
shall be deemed to be such amount, reduced as provided in the
following subparagraphs:
``(A) Applicability of shortfall amortization
base.--For purposes of subsection (c)(5), the value of
plan assets is deemed to be such amount, reduced by the
amount of the prefunding balance, but only if an
election under paragraph (2) applying any portion of
the prefunding balance in reducing the minimum required
contribution is in effect for the plan year.
``(B) Determination of excess assets, funding
shortfall, and funding target attainment percentage.--
``(i) In general.--For purposes of
subsections (a), (c)(4)(B), and (d)(2)(A), the
value of plan assets is deemed to be such
amount, reduced by the amount of the prefunding
balance and the funding standard carryover
balance.
``(ii) Special rule for certain binding
agreements with pbgc.--For purposes of
subsection (c)(4)(B), the value of plan assets
shall not be deemed to be reduced for a plan
year by the amount of the specified balance if,
with respect to such balance, there is in
effect for a plan year a binding written
agreement with the Pension Benefit Guaranty
Corporation which provides that such balance is
not available to reduce the minimum required
contribution for the plan year. For purposes of
the preceding sentence, the term `specified
balance' means the prefunding balance or the
funding standard carryover balance, as the case
may be.
``(C) Availability of balances in plan year for
crediting against minimum required contribution.--For
purposes of paragraph (3)(C)(i) of this subsection, the
value of plan assets is deemed to be such amount,
reduced by the amount of the prefunding balance.
``(5) Election to reduce balance prior to determinations of
value of plan assets and crediting against minimum required
contribution.--
``(A) In general.--The plan sponsor may elect to
reduce by any amount the balance of the prefunding
balance and the funding standard carryover balance for
any plan year (but not below zero). Such reduction
shall be effective prior to any determination of the
value of plan assets for such plan year under this
section and application of the balance in reducing the
minimum required contribution for such plan for such
plan year pursuant to an election under paragraph (2).
``(B) Coordination between prefunding balance and
funding standard carryover balance.--To the extent that
any plan has a funding standard carryover balance
greater than zero, no election may be made under
subparagraph (A) with respect to the prefunding
balance.
``(6) Prefunding balance.--
``(A) In general.--A prefunding balance maintained
by a plan shall consist of a beginning balance of zero,
increased and decreased to the extent provided in
subparagraphs (B) and (C), and adjusted further as
provided in paragraph (8).
``(B) Increases.--
``(i) In general.--As of the first day of
each plan year beginning after 2008, the
prefunding balance of a plan shall be increased
by the amount elected by the plan sponsor for
the plan year. Such amount shall not exceed the
excess (if any) of--
``(I) the aggregate total of
employer contributions to the plan for
the preceding plan year, over--
``(II) the minimum required
contribution for such preceding plan
year.
``(ii) Adjustments for interest.--Any
excess contributions under clause (i) shall be
properly adjusted for interest accruing for the
periods between the first day of the current
plan year and the dates on which the excess
contributions were made, determined by using
the effective interest rate for the preceding
plan year and by treating contributions as
being first used to satisfy the minimum
required contribution.
``(iii) Certain contributions necessary to
avoid benefit limitations disregarded.--The
excess described in clause (i) with respect to
any preceding plan year shall be reduced (but
not below zero) by the amount of contributions
an employer would be required to make under
paragraph (1), (2), or (4) of section 206(g) to
avoid a benefit limitation which would
otherwise be imposed under such paragraph for
the preceding plan year. Any contribution which
may be taken into account in satisfying the
requirements of more than 1 of such paragraphs
shall be taken into account only once for
purposes of this clause.
``(C) Decreases.--The prefunding balance of a plan
shall be decreased (but not below zero) by the sum of--
``(i) as of the first day of each plan year
after 2008, the amount of such balance credited
under paragraph (2) (if any) in reducing the
minimum required contribution of the plan for
the preceding plan year, and
``(ii) as of the time specified in
paragraph (5))(A), any reduction in such
balance elected under paragraph (5).
``(7) Funding standard carryover balance.--
``(A) In general.--A funding standard carryover
balance maintained by a plan shall consist of a
beginning balance determined under subparagraph (B),
decreased to the extent provided in subparagraph (C),
and adjusted further as provided in paragraph (8).
``(B) Beginning balance.--The beginning balance of
the funding standard carryover balance shall be the
positive balance described in paragraph (1)(B)(ii)(II).
``(C) Decreases.--The funding standard carryover
balance of a plan shall be decreased (but not below
zero) by--
``(i) as of the first day of each plan year
after 2008, the amount of such balance credited
under paragraph (2) (if any) in reducing the
minimum required contribution of the plan for
the preceding plan year, and
``(ii) as of the time specified in
paragraph (5))(A), any reduction in such
balance elected under paragraph (5).
``(8) Adjustments for investment experience.--In
determining the prefunding balance or the funding standard
carryover balance of a plan as of the first day of the plan
year, the plan sponsor shall, in accordance with regulations
prescribed by the Secretary of the Treasury, adjust such
balance to reflect the rate of return on plan assets for the
preceding plan year. Notwithstanding subsection (g)(3), such
rate of return shall be determined on the basis of fair market
value and shall properly take into account, in accordance with
such regulations, all contributions, distributions, and other
plan payments made during such period.
``(9) Elections.--Elections under this subsection shall be
made at such times, and in such form and manner, as shall be
prescribed in regulations of the Secretary.
``(g) Valuation of Plan Assets and Liabilities.--
``(1) Timing of determinations.--Except as otherwise
provided under this subsection, all determinations under this
section for a plan year shall be made as of the valuation date
of the plan for such plan year.
``(2) Valuation date.--For purposes of this section--
``(A) In general.--Except as provided in
subparagraph (B), the valuation date of a plan for any
plan year shall be the first day of the plan year.
``(B) Exception for small plans.--If, on each day
during the preceding plan year, a plan had 100 or fewer
participants, the plan may designate any day during the
plan year as its valuation date for such plan year and
succeeding plan years. For purposes of this
subparagraph, all defined benefit plans (other than
multiemployer plans) maintained by the same employer
(or any member of such employer's controlled group)
shall be treated as 1 plan, but only participants with
respect to such employer or member shall be taken into
account.
``(C) Application of certain rules in determination
of plan size.--For purposes of this paragraph--
``(i) Plans not in existence in preceding
year.--In the case of the first plan year of
any plan, subparagraph (B) shall apply to such
plan by taking into account the number of
participants that the plan is reasonably
expected to have on days during such first plan
year.
``(ii) Predecessors.--Any reference in
subparagraph (B) to an employer shall include a
reference to any predecessor of such employer.
``(3) Determination of value of plan assets.--For purposes
of this section--
``(A) In general.--Except as provided in
subparagraph (B), the value of plan assets shall be the
fair market value of the assets.
``(B) Averaging allowed.--A plan may determine the
value of plan assets on the basis of the averaging of
fair market values, but only if such method--
``(i) is permitted under regulations
prescribed by the Secretary,
``(ii) does not provide for averaging of
such values over more than the period beginning
on the last day of the 25th month preceding the
month in which the valuation date occurs and
ending on the valuation date (or a similar
period in the case of a valuation date which is
not the 1st day of a month), and
``(iii) does not result in a determination
of the value of plan assets which, at any time,
is lower than 90 percent or greater than 110
percent of the fair market value of such assets
at such time.
Any such averaging shall be adjusted for contributions
and distributions (as provided by the Secretary).
``(4) Accounting for contribution receipts.--For purposes
of determining the value of assets under paragraph (3)--
``(A) Prior year contributions.--If--
``(i) an employer makes any contribution to
the plan after the valuation date for the plan
year in which the contribution is made, and
``(ii) the contribution is for a preceding
plan year,
the contribution shall be taken into account as an
asset of the plan as of the valuation date, except that
in the case of any plan year beginning after 2008, only
the present value (determined as of the valuation date)
of such contribution may be taken into account. For
purposes of the preceding sentence, present value shall
be determined using the effective interest rate for the
preceding plan year to which the contribution is
properly allocable.
``(B) Special rule for current year contributions
made before valuation date.--If any contributions for
any plan year are made to or under the plan during the
plan year but before the valuation date for the plan
year, the assets of the plan as of the valuation date
shall not include--
``(i) such contributions, and
``(ii) interest on such contributions for
the period between the date of the
contributions and the valuation date,
determined by using the effective interest rate
for the plan year.
``(h) Actuarial Assumptions and Methods.--
``(1) In general.--Subject to this subsection, the
determination of any present value or other computation under
this section shall be made on the basis of actuarial
assumptions and methods--
``(A) each of which is reasonable (taking into
account the experience of the plan and reasonable
expectations), and
``(B) which, in combination, offer the actuary's
best estimate of anticipated experience under the plan.
``(2) Interest rates.--
``(A) Effective interest rate.--For purposes of
this section, the term `effective interest rate' means,
with respect to any plan for any plan year, the single
rate of interest which, if used to determine the
present value of the plan's accrued or earned benefits
referred to in subsection (d)(1), would result in an
amount equal to the funding target of the plan for such
plan year.
``(B) Interest rates for determining funding
target.--For purposes of determining the funding target
of a plan for any plan year, the interest rate used in
determining the present value of the liabilities of the
plan shall be--
``(i) in the case of benefits reasonably
determined to be payable during the 5-year
period beginning on the first day of the plan
year, the first segment rate with respect to
the applicable month,
``(ii) in the case of benefits reasonably
determined to be payable during the 15-year
period beginning at the end of the period
described in clause (i), the second segment
rate with respect to the applicable month, and
``(iii) in the case of benefits reasonably
determined to be payable after the period
described in clause (ii), the third segment
rate with respect to the applicable month.
``(C) Segment rates.--For purposes of this
paragraph--
``(i) First segment rate.--The term `first
segment rate' means, with respect to any month,
the single rate of interest which shall be
determined by the Secretary for such month on
the basis of the corporate bond yield curve for
such month, taking into account only that
portion of such yield curve which is based on
bonds maturing during the 5-year period
commencing with such month.
``(ii) Second segment rate.--The term
`second segment rate' means, with respect to
any month, the single rate of interest which
shall be determined by the Secretary for such
month on the basis of the corporate bond yield
curve for such month, taking into account only
that portion of such yield curve which is based
on bonds maturing during the 15-year period
beginning at the end of the period described in
clause (i).
``(iii) Third segment rate.--The term
`third segment rate' means, with respect to any
month, the single rate of interest which shall
be determined by the Secretary for such month
on the basis of the corporate bond yield curve
for such month, taking into account only that
portion of such yield curve which is based on
bonds maturing during periods beginning after
the period described in clause (ii).
``(D) Corporate bond yield curve.--For purposes of
this paragraph--
``(i) In general.--The term `corporate bond
yield curve' means, with respect to any month,
a yield curve which is prescribed by the
Secretary for such month and which reflects the
average, for the 24-month period ending with
the month preceding such month, of monthly
yields on investment grade corporate bonds with
varying maturities and that are in the top 3
quality levels available.
``(ii) Election to use yield curve.--Solely
for purposes of determining the minimum
required contribution under this section, the
plan sponsor may, in lieu of the segment rates
determined under subparagraph (C), elect to use
interest rates under the corporate bond yield
curve. For purposes of the preceding sentence
such curve shall be determined without regard
to the 24-month averaging described in clause
(i). Such election, once made, may be revoked
only with the consent of the Secretary.
``(E) Applicable month.--For purposes of this
paragraph, the term `applicable month' means, with
respect to any plan for any plan year, the month which
includes the valuation date of such plan for such plan
year or, at the election of the plan sponsor, any of
the 4 months which precede such month. Any election
made under this subparagraph shall apply to the plan
year for which the election is made and all succeeding
plan years, unless the election is revoked with the
consent of the Secretary.
``(F) Publication requirements.--The Secretary
shall publish for each month the corporate bond yield
curve (and the corporate bond yield curve reflecting
the modification described in section 417(e)(3)(D)(i)
for such month and each of the rates determined under
subparagraph (B) for such month. The Secretary shall
also publish a description of the methodology used to
determine such yield curve and such rates which is
sufficiently detailed to enable plans to make
reasonable projections regarding the yield curve and
such rates for future months based on the plan's
projection of future interest rates.
``(G) Transition rule.--
``(i) In general.--Notwithstanding the
preceding provisions of this paragraph, for
plan years beginning in 2008 or 2009, the
first, second, or third segment rate for a plan
with respect to any month shall be equal to the
sum of--
``(I) the product of such rate for
such month determined without regard to
this subparagraph, multiplied by the
applicable percentage, and
``(II) the product of the rate
determined under the rules of section
412(b)(5)(B)(ii)(II) (as in effect for
plan years beginning in 2007),
multiplied by a percentage equal to 100
percent minus the applicable
percentage.
``(ii) Applicable percentage.--For purposes
of clause (i), the applicable percentage is
33\1/3\ percent for plan years beginning in
2008 and 66\2/3\ percent for plan years
beginning in 2009.
``(iii) New plans ineligible.--Clause (i)
shall not apply to any plan if the first plan
year of the plan begins after December 31,
2007.
``(iv) Election.--The plan sponsor may
elect not to have this subparagraph apply. Such
election, once made, may be revoked only with
the consent of the Secretary.
``(3) Mortality tables.--
``(A) In general.--Except as provided in
subparagraph (C) or (D), the Secretary shall by
regulation prescribe mortality tables to be used in
determining any present value or making any computation
under this section. Such tables shall be based on the
actual experience of pension plans and projected trends
in such experience. In prescribing such tables, the
Secretary shall take into account results of available
independent studies of mortality of individuals covered
by pension plans.
``(B) Periodic revision.--The Secretary shall (at
least every 10 years) make revisions in any table in
effect under subparagraph (A) to reflect the actual
experience of pension plans and projected trends in
such experience.
``(C) Substitute mortality table.--
``(i) In general.--Upon request by the plan
sponsor and approval by the Secretary, a
mortality table which meets the requirements of
clause (iii) shall be used in determining any
present value or making any computation under
this section during the period of consecutive
plan years (not to exceed 10) specified in the
request.
``(ii) Early termination of period.--
Notwithstanding clause (i), a mortality table
described in clause (i) shall cease to be in
effect as of the earliest of--
``(I) the date on which there is a
significant change in the participants
in the plan by reason of a plan spinoff
or merger or otherwise, or
``(II) the date on which the plan
actuary determines that such table does
not meet the requirements of clause
(iii).
``(iii) Requirements.--A mortality table
meets the requirements of this clause if--
``(I) there is a sufficient number
of plan participants, and the pension
plans have been maintained for a
sufficient period of time, to have
credible information necessary for
purposes of subclause (II), and
``(II) such table reflects the
actual experience of the pension plans
maintained by the sponsor and projected
trends in general mortality experience.
``(iv) All plans in controlled group must
use separate table.--Except as provided by the
Secretary, a plan sponsor may not use a
mortality table under this subparagraph for any
plan maintained by the plan sponsor unless--
``(I) a separate mortality table is
established and used under this
subparagraph for each other plan
maintained by the plan sponsor and if
the plan sponsor is a member of a
controlled group, each member of the
controlled group, and
``(II) the requirements of clause
(iii) are met separately with respect
to the table so established for each
such plan, determined by only taking
into account the participants of such
plan, the time such plan has been in
existence, and the actual experience of
such plan.
``(v) Deadline for submission and
disposition of application.--
``(I) Submission.--The plan sponsor
shall submit a mortality table to the
Secretary for approval under this
subparagraph at least 7 months before
the 1st day of the period described in
clause (i).
``(II) Disposition.--Any mortality
table submitted to the Secretary for
approval under this subparagraph shall
be treated as in effect as of the 1st
day of the period described in clause
(i) unless the Secretary, during the
180-day period beginning on the date of
such submission, disapproves of such
table and provides the reasons that
such table fails to meet the
requirements of clause (iii). The 180-
day period shall be extended upon
mutual agreement of the Secretary and
the plan sponsor.
``(D) Separate mortality tables for the disabled.--
Notwithstanding subparagraph (A)--
``(i) In general.--The Secretary shall
establish mortality tables which may be used
(in lieu of the tables under subparagraph (A))
under this subsection for individuals who are
entitled to benefits under the plan on account
of disability. The Secretary shall establish
separate tables for individuals whose
disabilities occur in plan years beginning
before January 1, 1995, and for individuals
whose disabilities occur in plan years
beginning on or after such date.
``(ii) Special rule for disabilities
occurring after 1994.--In the case of
disabilities occurring in plan years beginning
after December 31, 1994, the tables under
clause (i) shall apply only with respect to
individuals described in such subclause who are
disabled within the meaning of title II of the
Social Security Act and the regulations
thereunder.
``(iii) Periodic revision.--The Secretary
shall (at least every 10 years) make revisions
in any table in effect under clause (i) to
reflect the actual experience of pension plans
and projected trends in such experience.
``(4) Probability of benefit payments in the form of lump
sums or other optional forms.--For purposes of determining any
present value or making any computation under this section,
there shall be taken into account--
``(A) the probability that future benefit payments
under the plan will be made in the form of optional
forms of benefits provided under the plan (including
lump sum distributions, determined on the basis of the
plan's experience and other related assumptions), and
``(B) any difference in the present value of such
future benefit payments resulting from the use of
actuarial assumptions, in determining benefit payments
in any such optional form of benefits, which are
different from those specified in this subsection.
``(5) Approval of large changes in actuarial assumptions.--
``(A) In general.--No actuarial assumption used to
determine the funding target for a plan to which this
paragraph applies may be changed without the approval
of the Secretary.
``(B) Plans to which paragraph applies.--This
paragraph shall apply to a plan only if--
``(i) the plan is a defined benefit plan
(other than a multiemployer plan) to which
title IV of the Employee Retirement Income
Security Act of 1974 applies,
``(ii) the aggregate unfunded vested
benefits as of the close of the preceding plan
year (as determined under section
4006(a)(3)(E)(iii) of the Employee Retirement
Income Security Act of 1974) of such plan and
all other plans maintained by the contributing
sponsors (as defined in section 4001(a)(13) of
such Act) and members of such sponsors'
controlled groups (as defined in section
4001(a)(14) of such Act) which are covered by
title IV (disregarding plans with no unfunded
vested benefits) exceed $50,000,000, and
``(iii) the change in assumptions
(determined after taking into account any
changes in interest rate and mortality table)
results in a decrease in the funding shortfall
of the plan for the current plan year that
exceeds $50,000,000, or that exceeds $5,000,000
and that is 5 percent or more of the funding
target of the plan before such change.
``(i) Special Rules for At-Risk Plans.--
``(1) Funding target for plans in at-risk status.--
``(A) In general.--In the case of a plan which is
in at-risk status for a plan year, the funding target
of the plan for the plan year shall be equal to the sum
of--
``(i) the present value of all benefits
accrued or earned under the plan as of the
beginning of the plan year, as determined by
using the additional actuarial assumptions
described in subparagraph (B), and
``(ii) in the case of a plan which also has
been in at-risk status for at least 2 of the 4
preceding plan years, a loading factor
determined under subparagraph (C).
``(B) Additional actuarial assumptions.--The
actuarial assumptions described in this subparagraph
are as follows:
``(i) All employees who are not otherwise
assumed to retire as of the valuation date but
who will be eligible to elect benefits during
the plan year and the 10 succeeding plan years
shall be assumed to retire at the earliest
retirement date under the plan but not before
the end of the plan year for which the at-risk
funding target and at-risk target normal cost
are being determined.
``(ii) All employees shall be assumed to
elect the retirement benefit available under
the plan at the assumed retirement age
(determined after application of clause (i))
which would result in the highest present value
of benefits.
``(C) Loading factor.--The loading factor applied
with respect to a plan under this paragraph for any
plan year is the sum of--
``(i) $700, times the number of
participants in the plan, plus
``(ii) 4 percent of the funding target
(determined without regard to this paragraph)
of the plan for the plan year.
``(2) Target normal cost of at-risk plans.--In the case of
a plan which is in at-risk status for a plan year, the target
normal cost of the plan for such plan year shall be equal to
the sum of--
``(A) the present value of all benefits which are
expected to accrue or be earned under the plan during
the plan year, determined using the additional
actuarial assumptions described in paragraph (1)(B),
plus
``(B) in the case of a plan which also has been in
at-risk status for at least 2 of the 4 preceding plan
years, a loading factor equal to 4 percent of the
target normal cost (determined without regard to this
paragraph) of the plan for the plan year.
``(3) Minimum amount.--In no event shall--
``(A) the at-risk funding target be less than the
funding target, as determined without regard to this
subsection, or
``(B) the at-risk target normal cost be less than
the target normal cost, as determined without regard to
this subsection.
``(4) Determination of at-risk status.--For purposes of
this subsection--
``(A) In general.--A plan is in at-risk status for
a plan year if--
``(i) the funding target attainment
percentage for the preceding plan year
(determined under this section without regard
to this subsection) is less than 80 percent,
and
``(ii) the funding target attainment
percentage for the preceding plan year
(determined under this section by using the
additional actuarial assumptions described in
paragraph (1)(B) in computing the funding
target) is less than 70 percent.
``(B) Transition rule.--In the case of plan years
beginning in 2008, 2009, and 2010, subparagraph (A)(i)
shall be applied by substituting the following
percentages for `80 percent':
``(i) 65 percent in the case of 2008.
``(ii) 70 percent in the case of 2009.
``(iii) 75 percent in the case of 2010.
In the case of plan years beginning in 2008, the
funding target attainment percentage for the preceding
plan year under subparagraph (A)(ii) may be determined
using such methods of estimation as the Secretary may
provide.
``(C) Special rule for employees offered early
retirement in 2006.--
``(i) In general.--For purposes of
subparagraph (A)(ii), the additional actuarial
assumptions described in paragraph (1)(B) shall
not be taken into account with respect to any
employee if--
``(I) such employee is employed by
a specified automobile manufacturer,
``(II) such employee is offered a
substantial amount of additional cash
compensation, substantially enhanced
retirement benefits under the plan, or
materially reduced employment duties on
the condition that by a specified date
(not later than December 31, 2010) the
employee retires (as defined under the
terms of the plan),
``(III) such offer is made during
2006 and pursuant to a bona fide
retirement incentive program and
requires, by the terms of the offer,
that such offer can be accepted not
later than a specified date (not later
than December 31, 2006), and
``(IV) such employee does not elect
to accept such offer before the
specified date on which the offer
expires.
``(ii) Specified automobile manufacturer.--
For purposes of clause (i), the term `specified
automobile manufacturer' means--
``(I) any manufacturer of
automobiles, and
``(II) any manufacturer of
automobile parts which supplies such
parts directly to a manufacturer of
automobiles and which, after a
transaction or series of transactions
ending in 1999, ceased to be a member
of a controlled group which included
such manufacturer of automobiles.
``(5) Transition between applicable funding targets and
between applicable target normal costs.--
``(A) In general.--In any case in which a plan
which is in at-risk status for a plan year has been in
such status for a consecutive period of fewer than 5
plan years, the applicable amount of the funding target
and of the target normal cost shall be, in lieu of the
amount determined without regard to this paragraph, the
sum of--
``(i) the amount determined under this
section without regard to this subsection, plus
``(ii) the transition percentage for such
plan year of the excess of the amount
determined under this subsection (without
regard to this paragraph) over the amount
determined under this section without regard to
this subsection.
``(B) Transition percentage.--For purposes of
subparagraph (A), the transition percentage shall be
determined in accordance with the following table:
``If the consecutive number of
years (including the plan year) The transition
the plan is in at-risk status is-- percentage is--
1...................................................... 20
2...................................................... 40
3...................................................... 60
4...................................................... 80.
``(C) Years before effective date.--For purposes of
this paragraph, plan years beginning before 2008 shall
not be taken into account.
``(6) Small plan exception.--If, on each day during the
preceding plan year, a plan had 500 or fewer participants, the
plan shall not be treated as in at-risk status for the plan
year. For purposes of this paragraph, all defined benefit plans
(other than multiemployer plans) maintained by the same
employer (or any member of such employer's controlled group)
shall be treated as 1 plan, but only participants with respect
to such employer or member shall be taken into account and the
rules of subsection (g)(2)(C) shall apply.
``(j) Payment of Minimum Required Contributions.--
``(1) In general.--For purposes of this section, the due
date for any payment of any minimum required contribution for
any plan year shall be 8\1/2\ months after the close of the
plan year.
``(2) Interest.--Any payment required under paragraph (1)
for a plan year that is made on a date other than the valuation
date for such plan year shall be adjusted for interest accruing
for the period between the valuation date and the payment date,
at the effective rate of interest for the plan for such plan
year.
``(3) Accelerated quarterly contribution schedule for
underfunded plans.--
``(A) Failure to timely make required
installment.--In any case in which the plan has a
funding shortfall for the preceding plan year, the
employer maintaining the plan shall make the required
installments under this paragraph and if the employer
fails to pay the full amount of a required installment
for the plan year, then the amount of interest charged
under paragraph (2) on the underpayment for the period
of underpayment shall be determined by using a rate of
interest equal to the rate otherwise used under
paragraph (2) plus 5 percentage points.
``(B) Amount of underpayment, period of
underpayment.--For purposes of subparagraph (A)--
``(i) Amount.--The amount of the
underpayment shall be the excess of--
``(I) the required installment,
over
``(II) the amount (if any) of the
installment contributed to or under the
plan on or before the due date for the
installment.
``(ii) Period of underpayment.--The period
for which any interest is charged under this
paragraph with respect to any portion of the
underpayment shall run from the due date for
the installment to the date on which such
portion is contributed to or under the plan.
``(iii) Order of crediting contributions.--
For purposes of clause (i)(II), contributions
shall be credited against unpaid required
installments in the order in which such
installments are required to be paid.
``(C) Number of required installments; due dates.--
For purposes of this paragraph--
``(i) Payable in 4 installments.--There
shall be 4 required installments for each plan
year.
``(ii) Time for payment of installments.--
The due dates for required installments are set
forth in the following table:
In the case of the following The due date is:
required installment:
1st............................. April 15
2nd............................. July 15
3rd............................. October 15
4th............................. January 15 of the following year.
``(D) Amount of required installment.--For purposes
of this paragraph--
``(i) In general.--The amount of any
required installment shall be 25 percent of the
required annual payment.
``(ii) Required annual payment.--For
purposes of clause (i), the term `required
annual payment' means the lesser of--
``(I) 90 percent of the minimum
required contribution (determined
without regard to this subsection) to
the plan for the plan year under this
section, or
``(II) 100 percent of the minimum
required contribution (determined
without regard to this subsection or to
any waiver under section 302(c)) to the
plan for the preceding plan year.
Subclause (II) shall not apply if the preceding
plan year referred to in such clause was not a
year of 12 months.
``(E) Fiscal years and short years.--
``(i) Fiscal years.--In applying this
paragraph to a plan year beginning on any date
other than January 1, there shall be
substituted for the months specified in this
paragraph, the months which correspond thereto.
``(ii) Short plan year.--This subparagraph
shall be applied to plan years of less than 12
months in accordance with regulations
prescribed by the Secretary.
``(4) Liquidity requirement in connection with quarterly
contributions.--
``(A) In general.--A plan to which this paragraph
applies shall be treated as failing to pay the full
amount of any required installment under paragraph (3)
to the extent that the value of the liquid assets paid
in such installment is less than the liquidity
shortfall (whether or not such liquidity shortfall
exceeds the amount of such installment required to be
paid but for this paragraph).
``(B) Plans to which paragraph applies.--This
paragraph shall apply to a plan (other than a plan
described in subsection (g)(2)(B)) which--
``(i) is required to pay installments under
paragraph (3) for a plan year, and
``(ii) has a liquidity shortfall for any
quarter during such plan year.
``(C) Period of underpayment.--For purposes of
paragraph (3)(A), any portion of an installment that is
treated as not paid under subparagraph (A) shall
continue to be treated as unpaid until the close of the
quarter in which the due date for such installment
occurs.
``(D) Limitation on increase.--If the amount of any
required installment is increased by reason of
subparagraph (A), in no event shall such increase
exceed the amount which, when added to prior
installments for the plan year, is necessary to
increase the funding target attainment percentage of
the plan for the plan year (taking into account the
expected increase in funding target due to benefits
accruing or earned during the plan year) to 100
percent.
``(E) Definitions.--For purposes of this
paragraph--
``(i) Liquidity shortfall.--The term
`liquidity shortfall' means, with respect to
any required installment, an amount equal to
the excess (as of the last day of the quarter
for which such installment is made) of--
``(I) the base amount with respect
to such quarter, over
``(II) the value (as of such last
day) of the plan's liquid assets.
``(ii) Base amount.--
``(I) In general.--The term `base
amount' means, with respect to any
quarter, an amount equal to 3 times the
sum of the adjusted disbursements from
the plan for the 12 months ending on
the last day of such quarter.
``(II) Special rule.--If the amount
determined under subclause (I) exceeds
an amount equal to 2 times the sum of
the adjusted disbursements from the
plan for the 36 months ending on the
last day of the quarter and an enrolled
actuary certifies to the satisfaction
of the Secretary that such excess is
the result of nonrecurring
circumstances, the base amount with
respect to such quarter shall be
determined without regard to amounts
related to those nonrecurring
circumstances.
``(iii) Disbursements from the plan.--The
term `disbursements from the plan' means all
disbursements from the trust, including
purchases of annuities, payments of single sums
and other benefits, and administrative
expenses.
``(iv) Adjusted disbursements.--The term
`adjusted disbursements' means disbursements
from the plan reduced by the product of--
``(I) the plan's funding target
attainment percentage for the plan
year, and
``(II) the sum of the purchases of
annuities, payments of single sums, and
such other disbursements as the
Secretary shall provide in regulations.
``(v) Liquid assets.--The term `liquid
assets' means cash, marketable securities, and
such other assets as specified by the Secretary
in regulations.
``(vi) Quarter.--The term `quarter' means,
with respect to any required installment, the
3-month period preceding the month in which the
due date for such installment occurs.
``(F) Regulations.--The Secretary may prescribe
such regulations as are necessary to carry out this
paragraph.
``(k) Imposition of Lien Where Failure to Make Required
Contributions.--
``(1) In general.--In the case of a plan to which this
subsection applies, if--
``(A) any person fails to make a contribution
payment required by section 412 and this section before
the due date for such payment, and
``(B) the unpaid balance of such payment (including
interest), when added to the aggregate unpaid balance
of all preceding such payments for which payment was
not made before the due date (including interest),
exceeds $1,000,000,
then there shall be a lien in favor of the plan in the amount
determined under paragraph (3) upon all property and rights to
property, whether real or personal, belonging to such person
and any other person who is a member of the same controlled
group of which such person is a member.
``(2) Plans to which subsection applies.--This subsection
shall apply to a defined benefit plan (other than a
multiemployer plan) covered under section 4021 of the Employee
Retirement Income Security Act of 1974 for any plan year for
which the funding target attainment percentage (as defined in
subsection (d)(2)) of such plan is less than 100 percent.
``(3) Amount of lien.--For purposes of paragraph (1), the
amount of the lien shall be equal to the aggregate unpaid
balance of contribution payments required under this section
and section 412 for which payment has not been made before the
due date.
``(4) Notice of failure; lien.--
``(A) Notice of failure.--A person committing a
failure described in paragraph (1) shall notify the
Pension Benefit Guaranty Corporation of such failure
within 10 days of the due date for the required
contribution payment.
``(B) Period of lien.--The lien imposed by
paragraph (1) shall arise on the due date for the
required contribution payment and shall continue until
the last day of the first plan year in which the plan
ceases to be described in paragraph (1)(B). Such lien
shall continue to run without regard to whether such
plan continues to be described in paragraph (2) during
the period referred to in the preceding sentence.
``(C) Certain rules to apply.--Any amount with
respect to which a lien is imposed under paragraph (1)
shall be treated as taxes due and owing the United
States and rules similar to the rules of subsections
(c), (d), and (e) of section 4068 of the Employee
Retirement Income Security Act of 1974 shall apply with
respect to a lien imposed by subsection (a) and the
amount with respect to such lien.
``(5) Enforcement.--Any lien created under paragraph (1)
may be perfected and enforced only by the Pension Benefit
Guaranty Corporation, or at the direction of the Pension
Benefit Guaranty Corporation, by the contributing sponsor (or
any member of the controlled group of the contributing
sponsor).
``(6) Definitions.--For purposes of this subsection--
``(A) Contribution payment.--The term `contribution
payment' means, in connection with a plan, a
contribution payment required to be made to the plan,
including any required installment under paragraphs (3)
and (4) of subsection (j).
``(B) Due date; required installment.--The terms
`due date' and `required installment' have the meanings
given such terms by subsection (j), except that in the
case of a payment other than a required installment,
the due date shall be the date such payment is required
to be made under section 430.
``(C) Controlled group.--The term `controlled
group' means any group treated as a single employer
under subsections (b), (c), (m), and (o) of section
414.
``(l) Qualified Transfers to Health Benefit Accounts.--In the case
of a qualified transfer (as defined in section 420), any assets so
transferred shall not, for purposes of this section, be treated as
assets in the plan.''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning after December 31, 2007.
SEC. 113. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.
(a) Prohibition of Shutdown Benefits and Other Unpredictable
Contingent Event Benefits Under Single-Employer Plans.--
(1) In general.--Part III of subchapter D of chapter 1 of
the Internal Revenue Code of 1986 (relating to deferred
compensation, etc.) is amended--
(A) by striking the heading and inserting the
following:
``PART III--RULES RELATING TO MINIMUM FUNDING STANDARDS AND BENEFIT
LIMITATIONS
``subpart a. minimum funding standards for pension plans.
``subpart b. benefit limitations under single-employer plans.
``Subpart A--Minimum Funding Standards for Pension Plans
``Sec. 430. Minimum funding standards for single-employer defined
benefit pension plans.'', and
(B) by adding at the end the following new subpart:
``Subpart B--Benefit Limitations Under Single-Employer Plans
``Sec. 436. Funding-based limitation on shutdown benefits and other
unpredictable contingent event benefits
under single-employer plans.
``SEC. 436. FUNDING-BASED LIMITS ON BENEFITS AND BENEFIT ACCRUALS UNDER
SINGLE-EMPLOYER PLANS.
``(a) General Rule.--For purposes of section 401(a)(29), a defined
benefit plan which is a single-employer plan shall be treated as
meeting the requirements of this section if the plan meets the
requirements of subsections (b), (c), (d), and (e).
``(b) Funding-Based Limitation on Shutdown Benefits and Other
Unpredictable Contingent Event Benefits Under Single-Employer Plans.--
``(1) In general.--If a participant of a defined benefit
plan which is a single-employer plan is entitled to an
unpredictable contingent event benefit payable with respect to
any event occurring during any plan year, the plan shall
provide that such benefit may not be provided if the adjusted
funding target attainment percentage for such plan year--
``(A) is less than 60 percent, or
``(B) would be less than 60 percent taking into
account such occurrence.
``(2) Exemption.--Paragraph (1) shall cease to apply with
respect to any plan year, effective as of the first day of the
plan year, upon payment by the plan sponsor of a contribution
(in addition to any minimum required contribution under section
303) equal to--
``(A) in the case of paragraph (1)(A), the amount
of the increase in the funding target of the plan
(under section 430) for the plan year attributable to
the occurrence referred to in paragraph (1), and
``(B) in the case of paragraph (1)(B), the amount
sufficient to result in a funding target attainment
percentage of 60 percent.
``(3) Unpredictable contingent event.--For purposes of this
subsection, the term `unpredictable contingent event benefit'
means any benefit payable solely by reason of--
``(A) a plant shutdown (or similar event, as
determined by the Secretary), or
``(B) any event other than the attainment of any
age, performance of any service, receipt or derivation
of any compensation, or occurrence of death or
disability.
``(c) Limitations on Plan Amendments Increasing Liability for
Benefits.--
``(1) In general.--No amendment to a defined benefit plan
which is a single-employer plan which has the effect of
increasing liabilities of the plan by reason of increases in
benefits, establishment of new benefits, changing the rate of
benefit accrual, or changing the rate at which benefits become
nonforfeitable may take effect during any plan year if the
adjusted funding target attainment percentage for such plan
year is--
``(A) less than 80 percent, or
``(B) would be less than 80 percent taking into
account such amendment.
``(2) Exemption.--Paragraph (1) shall cease to apply with
respect to any plan year, effective as of the first day of the
plan year (or if later, the effective date of the amendment),
upon payment by the plan sponsor of a contribution (in addition
to any minimum required contribution under section 430) equal
to--
``(A) in the case of paragraph (1)(A), the amount
of the increase in the funding target of the plan
(under section 430) for the plan year attributable to
the amendment, and
``(B) in the case of paragraph (1)(B), the amount
sufficient to result in an adjusted funding target
attainment percentage of 80 percent.
``(3) Exception for certain benefit increases.--Paragraph
(1) shall not apply to any amendment which provides for an
increase in benefits under a formula which is not based on a
participant's compensation, but only if the rate of such
increase is not in excess of the contemporaneous rate of
increase in average wages of participants covered by the
amendment.
``(d) Limitations on Accelerated Benefit Distributions.--
``(1) Funding percentage less than 60 percent.--A defined
benefit plan which is a single-employer plan shall provide
that, in any case in which the plan's adjusted funding target
attainment percentage for a plan year is less than 60 percent,
the plan may not pay any prohibited payment after the valuation
date for the plan year.
``(2) Bankruptcy.--A defined benefit plan which is a
single-employer plan shall provide that, during any period in
which the plan sponsor is a debtor in a case under title 11,
United States Code, or similar Federal or State law, the plan
may not pay any prohibited payment. The preceding sentence
shall not apply on or after the date on which the enrolled
actuary of the plan certifies that the adjusted funding target
attainment percentage of such plan is not less than 100
percent.
``(3) Limited payment if percentage at least 60 percent but
less than 80 percent.--
``(A) In general.--A defined benefit plan which is
a single-employer plan shall provide that, in any case
in which the plan's adjusted funding target attainment
percentage for a plan year is 60 percent or greater but
less than 80 percent, the plan may not pay any
prohibited payment after the valuation date for the
plan year to the extent the amount of the payment
exceeds the lesser of--
``(i) 50 percent of the amount of the
payment which could be made without regard to
this section, or
``(ii) the present value (determined under
guidance prescribed by the Pension Benefit
Guaranty Corporation, using the interest and
mortality assumptions under section 417(e)) of
the maximum guarantee with respect to the
participant under section 4022 of the Employee
Retirement Income Security Act of 1974.
``(B) One-time application.--
``(i) In general.--The plan shall also
provide that only 1 prohibited payment meeting
the requirements of subparagraph (A) may be
made with respect to any participant during any
period of consecutive plan years to which the
limitations under either paragraph (1) or (2)
or this paragraph applies.
``(ii) Treatment of beneficiaries.--For
purposes of this subparagraph, a participant
and any beneficiary on his behalf (including an
alternate payee, as defined in section
414(p)(8)) shall be treated as 1 participant.
If the accrued benefit of a participant is
allocated to such an alternate payee and 1 or
more other persons, the amount under
subparagraph (A) shall be allocated among such
persons in the same manner as the accrued
benefit is allocated unless the qualified
domestic relations order (as defined in section
414(p)(1)(A)) provides otherwise.
``(4) Exception.--This subsection shall not apply to any
plan for any plan year if the terms of such plan (as in effect
for the period beginning on September 1, 2005, and ending with
such plan year) provide for no benefit accruals with respect to
any participant during such period.
``(5) Prohibited payment.--For purpose of this subsection,
the term `prohibited payment' means--
``(A) any payment, in excess of the monthly amount
paid under a single life annuity (plus any social
security supplements described in the last sentence of
section 411(a)(9)), to a participant or beneficiary
whose annuity starting date (as defined in section
417(f)(2)) occurs during any period a limitation under
paragraph (1) or (2) is in effect,
``(B) any payment for the purchase of an
irrevocable commitment from an insurer to pay benefits,
and
``(C) any other payment specified by the Secretary
by regulations.
``(e) Limitation on Benefit Accruals for Plans With Severe Funding
Shortfalls.--
``(1) In general.--A defined benefit plan which is a
single-employer plan shall provide that, in any case in which
the plan's adjusted funding target attainment percentage for a
plan year is less than 60 percent, benefit accruals under the
plan shall cease as of the valuation date for the plan year.
``(2) Exemption.--Paragraph (1) shall cease to apply with
respect to any plan year, effective as of the first day of the
plan year, upon payment by the plan sponsor of a contribution
(in addition to any minimum required contribution under section
430) equal to the amount sufficient to result in an adjusted
funding target attainment percentage of 60 percent.
``(f) Rules Relating to Contributions Required to Avoid Benefit
Limitations.--
``(1) Security may be provided.--
``(A) In general.--For purposes of this section,
the adjusted funding target attainment percentage shall
be determined by treating as an asset of the plan any
security provided by a plan sponsor in a form meeting
the requirements of subparagraph (B).
``(B) Form of security.--The security required
under subparagraph (A) shall consist of--
``(i) a bond issued by a corporate surety
company that is an acceptable surety for
purposes of section 412 of the Employee
Retirement Income Security Act of 1974,
``(ii) cash, or United States obligations
which mature in 3 years or less, held in escrow
by a bank or similar financial institution, or
``(iii) such other form of security as is
satisfactory to the Secretary and the parties
involved.
``(C) Enforcement.--Any security provided under
subparagraph (A) may be perfected and enforced at any
time after the earlier of--
``(i) the date on which the plan
terminates,
``(ii) if there is a failure to make a
payment of the minimum required contribution
for any plan year beginning after the security
is provided, the due date for the payment under
section 430(j), or
``(iii) if the adjusted funding target
attainment percentage is less than 60 percent
for a consecutive period of 7 years, the
valuation date for the last year in the period.
``(D) Release of security.--The security shall be
released (and any amounts thereunder shall be refunded
together with any interest accrued thereon) at such
time as the Secretary may prescribe in regulations,
including regulations for partial releases of the
security by reason of increases in the funding target
attainment percentage.
``(2) Prefunding balance or funding standard carryover
balance may not be used.--No prefunding balance under section
430(f) or funding standard carryover balance may be used under
subsection (b), (c), or (e) to satisfy any payment an employer
may make under any such subsection to avoid or terminate the
application of any limitation under such subsection.
``(3) Deemed reduction of funding balances.--
``(A) In general.--Subject to subparagraph (C), in
any case in which a benefit limitation under subsection
(b), (c), (d), or (e) would (but for this subparagraph
and determined without regard to subsection (b)(2),
(c)(2), or (e)(2)) apply to such plan for the plan
year, the plan sponsor of such plan shall be treated
for purposes of this title as having made an election
under section 430(f) to reduce the prefunding balance
or funding standard carryover balance by such amount as
is necessary for such benefit limitation to not apply
to the plan for such plan year.
``(B) Exception for insufficient funding
balances.--Subparagraph (A) shall not apply with
respect to a benefit limitation for any plan year if
the application of subparagraph (A) would not result in
the benefit limitation not applying for such plan year.
``(C) Restrictions of certain rules to collectively
bargained plans.--With respect to any benefit
limitation under subsection (b), (c), or (e),
subparagraph (A) shall only apply in the case of a plan
maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or
more employers.
``(g) New Plans.--Subsections (b), (c), and (e) shall not apply to
a plan for the first 5 plan years of the plan. For purposes of this
subsection, the reference in this subsection to a plan shall include a
reference to any predecessor plan.
``(h) Presumed Underfunding for Purposes of Benefit Limitations.--
``(1) Presumption of continued underfunding.--In any case
in which a benefit limitation under subsection (b), (c), (d),
or (e) has been applied to a plan with respect to the plan year
preceding the current plan year, the adjusted funding target
attainment percentage of the plan for the current plan year
shall be presumed to be equal to the adjusted funding target
attainment percentage of the plan for the preceding plan year
until the enrolled actuary of the plan certifies the actual
adjusted funding target attainment percentage of the plan for
the current plan year.
``(2) Presumption of underfunding after 10th month.--In any
case in which no certification of the adjusted funding target
attainment percentage for the current plan year is made with
respect to the plan before the first day of the 10th month of
such year, for purposes of subsections (b), (c), (d), and (e),
such first day shall be deemed, for purposes of such
subsection, to be the valuation date of the plan for the
current plan year and the plan's adjusted funding target
attainment percentage shall be conclusively presumed to be less
than 60 percent as of such first day.
``(3) Presumption of underfunding after 4th month for
nearly underfunded plans.--In any case in which--
``(A) a benefit limitation under subsection (b),
(c), (d), or (e) did not apply to a plan with respect
to the plan year preceding the current plan year, but
the adjusted funding target attainment percentage of
the plan for such preceding plan year was not more than
10 percentage points greater than the percentage which
would have caused such subsection to apply to the plan
with respect to such preceding plan year, and
``(B) as of the first day of the 4th month of the
current plan year, the enrolled actuary of the plan has
not certified the actual adjusted funding target
attainment percentage of the plan for the current plan
year,
until the enrolled actuary so certifies, such first day shall
be deemed, for purposes of such subsection, to be the valuation
date of the plan for the current plan year and the adjusted
funding target attainment percentage of the plan as of such
first day shall, for purposes of such subsection, be presumed
to be equal to 10 percentage points less than the adjusted
funding target attainment percentage of the plan for such
preceding plan year.
``(i) Treatment of Plan as of Close of Prohibited or Cessation
Period.--For purposes of applying this title--
``(1) Operation of plan after period.--Unless the plan
provides otherwise, payments and accruals will resume effective
as of the day following the close of the period for which any
limitation of payment or accrual of benefits under subsection
(d) or (e) applies.
``(2) Treatment of affected benefits.--Nothing in this
subsection shall be construed as affecting the plan's treatment
of benefits which would have been paid or accrued but for this
section.
``(j) Terms Relating to Funding Target Attainment Percentage.--For
purposes of this section--
``(1) In general.--The term `funding target attainment
percentage' has the same meaning given such term by section
430(d)(2).
``(2) Adjusted funding target attainment percentage.--The
term `adjusted funding target attainment percentage' means the
funding target attainment percentage which is determined under
paragraph (1) by increasing each of the amounts under
subparagraphs (A) and (B) of section 430(d)(2) by the aggregate
amount of purchases of annuities for employees other than
highly compensated employees (as defined in section 414(q))
which were made by the plan during the preceding 2 plan years.
``(3) Application to plans which are fully funded without
regard to reductions for funding balances.--
``(A) In general.--In the case of a plan for any
plan year, if the funding target attainment percentage
is 100 percent or more (determined without regard to
this paragraph and without regard to the reduction in
the value of assets under section 430(f)(4)(A)), the
funding target attainment percentage for purposes of
paragraph (1) shall be determined without regard to
such reduction.
``(B) Transition rule.--Subparagraph (A) shall be
applied to plan years beginning after 2007 and before
2011 by substituting for `100 percent' the applicable
percentage determined in accordance with the following
table:
``In the case of a plan year The applicable
beginning in calendar year: percentage is
2008................................................... 92
2009................................................... 94
2010................................................... 96.
``(C) Limitation.--Subparagraph (B) shall not apply
with respect to any plan year after 2008 unless the
funding target attainment percentage (determined
without regard to this paragraph) of the plan for each
preceding plan year after 2007 was not less than the
applicable percentage with respect to such preceding
plan year determined under subparagraph (B).
``(k) Special Rule for 2008.--For purposes of this section, in the
case of plan years beginning in 2008, the funding target attainment
percentage for the preceding plan year may be determined using such
methods of estimation as the Secretary may provide.''.
(2) Clerical amendment.--The table of parts for subchapter
D of chapter 1 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new item:
``Part III--Rules Relating to Minimum Funding Standards and Benefit
Limitations''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
(2) Collective bargaining exception.--In the case of a plan
maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more
employers ratified before January 1, 2008, the amendments made
by this section shall not apply to plan years beginning before
the earlier of--
(A) the later of--
(i) the date on which the last collective
bargaining agreement relating to the plan
terminates (determined without regard to any
extension thereof agreed to after the date of
the enactment of this Act), or
(ii) the first day of the first plan year
to which the amendments made by this subsection
would (but for this subparagraph) apply, or
(B) January 1, 2010.
For purposes of subparagraph (A)(i), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any requirement
added by this section shall not be treated as a termination of
such collective bargaining agreement.
SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS.
(a) Amendments Related to Qualification Requirements.--
(1) Section 401(a)(29) of the Internal Revenue Code of 1986
is amended to read as follows:
``(29) Benefit limitations on plans in at-risk status.--In
the case of a defined benefit plan (other than a multiemployer
plan) to which the requirements of section 412 apply, the trust
of which the plan is a part shall not constitute a qualified
trust under this subsection unless the plan meets the
requirements of section 436.''.
(2) Section 401(a)(32) of such Code is amended--
(A) in subparagraph (A), by striking ``412(m)(5)''
each place it appears and inserting ``section
430(j)(4)'', and
(B) in subparagraph (C), by striking ``section
412(m)'' and inserting ``section 430(j)''.
(3) Section 401(a)(33) of such Code is amended--
(A) in subparagraph (B)(i), by striking ``funded
current liability percentage (within the meaning of
section 412(l)(8))'' and inserting ``funding target
attainment percentage (as defined in section
430(d)(2))'',
(B) in subparagraph (B)(iii), by striking
``subsection 412(c)(8)'' and inserting ``section
412(c)(2)'', and
(C) in subparagraph (D), by striking ``section
412(c)(11) (without regard to subparagraph (B)
thereof)'' and inserting ``section 412(b)(2) (without
regard to subparagraph (B) thereof)''.
(b) Vesting Rules.--Section 411 of such Code is amended--
(1) by striking ``section 412(c)(8)'' in subsection
(a)(3)(C) and inserting ``section 412(c)(2)'',
(2) in subsection (b)(1)(F)--
(A) by striking ``paragraphs (2) and (3) of section
412(i)'' in clause (ii) and inserting ``subparagraphs
(B) and (C) of section 412(e)(3)'', and
(B) by striking ``paragraphs (4), (5), and (6) of
section 412(i)'' and inserting ``subparagraphs (D),
(E), and (F) of section 412(e)(3)'', and
(3) by striking ``section 412(c)(8)'' in subsection
(d)(6)(A) and inserting ``section 412(e)(2)''.
(c) Mergers and Consolidations of Plans.--Subclause (I) of section
414(l)(2)(B)(i) of such Code is amended to read as follows:
``(I) the amount determined under
section 431(c)(6)(A)(i) in the case of
a multiemployer plan (and the sum of
the funding shortfall and target normal
cost determined under section 430 in
the case of any other plan), over''.
(d) Transfer of Excess Pension Assets to Retiree Health Accounts.--
(1) Section 420(e)(2) of such Code is amended to read as
follows:
``(2) Excess pension assets.--The term `excess pension
assets' means the excess (if any) of--
``(A) the lesser of--
``(i) the fair market value of the plan's
assets (reduced by the prefunding balance and
funding standard carryover balance determined
under section 430(f)), or
``(ii) the value of plan assets as
determined under section 430(g)(3) after
reduction under section 430(f), over
``(B) 125 percent of the sum of the funding
shortfall and the target normal cost determined under
section 430 for such plan year.''.
(2) Section 420(e)(4) of such Code is amended to read as
follows:
``(4) Coordination with section 430.--In the case of a
qualified transfer, any assets so transferred shall not, for
purposes of this section and section 430, be treated as assets
in the plan.''.
(e) Excise Taxes.--
(1) In general.--Subsections (a) and (b) of section 4971 of
such Code are amended to read as follows:
``(a) Initial Tax.--If at any time during any taxable year an
employer maintains a plan to which section 412 applies, there is hereby
imposed for the taxable year a tax equal to--
``(1) in the case of a single-employer plan, 10 percent of
the aggregate unpaid minimum required contributions for all
plan years remaining unpaid as of the end of any plan year
ending with or within the taxable year, and
``(2) in the case of a multiemployer plan, 5 percent of the
accumulated funding deficiency determined under section 431 as
of the end of any plan year ending with or within the taxable
year.
``(b) Additional Tax.--If--
``(1) a tax is imposed under subsection (a)(1) on any
unpaid required minimum contribution and such amount remains
unpaid as of the close of the taxable period, or
``(2) a tax is imposed under subsection (a)(2) on any
accumulated funding deficiency and the accumulated funding
deficiency is not corrected within the taxable period,
there is hereby imposed a tax equal to 100 percent of the unpaid
minimum required contribution or accumulated funding deficiency,
whichever is applicable, to the extent not so paid or corrected.''.
(2) Section 4971(c) of such Code is amended--
(A) by striking ``the last two sentences of section
412(a)'' in paragraph (1) and inserting ``section
431'', and
(B) by adding at the end the following new
paragraph:
``(4) Unpaid minimum required contribution.--
``(A) In general.--The term `unpaid minimum
required contribution' means, with respect to any plan
year, any minimum required contribution under section
430 for the plan year which is not paid on or before
the due date (as determined under section 430(j)(1))
for the plan year.
``(B) Ordering rule.--Any payment to or under a
plan for any plan year shall be allocated first to
unpaid minimum required contributions for all preceding
plan years on a first-in, first-out basis and then to
the minimum required contribution under section 430 for
the plan year.''.
(3) Section 4971(e)(1) of such Code is amended by striking
``section 412(b)(3)(A)'' and inserting ``section
412(a)(1)(A)''.
(4) Section 4971(f)(1) of such Code is amended--
(A) by striking ``section 412(m)(5)'' and inserting
``section 430(j)(4)'', and
(B) by striking ``section 412(m)'' and inserting
``section 430(j)''.
(5) Section 4972(c)(7) of such Code is amended by striking
``except to the extent that such contributions exceed the full-
funding limitation (as defined in section 412(c)(7), determined
without regard to subparagraph (A)(i)(I) thereof)'' and
inserting ``except, in the case of a multiemployer plan, to the
extent that such contributions exceed the full-funding
limitation (as defined in section 431(c)(6))''.
(f) Reporting Requirements.--Section 6059(b) of such Code is
amended--
(1) by striking ``the accumulated funding deficiency (as
defined in section 412(a))'' in paragraph (2) and inserting
``the minimum required contribution determined under section
430, or the accumulated funding deficiency determined under
section 431,'', and
(2) by striking paragraph (3)(B) and inserting:
``(B) the requirements for reasonable actuarial
assumptions under section 430(h)(1) or 431(c)(3),
whichever are applicable, have been complied with.''.
SEC. 115. MODIFICATION OF TRANSITION RULE TO PENSION FUNDING
REQUIREMENTS.
(a) In General.--In the case of a plan that--
(1) was not required to pay a variable rate premium for the
plan year beginning in 1996,
(2) has not, in any plan year beginning after 1995, merged
with another plan (other than a plan sponsored by an employer
that was in 1996 within the controlled group of the plan
sponsor); and
(3) is sponsored by a company that is engaged primarily in
the interurban or interstate passenger bus service,
the rules described in subsection (b) shall apply for any plan year
beginning after December 31, 2007.
(b) Modified Rules.--The rules described in this subsection are as
follows:
(1) For purposes of section 430(j)(3) of the Internal
Revenue Code of 1986 and section 303(j)(3) of the Employee
Retirement Income Security Act of 1974, the plan shall be
treated as not having a funding shortfall for any plan year.
(2) For purposes of--
(A) determining unfunded vested benefits under
section 4006(a)(3)(E)(iii) of such Act, and
(B) determining any present value or making any
computation under section 412 of such Code or section
302 of such Act,
the mortality table shall be the mortality table used by the
plan.
(3) Section 430(c)(5)(B) of such Code and section
303(c)(5)(B) of such Act (relating to phase-in of funding
target for exemption from new shortfall amortization base)
shall each be applied by substituting ``2012'' for ``2011''
therein and by substituting for the table therein the
following:
The
applicable
In the case of a plan year beginning in calendar year: percentage
is:
2008...................................................... 90 percent
2009...................................................... 92 percent
2010...................................................... 94 percent
2011...................................................... 96 percent.
(c) Definitions.--Any term used in this section which is also used
in section 430 of such Code or section 303 of such Act shall have the
meaning provided such term in such section. If the same term has a
different meaning in such Code and such Act, such term shall, for
purposes of this section, have the meaning provided by such Code when
applied with respect to such Code and the meaning provided by such Act
when applied with respect to such Act.
(d) Special Rule for 2006 and 2007.--
(1) In general.--Section 769(c)(3) of the Retirement
Protection Act of 1994, as added by section 201 of the Pension
Funding Equity Act of 2004, is amended by striking ``and 2005''
and inserting ``, 2005, 2006, and 2007''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to plan years beginning after December 31, 2005.
(e) Conforming Amendment.--
(1) Section 769 of the Retirement Protection Act of 1994 is
amended by striking subsection (c).
(2) The amendment made by paragraph (1) shall take effect
on December 31, 2007, and shall apply to plan years beginning
after such date.
SEC. 116. RESTRICTIONS ON FUNDING OF NONQUALIFIED DEFERRED COMPENSATION
PLANS BY EMPLOYERS MAINTAINING UNDERFUNDED OR TERMINATED
SINGLE-EMPLOYER PLANS.
(a) Amendments of Internal Revenue Code.--Subsection (b) of section
409A of the Internal Revenue Code of 1986 (providing rules relating to
funding) is amended by redesignating paragraphs (3) and (4) as
paragraphs (4) and (5), respectively, and by inserting after paragraph
(2) the following new paragraph:
``(3) Treatment of employer's defined benefit plan during
restricted period.--
``(A) In general.--If-
``(i) during any restricted period with
respect to a single-employer defined benefit
plan, assets are set aside or reserved
(directly or indirectly) in a trust (or other
arrangement as determined by the Secretary) or
transferred to such a trust or other
arrangement for purposes of paying deferred
compensation of an applicable covered employee
under a nonqualified deferred compensation plan
of the plan sponsor or member of a controlled
group which includes the plan sponsor, or
``(ii) a nonqualified deferred compensation
plan of the plan sponsor or member of a
controlled group which includes the plan
sponsor provides that assets will become
restricted to the provision of benefits under
the plan in connection with such restricted
period (or other similar financial measure
determined by the Secretary) with respect to
the defined benefit plan, or assets are so
restricted,
such assets shall, for purposes of section 83, be
treated as property transferred in connection with the
performance of services whether or not such assets are
available to satisfy claims of general creditors.
Clause (i) shall not apply with respect to any assets
which are so set aside before the restricted period
with respect to the defined benefit plan.
``(B) Restricted period.--For purposes of this
section, the term `restricted period' means, with
respect to any plan described in subparagraph (A)--
``(i) any period during which the plan is
in at-risk status (as defined in section
430(i));
``(ii) any period the plan sponsor is a
debtor in a case under title 11, United States
Code, or similar Federal or State law, and
``(iii) the 12-month period beginning on
the date which is 6 months before the
termination date of the plan if, as of the
termination date, the plan is not sufficient
for benefit liabilities (within the meaning of
section 4041 of the Employee Retirement Income
Security Act of 1974).
``(C) Special rule for payment of taxes on deferred
compensation included in income.--If an employer
provides directly or indirectly for the payment of any
Federal, State, or local income taxes with respect to
any compensation required to be included in gross
income by reason of this paragraph--
``(i) interest shall be imposed under
subsection (a)(1)(B)(i)(I) on the amount of
such payment in the same manner as if such
payment was part of the deferred compensation
to which it relates,
``(ii) such payment shall be taken into
account in determining the amount of the
additional tax under subsection
(a)(1)(B)(i)(II) in the same manner as if such
payment was part of the deferred compensation
to which it relates, and
``(iii) no deduction shall be allowed under
this title with respect to such payment.
``(D) Other definitions.--For purposes of this
section--
``(i) Applicable covered employee.--The
term `applicable covered employee' means any--
``(I) covered employee of a plan
sponsor,
``(II) covered employee of a member
of a controlled group which includes
the plan sponsor, and
``(III) former employee who was a
covered employee at the time of
termination of employment with the plan
sponsor or a member of a controlled
group which includes the plan sponsor.
``(ii) Covered employee.--The term `covered
employee' means an individual described in
section 162(m)(3) or an individual subject to
the requirements of section 16(a) of the
Securities Exchange Act of 1934.''.
(b) Conforming Amendments.--Paragraphs (4) and (5) of section
409A(b) of such Code, as redesignated by subsection (a) of this
subsection, are each amended by striking ``paragraph (1) or (2)'' each
place it appears and inserting ``paragraph (1), (2), or (3)''.
(c) Effective Date.--The amendments made by this section shall
apply to transfers or other reservation of assets after the date of the
enactment of this Act.
TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS AND
RELATED PROVISIONS
Subtitle A--Amendments to Employee Retirement Income Security Act of
1974
SEC. 201. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS.
(a) In General.--Part 3 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (as amended by this Act) is
amended by inserting after section 303 the following new section:
``minimum funding standards for multiemployer plans
``Sec. 304. (a) In General.--For purposes of section 302, the
accumulated funding deficiency of a multiemployer plan for any plan
year is--
``(1) except as provided in paragraph (2), the amount,
determined as of the end of the plan year, equal to the excess
(if any) of the total charges to the funding standard account
of the plan for all plan years (beginning with the first plan
year for which this part applies to the plan) over the total
credits to such account for such years, and
``(2) if the multiemployer plan is in reorganization for
any plan year, the accumulated funding deficiency of the plan
determined under section 4243.
``(b) Funding Standard Account.--
``(1) Account required.--Each multiemployer plan to which
this part applies shall establish and maintain a funding
standard account. Such account shall be credited and charged
solely as provided in this section.
``(2) Charges to account.--For a plan year, the funding
standard account shall be charged with the sum of--
``(A) the normal cost of the plan for the plan
year,
``(B) the amounts necessary to amortize in equal
annual installments (until fully amortized)--
``(i) in the case of a plan which comes
into existence on or after January 1, 2008, the
unfunded past service liability under the plan
on the first day of the first plan year to
which this section applies, over a period of 15
plan years,
``(ii) separately, with respect to each
plan year, the net increase (if any) in
unfunded past service liability under the plan
arising from plan amendments adopted in such
year, over a period of 15 plan years,
``(iii) separately, with respect to each
plan year, the net experience loss (if any)
under the plan, over a period of 15 plan years,
and
``(iv) separately, with respect to each
plan year, the net loss (if any) resulting from
changes in actuarial assumptions used under the
plan, over a period of 15 plan years,
``(C) the amount necessary to amortize each waived
funding deficiency (within the meaning of section
302(c)(3)) for each prior plan year in equal annual
installments (until fully amortized) over a period of
15 plan years,
``(D) the amount necessary to amortize in equal
annual installments (until fully amortized) over a
period of 5 plan years any amount credited to the
funding standard account under section 302(b)(3)(D) (as
in effect on the day before the date of the enactment
of the Pension Protection Act of 2006), and
``(E) the amount necessary to amortize in equal
annual installments (until fully amortized) over a
period of 20 years the contributions which would be
required to be made under the plan but for the
provisions of section 302(c)(7)(A)(i)(I) (as in effect
on the day before the date of the enactment of the
Pension Protection Act of 2006).
``(3) Credits to account.--For a plan year, the funding
standard account shall be credited with the sum of--
``(A) the amount considered contributed by the
employer to or under the plan for the plan year,
``(B) the amount necessary to amortize in equal
annual installments (until fully amortized)--
``(i) separately, with respect to each plan
year, the net decrease (if any) in unfunded
past service liability under the plan arising
from plan amendments adopted in such year, over
a period of 15 plan years,
``(ii) separately, with respect to each
plan year, the net experience gain (if any)
under the plan, over a period of 15 plan years,
and
``(iii) separately, with respect to each
plan year, the net gain (if any) resulting from
changes in actuarial assumptions used under the
plan, over a period of 15 plan years,
``(C) the amount of the waived funding deficiency
(within the meaning of section 302(c)(3)) for the plan
year, and
``(D) in the case of a plan year for which the
accumulated funding deficiency is determined under the
funding standard account if such plan year follows a
plan year for which such deficiency was determined
under the alternative minimum funding standard under
section 305 (as in effect on the day before the date of
the enactment of the Pension Protection Act of 2006),
the excess (if any) of any debit balance in the funding
standard account (determined without regard to this
subparagraph) over any debit balance in the alternative
minimum funding standard account.
``(4) Special rule for amounts first amortized in plan
years before 2008.--In the case of any amount amortized under
section 302(b) (as in effect on the day before the date of the
enactment of the Pension Protection Act of 2006) over any
period beginning with a plan year beginning before 2008, in
lieu of the amortization described in paragraphs (2)(B) and
(3)(B), such amount shall continue to be amortized under such
section as so in effect.
``(5) Combining and offsetting amounts to be amortized.--
Under regulations prescribed by the Secretary of the Treasury,
amounts required to be amortized under paragraph (2) or
paragraph (3), as the case may be--
``(A) may be combined into one amount under such
paragraph to be amortized over a period determined on
the basis of the remaining amortization period for all
items entering into such combined amount, and
``(B) may be offset against amounts required to be
amortized under the other such paragraph, with the
resulting amount to be amortized over a period
determined on the basis of the remaining amortization
periods for all items entering into whichever of the
two amounts being offset is the greater.
``(6) Interest.--The funding standard account (and items
therein) shall be charged or credited (as determined under
regulations prescribed by the Secretary of the Treasury) with
interest at the appropriate rate consistent with the rate or
rates of interest used under the plan to determine costs.
``(7) Special rules relating to charges and credits to
funding standard account.--For purposes of this part--
``(A) Withdrawal liability.--Any amount received by
a multiemployer plan in payment of all or part of an
employer's withdrawal liability under part 1 of
subtitle E of title IV shall be considered an amount
contributed by the employer to or under the plan. The
Secretary of the Treasury may prescribe by regulation
additional charges and credits to a multiemployer
plan's funding standard account to the extent necessary
to prevent withdrawal liability payments from being
unduly reflected as advance funding for plan
liabilities.
``(B) Adjustments when a multiemployer plan leaves
reorganization.--If a multiemployer plan is not in
reorganization in the plan year but was in
reorganization in the immediately preceding plan year,
any balance in the funding standard account at the
close of such immediately preceding plan year--
``(i) shall be eliminated by an offsetting
credit or charge (as the case may be), but
``(ii) shall be taken into account in
subsequent plan years by being amortized in
equal annual installments (until fully
amortized) over 30 plan years.
The preceding sentence shall not apply to the extent of
any accumulated funding deficiency under section
4243(a) as of the end of the last plan year that the
plan was in reorganization.
``(C) Plan payments to supplemental program or
withdrawal liability payment fund.--Any amount paid by
a plan during a plan year to the Pension Benefit
Guaranty Corporation pursuant to section 4222 of this
Act or to a fund exempt under section 501(c)(22) of the
Internal Revenue Code of 1986 pursuant to section 4223
of this Act shall reduce the amount of contributions
considered received by the plan for the plan year.
``(D) Interim withdrawal liability payments.--Any
amount paid by an employer pending a final
determination of the employer's withdrawal liability
under part 1 of subtitle E of title IV and subsequently
refunded to the employer by the plan shall be charged
to the funding standard account in accordance with
regulations prescribed by the Secretary of the
Treasury.
``(E) Election for deferral of charge for portion
of net experience loss.--If an election is in effect
under section 302(b)(7)(F) (as in effect on the day
before the date of the enactment of the Pension
Protection Act of 2006) for any plan year, the funding
standard account shall be charged in the plan year to
which the portion of the net experience loss deferred
by such election was deferred with the amount so
deferred (and paragraph (2)(B)(iii) shall not apply to
the amount so charged).
``(F) Financial assistance.--Any amount of any
financial assistance from the Pension Benefit Guaranty
Corporation to any plan, and any repayment of such
amount, shall be taken into account under this section
and section 302 in such manner as is determined by the
Secretary of the Treasury.
``(G) Short-term benefits.--To the extent that any
plan amendment increases the unfunded past service
liability under the plan by reason of an increase in
benefits which are not payable as a life annuity but
are payable under the terms of the plan for a period
that does not exceed 14 years from the effective date
of the amendment, paragraph (2)(B)(ii) shall be applied
separately with respect to such increase in unfunded
past service liability by substituting the number of
years of the period during which such benefits are
payable for `15'.
``(c) Additional Rules.--
``(1) Determinations to be made under funding method.--For
purposes of this part, normal costs, accrued liability, past
service liabilities, and experience gains and losses shall be
determined under the funding method used to determine costs
under the plan.
``(2) Valuation of assets.--
``(A) In general.--For purposes of this part, the
value of the plan's assets shall be determined on the
basis of any reasonable actuarial method of valuation
which takes into account fair market value and which is
permitted under regulations prescribed by the Secretary
of the Treasury.
``(B) Election with respect to bonds.--The value of
a bond or other evidence of indebtedness which is not
in default as to principal or interest may, at the
election of the plan administrator, be determined on an
amortized basis running from initial cost at purchase
to par value at maturity or earliest call date. Any
election under this subparagraph shall be made at such
time and in such manner as the Secretary of the
Treasury shall by regulations provide, shall apply to
all such evidences of indebtedness, and may be revoked
only with the consent of such Secretary.
``(3) Actuarial assumptions must be reasonable.--For
purposes of this section, all costs, liabilities, rates of
interest, and other factors under the plan shall be determined
on the basis of actuarial assumptions and methods--
``(A) each of which is reasonable (taking into
account the experience of the plan and reasonable
expectations), and
``(B) which, in combination, offer the actuary's
best estimate of anticipated experience under the plan.
``(4) Treatment of certain changes as experience gain or
loss.--For purposes of this section, if--
``(A) a change in benefits under the Social
Security Act or in other retirement benefits created
under Federal or State law, or
``(B) a change in the definition of the term
`wages' under section 3121 of the Internal Revenue Code
of 1986, or a change in the amount of such wages taken
into account under regulations prescribed for purposes
of section 401(a)(5) of such Code,
results in an increase or decrease in accrued liability under a
plan, such increase or decrease shall be treated as an
experience loss or gain.
``(5) Full funding.--If, as of the close of a plan year, a
plan would (without regard to this paragraph) have an
accumulated funding deficiency in excess of the full funding
limitation--
``(A) the funding standard account shall be
credited with the amount of such excess, and
``(B) all amounts described in subparagraphs (B),
(C), and (D) of subsection (b) (2) and subparagraph (B)
of subsection (b)(3) which are required to be amortized
shall be considered fully amortized for purposes of
such subparagraphs.
``(6) Full-funding limitation.--
``(A) In general.--For purposes of paragraph (5),
the term `full-funding limitation' means the excess (if
any) of--
``(i) the accrued liability (including
normal cost) under the plan (determined under
the entry age normal funding method if such
accrued liability cannot be directly calculated
under the funding method used for the plan),
over
``(ii) the lesser of--
``(I) the fair market value of the
plan's assets, or
``(II) the value of such assets
determined under paragraph (2).
``(B) Minimum amount.--
``(i) In general.--In no event shall the
full-funding limitation determined under
subparagraph (A) be less than the excess (if
any) of--
``(I) 90 percent of the current
liability of the plan (including the
expected increase in current liability
due to benefits accruing during the
plan year), over
``(II) the value of the plan's
assets determined under paragraph (2).
``(ii) Assets.--For purposes of clause (i),
assets shall not be reduced by any credit
balance in the funding standard account.
``(C) Full funding limitation.--For purposes of
this paragraph, unless otherwise provided by the plan,
the accrued liability under a multiemployer plan shall
not include benefits which are not nonforfeitable under
the plan after the termination of the plan (taking into
consideration section 411(d)(3) of the Internal Revenue
Code of 1986).
``(D) Current liability.--For purposes of this
paragraph--
``(i) In general.--The term `current
liability' means all liabilities to employees
and their beneficiaries under the plan.
``(ii) Treatment of unpredictable
contingent event benefits.--For purposes of
clause (i), any benefit contingent on an event
other than--
``(I) age, service, compensation,
death, or disability, or
``(II) an event which is reasonably
and reliably predictable (as determined
by the Secretary of the Treasury),
shall not be taken into account until the event
on which the benefit is contingent occurs.
``(iii) Interest rate used.--The rate of
interest used to determine current liability
under this paragraph shall be the rate of
interest determined under subparagraph (E).
``(iv) Mortality tables.--
``(I) Commissioners' standard
table.--In the case of plan years
beginning before the first plan year to
which the first tables prescribed under
subclause (II) apply, the mortality
table used in determining current
liability under this paragraph shall be
the table prescribed by the Secretary
of the Treasury which is based on the
prevailing commissioners' standard
table (described in section
807(d)(5)(A) of the Internal Revenue
Code of 1986) used to determine
reserves for group annuity contracts
issued on January 1, 1993.
``(II) Secretarial authority.--The
Secretary of the Treasury may by
regulation prescribe for plan years
beginning after December 31, 1999,
mortality tables to be used in
determining current liability under
this subsection. Such tables shall be
based upon the actual experience of
pension plans and projected trends in
such experience. In prescribing such
tables, such Secretary shall take into
account results of available
independent studies of mortality of
individuals covered by pension plans.
``(v) Separate mortality tables for the
disabled.--Notwithstanding clause (iv)--
``(I) In general.--The Secretary of
the Treasury shall establish mortality
tables which may be used (in lieu of
the tables under clause (iv)) to
determine current liability under this
subsection for individuals who are
entitled to benefits under the plan on
account of disability. Such Secretary
shall establish separate tables for
individuals whose disabilities occur in
plan years beginning before January 1,
1995, and for individuals whose
disabilities occur in plan years
beginning on or after such date.
``(II) Special rule for
disabilities occurring after 1994.--In
the case of disabilities occurring in
plan years beginning after December 31,
1994, the tables under subclause (I)
shall apply only with respect to
individuals described in such subclause
who are disabled within the meaning of
title II of the Social Security Act and
the regulations thereunder.
``(vi) Periodic review.--The Secretary of
the Treasury shall periodically (at least every
5 years) review any tables in effect under this
subparagraph and shall, to the extent such
Secretary determines necessary, by regulation
update the tables to reflect the actual
experience of pension plans and projected
trends in such experience.
``(E) Required change of interest rate.--For
purposes of determining a plan's current liability for
purposes of this paragraph--
``(i) In general.--If any rate of interest
used under the plan under subsection (b)(6) to
determine cost is not within the permissible
range, the plan shall establish a new rate of
interest within the permissible range.
``(ii) Permissible range.--For purposes of
this subparagraph--
``(I) In general.--Except as
provided in subclause (II), the term
`permissible range' means a rate of
interest which is not more than 5
percent above, and not more than 10
percent below, the weighted average of
the rates of interest on 30-year
Treasury securities during the 4-year
period ending on the last day before
the beginning of the plan year.
``(II) Secretarial authority.--If
the Secretary of the Treasury finds
that the lowest rate of interest
permissible under subclause (I) is
unreasonably high, such Secretary may
prescribe a lower rate of interest,
except that such rate may not be less
than 80 percent of the average rate
determined under such subclause.
``(iii) Assumptions.--Notwithstanding
paragraph (3)(A), the interest rate used under
the plan shall be--
``(I) determined without taking
into account the experience of the plan
and reasonable expectations, but
``(II) consistent with the
assumptions which reflect the purchase
rates which would be used by insurance
companies to satisfy the liabilities
under the plan.
``(7) Annual valuation.--
``(A) In general.--For purposes of this section, a
determination of experience gains and losses and a
valuation of the plan's liability shall be made not
less frequently than once every year, except that such
determination shall be made more frequently to the
extent required in particular cases under regulations
prescribed by the Secretary of the Treasury.
``(B) Valuation date.--
``(i) Current year.--Except as provided in
clause (ii), the valuation referred to in
subparagraph (A) shall be made as of a date
within the plan year to which the valuation
refers or within one month prior to the
beginning of such year.
``(ii) Use of prior year valuation.--The
valuation referred to in subparagraph (A) may
be made as of a date within the plan year prior
to the year to which the valuation refers if,
as of such date, the value of the assets of the
plan are not less than 100 percent of the
plan's current liability (as defined in
paragraph (6)(D) without regard to clause (iv)
thereof).
``(iii) Adjustments.--Information under
clause (ii) shall, in accordance with
regulations, be actuarially adjusted to reflect
significant differences in participants.
``(iv) Limitation.--A change in funding
method to use a prior year valuation, as
provided in clause (ii), may not be made unless
as of the valuation date within the prior plan
year, the value of the assets of the plan are
not less than 125 percent of the plan's current
liability (as defined in paragraph (6)(D)
without regard to clause (iv) thereof).
``(8) Time when certain contributions deemed made.--For
purposes of this section, any contributions for a plan year
made by an employer after the last day of such plan year, but
not later than two and one-half months after such day, shall be
deemed to have been made on such last day. For purposes of this
subparagraph, such two and one-half month period may be
extended for not more than six months under regulations
prescribed by the Secretary of the Treasury.
``(d) Extension of Amortization Periods for Multiemployer Plans.--
``(1) Automatic extension upon application by certain
plans.--
``(A) In general.--If the plan sponsor of a
multiemployer plan--
``(i) submits to the Secretary of the
Treasury an application for an extension of the
period of years required to amortize any
unfunded liability described in any clause of
subsection (b)(2)(B) or described in subsection
(b)(4), and
``(ii) includes with the application a
certification by the plan's actuary described
in subparagraph (B),
the Secretary of the Treasury shall extend the
amortization period for the period of time (not in
excess of 5 years) specified in the application. Such
extension shall be in addition to any extension under
paragraph (2).
``(B) Criteria.--A certification with respect to a
multiemployer plan is described in this subparagraph if
the plan's actuary certifies that, based on reasonable
assumptions--
``(i) absent the extension under
subparagraph (A), the plan would have an
accumulated funding deficiency in the current
plan year or any of the 9 succeeding plan
years,
``(ii) the plan sponsor has adopted a plan
to improve the plan's funding status,
``(iii) the plan is projected to have
sufficient assets to timely pay expected
benefits and anticipated expenditures over the
amortization period as extended, and
``(iv) the notice required under paragraph
(3)(A) has been provided.
``(C) Termination.--The preceding provisions of
this paragraph shall not apply with respect to any
application submitted after December 31, 2014.
``(2) Alternative extension.--
``(A) In general.--If the plan sponsor of a
multiemployer plan submits to the Secretary of the
Treasury an application for an extension of the period
of years required to amortize any unfunded liability
described in any clause of subsection (b)(2)(B) or
described in subsection (b)(4), the Secretary of the
Treasury may extend the amortization period for a
period of time (not in excess of 10 years reduced by
the number of years of any extension under paragraph
(1) with respect to such unfunded liability) if the
Secretary of the Treasury makes the determination
described in subparagraph (B). Such extension shall be
in addition to any extension under paragraph (1).
``(B) Determination.--The Secretary of the Treasury
may grant an extension under subparagraph (A) if such
Secretary determines that--
``(i) such extension would carry out the
purposes of this Act and would provide adequate
protection for participants under the plan and
their beneficiaries, and
``(ii) the failure to permit such extension
would--
``(I) result in a substantial risk
to the voluntary continuation of the
plan, or a substantial curtailment of
pension benefit levels or employee
compensation, and
``(II) be adverse to the interests
of plan participants in the aggregate.
``(C) Action by secretary of the treasury.--The
Secretary of the Treasury shall act upon any
application for an extension under this paragraph
within 180 days of the submission of such application.
If such Secretary rejects the application for an
extension under this paragraph, such Secretary shall
provide notice to the plan detailing the specific
reasons for the rejection, including references to the
criteria set forth above.
``(3) Advance notice.--
``(A) In general.--The Secretary of the Treasury
shall, before granting an extension under this
subsection, require each applicant to provide evidence
satisfactory to such Secretary that the applicant has
provided notice of the filing of the application for
such extension to each affected party (as defined in
section 4001(a)(21)) with respect to the affected plan.
Such notice shall include a description of the extent
to which the plan is funded for benefits which are
guaranteed under title IV and for benefit liabilities.
``(B) Consideration of relevant information.--The
Secretary of the Treasury shall consider any relevant
information provided by a person to whom notice was
given under paragraph (1).''.
(b) Shortfall Funding Method.--
(1) In general.--A multiemployer plan meeting the criteria
of paragraph (2) may adopt, use, or cease using, the shortfall
funding method and such adoption, use, or cessation of use of
such method, shall be deemed approved by the Secretary of the
Treasury under section 302(d)(1) of the Employee Retirement
Income Security Act of 1974 and section 412(d)(1) of the
Internal Revenue Code of 1986.
(2) Criteria.--A multiemployer pension plan meets the
criteria of this clause if--
(A) the plan has not used the shortfall funding
method during the 5-year period ending on the day
before the date the plan is to use the method under
paragraph (1); and
(B) the plan is not operating under an amortization
period extension under section 304(d) of such Act and
did not operate under such an extension during such 5-
year period.
(3) Shortfall funding method defined.--For purposes of this
subsection, the term ``shortfall funding method'' means the
shortfall funding method described in Treasury Regulations
section 1.412(c)(1)-2 (26 C.F.R. 1.412(c)(1)-2).
(4) Benefit restrictions to apply.--The benefit
restrictions under section 302(c)(7) of such Act and section
412(c)(7) of such Code shall apply during any period a
multiemployer plan is on the shortfall funding method pursuant
to this subsection.
(5) Use of shortfall method not to preclude other
options.--Nothing in this subsection shall be construed to
affect a multiemployer plan's ability to adopt the shortfall
funding method with the Secretary's permission under otherwise
applicable regulations or to affect a multiemployer plan's
right to change funding methods, with or without the
Secretary's consent, as provided in applicable rules and
regulations.
(c) Conforming Amendments.--
(1) Section 301 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1081) is amended by striking subsection
(d).
(2) The table of contents in section 1 of such Act (as
amended by this Act) is amended by inserting after the item
relating to section 303 the following new item:
``Sec. 304. Minimum funding standards for multiemployer plans.''.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after 2007.
(2) Special rule for certain amortization extensions.--If
the Secretary of the Treasury grants an extension under section
304 of the Employee Retirement Income Security Act of 1974 and
section 412(e) of the Internal Revenue Code of 1986 with
respect to any application filed with the Secretary of the
Treasury on or before June 30, 2005, the extension (and any
modification thereof) shall be applied and administered under
the rules of such sections as in effect before the enactment of
this Act, including the use of the rate of interest determined
under section 6621(b) of such Code.
SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN
ENDANGERED OR CRITICAL STATUS.
(a) In General.--Part 3 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (as amended by the preceding
provisions of this Act) is amended by inserting after section 304 the
following new section:
``additional funding rules for multiemployer plans in endangered status
or critical status
``Sec. 305. (a) General Rule.--For purposes of this part, in the
case of a multiemployer plan in effect on July 16, 2006--
``(1) if the plan is in endangered status--
``(A) the plan sponsor shall adopt and implement a
funding improvement plan in accordance with the
requirements of subsection (c), and
``(B) the requirements of subsection (d) shall
apply during the funding plan adoption period and the
funding improvement period, and
``(2) if the plan is in critical status--
``(A) the plan sponsor shall adopt and implement a
rehabilitation plan in accordance with the requirements
of subsection (e), and
``(B) the requirements of subsection (f) shall
apply during the rehabilitation plan adoption period
and the rehabilitation period.
``(b) Determination of Endangered and Critical Status.--For
purposes of this section--
``(1) Endangered status.--A multiemployer plan is in
endangered status for a plan year if, as determined by the plan
actuary under paragraph (3), the plan is not in critical status
for the plan year and, as of the beginning of the plan year,
either--
``(A) the plan's funded percentage for such plan
year is less than 80 percent, or
``(B) the plan has an accumulated funding
deficiency for such plan year, or is projected to have
such an accumulated funding deficiency for any of the 6
succeeding plan years, taking into account any
extension of amortization periods under section 304(d).
For purposes of this section, a plan shall be treated as in
seriously endangered status for a plan year if the plan is
described in both subparagraphs (A) and (B).
``(2) Critical status.--A multiemployer plan is in critical
status for a plan year if, as determined by the plan actuary
under paragraph (3), the plan is described in 1 or more of the
following subparagraphs as of the beginning of the plan year:
``(A) A plan is described in this subparagraph if--
``(i) the funded percentage of the plan is
less than 65 percent, and
``(ii) the sum of--
``(I) the fair market value of plan
assets, plus
``(II) the present value of the
reasonably anticipated employer
contributions for the current plan year
and each of the 6 succeeding plan
years, assuming that the terms of all
collective bargaining agreements
pursuant to which the plan is
maintained for the current plan year
continue in effect for succeeding plan
years,
is less than the present value of all
nonforfeitable benefits projected to be payable
under the plan during the current plan year and
each of the 6 succeeding plan years (plus
administrative expenses for such plan years).
``(B) A plan is described in this subparagraph if--
``(i) the plan has an accumulated funding
deficiency for the current plan year, not
taking into account any extension of
amortization periods under section 304(d), or
``(ii) the plan is projected to have an
accumulated funding deficiency for any of the 3
succeeding plan years (4 succeeding plan years
if the funded percentage of the plan is 65
percent or less), not taking into account any
extension of amortization periods under section
304(d).
``(C) A plan is described in this subparagraph if--
``(i)(I) the plan's normal cost for the
current plan year, plus interest (determined at
the rate used for determining costs under the
plan) for the current plan year on the amount
of unfunded benefit liabilities under the plan
as of the last date of the preceding plan year,
exceeds
``(II) the present value of the reasonably
anticipated employer and employee contributions
for the current plan year,
``(ii) the present value, as of the
beginning of the current plan year, of
nonforfeitable benefits of inactive
participants is greater than the present value
of nonforfeitable benefits of active
participants, and
``(iii) the plan has an accumulated funding
deficiency for the current plan year, or is
projected to have such a deficiency for any of
the 4 succeeding plan years, not taking into
account any extension of amortization periods
under section 304(d).
``(D) A plan is described in this subparagraph if
the sum of--
``(i) the fair market value of plan assets,
plus
``(ii) the present value of the reasonably
anticipated employer contributions for the
current plan year and each of the 4 succeeding
plan years, assuming that the terms of all
collective bargaining agreements pursuant to
which the plan is maintained for the current
plan year continue in effect for succeeding
plan years,
is less than the present value of all benefits
projected to be payable under the plan during the
current plan year and each of the 4 succeeding plan
years (plus administrative expenses for such plan
years).
``(3) Annual certification by plan actuary.--
``(A) In general.--Not later than the 90th day of
each plan year of a multiemployer plan, the plan
actuary shall certify to the Secretary of the Treasury
and to the plan sponsor--
``(i) whether or not the plan is in
endangered status for such plan year and
whether or not the plan is or will be in
critical status for such plan year, and
``(ii) in the case of a plan which is in a
funding improvement or rehabilitation period,
whether or not the plan is making the scheduled
progress in meeting the requirements of its
funding improvement or rehabilitation plan.
``(B) Actuarial projections of assets and
liabilities.--
``(i) In general.--In making the
determinations and projections under this
subsection, the plan actuary shall make
projections required for the current and
succeeding plan years of the current value of
the assets of the plan and the present value of
all liabilities to participants and
beneficiaries under the plan for the current
plan year as of the beginning of such year. The
actuary's projections shall be based on
reasonable actuarial estimates, assumptions,
and methods that, except as provided in clause
(iii), offer the actuary's best estimate of
anticipated experience under the plan. The
projected present value of liabilities as of
the beginning of such year shall be determined
based on the most recent of either--
``(I) the actuarial statement
required under section 103(d) with
respect to the most recently filed
annual report, or
``(II) the actuarial valuation for
the preceding plan year.
``(ii) Determinations of future
contributions.--Any actuarial projection of
plan assets shall assume--
``(I) reasonably anticipated
employer contributions for the current
and succeeding plan years, assuming
that the terms of the one or more
collective bargaining agreements
pursuant to which the plan is
maintained for the current plan year
continue in effect for succeeding plan
years, or
``(II) that employer contributions
for the most recent plan year will
continue indefinitely, but only if the
plan actuary determines there have been
no significant demographic changes that
would make such assumption
unreasonable.
``(iii) Projected industry activity.--Any
projection of activity in the industry or
industries covered by the plan, including
future covered employment and contribution
levels, shall be based on information provided
by the plan sponsor, which shall act reasonably
and in good faith.
``(C) Penalty for failure to secure timely
actuarial certification.--Any failure of the plan's
actuary to certify the plan's status under this
subsection by the date specified in subparagraph (A)
shall be treated for purposes of section 502(c)(2) as a
failure or refusal by the plan administrator to file
the annual report required to be filed with the
Secretary under section 101(b)(4).
``(D) Notice.--
``(i) In general.--In any case in which it
is certified under subparagraph (A) that a
multiemployer plan is or will be in endangered
or critical status for a plan year, the plan
sponsor shall, not later than 30 days after the
date of the certification, provide notification
of the endangered or critical status to the
participants and beneficiaries, the bargaining
parties, the Pension Benefit Guaranty
Corporation, and the Secretary.
``(ii) Plans in critical status.--If it is
certified under subparagraph (A) that a
multiemployer plan is or will be in critical
status, the plan sponsor shall include in the
notice under clause (i) an explanation of the
possibility that--
``(I) adjustable benefits (as
defined in subsection (e)(8)) may be
reduced, and
``(II) such reductions may apply to
participants and beneficiaries whose
benefit commencement date is on or
after the date such notice is provided
for the first plan year in which the
plan is in critical status.
``(iii) Model notice.--The Secretary shall
prescribe a model notice that a multiemployer
plan may use to satisfy the requirements under
clause (ii).
``(c) Funding Improvement Plan Must Be Adopted for Multiemployer
Plans in Endangered Status.--
``(1) In general.--In any case in which a multiemployer
plan is in endangered status for a plan year, the plan sponsor,
in accordance with this subsection--
``(A) shall adopt a funding improvement plan not
later than 240 days following the required date for the
actuarial certification of endangered status under
subsection (b)(3)(A), and
``(B) within 30 days after the adoption of the
funding improvement plan--
``(i) shall provide to the bargaining
parties 1 or more schedules showing revised
benefit structures, revised contribution
structures, or both, which, if adopted, may
reasonably be expected to enable the
multiemployer plan to meet the applicable
benchmarks in accordance with the funding
improvement plan, including--
``(I) one proposal for reductions
in the amount of future benefit
accruals necessary to achieve the
applicable benchmarks, assuming no
amendments increasing contributions
under the plan (other than amendments
increasing contributions necessary to
achieve the applicable benchmarks after
amendments have reduced future benefit
accruals to the maximum extent
permitted by law), and
``(II) one proposal for increases
in contributions under the plan
necessary to achieve the applicable
benchmarks, assuming no amendments
reducing future benefit accruals under
the plan, and
``(ii) may, if the plan sponsor deems
appropriate, prepare and provide the bargaining
parties with additional information relating to
contribution rates or benefit reductions,
alternative schedules, or other information
relevant to achieving the applicable benchmarks
in accordance with the funding improvement
plan.
For purposes of this section, the term `applicable
benchmarks' means the requirements applicable to the
multiemployer plan under paragraph (3) (as modified by
paragraph (5)).
``(2) Exception for years after process begins.--Paragraph
(1) shall not apply to a plan year if such year is in a funding
plan adoption period or funding improvement period by reason of
the plan being in endangered status for a preceding plan year.
For purposes of this section, such preceding plan year shall be
the initial determination year with respect to the funding
improvement plan to which it relates.
``(3) Funding improvement plan.--For purposes of this
section--
``(A) In general.--A funding improvement plan is a
plan which consists of the actions, including options
or a range of options to be proposed to the bargaining
parties, formulated to provide, based on reasonably
anticipated experience and reasonable actuarial
assumptions, for the attainment by the plan during the
funding improvement period of the following
requirements:
``(i) Increase in plan's funding
percentage.--The plan's funded percentage as of
the close of the funding improvement period
equals or exceeds a percentage equal to the sum
of--
``(I) such percentage as of the
beginning of such period, plus
``(II) 33 percent of the difference
between 100 percent and the percentage
under subclause (I).
``(ii) Avoidance of accumulated funding
deficiencies.--No accumulated funding
deficiency for any plan year during the funding
improvement period (taking into account any
extension of amortization periods under section
304(d)).
``(B) Seriously endangered plans.--In the case of a
plan in seriously endangered status, except as provided
in paragraph (5), subparagraph (A)(i)(II) shall be
applied by substituting `20 percent' for `33 percent'.
``(4) Funding improvement period.--For purposes of this
section--
``(A) In general.--The funding improvement period
for any funding improvement plan adopted pursuant to
this subsection is the 10-year period beginning on the
first day of the first plan year of the multiemployer
plan beginning after the earlier of--
``(i) the second anniversary of the date of
the adoption of the funding improvement plan,
or
``(ii) the expiration of the collective
bargaining agreements in effect on the due date
for the actuarial certification of endangered
status for the initial determination year under
subsection (b)(3)(A) and covering, as of such
due date, at least 75 percent of the active
participants in such multiemployer plan.
``(B) Seriously endangered plans.--In the case of a
plan in seriously endangered status, except as provided
in paragraph (5), subparagraph (A) shall be applied by
substituting `15-year period' for `10-year period'.
``(C) Coordination with changes in status.--
``(i) Plans no longer in endangered
status.--If the plan's actuary certifies under
subsection (b)(3)(A) for a plan year in any
funding plan adoption period or funding
improvement period that the plan is no longer
in endangered status and is not in critical
status, the funding plan adoption period or
funding improvement period, whichever is
applicable, shall end as of the close of the
preceding plan year.
``(ii) Plans in critical status.--If the
plan's actuary certifies under subsection
(b)(3)(A) for a plan year in any funding plan
adoption period or funding improvement period
that the plan is in critical status, the
funding plan adoption period or funding
improvement period, whichever is applicable,
shall end as of the close of the plan year
preceding the first plan year in the
rehabilitation period with respect to such
status.
``(D) Plans in endangered status at end of
period.--If the plan's actuary certifies under
subsection (b)(3)(A) for the first plan year following
the close of the period described in subparagraph (A)
that the plan is in endangered status, the provisions
of this subsection and subsection (d) shall be applied
as if such first plan year were an initial
determination year, except that the plan may not be
amended in a manner inconsistent with the funding
improvement plan in effect for the preceding plan year
until a new funding improvement plan is adopted.
``(5) Special rules for seriously endangered plans more
than 70 percent funded.--
``(A) In general.--If the funded percentage of a
plan in seriously endangered status was more than 70
percent as of the beginning of the initial
determination year--
``(i) paragraphs (3)(B) and (4)(B) shall
apply only if the plan's actuary certifies,
within 30 days after the certification under
subsection (b)(3)(A) for the initial
determination year, that, based on the terms of
the plan and the collective bargaining
agreements in effect at the time of such
certification, the plan is not projected to
meet the requirements of paragraph (3)(A)
(without regard to paragraphs (3)(B) and
(4)(B)), and
``(ii) if there is a certification under
clause (i), the plan may, in formulating its
funding improvement plan, only take into
account the rules of paragraph (3)(B) and
(4)(B) for plan years in the funding
improvement period beginning on or before the
date on which the last of the collective
bargaining agreements described in paragraph
(4)(A)(ii) expires.
``(B) Special rule after expiration of
agreements.--Notwithstanding subparagraph (A)(ii), if,
for any plan year ending after the date described in
subparagraph (A)(ii), the plan actuary certifies (at
the time of the annual certification under subsection
(b)(3)(A) for such plan year) that, based on the terms
of the plan and collective bargaining agreements in
effect at the time of that annual certification, the
plan is not projected to be able to meet the
requirements of paragraph (3)(A) (without regard to
paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and
(4)(B) shall continue to apply for such year.
``(6) Updates to funding improvement plan and schedules.--
``(A) Funding improvement plan.--The plan sponsor
shall annually update the funding improvement plan and
shall file the update with the plan's annual report
under section 104.
``(B) Schedules.--The plan sponsor shall annually
update any schedule of contribution rates provided
under this subsection to reflect the experience of the
plan.
``(C) Duration of schedule.--A schedule of
contribution rates provided by the plan sponsor and
relied upon by bargaining parties in negotiating a
collective bargaining agreement shall remain in effect
for the duration of that collective bargaining
agreement.
``(7) Imposition of default schedule where failure to adopt
funding improvement plan.--
``(A) In general.--If--
``(i) a collective bargaining agreement
providing for contributions under a
multiemployer plan that was in effect at the
time the plan entered endangered status
expires, and
``(ii) after receiving one or more
schedules from the plan sponsor under paragraph
(1)(B), the bargaining parties with respect to
such agreement fail to agree on changes to
contribution or benefit schedules necessary to
meet the applicable benchmarks in accordance
with the funding improvement plan,
the plan sponsor shall implement the schedule described
in paragraph (1)(B)(i)(I) beginning on the date
specified in subparagraph (B).
``(B) Date of implementation.--The date specified
in this subparagraph is the earlier of the date--
``(i) on which the Secretary certifies that
the parties are at an impasse, or
``(ii) which is 180 days after the date on
which the collective bargaining agreement
described in subparagraph (A) expires.
``(8) Funding plan adoption period.--For purposes of this
section, the term `funding plan adoption period' means the
period beginning on the date of the certification under
subsection (b)(3)(A) for the initial determination year and
ending on the day before the first day of the funding
improvement period.
``(d) Rules for Operation of Plan During Adoption and Improvement
Periods.--
``(1) Special rules for plan adoption period.--During the
funding plan adoption period--
``(A) the plan sponsor may not accept a collective
bargaining agreement or participation agreement with
respect to the multiemployer plan that provides for--
``(i) a reduction in the level of
contributions for any participants,
``(ii) a suspension of contributions with
respect to any period of service, or
``(iii) any new direct or indirect
exclusion of younger or newly hired employees
from plan participation,
``(B) no amendment of the plan which increases the
liabilities of the plan by reason of any increase in
benefits, any change in the accrual of benefits, or any
change in the rate at which benefits become
nonforfeitable under the plan may be adopted unless the
amendment is required as a condition of qualification
under part I of subchapter D of chapter 1 of the
Internal Revenue Code of 1986 or to comply with other
applicable law, and
``(C) in the case of a plan in seriously endangered
status, the plan sponsor shall take all reasonable
actions which are consistent with the terms of the plan
and applicable law and which are expected, based on
reasonable assumptions, to achieve--
``(i) an increase in the plan's funded
percentage, and
``(ii) postponement of an accumulated
funding deficiency for at least 1 additional
plan year.
Actions under subparagraph (C) include applications for
extensions of amortization periods under section 304(d), use of
the shortfall funding method in making funding standard account
computations, amendments to the plan's benefit structure,
reductions in future benefit accruals, and other reasonable
actions consistent with the terms of the plan and applicable
law.
``(2) Compliance with funding improvement plan.--
``(A) In general.--A plan may not be amended after
the date of the adoption of a funding improvement plan
so as to be inconsistent with the funding improvement
plan.
``(B) No reduction in contributions.--A plan
sponsor may not during any funding improvement period
accept a collective bargaining agreement or
participation agreement with respect to the
multiemployer plan that provides for--
``(i) a reduction in the level of
contributions for any participants,
``(ii) a suspension of contributions with
respect to any period of service, or
``(iii) any new direct or indirect
exclusion of younger or newly hired employees
from plan participation.
``(C) Special rules for benefit increases.--A plan
may not be amended after the date of the adoption of a
funding improvement plan so as to increase benefits,
including future benefit accruals, unless the plan
actuary certifies that the benefit increase is
consistent with the funding improvement plan and is
paid for out of contributions not required by the
funding improvement plan to meet the applicable
benchmark in accordance with the schedule contemplated
in the funding improvement plan.
``(e) Rehabilitation Plan Must Be Adopted for Multiemployer Plans
in Critical Status.--
``(1) In general.--In any case in which a multiemployer
plan is in critical status for a plan year, the plan sponsor,
in accordance with this subsection--
``(A) shall adopt a rehabilitation plan not later
than 240 days following the required date for the
actuarial certification of critical status under
subsection (b)(3)(A), and
``(B) within 30 days after the adoption of the
rehabilitation plan--
``(i) shall provide to the bargaining
parties 1 or more schedules showing revised
benefit structures, revised contribution
structures, or both, which, if adopted, may
reasonably be expected to enable the
multiemployer plan to emerge from critical
status in accordance with the rehabilitation
plan, and
``(ii) may, if the plan sponsor deems
appropriate, prepare and provide the bargaining
parties with additional information relating to
contribution rates or benefit reductions,
alternative schedules, or other information
relevant to emerging from critical status in
accordance with the rehabilitation plan.
The schedule or schedules described in subparagraph (B)(i)
shall reflect reductions in future benefit accruals and
adjustable benefits, and increases in contributions, that the
plan sponsor determines are reasonably necessary to emerge from
critical status. One schedule shall be designated as the
default schedule and such schedule shall assume that there are
no increases in contributions under the plan other than the
increases necessary to emerge from critical status after future
benefit accruals and other benefits (other than benefits the
reduction or elimination of which are not permitted under
section 204(g)) have been reduced to the maximum extent
permitted by law.
``(2) Exception for years after process begins.--Paragraph
(1) shall not apply to a plan year if such year is in a
rehabilitation plan adoption period or rehabilitation period by
reason of the plan being in critical status for a preceding
plan year. For purposes of this section, such preceding plan
year shall be the initial critical year with respect to the
rehabilitation plan to which it relates.
``(3) Rehabilitation plan.--For purposes of this section--
``(A) In general.--A rehabilitation plan is a plan
which consists of--
``(i) actions, including options or a range
of options to be proposed to the bargaining
parties, formulated, based on reasonably
anticipated experience and reasonable actuarial
assumptions, to enable the plan to cease to be
in critical status by the end of the
rehabilitation period and may include
reductions in plan expenditures (including plan
mergers and consolidations), reductions in
future benefit accruals or increases in
contributions, if agreed to by the bargaining
parties, or any combination of such actions, or
``(ii) if the plan sponsor determines that,
based on reasonable actuarial assumptions and
upon exhaustion of all reasonable measures, the
plan can not reasonably be expected to emerge
from critical status by the end of the
rehabilitation period, reasonable measures to
emerge from critical status at a later time or
to forestall possible insolvency (within the
meaning of section 4245).
A rehabilitation plan must provide annual standards for
meeting the requirements of such rehabilitation plan.
Such plan shall also include the schedules required to
be provided under paragraph (1)(B)(i) and if clause
(ii) applies, shall set forth the alternatives
considered, explain why the plan is not reasonably
expected to emerge from critical status by the end of
the rehabilitation period, and specify when, if ever,
the plan is expected to emerge from critical status in
accordance with the rehabilitation plan.
``(B) Updates to rehabilitation plan and
schedules.--
``(i) Rehabilitation plan.--The plan
sponsor shall annually update the
rehabilitation plan and shall file the update
with the plan's annual report under section
104.
``(ii) Schedules.--The plan sponsor shall
annually update any schedule of contribution
rates provided under this subsection to reflect
the experience of the plan.
``(iii) Duration of schedule.--A schedule
of contribution rates provided by the plan
sponsor and relied upon by bargaining parties
in negotiating a collective bargaining
agreement shall remain in effect for the
duration of that collective bargaining
agreement.
``(C) Imposition of default schedule where failure
to adopt rehabilitation plan.--
``(i) In general.--If--
``(I) a collective bargaining
agreement providing for contributions
under a multiemployer plan that was in
effect at the time the plan entered
critical status expires, and
``(II) after receiving one or more
schedules from the plan sponsor under
paragraph (1)(B), the bargaining
parties with respect to such agreement
fail to adopt a contribution or benefit
schedules with terms consistent with
the rehabilitation plan and the
schedule from the plan sponsor under
paragraph (1)(B)(i),
the plan sponsor shall implement the default
schedule described in the last sentence of
paragraph (1) beginning on the date specified
in clause (ii).
``(ii) Date of implementation.--The date
specified in this clause is the earlier of the
date--
``(I) on which the Secretary
certifies that the parties are at an
impasse, or
``(II) which is 180 days after the
date on which the collective bargaining
agreement described in clause (i)
expires.
``(4) Rehabilitation period.--For purposes of this
section--
``(A) In general.--The rehabilitation period for a
plan in critical status is the 10-year period beginning
on the first day of the first plan year of the
multiemployer plan following the earlier of--
``(i) the second anniversary of the date of
the adoption of the rehabilitation plan, or
``(ii) the expiration of the collective
bargaining agreements in effect on the date of
the due date for the actuarial certification of
critical status for the initial critical year
under subsection (a)(1) and covering, as of
such date at least 75 percent of the active
participants in such multiemployer plan.
If a plan emerges from critical status as provided
under subparagraph (B) before the end of such 10-year
period, the rehabilitation period shall end with the
plan year preceding the plan year for which the
determination under subparagraph (B) is made.
``(B) Emergence.--A plan in critical status shall
remain in such status until a plan year for which the
plan actuary certifies, in accordance with subsection
(b)(3)(A), that the plan is not projected to have an
accumulated funding deficiency for the plan year or any
of the 9 succeeding plan years, without regard to the
use of the shortfall method and taking into account any
extension of amortization periods under section 304(d).
``(5) Rehabilitation plan adoption period.--For purposes of
this section, the term `rehabilitation plan adoption period'
means the period beginning on the date of the certification
under subsection (b)(3)(A) for the initial critical year and
ending on the day before the first day of the rehabilitation
period.
``(6) Limitation on reduction in rates of future
accruals.--Any reduction in the rate of future accruals under
the default schedule described in paragraph (1)(B)(i) shall not
reduce the rate of future accruals below--
``(A) a monthly benefit (payable as a single life
annuity commencing at the participant's normal
retirement age) equal to 1 percent of the contributions
required to be made with respect to a participant, or
the equivalent standard accrual rate for a participant
or group of participants under the collective
bargaining agreements in effect as of the first day of
the initial critical year, or
``(B) if lower, the accrual rate under the plan on
such first day.
The equivalent standard accrual rate shall be determined by the
plan sponsor based on the standard or average contribution base
units which the plan sponsor determines to be representative
for active participants and such other factors as the plan
sponsor determines to be relevant. Nothing in this paragraph
shall be construed as limiting the ability of the plan sponsor
to prepare and provide the bargaining parties with alternative
schedules to the default schedule that established lower or
higher accrual and contribution rates than the rates otherwise
described in this paragraph.
``(7) Automatic employer surcharge.--
``(A) Imposition of surcharge.--Each employer
otherwise obligated to make contributions for the
initial critical year shall be obligated to pay to the
plan for such year a surcharge equal to 5 percent of
the contributions otherwise required under the
applicable collective bargaining agreement (or other
agreement pursuant to which the employer contributes).
For each succeeding plan year in which the plan is in
critical status for a consecutive period of years
beginning with the initial critical year, the surcharge
shall be 10 percent of the contributions otherwise so
required.
``(B) Enforcement of surcharge.--The surcharges
under subparagraph (A) shall be due and payable on the
same schedule as the contributions on which the
surcharges are based. Any failure to make a surcharge
payment shall be treated as a delinquent contribution
under section 515 and shall be enforceable as such.
``(C) Surcharge to terminate upon collective
bargaining agreement renegotiation.--The surcharge
under this paragraph shall cease to be effective with
respect to employees covered by a collective bargaining
agreement (or other agreement pursuant to which the
employer contributes), beginning on the effective date
of a collective bargaining agreement (or other such
agreement) that includes terms consistent with a
schedule presented by the plan sponsor under paragraph
(1)(B)(i), as modified under subparagraph (B) of
paragraph (3).
``(D) Surcharge not to apply until employer
receives notice.--The surcharge under this paragraph
shall not apply to an employer until 30 days after the
employer has been notified by the plan sponsor that the
plan is in critical status and that the surcharge is in
effect.
``(E) Surcharge not to generate increased benefit
accruals.--Notwithstanding any provision of a plan to
the contrary, the amount of any surcharge under this
paragraph shall not be the basis for any benefit
accrual under the plan.
``(8) Benefit adjustments.--
``(A) Adjustable benefits.--
``(i) In general.--Notwithstanding section
204(g), the plan sponsor shall, subject to the
notice requirements in subparagraph (C), make
any reductions to adjustable benefits which the
plan sponsor deems appropriate, based upon the
outcome of collective bargaining over the
schedule or schedules provided under paragraph
(1)(B)(i).
``(ii) Exception for retirees.--Except in
the case of adjustable benefits described in
clause (iv)(III), the plan sponsor of a plan in
critical status shall not reduce adjustable
benefits of any participant or beneficiary
whose benefit commencement date is before the
date on which the plan provides notice to the
participant or beneficiary under subsection
(b)(3)(D) for the initial critical year.
``(iii) Plan sponsor flexibility.--The plan
sponsor shall include in the schedules provided
to the bargaining parties an allowance for
funding the benefits of participants with
respect to whom contributions are not currently
required to be made, and shall reduce their
benefits to the extent permitted under this
title and considered appropriate by the plan
sponsor based on the plan's then current
overall funding status.
``(iv) Adjustable benefit defined.--For
purposes of this paragraph, the term
`adjustable benefit' means--
``(I) benefits, rights, and
features under the plan, including
post-retirement death benefits, 60-
month guarantees, disability benefits
not yet in pay status, and similar
benefits,
``(II) any early retirement benefit
or retirement-type subsidy (within the
meaning of section 204(g)(2)(A)) and
any benefit payment option (other than
the qualified joint-and survivor
annuity), and
``(III) benefit increases that
would not be eligible for a guarantee
under section 4022A on the first day of
initial critical year because the
increases were adopted (or, if later,
took effect) less than 60 months before
such first day.
``(B) Normal retirement benefits protected.--Except
as provided in subparagraph (A)(iv)(III), nothing in
this paragraph shall be construed to permit a plan to
reduce the level of a participant's accrued benefit
payable at normal retirement age.
``(C) Notice requirements.--
``(i) In general.--No reduction may be made
to adjustable benefits under subparagraph (A)
unless notice of such reduction has been given
at least 30 days before the general effective
date of such reduction for all participants and
beneficiaries to--
``(I) plan participants and
beneficiaries,
``(II) each employer who has an
obligation to contribute (within the
meaning of section 4212(a)) under the
plan, and
``(III) each employee organization
which, for purposes of collective
bargaining, represents plan
participants employed by such an
employer.
``(ii) Content of notice.--The notice under
clause (i) shall contain--
``(I) sufficient information to
enable participants and beneficiaries
to understand the effect of any
reduction on their benefits, including
an estimate (on an annual or monthly
basis) of any affected adjustable
benefit that a participant or
beneficiary would otherwise have been
eligible for as of the general
effective date described in clause (i),
and
``(II) information as to the rights
and remedies of plan participants and
beneficiaries as well as how to contact
the Department of Labor for further
information and assistance where
appropriate.
``(iii) Form and manner.--Any notice under
clause (i)--
``(I) shall be provided in a form
and manner prescribed in regulations of
the Secretary,
``(II) shall be written in a manner
so as to be understood by the average
plan participant, and
``(III) may be provided in written,
electronic, or other appropriate form
to the extent such form is reasonably
accessible to persons to whom the
notice is required to be provided.
The Secretary shall in the regulations
prescribed under subclause (I) establish a
model notice that a plan sponsor may use to
meet the requirements of this subparagraph.
``(9) Adjustments disregarded in withdrawal liability
determination.--
``(A) Benefit reductions.--Any benefit reductions
under this subsection shall be disregarded in
determining a plan's unfunded vested benefits for
purposes of determining an employer's withdrawal
liability under section 4201.
``(B) Surcharges.--Any surcharges under paragraph
(7) shall be disregarded in determining an employer's
withdrawal liability under section 4211, except for
purposes of determining the unfunded vested benefits
attributable to an employer under section 4211(c)(4) or
a comparable method approved under section 4211(c)(5).
``(C) Simplified calculations.--The Pension Benefit
Guaranty Corporation shall prescribe simplified methods
for the application of this paragraph in determining
withdrawal liability.
``(f) Rules for Operation of Plan During Adoption and
Rehabilitation Period.--
``(1) Compliance with rehabilitation plan.--
``(A) In general.--A plan may not be amended after
the date of the adoption of a rehabilitation plan under
subsection (e) so as to be inconsistent with the
rehabilitation plan.
``(B) Special rules for benefit increases.--A plan
may not be amended after the date of the adoption of a
rehabilitation plan under subsection (e) so as to
increase benefits, including future benefit accruals,
unless the plan actuary certifies that such increase is
paid for out of additional contributions not
contemplated by the rehabilitation plan, and, after
taking into account the benefit increase, the
multiemployer plan still is reasonably expected to
emerge from critical status by the end of the
rehabilitation period on the schedule contemplated in
the rehabilitation plan.
``(2) Restriction on lump sums and similar benefits.--
``(A) In general.--Effective on the date the notice
of certification of the plan's critical status for the
initial critical year under subsection (b)(3)(D) is
sent, and notwithstanding section 204(g), the plan
shall not pay--
``(i) any payment, in excess of the monthly
amount paid under a single life annuity (plus
any social security supplements described in
the last sentence of section 204(b)(1)(G)),
``(ii) any payment for the purchase of an
irrevocable commitment from an insurer to pay
benefits, and
``(iii) any other payment specified by the
Secretary of the Treasury by regulations.
``(B) Exception.--Subparagraph (A) shall not apply
to a benefit which under section 203(e) may be
immediately distributed without the consent of the
participant or to any makeup payment in the case of a
retroactive annuity starting date or any similar
payment of benefits owed with respect to a prior
period.
``(3) Adjustments disregarded in withdrawal liability
determination.--Any benefit reductions under this subsection
shall be disregarded in determining a plan's unfunded vested
benefits for purposes of determining an employer's withdrawal
liability under section 4201.
``(4) Special rules for plan adoption period.--During the
rehabilitation plan adoption period--
``(A) the plan sponsor may not accept a collective
bargaining agreement or participation agreement with
respect to the multiemployer plan that provides for--
``(i) a reduction in the level of
contributions for any participants,
``(ii) a suspension of contributions with
respect to any period of service, or
``(iii) any new direct or indirect
exclusion of younger or newly hired employees
from plan participation, and
``(B) no amendment of the plan which increases the
liabilities of the plan by reason of any increase in
benefits, any change in the accrual of benefits, or any
change in the rate at which benefits become
nonforfeitable under the plan may be adopted unless the
amendment is required as a condition of qualification
under part I of subchapter D of chapter 1 of the
Internal Revenue Code of 1986 or to comply with other
applicable law.
``(g) Expedited Resolution of Plan Sponsor Decisions.--If, within
60 days of the due date for adoption of a funding improvement plan or a
rehabilitation plan under subsection (e), the plan sponsor of a plan in
endangered status or a plan in critical status has not agreed on a
funding improvement plan or rehabilitation plan, then any member of the
board or group that constitutes the plan sponsor may require that the
plan sponsor enter into an expedited dispute resolution procedure for
the development and adoption of a funding improvement plan or
rehabilitation plan.
``(h) Nonbargained Participation.--
``(1) Both bargained and nonbargained employee-
participants.--In the case of an employer that contributes to a
multiemployer plan with respect to both employees who are
covered by one or more collective bargaining agreements and
employees who are not so covered, if the plan is in endangered
status or in critical status, benefits of and contributions for
the nonbargained employees, including surcharges on those
contributions, shall be determined as if those nonbargained
employees were covered under the first to expire of the
employer's collective bargaining agreements in effect when the
plan entered endangered or critical status.
``(2) Nonbargained employees only.--In the case of an
employer that contributes to a multiemployer plan only with
respect to employees who are not covered by a collective
bargaining agreement, this section shall be applied as if the
employer were the bargaining party, and its participation
agreement with the plan were a collective bargaining agreement
with a term ending on the first day of the plan year beginning
after the employer is provided the schedule or schedules
described in subsections (c) and (e).
``(i) Definitions; Actuarial Method.--For purposes of this
section--
``(1) Bargaining party.--The term `bargaining party'
means--
``(A)(i) except as provided in clause (ii), an
employer who has an obligation to contribute under the
plan; or
``(ii) in the case of a plan described under
section 404(c) of the Internal Revenue Code of 1986, or
a continuation of such a plan, the association of
employers that is the employer settlor of the plan; and
``(B) an employee organization which, for purposes
of collective bargaining, represents plan participants
employed by an employer who has an obligation to
contribute under the plan.
``(2) Funded percentage.--The term `funded percentage'
means the percentage equal to a fraction--
``(A) the numerator of which is the value of the
plan's assets, as determined under section 304(c)(2),
and
``(B) the denominator of which is the accrued
liability of the plan, determined using actuarial
assumptions described in section 304(c)(3).
``(3) Accumulated funding deficiency.--The term
`accumulated funding deficiency' has the meaning given such
term in section 304(a).
``(4) Active participant.--The term `active participant'
means, in connection with a multiemployer plan, a participant
who is in covered service under the plan.
``(5) Inactive participant.--The term `inactive
participant' means, in connection with a multiemployer plan, a
participant, or the beneficiary or alternate payee of a
participant, who--
``(A) is not in covered service under the plan, and
``(B) is in pay status under the plan or has a
nonforfeitable right to benefits under the plan.
``(6) Pay status.--A person is in pay status under a
multiemployer plan if--
``(A) at any time during the current plan year,
such person is a participant or beneficiary under the
plan and is paid an early, late, normal, or disability
retirement benefit under the plan (or a death benefit
under the plan related to a retirement benefit), or
``(B) to the extent provided in regulations of the
Secretary of the Treasury, such person is entitled to
such a benefit under the plan.
``(7) Obligation to contribute.--The term `obligation to
contribute' has the meaning given such term under section
4212(a).
``(8) Actuarial method.--Notwithstanding any other
provision of this section, the actuary's determinations with
respect to a plan's normal cost, actuarial accrued liability,
and improvements in a plan's funded percentage under this
section shall be based upon the unit credit funding method
(whether or not that method is used for the plan's actuarial
valuation).
``(9) Plan sponsor.--In the case of a plan described under
section 404(c) of the Internal Revenue Code of 1986, or a
continuation of such a plan, the term `plan sponsor' means the
bargaining parties described under paragraph (1).
``(10) Benefit commencement date.--The term `benefit
commencement date' means the annuity starting date (or in the
case of a retroactive annuity starting date, the date on which
benefit payments begin).''.
(b) Enforcement.--Section 502 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132) is amended--
(1) in subsection (a)(6) by striking ``(6), or (7)'' and
inserting ``(6), (7), or (8)'';
(2) by redesignating subsection (c)(8) as subsection
(c)(9); and
(3) by inserting after subsection (c)(7) the following new
paragraph:
``(8) The Secretary may assess against any plan sponsor of
a multiemployer plan a civil penalty of not more than $1,100
per day--
``(A) for each violation by such sponsor of the
requirement under section 305 to adopt by the deadline
established in that section a funding improvement plan
or rehabilitation plan with respect to a multiemployer
which is in endangered or critical status, or
``(B) in the case of a plan in endangered status
which is not in seriously endangered status, for
failure by the plan to meet the applicable benchmarks
under section 305 by the end of the funding improvement
period with respect to the plan.''.
(c) Cause of Action To Compel Adoption or Implementation of Funding
Improvement or Rehabilitation Plan.--Section 502(a) of the Employee
Retirement Income Security Act of 1974 is amended by striking ``or'' at
the end of paragraph (8), by striking the period at the end of
paragraph (9) and inserting ``; or'' and by adding at the end the
following:
``(10) in the case of a multiemployer plan that has been
certified by the actuary to be in endangered or critical status
under section 305, if the plan sponsor--
``(A) has not adopted a funding improvement or
rehabilitation plan under that section by the deadline
established in such section, or
``(B) fails to update or comply with the terms of
the funding improvement or rehabilitation plan in
accordance with the requirements of such section,
by an employer that has an obligation to contribute with
respect to the multiemployer plan or an employee organization
that represents active participants in the multiemployer plan,
for an order compelling the plan sponsor to adopt a funding
improvement or rehabilitation plan or to update or comply with
the terms of the funding improvement or rehabilitation plan in
accordance with the requirements of such section and the
funding improvement or rehabilitation plan.''.
(d) No Additional Contributions Required.--Section 302(b) of the
Employee Retirement Income Security Act of 1974, as amended by this
Act, is amended by adding at the end the following new paragraph:
``(3) Multiemployer plans in critical status.--Paragraph
(1) shall not apply in the case of a multiemployer plan for any
plan year in which the plan is in critical status pursuant to
section 305. This paragraph shall only apply if the plan adopts
a rehabilitation plan in accordance with section 305(e) and
complies with the terms of such rehabilitation plan (and any
updates or modifications of the plan).''.
(e) Conforming Amendment.--The table of contents in section 1 of
such Act (as amended by the preceding provisions of this Act) is
amended by inserting after the item relating to section 304 the
following new item:
``Sec. 305. Additional funding rules for multiemployer plans in
endangered status or critical status.''.
(f) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply with respect to plan years beginning after 2007.
(2) Special rule for certain notices.--In any case in which
a plan's actuary certifies that it is reasonably expected that
a multiemployer plan will be in critical status under section
305(b)(3) of the Employee Retirement Income Security Act of
1974, as added by this section, with respect to the first plan
year beginning after 2007, the notice required under
subparagraph (D) of such section may be provided at any time
after the date of enactment, so long as it is provided on or
before the last date for providing the notice under such
subparagraph.
(3) Special rule for certain restored benefits.--In the
case of a multiemployer plan--
(A) with respect to which benefits were reduced
pursuant to a plan amendment adopted on or after
January 1, 2002, and before June 30, 2005, and
(B) which, pursuant to the plan document, the trust
agreement, or a formal written communication from the
plan sponsor to participants provided before June 30,
2005, provided for the restoration of such benefits,
the amendments made by this section shall not apply to such
benefit restorations to the extent that any restriction on the
providing or accrual of such benefits would otherwise apply by
reason of such amendments.
SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER PLANS.
(a) Advance Determination of Impending Insolvency Over 5 Years.--
Section 4245(d)(1) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1426(d)(1)) is amended--
(1) by striking ``3 plan years'' the second place it
appears and inserting ``5 plan years''; and
(2) by adding at the end the following new sentence: ``If
the plan sponsor makes such a determination that the plan will
be insolvent in any of the next 5 plan years, the plan sponsor
shall make the comparison under this paragraph at least
annually until the plan sponsor makes a determination that the
plan will not be insolvent in any of the next 5 plan years.''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to determinations made in plan years beginning after
2007.
SEC. 204. WITHDRAWAL LIABILITY REFORMS.
(a) Update of Rules Relating to Limitations on Withdrawal
Liability.--
(1) Increase in limits.--Section 4225(a)(2) of such Act (29
U.S.C. 1405(a)(2)) is amended by striking the table contained
therein and inserting the following new table:
----------------------------------------------------------------------------------------------------------------
``If the liquidation or distribution value of the employer
after the sale or exchange is-- The portion is--
----------------------------------------------------------------------------------------------------------------
Not more than $5,000,000................................... 30 percent of the amount.
More than $5,000,000, but not more than $10,000,000........ $1,500,000, plus 35 percent of the amount in excess
of $5,000,000.
More than $10,000,000, but not more than $15,000,000....... $3,250,000, plus 40 percent of the amount in excess
of $10,000,000.
More than $15,000,000, but not more than $17,500,000....... $5,250,000, plus 45 percent of the amount in excess
of $15,000,000.
More than $17,500,000, but not more than $20,000,000....... $6,375,000, plus 50 percent of the amount in excess
of $17,500,000.
More than $20,000,000, but not more than $22,500,000....... $7,625,000, plus 60 percent of the amount in excess
of $20,000,000.
More than $22,500,000, but not more than $25,000,000....... $9,125,000, plus 70 percent of the amount in excess
of $22,500,000.
More than $25,000,000...................................... $10,875,000, plus 80 percent of the amount in
excess of $25,000,000.''.
----------------------------------------------------------------------------------------------------------------
(2) Plans using attributable method.--Section 4225(a)(1)(B)
of such Act (29 U.S.C. 1405(a)(1)(B)) is amended to read as
follows:
``(B) in the case of a plan using the attributable
method of allocating withdrawal liability, the unfunded
vested benefits attributable to employees of the
employer.''.
(3) Effective date.--The amendments made by this subsection
shall apply to sales occurring on or after January 1, 2007.
(b) Withdrawal Liability Continues if Work Contracted Out.--
(1) In general.--Clause (i) of section 4205(b)(2)(A) of
such Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting ``or
to an entity or entities owned or controlled by the employer''
after ``to another location''.
(2) Effective date.--The amendment made by this subsection
shall apply with respect to work transferred on or after the
date of the enactment of this Act.
(c) Application of Rules to Plans Primarily Covering Employees in
the Building and Construction Industry.--
(1) In general.--Section 4210(b) of such Act (29 U.S.C.
1390(b)) is amended--
(A) by striking paragraph (1); and
(B) by redesignating paragraphs (2) through (4) as
paragraphs (1) through (3), respectively.
(2) Fresh start option.--Section 4211(c)(5) of such Act (29
U.S.C. 1391(c)(5)) is amended by adding at the end the
following new subparagraph:
``(E) Fresh start option.--Notwithstanding
paragraph (1), a plan may be amended to provide that
the withdrawal liability method described in subsection
(b) shall be applied by substituting the plan year
which is specified in the amendment and for which the
plan has no unfunded vested benefits for the plan year
ending before September 26, 1980.''.
(3) Effective date.--The amendments made by this subsection
shall apply with respect to plan withdrawals occurring on or
after January 1, 2007.
(d) Procedures Applicable to Disputes Involving Pension Plan
Withdrawal Liability.--
(1) In general.--Section 4221 of Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1401) is amended by adding at
the end the following:
``(g) Procedures Applicable to Certain Disputes.--
``(1) In general.--If--
``(A) a plan sponsor of a plan determines that--
``(i) a complete or partial withdrawal of
an employer has occurred, or
``(ii) an employer is liable for withdrawal
liability payments with respect to such
complete or partial withdrawal, and
``(B) such determination is based in whole or in
part on a finding by the plan sponsor under section
4212(c) that a principal purpose of any transaction
which occurred after December 31, 1998, and at least 5
years (2 years in the case of a small employer) before
the date of the complete or partial withdrawal was to
evade or avoid withdrawal liability under this
subtitle,
then the person against which the withdrawal liability is
assessed based solely on the application of section 4212(c) may
elect to use the special rule under paragraph (2) in applying
subsection (d) of this section and section 4219(c) to such
person.
``(2) Special rule.--Notwithstanding subsection (d) and
section 4219(c), if an electing person contests the plan
sponsor's determination with respect to withdrawal liability
payments under paragraph (1) through an arbitration proceeding
pursuant to subsection (a), through an action brought in a
court of competent jurisdiction for review of such an
arbitration decision, or as otherwise permitted by law, the
electing person shall not be obligated to make the withdrawal
liability payments until a final decision in the arbitration
proceeding, or in court, upholds the plan sponsor's
determination, but only if the electing person--
``(A) provides notice to the plan sponsor of its
election to apply the special rule in this paragraph
within 90 days after the plan sponsor notifies the
electing person of its liability by reason of the
application of section 4212(c); and
``(B) if a final decision in the arbitration
proceeding, or in court, of the withdrawal liability
dispute has not been rendered within 12 months from the
date of such notice, the electing person provides to
the plan, effective as of the first day following the
12-month period, a bond issued by a corporate surety
company that is an acceptable surety for purposes of
section 412 of this Act, or an amount held in escrow by
a bank or similar financial institution satisfactory to
the plan, in an amount equal to the sum of the
withdrawal liability payments that would otherwise be
due under subsection (d) and section 4219(c) for the
12-month period beginning with the first anniversary of
such notice. Such bond or escrow shall remain in effect
until there is a final decision in the arbitration
proceeding, or in court, of the withdrawal liability
dispute, at which time such bond or escrow shall be
paid to the plan if such final decision upholds the
plan sponsor's determination.
``(3) Definition of small employer.--For purposes of this
subsection--
``(A) In general.--The term `small employer' means
any employer which, for the calendar year in which the
transaction referred to in paragraph (1)(B) occurred
and for each of the 3 preceding years, on average--
``(i) employs not more than 500 employees,
and
``(ii) is required to make contributions to
the plan for not more than 250 employees.
``(B) Controlled group.--Any group treated as a
single employer under subsection (b)(1) of section
4001, without regard to any transaction that was a
basis for the plan's finding under section 4212, shall
be treated as a single employer for purposes of this
subparagraph.
``(4) Additional security pending resolution of dispute.--
If a withdrawal liability dispute to which this subsection
applies is not concluded by 12 months after the electing person
posts the bond or escrow described in paragraph (2), the
electing person shall, at the start of each succeeding 12-month
period, provide an additional bond or amount held in escrow
equal to the sum of the withdrawal liability payments that
would otherwise be payable to the plan during that period.
``(5) The liability of the party furnishing a bond or
escrow under this subsection shall be reduced, upon the payment
of the bond or escrow to the plan, by the amount thereof.''
(2) Effective date.--The amendments made by this subsection
shall apply to any person that receives a notification under
section 4219(b)(1) of the Employee Retirement Income Security
Act of 1974 on or after the date of enactment of this Act with
respect to a transaction that occurred after December 31, 1998.
SEC. 205. PROHIBITION ON RETALIATION AGAINST EMPLOYERS EXERCISING THEIR
RIGHTS TO PETITION THE FEDERAL GOVERNMENT.
Section 510 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1140) is amended by inserting before the last sentence
thereof the following new sentence:``In the case of a multiemployer
plan, it shall be unlawful for the plan sponsor or any other person to
discriminate against any contributing employer for exercising rights
under this Act or for giving information or testifying in any inquiry
or proceeding relating to this Act before Congress.''
SEC. 206. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED UNDER AN AGREEMENT
APPROVED BY THE PENSION BENEFIT GUARANTY CORPORATION.
In the case of a multiemployer plan that is a party to an agreement
that was approved by the Pension Benefit Guaranty Corporation prior to
June 30, 2005, and that--
(1) increases benefits, and
(2) provides for special withdrawal liability rules under
section 4203(f) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1383),
the amendments made by sections 201, 202, 211, and 212 of this Act
shall not apply to the benefit increases under any plan amendment
adopted prior to June 30, 2005, that are funded pursuant to such
agreement if the plan is funded in compliance with such agreement (and
any amendments thereto).
Subtitle B--Amendments to Internal Revenue Code of 1986
SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS.
(a) In General.--Subpart A of part III of subchapter D of chapter 1
of the Internal Revenue Code of 1986 (as added by this Act) is amended
by inserting after section 430 the following new section:
``SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER PLANS.
``(a) In General.--For purposes of section 412, the accumulated
funding deficiency of a multiemployer plan for any plan year is--
``(1) except as provided in paragraph (2), the amount,
determined as of the end of the plan year, equal to the excess
(if any) of the total charges to the funding standard account
of the plan for all plan years (beginning with the first plan
year for which this part applies to the plan) over the total
credits to such account for such years, and
``(2) if the multiemployer plan is in reorganization for
any plan year, the accumulated funding deficiency of the plan
determined under section 4243 of the Employee Retirement Income
Security Act of 1974.
``(b) Funding Standard Account.--
``(1) Account required.--Each multiemployer plan to which
this part applies shall establish and maintain a funding
standard account. Such account shall be credited and charged
solely as provided in this section.
``(2) Charges to account.--For a plan year, the funding
standard account shall be charged with the sum of--
``(A) the normal cost of the plan for the plan
year,
``(B) the amounts necessary to amortize in equal
annual installments (until fully amortized)--
``(i) in the case of a plan which comes
into existence on or after January 1, 2008, the
unfunded past service liability under the plan
on the first day of the first plan year to
which this section applies, over a period of 15
plan years,
``(ii) separately, with respect to each
plan year, the net increase (if any) in
unfunded past service liability under the plan
arising from plan amendments adopted in such
year, over a period of 15 plan years,
``(iii) separately, with respect to each
plan year, the net experience loss (if any)
under the plan, over a period of 15 plan years,
and
``(iv) separately, with respect to each
plan year, the net loss (if any) resulting from
changes in actuarial assumptions used under the
plan, over a period of 15 plan years,
``(C) the amount necessary to amortize each waived
funding deficiency (within the meaning of section
412(c)(3)) for each prior plan year in equal annual
installments (until fully amortized) over a period of
15 plan years,
``(D) the amount necessary to amortize in equal
annual installments (until fully amortized) over a
period of 5 plan years any amount credited to the
funding standard account under section 412(b)(3)(D) (as
in effect on the day before the date of the enactment
of the Pension Protection Act of 2006), and
``(E) the amount necessary to amortize in equal
annual installments (until fully amortized) over a
period of 20 years the contributions which would be
required to be made under the plan but for the
provisions of section 412(c)(7)(A)(i)(I) (as in effect
on the day before the date of the enactment of the
Pension Protection Act of 2006).
``(3) Credits to account.--For a plan year, the funding
standard account shall be credited with the sum of--
``(A) the amount considered contributed by the
employer to or under the plan for the plan year,
``(B) the amount necessary to amortize in equal
annual installments (until fully amortized)--
``(i) separately, with respect to each plan
year, the net decrease (if any) in unfunded
past service liability under the plan arising
from plan amendments adopted in such year, over
a period of 15 plan years,
``(ii) separately, with respect to each
plan year, the net experience gain (if any)
under the plan, over a period of 15 plan years,
and
``(iii) separately, with respect to each
plan year, the net gain (if any) resulting from
changes in actuarial assumptions used under the
plan, over a period of 15 plan years,
``(C) the amount of the waived funding deficiency
(within the meaning of section 412(c)(3)) for the plan
year, and
``(D) in the case of a plan year for which the
accumulated funding deficiency is determined under the
funding standard account if such plan year follows a
plan year for which such deficiency was determined
under the alternative minimum funding standard under
section 412(g) (as in effect on the day before the date
of the enactment of the Pension Protection Act of
2006), the excess (if any) of any debit balance in the
funding standard account (determined without regard to
this subparagraph) over any debit balance in the
alternative minimum funding standard account.
``(4) Special rule for amounts first amortized in plan
years before 2008.--In the case of any amount amortized under
section 412(b) (as in effect on the day before the date of the
enactment of the Pension Protection Act of 2006) over any
period beginning with a plan year beginning before 2008 in lieu
of the amortization described in paragraphs (2)(B) and (3)(B),
such amount shall continue to be amortized under such section
as so in effect.
``(5) Combining and offsetting amounts to be amortized.--
Under regulations prescribed by the Secretary, amounts required
to be amortized under paragraph (2) or paragraph (3), as the
case may be--
``(A) may be combined into one amount under such
paragraph to be amortized over a period determined on
the basis of the remaining amortization period for all
items entering into such combined amount, and
``(B) may be offset against amounts required to be
amortized under the other such paragraph, with the
resulting amount to be amortized over a period
determined on the basis of the remaining amortization
periods for all items entering into whichever of the
two amounts being offset is the greater.
``(6) Interest.--The funding standard account (and items
therein) shall be charged or credited (as determined under
regulations prescribed by the Secretary of the Treasury) with
interest at the appropriate rate consistent with the rate or
rates of interest used under the plan to determine costs.
``(7) Special rules relating to charges and credits to
funding standard account.--For purposes of this part--
``(A) Withdrawal liability.--Any amount received by
a multiemployer plan in payment of all or part of an
employer's withdrawal liability under part 1 of
subtitle E of title IV of the Employee Retirement
Income Security Act of 1974 shall be considered an
amount contributed by the employer to or under the
plan. The Secretary may prescribe by regulation
additional charges and credits to a multiemployer
plan's funding standard account to the extent necessary
to prevent withdrawal liability payments from being
unduly reflected as advance funding for plan
liabilities.
``(B) Adjustments when a multiemployer plan leaves
reorganization.--If a multiemployer plan is not in
reorganization in the plan year but was in
reorganization in the immediately preceding plan year,
any balance in the funding standard account at the
close of such immediately preceding plan year--
``(i) shall be eliminated by an offsetting
credit or charge (as the case may be), but
``(ii) shall be taken into account in
subsequent plan years by being amortized in
equal annual installments (until fully
amortized) over 30 plan years.
The preceding sentence shall not apply to the extent of
any accumulated funding deficiency under section
4243(a) of such Act as of the end of the last plan year
that the plan was in reorganization.
``(C) Plan payments to supplemental program or
withdrawal liability payment fund.--Any amount paid by
a plan during a plan year to the Pension Benefit
Guaranty Corporation pursuant to section 4222 of such
Act or to a fund exempt under section 501(c)(22)
pursuant to section 4223 of such Act shall reduce the
amount of contributions considered received by the plan
for the plan year.
``(D) Interim withdrawal liability payments.--Any
amount paid by an employer pending a final
determination of the employer's withdrawal liability
under part 1 of subtitle E of title IV of such Act and
subsequently refunded to the employer by the plan shall
be charged to the funding standard account in
accordance with regulations prescribed by the
Secretary.
``(E) Election for deferral of charge for portion
of net experience loss.--If an election is in effect
under section 412(b)(7)(F) (as in effect on the day
before the date of the enactment of the Pension
Protection Act of 2006) for any plan year, the funding
standard account shall be charged in the plan year to
which the portion of the net experience loss deferred
by such election was deferred with the amount so
deferred (and paragraph (2)(B)(iii) shall not apply to
the amount so charged).
``(F) Financial assistance.--Any amount of any
financial assistance from the Pension Benefit Guaranty
Corporation to any plan, and any repayment of such
amount, shall be taken into account under this section
and section 412 in such manner as is determined by the
Secretary.
``(G) Short-term benefits.--To the extent that any
plan amendment increases the unfunded past service
liability under the plan by reason of an increase in
benefits which are not payable as a life annuity but
are payable under the terms of the plan for a period
that does not exceed 14 years from the effective date
of the amendment, paragraph (2)(B)(ii) shall be applied
separately with respect to such increase in unfunded
past service liability by substituting the number of
years of the period during which such benefits are
payable for `15'.
``(c) Additional Rules.--
``(1) Determinations to be made under funding method.--For
purposes of this part, normal costs, accrued liability, past
service liabilities, and experience gains and losses shall be
determined under the funding method used to determine costs
under the plan.
``(2) Valuation of assets.--
``(A) In general.--For purposes of this part, the
value of the plan's assets shall be determined on the
basis of any reasonable actuarial method of valuation
which takes into account fair market value and which is
permitted under regulations prescribed by the
Secretary.
``(B) Election with respect to bonds.--The value of
a bond or other evidence of indebtedness which is not
in default as to principal or interest may, at the
election of the plan administrator, be determined on an
amortized basis running from initial cost at purchase
to par value at maturity or earliest call date. Any
election under this subparagraph shall be made at such
time and in such manner as the Secretary shall by
regulations provide, shall apply to all such evidences
of indebtedness, and may be revoked only with the
consent of the Secretary.
``(3) Actuarial assumptions must be reasonable.--For
purposes of this section, all costs, liabilities, rates of
interest, and other factors under the plan shall be determined
on the basis of actuarial assumptions and methods--
``(A) each of which is reasonable (taking into
account the experience of the plan and reasonable
expectations), and
``(B) which, in combination, offer the actuary's
best estimate of anticipated experience under the plan.
``(4) Treatment of certain changes as experience gain or
loss.--For purposes of this section, if--
``(A) a change in benefits under the Social
Security Act or in other retirement benefits created
under Federal or State law, or
``(B) a change in the definition of the term
`wages' under section 3121, or a change in the amount
of such wages taken into account under regulations
prescribed for purposes of section 401(a)(5),
results in an increase or decrease in accrued liability under a
plan, such increase or decrease shall be treated as an
experience loss or gain.
``(5) Full funding.--If, as of the close of a plan year, a
plan would (without regard to this paragraph) have an
accumulated funding deficiency in excess of the full funding
limitation--
``(A) the funding standard account shall be
credited with the amount of such excess, and
``(B) all amounts described in subparagraphs (B),
(C), and (D) of subsection (b) (2) and subparagraph (B)
of subsection (b)(3) which are required to be amortized
shall be considered fully amortized for purposes of
such subparagraphs.
``(6) Full-funding limitation.--
``(A) In general.--For purposes of paragraph (5),
the term `full-funding limitation' means the excess (if
any) of--
``(i) the accrued liability (including
normal cost) under the plan (determined under
the entry age normal funding method if such
accrued liability cannot be directly calculated
under the funding method used for the plan),
over
``(ii) the lesser of--
``(I) the fair market value of the
plan's assets, or
``(II) the value of such assets
determined under paragraph (2).
``(B) Minimum amount.--
``(i) In general.--In no event shall the
full-funding limitation determined under
subparagraph (A) be less than the excess (if
any) of--
``(I) 90 percent of the current
liability of the plan (including the
expected increase in current liability
due to benefits accruing during the
plan year), over
``(II) the value of the plan's
assets determined under paragraph (2).
``(ii) Assets.--For purposes of clause (i),
assets shall not be reduced by any credit
balance in the funding standard account.
``(C) Full funding limitation.--For purposes of
this paragraph, unless otherwise provided by the plan,
the accrued liability under a multiemployer plan shall
not include benefits which are not nonforfeitable under
the plan after the termination of the plan (taking into
consideration section 411(d)(3)).
``(D) Current liability.--For purposes of this
paragraph--
``(i) In general.--The term `current
liability' means all liabilities to employees
and their beneficiaries under the plan.
``(ii) Treatment of unpredictable
contingent event benefits.--For purposes of
clause (i), any benefit contingent on an event
other than--
``(I) age, service, compensation,
death, or disability, or
``(II) an event which is reasonably
and reliably predictable (as determined
by the Secretary),
shall not be taken into account until the event
on which the benefit is contingent occurs.
``(iii) Interest rate used.--The rate of
interest used to determine current liability
under this paragraph shall be the rate of
interest determined under subparagraph (E).
``(iv) Mortality tables.--
``(I) Commissioners' standard
table.--In the case of plan years
beginning before the first plan year to
which the first tables prescribed under
subclause (II) apply, the mortality
table used in determining current
liability under this paragraph shall be
the table prescribed by the Secretary
which is based on the prevailing
commissioners' standard table
(described in section 807(d)(5)(A))
used to determine reserves for group
annuity contracts issued on January 1,
1993.
``(II) Secretarial authority.--The
Secretary may by regulation prescribe
for plan years beginning after December
31, 1999, mortality tables to be used
in determining current liability under
this subsection. Such tables shall be
based upon the actual experience of
pension plans and projected trends in
such experience. In prescribing such
tables, the Secretary shall take into
account results of available
independent studies of mortality of
individuals covered by pension plans.
``(v) Separate mortality tables for the
disabled.--Notwithstanding clause (iv)--
``(I) In general.--The Secretary
shall establish mortality tables which
may be used (in lieu of the tables
under clause (iv)) to determine current
liability under this subsection for
individuals who are entitled to
benefits under the plan on account of
disability. The Secretary shall
establish separate tables for
individuals whose disabilities occur in
plan years beginning before January 1,
1995, and for individuals whose
disabilities occur in plan years
beginning on or after such date.
``(II) Special rule for
disabilities occurring after 1994.--In
the case of disabilities occurring in
plan years beginning after December 31,
1994, the tables under subclause (I)
shall apply only with respect to
individuals described in such subclause
who are disabled within the meaning of
title II of the Social Security Act and
the regulations thereunder.
``(vi) Periodic review.--The Secretary
shall periodically (at least every 5 years)
review any tables in effect under this
subparagraph and shall, to the extent such
Secretary determines necessary, by regulation
update the tables to reflect the actual
experience of pension plans and projected
trends in such experience.
``(E) Required change of interest rate.--For
purposes of determining a plan's current liability for
purposes of this paragraph--
``(i) In general.--If any rate of interest
used under the plan under subsection (b)(6) to
determine cost is not within the permissible
range, the plan shall establish a new rate of
interest within the permissible range.
``(ii) Permissible range.--For purposes of
this subparagraph--
``(I) In general.--Except as
provided in subclause (II), the term
`permissible range' means a rate of
interest which is not more than 5
percent above, and not more than 10
percent below, the weighted average of
the rates of interest on 30-year
Treasury securities during the 4-year
period ending on the last day before
the beginning of the plan year.
``(II) Secretarial authority.--If
the Secretary finds that the lowest
rate of interest permissible under
subclause (I) is unreasonably high, the
Secretary may prescribe a lower rate of
interest, except that such rate may not
be less than 80 percent of the average
rate determined under such subclause.
``(iii) Assumptions.--Notwithstanding
paragraph (3)(A), the interest rate used under
the plan shall be--
``(I) determined without taking
into account the experience of the plan
and reasonable expectations, but
``(II) consistent with the
assumptions which reflect the purchase
rates which would be used by insurance
companies to satisfy the liabilities
under the plan.
``(7) Annual valuation.--
``(A) In general.--For purposes of this section, a
determination of experience gains and losses and a
valuation of the plan's liability shall be made not
less frequently than once every year, except that such
determination shall be made more frequently to the
extent required in particular cases under regulations
prescribed by the Secretary.
``(B) Valuation date.--
``(i) Current year.--Except as provided in
clause (ii), the valuation referred to in
subparagraph (A) shall be made as of a date
within the plan year to which the valuation
refers or within one month prior to the
beginning of such year.
``(ii) Use of prior year valuation.--The
valuation referred to in subparagraph (A) may
be made as of a date within the plan year prior
to the year to which the valuation refers if,
as of such date, the value of the assets of the
plan are not less than 100 percent of the
plan's current liability (as defined in
paragraph (6)(D) without regard to clause (iv)
thereof).
``(iii) Adjustments.--Information under
clause (ii) shall, in accordance with
regulations, be actuarially adjusted to reflect
significant differences in participants.
``(iv) Limitation.--A change in funding
method to use a prior year valuation, as
provided in clause (ii), may not be made unless
as of the valuation date within the prior plan
year, the value of the assets of the plan are
not less than 125 percent of the plan's current
liability (as defined in paragraph (6)(D)
without regard to clause (iv) thereof).
``(8) Time when certain contributions deemed made.--For
purposes of this section, any contributions for a plan year
made by an employer after the last day of such plan year, but
not later than two and one-half months after such day, shall be
deemed to have been made on such last day. For purposes of this
subparagraph, such two and one-half month period may be
extended for not more than six months under regulations
prescribed by the Secretary.
``(d) Extension of Amortization Periods for Multiemployer Plans.--
``(1) Automatic extension upon application by certain
plans.--
``(A) In general.--If the plan sponsor of a
multiemployer plan--
``(i) submits to the Secretary an
application for an extension of the period of
years required to amortize any unfunded
liability described in any clause of subsection
(b)(2)(B) or described in subsection (b)(4),
and
``(ii) includes with the application a
certification by the plan's actuary described
in subparagraph (B),
the Secretary shall extend the amortization period for
the period of time (not in excess of 5 years) specified
in the application. Such extension shall be in addition
to any extension under paragraph (2).
``(B) Criteria.--A certification with respect to a
multiemployer plan is described in this subparagraph if
the plan's actuary certifies that, based on reasonable
assumptions--
``(i) absent the extension under
subparagraph (A), the plan would have an
accumulated funding deficiency in the current
plan year or any of the 9 succeeding plan
years,
``(ii) the plan sponsor has adopted a plan
to improve the plan's funding status,
``(iii) the plan is projected to have
sufficient assets to timely pay expected
benefits and anticipated expenditures over the
amortization period as extended, and
``(iv) the notice required under paragraph
(3)(A) has been provided.
``(C) Termination.--The preceding provisions of
this paragraph shall not apply with respect to any
application submitted after December 31, 2014.
``(2) Alternative extension.--
``(A) In general.--If the plan sponsor of a
multiemployer plan submits to the Secretary an
application for an extension of the period of years
required to amortize any unfunded liability described
in any clause of subsection (b)(2)(B) or described in
subsection (b)(4), the Secretary may extend the
amortization period for a period of time (not in excess
of 10 years reduced by the number of years of any
extension under paragraph (1) with respect to such
unfunded liability) if the Secretary makes the
determination described in subparagraph (B). Such
extension shall be in addition to any extension under
paragraph (1).
``(B) Determination.--The Secretary may grant an
extension under subparagraph (A) if the Secretary
determines that--
``(i) such extension would carry out the
purposes of this Act and would provide adequate
protection for participants under the plan and
their beneficiaries, and
``(ii) the failure to permit such extension
would--
``(I) result in a substantial risk
to the voluntary continuation of the
plan, or a substantial curtailment of
pension benefit levels or employee
compensation, and
``(II) be adverse to the interests
of plan participants in the aggregate.
``(C) Action by secretary.--The Secretary shall act
upon any application for an extension under this
paragraph within 180 days of the submission of such
application. If the Secretary rejects the application
for an extension under this paragraph, the Secretary
shall provide notice to the plan detailing the specific
reasons for the rejection, including references to the
criteria set forth above.
``(3) Advance notice.--
``(A) In general.--The Secretary shall, before
granting an extension under this subsection, require
each applicant to provide evidence satisfactory to such
Secretary that the applicant has provided notice of the
filing of the application for such extension to each
affected party (as defined in section 4001(a)(21) of
the Employee Retirement Income Security Act of 1974)
with respect to the affected plan. Such notice shall
include a description of the extent to which the plan
is funded for benefits which are guaranteed under title
IV of such Act and for benefit liabilities.
``(B) Consideration of relevant information.--The
Secretary shall consider any relevant information
provided by a person to whom notice was given under
paragraph (1).''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after 2007.
(2) Special rule for certain amortization extensions.--If
the Secretary of the Treasury grants an extension under section
304 of the Employee Retirement Income Security Act of 1974 and
section 412(e) of the Internal Revenue Code of 1986 with
respect to any application filed with the Secretary of the
Treasury on or before June 30, 2005, the extension (and any
modification thereof) shall be applied and administered under
the rules of such sections as in effect before the enactment of
this Act, including the use of the rate of interest determined
under section 6621(b) of such Code.
SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN
ENDANGERED OR CRITICAL STATUS.
(a) In General.--Subpart A of part III of subchapter D of chapter 1
of the Internal Revenue Code of 1986 (as amended by this Act) is
amended by inserting after section 431 the following new section:
``SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN
ENDANGERED STATUS OR CRITICAL STATUS.
``(a) General Rule.--For purposes of this part, in the case of a
multiemployer plan in effect on July 16, 2006 --
``(1) if the plan is in endangered status--
``(A) the plan sponsor shall adopt and implement a
funding improvement plan in accordance with the
requirements of subsection (c), and
``(B) the requirements of subsection (d) shall
apply during the funding plan adoption period and the
funding improvement period, and
``(2) if the plan is in critical status--
``(A) the plan sponsor shall adopt and implement a
rehabilitation plan in accordance with the requirements
of subsection (e), and
``(B) the requirements of subsection (f) shall
apply during the rehabilitation plan adoption period
and the rehabilitation period.
``(b) Determination of Endangered and Critical Status.--For
purposes of this section--
``(1) Endangered status.--A multiemployer plan is in
endangered status for a plan year if, as determined by the plan
actuary under paragraph (3), the plan is not in critical status
for the plan year and, as of the beginning of the plan year,
either--
``(A) the plan's funded percentage for such plan
year is less than 80 percent, or
``(B) the plan has an accumulated funding
deficiency for such plan year, or is projected to have
such an accumulated funding deficiency for any of the 6
succeeding plan years, taking into account any
extension of amortization periods under section 431(d).
For purposes of this section, a plan shall be treated as in
seriously endangered status for a plan year if the plan is
described in both subparagraphs (A) and (B).
``(2) Critical status.--A multiemployer plan is in critical
status for a plan year if, as determined by the plan actuary
under paragraph (3), the plan is described in 1 or more of the
following subparagraphs as of the beginning of the plan year:
``(A) A plan is described in this subparagraph if--
``(i) the funded percentage of the plan is
less than 65 percent, and
``(ii) the sum of--
``(I) the fair market value of plan
assets, plus
``(II) the present value of the
reasonably anticipated employer
contributions for the current plan year
and each of the 6 succeeding plan
years, assuming that the terms of all
collective bargaining agreements
pursuant to which the plan is
maintained for the current plan year
continue in effect for succeeding plan
years,
is less than the present value of all
nonforfeitable benefits projected to be payable
under the plan during the current plan year and
each of the 6 succeeding plan years (plus
administrative expenses for such plan years).
``(B) A plan is described in this subparagraph if--
``(i) the plan has an accumulated funding
deficiency for the current plan year, not
taking into account any extension of
amortization periods under section 431(d), or
``(ii) the plan is projected to have an
accumulated funding deficiency for any of the 3
succeeding plan years (4 succeeding plan years
if the funded percentage of the plan is 65
percent or less), not taking into account any
extension of amortization periods under section
431(d).
``(C) A plan is described in this subparagraph if--
``(i)(I) the plan's normal cost for the
current plan year, plus interest (determined at
the rate used for determining costs under the
plan) for the current plan year on the amount
of unfunded benefit liabilities under the plan
as of the last date of the preceding plan year,
exceeds
``(II) the present value of the reasonably
anticipated employer and employee contributions
for the current plan year,
``(ii) the present value, as of the
beginning of the current plan year, of
nonforfeitable benefits of inactive
participants is greater than the present value
of nonforfeitable benefits of active
participants, and
``(iii) the plan has an accumulated funding
deficiency for the current plan year, or is
projected to have such a deficiency for any of
the 4 succeeding plan years, not taking into
account any extension of amortization periods
under section 431(d).
``(D) A plan is described in this subparagraph if
the sum of--
``(i) the fair market value of plan assets,
plus
``(ii) the present value of the reasonably
anticipated employer contributions for the
current plan year and each of the 4 succeeding
plan years, assuming that the terms of all
collective bargaining agreements pursuant to
which the plan is maintained for the current
plan year continue in effect for succeeding
plan years,
is less than the present value of all benefits
projected to be payable under the plan during the
current plan year and each of the 4 succeeding plan
years (plus administrative expenses for such plan
years).
``(3) Annual certification by plan actuary.--
``(A) In general.--Not later than the 90th day of
each plan year of a multiemployer plan, the plan
actuary shall certify to the Secretary and to the plan
sponsor--
``(i) whether or not the plan is in
endangered status for such plan year and
whether or not the plan is or will be in
critical status for such plan year, and
``(ii) in the case of a plan which is in a
funding improvement or rehabilitation period,
whether or not the plan is making the scheduled
progress in meeting the requirements of its
funding improvement or rehabilitation plan.
``(B) Actuarial projections of assets and
liabilities.--
``(i) In general.--In making the
determinations and projections under this
subsection, the plan actuary shall make
projections required for the current and
succeeding plan years of the current value of
the assets of the plan and the present value of
all liabilities to participants and
beneficiaries under the plan for the current
plan year as of the beginning of such year. The
actuary's projections shall be based on
reasonable actuarial estimates, assumptions,
and methods that, except as provided in clause
(iii), offer the actuary's best estimate of
anticipated experience under the plan. The
projected present value of liabilities as of
the beginning of such year shall be determined
based on the most recent of either--
``(I) the actuarial statement
required under section 103(d) of the
Employee Retirement Income Security Act
of 1974 with respect to the most
recently filed annual report, or
``(II) the actuarial valuation for
the preceding plan year.
``(ii) Determinations of future
contributions.--Any actuarial projection of
plan assets shall assume--
``(I) reasonably anticipated
employer contributions for the current
and succeeding plan years, assuming
that the terms of the one or more
collective bargaining agreements
pursuant to which the plan is
maintained for the current plan year
continue in effect for succeeding plan
years, or
``(II) that employer contributions
for the most recent plan year will
continue indefinitely, but only if the
plan actuary determines there have been
no significant demographic changes that
would make such assumption
unreasonable.
``(iii) Projected industry activity.--Any
projection of activity in the industry or
industries covered by the plan, including
future covered employment and contribution
levels, shall be based on information provided
by the plan sponsor, which shall act reasonably
and in good faith.
``(C) Penalty for failure to secure timely
actuarial certification.--Any failure of the plan's
actuary to certify the plan's status under this
subsection by the date specified in subparagraph (A)
shall be treated for purposes of section 502(c)(2) of
the Employee Retirement Income Security Act of 1974 as
a failure or refusal by the plan administrator to file
the annual report required to be filed with the
Secretary under section 101(b)(4) of such Act.
``(D) Notice.--
``(i) In general.--In any case in which it
is certified under subparagraph (A) that a
multiemployer plan is or will be in endangered
or critical status for a plan year, the plan
sponsor shall, not later than 30 days after the
date of the certification, provide notification
of the endangered or critical status to the
participants and beneficiaries, the bargaining
parties, the Pension Benefit Guaranty
Corporation, and the Secretary of Labor.
``(ii) Plans in critical status.--If it is
certified under subparagraph (A) that a
multiemployer plan is or will be in critical
status, the plan sponsor shall include in the
notice under clause (i) an explanation of the
possibility that--
``(I) adjustable benefits (as
defined in subsection (e)(8)) may be
reduced, and
``(II) such reductions may apply to
participants and beneficiaries whose
benefit commencement date is on or
after the date such notice is provided
for the first plan year in which the
plan is in critical status.
``(iii) Model notice.--The Secretary of
Labor shall prescribe a model notice that a
multiemployer plan may use to satisfy the
requirements under clause (ii).
``(c) Funding Improvement Plan Must Be Adopted for Multiemployer
Plans in Endangered Status.--
``(1) In general.--In any case in which a multiemployer
plan is in endangered status for a plan year, the plan sponsor,
in accordance with this subsection--
``(A) shall adopt a funding improvement plan not
later than 240 days following the required date for the
actuarial certification of endangered status under
subsection (b)(3)(A), and
``(B) within 30 days after the adoption of the
funding improvement plan--
``(i) shall provide to the bargaining
parties 1 or more schedules showing revised
benefit structures, revised contribution
structures, or both, which, if adopted, may
reasonably be expected to enable the
multiemployer plan to meet the applicable
benchmarks in accordance with the funding
improvement plan, including--
``(I) one proposal for reductions
in the amount of future benefit
accruals necessary to achieve the
applicable benchmarks, assuming no
amendments increasing contributions
under the plan (other than amendments
increasing contributions necessary to
achieve the applicable benchmarks after
amendments have reduced future benefit
accruals to the maximum extent
permitted by law), and
``(II) one proposal for increases
in contributions under the plan
necessary to achieve the applicable
benchmarks, assuming no amendments
reducing future benefit accruals under
the plan, and
``(ii) may, if the plan sponsor deems
appropriate, prepare and provide the bargaining
parties with additional information relating to
contribution rates or benefit reductions,
alternative schedules, or other information
relevant to achieving the applicable benchmarks
in accordance with the funding improvement
plan.
For purposes of this section, the term `applicable
benchmarks' means the requirements applicable to the
multiemployer plan under paragraph (3) (as modified by
paragraph (5)).
``(2) Exception for years after process begins.--Paragraph
(1) shall not apply to a plan year if such year is in a funding
plan adoption period or funding improvement period by reason of
the plan being in endangered status for a preceding plan year.
For purposes of this section, such preceding plan year shall be
the initial determination year with respect to the funding
improvement plan to which it relates.
``(3) Funding improvement plan.--For purposes of this
section--
``(A) In general.--A funding improvement plan is a
plan which consists of the actions, including options
or a range of options to be proposed to the bargaining
parties, formulated to provide, based on reasonably
anticipated experience and reasonable actuarial
assumptions, for the attainment by the plan during the
funding improvement period of the following
requirements:
``(i) Increase in plan's funding
percentage.--The plan's funded percentage as of
the close of the funding improvement period
equals or exceeds a percentage equal to the sum
of--
``(I) such percentage as of the
beginning of such period, plus
``(II) 33 percent of the difference
between 100 percent and the percentage
under subclause (I).
``(ii) Avoidance of accumulated funding
deficiencies.--No accumulated funding
deficiency for any plan year during the funding
improvement period (taking into account any
extension of amortization periods under section
304(d)).
``(B) Seriously endangered plans.--In the case of a
plan in seriously endangered status, except as provided
in paragraph (5), subparagraph (A)(i)(II) shall be
applied by substituting `20 percent' for `33 percent'.
``(4) Funding improvement period.--For purposes of this
section--
``(A) In general.--The funding improvement period
for any funding improvement plan adopted pursuant to
this subsection is the 10-year period beginning on the
first day of the first plan year of the multiemployer
plan beginning after the earlier of--
``(i) the second anniversary of the date of
the adoption of the funding improvement plan,
or
``(ii) the expiration of the collective
bargaining agreements in effect on the due date
for the actuarial certification of endangered
status for the initial determination year under
subsection (b)(3)(A) and covering, as of such
due date, at least 75 percent of the active
participants in such multiemployer plan.
``(B) Seriously endangered plans.--In the case of a
plan in seriously endangered status, except as provided
in paragraph (5), subparagraph (A) shall be applied by
substituting `15-year period' for `10-year period'.
``(C) Coordination with changes in status.--
``(i) Plans no longer in endangered
status.--If the plan's actuary certifies under
subsection (b)(3)(A) for a plan year in any
funding plan adoption period or funding
improvement period that the plan is no longer
in endangered status and is not in critical
status, the funding plan adoption period or
funding improvement period, whichever is
applicable, shall end as of the close of the
preceding plan year.
``(ii) Plans in critical status.--If the
plan's actuary certifies under subsection
(b)(3)(A) for a plan year in any funding plan
adoption period or funding improvement period
that the plan is in critical status, the
funding plan adoption period or funding
improvement period, whichever is applicable,
shall end as of the close of the plan year
preceding the first plan year in the
rehabilitation period with respect to such
status.
``(D) Plans in endangered status at end of
period.--If the plan's actuary certifies under
subsection (b)(3)(A) for the first plan year following
the close of the period described in subparagraph (A)
that the plan is in endangered status, the provisions
of this subsection and subsection (d) shall be applied
as if such first plan year were an initial
determination year, except that the plan may not be
amended in a manner inconsistent with the funding
improvement plan in effect for the preceding plan year
until a new funding improvement plan is adopted.
``(5) Special rules for seriously endangered plans more
than 70 percent funded.--
``(A) In general.--If the funded percentage of a
plan in seriously endangered status was more than 70
percent as of the beginning of the initial
determination year--
``(i) paragraphs (3)(B) and (4)(B) shall
apply only if the plan's actuary certifies,
within 30 days after the certification under
subsection (b)(3)(A) for the initial
determination year, that, based on the terms of
the plan and the collective bargaining
agreements in effect at the time of such
certification, the plan is not projected to
meet the requirements of paragraph (3)(A)
(without regard to paragraphs (3)(B) and
(4)(B)), and
``(ii) if there is a certification under
clause (i), the plan may, in formulating its
funding improvement plan, only take into
account the rules of paragraph (3)(B) and
(4)(B) for plan years in the funding
improvement period beginning on or before the
date on which the last of the collective
bargaining agreements described in paragraph
(4)(A)(ii) expires.
``(B) Special rule after expiration of
agreements.--Notwithstanding subparagraph (A)(ii), if,
for any plan year ending after the date described in
subparagraph (A)(ii), the plan actuary certifies (at
the time of the annual certification under subsection
(b)(3)(A) for such plan year) that, based on the terms
of the plan and collective bargaining agreements in
effect at the time of that annual certification, the
plan is not projected to be able to meet the
requirements of paragraph (3)(A) (without regard to
paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and
(4)(B) shall continue to apply for such year.
``(6) Updates to funding improvement plans and schedules.--
``(A) Funding improvement plan.--The plan sponsor
shall annually update the funding improvement plan and
shall file the update with the plan's annual report
under section 104 of the Employee Retirement Income
Security Act of 1974.
``(B) Schedules.--The plan sponsor shall annually
update any schedule of contribution rates provided
under this subsection to reflect the experience of the
plan.
``(C) Duration of schedule.--A schedule of
contribution rates provided by the plan sponsor and
relied upon by bargaining parties in negotiating a
collective bargaining agreement shall remain in effect
for the duration of that collective bargaining
agreement.
``(7) Imposition of default schedule where failure to adopt
funding improvement plan.--
``(A) In general.--If--
``(i) a collective bargaining agreement
providing for contributions under a
multiemployer plan that was in effect at the
time the plan entered endangered status
expires, and
``(ii) after receiving one or more
schedules from the plan sponsor under paragraph
(1)(B), the bargaining parties with respect to
such agreement fail to agree on changes to
contribution or benefit schedules necessary to
meet the applicable benchmarks in accordance
with the funding improvement plan,
the plan sponsor shall implement the schedule described
in paragraph (1)(B)(i)(I) beginning on the date
specified in subparagraph (B).
``(B) Date of implementation.--The date specified
in this subparagraph is the earlier of the date--
``(i) on which the Secretary of Labor
certifies that the parties are at an impasse,
or
``(ii) which is 180 days after the date on
which the collective bargaining agreement
described in subparagraph (A) expires.
``(8) Funding plan adoption period.--For purposes of this
section, the term `funding plan adoption period' means the
period beginning on the date of the certification under
subsection (b)(3)(A) for the initial determination year and
ending on the day before the first day of the funding
improvement period.
``(d) Rules for Operation of Plan During Adoption and Improvement
Periods.--
``(1) Special rules for plan adoption period.--During the
funding plan adoption period--
``(A) the plan sponsor may not accept a collective
bargaining agreement or participation agreement with
respect to the multiemployer plan that provides for--
``(i) a reduction in the level of
contributions for any participants,
``(ii) a suspension of contributions with
respect to any period of service, or
``(iii) any new direct or indirect
exclusion of younger or newly hired employees
from plan participation,
``(B) no amendment of the plan which increases the
liabilities of the plan by reason of any increase in
benefits, any change in the accrual of benefits, or any
change in the rate at which benefits become
nonforfeitable under the plan may be adopted unless the
amendment is required as a condition of qualification
under part I of subchapter D of chapter 1 or to comply
with other applicable law, and
``(C) in the case of a plan in seriously endangered
status, the plan sponsor shall take all reasonable
actions which are consistent with the terms of the plan
and applicable law and which are expected, based on
reasonable assumptions, to achieve--
``(i) an increase in the plan's funded
percentage, and
``(ii) postponement of an accumulated
funding deficiency for at least 1 additional
plan year.
Actions under subparagraph (C) include applications for
extensions of amortization periods under section 431(d), use of
the shortfall funding method in making funding standard account
computations, amendments to the plan's benefit structure,
reductions in future benefit accruals, and other reasonable
actions consistent with the terms of the plan and applicable
law.
``(2) Compliance with funding improvement plan.--
``(A) In general.--A plan may not be amended after
the date of the adoption of a funding improvement plan
so as to be inconsistent with the funding improvement
plan.
``(B) No reduction in contributions.--A plan
sponsor may not during any funding improvement period
accept a collective bargaining agreement or
participation agreement with respect to the
multiemployer plan that provides for--
``(i) a reduction in the level of
contributions for any participants,
``(ii) a suspension of contributions with
respect to any period of service, or
``(iii) any new direct or indirect
exclusion of younger or newly hired employees
from plan participation.
``(C) Special rules for benefit increases.--A plan
may not be amended after the date of the adoption of a
funding improvement plan so as to increase benefits,
including future benefit accruals, unless the plan
actuary certifies that the benefit increase is
consistent with the funding improvement plan and is
paid for out of contributions not required by the
funding improvement plan to meet the applicable
benchmark in accordance with the schedule contemplated
in the funding improvement plan.
``(e) Rehabilitation Plan Must Be Adopted for Multiemployer Plans
in Critical Status.--
``(1) In general.--In any case in which a multiemployer
plan is in critical status for a plan year, the plan sponsor,
in accordance with this subsection--
``(A) shall adopt a rehabilitation plan not later
than 240 days following the required date for the
actuarial certification of critical status under
subsection (b)(3)(A), and
``(B) within 30 days after the adoption of the
rehabilitation plan--
``(i) shall provide to the bargaining
parties 1 or more schedules showing revised
benefit structures, revised contribution
structures, or both, which, if adopted, may
reasonably be expected to enable the
multiemployer plan to emerge from critical
status in accordance with the rehabilitation
plan, and
``(ii) may, if the plan sponsor deems
appropriate, prepare and provide the bargaining
parties with additional information relating to
contribution rates or benefit reductions,
alternative schedules, or other information
relevant to emerging from critical status in
accordance with the rehabilitation plan.
The schedule or schedules described in subparagraph (B)(i)
shall reflect reductions in future benefit accruals and
adjustable benefits, and increases in contributions, that the
plan sponsor determines are reasonably necessary to emerge from
critical status. One schedule shall be designated as the
default schedule and such schedule shall assume that there are
no increases in contributions under the plan other than the
increases necessary to emerge from critical status after future
benefit accruals and other benefits (other than benefits the
reduction or elimination of which are not permitted under
section 411(d)(6)) have been reduced to the maximum extent
permitted by law.
``(2) Exception for years after process begins.--Paragraph
(1) shall not apply to a plan year if such year is in a
rehabilitation plan adoption period or rehabilitation period by
reason of the plan being in critical status for a preceding
plan year. For purposes of this section, such preceding plan
year shall be the initial critical year with respect to the
rehabilitation plan to which it relates.
``(3) Rehabilitation plan.--For purposes of this section--
``(A) In general.--A rehabilitation plan is a plan
which consists of--
``(i) actions, including options or a range
of options to be proposed to the bargaining
parties, formulated, based on reasonably
anticipated experience and reasonable actuarial
assumptions, to enable the plan to cease to be
in critical status by the end of the
rehabilitation period and may include
reductions in plan expenditures (including plan
mergers and consolidations), reductions in
future benefit accruals or increases in
contributions, if agreed to by the bargaining
parties, or any combination of such actions, or
``(ii) if the plan sponsor determines that,
based on reasonable actuarial assumptions and
upon exhaustion of all reasonable measures, the
plan can not reasonably be expected to emerge
from critical status by the end of the
rehabilitation period, reasonable measures to
emerge from critical status at a later time or
to forestall possible insolvency (within the
meaning of section 4245 of the Employee
Retirement Income Security Act of 1974).
A rehabilitation plan must provide annual standards for
meeting the requirements of such rehabilitation plan.
Such plan shall also include the schedules required to
be provided under paragraph (1)(B)(i) and if clause
(ii) applies, shall set forth the alternatives
considered, explain why the plan is not reasonably
expected to emerge from critical status by the end of
the rehabilitation period, and specify when, if ever,
the plan is expected to emerge from critical status in
accordance with the rehabilitation plan.
``(B) Updates to rehabilitation plan and
schedules.--
``(i) Rehabilitation plan.--The plan
sponsor shall annually update the
rehabilitation plan and shall file the update
with the plan's annual report under section 104
of the Employee Retirement Income Security Act
of 1974.
``(ii) Schedules.--The plan sponsor shall
annually update any schedule of contribution
rates provided under this subsection to reflect
the experience of the plan.
``(iii) Duration of schedule.--A schedule
of contribution rates provided by the plan
sponsor and relied upon by bargaining parties
in negotiating a collective bargaining
agreement shall remain in effect for the
duration of that collective bargaining
agreement.
``(C) Imposition of default schedule where failure
to adopt rehabilitation plan.--
``(i) In general.--If--
``(I) a collective bargaining
agreement providing for contributions
under a multiemployer plan that was in
effect at the time the plan entered
critical status expires, and
``(II) after receiving one or more
schedules from the plan sponsor under
paragraph (1)(B), the bargaining
parties with respect to such agreement
fail to adopt a contribution or benefit
schedules with terms consistent with
the rehabilitation plan and the
schedule from the plan sponsor under
paragraph (1)(B)(i),
the plan sponsor shall implement the default
schedule described in the last sentence of
paragraph (1) beginning on the date specified
in clause (ii).
``(ii) Date of implementation.--The date
specified in this clause is the earlier of the
date--
``(I) on which the Secretary of
Labor certifies that the parties are at
an impasse, or
``(II) which is 180 days after the
date on which the collective bargaining
agreement described in clause (i)
expires.
``(4) Rehabilitation period.--For purposes of this
section--
``(A) In general.--The rehabilitation period for a
plan in critical status is the 10-year period beginning
on the first day of the first plan year of the
multiemployer plan following the earlier of--
``(i) the second anniversary of the date of
the adoption of the rehabilitation plan, or
``(ii) the expiration of the collective
bargaining agreements in effect on the date of
the due date for the actuarial certification of
critical status for the initial critical year
under subsection (a)(1) and covering, as of
such date at least 75 percent of the active
participants in such multiemployer plan.
If a plan emerges from critical status as provided
under subparagraph (B) before the end of such 10-year
period, the rehabilitation period shall end with the
plan year preceding the plan year for which the
determination under subparagraph (B) is made.
``(B) Emergence.--A plan in critical status shall
remain in such status until a plan year for which the
plan actuary certifies, in accordance with subsection
(b)(3)(A), that the plan is not projected to have an
accumulated funding deficiency for the plan year or any
of the 9 succeeding plan years, without regard to the
use of the shortfall method and taking into account any
extension of amortization periods under section 431(d).
``(5) Rehabilitation plan adoption period.--For purposes of
this section, the term `rehabilitation plan adoption period'
means the period beginning on the date of the certification
under subsection (b)(3)(A) for the initial critical year and
ending on the day before the first day of the rehabilitation
period.
``(6) Limitation on reduction in rates of future
accruals.--Any reduction in the rate of future accruals under
the default schedule described in paragraph (1)(B)(i) shall not
reduce the rate of future accruals below--
``(A) a monthly benefit (payable as a single life
annuity commencing at the participant's normal
retirement age) equal to 1 percent of the contributions
required to be made with respect to a participant, or
the equivalent standard accrual rate for a participant
or group of participants under the collective
bargaining agreements in effect as of the first day of
the initial critical year, or
``(B) if lower, the accrual rate under the plan on
such first day.
The equivalent standard accrual rate shall be determined by the
plan sponsor based on the standard or average contribution base
units which the plan sponsor determines to be representative
for active participants and such other factors as the plan
sponsor determines to be relevant. Nothing in this paragraph
shall be construed as limiting the ability of the plan sponsor
to prepare and provide the bargaining parties with alternative
schedules to the default schedule that established lower or
higher accrual and contribution rates than the rates otherwise
described in this paragraph.
``(7) Automatic employer surcharge.--
``(A) Imposition of surcharge.--Each employer
otherwise obligated to make a contribution for the
initial critical year shall be obligated to pay to the
plan for such year a surcharge equal to 5 percent of
the contribution otherwise required under the
applicable collective bargaining agreement (or other
agreement pursuant to which the employer contributes).
For each succeeding plan year in which the plan is in
critical status for a consecutive period of years
beginning with the initial critical year, the surcharge
shall be 10 percent of the contribution otherwise so
required.
``(B) Enforcement of surcharge.--The surcharges
under subparagraph (A) shall be due and payable on the
same schedule as the contributions on which the
surcharges are based. Any failure to make a surcharge
payment shall be treated as a delinquent contribution
under section 515 of the Employee Retirement Income
Security Act of 1974 and shall be enforceable as such.
``(C) Surcharge to terminate upon collective
bargaining agreement renegotiation.--The surcharge
under this paragraph shall cease to be effective with
respect to employees covered by a collective bargaining
agreement (or other agreement pursuant to which the
employer contributes), beginning on the effective date
of a collective bargaining agreement (or other such
agreement) that includes terms consistent with a
schedule presented by the plan sponsor under paragraph
(1)(B)(i), as modified under subparagraph (B) of
paragraph (3).
``(D) Surcharge not to apply until employer
receives notice.--The surcharge under this paragraph
shall not apply to an employer until 30 days after the
employer has been notified by the plan sponsor that the
plan is in critical status and that the surcharge is in
effect.
``(E) Surcharge not to generate increased benefit
accruals.--Notwithstanding any provision of a plan to
the contrary, the amount of any surcharge under this
paragraph shall not be the basis for any benefit
accrual under the plan.
``(8) Benefit adjustments.--
``(A) Adjustable benefits.--
``(i) In general.--Notwithstanding section
204(g), the plan sponsor shall, subject to the
notice requirement under subparagraph (C), make
any reductions to adjustable benefits which the
plan sponsor deems appropriate, based upon the
outcome of collective bargaining over the
schedule or schedules provided under paragraph
(1)(B)(i).
``(ii) Exception for retirees.--Except in
the case of adjustable benefits described in
clause (iv)(III), the plan sponsor of a plan in
critical status shall not reduce adjustable
benefits of any participant or beneficiary
whose benefit commencement date is before the
date on which the plan provides notice to the
participant or beneficiary under subsection
(b)(3)(D) for the initial critical year.
``(iii) Plan sponsor flexibility.--The plan
sponsor shall include in the schedules provided
to the bargaining parties an allowance for
funding the benefits of participants with
respect to whom contributions are not currently
required to be made, and shall reduce their
benefits to the extent permitted under this
title and considered appropriate by the plan
sponsor based on the plan's then current
overall funding status.
``(iv) Adjustable benefit defined.--For
purposes of this paragraph, the term
`adjustable benefit' means--
``(I) benefits, rights, and
features under the plan, including
post-retirement death benefits, 60-
month guarantees, disability benefits
not yet in pay status, and similar
benefits,
``(II) any early retirement benefit
or retirement-type subsidy (within the
meaning of section 411(d)(6)(B)(i)) and
any benefit payment option (other than
the qualified joint-and survivor
annuity), and
``(III) benefit increases that
would not be eligible for a guarantee
under section 4022A of the Employee
Retirement Income Security Act of 1974
on the first day of initial critical
year because the increases were adopted
(or, if later, took effect) less than
60 months before such first day.
``(B) Normal retirement benefits protected.--Except
as provided in subparagraph (A)(iv)(III), nothing in
this paragraph shall be construed to permit a plan to
reduce the level of a participant's accrued benefit
payable at normal retirement age.
``(C) Notice requirements.--
``(i) In general.--No reduction may be made
to adjustable benefits under subparagraph (A)
unless notice of such reduction has been given
at least 30 days before the general effective
date of such reduction for all participants and
beneficiaries to--
``(I) plan participants and
beneficiaries,
``(II) each employer who has an
obligation to contribute (within the
meaning of section 4212(a)) under the
plan, and
``(III) each employee organization
which, for purposes of collective
bargaining, represents plan
participants employed by such an
employer.
``(ii) Content of notice.--The notice under
clause (i) shall contain--
``(I) sufficient information to
enable participants and beneficiaries
to understand the effect of any
reduction on their benefits, including
an estimate (on an annual or monthly
basis) of any affected adjustable
benefit that a participant or
beneficiary would otherwise have been
eligible for as of the general
effective date described in clause (i),
and
``(II) information as to the rights
and remedies of plan participants and
beneficiaries as well as how to contact
the Department of Labor for further
information and assistance where
appropriate.
``(iii) Form and manner.--Any notice under
clause (i)--
``(I) shall be provided in a form
and manner prescribed in regulations of
the Secretary of Labor,
``(II) shall be written in a manner
so as to be understood by the average
plan participant, and
``(III) may be provided in written,
electronic, or other appropriate form
to the extent such form is reasonably
accessible to persons to whom the
notice is required to be provided.
The Secretary of Labor shall in the regulations
prescribed under subclause (I) establish a
model notice that a plan sponsor may use to
meet the requirements of this subparagraph.
``(9) Adjustments disregarded in withdrawal liability
determination.--
``(A) Benefit reductions.--Any benefit reductions
under this subsection shall be disregarded in
determining a plan's unfunded vested benefits for
purposes of determining an employer's withdrawal
liability under section 4201 of the Employee Retirement
Income Security Act of 1974.
``(B) Surcharges.--Any surcharges under paragraph
(7) shall be disregarded in determining an employer's
withdrawal liability under section 4211 of such Act,
except for purposes of determining the unfunded vested
benefits attributable to an employer under section
4211(c)(4) of such Act or a comparable method approved
under section 4211(c)(5) of such Act.
``(C) Simplified calculations.--The Pension Benefit
Guaranty Corporation shall prescribe simplified methods
for the application of this paragraph in determining
withdrawal liability.
``(f) Rules for Operation of Plan During Adoption and
Rehabilitation Period.--
``(1) Compliance with rehabilitation plan.--
``(A) In general.--A plan may not be amended after
the date of the adoption of a rehabilitation plan under
subsection (e) so as to be inconsistent with the
rehabilitation plan.
``(B) Special rules for benefit increases.--A plan
may not be amended after the date of the adoption of a
rehabilitation plan under subsection (e) so as to
increase benefits, including future benefit accruals,
unless the plan actuary certifies that such increase is
paid for out of additional contributions not
contemplated by the rehabilitation plan, and, after
taking into account the benefit increase, the
multiemployer plan still is reasonably expected to
emerge from critical status by the end of the
rehabilitation period on the schedule contemplated in
the rehabilitation plan.
``(2) Restriction on lump sums and similar benefits.--
``(A) In general.--Effective on the date the notice
of certification of the plan's critical status for the
initial critical year under subsection (b)(3)(D) is
sent, and notwithstanding section 411(d)(6), the plan
shall not pay--
``(i) any payment, in excess of the monthly
amount paid under a single life annuity (plus
any social security supplements described in
the last sentence of section 411(b)(1)(A)),
``(ii) any payment for the purchase of an
irrevocable commitment from an insurer to pay
benefits, and
``(iii) any other payment specified by the
Secretary by regulations.
``(B) Exception.--Subparagraph (A) shall not apply
to a benefit which under section 411(a)(11) may be
immediately distributed without the consent of the
participant or to any makeup payment in the case of a
retroactive annuity starting date or any similar
payment of benefits owed with respect to a prior
period.
``(3) Adjustments disregarded in withdrawal liability
determination.--Any benefit reductions under this subsection
shall be disregarded in determining a plan's unfunded vested
benefits for purposes of determining an employer's withdrawal
liability under section 4201 of the Employee Retirement Income
Security Act of 1974.
``(4) Special rules for plan adoption period.--During the
rehabilitation plan adoption period--
``(A) the plan sponsor may not accept a collective
bargaining agreement or participation agreement with
respect to the multiemployer plan that provides for--
``(i) a reduction in the level of
contributions for any participants,
``(ii) a suspension of contributions with
respect to any period of service, or
``(iii) any new direct or indirect
exclusion of younger or newly hired employees
from plan participation, and
``(B) no amendment of the plan which increases the
liabilities of the plan by reason of any increase in
benefits, any change in the accrual of benefits, or any
change in the rate at which benefits become
nonforfeitable under the plan may be adopted unless the
amendment is required as a condition of qualification
under part I of subchapter D of chapter 1 or to comply
with other applicable law.
``(g) Expedited Resolution of Plan Sponsor Decisions.--If, within
60 days of the due date for adoption of a funding improvement plan or a
rehabilitation plan under subsection (e), the plan sponsor of a plan in
endangered status or a plan in critical status has not agreed on a
funding improvement plan or rehabilitation plan, then any member of the
board or group that constitutes the plan sponsor may require that the
plan sponsor enter into an expedited dispute resolution procedure for
the development and adoption of a funding improvement plan or
rehabilitation plan.
``(h) Nonbargained Participation.--
``(1) Both bargained and nonbargained employee-
participants.--In the case of an employer that contributes to a
multiemployer plan with respect to both employees who are
covered by one or more collective bargaining agreements and
employees who are not so covered, if the plan is in endangered
status or in critical status, benefits of and contributions for
the nonbargained employees, including surcharges on those
contributions, shall be determined as if those nonbargained
employees were covered under the first to expire of the
employer's collective bargaining agreements in effect when the
plan entered endangered or critical status.
``(2) Nonbargained employees only.--In the case of an
employer that contributes to a multiemployer plan only with
respect to employees who are not covered by a collective
bargaining agreement, this section shall be applied as if the
employer were the bargaining party, and its participation
agreement with the plan were a collective bargaining agreement
with a term ending on the first day of the plan year beginning
after the employer is provided the schedule or schedules
described in subsections (c) and (e).
``(i) Definitions; Actuarial Method.--For purposes of this
section--
``(1) Bargaining party.--The term `bargaining party'
means--
``(A)(i) except as provided in clause (ii), an
employer who has an obligation to contribute under the
plan; or
``(ii) in the case of a plan described under
section 404(c), or a continuation of such a plan, the
association of employers that is the employer settlor
of the plan; and
``(B) an employee organization which, for purposes
of collective bargaining, represents plan participants
employed by an employer who has an obligation to
contribute under the plan.
``(2) Funded percentage.--The term `funded percentage'
means the percentage equal to a fraction--
``(A) the numerator of which is the value of the
plan's assets, as determined under section 431(c)(2),
and
``(B) the denominator of which is the accrued
liability of the plan, determined using actuarial
assumptions described in section 431(c)(3).
``(3) Accumulated funding deficiency.--The term
`accumulated funding deficiency' has the meaning given such
term in section 412(a).
``(4) Active participant.--The term `active participant'
means, in connection with a multiemployer plan, a participant
who is in covered service under the plan.
``(5) Inactive participant.--The term `inactive
participant' means, in connection with a multiemployer plan, a
participant, or the beneficiary or alternate payee of a
participant, who--
``(A) is not in covered service under the plan, and
``(B) is in pay status under the plan or has a
nonforfeitable right to benefits under the plan.
``(6) Pay status.--A person is in pay status under a
multiemployer plan if--
``(A) at any time during the current plan year,
such person is a participant or beneficiary under the
plan and is paid an early, late, normal, or disability
retirement benefit under the plan (or a death benefit
under the plan related to a retirement benefit), or
``(B) to the extent provided in regulations of the
Secretary, such person is entitled to such a benefit
under the plan.
``(7) Obligation to contribute.--The term `obligation to
contribute' has the meaning given such term under section
4212(a) of the Employee Retirement Income Security Act of 1974.
``(8) Actuarial method.--Notwithstanding any other
provision of this section, the actuary's determinations with
respect to a plan's normal cost, actuarial accrued liability,
and improvements in a plan's funded percentage under this
section shall be based upon the unit credit funding method
(whether or not that method is used for the plan's actuarial
valuation).
``(9) Plan sponsor.--In the case of a plan described under
section 404(c), or a continuation of such a plan, the term
`plan sponsor' means the bargaining parties described under
paragraph (1).
``(10) Benefit commencement date.--The term `benefit
commencement date' means the annuity starting date (or in the
case of a retroactive annuity starting date, the date on which
benefit payments begin).''
(b) Excise Taxes on Failures Relating to Multiemployer Plans in
Endangered or Critical Status.--
(1) In general.--Section 4971 of the Internal Revenue Code
of 1986 is amended by redesignating subsection (g) as
subsection (h) and by inserting after subsection (f) the
following:
``(g) Multiemployer Plans in Endangered or Critical Status.--
``(1) In general.--Except as provided in this subsection--
``(A) no tax shall be imposed under this section
for a taxable year with respect to a multiemployer plan
if, for the plan years ending with or within the
taxable year, the plan is in critical status pursuant
to section 432, and
``(B) any tax imposed under this subsection for a
taxable year with respect to a multiemployer plan if,
for the plan years ending with or within the taxable
year, the plan is in endangered status pursuant to
section 432 shall be in addition to any other tax
imposed by this section.
``(2) Failure to comply with funding improvement or
rehabilitation plan.--
``(A) In general.--If any funding improvement plan
or rehabilitation plan in effect under section 432 with
respect to a multiemployer plan requires an employer to
make a contribution to the plan, there is hereby
imposed a tax on each failure of the employer to make
the required contribution within the time required
under such plan.
``(B) Amount of tax.--The amount of the tax imposed
by subparagraph (A) shall be equal to the amount of the
required contribution the employer failed to make in a
timely manner.
``(C) Liability for tax.--The tax imposed by
subparagraph (A) shall be paid by the employer
responsible for contributing to or under the
rehabilitation plan which fails to make the
contribution.
``(3) Failure to meet requirements for plans in endangered
or critical status.--If--
``(A) a plan which is in seriously endangered
status fails to meet the applicable benchmarks by the
end of the funding improvement period, or
``(B) a plan which is in critical status either--
``(i) fails to meet the requirements of
section 432(e) by the end of the rehabilitation
period, or
``(ii) has received a certification under
section 432(b)(3)(A)(ii) for 3 consecutive plan
years that the plan is not making the scheduled
progress in meeting its requirements under the
rehabilitation plan,
the plan shall be treated as having an accumulated
funding deficiency for purposes of this section for the
last plan year in such funding improvement,
rehabilitation, or 3-consecutive year period (and each
succeeding plan year until such benchmarks or
requirements are met) in an amount equal to the greater
of the amount of the contributions necessary to meet
such benchmarks or requirements or the amount of such
accumulated funding deficiency without regard to this
paragraph.
``(4) Failure to adopt rehabilitation plan.--
``(A) In general.--In the case of a multiemployer
plan which is in critical status, there is hereby
imposed a tax on the failure of such plan to adopt a
rehabilitation plan within the time prescribed under
section 432.
``(B) Amount of tax.--The amount of the tax imposed
under subparagraph (A) with respect to any plan sponsor
for any taxable year shall be the greater of--
``(i) the amount of tax imposed under
subsection (a) for the taxable year (determined
without regard to this subsection), or
``(ii) the amount equal to $1,100
multiplied by the number of days during the
taxable year which are included in the period
beginning on the first day of the 240-day
period described in section 432(e)(1)(A) and
ending on the day on which the rehabilitation
plan is adopted.
``(C) Liability for tax.--
``(i) In general.--The tax imposed by
subparagraph (A) shall be paid by each plan
sponsor.
``(ii) Plan sponsor.--For purposes of
clause (i), the term `plan sponsor' in the case
of a multiemployer plan means the association,
committee, joint board of trustees, or other
similar group of representatives of the parties
who establish or maintain the plan.
``(5) Waiver.--In the case of a failure described in
paragraph (2) or (3) which is due to reasonable cause and not
to willful neglect, the Secretary may waive part or all of the
tax imposed by this subsection. For purposes of this paragraph,
reasonable cause includes unanticipated and material market
fluctuations, the loss of a significant contributing employer,
or other factors to the extent that the payment of tax under
this subsection with respect to the failure would be excessive
or otherwise inequitable relative to the failure involved.
``(6) Terms used in section 432.--For purposes of this
subsection, any term used in this subsection which is also used
in section 432 shall have the meaning given such term by
section 432.''.
(2) Controlled groups.--Section 4971(c)(2) of such Code is
amended--
(A) by striking ``In the case of a plan other than
a multiemployer plan, if the'' and inserting ``If an'',
and
(B) by striking ``or (f)'' and inserting ``(f), or
(g)''.
(c) No Additional Contribution Required.--Section 412(b) of the
Internal Revenue Code of 1986, as amended by this Act, is amended by
adding at the end the following new paragraph:
``(3) Multiemployer plans in critical status.--Paragraph
(1) shall not apply in the case of a multiemployer plan for any
plan year in which the plan is in critical status pursuant to
section 432. This paragraph shall only apply if the plan adopts
a rehabilitation plan in accordance with section 432(e) and
complies with such rehabilitation plan (and any modifications
of the plan).''.
(d) Clerical Amendment.--The table of sections for subpart A of
part III of subchapter D of chapter 1 of such Code is amended by adding
at the end the following new item:
``Sec. 432. Additional funding rules for multiemployer plans in
endangered status or critical status.''.
(e) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply with respect to plan years beginning after 2007.
(2) Special rule for certain notices.--In any case in which
a plan's actuary certifies that it is reasonably expected that
a multiemployer plan will be in critical status under section
305(b)(3) of the Employee Retirement Income Security Act of
1974, as added by this section, with respect to the first plan
year beginning after 2007, the notice required under
subparagraph (D) of such section may be provided at any time
after the date of enactment, so long as it is provided on or
before the last date for providing the notice under such
subparagraph.
(3) Special rule for certain restored benefits.--In the
case of a multiemployer plan--
(A) with respect to which benefits were reduced
pursuant to a plan amendment adopted on or after
January 1, 2002, and before June 30, 2005, and
(B) which, pursuant to the plan document, the trust
agreement, or a formal written communication from the
plan sponsor to participants provided before June 30,
2005, provided for the restoration of such benefits,
the amendments made by this section shall not apply to such
benefit restorations to the extent that any restriction on the
providing or accrual of such benefits would otherwise apply by
reason of such amendments.
SEC. 213. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER PLANS.
(a) Advance Determination of Impending Insolvency Over 5 Years.--
Section 418E(d)(1) of the Internal Revenue Code of 1986 is amended--
(1) by striking ``3 plan years'' the second place it
appears and inserting ``5 plan years''; and
(2) by adding at the end the following new sentence: ``If
the plan sponsor makes such a determination that the plan will
be insolvent in any of the next 5 plan years, the plan sponsor
shall make the comparison under this paragraph at least
annually until the plan sponsor makes a determination that the
plan will not be insolvent in any of the next 5 plan years.''.
(b) Effective Date.--The amendments made by this section shall
apply with respect to the determinations made in plan years beginning
after 2007.
SEC. 214. EXEMPTION FROM EXCISE TAXES FOR CERTAIN MULTIEMPLOYER PENSION
PLANS.
(a) In General.--Notwithstanding any other provision of law, no tax
shall be imposed under subsection (a) or (b) of section 4971 of the
Internal Revenue Code of 1986 with respect to any accumulated funding
deficiency of a plan described in subsection (b) of this section for
any taxable year beginning before the earlier of--
(1) the taxable year in which the plan sponsor adopts a
rehabilitation plan under section 305(e) of the Employee
Retirement Income Security Act of 1974 and section 432(e) of
such Code (as added by this Act); or
(2) the taxable year that contains January 1, 2009.
(b) Plan Described.--A plan described under this subsection is a
multiemployer pension plan--
(1) with less than 100 participants;
(2) with respect to which the contributing employers
participated in a Federal fishery capacity reduction program;
(3) with respect to which employers under the plan
participated in the Northeast Fisheries Assistance Program; and
(4) with respect to which the annual normal cost is less
than $100,000 and the plan is experiencing a funding deficiency
on the date of enactment of this Act.
Subtitle C--Sunset of Additional Funding Rules
SEC. 221. SUNSET OF ADDITIONAL FUNDING RULES.
(a) Report.--Not later than December 31, 2011, the Secretary of
Labor, the Secretary of the Treasury, and the Executive Director of the
Pension Benefit Guaranty Corporation shall conduct a study of the
effect of the amendments made by this subtitle on the operation and
funding status of multiemployer plans and shall report the results of
such study, including any recommendations for legislation, to the
Congress.
(b) Matters Included in Study.--The study required under subsection
(a) shall include--
(1) the effect of funding difficulties, funding rules in
effect before the date of the enactment of this Act, and the
amendments made by this subtitle on small businesses
participating in multiemployer plans,
(2) the effect on the financial status of small employers
of--
(A) funding targets set in funding improvement and
rehabilitation plans and associated contribution
increases,
(B) funding deficiencies,
(C) excise taxes,
(D) withdrawal liability,
(E) the possibility of alternatives schedules and
procedures for financially-troubled employers, and
(F) other aspects of the multiemployer system, and
(3) the role of the multiemployer pension plan system in
helping small employers to offer pension benefits.
(c) Sunset.--
(1) In general.--Except as provided in this subsection,
notwithstanding any other provision of this Act, the provisions
of, and the amendments made by, sections 201(b), 202, and 212
shall not apply to plan years beginning after December 31,
2014.
(2) Funding improvement and rehabilitation plans.--If a
plan is operating under a funding improvement or rehabilitation
plan under section 305 of such Act or 432 of such Code for its
last year beginning before January 1, 2015, such plan shall
continue to operate under such funding improvement or
rehabilitation plan during any period after December 31, 2014,
such funding improvement or rehabilitation plan is in effect
and all provisions of such Act or Code relating to the
operation of such funding improvement or rehabilitation plan
shall continue in effect during such period.
TITLE III--INTEREST RATE ASSUMPTIONS
SEC. 301. EXTENSION OF REPLACEMENT OF 30-YEAR TREASURY RATES.
(a) Amendments of ERISA.--
(1) Determination of range.--Subclause (II) of section
302(b)(5)(B)(ii) of the Employee Retirement Income Security Act
of 1974 is amended--
(A) by striking ``2006'' and inserting ``2008'',
and
(B) by striking ``and 2005'' in the heading and
inserting ``, 2005, 2006, and 2007''.
(2) Determination of current liability.--Subclause (IV) of
section 302(d)(7)(C)(i) of such Act is amended--
(A) by striking ``or 2005'' and inserting ``, 2005,
2006, or 2007'', and
(B) by striking ``and 2005'' in the heading and
inserting ``, 2005, 2006, and 2007''.
(3) PBGC premium rate.--Subclause (V) of section
4006(a)(3)(E)(iii) of such Act is amended by striking ``2006''
and inserting ``2008''.
(b) Amendments of Internal Revenue Code.--
(1) Determination of range.--Subclause (II) of section
412(b)(5)(B)(ii) of the Internal Revenue Code of 1986 is
amended--
(A) by striking ``2006'' and inserting ``2008'',
and
(B) by striking ``and 2005'' in the heading and
inserting ``, 2005, 2006, and 2007''.
(2) Determination of current liability.--Subclause (IV) of
section 412(l)(7)(C)(i) of such Code is amended--
(A) by striking ``or 2005'' and inserting ``, 2005,
2006, or 2007'', and
(B) by striking ``and 2005'' in the heading and
inserting ``, 2005, 2006, and 2007''.
(c) Plan Amendments.--Clause (ii) of section 101(c)(2)(A) of the
Pension Funding Equity Act of 2004 is amended by striking ``2006'' and
inserting ``2008''.
SEC. 302. INTEREST RATE ASSUMPTION FOR DETERMINATION OF LUMP SUM
DISTRIBUTIONS.
(a) Amendment to Employee Retirement Income Security Act of 1974.--
Paragraph (3) of section 205(g) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1055(g)(3)) is amended to read as
follows:
``(3)(A) For purposes of paragraphs (1) and (2), the present value
shall not be less than the present value calculated by using the
applicable mortality table and the applicable interest rate.
``(B) For purposes of subparagraph (A)--
``(i) The term `applicable mortality table' means a
mortality table, modified as appropriate by the Secretary of
the Treasury, based on the mortality table specified for the
plan year under subparagraph (A) of section 303(h)(3) (without
regard to subparagraph (C) or (D) of such section).
``(ii) The term `applicable interest rate' means the
adjusted first, second, and third segment rates applied under
rules similar to the rules of section 303(h)(2)(C) for the
month before the date of the distribution or such other time as
the Secretary of the Treasury may by regulations prescribe.
``(iii) For purposes of clause (ii), the adjusted first,
second, and third segment rates are the first, second, and
third segment rates which would be determined under section
303(h)(2)(C) if--
``(I) section 303(h)(2)(D) were applied by
substituting the average yields for the month described
in clause (ii) for the average yields for the 24-month
period described in such section,
``(II) section 303(h)(2)(G)(i)(II) were applied by
substituting `section 205(g)(3)(B)(iii)(II)' for
`section 302(b)(5)(B)(ii)(II)', and
``(III) the applicable percentage under section
303(h)(2)(G) were determined in accordance with the
following table:
In the case of plan years The applicable percentage is:
beginning in:
2008............................ 20 percent
2009............................ 40 percent
2010............................ 60 percent
2011............................ 80 percent.''.
(b) Amendment to Internal Revenue Code of 1986.--Paragraph (3) of
section 417(e) of the Internal Revenue Code of 1986 is amended to read
as follows:
``(3) Determination of present value.--
``(A) In general.--For purposes of paragraphs (1)
and (2), the present value shall not be less than the
present value calculated by using the applicable
mortality table and the applicable interest rate.
``(B) Applicable mortality table.--For purposes of
subparagraph (A), the term `applicable mortality table'
means a mortality table, modified as appropriate by the
Secretary, based on the mortality table specified for
the plan year under subparagraph (A) of section
430(h)(3) (without regard to subparagraph (C) or (D) of
such section).
``(C) Applicable interest rate.--For purposes of
subparagraph (A), the term `applicable interest rate'
means the adjusted first, second, and third segment
rates applied under rules similar to the rules of
section 430(h)(2)(C) for the month before the date of
the distribution or such other time as the Secretary
may by regulations prescribe.
``(D) Applicable segment rates.--For purposes of
subparagraph (C), the adjusted first, second, and third
segment rates are the first, second, and third segment
rates which would be determined under section
430(h)(2)(C) if--
``(i) section 430(h)(2)(D) were applied by
substituting the average yields for the month
described in clause (ii) for the average yields
for the 24-month period described in such
section,
``(ii) section 430(h)(2)(G)(i)(II) were
applied by substituting `section
417(e)(3)(A)(ii)(II)' for `section
412(b)(5)(B)(ii)(II)', and
``(iii) the applicable percentage under
section 430(h)(2)(G) were determined in
accordance with the following table:
In the case of plan years The applicable percentage is:
beginning in:
2008............................ 20 percent
2009............................ 40 percent
2010............................ 60 percent
2011............................ 80 percent.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning after December 31, 2007.
SEC. 303. INTEREST RATE ASSUMPTION FOR APPLYING BENEFIT LIMITATIONS TO
LUMP SUM DISTRIBUTIONS.
(a) In General.--Clause (ii) of section 415(b)(2)(E) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(ii) For purposes of adjusting any
benefit under subparagraph (B) for any form of
benefit subject to section 417(e)(3), the
interest rate assumption shall not be less than
the greatest of--
``(I) 5.5 percent,
``(II) the rate that provides a
benefit of not more than 105 percent of
the benefit that would be provided if
the applicable interest rate (as
defined in section 417(e)(3)) were the
interest rate assumption, or
``(III) the rate specified under
the plan.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to distributions made in years beginning after December 31, 2005.
TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS
SEC. 401. PBGC PREMIUMS.
(a) Variable-Rate Premiums.--
(1) Conforming amendments related to funding rules for
single-employer plans.--Section 4006(a)(3)(E) of the Employee
Retirement Income and Security Act of 1974 (29 U.S.C.
1306(a)(3)(E)) is amended by striking clauses (iii) and (iv)
and inserting the following:
``(iii) For purposes of clause (ii), the term `unfunded vested
benefits' means, for a plan year, the excess (if any) of--
``(I) the funding target of the plan as determined under
section 303(d) for the plan year by only taking into account
vested benefits and by using the interest rate described in
clause (iv), over
``(II) the fair market value of plan assets for the plan
year which are held by the plan on the valuation date.
``(iv) The interest rate used in valuing benefits for purposes of
subclause (I) of clause (iii) shall be equal to the first, second, or
third segment rate for the month preceding the month in which the plan
year begins, which would be determined under section 303(h)(2)(C) if
section 303(h)(2)(D) were applied by using the monthly yields for the
month preceding the month in which the plan year begins on investment
grade corporate bonds with varying maturities and in the top 3 quality
levels rather than the average of such yields for a 24-month period.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply with respect to plan years beginning after 2007.
(b) Termination Premiums.--
(1) Repeal of sunset provision.--Subparagraph (E) of
section 4006(a)(7) of such Act is repealed.
(2) Technical correction.--
(A) In general.--Section 4006(a)(7)(C)(ii) of such
Act is amended by striking ``subparagraph (B)(i)(I)''
and inserting ``subparagraph (B)''.
(B) Effective date.--The amendment made by this
paragraph shall take effect as if included in the
provision of the Deficit Reduction Act of 2005 to which
it relates.
SEC. 402. SPECIAL FUNDING RULES FOR CERTAIN PLANS MAINTAINED BY
COMMERCIAL AIRLINES.
(a) In General.--The plan sponsor of an eligible plan may elect to
either--
(1) have the rules of subsection (b) apply, or
(2) have section 303 of the Employee Retirement Income
Security Act of 1974 and section 430 of the Internal Revenue
Code of 1986 applied to its first taxable year beginning in
2008 by amortizing the shortfall amortization base for such
taxable year over a period of 10 plan years (rather than 7 plan
years) beginning with such plan year.
(b) Alternative Funding Schedule.--
(1) In general.--If an election is made under subsection
(a)(1) to have this subsection apply to an eligible plan and
the requirements of paragraphs (2) and (3) are met with respect
to the plan--
(A) in the case of any applicable plan year
beginning before January 1, 2008, the plan shall not
have an accumulated funding deficiency for purposes of
section 302 of the Employee Retirement Income Security
Act of 1974 and sections 412 and 4971 of the Internal
Revenue Code of 1986 if contributions to the plan for
the plan year are not less than the minimum required
contribution determined under subsection (e) for the
plan for the plan year, and
(B) in the case of any applicable plan year
beginning on or after January 1, 2008, the minimum
required contribution determined under sections 303 of
such Act and 430 of such Code shall, for purposes of
sections 302 and 303 of such Act and sections 412, 430,
and 4971 of such Code, be equal to the minimum required
contribution determined under subsection (e) for the
plan for the plan year.
(2) Accrual restrictions.--
(A) In general.--The requirements of this paragraph
are met if, effective as of the first day of the first
applicable plan year and at all times thereafter while
an election under this section is in effect, the plan
provides that--
(i) the accrued benefit, any death or
disability benefit, and any social security
supplement described in the last sentence of
section 411(a)(9) of such Code and section
204(b)(1)(G) of such Act, of each participant
are frozen at the amount of such benefit or
supplement immediately before such first day,
and
(ii) all other benefits under the plan are
eliminated,
but only to the extent the freezing or elimination of
such benefits would have been permitted under section
411(d)(6) of such Code and section 204(g) of such Act
if they had been implemented by a plan amendment
adopted immediately before such first day.
(B) Increases in section 415 limits.--If a plan
provides that an accrued benefit of a participant which
has been subject to any limitation under section 415 of
such Code will be increased if such limitation is
increased, the plan shall not be treated as meeting the
requirements of this section unless, effective as of
the first day of the first applicable plan year (or, if
later, the date of the enactment of this Act) and at
all times thereafter while an election under this
section is in effect, the plan provides that any such
increase shall not take effect. A plan shall not fail
to meet the requirements of section 411(d)(6) of such
Code and section 204(g) of such Act solely because the
plan is amended to meet the requirements of this
subparagraph.
(3) Restriction on applicable benefit increases.--
(A) In general.--The requirements of this paragraph
are met if no applicable benefit increase takes effect
at any time during the period beginning on July 26,
2005, and ending on the day before the first day of the
first applicable plan year.
(B) Applicable benefit increase.--For purposes of
this paragraph, the term ``applicable benefit
increase'' means, with respect to any plan year, any
increase in liabilities of the plan by plan amendment
(or otherwise provided in regulations provided by the
Secretary) which, but for this paragraph, would occur
during the plan year by reason of--
(i) any increase in benefits,
(ii) any change in the accrual of benefits,
or
(iii) any change in the rate at which
benefits become nonforfeitable under the plan.
(4) Exception for imputed disability service.--Paragraphs
(2) and (3) shall not apply to any accrual or increase with
respect to imputed service provided to a participant during any
period of the participant's disability occurring on or after
the effective date of the plan amendment providing the
restrictions under paragraph (2) (or on or after July 26, 2005,
in the case of the restrictions under paragraph (3)) if the
participant--
(A) was receiving disability benefits as of such
date, or
(B) was receiving sick pay and subsequently
determined to be eligible for disability benefits as of
such date.
(c) Definitions.--For purposes of this section--
(1) Eligible plan.--The term ``eligible plan'' means a
defined benefit plan (other than a multiemployer plan) to which
sections 302 of such Act and 412 of such Code applies which is
sponsored by an employer--
(A) which is a commercial airline passenger
airline, or
(B) the principal business of which is providing
catering services to a commercial passenger airline.
(2) Applicable plan year.--The term ``applicable plan
year'' means each plan year to which the election under
subsection (a)(1) applies under subsection (d)(1)(A).
(d) Elections and Related Terms.--
(1) Years for which election made.--
(A) Alternative funding schedule.--If an election
under subsection (a)(1) was made with respect to an
eligible plan, the plan sponsor may select either a
plan year beginning in 2006 or a plan year beginning in
2007 as the first plan year to which such election
applies. The election shall apply to such plan year and
all subsequent years. The election shall be made--
(i) not later than December 31, 2006, in
the case of an election for a plan year
beginning in 2006, or
(ii) not later than December 31, 2007, in
the case of an election for a plan year
beginning in 2007.
(B) 10 year amortization.--An election under
subsection (a)(2) shall be made not later than December
31, 2007.
(C) Election of new plan year for alternative
funding schedule.--In the case of an election under
subsection (a)(1), the plan sponsor may specify a new
plan year in such election and the plan year of the
plan may be changed to such new plan year without the
approval of the Secretary of the Treasury.
(2) Manner of election.--A plan sponsor shall make any
election under subsection (a) in such manner as the Secretary
of the Treasury may prescribe. Such election, once made, may be
revoked only with the consent of such Secretary.
(e) Minimum Required Contribution.--In the case of an eligible plan
with respect to which an election is made under subsection (a)(1)--
(1) In general.--In the case of any applicable plan year
during the amortization period, the minimum required
contribution shall be the amount necessary to amortize the
unfunded liability of the plan, determined as of the first day
of the plan year, in equal annual installments (until fully
amortized) over the remainder of the amortization period. Such
amount shall be separately determined for each applicable plan
year.
(2) Years after amortization period.--In the case of any
plan year beginning after the end of the amortization period,
section 302(a)(2)(A) of such Act and section 412(a)(2)(A) of
such Code shall apply to such plan, but the prefunding balance
and funding standard carryover balance as of the first day of
the first of such years under section 303(f) of such Act and
section 430(f) of such Code shall be zero.
(3) Definitions.--For purposes of this section--
(A) Unfunded liability.--The term ``unfunded
liability'' means the unfunded accrued liability under
the plan, determined under the unit credit funding
method.
(B) Amortization period.--The term ``amortization
period'' means the 17-plan year period beginning with
the first applicable plan year.
(4) Other rules.--In determining the minimum required
contribution and amortization amount under this subsection--
(A) the provisions of section 302(c)(3) of such Act
and section 412(c)(3) of such Code, as in effect before
the date of enactment of this section, shall apply,
(B) a rate of interest of 8.85 percent shall be
used for all calculations requiring an interest rate,
and
(C) the value of plan assets shall be equal to
their fair market value.
(5) Special rule for certain plan spinoffs.--For purposes
of subsection (b), if, with respect to any eligible plan to
which this subsection applies--
(A) any applicable plan year includes the date of
the enactment of this Act,
(B) a plan was spun off from the eligible plan
during the plan year but before such date of enactment,
the minimum required contribution under paragraph (1) for the
eligible plan for such applicable plan year shall be an
aggregate amount determined as if the plans were a single plan
for that plan year (based on the full 12-month plan year in
effect prior to the spin-off). The employer shall designate the
allocation of such aggregate amount between such plans for the
applicable plan year.
(f) Special Rules for Certain Balances and Waivers.--In the case of
an eligible plan with respect to which an election is made under
subsection (a)(1)--
(1) Funding standard account and credit balances.--Any
charge or credit in the funding standard account under section
302 of such Act or section 412 of such Code, and any prefunding
balance or funding standard carryover balance under section 303
of such Act or section 430 of such Code, as of the day before
the first day of the first applicable plan year, shall be
reduced to zero.
(2) Waived funding deficiencies.--Any waived funding
deficiency under sections 302 and 303 of such Act or section
412 of such Code, as in effect before the date of enactment of
this section, shall be deemed satisfied as of the first day of
the first applicable plan year and the amount of such waived
funding deficiency shall be taken into account in determining
the plan's unfunded liability under subsection (e)(3)(A). In
the case of a plan amendment adopted to satisfy the
requirements of subsection (b)(2), the plan shall not be deemed
to violate section 304(b) of such Act or section 412(f) of such
Code, as so in effect, by reason of such amendment or any
increase in benefits provided to such plan's participants under
a separate plan that is a defined contribution plan or a
multiemployer plan.
(g) Other Rules for Plans Making Election Under This Section.--
(1) Successor plans to certain plans.--If--
(A) an election under paragraph (1) or (2) of
subsection (a) is in effect with respect to any
eligible plan, and
(B) the eligible plan is maintained by an employer
that establishes or maintains 1 or more other defined
benefit plans (other than any multiemployer plan), and
such other plans in combination provide benefit
accruals to any substantial number of successor
employees,
the Secretary of the Treasury may, in the Secretary's
discretion, determine that any trust of which any other such
plan is a part does not constitute a qualified trust under
section 401(a) of the Internal Revenue Code of 1986 unless all
benefit obligations of the eligible plan have been satisfied.
For purposes of this paragraph, the term ``successor employee''
means any employee who is or was covered by the eligible plan
and any employees who perform substantially the same type of
work with respect to the same business operations as an
employee covered by such eligible plan.
(2) Special rules for terminations.--
(A) PBGC liability limited.--Section 4022 of the
Employee Retirement Income Security Act of 1974, as
amended by this Act, is amended by adding at the end
the following new subsection:
``(h) Special Rule for Plans Electing Certain Funding
Requirements.--If any plan makes an election under section 402(a)(1) of
the Pension Protection Act of 2006 and is terminated effective before
the end of the 10-year period beginning on the first day of the first
applicable plan year--
``(1) this section shall be applied--
``(A) by treating the first day of the first
applicable plan year as the termination date of the
plan, and
``(B) by determining the amount of guaranteed
benefits on the basis of plan assets and liabilities as
of such assumed termination date, and
``(2) notwithstanding section 4044(a), plan assets shall
first be allocated to pay the amount, if any, by which--
``(A) the amount of guaranteed benefits under this
section (determined without regard to paragraph (1) and
on the basis of plan assets and liabilities as of the
actual date of plan termination), exceeds
``(B) the amount determined under paragraph (1).''.
(B) Termination premium.--In applying section
4006(a)(7)(A) of the Employee Retirement Income
Security Act of 1974 to an eligible plan during any
period in which an election under subsection (a)(1) is
in effect--
(i) ``$2,500'' shall be substituted for
``$1,250'' in such section if such plan
terminates during the 5-year period beginning
on the first day of the first applicable plan
year with respect to such plan, and
(ii) such section shall be applied without
regard to subparagraph (B) of section
8101(d)(2) of the Deficit Reduction Act of 2005
(relating to special rule for plans terminated
in bankruptcy).
The substitution described in clause (i) shall not
apply with respect to any plan if the Secretary of
Labor determines that such plan terminated as a result
of extraordinary circumstances such as a terrorist
attack or other similar event.
(3) Limitation on deductions under certain plans.--Section
404(a)(7)(C)(iv) of the Internal Revenue Code of 1986, as added
by this Act, shall not apply with respect to any taxable year
of a plan sponsor of an eligible plan if any applicable plan
year with respect to such plan ends with or within such taxable
year.
(4) Notice.--In the case of a plan amendment adopted in
order to comply with this section, any notice required under
section 204(h) of such Act or section 4980F(e) of such Code
shall be provided within 15 days of the effective date of such
plan amendment. This subsection shall not apply to any plan
unless such plan is maintained pursuant to one or more
collective bargaining agreements between employee
representatives and 1 or more employers.
(h) Exclusion of Certain Employees From Minimum Coverage
Requirements.--
(1) In general.--Section 410(b)(3) of such Code is amended
by striking the last sentence and inserting the following:
``For purposes of subparagraph (B), management pilots who are
not represented in accordance with title II of the Railway
Labor Act shall be treated as covered by a collective
bargaining agreement described in such subparagraph if the
management pilots manage the flight operations of air pilots
who are so represented and the management pilots are, pursuant
to the terms of the agreement, included in the group of
employees benefitting under the trust described in such
subparagraph. Subparagraph (B) shall not apply in the case of a
plan which provides contributions or benefits for employees
whose principal duties are not customarily performed aboard an
aircraft in flight (other than management pilots described in
the preceding sentence).''
(2) Effective date.--The amendment made by this subsection
shall apply to years beginning before, on, or after the date of
the enactment of this Act.
(i) Extension of Special Rule for Additional Funding
Requirements.--In the case of an employer which is a commercial
passenger airline, section 302(d)(12) of the Employee Retirement Income
Security Act of 1974 and section 412(l)(12) of the Internal Revenue
Code of 1986, as in effect before the date of the enactment of this
Act, shall each be applied--
(1) by substituting ``December 28, 2007'' for ``December
28, 2005'' in subparagraph (D)(i) thereof, and
(2) without regard to subparagraph (D)(ii).
(j) Effective Date.--Except as otherwise provided in this section,
the provisions of and amendments made by this section shall apply to
plan years ending after the date of the enactment of this Act.
SEC. 403. LIMITATION ON PBGC GUARANTEE OF SHUTDOWN AND OTHER BENEFITS.
(a) In General.--Section 4022(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1322(b)) is amended by adding at the
end the following:
``(8) If an unpredictable contingent event benefit (as
defined in section 206(g)(1)) is payable by reason of the
occurrence of any event, this section shall be applied as if a
plan amendment had been adopted on the date such event
occurred.''.
(b) Effective Date.--The amendment made by this section shall apply
to benefits that become payable as a result of an event which occurs
after July 26, 2005.
SEC. 404. RULES RELATING TO BANKRUPTCY OF EMPLOYER.
(a) Guarantee.--Section 4022 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1322) is amended by adding at the end
the following:
``(g) Bankruptcy Filing Substituted for Termination Date.--If a
contributing sponsor of a plan has filed or has had filed against such
person a petition seeking liquidation or reorganization in a case under
title 11, United States Code, or under any similar Federal law or law
of a State or political subdivision, and the case has not been
dismissed as of the termination date of the plan, then this section
shall be applied by treating the date such petition was filed as the
termination date of the plan.''.
(b) Allocation of Assets Among Priority Groups in Bankruptcy
Proceedings.--Section 4044 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1344) is amended by adding at the end the
following:
``(e) Bankruptcy Filing Substituted for Termination Date.--If a
contributing sponsor of a plan has filed or has had filed against such
person a petition seeking liquidation or reorganization in a case under
title 11, United States Code, or under any similar Federal law or law
of a State or political subdivision, and the case has not been
dismissed as of the termination date of the plan, then subsection
(a)(3) shall be applied by treating the date such petition was filed as
the termination date of the plan.''.
(c) Effective Date.--The amendments made this section shall apply
with respect to proceedings initiated under title 11, United States
Code, or under any similar Federal law or law of a State or political
subdivision, on or after the date that is 30 days after the date of
enactment of this Act.
SEC. 405. PBGC PREMIUMS FOR SMALL PLANS.
(a) Small Plans.--Paragraph (3) of section 4006(a) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)) is amended--
(1) by striking ``The additional'' in subparagraph (E)(i)
and inserting ``Except as provided in subparagraph (H), the
additional'', and
(2) by inserting after subparagraph (G) the following new
subparagraph:
``(H)(i) In the case of an employer who has 25 or fewer employees
on the first day of the plan year, the additional premium determined
under subparagraph (E) for each participant shall not exceed $5
multiplied by the number of participants in the plan as of the close of
the preceding plan year.
``(ii) For purposes of clause (i), whether an employer has 25 or
fewer employees on the first day of the plan year is determined by
taking into consideration all of the employees of all members of the
contributing sponsor's controlled group. In the case of a plan
maintained by two or more contributing sponsors, the employees of all
contributing sponsors and their controlled groups shall be aggregated
for purposes of determining whether the 25-or-fewer-employees
limitation has been satisfied.''
(b) Effective Dates.--The amendment made by this section shall
apply to plan years beginning after December 31, 2006.
SEC. 406. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM OVERPAYMENT
REFUNDS.
(a) In General.--Section 4007(b) of the Employment Retirement
Income Security Act of 1974 (29 U.S.C. 1307(b)) is amended--
(1) by striking ``(b)'' and inserting ``(b)(1)'', and
(2) by inserting at the end the following new paragraph:
``(2) The corporation is authorized to pay, subject to regulations
prescribed by the corporation, interest on the amount of any
overpayment of premium refunded to a designated payor. Interest under
this paragraph shall be calculated at the same rate and in the same
manner as interest is calculated for underpayments under paragraph
(1).''
(b) Effective Date.--The amendments made by subsection (a) shall
apply to interest accruing for periods beginning not earlier than the
date of the enactment of this Act.
SEC. 407. RULES FOR SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.
(a) Modification of Phase-In of Guarantee.--Section 4022(b)(5) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1322(b)(5)) is amended to read as follows:
``(5)(A) For purposes of this paragraph, the term `majority owner'
means an individual who, at any time during the 60-month period ending
on the date the determination is being made--
``(i) owns the entire interest in an unincorporated trade
or business,
``(ii) in the case of a partnership, is a partner who owns,
directly or indirectly, 50 percent or more of either the
capital interest or the profits interest in such partnership,
or
``(iii) in the case of a corporation, owns, directly or
indirectly, 50 percent or more in value of either the voting
stock of that corporation or all the stock of that corporation.
For purposes of clause (iii), the constructive ownership rules of
section 1563(e) of the Internal Revenue Code of 1986 (other than
paragraph (3)(C) thereof) shall apply, including the application of
such rules under section 414(c) of such Code.
``(B) In the case of a participant who is a majority owner, the
amount of benefits guaranteed under this section shall equal the
product of--
``(i) a fraction (not to exceed 1) the numerator of which
is the number of years from the later of the effective date or
the adoption date of the plan to the termination date, and the
denominator of which is 10, and
``(ii) the amount of benefits that would be guaranteed
under this section if the participant were not a majority
owner.''
(b) Modification of Allocation of Assets.--
(1) Section 4044(a)(4)(B) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by
striking ``section 4022(b)(5)'' and inserting ``section
4022(b)(5)(B)''.
(2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is
amended--
(A) by striking ``(5)'' in paragraph (2) and
inserting ``(4), (5),'', and
(B) by redesignating paragraphs (3) through (6) as
paragraphs (4) through (7), respectively, and by
inserting after paragraph (2) the following new
paragraph:
``(3) If assets available for allocation under paragraph
(4) of subsection (a) are insufficient to satisfy in full the
benefits of all individuals who are described in that
paragraph, the assets shall be allocated first to benefits
described in subparagraph (A) of that paragraph. Any remaining
assets shall then be allocated to benefits described in
subparagraph (B) of that paragraph. If assets allocated to such
subparagraph (B) are insufficient to satisfy in full the
benefits described in that subparagraph, the assets shall be
allocated pro rata among individuals on the basis of the
present value (as of the termination date) of their respective
benefits described in that subparagraph.''
(c) Conforming Amendments.--
(1) Section 4021 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1321) is amended--
(A) in subsection (b)(9), by striking ``as defined
in section 4022(b)(6)'', and
(B) by adding at the end the following new
subsection:
``(d) For purposes of subsection (b)(9), the term `substantial
owner' means an individual who, at any time during the 60-month period
ending on the date the determination is being made--
``(1) owns the entire interest in an unincorporated trade
or business,
``(2) in the case of a partnership, is a partner who owns,
directly or indirectly, more than 10 percent of either the
capital interest or the profits interest in such partnership,
or
``(3) in the case of a corporation, owns, directly or
indirectly, more than 10 percent in value of either the voting
stock of that corporation or all the stock of that corporation.
For purposes of paragraph (3), the constructive ownership rules of
section 1563(e) of the Internal Revenue Code of 1986 (other than
paragraph (3)(C) thereof) shall apply, including the application of
such rules under section 414(c) of such Code.''
(2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7))
is amended by striking ``section 4022(b)(6)'' and inserting
``section 4021(d)''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan
terminations--
(A) under section 4041(c) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1341(c)) with respect to which notices of intent to
terminate are provided under section 4041(a)(2) of such
Act (29 U.S.C. 1341(a)(2)) after December 31, 2005, and
(B) under section 4042 of such Act (29 U.S.C. 1342)
with respect to which notices of determination are
provided under such section after such date.
(2) Conforming amendments.--The amendments made by
subsection (c) shall take effect on January 1, 2006.
SEC. 408. ACCELERATION OF PBGC COMPUTATION OF BENEFITS ATTRIBUTABLE TO
RECOVERIES FROM EMPLOYERS.
(a) Modification of Average Recovery Percentage of Outstanding
Amount of Benefit Liabilities Payable by Corporation to Participants
and Beneficiaries.--Section 4022(c)(3)(B)(ii) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1322(c)(3)(B)(ii)) is
amended to read as follows:
``(ii) notices of intent to terminate were
provided (or in the case of a termination by
the corporation, a notice of determination
under section 4042 was issued) during the 5-
Federal fiscal year period ending with the
third fiscal year preceding the fiscal year in
which occurs the date of the notice of intent
to terminate (or the notice of determination
under section 4042) with respect to the plan
termination for which the recovery ratio is
being determined.''
(b) Valuation of Section 4062(c) Liability for Determining Amounts
Payable by Corporation to Participants and Beneficiaries.--
(1) Single-employer plan benefits guaranteed.--Section
4022(c)(3)(A) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 13) is amended to read as follows:
``(A) In general.--Except as provided in
subparagraph (C), the term `recovery ratio' means the
ratio which--
``(i) the sum of the values of all
recoveries under section 4062, 4063, or 4064,
determined by the corporation in connection
with plan terminations described under
subparagraph (B), bears to
``(ii) the sum of all unfunded benefit
liabilities under such plans as of the
termination date in connection with any such
prior termination.''.
(2) Allocation of assets.--Section 4044 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1362) is
amended by adding at the end the following new subsection:
``(e) Valuation of Section 4062(c) Liability for Determining
Amounts Payable by Corporation to Participants and Beneficiaries.--
``(1) In general.--In the case of a terminated plan, the
value of the recovery of liability under section 4062(c)
allocable as a plan asset under this section for purposes of
determining the amount of benefits payable by the corporation
shall be determined by multiplying--
``(A) the amount of liability under section 4062(c)
as of the termination date of the plan, by
``(B) the applicable section 4062(c) recovery
ratio.
``(2) Section 4062(c) recovery ratio.--For purposes of this
subsection--
``(A) In general.--Except as provided in
subparagraph (C), the term `section 4062(c) recovery
ratio' means the ratio which--
``(i) the sum of the values of all
recoveries under section 4062(c) determined by
the corporation in connection with plan
terminations described under subparagraph (B),
bears to
``(ii) the sum of all the amounts of
liability under section 4062(c) with respect to
such plans as of the termination date in
connection with any such prior termination.
``(B) Prior terminations.--A plan termination
described in this subparagraph is a termination with
respect to which--
``(i) the value of recoveries under section
4062(c) have been determined by the
corporation, and
``(ii) notices of intent to terminate were
provided (or in the case of a termination by
the corporation, a notice of determination
under section 4042 was issued) during the 5-
Federal fiscal year period ending with the
third fiscal year preceding the fiscal year in
which occurs the date of the notice of intent
to terminate (or the notice of determination
under section 4042) with respect to the plan
termination for which the recovery ratio is
being determined.
``(C) Exception.--In the case of a terminated plan
with respect to which the outstanding amount of benefit
liabilities exceeds $20,000,000, the term `section
4062(c) recovery ratio' means, with respect to the
termination of such plan, the ratio of--
``(i) the value of the recoveries on behalf
of the plan under section 4062(c), to
``(ii) the amount of the liability owed
under section 4062(c) as of the date of plan
termination to the trustee appointed under
section 4042 (b) or (c).
``(3) Subsection not to apply.--This subsection shall not
apply with respect to the determination of--
``(A) whether the amount of outstanding benefit
liabilities exceeds $20,000,000, or
``(B) the amount of any liability under section
4062 to the corporation or the trustee appointed under
section 4042 (b) or (c).
``(4) Determinations.--Determinations under this subsection
shall be made by the corporation. Such determinations shall be
binding unless shown by clear and convincing evidence to be
unreasonable.''
(c) Effective Date.--The amendments made by this section shall
apply for any termination for which notices of intent to terminate are
provided (or in the case of a termination by the corporation, a notice
of determination under section 4042 under the Employee Retirement
Income Security Act of 1974 is issued) on or after the date which is 30
days after the date of enactment of this section.
SEC. 409. TREATMENT OF CERTAIN PLANS WHERE CESSATION OR CHANGE IN
MEMBERSHIP OF A CONTROLLED GROUP.
(a) In General.--Section 4041(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1341(b)) is amended by adding at the
end the following new paragraph:
``(5) Special rule for certain plans where cessation or
change in membership of a controlled group.--
``(A) In general.--Except as provided in
subparagraph (B), if--
``(i) there is transaction or series of
transactions which result in a person ceasing
to be a member of a controlled group, and
``(ii) such person immediately before the
transaction or series of transactions
maintained a single-employer plan which is a
defined benefit plan which is fully funded,
then the interest rate used in determining whether the
plan is sufficient for benefit liabilities or to
otherwise assess plan liabilities for purposes of this
subsection or section 4042(a)(4) shall be not less than
the interest rate used in determining whether the plan
is fully funded.
``(B) Limitations.--Subparagraph (A) shall not
apply to any transaction or series of transactions
unless--
``(i) any employer maintaining the plan
immediately before or after such transaction or
series of transactions--
``(I) has an outstanding senior
unsecured debt instrument which is
rated investment grade by each of the
nationally recognized statistical
rating organizations for corporate
bonds that has issued a credit rating
for such instrument, or
``(II) if no such debt instrument
of such employer has been rated by such
an organization but 1 or more of such
organizations has made an issuer credit
rating for such employer, all such
organizations which have so rated the
employer have rated such employer
investment grade, and
``(ii) the employer maintaining the plan
after the transaction or series of transactions
employs at least 20 percent of the employees
located in the United States who were employed
by such employer immediately before the
transaction or series of transactions.
``(C) Fully funded.--For purposes of subparagraph
(A), a plan shall be treated as fully funded with
respect to any transaction or series of transactions
if--
``(i) in the case of a transaction or
series of transactions which occur in a plan
year beginning before January 1, 2008, the
funded current liability percentage determined
under section 302(d) for the plan year is at
least 100 percent, and
``(ii) in the case of a transaction or
series of transactions which occur in a plan
year beginning on or after such date, the
funding target attainment percentage determined
under section 303 is, as of the valuation date
for such plan year, at least 100 percent.
``(D) 2 year limitation.--Subparagraph (A) shall
not apply to any transaction or series of transaction
if the plan referred to in subparagraph (A)(ii) is
terminated under section 4041(c) or 4042 after the
close of the 2-year period beginning on the date on
which the first such transaction occurs.''
(b) Effective Date.--The amendments made by this section shall
apply to any transaction or series of transactions occurring on and
after the date of the enactment of this Act.
SEC. 410. MISSING PARTICIPANTS.
(a) In General.--Section 4050 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1350) is amended by redesignating
subsection (c) as subsection (e) and by inserting after subsection (b)
the following new subsections:
``(c) Multiemployer Plans.--The corporation shall prescribe rules
similar to the rules in subsection (a) for multiemployer plans covered
by this title that terminate under section 4041A.
``(d) Plans Not Otherwise Subject to Title.--
``(1) Transfer to corporation.--The plan administrator of a
plan described in paragraph (4) may elect to transfer a missing
participant's benefits to the corporation upon termination of
the plan.
``(2) Information to the corporation.--To the extent
provided in regulations, the plan administrator of a plan
described in paragraph (4) shall, upon termination of the plan,
provide the corporation information with respect to benefits of
a missing participant if the plan transfers such benefits--
``(A) to the corporation, or
``(B) to an entity other than the corporation or a
plan described in paragraph (4)(B)(ii).
``(3) Payment by the corporation.--If benefits of a missing
participant were transferred to the corporation under paragraph
(1), the corporation shall, upon location of the participant or
beneficiary, pay to the participant or beneficiary the amount
transferred (or the appropriate survivor benefit) either--
``(A) in a single sum (plus interest), or
``(B) in such other form as is specified in
regulations of the corporation.
``(4) Plans described.--A plan is described in this
paragraph if--
``(A) the plan is a pension plan (within the
meaning of section 3(2))--
``(i) to which the provisions of this
section do not apply (without regard to this
subsection), and
``(ii) which is not a plan described in
paragraphs (2) through (11) of section 4021(b),
and
``(B) at the time the assets are to be distributed
upon termination, the plan--
``(i) has missing participants, and
``(ii) has not provided for the transfer of
assets to pay the benefits of all missing
participants to another pension plan (within
the meaning of section 3(2)).
``(5) Certain provisions not to apply.--Subsections (a)(1)
and (a)(3) shall not apply to a plan described in paragraph
(4).''.
(b) Conforming Amendments.--Section 206(f) of such Act (29 U.S.C.
1056(f)) is amended--
(1) by striking ``title IV'' and inserting ``section
4050''; and
(2) by striking ``the plan shall provide that,''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions made after final regulations implementing
subsections (c) and (d) of section 4050 of the Employee Retirement
Income Security Act of 1974 (as added by subsection (a)), respectively,
are prescribed.
SEC. 411. DIRECTOR OF THE PENSION BENEFIT GUARANTY CORPORATION.
(a) In General.--Title IV of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1301 et seq.) is amended--
(1) by striking the second sentence of section 4002(a) and
inserting the following: ``In carrying out its functions under
this title, the corporation shall be administered by a
Director, who shall be appointed by the President, by and with
the advice and consent of the Senate, and who shall act in
accordance with the policies established by the board.''; and
(2) in section 4003(b), by--
(A) striking ``under this title, any member'' and
inserting ``under this title, the Director, any
member''; and
(B) striking ``designated by the chairman'' and
inserting ``designated by the Director or chairman''.
(b) Compensation of Director.--Section 5314 of title 5, United
States Code, is amended by adding at the end the following new item:
``Director, Pension Benefit Guaranty Corporation.''.
(c) Jurisdiction of Nomination.--
(1) In general.--The Committee on Finance of the Senate and
the Committee on Health, Education, Labor, and Pensions of the
Senate shall have joint jurisdiction over the nomination of a
person nominated by the President to fill the position of
Director of the Pension Benefit Guaranty Corporation under
section 4002 of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1302) (as amended by this Act), and if one
committee votes to order reported such a nomination, the other
shall report within 30 calendar days, or be automatically
discharged.
(2) Rulemaking of the senate.--This subsection is enacted
by Congress--
(A) as an exercise of rulemaking power of the
Senate, and as such it is deemed a part of the rules of
the Senate, but applicable only with respect to the
procedure to be followed in the Senate in the case of a
nomination described in such sentence, and it
supersedes other rules only to the extent that it is
inconsistent with such rules; and
(B) with full recognition of the constitutional
right of the Senate to change the rules (so far as
relating to the procedure of the Senate) at any time,
in the same manner and to the same extent as in the
case of any other rule of the Senate.
(d) Transition.--The term of the individual serving as Executive
Director of the Pension Benefit Guaranty Corporation on the date of
enactment of this Act shall expire on such date of enactment. Such
individual, or any other individual, may serve as interim Director of
such Corporation until an individual is appointed as Director of such
Corporation under section 4002 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1302) (as amended by this Act).
SEC. 412. INCLUSION OF INFORMATION IN THE PBGC ANNUAL REPORT.
Section 4008 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1308) is amended by--
(1) striking ``As soon as practicable'' and inserting ``(a)
As soon as practicable''; and
(2) adding at the end the following:
``(b) The report under subsection (a) shall include--
``(1) a summary of the Pension Insurance Modeling System
microsimulation model, including the specific simulation
parameters, specific initial values, temporal parameters, and
policy parameters used to calculate the financial statements
for the corporation;
``(2) a comparison of--
``(A) the average return on investments earned with
respect to assets invested by the corporation for the
year to which the report relates; and
``(B) an amount equal to 60 percent of the average
return on investment for such year in the Standard &
Poor's 500 Index, plus 40 percent of the average return
on investment for such year in the Lehman Aggregate
Bond Index (or in a similar fixed income index); and
``(3) a statement regarding the deficit or surplus for such
year that the corporation would have had if the corporation had
earned the return described in paragraph (2)(B) with respect to
assets invested by the corporation.''.
TITLE V--DISCLOSURE
SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICE.
(a) In General.--Section 101(f) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1021(f)) is amended to read as follows:
``(f) Defined Benefit Plan Funding Notices.--
``(1) In general.--The administrator of a defined benefit
plan to which title IV applies shall for each plan year provide
a plan funding notice to the Pension Benefit Guaranty
Corporation, to each plan participant and beneficiary, to each
labor organization representing such participants or
beneficiaries, and, in the case of a multiemployer plan, to
each employer that has an obligation to contribute to the plan.
``(2) Information contained in notices.--
``(A) Identifying information.--Each notice
required under paragraph (1) shall contain identifying
information, including the name of the plan, the
address and phone number of the plan administrator and
the plan's principal administrative officer, each plan
sponsor's employer identification number, and the plan
number of the plan.
``(B) Specific information.--A plan funding notice
under paragraph (1) shall include--
``(i)(I) in the case of a single-employer
plan, a statement as to whether the plan's
funding target attainment percentage (as
defined in section 303(d)(2)) for the plan year
to which the notice relates, and for the 2
preceding plan years, is at least 100 percent
(and, if not, the actual percentages), or
``(II) in the case of a multiemployer plan,
a statement as to whether the plan's funded
percentage (as defined in section 305(i)) for
the plan year to which the notice relates, and
for the 2 preceding plan years, is at least 100
percent (and, if not, the actual percentages),
``(ii)(I) in the case of a single-employer
plan, a statement of--
``(aa) the total assets (separately
stating the prefunding balance and the
funding standard carryover balance) and
liabilities of the plan, determined in
the same manner as under section 303,
for the plan year for which the latest
annual report filed under section
104(a) was filed and for the 2
preceding plan years, as reported in
the annual report for each such plan
year, and
``(bb) the value of the plan's
assets and liabilities for the plan
year to which the notice relates as of
the last day of the plan year to which
the notice relates determined using the
asset valuation under subclause (II) of
section 4006(a)(3)(E)(iii) and the
interest rate under section
4006(a)(3)(E)(iv), and
``(II) in the case of a multiemployer plan,
a statement of the value of the plan's assets
and liabilities for the plan year to which the
notice relates as the last day of such plan
year and the preceding 2 plan years,
``(iii) a statement of the number of
participants who are--
``(I) retired or separated from
service and are receiving benefits,
``(II) retired or separated
participants entitled to future
benefits, and
``(III) active participants under
the plan,
``(iv) a statement setting forth the
funding policy of the plan and the asset
allocation of investments under the plan
(expressed as percentages of total assets) as
of the end of the plan year to which the notice
relates,
``(v) in the case of a multiemployer plan,
whether the plan was in critical or endangered
status under section 305 for such plan year
and, if so--
``(I) a statement describing how a
person may obtain a copy of the plan's
funding improvement or rehabilitation
plan, as appropriate, adopted under
section 305 and the actuarial and
financial data that demonstrate any
action taken by the plan toward fiscal
improvement, and
``(II) a summary of any funding
improvement plan, rehabilitation plan,
or modification thereof adopted under
section 305 during the plan year to
which the notice relates,
``(vi) in the case of any plan amendment,
scheduled benefit increase or reduction, or
other known event taking effect in the current
plan year and having a material effect on plan
liabilities or assets for the year (as defined
in regulations by the Secretary), an
explanation of the amendment, schedule increase
or reduction, or event, and a projection to the
end of such plan year of the effect of the
amendment, scheduled increase or reduction, or
event on plan liabilities,
``(vii)(I) in the case of a single-employer
plan, a summary of the rules governing
termination of single-employer plans under
subtitle C of title IV, or
``(II) in the case of a multiemployer plan,
a summary of the rules governing reorganization
or insolvency, including the limitations on
benefit payments,
``(viii) a general description of the
benefits under the plan which are eligible to
be guaranteed by the Pension Benefit Guaranty
Corporation, along with an explanation of the
limitations on the guarantee and the
circumstances under which such limitations
apply,
``(ix) a statement that a person may obtain
a copy of the annual report of the plan filed
under section 104(a) upon request, through the
Internet website of the Department of Labor, or
through an Intranet website maintained by the
applicable plan sponsor (or plan administrator
on behalf of the plan sponsor), and
``(x) if applicable, a statement that each
contributing sponsor, and each member of the
contributing sponsor's controlled group, of the
single-employer plan was required to provide
the information under section 4010 for the plan
year to which the notice relates.
``(C) Other information.--Each notice under
paragraph (1) shall include--
``(i) in the case of a multiemployer plan,
a statement that the plan administrator shall
provide, upon written request, to any labor
organization representing plan participants and
beneficiaries and any employer that has an
obligation to contribute to the plan, a copy of
the annual report filed with the Secretary
under section 104(a), and
``(ii) any additional information which the
plan administrator elects to include to the
extent not inconsistent with regulations
prescribed by the Secretary.
``(3) Time for providing notice.--
``(A) In general.--Any notice under paragraph (1)
shall be provided not later than 120 days after the end
of the plan year to which the notice relates.
``(B) Exception for small plans.--In the case of a
small plan (as such term is used under section
303(g)(2)(B)) any notice under paragraph (1) shall be
provided upon filing of the annual report under section
104(a).
``(4) Form and manner.--Any notice under paragraph (1)--
``(A) shall be provided in a form and manner
prescribed in regulations of the Secretary,
``(B) shall be written in a manner so as to be
understood by the average plan participant, and
``(C) may be provided in written, electronic, or
other appropriate form to the extent such form is
reasonably accessible to persons to whom the notice is
required to be provided.''.
(b) Repeal of Notice to Participants of Funding Status.--
(1) In general.--Title IV of such Act (29 U.S.C. 1301 et
seq.) is amended by striking section 4011.
(2) Clerical amendment.--Section 1 of such Act is amended
in the table of contents by striking the item relating to
section 4011.
(c) Model Notice.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of Labor shall publish a model
version of the notice required by section 101(f) of the Employee
Retirement Income Security Act of 1974. The Secretary of Labor may
promulgate any interim final rules as the Secretary determines
appropriate to carry out the provisions of this subsection.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007, except
that the amendment made by subsection (b) shall apply to plan
years beginning after December 31, 2006.
(2) Transition rule.--Any requirement under section 101(f)
of the Employee Retirement Income Security Act of 1974 (as
amended by this section) to report the funding target
attainment percentage or funded percentage of a plan with
respect to any plan year beginning before January 1, 2008,
shall be treated as met if the plan reports--
(A) in the case of a plan year beginning in 2006,
the funded current liability percentage (as defined in
section 302(d)(8) of such Act) of the plan for such
plan year, and
(B) in the case of a plan year beginning in 2007,
the funding target attainment percentage or funded
percentage as determined using such methods of
estimation as the Secretary of the Treasury may
provide.
SEC. 502. ACCESS TO MULTIEMPLOYER PENSION PLAN INFORMATION.
(a) Financial Information With Respect to Multiemployer Plans.--
(1) In general.--Section 101 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1021), as amended by
section 103, is amended--
(A) by redesignating subsection (k) as subsection
(l); and
(B) by inserting after subsection (j) the following
new subsection:
``(k) Multiemployer Plan Information Made Available on Request.--
``(1) In general.--Each administrator of a multiemployer
plan shall, upon written request, furnish to any plan
participant or beneficiary, employee representative, or any
employer that has an obligation to contribute to the plan--
``(A) a copy of any periodic actuarial report
(including any sensitivity testing) received by the
plan for any plan year which has been in the plan's
possession for at least 30 days,
``(B) a copy of any quarterly, semi-annual, or
annual financial report prepared for the plan by any
plan investment manager or advisor or other fiduciary
which has been in the plan's possession for at least 30
days, and
``(C) a copy of any application filed with the
Secretary of the Treasury requesting an extension under
section 304 of this Act or section 431(d) of the
Internal Revenue Code of 1986 and the determination of
such Secretary pursuant to such application.
``(2) Compliance.--Information required to be provided
under paragraph (1) --
``(A) shall be provided to the requesting
participant, beneficiary, or employer within 30 days
after the request in a form and manner prescribed in
regulations of the Secretary,
``(B) may be provided in written, electronic, or
other appropriate form to the extent such form is
reasonably accessible to persons to whom the
information is required to be provided, and
``(C) shall not--
``(i) include any individually identifiable
information regarding any plan participant,
beneficiary, employee, fiduciary, or
contributing employer, or
``(ii) reveal any proprietary information
regarding the plan, any contributing employer,
or entity providing services to the plan.
``(3) Limitations.--In no case shall a participant,
beneficiary, or employer be entitled under this subsection to
receive more than one copy of any report or application
described in paragraph (1) during any one 12-month period. The
administrator may make a reasonable charge to cover copying,
mailing, and other costs of furnishing copies of information
pursuant to paragraph (1). The Secretary may by regulations
prescribe the maximum amount which will constitute a reasonable
charge under the preceding sentence.''.
(2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended by striking ``section 101(j)'' and
inserting ``subsection (j) or (k) of section 101''.
(3) Regulations.--The Secretary shall prescribe regulations
under section 101(k)(2) of the Employee Retirement Income
Security Act of 1974 (as added by paragraph (1)) not later than
1 year after the date of the enactment of this Act.
(b) Notice of Potential Withdrawal Liability to Multiemployer
Plans.--
(1) In general.--Section 101 of such Act (as amended by
subsection (a)) is amended--
(A) by redesignating subsection (l) as subsection
(m); and
(B) by inserting after subsection (k) the following
new subsection:
``(l) Notice of Potential Withdrawal Liability.--
``(1) In general.--The plan sponsor or administrator of a
multiemployer plan shall, upon written request, furnish to any
employer who has an obligation to contribute to the plan a
notice of--
``(A) the estimated amount which would be the
amount of such employer's withdrawal liability under
part 1 of subtitle E of title IV if such employer
withdrew on the last day of the plan year preceding the
date of the request, and
``(B) an explanation of how such estimated
liability amount was determined, including the
actuarial assumptions and methods used to determine the
value of the plan liabilities and assets, the data
regarding employer contributions, unfunded vested
benefits, annual changes in the plan's unfunded vested
benefits, and the application of any relevant
limitations on the estimated withdrawal liability.
For purposes of subparagraph (B), the term `employer
contribution' means, in connection with a participant, a
contribution made by an employer as an employer of such
participant.
``(2) Compliance.--Any notice required to be provided under
paragraph (1)--
``(A) shall be provided in a form and manner
prescribed in regulations of the Secretary to the
requesting employer within--
``(i) 180 days after the request, or
``(ii) subject to regulations of the
Secretary, such longer time as may be necessary
in the case of a plan that determines
withdrawal liability based on any method
described under paragraph (4) or (5) of section
4211(c); and
``(B) may be provided in written, electronic, or
other appropriate form to the extent such form is
reasonably accessible to employers to whom the
information is required to be provided.
``(3) Limitations.--In no case shall an employer be
entitled under this subsection to receive more than one notice
described in paragraph (1) during any one 12-month period. The
person required to provide such notice may make a reasonable
charge to cover copying, mailing, and other costs of furnishing
such notice pursuant to paragraph (1). The Secretary may by
regulations prescribe the maximum amount which will constitute
a reasonable charge under the preceding sentence.''.
(2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended by striking ``section 101(j) or (k)''
and inserting ``subsection (j), (k), or (l) of section 101''.
(c) Notice of Amendment Reducing Future Accruals.--
(1) Amendment of erisa.--Section 204(h)(1) of such Act (29
U.S.C. 1054(h)(1)) is amended by inserting at the end before
the period the following: ``and to each employer who has an
obligation to contribute to the plan.''.
(2) Amendment of internal revenue code.--Section
4980F(e)(1) of such Code is amended by adding at the end before
the period the following: ``and to each employer who has an
obligation to contribute to the plan.''.
(d) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
SEC. 503. ADDITIONAL ANNUAL REPORTING REQUIREMENTS.
(a) Additional Annual Reporting Requirements With Respect to
Defined Benefit Plans.--
(1) In general.--Section 103 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1023) is amended--
(A) in subsection (a)(1)(B), by striking
``subsections (d) and (e)'' and inserting ``subsections
(d), (e), and (f)''; and
(B) by adding at the end the following new
subsection:
``(f) Additional Information With Respect to Defined Benefit
Plans.--
``(1) Liabilities under 2 or more plans.--
``(A) In general.--In any case in which any
liabilities to participants or their beneficiaries
under a defined benefit plan as of the end of a plan
year consist (in whole or in part) of liabilities to
such participants and beneficiaries under 2 or more
pension plans as of immediately before such plan year,
an annual report under this section for such plan year
shall include the funded percentage of each of such 2
or more pension plans as of the last day of such plan
year and the funded percentage of the plan with respect
to which the annual report is filed as of the last day
of such plan year.
``(B) Funded percentage.--For purposes of this
paragraph, the term `funded percentage'--
``(i) in the case of a single-employer
plan, means the funding target attainment
percentage, as defined in section 303(d)(2),
and
``(ii) in the case of a multiemployer plan,
has the meaning given such term in section
305(i)(2).
``(2) Additional information for multiemployer plans.--With
respect to any defined benefit plan which is a multiemployer
plan, an annual report under this section for a plan year shall
include, in addition to the information required under
paragraph (1), the following, as of the end of the plan year to
which the report relates:
``(A) The number of employers obligated to
contribute to the plan.
``(B) A list of the employers that contributed more
than 5 percent of the total contributions to the plan
during such plan year.
``(C) The number of participants under the plan on
whose behalf no contributions were made by an employer
as an employer of the participant for such plan year
and for each of the 2 preceding plan years.
``(D) The ratios of--
``(i) the number of participants under the
plan on whose behalf no employer had an
obligation to make an employer contribution
during the plan year, to
``(ii) the number of participants under the
plan on whose behalf no employer had an
obligation to make an employer contribution
during each of the 2 preceding plan years.
``(E) Whether the plan received an amortization
extension under section 304(d) of this Act or section
431(d) of the Internal Revenue Code of 1986 for such
plan year and, if so, the amount of the difference
between the minimum required contribution for the year
and the minimum required contribution which would have
been required without regard to the extension, and the
period of such extension.
``(F) Whether the plan used the shortfall funding
method (as such term is used in section 305) for such
plan year and, if so, the amount of the difference
between the minimum required contribution for the year
and the minimum required contribution which would have
been required without regard to the use of such method,
and the period of use of such method.
``(G) Whether the plan was in critical or
endangered status under section 305 for such plan year,
and if so, a summary of any funding improvement or
rehabilitation plan (or modification thereto) adopted
during the plan year, and the funded percentage of the
plan.
``(H) The number of employers that withdrew from
the plan during the preceding plan year and the
aggregate amount of withdrawal liability assessed, or
estimated to be assessed, against such withdrawn
employers.
``(I) In the case of a multiemployer plan that has
merged with another plan or to which assets and
liabilities have been transferred, the actuarial
valuation of the assets and liabilities of each
affected plan during the year preceding the effective
date of the merger or transfer, based upon the most
recent data available as of the day before the first
day of the plan year, or other valuation method
performed under standards and procedures as the
Secretary may prescribe by regulation.''.
(2) Guidance by secretary of labor.--Not later than 1 year
after the date of enactment of this Act, the Secretary of Labor
shall publish guidance to assist multiemployer defined benefit
plans to--
(A) identify and enumerate plan participants for
whom there is no employer with an obligation to make an
employer contribution under the plan; and
(B) report such information under section
103(f)(2)(D) of the Employee Retirement Income Security
Act of 1974 (as added by this section).
(b) Additional Information in Annual Actuarial Statement Regarding
Plan Retirement Projections.--Section 103(d) of such Act (29 U.S.C.
1023(d)) is amended--
(1) by redesignating paragraphs (12) and (13) as paragraphs
(13) and (14), respectively; and
(2) by inserting after paragraph (11) the following new
paragraph:
``(12) A statement explaining the actuarial assumptions and
methods used in projecting future retirements and forms of
benefit distributions under the plan.''.
(c) Repeal of Summary Annual Report Requirement for Defined Benefit
Plans.--
(1) In general.--Section 104(b)(3) of such Act (29 U.S.C.
1024(b)(3)) is amended by inserting ``(other than an
administrator of a defined benefit plan to which the
requirements of section 103(f) applies)'' after ``the
administrators''.
(2) Conforming amendments.--Section 101(a)(2) of such Act
(29 U.S.C. 1021(a)(2)) is amended by inserting ``subsection (f)
and'' before ``sections 104(b)(3) and 105(a) and (c)''.
(d) Furnishing Summary Plan Information to Employers and Employee
Representatives of Multiemployer Plans.--Section 104 of such Act (29
U.S.C. 1024) is amended--
(1) in the header, by striking ``participants'' and
inserting ``participants and certain employers'';
(2) redesignating subsection (d) as subsection (e); and
(3) inserting after subsection (c) the following:
``(d) Furnishing Summary Plan Information to Employers and Employee
Representatives of Multiemployer Plans.--
``(1) In general.--With respect to a multiemployer plan
subject to this section, within 30 days after the due date
under subsection (a)(1) for the filing of the annual report for
the fiscal year of the plan, the administrators shall furnish
to each employee organization and to each employer with an
obligation to contribute to the plan a report that contains--
``(A) a description of the contribution schedules
and benefit formulas under the plan, and any
modification to such schedules and formulas, during
such plan year;
``(B) the number of employers obligated to
contribute to the plan;
``(C) a list of the employers that contributed more
than 5 percent of the total contributions to the plan
during such plan year;
``(D) the number of participants under the plan on
whose behalf no contributions were made by an employer
as an employer of the participant for such plan year
and for each of the 2 preceding plan years;
``(E) whether the plan was in critical or
endangered status under section 305 for such plan year
and, if so, include--
``(i) a list of the actions taken by the
plan to improve its funding status; and
``(ii) a statement describing how a person
may obtain a copy of the plan's improvement or
rehabilitation plan, as applicable, adopted
under section 305 and the actuarial and
financial data that demonstrate any action
taken by the plan toward fiscal improvement;
``(F) the number of employers that withdrew from
the plan during the preceding plan year and the
aggregate amount of withdrawal liability assessed, or
estimated to be assessed, against such withdrawn
employers, as reported on the annual report for the
plan year to which the report under this subsection
relates;
``(G) in the case of a multiemployer plan that has
merged with another plan or to which assets and
liabilities have been transferred, the actuarial
valuation of the assets and liabilities of each
affected plan during the year preceding the effective
date of the merger or transfer, based upon the most
recent data available as of the day before the first
day of the plan year, or other valuation method
performed under standards and procedures as the
Secretary may prescribe by regulation;
``(H) a description as to whether the plan--
``(i) sought or received an amortization
extension under section 304(d) of this Act or
section 431(d) of the Internal Revenue Code of
1986 for such plan year; or
``(ii) used the shortfall funding method
(as such term is used in section 305) for such
plan year; and
``(I) notification of the right under this section
of the recipient to a copy of the annual report filed
with the Secretary under subsection (a), summary plan
description, summary of any material modification of
the plan, upon written request, but that--
``(i) in no case shall a recipient be
entitled to receive more than one copy of any
such document described during any one 12-month
period; and
``(ii) the administrator may make a
reasonable charge to cover copying, mailing,
and other costs of furnishing copies of
information pursuant to this subparagraph.
``(2) Effect of subsection.--Nothing in this subsection
waives any other provision under this title requiring plan
administrators to provide, upon request, information to
employers that have an obligation to contribute under the
plan.''.
(e) Model Form.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of Labor shall publish a model
form for providing the statements, schedules, and other material
required to be provided under section 101(f) of the Employee Retirement
Income Security Act of 1974, as amended by this section. The Secretary
of Labor may promulgate any interim final rules as the Secretary
determines appropriate to carry out the provisions of this subsection.
(f) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
SEC. 504. ELECTRONIC DISPLAY OF ANNUAL REPORT INFORMATION.
(a) Electronic Display of Information.--Section 104(b) of such Act
(29 U.S.C. 1024(b)) is amended by adding at the end the following:
``(5) Identification and basic plan information and actuarial
information included in the annual report for any plan year shall be
filed with the Secretary in an electronic format which accommodates
display on the Internet, in accordance with regulations which shall be
prescribed by the Secretary. The Secretary shall provide for display of
such information included in the annual report, within 90 days after
the date of the filing of the annual report, on an Internet website
maintained by the Secretary and other appropriate media. Such
information shall also be displayed on any Intranet website maintained
by the plan sponsor (or by the plan administrator on behalf of the plan
sponsor) for the purpose of communicating with employees and not the
public, in accordance with regulations which shall be prescribed by the
Secretary.''.
(b) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
SEC. 505. SECTION 4010 FILINGS WITH THE PBGC.
(a) Change in Criteria for Persons Required To Provide Information
To PBGC.--Section 4010(b) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1310(b)) is amended by striking paragraph (1)
and inserting the following:
``(1) the funding target attainment percentage (as defined
in subsection (d)) at the end of the preceding plan year of a
plan maintained by the contributing sponsor or any member of
its controlled group is less than 80 percent;''.
(b) Additional Information Required.--Section 4010 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1310) is amended by
adding at the end the following new subsection:
``(d) Additional Information Required.--
``(1) In general.--The information submitted to the
corporation under subsection (a) shall include--
``(A) the amount of benefit liabilities under the
plan determined using the assumptions used by the
corporation in determining liabilities;
``(B) the funding target of the plan determined as
if the plan has been in at-risk status for at least 5
plan years; and
``(C) the funding target attainment percentage of
the plan.
``(2) Definitions.--For purposes of this subsection:
``(A) Funding target.--The term `funding target'
has the meaning provided under section 303(d)(1).
``(B) Funding target attainment percentage.--The
term `funding target attainment percentage' has the
meaning provided under section 302(d)(2).
``(C) At-risk status.--The term `at-risk status'
has the meaning provided in section 303(i)(4).
``(e) Notice to Congress.--The corporation shall, on an annual
basis, submit to the Committee on Health, Education, Labor, and
Pensions and the Committee on Finance of the Senate and the Committee
on Education and the Workforce and the Committee on Ways and Means of
the House of Representatives, a summary report in the aggregate of the
information submitted to the corporation under this section.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to years beginning after 2007.
SEC. 506. DISCLOSURE OF TERMINATION INFORMATION TO PLAN PARTICIPANTS.
(a) Distress Terminations.--
(1) In general.--Section 4041(c)(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1341(c)(2))
is amended by adding at the end the following:
``(D) Disclosure of termination information.--
``(i) In general.--A plan administrator
that has filed a notice of intent to terminate
under subsection (a)(2) shall provide to an
affected party any information provided to the
corporation under subsection (a)(2) not later
than 15 days after--
``(I) receipt of a request from the
affected party for the information; or
``(II) the provision of new
information to the corporation relating
to a previous request.
``(ii) Confidentiality.--
``(I) In general.--The plan
administrator shall not provide
information under clause (i) in a form
that includes any information that may
directly or indirectly be associated
with, or otherwise identify, an
individual participant or beneficiary.
``(II) Limitation.--A court may
limit disclosure under this
subparagraph of confidential
information described in section 552(b)
of title 5, United States Code, to any
authorized representative of the
participants or beneficiaries that
agrees to ensure the confidentiality of
such information.
``(iii) Form and manner of information;
charges.--
``(I) Form and manner.--The
corporation may prescribe the form and
manner of the provision of information
under this subparagraph, which shall
include delivery in written,
electronic, or other appropriate form
to the extent that such form is
reasonably accessible to individuals to
whom the information is required to be
provided.
``(II) Reasonable charges.--A plan
administrator may charge a reasonable
fee for any information provided under
this subparagraph in other than
electronic form.
``(iv) Authorized representative.--For
purposes of this subparagraph, the term
`authorized representative' means any employee
organization representing participants in the
pension plan.''.
(2) Conforming amendment.--Section 4041(c)(1) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1341(c)(1)) is amended in subparagraph (C) by striking
``subparagraph (B)'' and inserting ``subparagraphs (B) and
(D)''.
(b) Involuntary Terminations.--
(1) In general.--Section 4042(c) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1342(c)) is amended by--
(A) striking ``(c) If the'' and inserting ``(c)(1)
If the'';
(B) redesignating paragraph (3) as paragraph (2);
and
(C) adding at the end the following:
``(3) Disclosure of termination information.--
``(A) In general.--
``(i) Information from plan sponsor or
administrator.--A plan sponsor or plan
administrator of a single-employer plan that
has received a notice from the corporation of a
determination that the plan should be
terminated under this section shall provide to
an affected party any information provided to
the corporation in connection with the plan
termination.
``(ii) Information from corporation.--The
corporation shall provide a copy of the
administrative record, including the
trusteeship decision record of a termination of
a plan described under clause (i).
``(B) Timing of disclosure.--The plan sponsor, plan
administrator, or the corporation, as applicable, shall
provide the information described in subparagraph (A)
not later than 15 days after--
``(i) receipt of a request from an affected
party for such information; or
``(ii) in the case of information described
under subparagraph (A)(i), the provision of any
new information to the corporation relating to
a previous request by an affected party.
``(C) Confidentiality.--
``(i) In general.--The plan administrator
and plan sponsor shall not provide information
under subparagraph (A)(i) in a form which
includes any information that may directly or
indirectly be associated with, or otherwise
identify, an individual participant or
beneficiary.
``(ii) Limitation.--A court may limit
disclosure under this paragraph of confidential
information described in section 552(b) of
title 5, United States Code, to authorized
representatives (within the meaning of section
4041(c)(2)(D)(iv)) of the participants or
beneficiaries that agree to ensure the
confidentiality of such information.
``(D) Form and manner of information; charges.--
``(i) Form and manner.--The corporation may
prescribe the form and manner of the provision
of information under this paragraph, which
shall include delivery in written, electronic,
or other appropriate form to the extent that
such form is reasonably accessible to
individuals to whom the information is required
to be provided.
``(ii) Reasonable charges.--A plan sponsor
may charge a reasonable fee for any information
provided under this paragraph in other than
electronic form.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to any plan termination under title IV of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1301 et seq.)
with respect to which the notice of intent to terminate (or in
the case of a termination by the Pension Benefit Guaranty
Corporation, a notice of determination under section 4042 of
such Act (29 U.S.C. 1342)) occurs after the date of enactment
of this Act.
(2) Transition rule.--If notice under section 4041(c)(2)(D)
or 4042(c)(3) of the Employee Retirement Income Security Act of
1974 (as added by this section) would otherwise be required to
be provided before the 90th day after the date of the enactment
of this Act, such notice shall not be required to be provided
until such 90th day.
SEC. 507. NOTICE OF FREEDOM TO DIVEST EMPLOYER SECURITIES.
(a) In General.--Section 101 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1021), as amended by this Act, is
amended by redesignating subsection (m) as subsection (n) and by
inserting after subsection (l) the following:
``(m) Notice of Right To Divest.--Not later than 30 days before the
first date on which an applicable individual of an applicable
individual account plan is eligible to exercise the right under section
204(j) to direct the proceeds from the divestment of employer
securities with respect to any type of contribution, the administrator
shall provide to such individual a notice--
``(1) setting forth such right under such section, and
``(2) describing the importance of diversifying the
investment of retirement account assets.
The notice required by this subsection shall be written in a manner
calculated to be understood by the average plan participant and may be
delivered in written, electronic, or other appropriate form to the
extent that such form is reasonably accessible to the recipient.''
(b) Penalties.--Section 502(c)(7) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132(c)(7)) is amended by striking
``section 101(i)'' and inserting ``subsection (i) or (m) of section
101''.
(c) Model Notice.--The Secretary of the Treasury shall, within 180
days after the date of the enactment of this subsection, prescribe a
model notice for purposes of satisfying the requirements of the
amendments made by this section.
(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2006.
(2) Transition rule.--If notice under section 101(m) of the
Employee Retirement Income Security Act of 1974 (as added by
this section) would otherwise be required to be provided before
the 90th day after the date of the enactment of this Act, such
notice shall not be required to be provided until such 90th
day.
SEC. 508. PERIODIC PENSION BENEFIT STATEMENTS.
(a) Amendments of ERISA.--
(1) In general.--Section 105(a) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1025(a)) is amended to
read as follows:
``(a) Requirements To Provide Pension Benefit Statements.--
``(1) Requirements.--
``(A) Individual account plan.--The administrator
of an individual account plan (other than a one-
participant retirement plan described in section
101(i)(8)(B)) shall furnish a pension benefit
statement--
``(i) at least once each calendar quarter
to a participant or beneficiary who has the
right to direct the investment of assets in his
or her account under the plan,
``(ii) at least once each calendar year to
a participant or beneficiary who has his or her
own account under the plan but does not have
the right to direct the investment of assets in
that account, and
``(iii) upon written request to a plan
beneficiary not described in clause (i) or
(ii).
``(B) Defined benefit plan.--The administrator of a
defined benefit plan (other than a one-participant
retirement plan described in section 101(i)(8)(B))
shall furnish a pension benefit statement--
``(i) at least once every 3 years to each
participant with a nonforfeitable accrued
benefit and who is employed by the employer
maintaining the plan at the time the statement
is to be furnished, and
``(ii) to a participant or beneficiary of
the plan upon written request.
Information furnished under clause (i) to a participant
may be based on reasonable estimates determined under
regulations prescribed by the Secretary, in
consultation with the Pension Benefit Guaranty
Corporation.
``(2) Statements.--
``(A) In general.--A pension benefit statement
under paragraph (1)--
``(i) shall indicate, on the basis of the
latest available information--
``(I) the total benefits accrued,
and
``(II) the nonforfeitable pension
benefits, if any, which have accrued,
or the earliest date on which benefits
will become nonforfeitable,
``(ii) shall include an explanation of any
permitted disparity under section 401(l) of the
Internal Revenue Code of 1986 or any floor-
offset arrangement that may be applied in
determining any accrued benefits described in
clause (i),
``(iii) shall be written in a manner
calculated to be understood by the average plan
participant, and
``(iv) may be delivered in written,
electronic, or other appropriate form to the
extent such form is reasonably accessible to
the participant or beneficiary.
``(B) Additional information.--In the case of an
individual account plan, any pension benefit statement
under clause (i) or (ii) of paragraph (1)(A) shall
include--
``(i) the value of each investment to which
assets in the individual account have been
allocated, determined as of the most recent
valuation date under the plan, including the
value of any assets held in the form of
employer securities, without regard to whether
such securities were contributed by the plan
sponsor or acquired at the direction of the
plan or of the participant or beneficiary, and
``(ii) in the case of a pension benefit
statement under paragraph (1)(A)(i)--
``(I) an explanation of any
limitations or restrictions on any
right of the participant or beneficiary
under the plan to direct an investment,
``(II) an explanation, written in a
manner calculated to be understood by
the average plan participant, of the
importance, for the long-term
retirement security of participants and
beneficiaries, of a well-balanced and
diversified investment portfolio,
including a statement of the risk that
holding more than 20 percent of a
portfolio in the security of one entity
(such as employer securities) may not
be adequately diversified, and
``(III) a notice directing the
participant or beneficiary to the
Internet website of the Department of
Labor for sources of information on
individual investing and
diversification.
``(C) Alternative notice.--The requirements of
subparagraph (A)(i)(II) are met if, at least annually
and in accordance with requirements of the Secretary,
the plan--
``(i) updates the information described in
such paragraph which is provided in the pension
benefit statement, or
``(ii) provides in a separate statement
such information as is necessary to enable a
participant or beneficiary to determine their
nonforfeitable vested benefits.
``(3) Defined benefit plans.--
``(A) Alternative notice.--In the case of a defined
benefit plan, the requirements of paragraph (1)(B)(i)
shall be treated as met with respect to a participant
if at least once each year the administrator provides
to the participant notice of the availability of the
pension benefit statement and the ways in which the
participant may obtain such statement. Such notice may
be delivered in written, electronic, or other
appropriate form to the extent such form is reasonably
accessible to the participant.
``(B) Years in which no benefits accrue.--The
Secretary may provide that years in which no employee
or former employee benefits (within the meaning of
section 410(b) of the Internal Revenue Code of 1986)
under the plan need not be taken into account in
determining the 3-year period under paragraph
(1)(B)(i).''
(2) Conforming amendments.--
(A) Section 105 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1025) is amended by
striking subsection (d).
(B) Section 105(b) of such Act (29 U.S.C. 1025(b))
is amended to read as follows:
``(b) Limitation on Number of Statements.--In no case shall a
participant or beneficiary of a plan be entitled to more than 1
statement described in subparagraph (A)(iii) or (B)(ii) of subsection
(a)(1), whichever is applicable, in any 12-month period.''
(C) Section 502(c)(1) of such Act (29 U.S.C.
1132(c)(1)) is amended by striking ``or section
101(f)'' and inserting ``section 101(f), or section
105(a)''.
(b) Model Statements.--
(1) In general.--The Secretary of Labor shall, within 1
year after the date of the enactment of this section, develop 1
or more model benefit statements that are written in a manner
calculated to be understood by the average plan participant and
that may be used by plan administrators in complying with the
requirements of section 105 of the Employee Retirement Income
Security Act of 1974.
(2) Interim final rules.--The Secretary of Labor may
promulgate any interim final rules as the Secretary determines
appropriate to carry out the provisions of this subsection.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2006.
(2) Special rule for collectively bargained agreements.--In
the case of a plan maintained pursuant to 1 or more collective
bargaining agreements between employee representatives and 1 or
more employers ratified on or before the date of the enactment
of this Act, paragraph (1) shall be applied to benefits
pursuant to, and individuals covered by, any such agreement by
substituting for ``December 31, 2006'' the earlier of--
(A) the later of--
(i) December 31, 2007, or
(ii) the date on which the last of such
collective bargaining agreements terminates
(determined without regard to any extension
thereof after such date of enactment), or
(B) December 31, 2008.
SEC. 509. NOTICE TO PARTICIPANTS OR BENEFICIARIES OF BLACKOUT PERIODS.
(a) In General.--Section 101(i)(8)(B) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1021(i)(8)(B)) is amended by
striking clauses (i) through (iv), by redesignating clause (v) as
clause (ii), and by inserting before clause (ii), as so redesignated,
the following new clause:
``(i) on the first day of the plan year--
``(I) covered only one individual
(or the individual and the individual's
spouse) and the individual (or the
individual and the individual's spouse)
owned 100 percent of the plan sponsor
(whether or not incorporated), or
``(II) covered only one or more
partners (or partners and their
spouses) in the plan sponsor, and''.
(b) Effective Date.--The amendments made by this subsection shall
take effect as if included in the provisions of section 306 of Public
Law 107-204 (116 Stat. 745 et seq.).
TITLE VI--INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND FIDUCIARY
RULES
Subtitle A--Investment Advice
SEC. 601. PROHIBITED TRANSACTION EXEMPTION FOR PROVISION OF INVESTMENT
ADVICE.
(a) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) Exemption from prohibited transactions.--Section 408(b)
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1108(b)) is amended by adding at the end the following
new paragraph:
``(14) Any transaction in connection with the provision of
investment advice described in section 3(21)(A)(ii) to a
participant or beneficiary of an individual account plan that
permits such participant or beneficiary to direct the
investment of assets in their individual account, if--
``(A) the transaction is--
``(i) the provision of the investment
advice to the participant or beneficiary of the
plan with respect to a security or other
property available as an investment under the
plan,
``(ii) the acquisition, holding, or sale of
a security or other property available as an
investment under the plan pursuant to the
investment advice, or
``(iii) the direct or indirect receipt of
fees or other compensation by the fiduciary
adviser or an affiliate thereof (or any
employee, agent, or registered representative
of the fiduciary adviser or affiliate) in
connection with the provision of the advice or
in connection with an acquisition, holding, or
sale of a security or other property available
as an investment under the plan pursuant to the
investment advice; and
``(B) the requirements of subsection (g) are
met.''.
(2) Requirements.--Section 408 of such Act is amended
further by adding at the end the following new subsection:
``(g) Provision of Investment Advice to Participant and
Beneficiaries.--
``(1) In general.--The prohibitions provided in section 406
shall not apply to transactions described in subsection (b)(14)
if the investment advice provided by a fiduciary adviser is
provided under an eligible investment advice arrangement.
``(2) Eligible investment advice arrangement.--For purposes
of this subsection, the term `eligible investment advice
arrangement' means an arrangement--
``(A) which either--
``(i) provides that any fees (including any
commission or other compensation) received by
the fiduciary adviser for investment advice or
with respect to the sale, holding, or
acquisition of any security or other property
for purposes of investment of plan assets do
not vary depending on the basis of any
investment option selected, or
``(ii) uses a computer model under an
investment advice program meeting the
requirements of paragraph (3) in connection
with the provision of investment advice by a
fiduciary adviser to a participant or
beneficiary, and
``(B) with respect to which the requirements of
paragraph (4), (5), (6), (7), (8), and (9) are met.
``(3) Investment advice program using computer model.--
``(A) In general.--An investment advice program
meets the requirements of this paragraph if the
requirements of subparagraphs (B), (C), and (D) are
met.
``(B) Computer model.--The requirements of this
subparagraph are met if the investment advice provided
under the investment advice program is provided
pursuant to a computer model that--
``(i) applies generally accepted investment
theories that take into account the historic
returns of different asset classes over defined
periods of time,
``(ii) utilizes relevant information about
the participant, which may include age, life
expectancy, retirement age, risk tolerance,
other assets or sources of income, and
preferences as to certain types of investments,
``(iii) utilizes prescribed objective
criteria to provide asset allocation portfolios
comprised of investment options available under
the plan,
``(iv) operates in a manner that is not
biased in favor of investments offered by the
fiduciary adviser or a person with a material
affiliation or contractual relationship with
the fiduciary adviser, and
``(v) takes into account all investment
options under the plan in specifying how a
participant's account balance should be
invested and is not inappropriately weighted
with respect to any investment option.
``(C) Certification.--
``(i) In general.--The requirements of this
subparagraph are met with respect to any
investment advice program if an eligible
investment expert certifies, prior to the
utilization of the computer model and in
accordance with rules prescribed by the
Secretary, that the computer model meets the
requirements of subparagraph (B).
``(ii) Renewal of certifications.--If, as
determined under regulations prescribed by the
Secretary, there are material modifications to
a computer model, the requirements of this
subparagraph are met only if a certification
described in clause (i) is obtained with
respect to the computer model as so modified.
``(iii) Eligible investment expert.--The
term `eligible investment expert' means any
person--
``(I) which meets such requirements
as the Secretary may provide, and
``(II) does not bear any material
affiliation or contractual relationship
with any investment adviser or a
related person thereof (or any
employee, agent, or registered
representative of the investment
adviser or related person).
``(D) Exclusivity of recommendation.--The
requirements of this subparagraph are met with respect
to any investment advice program if--
``(i) the only investment advice provided
under the program is the advice generated by
the computer model described in subparagraph
(B), and
``(ii) any transaction described in
subsection (b)(14)(B)(ii) occurs solely at the
direction of the participant or beneficiary.
Nothing in the preceding sentence shall preclude the
participant or beneficiary from requesting investment
advice other than that described in subparagraph (A),
but only if such request has not been solicited by any
person connected with carrying out the arrangement.
``(4) Express authorization by separate fiduciary.--The
requirements of this paragraph are met with respect to an
arrangement if the arrangement is expressly authorized by a
plan fiduciary other than the person offering the investment
advice program, any person providing investment options under
the plan, or any affiliate of either.
``(5) Annual audit.--The requirements of this paragraph are
met if an independent auditor, who has appropriate technical
training or experience and proficiency and so represents in
writing--
``(A) conducts an annual audit of the arrangement
for compliance with the requirements of this
subsection, and
``(B) following completion of the annual audit,
issues a written report to the fiduciary who authorized
use of the arrangement which presents its specific
findings regarding compliance of the arrangement with
the requirements of this subsection.
For purposes of this paragraph, an auditor is considered
independent if it is not related to the person offering the
arrangement to the plan and is not related to any person
providing investment options under the plan.
``(6) Disclosure.--The requirements of this paragraph are
met if--
``(A) the fiduciary adviser provides to a
participant or a beneficiary before the initial
provision of the investment advice with regard to any
security or other property offered as an investment
option, a written notification (which may consist of
notification by means of electronic communication)--
``(i) of the role of any party that has a
material affiliation or contractual
relationship with the financial adviser in the
development of the investment advice program
and in the selection of investment options
available under the plan,
``(ii) of the past performance and
historical rates of return of the investment
options available under the plan,
``(iii) of all fees or other compensation
relating to the advice that the fiduciary
adviser or any affiliate thereof is to receive
(including compensation provided by any third
party) in connection with the provision of the
advice or in connection with the sale,
acquisition, or holding of the security or
other property,
``(iv) of any material affiliation or
contractual relationship of the fiduciary
adviser or affiliates thereof in the security
or other property,
``(v) the manner, and under what
circumstances, any participant or beneficiary
information provided under the arrangement will
be used or disclosed,
``(vi) of the types of services provided by
the fiduciary adviser in connection with the
provision of investment advice by the fiduciary
adviser,
``(vii) that the adviser is acting as a
fiduciary of the plan in connection with the
provision of the advice, and
``(viii) that a recipient of the advice may
separately arrange for the provision of advice
by another adviser, that could have no material
affiliation with and receive no fees or other
compensation in connection with the security or
other property, and
``(B) at all times during the provision of advisory
services to the participant or beneficiary, the
fiduciary adviser--
``(i) maintains the information described
in subparagraph (A) in accurate form and in the
manner described in paragraph (8),
``(ii) provides, without charge, accurate
information to the recipient of the advice no
less frequently than annually,
``(iii) provides, without charge, accurate
information to the recipient of the advice upon
request of the recipient, and
``(iv) provides, without charge, accurate
information to the recipient of the advice
concerning any material change to the
information required to be provided to the
recipient of the advice at a time reasonably
contemporaneous to the change in information.
``(7) Other conditions.--The requirements of this paragraph
are met if--
``(A) the fiduciary adviser provides appropriate
disclosure, in connection with the sale, acquisition,
or holding of the security or other property, in
accordance with all applicable securities laws,
``(B) the sale, acquisition, or holding occurs
solely at the direction of the recipient of the advice,
``(C) the compensation received by the fiduciary
adviser and affiliates thereof in connection with the
sale, acquisition, or holding of the security or other
property is reasonable, and
``(D) the terms of the sale, acquisition, or
holding of the security or other property are at least
as favorable to the plan as an arm's length transaction
would be.
``(8) Standards for presentation of information.--
``(A) In general.--The requirements of this
paragraph are met if the notification required to be
provided to participants and beneficiaries under
paragraph (6)(A) is written in a clear and conspicuous
manner and in a manner calculated to be understood by
the average plan participant and is sufficiently
accurate and comprehensive to reasonably apprise such
participants and beneficiaries of the information
required to be provided in the notification.
``(B) Model form for disclosure of fees and other
compensation.--The Secretary shall issue a model form
for the disclosure of fees and other compensation
required in paragraph (6)(A)(iii) which meets the
requirements of subparagraph (A).
``(9) Maintenance for 6 years of evidence of compliance.--
The requirements of this paragraph are met if a fiduciary
adviser who has provided advice referred to in paragraph (1)
maintains, for a period of not less than 6 years after the
provision of the advice, any records necessary for determining
whether the requirements of the preceding provisions of this
subsection and of subsection (b)(14) have been met. A
transaction prohibited under section 406 shall not be
considered to have occurred solely because the records are lost
or destroyed prior to the end of the 6-year period due to
circumstances beyond the control of the fiduciary adviser.
``(10) Exemption for plan sponsor and certain other
fiduciaries.--
``(A) In general.--Subject to subparagraph (B), a
plan sponsor or other person who is a fiduciary (other
than a fiduciary adviser) shall not be treated as
failing to meet the requirements of this part solely by
reason of the provision of investment advice referred
to in section 3(21)(A)(ii) (or solely by reason of
contracting for or otherwise arranging for the
provision of the advice), if--
``(i) the advice is provided by a fiduciary
adviser pursuant to an eligible investment
advice arrangement between the plan sponsor or
other fiduciary and the fiduciary adviser for
the provision by the fiduciary adviser of
investment advice referred to in such section,
``(ii) the terms of the eligible investment
advice arrangement require compliance by the
fiduciary adviser with the requirements of this
subsection, and
``(iii) the terms of the eligible
investment advice arrangement include a written
acknowledgment by the fiduciary adviser that
the fiduciary adviser is a fiduciary of the
plan with respect to the provision of the
advice.
``(B) Continued duty of prudent selection of
adviser and periodic review.--Nothing in subparagraph
(A) shall be construed to exempt a plan sponsor or
other person who is a fiduciary from any requirement of
this part for the prudent selection and periodic review
of a fiduciary adviser with whom the plan sponsor or
other person enters into an eligible investment advice
arrangement for the provision of investment advice
referred to in section 3(21)(A)(ii). The plan sponsor
or other person who is a fiduciary has no duty under
this part to monitor the specific investment advice
given by the fiduciary adviser to any particular
recipient of the advice.
``(C) Availability of plan assets for payment for
advice.--Nothing in this part shall be construed to
preclude the use of plan assets to pay for reasonable
expenses in providing investment advice referred to in
section 3(21)(A)(ii).
``(11) Definitions.--For purposes of this subsection and
subsection (b)(14)--
``(A) Fiduciary adviser.--The term `fiduciary
adviser' means, with respect to a plan, a person who is
a fiduciary of the plan by reason of the provision of
investment advice referred to in section 3(21)(A)(ii)
by the person to the participant or beneficiary of the
plan and who is--
``(i) registered as an investment adviser
under the Investment Advisers Act of 1940 (15
U.S.C. 80b-1 et seq.) or under the laws of the
State in which the fiduciary maintains its
principal office and place of business,
``(ii) a bank or similar financial
institution referred to in section 408(b)(4) or
a savings association (as defined in section
3(b)(1) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(b)(1)), but only if the advice
is provided through a trust department of the
bank or similar financial institution or
savings association which is subject to
periodic examination and review by Federal or
State banking authorities,
``(iii) an insurance company qualified to
do business under the laws of a State,
``(iv) a person registered as a broker or
dealer under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.),
``(v) an affiliate of a person described in
any of clauses (i) through (iv), or
``(vi) an employee, agent, or registered
representative of a person described in clauses
(i) through (v) who satisfies the requirements
of applicable insurance, banking, and
securities laws relating to the provision of
the advice.
For purposes of this part, a person who develops the
computer model described in paragraph (3)(B) or markets
the investment advice program or computer model shall
be treated as a person who is a fiduciary of the plan
by reason of the provision of investment advice
referred to in section 3(21)(A)(ii) to the participant
or beneficiary and shall be treated as a fiduciary
adviser for purposes of this subsection and subsection
(b)(14), except that the Secretary may prescribe rules
under which only 1 fiduciary adviser may elect to be
treated as a fiduciary with respect to the plan.
``(B) Affiliate.--The term `affiliate' of another
entity means an affiliated person of the entity (as
defined in section 2(a)(3) of the Investment Company
Act of 1940 (15 U.S.C. 80a-2(a)(3))).
``(C) Registered representative.--The term
`registered representative' of another entity means a
person described in section 3(a)(18) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(18))
(substituting the entity for the broker or dealer
referred to in such section) or a person described in
section 202(a)(17) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)(17)) (substituting the entity
for the investment adviser referred to in such
section).''.
(3) Effective date.--The amendments made by this subsection
shall apply with respect to advice referred to in section
3(21)(A)(ii) of the Employee Retirement Income Security Act of
1974 provided after December 31, 2006.
(b) Amendments to Internal Revenue Code of 1986.--
(1) Exemption from prohibited transactions.--Subsection (d)
of section 4975 of the Internal Revenue Code of 1986 (relating
to exemption from tax on prohibited transactions) is amended--
(A) in paragraph (15), by striking ``or'' at the
end;
(B) in paragraph (16), by striking the period at
the end and inserting ``;or''; and
(C) by adding at the end the following new
paragraph:
``(17) Any transaction in connection with the provision of
investment advice described in subsection (e)(3)(B) to a
participant or beneficiary in a plan and that permits such
participant or beneficiary to direct the investment of plan
assets in an individual account, if--
``(A) the transaction is--
``(i) the provision of the investment
advice to the participant or beneficiary of the
plan with respect to a security or other
property available as an investment under the
plan,
``(ii) the acquisition, holding, or sale of
a security or other property available as an
investment under the plan pursuant to the
investment advice, or
``(iii) the direct or indirect receipt of
fees or other compensation by the fiduciary
adviser or an affiliate thereof (or any
employee, agent, or registered representative
of the fiduciary adviser or affiliate) in
connection with the provision of the advice or
in connection with an acquisition, holding, or
sale of a security or other property available
as an investment under the plan pursuant to the
investment advice; and
``(B) the requirements of subsection (f)(8) are
met.''.
(2) Requirements.--Subsection (f) of such section 4975
(relating to other definitions and special rules) is amended by
adding at the end the following new paragraph:
``(8) Provision of investment advice to participant and
beneficiaries.--
``(A) In general.--The prohibitions provided in
subsection (c) shall not apply to transactions
described in subsection (b)(14) if the investment
advice provided by a fiduciary adviser is provided
under an eligible investment advice arrangement.
``(B) Eligible investment advice arrangement.--For
purposes of this paragraph, the term `eligible
investment advice arrangement' means an arrangement--
``(i) which either--
``(I) provides that any fees
(including any commission or other
compensation) received by the fiduciary
adviser for investment advice or with
respect to the sale, holding, or
acquisition of any security or other
property for purposes of investment of
plan assets do not vary depending on
the basis of any investment option
selected, or
``(II) uses a computer model under
an investment advice program meeting
the requirements of subparagraph (C) in
connection with the provision of
investment advice by a fiduciary
adviser to a participant or
beneficiary, and
``(ii) with respect to which the
requirements of subparagraphs (D), (E), (F),
(G), (H), and (I) are met.
``(C) Investment advice program using computer
model.--
``(i) In general.--An investment advice
program meets the requirements of this
subparagraph if the requirements of clauses
(ii), (iii), and (iv) are met.
``(ii) Computer model.--The requirements of
this clause are met if the investment advice
provided under the investment advice program is
provided pursuant to a computer model that--
``(I) applies generally accepted
investment theories that take into
account the historic returns of
different asset classes over defined
periods of time,
``(II) utilizes relevant
information about the participant,
which may include age, life expectancy,
retirement age, risk tolerance, other
assets or sources of income, and
preferences as to certain types of
investments,
``(III) utilizes prescribed
objective criteria to provide asset
allocation portfolios comprised of
investment options available under the
plan,
``(IV) operates in a manner that is
not biased in favor of investments
offered by the fiduciary adviser or a
person with a material affiliation or
contractual relationship with the
fiduciary adviser, and
``(V) takes into account all
investment options under the plan in
specifying how a participant's account
balance should be invested and is not
inappropriately weighted with respect
to any investment option.
``(iii) Certification.--
``(I) In general.--The requirements
of this clause are met with respect to
any investment advice program if an
eligible investment expert certifies,
prior to the utilization of the
computer model and in accordance with
rules prescribed by the Secretary of
Labor, that the computer model meets
the requirements of clause (ii).
``(II) Renewal of certifications.--
If, as determined under regulations
prescribed by the Secretary of Labor,
there are material modifications to a
computer model, the requirements of
this clause are met only if a
certification described in subclause
(I) is obtained with respect to the
computer model as so modified.
``(III) Eligible investment
expert.--The term `eligible investment
expert' means any person which meets
such requirements as the Secretary of
Labor may provide and which does not
bear any material affiliation or
contractual relationship with any
investment adviser or a related person
thereof (or any employee, agent, or
registered representative of the
investment adviser or related person).
``(iv) Exclusivity of recommendation.--The
requirements of this clause are met with
respect to any investment advice program if--
``(I) the only investment advice
provided under the program is the
advice generated by the computer model
described in clause (ii), and
``(II) any transaction described in
subsection (b)(14)(B)(ii) occurs solely
at the direction of the participant or
beneficiary.
Nothing in the preceding sentence shall
preclude the participant or beneficiary from
requesting investment advice other than that
described in clause (i), but only if such
request has not been solicited by any person
connected with carrying out the arrangement.
``(D) Express authorization by separate
fiduciary.--The requirements of this subparagraph are
met with respect to an arrangement if the arrangement
is expressly authorized by a plan fiduciary other than
the person offering the investment advice program, any
person providing investment options under the plan, or
any affiliate of either.
``(E) Audits.--
``(i) In general.--The requirements of this
subparagraph are met if an independent auditor,
who has appropriate technical training or
experience and proficiency and so represents in
writing--
``(I) conducts an annual audit of
the arrangement for compliance with the
requirements of this paragraph, and
``(II) following completion of the
annual audit, issues a written report
to the fiduciary who authorized use of
the arrangement which presents its
specific findings regarding compliance
of the arrangement with the
requirements of this paragraph.
``(ii) Special rule for individual
retirement and similar plans.--In the case of a
plan described in subparagraphs (B) through (F)
(and so much of subparagraph (G) as relates to
such subparagraphs) of subsection (e)(1), in
lieu of the requirements of clause (i), audits
of the arrangement shall be conducted at such
times and in such manner as the Secretary of
Labor may prescribe.
``(iii) Independent auditor.--For purposes
of this subparagraph, an auditor is considered
independent if it is not related to the person
offering the arrangement to the plan and is not
related to any person providing investment
options under the plan.
``(F) Disclosure.--The requirements of this
subparagraph are met if--
``(i) the fiduciary adviser provides to a
participant or a beneficiary before the initial
provision of the investment advice with regard
to any security or other property offered as an
investment option, a written notification
(which may consist of notification by means of
electronic communication)--
``(I) of the role of any party that
has a material affiliation or
contractual relationship with the
financial adviser in the development of
the investment advice program and in
the selection of investment options
available under the plan,
``(II) of the past performance and
historical rates of return of the
investment options available under the
plan,
``(III) of all fees or other
compensation relating to the advice
that the fiduciary adviser or any
affiliate thereof is to receive
(including compensation provided by any
third party) in connection with the
provision of the advice or in
connection with the sale, acquisition,
or holding of the security or other
property,
``(IV) of any material affiliation
or contractual relationship of the
fiduciary adviser or affiliates thereof
in the security or other property,
``(V) the manner, and under what
circumstances, any participant or
beneficiary information provided under
the arrangement will be used or
disclosed,
``(VI) of the types of services
provided by the fiduciary adviser in
connection with the provision of
investment advice by the fiduciary
adviser,
``(VII) that the adviser is acting
as a fiduciary of the plan in
connection with the provision of the
advice, and
``(VIII) that a recipient of the
advice may separately arrange for the
provision of advice by another adviser,
that could have no material affiliation
with and receive no fees or other
compensation in connection with the
security or other property, and
``(ii) at all times during the provision of
advisory services to the participant or
beneficiary, the fiduciary adviser--
``(I) maintains the information
described in clause (i) in accurate
form and in the manner described in
subparagraph (H),
``(II) provides, without charge,
accurate information to the recipient
of the advice no less frequently than
annually,
``(III) provides, without charge,
accurate information to the recipient
of the advice upon request of the
recipient, and
``(IV) provides, without charge,
accurate information to the recipient
of the advice concerning any material
change to the information required to
be provided to the recipient of the
advice at a time reasonably
contemporaneous to the change in
information.
``(G) Other conditions.--The requirements of this
subparagraph are met if--
``(i) the fiduciary adviser provides
appropriate disclosure, in connection with the
sale, acquisition, or holding of the security
or other property, in accordance with all
applicable securities laws,
``(ii) the sale, acquisition, or holding
occurs solely at the direction of the recipient
of the advice,
``(iii) the compensation received by the
fiduciary adviser and affiliates thereof in
connection with the sale, acquisition, or
holding of the security or other property is
reasonable, and
``(iv) the terms of the sale, acquisition,
or holding of the security or other property
are at least as favorable to the plan as an
arm's length transaction would be.
``(H) Standards for presentation of information.--
``(i) In general.--The requirements of this
subparagraph are met if the notification
required to be provided to participants and
beneficiaries under subparagraph (F)(i) is
written in a clear and conspicuous manner and
in a manner calculated to be understood by the
average plan participant and is sufficiently
accurate and comprehensive to reasonably
apprise such participants and beneficiaries of
the information required to be provided in the
notification.
``(ii) Model form for disclosure of fees
and other compensation.--The Secretary of Labor
shall issue a model form for the disclosure of
fees and other compensation required in
subparagraph (F)(i)(III) which meets the
requirements of clause (i).
``(I) Maintenance for 6 years of evidence of
compliance.--The requirements of this subparagraph are
met if a fiduciary adviser who has provided advice
referred to in subparagraph (A) maintains, for a period
of not less than 6 years after the provision of the
advice, any records necessary for determining whether
the requirements of the preceding provisions of this
paragraph and of subsection (d)(17) have been met. A
transaction prohibited under section 406 shall not be
considered to have occurred solely because the records
are lost or destroyed prior to the end of the 6-year
period due to circumstances beyond the control of the
fiduciary adviser.
``(J) Definitions.--For purposes of this paragraph
and subsection (d)(17)--
``(i) Fiduciary adviser.--The term
`fiduciary adviser' means, with respect to a
plan, a person who is a fiduciary of the plan
by reason of the provision of investment advice
by the person to the participant or beneficiary
of the plan and who is--
``(I) registered as an investment
adviser under the Investment Advisers
Act of 1940 (15 U.S.C. 80b-1 et seq.)
or under the laws of the State in which
the fiduciary maintains its principal
office and place of business,
``(II) a bank or similar financial
institution referred to in section
408(b)(4) or a savings association (as
defined in section 3(b)(1) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(b)(1)), but only if the
advice is provided through a trust
department of the bank or similar
financial institution or savings
association which is subject to
periodic examination and review by
Federal or State banking authorities,
``(III) an insurance company
qualified to do business under the laws
of a State,
``(IV) a person registered as a
broker or dealer under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.),
``(V) an affiliate of a person
described in any of subclauses (I)
through (IV), or
``(VI) an employee, agent, or
registered representative of a person
described in subclauses (I) through (V)
who satisfies the requirements of
applicable insurance, banking, and
securities laws relating to the
provision of the advice.
For purposes of this title, a person who
develops the computer model described in
subparagraph (C)(ii) or markets the investment
advice program or computer model shall be
treated as a person who is a fiduciary of the
plan by reason of the provision of investment
advice referred to in subsection (e)(3)(B) to
the participant or beneficiary and shall be
treated as a fiduciary adviser for purposes of
this paragraph and subsection (d)(17), except
that the Secretary of Labor may prescribe rules
under which only 1 fiduciary adviser may elect
to be treated as a fiduciary with respect to
the plan.
``(ii) Affiliate.--The term `affiliate' of
another entity means an affiliated person of
the entity (as defined in section 2(a)(3) of
the Investment Company Act of 1940 (15 U.S.C.
80a-2(a)(3))).
``(iii) Registered representative.--The
term `registered representative' of another
entity means a person described in section
3(a)(18) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(18)) (substituting the entity
for the broker or dealer referred to in such
section) or a person described in section
202(a)(17) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)(17)) (substituting the
entity for the investment adviser referred to
in such section).''.
(3) Determination of feasibility of application of computer
model investment advice programs for individual retirement and
similar plans.--
(A) Solicitation of information.--As soon as
practicable after the date of the enactment of this
Act, the Secretary of Labor, in consultation with the
Secretary of the Treasury, shall--
(i) solicit information as to the
feasibility of the application of computer
model investment advice programs for plans
described in subparagraphs (B) through (F) (and
so much of subparagraph (G) as relates to such
subparagraphs) of section 4975(e)(1) of the
Internal Revenue Code of 1986, including
soliciting information from--
(I) at least the top 50 trustees of
such plans, determined on the basis of
assets held by such trustees, and
(II) other persons offering
computer model investment advice
programs based on nonproprietary
products, and
(ii) shall on the basis of such information
make the determination under subparagraph (B).
The information solicited by the Secretary of Labor
under clause (i) from persons described in subclauses
(I) and (II) of clause (i) shall include information on
computer modeling capabilities of such persons with
respect to the current year and preceding year,
including such capabilities for investment accounts
maintained by such persons.
(B) Determination of feasibility.--The Secretary of
Labor, in consultation with the Secretary of the
Treasury, shall, on the basis of information received
under subparagraph (A), determine whether there is any
computer model investment advice program which may be
utilized by a plan described in subparagraph (A)(i) to
provide investment advice to the account beneficiary of
the plan which--
(i) utilizes relevant information about the
account beneficiary, which may include age,
life expectancy, retirement age, risk
tolerance, other assets or sources of income,
and preferences as to certain types of
investments,
(ii) takes into account the full range of
investments, including equities and bonds, in
determining the options for the investment
portfolio of the account beneficiary, and
(iii) allows the account beneficiary, in
directing the investment of assets, sufficient
flexibility in obtaining advice to evaluate and
select investment options.
The Secretary of Labor shall report the results of such
determination to the committees of Congress referred to
in subparagraph (D)(ii) not later than December 31,
2007.
(C) Application of computer model investment advice
program.--
(i) Certification required for use of
computer model.--
(I) Restriction on use.--Subclause
(II) of section 4975(f)(8)(B)(i) of the
Internal Revenue Code of 1986 shall not
apply to a plan described in
subparagraph (A)(i).
(II) Restriction lifted if model
certified.--If the Secretary of Labor
determines under subparagraph (B) or
(D) that there is a computer model
investment advice program described in
subparagraph (B), subclause (I) shall
cease to apply as of the date of such
determination.
(ii) Class exemption if no initial
certification by secretary.--If the Secretary
of Labor determines under subparagraph (B) that
there is no computer model investment advice
program described in subparagraph (B), the
Secretary of Labor shall grant a class
exemption from treatment as a prohibited
transaction under section 4975(c) of the
Internal Revenue Code of 1986 to any
transaction described in section 4975(d)(17)(A)
of such Code with respect to plans described in
subparagraph (A)(i), subject to such conditions
as set forth in such exemption as are in the
interests of the plan and its account
beneficiary and protective of the rights of the
account beneficiary and as are necessary to--
(I) ensure the requirements of
sections 4975(d)(17) and 4975(f)(8)
(other than subparagraph (C) thereof)
of the Internal Revenue Code of 1986
are met, and
(II) ensure the investment advice
provided under the investment advice
program utilizes prescribed objective
criteria to provide asset allocation
portfolios comprised of securities or
other property available as investments
under the plan.
If the Secretary of Labor solicits any
information under subparagraph (A) from a
person and such person does not provide such
information within 60 days after the
solicitation, then, unless such failure was due
to reasonable cause and not wilful neglect,
such person shall not be entitled to utilize
the class exemption under this clause.
(D) Subsequent determination.--
(i) In general.--If the Secretary of Labor
initially makes a determination described in
subparagraph (C)(ii), the Secretary may
subsequently determine that there is a computer
model investment advice program described in
subparagraph (B). If the Secretary makes such
subsequent determination, then the class
exemption described in subparagraph (C)(ii)
shall cease to apply after the later of--
(I) the date which is 2 years after
such subsequent determination, or
(II) the date which is 3 years
after the first date on which such
exemption took effect.
(ii) Requests for determination.--Any
person may request the Secretary of Labor to
make a determination under this subparagraph
with respect to any computer model investment
advice program, and the Secretary of Labor
shall make a determination with respect to such
request within 90 days. If the Secretary of
Labor makes a determination that such program
is not described in subparagraph (B), the
Secretary shall, within 10 days of such
determination, notify the Committee on Ways and
Means and the Committee on Education and the
Workforce of the House of Representatives and
the Committee on Finance and the Committee on
Health, Education, Labor, and Pensions of the
Senate of such determination and the reasons
for such determination.
(E) Effective date.--The provisions of this
paragraph shall take effect on the date of the
enactment of this Act.
(4) Effective date.--Except as provided in this subsection,
the amendments made by this subsection shall apply with respect
to advice referred to in section 4975(c)(3)(B) of the Internal
Revenue Code of 1986 provided after December 31, 2006.
(c) Coordination With Existing Exemptions.--Any exemption under
section 408(b) of the Employee Retirement Income Security Act of 1974
and section 4975(d) of the Internal Revenue Code of 1986 provided by
the amendments made by this section shall not in any manner alter
existing individual or class exemptions, provided by statute or
administrative action.
Subtitle B--Prohibited Transactions
SEC. 611. PROHIBITED TRANSACTION RULES RELATING TO FINANCIAL
INVESTMENTS.
(a) Exemption for Block Trading.--
(1) Amendments to employee retirement income security act
of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as
amended by section 601, is amended by adding at the end the
following new paragraph:
``(15)(A) Any transaction involving the purchase or sale of
securities, or other property (as determined by the Secretary),
between a plan and a party in interest (other than a fiduciary
described in section 3(21)(A)) with respect to a plan if--
``(i) the transaction involves a block trade,
``(ii) at the time of the transaction, the interest
of the plan (together with the interests of any other
plans maintained by the same plan sponsor), does not
exceed 10 percent of the aggregate size of the block
trade,
``(iii) the terms of the transaction, including the
price, are at least as favorable to the plan as an
arm's length transaction, and
``(iv) the compensation associated with the
purchase and sale is not greater than the compensation
associated with an arm's length transaction with an
unrelated party.
``(B) For purposes of this paragraph, the term `block
trade' means any trade of at least 10,000 shares or with a
market value of at least $200,000 which will be allocated
across two or more unrelated client accounts of a fiduciary.''.
(2) Amendments to internal revenue code of 1986.--
(A) In general.--Subsection (d) of section 4975 of
the Internal Revenue Code of 1986 (relating to
exemptions), as amended by section 601, is amended by
striking ``or'' at the end of paragraph (16), by
striking the period at the end of paragraph (17) and
inserting ``, or'', and by adding at the end the
following new paragraph:
``(18) any transaction involving the purchase or sale of
securities, or other property (as determined by the Secretary
of Labor), between a plan and a party in interest (other than a
fiduciary described in subsection (e)(3)(B)) with respect to a
plan if--
``(A) the transaction involves a block trade,
``(B) at the time of the transaction, the interest
of the plan (together with the interests of any other
plans maintained by the same plan sponsor), does not
exceed 10 percent of the aggregate size of the block
trade,
``(C) the terms of the transaction, including the
price, are at least as favorable to the plan as an
arm's length transaction, and
``(D) the compensation associated with the purchase
and sale is not greater than the compensation
associated with an arm's length transaction with an
unrelated party.''.
(B) Special rule relating to block trade.--
Subsection (f) of section 4975 of such Code (relating
to other definitions and special rules), as amended by
section 601, is amended by adding at the end the
following new paragraph:
``(9) Block trade.--The term `block trade' means any trade
of at least 10,000 shares or with a market value of at least
$200,000 which will be allocated across two or more unrelated
client accounts of a fiduciary.''.
(b) Bonding Relief.--Section 412(a) of such Act (29 U.S.C. 1112(a))
is amended--
(1) by redesignating paragraph (2) as paragraph (3),
(2) by striking ``and'' at the end of paragraph (1), and
(3) by inserting after paragraph (1) the following new
paragraph:
``(2) no bond shall be required of any entity which is
registered as a broker or a dealer under section 15(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) if the
broker or dealer is subject to the fidelity bond requirements
of a self-regulatory organization (within the meaning of
section 3(a)(26) of such Act (15 U.S.C. 78c(a)(26)).''.
(c) Exemption for Electronic Communication Network.--
(1) Amendments to employee retirement income security act
of 1974.--Section 408(b) of such Act, as amended by subsection
(a), is amended by adding at the end the following:
``(16) Any transaction involving the purchase or sale of
securities, or other property (as determined by the Secretary),
between a plan and a party in interest if--
``(A) the transaction is executed through an
electronic communication network, alternative trading
system, or similar execution system or trading venue
subject to regulation and oversight by--
``(i) the applicable Federal regulating
entity, or
``(ii) such foreign regulatory entity as
the Secretary may determine by regulation,
``(B) either--
``(i) the transaction is effected pursuant
to rules designed to match purchases and sales
at the best price available through the
execution system in accordance with applicable
rules of the Securities and Exchange Commission
or other relevant governmental authority, or
``(ii) neither the execution system nor the
parties to the transaction take into account
the identity of the parties in the execution of
trades,
``(C) the price and compensation associated with
the purchase and sale are not greater than the price
and compensation associated with an arm's length
transaction with an unrelated party,
``(D) if the party in interest has an ownership
interest in the system or venue described in
subparagraph (A), the system or venue has been
authorized by the plan sponsor or other independent
fiduciary for transactions described in this paragraph,
and
``(E) not less than 30 days prior to the initial
transaction described in this paragraph executed
through any system or venue described in subparagraph
(A), a plan fiduciary is provided written or electronic
notice of the execution of such transaction through
such system or venue.''.
(2) Amendments to internal revenue code of 1986.--
Subsection (d) of section 4975 of the Internal Revenue Code of
1986 (relating to exemptions), as amended by subsection (a), is
amended by striking ``or'' at the end of paragraph (17), by
striking the period at the end of paragraph (18) and inserting
``, or'', and by adding at the end the following new paragraph:
``(19) any transaction involving the purchase or sale of
securities, or other property (as determined by the Secretary
of Labor), between a plan and a party in interest if--
``(A) the transaction is executed through an
electronic communication network, alternative trading
system, or similar execution system or trading venue
subject to regulation and oversight by--
``(i) the applicable Federal regulating
entity, or
``(ii) such foreign regulatory entity as
the Secretary of Labor may determine by
regulation,
``(B) either--
``(i) the transaction is effected pursuant
to rules designed to match purchases and sales
at the best price available through the
execution system in accordance with applicable
rules of the Securities and Exchange Commission
or other relevant governmental authority, or
``(ii) neither the execution system nor the
parties to the transaction take into account
the identity of the parties in the execution of
trades,
``(C) the price and compensation associated with
the purchase and sale are not greater than the price
and compensation associated with an arm's length
transaction with an unrelated party,
``(D) if the party in interest has an ownership
interest in the system or venue described in
subparagraph (A), the system or venue has been
authorized by the plan sponsor or other independent
fiduciary for transactions described in this paragraph,
and
``(E) not less than 30 days prior to the initial
transaction described in this paragraph executed
through any system or venue described in subparagraph
(A), a plan fiduciary is provided written or electronic
notice of the execution of such transaction through
such system or venue.''.
(d) Exemption for Service Providers.--
(1) Amendments to employee retirement income security act
of 1974.--Section 408(b) of such Act (29 U.S.C. 1106), as
amended by subsection (c), is amended by adding at the end the
following new paragraph:
``(17)(A) Transactions described in subparagraphs (A), (B),
and (D) of section 406(a)(1) between a plan and a person that
is a party in interest other than a fiduciary (or an affiliate)
who has or exercises any discretionary authority or control
with respect to the investment of the plan assets involved in
the transaction or renders investment advice (within the
meaning of section 3(21)(A)(ii)) with respect to those assets,
solely by reason of providing services to the plan or solely by
reason of a relationship to such a service provider described
in subparagraph (F), (G), (H), or (I) of section 3(14), or
both, but only if in connection with such transaction the plan
receives no less, nor pays no more, than adequate
consideration.
``(B) For purposes of this paragraph, the term `adequate
consideration' means--
``(i) in the case of a security for which
there is a generally recognized market--
``(I) the price of the security
prevailing on a national securities
exchange which is registered under
section 6 of the Securities Exchange
Act of 1934, taking into account
factors such as the size of the
transaction and marketability of the
security, or
``(II) if the security is not
traded on such a national securities
exchange, a price not less favorable to
the plan than the offering price for
the security as established by the
current bid and asked prices quoted by
persons independent of the issuer and
of the party in interest, taking into
account factors such as the size of the
transaction and marketability of the
security, and
``(ii) in the case of an asset other than a
security for which there is a generally
recognized market, the fair market value of the
asset as determined in good faith by a
fiduciary or fiduciaries in accordance with
regulations prescribed by the Secretary.''.
(2) Amendment to internal revenue code of 1986.--
(A) In general.--Subsection (d) of section 4975 of
the Internal Revenue Code of 1986 (relating to
exemptions), as amended by subsection (c), is amended
by striking ``or'' at the end of paragraph (18), by
striking the period at the end of paragraph (19) and
inserting ``, or'', and by adding at the end the
following new paragraph:
``(20) transactions described in subparagraphs (A), (B),
and (D) of subsection (c)(1) between a plan and a person that
is a party in interest other than a fiduciary (or an affiliate)
who has or exercises any discretionary authority or control
with respect to the investment of the plan assets involved in
the transaction or renders investment advice (within the
meaning of subsection (e)(3)(B)) with respect to those assets,
solely by reason of providing services to the plan or solely by
reason of a relationship to such a service provider described
in subparagraph (F), (G), (H), or (I) of subsection (e)(2), or
both, but only if in connection with such transaction the plan
receives no less, nor pays no more, than adequate
consideration.''.
(B) Special rule relating to service providers.--
Subsection (f) of section 4975 of such Code (relating
to other definitions and special rules), as amended by
subsection (a), is amended by adding at the end the
following new paragraph:
``(10) Adequate consideration.--The term `adequate
consideration' means--
``(A) in the case of a security for which there is
a generally recognized market--
``(i) the price of the security prevailing
on a national securities exchange which is
registered under section 6 of the Securities
Exchange Act of 1934, taking into account
factors such as the size of the transaction and
marketability of the security, or
``(ii) if the security is not traded on
such a national securities exchange, a price
not less favorable to the plan than the
offering price for the security as established
by the current bid and asked prices quoted by
persons independent of the issuer and of the
party in interest, taking into account factors
such as the size of the transaction and
marketability of the security, and
``(B) in the case of an asset other than a security
for which there is a generally recognized market, the
fair market value of the asset as determined in good
faith by a fiduciary or fiduciaries in accordance with
regulations prescribed by the Secretary of Labor.''.
(e) Relief for Foreign Exchange Transactions.--
(1) Amendments to employee retirement income security act
of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as
amended by subsection (d), is amended by adding at the end the
following new paragraph:
``(18) Foreign exchange transactions.--Any foreign exchange
transactions, between a bank or broker-dealer (or any affiliate
of either), and a plan (as defined in section 3(3)) with
respect to which such bank or broker-dealer (or affiliate) is a
trustee, custodian, fiduciary, or other party in interest, if--
``(A) the transaction is in connection with the
purchase, holding, or sale of securities or other
investment assets (other than a foreign exchange
transaction unrelated to any other investment in
securities or other investment assets),
``(B) at the time the foreign exchange transaction
is entered into, the terms of the transaction are not
less favorable to the plan than the terms generally
available in comparable arm's length foreign exchange
transactions between unrelated parties, or the terms
afforded by the bank or broker-dealer (or any affiliate
of either) in comparable arm's-length foreign exchange
transactions involving unrelated parties,
``(C) the exchange rate used by such bank or
broker-dealer (or affiliate) for a particular foreign
exchange transaction does not deviate by more or less
than 3 percent from the interbank bid and asked rates
for transactions of comparable size and maturity at the
time of the transaction as displayed on an independent
service that reports rates of exchange in the foreign
currency market for such currency, and
``(D) the bank or broker-dealer (or any affiliate
of either) does not have investment discretion, or
provide investment advice, with respect to the
transaction.''.
(2) Amendment to internal revenue code of 1986.--Subsection
(d) of section 4975 of the Internal Revenue Code of 1986
(relating to exemptions), as amended by subsection (d), is
amended by striking ``or'' at the end of paragraph (19), by
striking the period at the end of paragraph (20) and inserting
``, or'', and by adding at the end the following new paragraph:
``(21) any foreign exchange transactions, between a bank or
broker-dealer (or any affiliate of either) and a plan (as
defined in this section) with respect to which such bank or
broker-dealer (or affiliate) is a trustee, custodian,
fiduciary, or other party in interest person, if--
``(A) the transaction is in connection with the
purchase, holding, or sale of securities or other
investment assets (other than a foreign exchange
transaction unrelated to any other investment in
securities or other investment assets),
``(B) at the time the foreign exchange transaction
is entered into, the terms of the transaction are not
less favorable to the plan than the terms generally
available in comparable arm's length foreign exchange
transactions between unrelated parties, or the terms
afforded by the bank or broker-dealer (or any affiliate
of either) in comparable arm's-length foreign exchange
transactions involving unrelated parties,
``(C) the exchange rate used by such bank or
broker-dealer (or affiliate) for a particular foreign
exchange transaction does not deviate by more or less
than 3 percent from the interbank bid and asked rates
for transactions of comparable size and maturity at the
time of the transaction as displayed on an independent
service that reports rates of exchange in the foreign
currency market for such currency, and
``(D) the bank or broker-dealer (or any affiliate
of either) does not have investment discretion, or
provide investment advice, with respect to the
transaction.''.
(f) Definition of Plan Asset Vehicle.--Section 3 of such Act (29
U.S.C. 1002) is amended by adding at the end the following new
paragraph:
``(42) the term `plan assets' means plan assets as defined by such
regulations as the Secretary may prescribe, except that under such
regulations the assets of any entity shall not be treated as plan
assets if, immediately after the most recent acquisition of any equity
interest in the entity, less than 25 percent of the total value of each
class of equity interest in the entity is held by benefit plan
investors. For purposes of determinations pursuant to this paragraph,
the value of any equity interest held by a person (other than such a
benefit plan investor) who has discretionary authority or control with
respect to the assets of the entity or any person who provides
investment advice for a fee (direct or indirect) with respect to such
assets, or any affiliate of such a person, shall be disregarded for
purposes of calculating the 25 percent threshold. An entity shall be
considered to hold plan assets only to the extent of the percentage of
the equity interest held by benefit plan investors. For purposes of
this paragraph, the term `benefit plan investor' means an employee
benefit plan subject to part 4, any plan to which section 4975 of the
Internal Revenue Code of 1986 applies, and any entity whose underlying
assets include plan assets by reason of a plan's investment in such
entity.''.
(g) Exemption for Cross Trading.--
(1) Amendments to employee retirement income security act
of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as
amended by subsection (e), is amended by adding at the end the
following new paragraph:
``(19) Cross trading.--Any transaction described in
sections 406(a)(1)(A) and 406(b)(2) involving the purchase and
sale of a security between a plan and any other account managed
by the same investment manager, if--
``(A) the transaction is a purchase or sale, for no
consideration other than cash payment against prompt
delivery of a security for which market quotations are
readily available,
``(B) the transaction is effected at the
independent current market price of the security
(within the meaning of section 270.17a-7(b) of title
17, Code of Federal Regulations),
``(C) no brokerage commission, fee (except for
customary transfer fees, the fact of which is disclosed
pursuant to subparagraph (D)), or other remuneration is
paid in connection with the transaction,
``(D) a fiduciary (other than the investment
manager engaging in the cross-trades or any affiliate)
for each plan participating in the transaction
authorizes in advance of any cross-trades (in a
document that is separate from any other written
agreement of the parties) the investment manager to
engage in cross trades at the investment manager's
discretion, after such fiduciary has received
disclosure regarding the conditions under which cross
trades may take place (but only if such disclosure is
separate from any other agreement or disclosure
involving the asset management relationship), including
the written policies and procedures of the investment
manager described in subparagraph (H),
``(E) each plan participating in the transaction
has assets of at least $100,000,000, except that if the
assets of a plan are invested in a master trust
containing the assets of plans maintained by employers
in the same controlled group (as defined in section
407(d)(7)), the master trust has assets of at least
$100,000,000,
``(F) the investment manager provides to the plan
fiduciary who authorized cross trading under
subparagraph (D) a quarterly report detailing all cross
trades executed by the investment manager in which the
plan participated during such quarter, including the
following information, as applicable: (i) the identity
of each security bought or sold; (ii) the number of
shares or units traded, (iii) the parties involved in
the cross-trade; and (iv) trade price and the method
used to establish the trade price,
``(G) the investment manager does not base its fee
schedule on the plan`s consent to cross trading, and no
other service (other than the investment opportunities
and cost savings available through a cross trade) is
conditioned on the plan's consent to cross trading,
``(H) the investment manager has adopted, and
cross-trades are effected in accordance with, written
cross-trading policies and procedures that are fair and
equitable to all accounts participating in the cross-
trading program, and that include a description of the
manager's pricing policies and procedures, and the
manager's policies and procedures for allocating cross
trades in an objective manner among accounts
participating in the cross-trading program, and
``(I) the investment manager has designated an
individual responsible for periodically reviewing such
purchases and sales to ensure compliance with the
written policies and procedures described in
subparagraph (H), and following such review, the
individual shall issue an annual written report no
later than 90 days following the period to which it
relates signed under penalty of perjury to the plan
fiduciary who authorized cross trading under
subparagraph (D) describing the steps performed during
the course of the review, the level of compliance, and
any specific instances of non-compliance.
The written report under subparagraph (I) shall also notify the
plan fiduciary of the plan's right to terminate participation
in the investment manager's cross-trading program at any
time.''.
(2) Amendments of internal revenue code of 1986.--
Subsection (d) of section 4975 of the Internal Revenue Code of
1986 (relating to exemptions), as amended by subsection (e), is
amended by striking ``or'' at the end of paragraph (20), by
striking the period at the end of paragraph (21) and inserting
``, or'', and by adding at the end the following new paragraph:
``(22) any transaction described in subsection (c)(1)(A)
involving the purchase and sale of a security between a plan
and any other account managed by the same investment manager,
if--
``(A) the transaction is a purchase or sale, for no
consideration other than cash payment against prompt
delivery of a security for which market quotations are
readily available,
``(B) the transaction is effected at the
independent current market price of the security
(within the meaning of section 270.17a-7(b) of title
17, Code of Federal Regulations),
``(C) no brokerage commission, fee (except for
customary transfer fees, the fact of which is disclosed
pursuant to subparagraph (D)), or other remuneration is
paid in connection with the transaction,
``(D) a fiduciary (other than the investment
manager engaging in the cross-trades or any affiliate)
for each plan participating in the transaction
authorizes in advance of any cross-trades (in a
document that is separate from any other written
agreement of the parties) the investment manager to
engage in cross trades at the investment manager's
discretion, after such fiduciary has received
disclosure regarding the conditions under which cross
trades may take place (but only if such disclosure is
separate from any other agreement or disclosure
involving the asset management relationship), including
the written policies and procedures of the investment
manager described in subparagraph (H),
``(E) each plan participating in the transaction
has assets of at least $100,000,000, except that if the
assets of a plan are invested in a master trust
containing the assets of plans maintained by employers
in the same controlled group (as defined in section
407(d)(7) of the Employee Retirement Income Security
Act of 1974), the master trust has assets of at least
$100,000,000,
``(F) the investment manager provides to the plan
fiduciary who authorized cross trading under
subparagraph (D) a quarterly report detailing all cross
trades executed by the investment manager in which the
plan participated during such quarter, including the
following information, as applicable: (i) the identity
of each security bought or sold; (ii) the number of
shares or units traded, (iii) the parties involved in
the cross-trade; and (iv) trade price and the method
used to establish the trade price,
``(G) the investment manager does not base its fee
schedule on the plan`s consent to cross trading, and no
other service (other than the investment opportunities
and cost savings available through a cross trade) is
conditioned on the plan's consent to cross trading,
``(H) the investment manager has adopted, and
cross-trades are effected in accordance with, written
cross-trading policies and procedures that are fair and
equitable to all accounts participating in the cross-
trading program, and that include a description of the
manager's pricing policies and procedures, and the
manager's policies and procedures for allocating cross
trades in an objective manner among accounts
participating in the cross-trading program, and
``(I) the investment manager has designated an
individual responsible for periodically reviewing such
purchases and sales to ensure compliance with the
written policies and procedures described in
subparagraph (H), and following such review, the
individual shall issue an annual written report no
later than 90 days following the period to which it
relates signed under penalty of perjury to the plan
fiduciary who authorized cross trading under
subparagraph (D) describing the steps performed during
the course of the review, the level of compliance, and
any specific instances of non-compliance.
The written report shall also notify the plan fiduciary of the
plan's right to terminate participation in the investment
manager's cross-trading program at any time.''.
(3) Regulations.--No later than 180 days after the date of
the enactment of this Act, the Secretary of Labor, after
consultation with the Securities and Exchange Commission, shall
issue regulations regarding the content of policies and
procedures required to be adopted by an investment manager
under section 408(b)(19) of the Employee Retirement Income
Security Act of 1974.
(h) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to transactions
occurring after the date of the enactment of this Act.
(2) Bonding rule.--The amendments made by subsection (b)
shall apply to plan years beginning after such date.
SEC. 612. CORRECTION PERIOD FOR CERTAIN TRANSACTIONS INVOLVING
SECURITIES AND COMMODITIES.
(a) Amendment of Employee Retirement Income Security Act of 1974.--
Section 408(b) of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1108(b)), as amended by sections 601 and 611, is further
amended by adding at the end the following new paragraph:
``(20)(A) Except as provided in subparagraphs (B) and (C),
a transaction described in section 406(a) in connection with
the acquisition, holding, or disposition of any security or
commodity, if the transaction is corrected before the end of
the correction period.
``(B) Subparagraph (A) does not apply to any transaction
between a plan and a plan sponsor or its affiliates that
involves the acquisition or sale of an employer security (as
defined in section 407(d)(1)) or the acquisition, sale, or
lease of employer real property (as defined in section
407(d)(2)).
``(C) In the case of any fiduciary or other party in
interest (or any other person knowingly participating in such
transaction), subparagraph (A) does not apply to any
transaction if, at the time the transaction occurs, such
fiduciary or party in interest (or other person) knew (or
reasonably should have known) that the transaction would
(without regard to this paragraph) constitute a violation of
section 406(a).
``(D) For purposes of this paragraph, the term `correction
period' means, in connection with a fiduciary or party in
interest (or other person knowingly participating in the
transaction), the 14-day period beginning on the date on which
such fiduciary or party in interest (or other person)
discovers, or reasonably should have discovered, that the
transaction would (without regard to this paragraph) constitute
a violation of section 406(a).
``(E) For purposes of this paragraph--
``(i) The term `security' has the meaning given
such term by section 475(c)(2) of the Internal Revenue
Code of 1986 (without regard to subparagraph (F)(iii)
and the last sentence thereof).
``(ii) The term `commodity' has the meaning given
such term by section 475(e)(2) of such Code (without
regard to subparagraph (D)(iii) thereof).
``(iii) The term `correct' means, with respect to a
transaction--
``(I) to undo the transaction to the extent
possible and in any case to make good to the
plan or affected account any losses resulting
from the transaction, and
``(II) to restore to the plan or affected
account any profits made through the use of
assets of the plan.''.
(b) Amendment of Internal Revenue Code of 1986.--
(1) In general.--Subsection (d) of section 4975 of the
Internal Revenue Code of 1986 (relating to exemptions), as
amended by sections 601 and 611, is amended by striking ``or''
at the end of paragraph (21), by striking the period at the end
of paragraph (22) and inserting ``, or'', and by adding at the
end the following new paragraph:
``(23) except as provided in subsection (f)(11), a
transaction described in subparagraph (A), (B), (C), or (D) of
subsection (c)(1) in connection with the acquisition, holding,
or disposition of any security or commodity, if the transaction
is corrected before the end of the correction period.''.
(2) Special rules relating to correction period.--
Subsection (f) of section 4975 of such Code (relating to other
definitions and special rules), as amended by sections 601 and
611, is amended by adding at the end the following new
paragraph:
``(11) Correction period.--
``(A) In general.--For purposes of subsection
(d)(23), the term `correction period' means the 14-day
period beginning on the date on which the disqualified
person discovers, or reasonably should have discovered,
that the transaction would (without regard to this
paragraph and subsection (d)(23)) constitute a
prohibited transaction.
``(B) Exceptions.--
``(i) Employer securities.--Subsection
(d)(23) does not apply to any transaction
between a plan and a plan sponsor or its
affiliates that involves the acquisition or
sale of an employer security (as defined in
section 407(d)(1)) or the acquisition, sale, or
lease of employer real property (as defined in
section 407(d)(2)).
``(ii) Knowing prohibited transaction.--In
the case of any disqualified person, subsection
(d)(23) does not apply to a transaction if, at
the time the transaction is entered into, the
disqualified person knew (or reasonably should
have known) that the transaction would (without
regard to this paragraph) constitute a
prohibited transaction.
``(C) Abatement of tax where there is a
correction.--If a transaction is not treated as a
prohibited transaction by reason of subsection (d)(23),
then no tax under subsection (a) and (b) shall be
assessed with respect to such transaction, and if
assessed the assessment shall be abated, and if
collected shall be credited or refunded as an
overpayment.
``(D) Definitions.--For purposes of this paragraph
and subsection (d)(23)--
``(i) Security.--The term `security' has
the meaning given such term by section
475(c)(2) (without regard to subparagraph
(F)(iii) and the last sentence thereof).
``(ii) Commodity.--The term `commodity' has
the meaning given such term by section
475(e)(2) (without regard to subparagraph
(D)(iii) thereof).
``(iii) Correct.--The term `correct' means,
with respect to a transaction--
``(I) to undo the transaction to
the extent possible and in any case to
make good to the plan or affected
account any losses resulting from the
transaction, and
``(II) to restore to the plan or
affected account any profits made
through the use of assets of the
plan.''.
(c) Effective Date.--The amendments made by this section shall
apply to any transaction which the fiduciary or disqualified person
discovers, or reasonably should have discovered, after the date of the
enactment of this Act constitutes a prohibited transaction.
Subtitle C--Fiduciary and Other Rules
SEC. 621. INAPPLICABILITY OF RELIEF FROM FIDUCIARY LIABILITY DURING
SUSPENSION OF ABILITY OF PARTICIPANT OR BENEFICIARY TO
DIRECT INVESTMENTS.
(a) In General.--Section 404(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104(c)) is amended--
(1) in paragraph (1)--
(A) by redesignating subparagraphs (A) and (B) as
clauses (i) and (ii), respectively, and by inserting
``(A)'' after ``(c)(1)'',
(B) in subparagraph (A)(ii) (as redesignated by
paragraph (1)), by inserting before the period the
following: ``, except that this clause shall not apply
in connection with such participant or beneficiary for
any blackout period during which the ability of such
participant or beneficiary to direct the investment of
the assets in his or her account is suspended by a plan
sponsor or fiduciary'', and
(C) by adding at the end the following new
subparagraphs:
``(B) If a person referred to in subparagraph (A)(ii) meets the
requirements of this title in connection with authorizing and
implementing the blackout period, any person who is otherwise a
fiduciary shall not be liable under this title for any loss occurring
during such period.
``(C) For purposes of this paragraph, the term `blackout period'
has the meaning given such term by section 101(i)(7).''; and
(2) by adding at the end the following:
``(4)(A) In any case in which a qualified change in
investment options occurs in connection with an individual
account plan, a participant or beneficiary shall not be treated
for purposes of paragraph (1) as not exercising control over
the assets in his account in connection with such change if the
requirements of subparagraph (C) are met in connection with
such change.
``(B) For purposes of subparagraph (A), the term `qualified
change in investment options' means, in connection with an
individual account plan, a change in the investment options
offered to the participant or beneficiary under the terms of
the plan, under which--
``(i) the account of the participant or beneficiary
is reallocated among one or more remaining or new
investment options which are offered in lieu of one or
more investment options offered immediately prior to
the effective date of the change, and
``(ii) the stated characteristics of the remaining
or new investment options provided under clause (i),
including characteristics relating to risk and rate of
return, are, as of immediately after the change,
reasonably similar to those of the existing investment
options as of immediately before the change.
``(C) The requirements of this subparagraph are met in
connection with a qualified change in investment options if--
``(i) at least 30 days and no more than 60 days
prior to the effective date of the change, the plan
administrator furnishes written notice of the change to
the participants and beneficiaries, including
information comparing the existing and new investment
options and an explanation that, in the absence of
affirmative investment instructions from the
participant or beneficiary to the contrary, the account
of the participant or beneficiary will be invested in
the manner described in subparagraph (B),
``(ii) the participant or beneficiary has not
provided to the plan administrator, in advance of the
effective date of the change, affirmative investment
instructions contrary to the change, and
``(iii) the investments under the plan of the
participant or beneficiary as in effect immediately
prior to the effective date of the change were the
product of the exercise by such participant or
beneficiary of control over the assets of the account
within the meaning of paragraph (1).''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
(2) Special rule for collectively bargained agreements.--In
the case of a plan maintained pursuant to 1 or more collective
bargaining agreements between employee representatives and 1 or
more employers ratified on or before the date of the enactment
of this Act, paragraph (1) shall be applied to benefits
pursuant to, and individuals covered by, any such agreement by
substituting for ``December 31, 2007'' the earlier of--
(A) the later of--
(i) December 31, 2008, or
(ii) the date on which the last of such
collective bargaining agreements terminates
(determined without regard to any extension
thereof after such date of enactment), or
(B) December 31, 2009.
SEC. 622. INCREASE IN MAXIMUM BOND AMOUNT.
(a) In General.--Section 412(a) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1112), as amended by section 611(b), is
amended by adding at the end the following: ``In the case of a plan
that holds employer securities (within the meaning of section
407(d)(1)), this subsection shall be applied by substituting
`$1,000,000' for `$500,000' each place it appears.''
(b) Effective Date.--The amendment made by this section shall apply
to plan years beginning after December 31, 2007.
SEC. 623. INCREASE IN PENALTIES FOR COERCIVE INTERFERENCE WITH EXERCISE
OF ERISA RIGHTS.
(a) In General.--Section 511 of the Employment Retirement Income
Security Act of 1974 (29 U.S.C. 1141) is amended--
(1) by striking ``$10,000'' and inserting ``$100,000'', and
(2) by striking ``one year'' and inserting ``10 years''.
(b) Effective Date.--The amendments made by this section shall
apply to violations occurring on and after the date of the enactment of
this Act.
SEC. 624. TREATMENT OF INVESTMENT OF ASSETS BY PLAN WHERE PARTICIPANT
FAILS TO EXERCISE INVESTMENT ELECTION.
(a) In General.--Section 404(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1104(c)), as amended by section 622, is
amended by adding at the end the following new paragraph:
``(5) Default investment arrangements.--
``(A) In general.--For purposes of paragraph (1), a
participant in an individual account plan meeting the
notice requirements of subparagraph (B) shall be
treated as exercising control over the assets in the
account with respect to the amount of contributions and
earnings which, in the absence of an investment
election by the participant, are invested by the plan
in accordance with regulations prescribed by the
Secretary. The regulations under this subparagraph
shall provide guidance on the appropriateness of
designating default investments that include a mix of
asset classes consistent with capital preservation or
long-term capital appreciation, or a blend of both.
``(B) Notice requirements.--
``(i) In general.--The requirements of this
subparagraph are met if each participant--
``(I) receives, within a reasonable
period of time before each plan year, a
notice explaining the employee's right
under the plan to designate how
contributions and earnings will be
invested and explaining how, in the
absence of any investment election by
the participant, such contributions and
earnings will be invested, and
``(II) has a reasonable period of
time after receipt of such notice and
before the beginning of the plan year
to make such designation.
``(ii) Form of notice.--The requirements of
clauses (i) and (ii) of section 401(k)(12)(D)
of the Internal Revenue Code of 1986 shall
apply with respect to the notices described in
this subparagraph.''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2006.
(2) Regulations.--Final regulations under section
404(c)(5)(A) of the Employee Retirement Income Security Act of
1974 (as added by this section) shall be issued no later than 6
months after the date of the enactment of this Act.
SEC. 625. CLARIFICATION OF FIDUCIARY RULES.
(a) In General.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of Labor shall issue final
regulations clarifying that the selection of an annuity contract as an
optional form of distribution from an individual account plan to a
participant or beneficiary--
(1) is not subject to the safest available annuity standard
under Interpretive Bulletin 95-1 (29 C.F.R. 2509.95-1), and
(2) is subject to all otherwise applicable fiduciary
standards.
(b) Effective Date.--This section shall take effect on the date of
enactment of this Act.
TITLE VII--BENEFIT ACCRUAL STANDARDS
SEC. 701. BENEFIT ACCRUAL STANDARDS.
(a) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) Rules relating to reduction in rate of benefit
accrual.--Section 204(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1054(b)) is amended by adding
at the end the following new paragraph:
``(5) Special rules relating to age.--
``(A) Comparison to similarly situated younger
individual.--
``(i) In general.--A plan shall not be
treated as failing to meet the requirements of
paragraph (1)(H)(i) if a participant's accrued
benefit, as determined as of any date under the
terms of the plan, would be equal to or greater
than that of any similarly situated, younger
individual who is or could be a participant.
``(ii) Similarly situated.--For purposes of
this subparagraph, a participant is similarly
situated to any other individual if such
participant is identical to such other
individual in every respect (including period
of service, compensation, position, date of
hire, work history, and any other respect)
except for age.
``(iii) Disregard of subsidized early
retirement benefits.--In determining the
accrued benefit as of any date for purposes of
this clause, the subsidized portion of any
early retirement benefit or retirement-type
subsidy shall be disregarded.
``(iv) Accrued benefit.--For purposes of
this subparagraph, the accrued benefit may,
under the terms of the plan, be expressed as an
annuity payable at normal retirement age, the
balance of a hypothetical account, or the
current value of the accumulated percentage of
the employee's final average compensation.
``(B) Applicable defined benefit plans.--
``(i) Interest credits.--
``(I) In general.--An applicable
defined benefit plan shall be treated
as failing to meet the requirements of
paragraph (1)(H) unless the terms of
the plan provide that any interest
credit (or an equivalent amount) for
any plan year shall be at a rate which
is not greater than a market rate of
return. A plan shall not be treated as
failing to meet the requirements of
this subclause merely because the plan
provides for a reasonable minimum
guaranteed rate of return or for a rate
of return that is equal to the greater
of a fixed or variable rate of return.
``(II) Preservation of capital.--An
interest credit (or an equivalent
amount) of less than zero shall in no
event result in the account balance or
similar amount being less than the
aggregate amount of contributions
credited to the account.
``(III) Market rate of return.--The
Secretary of the Treasury may provide
by regulation for rules governing the
calculation of a market rate of return
for purposes of subclause (I) and for
permissible methods of crediting
interest to the account (including
fixed or variable interest rates)
resulting in effective rates of return
meeting the requirements of subclause
(I).
``(ii) Special rule for plan conversions.--
If, after June 29, 2005, an applicable plan
amendment is adopted, the plan shall be treated
as failing to meet the requirements of
paragraph (1)(H) unless the requirements of
clause (iii) are met with respect to each
individual who was a participant in the plan
immediately before the adoption of the
amendment.
``(iii) Rate of benefit accrual.--Subject
to clause (iv), the requirements of this clause
are met with respect to any participant if the
accrued benefit of the participant under the
terms of the plan as in effect after the
amendment is not less than the sum of--
``(I) the participant's accrued
benefit for years of service before the
effective date of the amendment,
determined under the terms of the plan
as in effect before the amendment, plus
``(II) the participant's accrued
benefit for years of service after the
effective date of the amendment,
determined under the terms of the plan
as in effect after the amendment.
``(iv) Special rules for early retirement
subsidies.--For purposes of clause (iii)(I),
the plan shall credit the accumulation account
or similar amount with the amount of any early
retirement benefit or retirement-type subsidy
for the plan year in which the participant
retires if, as of such time, the participant
has met the age, years of service, and other
requirements under the plan for entitlement to
such benefit or subsidy.
``(v) Applicable plan amendment.--For
purposes of this subparagraph--
``(I) In general.--The term
`applicable plan amendment' means an
amendment to a defined benefit plan
which has the effect of converting the
plan to an applicable defined benefit
plan.
``(II) Special rule for coordinated
benefits.--If the benefits of 2 or more
defined benefit plans established or
maintained by an employer are
coordinated in such a manner as to have
the effect of the adoption of an
amendment described in subclause (I),
the sponsor of the defined benefit plan
or plans providing for such
coordination shall be treated as having
adopted such a plan amendment as of the
date such coordination begins.
``(III) Multiple amendments.--The
Secretary of the Treasury shall issue
regulations to prevent the avoidance of
the purposes of this subparagraph
through the use of 2 or more plan
amendments rather than a single
amendment.
``(IV) Applicable defined benefit
plan.--For purposes of this
subparagraph, the term `applicable
defined benefit plan' has the meaning
given such term by section 203(f)(3).
``(vi) Termination requirements.--An
applicable defined benefit plan shall not be
treated as meeting the requirements of clause
(i) unless the plan provides that, upon the
termination of the plan--
``(I) if the interest credit rate
(or an equivalent amount) under the
plan is a variable rate, the rate of
interest used to determine accrued
benefits under the plan shall be equal
to the average of the rates of interest
used under the plan during the 5-year
period ending on the termination date,
and
``(II) the interest rate and
mortality table used to determine the
amount of any benefit under the plan
payable in the form of an annuity
payable at normal retirement age shall
be the rate and table specified under
the plan for such purpose as of the
termination date, except that if such
interest rate is a variable rate, the
interest rate shall be determined under
the rules of subclause (I).
``(C) Certain offsets permitted.--A plan shall not
be treated as failing to meet the requirements of
paragraph (1)(H)(i) solely because the plan provides
offsets against benefits under the plan to the extent
such offsets are allowable in applying the requirements
of section 401(a) of the Internal Revenue Code of 1986.
``(D) Permitted disparities in plan contributions
or benefits.--A plan shall not be treated as failing to
meet the requirements of paragraph (1)(H) solely
because the plan provides a disparity in contributions
or benefits with respect to which the requirements of
section 401(l) of the Internal Revenue Code of 1986 are
met.
``(E) Indexing permitted.--
``(i) In general.--A plan shall not be
treated as failing to meet the requirements of
paragraph (1)(H) solely because the plan
provides for indexing of accrued benefits under
the plan.
``(ii) Protection against loss.--Except in
the case of any benefit provided in the form of
a variable annuity, clause (i) shall not apply
with respect to any indexing which results in
an accrued benefit less than the accrued
benefit determined without regard to such
indexing.
``(iii) Indexing.--For purposes of this
subparagraph, the term `indexing' means, in
connection with an accrued benefit, the
periodic adjustment of the accrued benefit by
means of the application of a recognized
investment index or methodology.
``(F) Early retirement benefit or retirement-type
subsidy.--For purposes of this paragraph, the terms
`early retirement benefit' and `retirement-type
subsidy' have the meaning given such terms in
subsection (g)(2)(A).
``(G) Benefit accrued to date.--For purposes of
this paragraph, any reference to the accrued benefit
shall be a reference to such benefit accrued to
date.''.
(2) Determinations of accrued benefit as balance of benefit
account or equivalent amounts.--Section 203 of such Act (29
U.S.C. 1053) is amended by adding at the end the following new
subsection:
``(f) Special Rules for Plans Computing Accrued Benefits by
Reference to Hypothetical Account Balance or Equivalent Amounts.--
``(1) In general.--An applicable defined benefit plan shall
not be treated as failing to meet--
``(A) subject to paragraph (2), the requirements of
subsection (a)(2), or
``(B) the requirements of section 204(c) or section
205(g) with respect to contributions other than
employee contributions,
solely because the present value of the accrued benefit (or any
portion thereof) of any participant is, under the terms of the
plan, equal to the amount expressed as the balance in the
hypothetical account described in paragraph (3) or as an
accumulated percentage of the participant's final average
compensation.
``(2) 3-year vesting.--In the case of an applicable defined
benefit plan, such plan shall be treated as meeting the
requirements of subsection (a)(2) only if an employee who has
completed at least 3 years of service has a nonforfeitable
right to 100 percent of the employee's accrued benefit derived
from employer contributions.
``(3) Applicable defined benefit plan and related rules.--
For purposes of this subsection--
``(A) In general.--The term `applicable defined
benefit plan' means a defined benefit plan under which
the accrued benefit (or any portion thereof) is
calculated as the balance of a hypothetical account
maintained for the participant or as an accumulated
percentage of the participant's final average
compensation.
``(B) Regulations to include similar plans.--The
Secretary of the Treasury shall issue regulations which
include in the definition of an applicable defined
benefit plan any defined benefit plan (or any portion
of such a plan) which has an effect similar to an
applicable defined benefit plan.''.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) Rules relating to reduction in rate of benefit
accrual.--Subsection (b) of section 411 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
paragraph:
``(5) Special rules relating to age.--
``(A) Comparison to similarly situated younger
individual.--
``(i) In general.--A plan shall not be
treated as failing to meet the requirements of
paragraph (1)(H)(i) if a participant's accrued
benefit, as determined as of any date under the
terms of the plan, would be equal to or greater
than that of any similarly situated, younger
individual who is or could be a participant.
``(ii) Similarly situated.--For purposes of
this subparagraph, a participant is similarly
situated to any other individual if such
participant is identical to such other
individual in every respect (including period
of service, compensation, position, date of
hire, work history, and any other respect)
except for age.
``(iii) Disregard of subsidized early
retirement benefits.--In determining the
accrued benefit as of any date for purposes of
this clause, the subsidized portion of any
early retirement benefit or retirement-type
subsidy shall be disregarded.
``(iv) Accrued benefit.--For purposes of
this subparagraph, the accrued benefit may,
under the terms of the plan, be expressed as an
annuity payable at normal retirement age, the
balance of a hypothetical account, or the
current value of the accumulated percentage of
the employee's final average compensation.
``(B) Applicable defined benefit plans.--
``(i) Interest credits.--
``(I) In general.--An applicable
defined benefit plan shall be treated
as failing to meet the requirements of
paragraph (1)(H) unless the terms of
the plan provide that any interest
credit (or an equivalent amount) for
any plan year shall be at a rate which
is not greater than a market rate of
return. A plan shall not be treated as
failing to meet the requirements of
this subclause merely because the plan
provides for a reasonable minimum
guaranteed rate of return or for a rate
of return that is equal to the greater
of a fixed or variable rate of return.
``(II) Preservation of capital.--An
interest credit (or an equivalent
amount) of less than zero shall in no
event result in the account balance or
similar amount being less than the
aggregate amount of contributions
credited to the account.
``(III) Market rate of return.--The
Secretary may provide by regulation for
rules governing the calculation of a
market rate of return for purposes of
subclause (I) and for permissible
methods of crediting interest to the
account (including fixed or variable
interest rates) resulting in effective
rates of return meeting the
requirements of subclause (I).
``(ii) Special rule for plan conversions.--
If, after June 29, 2005, an applicable plan
amendment is adopted, the plan shall be treated
as failing to meet the requirements of
paragraph (1)(H) unless the requirements of
clause (iii) are met with respect to each
individual who was a participant in the plan
immediately before the adoption of the
amendment.
``(iii) Rate of benefit accrual.--Subject
to clause (iv), the requirements of this clause
are met with respect to any participant if the
accrued benefit of the participant under the
terms of the plan as in effect after the
amendment is not less than the sum of--
``(I) the participant's accrued
benefit for years of service before the
effective date of the amendment,
determined under the terms of the plan
as in effect before the amendment, plus
``(II) the participant's accrued
benefit for years of service after the
effective date of the amendment,
determined under the terms of the plan
as in effect after the amendment.
``(iv) Special rules for early retirement
subsidies.--For purposes of clause (iii)(I),
the plan shall credit the accumulation account
or similar amount with the amount of any early
retirement benefit or retirement-type subsidy
for the plan year in which the participant
retires if, as of such time, the participant
has met the age, years of service, and other
requirements under the plan for entitlement to
such benefit or subsidy.
``(v) Applicable plan amendment.--For
purposes of this subparagraph--
``(I) In general.--The term
`applicable plan amendment' means an
amendment to a defined benefit plan
which has the effect of converting the
plan to an applicable defined benefit
plan.
``(II) Special rule for coordinated
benefits.--If the benefits of 2 or more
defined benefit plans established or
maintained by an employer are
coordinated in such a manner as to have
the effect of the adoption of an
amendment described in subclause (I),
the sponsor of the defined benefit plan
or plans providing for such
coordination shall be treated as having
adopted such a plan amendment as of the
date such coordination begins.
``(III) Multiple amendments.--The
Secretary shall issue regulations to
prevent the avoidance of the purposes
of this subparagraph through the use of
2 or more plan amendments rather than a
single amendment.
``(IV) Applicable defined benefit
plan.--For purposes of this
subparagraph, the term `applicable
defined benefit plan' has the meaning
given such term by section 411(a)(13).
``(vi) Termination requirements.--An
applicable defined benefit plan shall not be
treated as meeting the requirements of clause
(i) unless the plan provides that, upon the
termination of the plan--
``(I) if the interest credit rate
(or an equivalent amount) under the
plan is a variable rate, the rate of
interest used to determine accrued
benefits under the plan shall be equal
to the average of the rates of interest
used under the plan during the 5-year
period ending on the termination date,
and
``(II) the interest rate and
mortality table used to determine the
amount of any benefit under the plan
payable in the form of an annuity
payable at normal retirement age shall
be the rate and table specified under
the plan for such purpose as of the
termination date, except that if such
interest rate is a variable rate, the
interest rate shall be determined under
the rules of subclause (I).
``(C) Certain offsets permitted.--A plan shall not
be treated as failing to meet the requirements of
paragraph (1)(H)(i) solely because the plan provides
offsets against benefits under the plan to the extent
such offsets are allowable in applying the requirements
of section 401(a).
``(D) Permitted disparities in plan contributions
or benefits.--A plan shall not be treated as failing to
meet the requirements of paragraph (1)(H) solely
because the plan provides a disparity in contributions
or benefits with respect to which the requirements of
section 401(l) are met.
``(E) Indexing permitted.--
``(i) In general.--A plan shall not be
treated as failing to meet the requirements of
paragraph (1)(H) solely because the plan
provides for indexing of accrued benefits under
the plan.
``(ii) Protection against loss.--Except in
the case of any benefit provided in the form of
a variable annuity, clause (i) shall not apply
with respect to any indexing which results in
an accrued benefit less than the accrued
benefit determined without regard to such
indexing.
``(iii) Indexing.--For purposes of this
subparagraph, the term `indexing' means, in
connection with an accrued benefit, the
periodic adjustment of the accrued benefit by
means of the application of a recognized
investment index or methodology.
``(F) Early retirement benefit or retirement-type
subsidy.--For purposes of this paragraph, the terms
`early retirement benefit' and `retirement-type
subsidy' have the meaning given such terms in
subsection (d)(6)(B)(i).
``(G) Benefit accrued to date.--For purposes of
this paragraph, any reference to the accrued benefit
shall be a reference to such benefit accrued to
date.''.
(2) Determinations of accrued benefit as balance of benefit
account or equivalent amounts.--Subsection (a) of section 411
of such Code is amended by adding at the end the following new
paragraph:
``(13) Special rules for plans computing accrued benefits
by reference to hypothetical account balance or equivalent
amounts.--
``(A) In general.--An applicable defined benefit
plan shall not be treated as failing to meet--
``(i) subject to paragraph (2), the
requirements of subsection (a)(2), or
``(ii) the requirements of subsection (c)
or section 417(e) with respect to contributions
other than employee contributions,
solely because the present value of the accrued benefit
(or any portion thereof) of any participant is, under
the terms of the plan, equal to the amount expressed as
the balance in the hypothetical account described in
paragraph (3) or as an accumulated percentage of the
participant's final average compensation.
``(B) 3-year vesting.--In the case of an applicable
defined benefit plan, such plan shall be treated as
meeting the requirements of subsection (a)(2) only if
an employee who has completed at least 3 years of
service has a nonforfeitable right to 100 percent of
the employee's accrued benefit derived from employer
contributions.
``(C) Applicable defined benefit plan and related
rules.--For purposes of this subsection--
``(i) In general.--The term `applicable
defined benefit plan' means a defined benefit
plan under which the accrued benefit (or any
portion thereof) is calculated as the balance
of a hypothetical account maintained for the
participant or as an accumulated percentage of
the participant's final average compensation.
``(ii) Regulations to include similar
plans.--The Secretary shall issue regulations
which include in the definition of an
applicable defined benefit plan any defined
benefit plan (or any portion of such a plan)
which has an effect similar to an applicable
defined benefit plan.''.
(c) Amendments to Age Discrimination in Employment Act.--Section
4(i) of the Age Discrimination in Employment Act of 1967 (29 U.S.C.
623(i)) is amended by adding at the end the following new paragraph:
``(10) Special rules relating to age.--
``(A) Comparison to similarly situated younger
individual.--
``(i) In general.--A plan shall not be
treated as failing to meet the requirements of
paragraph (1) if a participant's accrued
benefit, as determined as of any date under the
terms of the plan, would be equal to or greater
than that of any similarly situated, younger
individual who is or could be a participant.
``(ii) Similarly situated.--For purposes of
this subparagraph, a participant is similarly
situated to any other individual if such
participant is identical to such other
individual in every respect (including period
of service, compensation, position, date of
hire, work history, and any other respect)
except for age.
``(iii) Disregard of subsidized early
retirement benefits.--In determining the
accrued benefit as of any date for purposes of
this clause, the subsidized portion of any
early retirement benefit or retirement-type
subsidy shall be disregarded.
``(iv) Accrued benefit.--For purposes of
this subparagraph, the accrued benefit may,
under the terms of the plan, be expressed as an
annuity payable at normal retirement age, the
balance of a hypothetical account, or the
current value of the accumulated percentage of
the employee's final average compensation.
``(B) Applicable defined benefit plans.--
``(i) Interest credits.--
``(I) In general.--An applicable
defined benefit plan shall be treated
as failing to meet the requirements of
paragraph (1) unless the terms of the
plan provide that any interest credit
(or an equivalent amount) for any plan
year shall be at a rate which is not
greater than a market rate of return. A
plan shall not be treated as failing to
meet the requirements of this subclause
merely because the plan provides for a
reasonable minimum guaranteed rate of
return or for a rate of return that is
equal to the greater of a fixed or
variable rate of return.
``(II) Preservation of capital.--An
interest credit (or an equivalent
amount) of less than zero shall in no
event result in the account balance or
similar amount being less than the
aggregate amount of contributions
credited to the account.
``(III) Market rate of return.--The
Secretary of the Treasury may provide
by regulation for rules governing the
calculation of a market rate of return
for purposes of subclause (I) and for
permissible methods of crediting
interest to the account (including
fixed or variable interest rates)
resulting in effective rates of return
meeting the requirements of subclause
(I).
``(ii) Special rule for plan conversions.--
If, after June 29, 2005, an applicable plan
amendment is adopted, the plan shall be treated
as failing to meet the requirements of
paragraph (1)(H) unless the requirements of
clause (iii) are met with respect to each
individual who was a participant in the plan
immediately before the adoption of the
amendment.
``(iii) Rate of benefit accrual.--Subject
to clause (iv), the requirements of this clause
are met with respect to any participant if the
accrued benefit of the participant under the
terms of the plan as in effect after the
amendment is not less than the sum of--
``(I) the participant's accrued
benefit for years of service before the
effective date of the amendment,
determined under the terms of the plan
as in effect before the amendment, plus
``(II) the participant's accrued
benefit for years of service after the
effective date of the amendment,
determined under the terms of the plan
as in effect after the amendment.
``(iv) Special rules for early retirement
subsidies.--For purposes of clause (iii)(I),
the plan shall credit the accumulation account
or similar amount with the amount of any early
retirement benefit or retirement-type subsidy
for the plan year in which the participant
retires if, as of such time, the participant
has met the age, years of service, and other
requirements under the plan for entitlement to
such benefit or subsidy.
``(v) Applicable plan amendment.--For
purposes of this subparagraph--
``(I) In general.--The term
`applicable plan amendment' means an
amendment to a defined benefit plan
which has the effect of converting the
plan to an applicable defined benefit
plan.
``(II) Special rule for coordinated
benefits.--If the benefits of 2 or more
defined benefit plans established or
maintained by an employer are
coordinated in such a manner as to have
the effect of the adoption of an
amendment described in subclause (I),
the sponsor of the defined benefit plan
or plans providing for such
coordination shall be treated as having
adopted such a plan amendment as of the
date such coordination begins.
``(III) Multiple amendments.--The
Secretary of the Treasury shall issue
regulations to prevent the avoidance of
the purposes of this subparagraph
through the use of 2 or more plan
amendments rather than a single
amendment.
``(IV) Applicable defined benefit
plan.--For purposes of this
subparagraph, the term `applicable
defined benefit plan' has the meaning
given such term by section 203(f)(3) of
the Employee Retirement Income Security
Act of 1974.
``(vi) Termination requirements.--An
applicable defined benefit plan shall not be
treated as meeting the requirements of clause
(i) unless the plan provides that, upon the
termination of the plan--
``(I) if the interest credit rate
(or an equivalent amount) under the
plan is a variable rate, the rate of
interest used to determine accrued
benefits under the plan shall be equal
to the average of the rates of interest
used under the plan during the 5-year
period ending on the termination date,
and
``(II) the interest rate and
mortality table used to determine the
amount of any benefit under the plan
payable in the form of an annuity
payable at normal retirement age shall
be the rate and table specified under
the plan for such purpose as of the
termination date, except that if such
interest rate is a variable rate, the
interest rate shall be determined under
the rules of subclause (I).
``(C) Certain offsets permitted.--A plan shall not
be treated as failing to meet the requirements of
paragraph (1) solely because the plan provides offsets
against benefits under the plan to the extent such
offsets are allowable in applying the requirements of
section 401(a) of the Internal Revenue Code of 1986.
``(D) Permitted disparities in plan contributions
or benefits.--A plan shall not be treated as failing to
meet the requirements of paragraph (1) solely because
the plan provides a disparity in contributions or
benefits with respect to which the requirements of
section 401(l) of the Internal Revenue Code of 1986 are
met.
``(E) Indexing permitted.--
``(i) In general.--A plan shall not be
treated as failing to meet the requirements of
paragraph (1) solely because the plan provides
for indexing of accrued benefits under the
plan.
``(ii) Protection against loss.--Except in
the case of any benefit provided in the form of
a variable annuity, clause (i) shall not apply
with respect to any indexing which results in
an accrued benefit less than the accrued
benefit determined without regard to such
indexing.
``(iii) Indexing.--For purposes of this
subparagraph, the term `indexing' means, in
connection with an accrued benefit, the
periodic adjustment of the accrued benefit by
means of the application of a recognized
investment index or methodology.
``(F) Early retirement benefit or retirement-type
subsidy.--For purposes of this paragraph, the terms
`early retirement benefit' and `retirement-type
subsidy' have the meaning given such terms in section
203(g)(2)(A) of the Employee Retirement Income Security
Act of 1974.
``(G) Benefit accrued to date.--For purposes of
this paragraph, any reference to the accrued benefit
shall be a reference to such benefit accrued to
date.''.
(d) No Inference.--Nothing in the amendments made by this section
shall be construed to create an inference with respect to--
(1) the treatment of applicable defined benefit plans or
conversions to applicable defined benefit plans under sections
204(b)(1)(H) of the Employee Retirement Income Security Act of
1974, 4(i)(1) of the Age Discrimination in Employment Act of
1967, and 411(b)(1)(H) of the Internal Revenue Code of 1986, as
in effect before such amendments, or
(2) the determination of whether an applicable defined
benefit plan fails to meet the requirements of sections
203(a)(2), 204(c), or 204(g) of the Employee Retirement Income
Security Act of 1974 or sections 411(a)(2), 411(c), or 417(e)
of such Code, as in effect before such amendments, solely
because the present value of the accrued benefit (or any
portion thereof) of any participant is, under the terms of the
plan, equal to the amount expressed as the balance in a
hypothetical account or as an accumulated percentage of the
participant's final average compensation.
For purposes of this subsection, the term ``applicable defined benefit
plan'' has the meaning given such term by section 203(f)(3) of the
Employee Retirement Income Security Act of 1974 and section
411(a)(13)(C) of such Code, as in effect after such amendments.
(e) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to periods beginning on or after June 29, 2005.
(2) Present value of accrued benefit.--The amendments made
by subsections (a)(2) and (b)(2) shall apply to distributions
made after the date of the enactment of this Act.
(3) Vesting and interest credit requirements.--In the case
of a plan in existence on June 29, 2005, the requirements of
clause (i) of section 411(b)(5)(B) of the Internal Revenue Code
of 1986, clause (i) of section 204(b)(5)(B) of the Employee
Retirement Income Security Act of 1974, and clause (i) of
section 4(i)(10)(B) of the Age Discrimination in Employment Act
of 1967 (as added by this Act) and the requirements of
203(f)(2) of the Employee Retirement Income Security Act of
1974 and section 411(a)(13)(B) of the Internal Revenue Code of
1986 (as so added) shall, for purposes of applying the
amendments made by subsections (a) and (b), apply to years
beginning after December 31, 2007, unless the plan sponsor
elects the application of such requirements for any period
after June 29, 2005, and before the first year beginning after
December 31, 2007.
(4) Special rule for collectively bargained plans.--In the
case of a plan maintained pursuant to 1 or more collective
bargaining agreements between employee representatives and 1 or
more employers ratified on or before the date of the enactment
of this Act, the requirements described in paragraph (3) shall,
for purposes of applying the amendments made by subsections (a)
and (b), not apply to plan years beginning before--
(A) the earlier of--
(i) the date on which the last of such
collective bargaining agreements terminates
(determined without regard to any extension
thereof on or after such date of enactment), or
(ii) January 1, 2008, or
(B) January 1, 2010.
(5) Conversions.--The requirements of clause (ii) of
section 411(b)(5)(B) of the Internal Revenue Code of 1986,
clause (ii) of section 204(b)(5)(B) of the Employee Retirement
Income Security Act of 1974, and clause (ii) of section
4(i)(10)(B) of the Age Discrimination in Employment Act of 1967
(as added by this Act), shall apply to plan amendments adopted
after, and taking effect after, June 29, 2005, except that the
plan sponsor may elect to have such amendments apply to plan
amendments adopted before, and taking effect after, such date.
SEC. 702. REGULATIONS RELATING TO MERGERS AND ACQUISITIONS.
The Secretary of the Treasury or his delegate shall, not later than
12 months after the date of the enactment of this Act, prescribe
regulations for the application of the amendments made by, and the
provisions of, this title in cases where the conversion of a plan to an
applicable defined benefit plan is made with respect to a group of
employees who become employees by reason of a merger, acquisition, or
similar transaction.
TITLE VIII--PENSION RELATED REVENUE PROVISIONS
Subtitle A--Deduction Limitations
SEC. 801. INCREASE IN DEDUCTION LIMIT FOR SINGLE-EMPLOYER PLANS.
(a) In General.--Section 404 of the Internal Revenue Code of 1986
(relating to deduction for contributions of an employer to an
employees' trust or annuity plan and compensation under a deferred
payment plan) is amended--
(1) in subsection (a)(1)(A), by inserting ``in the case of
a defined benefit plan other than a multiemployer plan, in an
amount determined under subsection (o), and in the case of any
other plan'' after ``section 501(a),'', and
(2) by inserting at the end the following new subsection:
``(o) Deduction Limit for Single-Employer Plans.--For purposes of
subsection (a)(1)(A)--
``(1) In general.--In the case of a defined benefit plan to
which subsection (a)(1)(A) applies (other than a multiemployer
plan), the amount determined under this subsection for any
taxable year shall be equal to the greater of--
``(A) the sum of the amounts determined under
paragraph (2) with respect to each plan year ending
with or within the taxable year, or
``(B) the sum of the minimum required contributions
under section 430 for such plan years.
``(2) Determination of amount.--
``(A) In general.--The amount determined under this
paragraph for any plan year shall be equal to the
excess (if any) of--
``(i) the sum of--
``(I) the funding target for the
plan year,
``(II) the target normal cost for
the plan year, and
``(III) the cushion amount for the
plan year, over
``(ii) the value (determined under section
430(g)(2)) of the assets of the plan which are
held by the plan as of the valuation date for
the plan year.
``(B) Special rule for certain employers.--If
section 430(i) does not apply to a plan for a plan
year, the amount determined under subparagraph (A)(i)
for the plan year shall in no event be less than the
sum of--
``(i) the funding target for the plan year
(determined as if section 430(i) applied to the
plan), plus
``(ii) the target normal cost for the plan
year (as so determined).
``(3) Cushion amount.--For purposes of paragraph
(2)(A)(i)(III)--
``(A) In general.--The cushion amount for any plan
year is the sum of--
``(i) 50 percent of the funding target for
the plan year, and
``(ii) the amount by which the funding
target for the plan year would increase if the
plan were to take into account--
``(I) increases in compensation
which are expected to occur in
succeeding plan years, or
``(II) if the plan does not base
benefits for service to date on
compensation, increases in benefits
which are expected to occur in
succeeding plan years (determined on
the basis of the average annual
increase in benefits over the 6
immediately preceding plan years).
``(B) Limitations.--
``(i) In general.--In making the
computation under subparagraph (A)(ii), the
plan's actuary shall assume that the
limitations under subsection (l) and section
415(b) shall apply.
``(ii) Expected increases.--In the case of
a plan year during which a plan is covered
under section 4021 of the Employee Retirement
Income Security Act of 1974, the plan's actuary
may, notwithstanding subsection (l), take into
account increases in the limitations which are
expected to occur in succeeding plan years.
``(4) Special rules for plans with 100 or fewer
participants.--
``(A) In general.--For purposes of determining the
amount under paragraph (3) for any plan year, in the
case of a plan which has 100 or fewer participants for
the plan year, the liability of the plan attributable
to benefit increases for highly compensated employees
(as defined in section 414(q)) resulting from a plan
amendment which is made or becomes effective, whichever
is later, within the last 2 years shall not be taken
into account in determining the target liability.
``(B) Rule for determining number of
participants.--For purposes of determining the number
of plan participants, all defined benefit plans
maintained by the same employer (or any member of such
employer's controlled group (within the meaning of
section 412(f)(4))) shall be treated as one plan, but
only participants of such member or employer shall be
taken into account.
``(5) Special rule for terminating plans.--In the case of a
plan which, subject to section 4041 of the Employee Retirement
Income Security Act of 1974, terminates during the plan year,
the amount determined under paragraph (2) shall in no event be
less than the amount required to make the plan sufficient for
benefit liabilities (within the meaning of section 4041(d) of
such Act).
``(6) Actuarial assumptions.--Any computation under this
subsection for any plan year shall use the same actuarial
assumptions which are used for the plan year under section 430.
``(7) Definitions.--Any term used in this subsection which
is also used in section 430 shall have the same meaning given
such term by section 430.''.
(b) Exception From Limitation on Deduction Where Combination of
Defined Contribution and Defined Benefit Plans.--Section 404(a)(7)(C)
of such Code, as amended by this Act, is amended by adding at the end
the following new clause:
``(iv) Guaranteed plans.--In applying this
paragraph, any single-employer plan covered
under section 4021 of the Employee Retirement
Income Security Act of 1974 shall not be taken
into account.''.
(c) Technical and Conforming Amendments.--
(1) The last sentence of section 404(a)(1)(A) of such Code
is amended by striking ``section 412'' each place it appears
and inserting ``section 431''.
(2) Section 404(a)(1)(B) of such Code is amended--
(A) by striking ``In the case of a plan'' and
inserting ``In the case of a multiemployer plan'',
(B) by striking ``section 412(c)(7)'' each place it
appears and inserting ``section 431(c)(6)'',
(C) by striking ``section 412(c)(7)(B)'' and
inserting ``section 431(c)(6)(A)(ii)'',
(D) by striking ``section 412(c)(7)(A)'' and
inserting ``section 431(c)(6)(A)(i)'', and
(E) by striking ``section 412'' and inserting
``section 431''.
(3) Section 404(a)(7) of such Code, as amended by this Act,
is amended--
(A) by adding at the end of subparagraph (A) the
following new sentence: ``In the case of a defined
benefit plan which is a single employer plan, the
amount necessary to satisfy the minimum funding
standard provided by section 412 shall not be less than
the plan's funding shortfall determined under section
430.'', and
(B) by striking subparagraph (D) and inserting:
``(D) Insurance contract plans.--For purposes of
this paragraph, a plan described in section 412(e)(3)
shall be treated as a defined benefit plan.''.
(4) Section 404A(g)(3)(A) of such Code is amended by
striking ``paragraphs (3) and (7) of section 412(c)'' and
inserting ``paragraphs (3) and (6) of section 431(c)''.
(d) Special Rule for 2006 and 2007.--
(1) In general.--Clause (i) of section 404(a)(1)(D) of the
Internal Revenue Code of 1986 (relating to special rule in case
of certain plans) is amended by striking ``section 412(l)'' and
inserting ``section 412(l)(8)(A), except that section
412(l)(8)(A) shall be applied for purposes of this clause by
substituting `150 percent (140 percent in the case of a
multiemployer plan) of current liability' for `the current
liability' in clause (i).''
(2) Conforming amendment.--Section 404(a)(1) of the
Internal Revenue Code of 1986 is amended by striking
subparagraph (F).
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to years beginning
after December 31, 2007.
(2) Special rules.--The amendments made by subsection (d)
shall apply to years beginning after December 31, 2005.
SEC. 802. DEDUCTION LIMITS FOR MULTIEMPLOYER PLANS.
(a) Increase in Deduction.--Section 404(a)(1)(D) of the Internal
Revenue Code of 1986, as amended by this Act, is amended to read as
follows:
``(D) Amount determined on basis of unfunded
current liability.--In the case of a defined benefit
plan which is a multiemployer plan, except as provided
in regulations, the maximum amount deductible under the
limitations of this paragraph shall not be less than
the excess (if any) of--
``(i) 140 percent of the current liability
of the plan determined under section
431(c)(6)(C), over
``(ii) the value of the plan's assets
determined under section 431(c)(2).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to years beginning after December 31, 2007.
SEC. 803. UPDATING DEDUCTION RULES FOR COMBINATION OF PLANS.
(a) In General.--Subparagraph (C) of section 404(a)(7) of the
Internal Revenue Code of 1986 (relating to limitation on deductions
where combination of defined contribution plan and defined benefit
plan) is amended by adding after clause (ii) the following new clause:
``(iii) Limitation.--In the case of
employer contributions to 1 or more defined
contribution plans, this paragraph shall only
apply to the extent that such contributions
exceed 6 percent of the compensation otherwise
paid or accrued during the taxable year to the
beneficiaries under such plans. For purposes of
this clause, amounts carried over from
preceding taxable years under subparagraph (B)
shall be treated as employer contributions to 1
or more defined contributions to the extent
attributable to employer contributions to such
plans in such preceding taxable years.''.
(b) Exception From Limitation on Deduction Where Combination of
Defined Contribution and Defined Benefit Plans.--Section 404(a)(7)(C)
of such Code, as amended by this Act, is amended by adding at the end
the following new clause:
``(v) Multiemployer plans.--In applying
this paragraph, any multiemployer plan shall
not be taken into account.''.
(c) Conforming Amendment.--Subparagraph (A) of section 4972(c)(6)
of such Code (relating to nondeductible contributions) is amended to
read as follows:
``(A) so much of the contributions to 1 or more
defined contribution plans which are not deductible
when contributed solely because of section 404(a)(7) as
does not exceed the amount of contributions described
in section 401(m)(4)(A), or''.
(d) Effective Date.--The amendments made by this section shall
apply to contributions for taxable years beginning after December 31,
2005.
Subtitle B--Certain Pension Provisions Made Permanent
SEC. 811. PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS OF
ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001
MADE PERMANENT.
Title IX of the Economic Growth and Tax Relief Reconciliation Act
of 2001 shall not apply to the provisions of, and amendments made by,
subtitles A through F of title VI of such Act (relating to pension and
individual retirement arrangement provisions).
SEC. 812. SAVER'S CREDIT.
Section 25B of the Internal Revenue Code of 1986 (relating to
elective deferrals and IRA contributions by certain individuals) is
amended by striking subsection (h).
Subtitle C--Improvements in Portability, Distribution, and Contribution
Rules
SEC. 821. CLARIFICATIONS REGARDING PURCHASE OF PERMISSIVE SERVICE
CREDIT.
(a) In General.--Section 415(n) of the Internal Revenue Code of
1986 (relating to special rules for the purchase of permissive service
credit) is amended--
(1) by striking ``an employee'' in paragraph (1) and
inserting ``a participant'', and
(2) by adding at the end of paragraph (3)(A) the following
new flush sentence:
``Such term may include service credit for periods for
which there is no performance of service, and,
notwithstanding clause (ii), may include service
credited in order to provide an increased benefit for
service credit which a participant is receiving under
the plan.''.
(b) Special Rules for Trustee-to-Trustee Transfers.--Section
415(n)(3) of such Code is amended by adding at the end the following
new subparagraph:
``(D) Special rules for trustee-to-trustee
transfers.--In the case of a trustee-to-trustee
transfer to which section 403(b)(13)(A) or
457(e)(17)(A) applies (without regard to whether the
transfer is made between plans maintained by the same
employer)--
``(i) the limitations of subparagraph (B)
shall not apply in determining whether the
transfer is for the purchase of permissive
service credit, and
``(ii) the distribution rules applicable
under this title to the defined benefit
governmental plan to which any amounts are so
transferred shall apply to such amounts and any
benefits attributable to such amounts.''.
(c) Nonqualified Service.--Section 415(n)(3) of such Code is
amended--
(1) by striking ``permissive service credit attributable to
nonqualified service'' each place it appears in subparagraph
(B) and inserting ``nonqualified service credit'',
(2) by striking so much of subparagraph (C) as precedes
clause (i) and inserting:
``(C) Nonqualified service credit.--For purposes of
subparagraph (B), the term `nonqualified service
credit' means permissive service credit other than that
allowed with respect to--'', and
(3) by striking ``elementary or secondary education
(through grade 12), as determined under State law'' in
subparagraph (C)(ii) and inserting ``elementary or secondary
education (through grade 12), or a comparable level of
education, as determined under the applicable law of the
jurisdiction in which the service was performed''.
(d) Effective Dates.--
(1) In general.--The amendments made by subsections (a) and
(c) shall take effect as if included in the amendments made by
section 1526 of the Taxpayer Relief Act of 1997.
(2) Subsection (b).--The amendments made by subsection (b)
shall take effect as if included in the amendments made by
section 647 of the Economic Growth and Tax Relief
Reconciliation Act of 2001.
SEC. 822. ALLOW ROLLOVER OF AFTER-TAX AMOUNTS IN ANNUITY CONTRACTS.
(a) In General.--Subparagraph (A) of section 402(c)(2) (relating to
the maximum amount which may be rolled over) is amended--
(1) by striking ``which is part of a plan which is a
defined contribution plan and which agrees to separately
account'' and inserting ``or to an annuity contract described
in section 403(b) and such trust or contract provides for
separate accounting''; and
(2) by inserting ``(and earnings thereon)'' after ``so
transferred''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 2006.
SEC. 823. CLARIFICATION OF MINIMUM DISTRIBUTION RULES FOR GOVERNMENTAL
PLANS.
The Secretary of the Treasury shall issue regulations under which a
governmental plan (as defined in section 414(d) of the Internal Revenue
Code of 1986) shall, for all years to which section 401(a)(9) of such
Code applies to such plan, be treated as having complied with such
section 401(a)(9) if such plan complies with a reasonable good faith
interpretation of such section 401(a)(9).
SEC. 824. ALLOW DIRECT ROLLOVERS FROM RETIREMENT PLANS TO ROTH IRAS.
(a) In General.--Subsection (e) of section 408A of the Internal
Revenue Code of 1986 (defining qualified rollover contribution) is
amended to read as follows:
``(e) Qualified Rollover Contribution.--For purposes of this
section, the term `qualified rollover contribution' means a rollover
contribution--
``(1) to a Roth IRA from another such account,
``(2) from an eligible retirement plan, but only if--
``(A) in the case of an individual retirement plan,
such rollover contribution meets the requirements of
section 408(d)(3), and
``(B) in the case of any eligible retirement plan
(as defined in section 402(c)(8)(B) other than clauses
(i) and (ii) thereof), such rollover contribution meets
the requirements of section 402(c), 403(b)(8), or
457(e)(16), as applicable.
For purposes of section 408(d)(3)(B), there shall be disregarded any
qualified rollover contribution from an individual retirement plan
(other than a Roth IRA) to a Roth IRA.''.
(b) Conforming Amendments.--
(1) Section 408A(c)(3)(B) of such Code, as in effect before
the Tax Increase Prevention and Reconciliation Act of 2005, is
amended--
(A) in the text by striking ``individual retirement
plan'' and inserting ``an eligible retirement plan (as
defined by section 402(c)(8)(B))'', and
(B) in the heading by striking ``IRA'' the first
place it appears and inserting ``eligible retirement
plan''.
(2) Section 408A(d)(3) of such Code is amended--
(A) in subparagraph (A), by striking ``section
408(d)(3)'' inserting ``sections 402(c), 403(b)(8),
408(d)(3), and 457(e)(16)'',
(B) in subparagraph (B), by striking ``individual
retirement plan'' and inserting ``eligible retirement
plan (as defined by section 402(c)(8)(B))'',
(C) in subparagraph (D), by inserting ``or 6047''
after ``408(i)'',
(D) in subparagraph (D), by striking ``or both''
and inserting ``persons subject to section 6047(d)(1),
or all of the foregoing persons'', and
(E) in the heading, by striking ``IRA'' the first
place it appears and inserting ``eligible retirement
plan''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions after December 31, 2007.
SEC. 825. ELIGIBILITY FOR PARTICIPATION IN RETIREMENT PLANS.
An individual shall not be precluded from participating in an
eligible deferred compensation plan by reason of having received a
distribution under section 457(e)(9) of the Internal Revenue Code of
1986, as in effect prior to the enactment of the Small Business Job
Protection Act of 1996.
SEC. 826. MODIFICATIONS OF RULES GOVERNING HARDSHIPS AND UNFORSEEN
FINANCIAL EMERGENCIES.
Within 180 days after the date of the enactment of this Act, the
Secretary of the Treasury shall modify the rules for determining
whether a participant has had a hardship for purposes of section
401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986 to provide
that if an event (including the occurrence of a medical expense) would
constitute a hardship under the plan if it occurred with respect to the
participant's spouse or dependent (as defined in section 152 of such
Code), such event shall, to the extent permitted under a plan,
constitute a hardship if it occurs with respect to a person who is a
beneficiary under the plan with respect to the participant. The
Secretary of the Treasury shall issue similar rules for purposes of
determining whether a participant has had--
(1) a hardship for purposes of section 403(b)(11)(B) of
such Code; or
(2) an unforeseen financial emergency for purposes of
sections 409A(a)(2)(A)(vi), 409A(a)(2)(B)(ii), and
457(d)(1)(A)(iii) of such Code.
SEC. 827. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR
INDIVIDUALS CALLED TO ACTIVE DUTY FOR AT LEAST 179 DAYS.
(a) In General.--Paragraph (2) of section 72(t) of the Internal
Revenue Code of 1986 (relating to 10-percent additional tax on early
distributions from qualified retirement plans) is amended by adding at
the end the following new subparagraph:
``(G) Distributions from retirement plans to
individuals called to active duty.--
``(i) In general.--Any qualified reservist
distribution.
``(ii) Amount distributed may be repaid.--
Any individual who receives a qualified
reservist distribution may, at any time during
the 2-year period beginning on the day after
the end of the active duty period, make one or
more contributions to an individual retirement
plan of such individual in an aggregate amount
not to exceed the amount of such distribution.
The dollar limitations otherwise applicable to
contributions to individual retirement plans
shall not apply to any contribution made
pursuant to the preceding sentence. No
deduction shall be allowed for any contribution
pursuant to this clause.
``(iii) Qualified reservist distribution.--
For purposes of this subparagraph, the term
`qualified reservist distribution' means any
distribution to an individual if--
``(I) such distribution is from an
individual retirement plan, or from
amounts attributable to employer
contributions made pursuant to elective
deferrals described in subparagraph (A)
or (C) of section 402(g)(3) or section
501(c)(18)(D)(iii),
``(II) such individual was (by
reason of being a member of a reserve
component (as defined in section 101 of
title 37, United States Code)) ordered
or called to active duty for a period
in excess of 179 days or for an
indefinite period, and
``(III) such distribution is made
during the period beginning on the date
of such order or call and ending at the
close of the active duty period.
``(iv) Application of subparagraph.--This
subparagraph applies to individuals ordered or
called to active duty after September 11, 2001,
and before December 31, 2007. In no event shall
the 2-year period referred to in clause (ii)
end before the date which is 2 years after the
date of the enactment of this subparagraph.''.
(b) Conforming Amendments.--
(1) Section 401(k)(2)(B)(i) of such Code is amended by
striking ``or'' at the end of subclause (III), by striking
``and'' at the end of subclause (IV) and inserting ``or'', and
by inserting after subclause (IV) the following new subclause:
``(V) in the case of a qualified
reservist distribution (as defined in
section 72(t)(2)(G)(iii)), the date on
which a period referred to in subclause
(III) of such section begins, and''.
(2) Section 403(b)(7)(A)(ii) of such Code is amended by
inserting ``(unless such amount is a distribution to which
section 72(t)(2)(G) applies)'' after ``distributee''.
(3) Section 403(b)(11) of such Code is amended by striking
``or'' at the end of subparagraph (A), by striking the period
at the end of subparagraph (B) and inserting ``, or'', and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) for distributions to which section
72(t)(2)(G) applies.''.
(c) Effective Date; Waiver of Limitations.--
(1) Effective date.--The amendment made by this section
shall apply to distributions after September 11, 2001.
(2) Waiver of limitations.--If refund or credit of any
overpayment of tax resulting from the amendments made by this
section is prevented at any time before the close of the 1-year
period beginning on the date of the enactment of this Act by
the operation of any law or rule of law (including res
judicata), such refund or credit may nevertheless be made or
allowed if claim therefor is filed before the close of such
period.
SEC. 828. WAIVER OF 10 PERCENT EARLY WITHDRAWAL PENALTY TAX ON CERTAIN
DISTRIBUTIONS OF PENSION PLANS FOR PUBLIC SAFETY
EMPLOYEES.
(a) In General.--Section 72(t) of the Internal Revenue Code of 1986
(relating to subsection not to apply to certain distributions) is
amended by adding at the end the following new paragraph:
``(10) Distributions to qualified public safety employees
in governmental plans.--
``(A) In general.--In the case of a distribution to
a qualified public safety employee from a governmental
plan (within the meaning of section 414(d)) which is a
defined benefit plan, paragraph (2)(A)(v) shall be
applied by substituting `age 50' for `age 55'.
``(B) Qualified public safety employee.--For
purposes of this paragraph, the term `qualified public
safety employee' means any employee of a State or
political subdivision of a State who provides police
protection, firefighting services, or emergency medical
services for any area within the jurisdiction of such
State or political subdivision.''
(b) Effective Date.--The amendment made by this section shall apply
to distributions after the date of the enactment of this Act.
SEC. 829. ALLOW ROLLOVERS BY NONSPOUSE BENEFICIARIES OF CERTAIN
RETIREMENT PLAN DISTRIBUTIONS.
(a) In General.--
(1) Qualified plans.--Section 402(c) of the Internal
Revenue Code of 1986 (relating to rollovers from exempt trusts)
is amended by adding at the end the following new paragraph:
``(11) Distributions to inherited individual retirement
plan of nonspouse beneficiary.--
``(A) In general.--If, with respect to any portion
of a distribution from an eligible retirement plan of a
deceased employee, a direct trustee-to-trustee transfer
is made to an individual retirement plan described in
clause (i) or (ii) of paragraph (8)(B) established for
the purposes of receiving the distribution on behalf of
an individual who is a designated beneficiary (as
defined by section 401(a)(9)(E)) of the employee and
who is not the surviving spouse of the employee--
``(i) the transfer shall be treated as an
eligible rollover distribution for purposes of
this subsection,
``(ii) the individual retirement plan shall
be treated as an inherited individual
retirement account or individual retirement
annuity (within the meaning of section
408(d)(3)(C)) for purposes of this title, and
``(iii) section 401(a)(9)(B) (other than
clause (iv) thereof) shall apply to such plan.
``(B) Certain trusts treated as beneficiaries.--For
purposes of this paragraph, to the extent provided in
rules prescribed by the Secretary, a trust maintained
for the benefit of one or more designated beneficiaries
shall be treated in the same manner as a trust
designated beneficiary.''.
(2) Section 403(a) plans.--Subparagraph (B) of section
403(a)(4) of such Code (relating to rollover amounts) is
amended by inserting ``and (11)'' after ``(7)''.
(3) Section 403(b) plans.--Subparagraph (B) of section
403(b)(8) of such Code (relating to rollover amounts) is
amended by striking ``and (9)'' and inserting ``, (9), and
(11)''.
(4) Section 457 plans.--Subparagraph (B) of section
457(e)(16) of such Code (relating to rollover amounts) is
amended by striking ``and (9)'' and inserting ``, (9), and
(11)''.
(b) Effective Date.--The amendments made by this section shall
apply to distributions after December 31, 2006.
SEC. 830. DIRECT PAYMENT OF TAX REFUNDS TO INDIVIDUAL RETIREMENT PLANS.
(a) In General.--The Secretary of the Treasury (or the Secretary's
delegate) shall make available a form (or modify existing forms) for
use by individuals to direct that a portion of any refund of
overpayment of tax imposed by chapter 1 of the Internal Revenue Code of
1986 be paid directly to an individual retirement plan (as defined in
section 7701(a)(37) of such Code) of such individual.
(b) Effective Date.--The form required by subsection (a) shall be
made available for taxable years beginning after December 31, 2006.
SEC. 831. ALLOWANCE OF ADDITIONAL IRA PAYMENTS IN CERTAIN BANKRUPTCY
CASES.
(a) Allowance of Contributions.--Section 219(b)(5) of the Internal
Revenue Code of 1986 (relating to deductible amount) is amended by
redesignating subparagraph (C) as subparagraph (D) and by inserting
after subparagraph (B) the following new subparagraph:
``(C) Catchup contributions for certain
individuals.--
``(i) In general.--In the case of an
applicable individual who elects to make a
qualified retirement contribution in addition
to the deductible amount determined under
subparagraph (A)--
``(I) the deductible amount for any
taxable year shall be increased by an
amount equal to 3 times the applicable
amount determined under subparagraph
(B) for such taxable year, and
``(II) subparagraph (B) shall not
apply.
``(ii) Applicable individual.--For purposes
of this subparagraph, the term `applicable
individual' means, with respect to any taxable
year, any individual who was a qualified
participant in a qualified cash or deferred
arrangement (as defined in section 401(k)) of
an employer described in clause (iii) under
which the employer matched at least 50 percent
of the employee's contributions to such
arrangement with stock of such employer.
``(iii) Employer described.--An employer is
described in this clause if, in any taxable
year preceding the taxable year described in
clause (ii)--
``(I) such employer (or any
controlling corporation of such
employer) was a debtor in a case under
title 11 of the United States Code, or
similar Federal or State law, and
``(II) such employer (or any other
person) was subject to an indictment or
conviction resulting from business
transactions related to such case.
``(iv) Qualified participant.--For purposes
of clause (ii), the term `qualified
participant' means any applicable individual
who was a participant in the cash or deferred
arrangement described in such clause on the
date that is 6 months before the filing of the
case described in clause (iii).
``(v) Termination.--This subparagraph shall
not apply to taxable years beginning after
December 31, 2009.''
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006.
SEC. 832. DETERMINATION OF AVERAGE COMPENSATION FOR SECTION 415 LIMITS.
(a) In General.--Section 415(b)(3) of the Internal Revenue Code of
1986 is amended by striking ``both was an active participant in the
plan and''.
(b) Effective Date.--The amendment made by this section shall apply
to years beginning after December 31, 2005.
SEC. 833. INFLATION INDEXING OF GROSS INCOME LIMITATIONS ON CERTAIN
RETIREMENT SAVINGS INCENTIVES.
(a) Saver's Credit.--Subsection (b) of section 25B of the Internal
Revenue Code of 1986 is amended to read as follows:
``(b) Applicable Percentage.--For purposes of this section--
``(1) Joint returns.--In the case of a joint return, the
applicable percentage is--
``(A) if the adjusted gross income of the taxpayer
is not over $30,000, 50 percent,
``(B) if the adjusted gross income of the taxpayer
is over $30,000 but not over $32,500, 20 percent,
``(C) if the adjusted gross income of the taxpayer
is over $32,500 but not over $50,000, 10 percent, and
``(D) if the adjusted gross income of the taxpayer
is over $50,000, zero percent.
``(2) Other returns.--In the case of--
``(A) a head of household, the applicable
percentage shall be determined under paragraph (1)
except that such paragraph shall be applied by
substituting for each dollar amount therein (as
adjusted under paragraph (3)) a dollar amount equal to
75 percent of such dollar amount, and
``(B) any taxpayer not described in paragraph (1)
or subparagraph (A), the applicable percentage shall be
determined under paragraph (1) except that such
paragraph shall be applied by substituting for each
dollar amount therein (as adjusted under paragraph (3))
a dollar amount equal to 50 percent of such dollar
amount.
``(3) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2006, each of the
dollar amount in paragraph (1) shall be increased by an amount
equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 2005' for `calendar year 1992' in
subparagraph (B) thereof.
Any increase determined under the preceding sentence shall be
rounded to the nearest multiple of $500.''.
(b) Deduction of Retirement Contributions for Active
Participants.--Section 219(g) of such Code is amended by adding at the
end the following new paragraph:
``(8) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2006, the dollar amount
in the last row of the table contained in paragraph (3)(B)(i),
the dollar amount in the last row of the table contained in
paragraph (3)(B)(ii), and the dollar amount contained in
paragraph (7)(A), shall each be increased by an amount equal
to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 2005' for `calendar year 1992' in
subparagraph (B) thereof.
Any increase determined under the preceding sentence shall be
rounded to the nearest multiple of $1,000.''.
(c) Contribution Limitation for Roth IRAs.--Section 408A(c)(3) of
such Code is amended by adding at the end the following new
subparagraph:
``(C) Inflation adjustment.--In the case of any
taxable year beginning in a calendar year after 2006,
the dollar amounts in subclauses (I) and (II) of
subparagraph (C)(ii) shall each be increased by an
amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
determined by substituting `calendar year 2005'
for `calendar year 1992' in subparagraph (B)
thereof.
Any increase determined under the preceding sentence
shall be rounded to the nearest multiple of $1,000.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after 2006.
Subtitle D--Health and Medical Benefits
SEC. 841. USE OF EXCESS PENSION ASSETS FOR FUTURE RETIREE HEALTH
BENEFITS AND COLLECTIVELY BARGAINED RETIREE HEALTH
BENEFITS.
(a) In General.--Section 420 of the Internal Revenue Code of 1986
(relating to transfers of excess pension assets to retiree health
accounts) is amended by adding at the end the following new subsection:
``(f) Qualified Transfers to Cover Future Retiree Health Costs and
Collectively Bargained Retiree Health Benefits.--
``(1) In general.--An employer maintaining a defined
benefit plan (other than a multiemployer plan) may, in lieu of
a qualified transfer, elect for any taxable year to have the
plan make--
``(A) a qualified future transfer, or
``(B) a collectively bargained transfer.
Except as provided in this subsection, a qualified future
transfer and a collectively bargained transfer shall be treated
for purposes of this title and the Employee Retirement Income
Security Act of 1974 as if it were a qualified transfer.
``(2) Qualified future and collectively bargained
transfers.--For purposes of this subsection--
``(A) In general.--The terms `qualified future
transfer' and `collectively bargained transfer' mean a
transfer which meets all of the requirements for a
qualified transfer, except that--
``(i) the determination of excess pension
assets shall be made under subparagraph (B),
``(ii) the limitation on the amount
transferred shall be determined under
subparagraph (C),
``(iii) the minimum cost requirements of
subsection (c)(3) shall be modified as provided
under subparagraph (D), and
``(iv) in the case of a collectively
bargained transfer, the requirements of
subparagraph (E) shall be met with respect to
the transfer.
``(B) Excess pension assets.--
``(i) In general.--In determining excess
pension assets for purposes of this subsection,
subsection (e)(2) shall be applied by
substituting `120 percent' for `125 percent'.
``(ii) Requirement to maintain funded
status.--If, as of any valuation date of any
plan year in the transfer period, the amount
determined under subsection (e)(2)(B) (after
application of clause (i)) exceeds the amount
determined under subsection (e)(2)(A), either--
``(I) the employer maintaining the
plan shall make contributions to the
plan in an amount not less than the
amount required to reduce such excess
to zero as of such date, or
``(II) there is transferred from
the health benefits account to the plan
an amount not less than the amount
required to reduce such excess to zero
as of such date.
``(C) Limitation on amount transferred.--
Notwithstanding subsection (b)(3), the amount of the
excess pension assets which may be transferred--
``(i) in the case of a qualified future
transfer shall be equal to the sum of--
``(I) if the transfer period
includes the taxable year of the
transfer, the amount determined under
subsection (b)(3) for such taxable
year, plus
``(II) in the case of all other
taxable years in the transfer period,
the sum of the qualified current
retiree health liabilities which the
plan reasonably estimates, in
accordance with guidance issued by the
Secretary, will be incurred for each of
such years, and
``(ii) in the case of a collectively
bargained transfer, shall not exceed the amount
which is reasonably estimated, in accordance
with the provisions of the collective
bargaining agreement and generally accepted
accounting principles, to be the amount the
employer maintaining the plan will pay (whether
directly or through reimbursement) out of such
account during the collectively bargained cost
maintenance period for collectively bargained
retiree health liabilities.
``(D) Minimum cost requirements.--
``(i) In general.--The requirements of
subsection (c)(3) shall be treated as met if--
``(I) in the case of a qualified
future transfer, each group health plan
or arrangement under which applicable
health benefits are provided provides
applicable health benefits during the
period beginning with the first year of
the transfer period and ending with the
last day of the 4th year following the
transfer period such that the annual
average amount of such the applicable
employer cost during such period is not
less than the applicable employer cost
determined under subsection (c)(3)(A)
with respect to the transfer, and
``(II) in the case of a
collectively bargained transfer, each
collectively bargained group health
plan under which collectively bargained
health benefits are provided provides
that the collectively bargained
employer cost for each taxable year
during the collectively bargained cost
maintenance period shall not be less
than the amount specified by the
collective bargaining agreement.
``(ii) Election to maintain benefits for
future transfers.--An employer may elect, in
lieu of the requirements of clause (i)(I), to
meet the requirements of subsection (c)(3) by
meeting the requirements of such subsection (as
in effect before the amendments made by section
535 of the Tax Relief Extension Act of 1999)
for each of the years described in the period
under clause (i)(I).
``(iii) Collectively bargained employer
cost.--For purposes of this subparagraph, the
term `collectively bargained employer cost'
means the average cost per covered individual
of providing collectively bargained retiree
health benefits as determined in accordance
with the applicable collective bargaining
agreement. Such agreement may provide for an
appropriate reduction in the collectively
bargained employer cost to take into account
any portion of the collectively bargained
retiree health benefits that is provided or
financed by a government program or other
source.
``(E) Special rules for collectively bargained
transfers.--
``(i) In general.--A collectively bargained
transfer shall only include a transfer which--
``(I) is made in accordance with a
collective bargaining agreement,
``(II) before the transfer, the
employer designates, in a written
notice delivered to each employee
organization that is a party to the
collective bargaining agreement, as a
collectively bargained transfer in
accordance with this section, and
``(III) involves a plan maintained
by an employer which, in its taxable
year ending in 2005, provided health
benefits or coverage to retirees and
their spouses and dependents under all
of the benefit plans maintained by the
employer, but only if the aggregate
cost (including administrative
expenses) of such benefits or coverage
which would have been allowable as a
deduction to the employer (if such
benefits or coverage had been provided
directly by the employer and the
employer used the cash receipts and
disbursements method of accounting) is
at least 5 percent of the gross
receipts of the employer (determined in
accordance with the last sentence of
subsection (c)(2)(E)(ii)(II)) for such
taxable year, or a plan maintained by a
successor to such employer.
``(ii) Use of assets.--Any assets
transferred to a health benefits account in a
collectively bargained transfer (and any income
allocable thereto) shall be used only to pay
collectively bargained retiree health
liabilities (other than liabilities of key
employees not taken into account under
paragraph (6)(B)(iii)) for the taxable year of
the transfer or for any subsequent taxable year
during the collectively bargained cost
maintenance period (whether directly or through
reimbursement).
``(3) Coordination with other transfers.--In applying
subsection (b)(3) to any subsequent transfer during a taxable
year in a transfer period or collectively bargained cost
maintenance period, qualified current retiree health
liabilities shall be reduced by any such liabilities taken into
account with respect to the qualified future transfer or
collectively bargained transfer to which such period relates.
``(4) Special deduction rules for collectively bargained
transfers.--In the case of a collectively bargained transfer--
``(A) the limitation under subsection (d)(1)(C)
shall not apply, and
``(B) notwithstanding subsection (d)(2), an
employer may contribute an amount to a health benefits
account or welfare benefit fund (as defined in section
419(e)(1)) with respect to collectively bargained
retiree health liabilities for which transferred assets
are required to be used under subsection (c)(1)(B), and
the deductibility of any such contribution shall be
governed by the limits applicable to the deductibility
of contributions to a welfare benefit fund under a
collective bargaining agreement (as determined under
section 419A(f)(5)(A)) without regard to whether such
contributions are made to a health benefits account or
welfare benefit fund and without regard to the
provisions of section 404 or the other provisions of
this section.
The Secretary shall provide rules to ensure that the
application of this paragraph does not result in a deduction
being allowed more than once for the same contribution or for 2
or more contributions or expenditures relating to the same
collectively bargained retiree health liabilities.
``(5) Transfer period.--For purposes of this subsection,
the term `transfer period' means, with respect to any transfer,
a period of consecutive taxable years (not less than 2)
specified in the election under paragraph (1) which begins and
ends during the 10-taxable-year period beginning with the
taxable year of the transfer.
``(6) Terms relating to collectively bargained transfers.--
For purposes of this subsection--
``(A) Collectively bargained cost maintenance
period.--The term `collectively bargained cost
maintenance period' means, with respect to each covered
retiree and his covered spouse and dependents, the
shorter of--
``(i) the remaining lifetime of such
covered retiree and his covered spouse and
dependents, or
``(ii) the period of coverage provided by
the collectively bargained health plan
(determined as of the date of the collectively
bargained transfer) with respect to such
covered retiree and his covered spouse and
dependents.
``(B) Collectively bargained retiree health
liabilities.--
``(i) In general.--The term `collectively
bargained retiree health liabilities' means the
present value, as of the beginning of a taxable
year and determined in accordance with the
applicable collective bargaining agreement, of
all collectively bargained health benefits
(including administrative expenses) for such
taxable year and all subsequent taxable years
during the collectively bargained cost
maintenance period.
``(ii) Reduction for amounts previously set
aside.--The amount determined under clause (i)
shall be reduced by the value (as of the close
of the plan year preceding the year of the
collectively bargained transfer) of the assets
in all health benefits accounts or welfare
benefit funds (as defined in section 419(e)(1))
set aside to pay for the collectively bargained
retiree health liabilities.
``(iii) Key employees excluded.--If an
employee is a key employee (within the meaning
of section 416(I)(1)) with respect to any plan
year ending in a taxable year, such employee
shall not be taken into account in computing
collectively bargained retiree health
liabilities for such taxable year or in
calculating collectively bargained employer
cost under subsection (c)(3)(C).
``(C) Collectively bargained health benefits.--The
term `collectively bargained health benefits' means
health benefits or coverage which are provided to--
``(i) retired employees who, immediately
before the collectively bargained transfer, are
entitled to receive such benefits upon
retirement and who are entitled to pension
benefits under the plan, and their spouses and
dependents, and
``(ii) if specified by the provisions of
the collective bargaining agreement governing
the collectively bargained transfer, active
employees who, following their retirement, are
entitled to receive such benefits and who are
entitled to pension benefits under the plan,
and their spouses and dependents.
``(D) Collectively bargained health plan.--The term
`collectively bargained health plan' means a group
health plan or arrangement for retired employees and
their spouses and dependents that is maintained
pursuant to 1 or more collective bargaining
agreements.''.
(b) Effective Date.--The amendments made by this section shall
apply to transfers after the date of the enactment of this Act.
SEC. 842. TRANSFER OF EXCESS PENSION ASSETS TO MULTIEMPLOYER HEALTH
PLAN.
(a) In General.--Section 420 of the Internal Revenue Code of 1986
is amended--
(1) by striking ``(other than a multiemployer plan)'' in
subsection (a), and
(2) by adding at the end of subsection (e) the following
new paragraph:
``(5) Application to multiemployer plans.--In the case of a
multiemployer plan, this section shall be applied to any such
plan--
``(A) by treating any reference in this section to
an employer as a reference to all employers maintaining
the plan (or, if appropriate, the plan sponsor), and
``(B) in accordance with such modifications of this
section (and the provisions of this title relating to
this section) as the Secretary determines appropriate
to reflect the fact the plan is not maintained by a
single employer.''
(b) Effective Date.--The amendment made by this section shall apply
to transfers made in taxable years beginning after December 31, 2006.
SEC. 843. ALLOWANCE OF RESERVE FOR MEDICAL BENEFITS OF PLANS SPONSORED
BY BONA FIDE ASSOCIATIONS.
(a) In General.--Section 419A(c) of the Internal Revenue Code of
1986 (relating to account limit) is amended by adding at the end the
following new paragraph:
``(6) Additional reserve for medical benefits of bona fide
association plans.--
``(A) In general.--An applicable account limit for
any taxable year may include a reserve in an amount not
to exceed 35 percent of the sum of--
``(i) the qualified direct costs, and
``(ii) the change in claims incurred but
unpaid,
for such taxable year with respect to medical benefits
(other than post-retirement medical benefits).
``(B) Applicable account limit.--For purposes of
this subsection, the term `applicable account limit'
means an account limit for a qualified asset account
with respect to medical benefits provided through a
plan maintained by a bona fide association (as defined
in section 2791(d)(3) of the Public Health Service Act
(42 U.S.C. 300gg-91(d)(3))''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2006.
SEC. 844. TREATMENT OF ANNUITY AND LIFE INSURANCE CONTRACTS WITH A
LONG-TERM CARE INSURANCE FEATURE.
(a) Exclusion From Gross Income.--Subsection (e) of section 72 of
the Internal Revenue Code of 1986 (relating to amounts not received as
annuities) is amended by redesignating paragraph (11) as paragraph (12)
and by inserting after paragraph (10) the following new paragraph:
``(11) Special rules for certain combination contracts
providing long-term care insurance.--Notwithstanding paragraphs
(2), (5)(C), and (10), in the case of any charge against the
cash value of an annuity contract or the cash surrender value
of a life insurance contract made as payment for coverage under
a qualified long-term care insurance contract which is part of
or a rider on such annuity or life insurance contract--
``(A) the investment in the contract shall be
reduced (but not below zero) by such charge, and
``(B) such charge shall not be includible in gross
income.''.
(b) Tax-Free Exchanges Among Certain Insurance Policies.--
(1) Annuity contracts can include qualified long-term care
insurance riders.--Paragraph (2) of section 1035(b) of such
Code is amended by adding at the end the following new
sentence: ``For purposes of the preceding sentence, a contract
shall not fail to be treated as an annuity contract solely
because a qualified long-term care insurance contract is a part
of or a rider on such contract.''.
(2) Life insurance contracts can include qualified long-
term care insurance riders.--Paragraph (3) of section 1035(b)
of such Code is amended by adding at the end the following new
sentence: ``For purposes of the preceding sentence, a contract
shall not fail to be treated as a life insurance contract
solely because a qualified long-term care insurance contract is
a part of or a rider on such contract.''.
(3) Expansion of tax-free exchanges of life insurance,
endowment, and annuity contracts for long-term care
contracts.--Subsection (a) of section 1035 of such Code
(relating to certain exchanges of insurance policies) is
amended--
(A) in paragraph (1) by inserting ``or for a
qualified long-term care insurance contract'' before
the semicolon at the end,
(B) in paragraph (2) by inserting ``, or (C) for a
qualified long-term care insurance contract'' before
the semicolon at the end, and
(C) in paragraph (3) by inserting ``or for a
qualified long-term care insurance contract'' before
the period at the end.
(4) Tax-free exchanges of qualified long-term care
insurance contract.--Subsection (a) of section 1035 of such
Code (relating to certain exchanges of insurance policies) is
amended by striking ``or'' at the end of paragraph (2), by
striking the period at the end of paragraph (3) and inserting
``; or'', and by inserting after paragraph (3) the following
new paragraph:
``(4) a qualified long-term care insurance contract for a
qualified long-term care insurance contract.''.
(c) Treatment of Coverage Provided as Part of a Life Insurance or
Annuity Contract.--Subsection (e) of section 7702B of such Code
(relating to treatment of qualified long-term care insurance) is
amended to read as follows:
``(e) Treatment of Coverage Provided as Part of a Life Insurance or
Annuity Contract.--Except as otherwise provided in regulations
prescribed by the Secretary, in the case of any long-term care
insurance coverage (whether or not qualified) provided by a rider on or
as part of a life insurance contract or an annuity contract--
``(1) In general.--This title shall apply as if the portion
of the contract providing such coverage is a separate contract.
``(2) Denial of deduction under section 213.--No deduction
shall be allowed under section 213(a) for any payment made for
coverage under a qualified long-term care insurance contract if
such payment is made as a charge against the cash surrender
value of a life insurance contract or the cash value of an
annuity contract.
``(3) Portion defined.--For purposes of this subsection,
the term `portion' means only the terms and benefits under a
life insurance contract or annuity contract that are in
addition to the terms and benefits under the contract without
regard to long-term care insurance coverage.
``(4) Annuity contracts to which paragraph (1) does not
apply.--For purposes of this subsection, none of the following
shall be treated as an annuity contract:
``(A) A trust described in section 401(a) which is
exempt from tax under section 501(a).
``(B) A contract--
``(i) purchased by a trust described in
subparagraph (A),
``(ii) purchased as part of a plan
described in section 403(a),
``(iii) described in section 403(b),
``(iv) provided for employees of a life
insurance company under a plan described in
section 818(a)(3), or
``(v) from an individual retirement account
or an individual retirement annuity.
``(C) A contract purchased by an employer for the
benefit of the employee (or the employee's spouse).
Any dividend described in section 404(k) which is received by a
participant or beneficiary shall, for purposes of this
paragraph, be treated as paid under a separate contract to
which subparagraph (B)(i) applies.''.
(d) Information Reporting.--
(1) Subpart B of part III of subchapter A of chapter 61 of
such Code (relating to information concerning transactions with
other persons) is amended by adding at the end the following
new section:
``SEC. 6050U. CHARGES OR PAYMENTS FOR QUALIFIED LONG-TERM CARE
INSURANCE CONTRACTS UNDER COMBINED ARRANGEMENTS.
``(a) Requirement of Reporting.--Any person who makes a charge
against the cash value of an annuity contract, or the cash surrender
value of a life insurance contract, which is excludible from gross
income under section 72(e)(11) shall make a return, according to the
forms or regulations prescribed by the Secretary, setting forth--
``(1) the amount of the aggregate of such charges against
each such contract for the calendar year,
``(2) the amount of the reduction in the investment in each
such contract by reason of such charges, and
``(3) the name, address, and TIN of the individual who is
the holder of each such contract.
``(b) Statements to Be Furnished to Persons With Respect to Whom
Information Is Required.--Every person required to make a return under
subsection (a) shall furnish to each individual whose name is required
to be set forth in such return a written statement showing--
``(1) the name, address, and phone number of the
information contact of the person making the payments, and
``(2) the information required to be shown on the return
with respect to such individual.
The written statement required under the preceding sentence shall be
furnished to the individual on or before January 31 of the year
following the calendar year for which the return under subsection (a)
was required to be made.''.
(2) Penalty for failure to file.--
(A) Return.--Subparagraph (B) of section 6724(d)(1)
of such Code is amended by striking ``or'' at the end
of clause (xvii), by striking ``and'' at the end of
clause (xviii) and inserting ``or'', and by adding at
the end the following new clause:
``(xix) section 6050U (relating to charges
or payments for qualified long-term care
insurance contracts under combined
arrangements), and''.
(B) Statement.--Paragraph (2) of section 6724(d) of
such Code is amended by striking ``or'' at the end of
subparagraph (AA), by striking the period at the end of
subparagraph (BB), and by inserting after subparagraph
(BB) the following new subparagraph:
``(CC) section 6050U (relating to charges or
payments for qualified long-term care insurance
contracts under combined arrangements).''.
(3) Clerical amendment.--The table of sections for subpart
B of part III of subchapter A of such chapter 61 of such Code
is amended by adding at the end the following new item:
``Sec. 6050U. Charges or payments for qualified long-term care
insurance contracts under combined
arrangements.''.
(e) Treatment of Policy Acquisition Expenses.--Subsection (e) of
section 848 of such Code (relating to classification of contracts) is
amended by adding at the end the following new paragraph:
``(6) Treatment of certain qualified long-term care
insurance contract arrangements.--An annuity or life insurance
contract which includes a qualified long-term care insurance
contract as a part of or a rider on such annuity or life
insurance contract shall be treated as a specified insurance
contract not described in subparagraph (A) or (B) of subsection
(c)(1).''.
(f) Technical Amendment.--Paragraph (1) of section 7702B(e) of such
Code (as in effect before amendment by subsection (c)) is amended by
striking ``section'' and inserting ``title''.
(g) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
contracts issued after December 31, 1996, but only with respect
to taxable years beginning after December 31, 2009.
(2) Tax-free exchanges.--The amendments made by subsection
(b) shall apply with respect to exchanges occurring after
December 31, 2009.
(3) Information reporting.--The amendments made by
subsection (d) shall apply to charges made after December 31,
2009.
(4) Policy acquisition expenses.--The amendment made by
subsection (e) shall apply to specified policy acquisition
expenses determined for taxable years beginning after December
31, 2009.
(5) Technical amendment.--The amendment made by subsection
(f) shall take effect as if included in section 321(a) of the
Health Insurance Portability and Accountability Act of 1996.
SEC. 845. DISTRIBUTIONS FROM GOVERNMENTAL RETIREMENT PLANS FOR HEALTH
AND LONG-TERM CARE INSURANCE FOR PUBLIC SAFETY OFFICERS.
(a) In General.--Section 402 of the Internal Revenue Code of 1986
(relating to taxability of beneficiary of employees' trust) is amended
by adding at the end the following new subsection:
``(l) Distributions From Governmental Plans for Health and Long-
Term Care Insurance.--
``(1) In general.--In the case of an employee who is an
eligible retired public safety officer who makes the election
described in paragraph (6) with respect to any taxable year of
such employee, gross income of such employee for such taxable
year does not include any distribution from an eligible
retirement plan to the extent that the aggregate amount of such
distributions does not exceed the amount paid by such employee
for qualified health insurance premiums of the employee, his
spouse, or dependents (as defined in section 152) for such
taxable year.
``(2) Limitation.--The amount which may be excluded from
gross income for the taxable year by reason of paragraph (1)
shall not exceed $3,000.
``(3) Distributions must otherwise be includible.--
``(A) In general.--An amount shall be treated as a
distribution for purposes of paragraph (1) only to the
extent that such amount would be includible in gross
income without regard to paragraph (1).
``(B) Application of section 72.--Notwithstanding
section 72, in determining the extent to which an
amount is treated as a distribution for purposes of
subparagraph (A), the aggregate amounts distributed
from an eligible retirement plan in a taxable year (up
to the amount excluded under paragraph (1)) shall be
treated as includible in gross income (without regard
to subparagraph (A)) to the extent that such amount
does not exceed the aggregate amount which would have
been so includible if all amounts distributed from all
eligible retirement plans were treated as 1 contract
for purposes of determining the inclusion of such
distribution under section 72. Proper adjustments shall
be made in applying section 72 to other distributions
in such taxable year and subsequent taxable years.
``(4) Definitions.--For purposes of this subsection--
``(A) Eligible retirement plan.--For purposes of
paragraph (1), the term `eligible retirement plan'
means a governmental plan (within the meaning of
section 414(d)) which is described in clause (iii),
(iv), (v), or (vi) of subsection (c)(8)(B).
``(B) Eligible retired public safety officer.--The
term `eligible retired public safety officer' means an
individual who, by reason of disability or attainment
of normal retirement age, is separated from service as
a public safety officer with the employer who maintains
the eligible retirement plan from which distributions
subject to paragraph (1) are made.
``(C) Public safety officer.--The term `public
safety officer' shall have the same meaning given such
term by section 1204(9)(A) of the Omnibus Crime Control
and Safe Streets Act of 1968 (42 U.S.C. 3796b(9)(A)).
``(D) Qualified health insurance premiums.--The
term `qualified health insurance premiums' means
premiums for coverage for the eligible retired public
safety officer, his spouse, and dependents, by an
accident or health insurance plan or qualified long-
term care insurance contract (as defined in section
7702B(b)).
``(5) Special rules.--For purposes of this subsection--
``(A) Direct payment to insurer required.--
Paragraph (1) shall only apply to a distribution if
payment of the premiums is made directly to the
provider of the accident or health insurance plan or
qualified long-term care insurance contract by
deduction from a distribution from the eligible
retirement plan.
``(B) Related plans treated as 1.--All eligible
retirement plans of an employer shall be treated as a
single plan.
``(6) Election described.--
``(A) In general.--For purposes of paragraph (1),
an election is described in this paragraph if the
election is made by an employee after separation from
service with respect to amounts not distributed from an
eligible retirement plan to have amounts from such plan
distributed in order to pay for qualified health
insurance premiums.
``(B) Special rule.--A plan shall not be treated as
violating the requirements of section 401, or as
engaging in a prohibited transaction for purposes of
section 503(b), merely because it provides for an
election with respect to amounts that are otherwise
distributable under the plan or merely because of a
distribution made pursuant to an election described in
subparagraph (A).
``(7) Coordination with medical expense deduction.--The
amounts excluded from gross income under paragraph (1) shall
not be taken into account under section 213.
``(8) Coordination with deduction for health insurance
costs of self-employed individuals.--The amounts excluded from
gross income under paragraph (1) shall not be taken into
account under section 162(l).''.
(b) Conforming Amendments.--
(1) Section 403(a) of such Code (relating to taxability of
beneficiary under a qualified annuity plan) is amended by
inserting after paragraph (1) the following new paragraph:
``(2) Special rule for health and long-term care
insurance.--To the extent provided in section 402(l), paragraph
(1) shall not apply to the amount distributed under the
contract which is otherwise includible in gross income under
this subsection.''.
(2) Section 403(b) of such Code (relating to taxability of
beneficiary under annuity purchased by section 501(c)(3)
organization or public school) is amended by inserting after
paragraph (1) the following new paragraph:
``(2) Special rule for health and long-term care
insurance.--To the extent provided in section 402(l), paragraph
(1) shall not apply to the amount distributed under the
contract which is otherwise includible in gross income under
this subsection.''.
(3) Section 457(a) of such Code (relating to year of
inclusion in gross income) is amended by adding at the end the
following new paragraph:
``(3) Special rule for health and long-term care
insurance.--In the case of a plan of an eligible employer
described in subsection (e)(1)(A), to the extent provided in
section 402(l), paragraph (1) shall not apply to amounts
otherwise includible in gross income under this subsection.''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions in taxable years beginning after December 31,
2006.
Subtitle E--United States Tax Court Modernization
SEC. 851. COST-OF-LIVING ADJUSTMENTS FOR TAX COURT JUDICIAL SURVIVOR
ANNUITIES.
(a) In General.--Subsection (s) of section 7448 of the Internal
Revenue Code of 1986 (relating to annuities to surviving spouses and
dependent children of judges) is amended to read as follows:
``(s) Increases in Survivor Annuities.--Each time that an increase
is made under section 8340(b) of title 5, United States Code, in
annuities payable under subchapter III of chapter 83 of that title,
each annuity payable from the survivors annuity fund under this section
shall be increased at the same time by the same percentage by which
annuities are increased under such section 8340(b).''.
(b) Effective Date.--The amendment made by this section shall apply
with respect to increases made under section 8340(b) of title 5, United
States Code, in annuities payable under subchapter III of chapter 83 of
that title, taking effect after the date of the enactment of this Act.
SEC. 852. COST OF LIFE INSURANCE COVERAGE FOR TAX COURT JUDGES AGE 65
OR OVER.
Section 7472 of the Internal Revenue Code of 1986 (relating to
expenditures) is amended by inserting after the first sentence the
following new sentence: ``Notwithstanding any other provision of law,
the Tax Court is authorized to pay on behalf of its judges, age 65 or
over, any increase in the cost of Federal Employees' Group Life
Insurance imposed after the date of the enactment of the Pension
Protection Act of 2006, including any expenses generated by such
payments, as authorized by the chief judge in a manner consistent with
such payments authorized by the Judicial Conference of the United
States pursuant to section 604(a)(5) of title 28, United States Code.''
SEC. 853. PARTICIPATION OF TAX COURT JUDGES IN THE THRIFT SAVINGS PLAN.
(a) In General.--Section 7447 of the Internal Revenue Code of 1986
(relating to retirement of judges) is amended by adding at the end the
following new subsection:
``(j) Thrift Savings Plan.--
``(1) Election to contribute.--
``(A) In general.--A judge of the Tax Court may
elect to contribute to the Thrift Savings Fund
established by section 8437 of title 5, United States
Code.
``(B) Period of election.--An election may be made
under this paragraph only during a period provided
under section 8432(b) of title 5, United States Code,
for individuals subject to chapter 84 of such title.
``(2) Applicability of title 5 provisions.--Except as
otherwise provided in this subsection, the provisions of
subchapters III and VII of chapter 84 of title 5, United States
Code, shall apply with respect to a judge who makes an election
under paragraph (1).
``(3) Special rules.--
``(A) Amount contributed.--The amount contributed
by a judge to the Thrift Savings Fund in any pay period
shall not exceed the maximum percentage of such judge's
basic pay for such period as allowable under section
8440f of title 5, United States Code. Basic pay does
not include any retired pay paid pursuant to this
section.
``(B) Contributions for benefit of judge.--No
contributions may be made for the benefit of a judge
under section 8432(c) of title 5, United States Code.
``(C) Applicability of section 8433(b) of title 5
whether or not judge retires.--Section 8433(b) of title
5, United States Code, applies with respect to a judge
who makes an election under paragraph (1) and who
either--
``(i) retires under subsection (b), or
``(ii) ceases to serve as a judge of the
Tax Court but does not retire under subsection
(b).
Retirement under subsection (b) is a separation from
service for purposes of subchapters III and VII of
chapter 84 of that title.
``(D) Applicability of section 8351(b)(5) of title
5.--The provisions of section 8351(b)(5) of title 5,
United States Code, shall apply with respect to a judge
who makes an election under paragraph (1).
``(E) Exception.--Notwithstanding subparagraph (C),
if any judge retires under this section, or resigns
without having met the age and service requirements set
forth under subsection (b)(2), and such judge's
nonforfeitable account balance is less than an amount
that the Executive Director of the Federal Retirement
Thrift Investment Board prescribes by regulation, the
Executive Director shall pay the nonforfeitable account
balance to the participant in a single payment.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act, except that United
States Tax Court judges may only begin to participate in the Thrift
Savings Plan at the next open season beginning after such date.
SEC. 854. ANNUITIES TO SURVIVING SPOUSES AND DEPENDENT CHILDREN OF
SPECIAL TRIAL JUDGES OF THE TAX COURT.
(a) Definitions.--Section 7448(a) of the Internal Revenue Code of
1986 (relating to definitions), as amended by this Act, is amended by
redesignating paragraphs (5), (6), (7), and (8) as paragraphs (7), (8),
(9), and (10), respectively, and by inserting after paragraph (4) the
following new paragraphs:
``(5) The term `special trial judge' means a judicial
officer appointed pursuant to section 7443A, including any
individual receiving an annuity under chapters 83 or 84 of
title 5, United States Code, whether or not performing judicial
duties under section 7443B.
``(6) The term `special trial judge's salary' means the
salary of a special trial judge received under section
7443A(d), any amount received as an annuity under chapters 83
or 84 of title 5, United States Code, and compensation received
under section 7443B.''.
(b) Election.--Subsection (b) of section 7448 of such Code
(relating to annuities to surviving spouses and dependent children of
judges) is amended--
(1) by striking the subsection heading and inserting the
following:
``(b) Election.--
``(1) Judges.--'',
(2) by moving the text 2 ems to the right, and
(3) by adding at the end the following new paragraph:
``(2) Special trial judges.--Any special trial judge may by
written election filed with the chief judge bring himself or
herself within the purview of this section. Such election shall
be filed not later than the later of 6 months after--
``(A) 6 months after the date of the enactment of
this paragraph,
``(B) the date the judge takes office, or
``(C) the date the judge marries.''.
(c) Conforming Amendments.--
(1) The heading of section 7448 of such Code is amended by
inserting ``and special trial judges'' after ``judges''.
(2) The item relating to section 7448 in the table of
sections for part I of subchapter C of chapter 76 of such Code
is amended by inserting ``and special trial judges'' after
``judges''.
(3) Subsections (c)(1), (d), (f), (g), (h), (j), (m), (n),
and (u) of section 7448 of such Code, as amended by this Act,
are each amended--
(A) by inserting ``or special trial judge'' after
``judge'' each place it appears other than in the
phrase ``chief judge'', and
(B) by inserting ``or special trial judge's'' after
``judge's'' each place it appears.
(4) Section 7448(c) of such Code is amended--
(A) in paragraph (1), by striking ``Tax Court
judges'' and inserting ``Tax Court judicial officers'',
(B) in paragraph (2)--
(i) in subparagraph (A), by inserting ``and
section 7443A(d)'' after ``(a)(4)'', and
(ii) in subparagraph (B), by striking
``subsection (a)(4)'' and inserting
``subsections (a)(4) and (a)(6)''.
(5) Section 7448(j)(1) of such Code is amended--
(A) in subparagraph (A), by striking ``service or
retired'' and inserting ``service, retired'', and by
inserting ``, or receiving any annuity under chapters
83 or 84 of title 5, United States Code,'' after
``section 7447'', and
(B) in the last sentence, by striking ``subsections
(a) (6) and (7)'' and inserting ``paragraphs (8) and
(9) of subsection (a)''.
(6) Section 7448(m)(1) of such Code, as amended by this
Act, is amended by inserting ``or any annuity under chapters 83
or 84 of title 5, United States Code'' after ``7447(d)''.
(7) Section 7448(n) of such Code is amended by inserting
``his years of service pursuant to any appointment under
section 7443A,'' after ``of the Tax Court,''.
(8) Section 3121(b)(5)(E) of such Code is amended by
inserting ``or special trial judge'' before ``of the United
States Tax Court''.
(9) Section 210(a)(5)(E) of the Social Security Act is
amended by inserting ``or special trial judge'' before ``of the
United States Tax Court''.
SEC. 855. JURISDICTION OF TAX COURT OVER COLLECTION DUE PROCESS CASES.
(a) In General.--Paragraph (1) of section 6330(d) of the Internal
Revenue Code of 1986 (relating to proceeding after hearing) is amended
to read as follows:
``(1) Judicial review of determination.--The person may,
within 30 days of a determination under this section, appeal
such determination to the Tax Court (and the Tax Court shall
have jurisdiction with respect to such matter).''.
(b) Effective Date.--The amendment made by this section shall apply
to determinations made after the date which is 60 days after the date
of the enactment of this Act.
SEC. 856. PROVISIONS FOR RECALL.
(a) In General.--Part I of subchapter C of chapter 76 of the
Internal Revenue Code of 1986 is amended by inserting after section
7443A the following new section:
``SEC. 7443B. RECALL OF SPECIAL TRIAL JUDGES OF THE TAX COURT.
``(a) Recalling of Retired Special Trial Judges.--Any individual
who has retired pursuant to the applicable provisions of title 5,
United States Code, upon reaching the age and service requirements
established therein, may at or after retirement be called upon by the
chief judge of the Tax Court to perform such judicial duties with the
Tax Court as may be requested of such individual for any period or
periods specified by the chief judge; except that in the case of any
such individual--
``(1) the aggregate of such periods in any 1 calendar year
shall not (without such individual's consent) exceed 90
calendar days, and
``(2) such individual shall be relieved of performing such
duties during any period in which illness or disability
precludes the performance of such duties.
Any act, or failure to act, by an individual performing judicial duties
pursuant to this subsection shall have the same force and effect as if
it were the act (or failure to act) of a special trial judge of the Tax
Court.
``(b) Compensation.--For the year in which a period of recall
occurs, the special trial judge shall receive, in addition to the
annuity provided under the applicable provisions of title 5, United
States Code, an amount equal to the difference between that annuity and
the current salary of the office to which the special trial judge is
recalled.
``(c) Rulemaking Authority.--The provisions of this section may be
implemented under such rules as may be promulgated by the Tax Court.''
(b) Conforming Amendment.--The table of sections for part I of
subchapter C of chapter 76 of such Code is amended by inserting after
the item relating to section 7443A the following new item:
``Sec. 7443B. Recall of special trial judges of the Tax Court.''.
SEC. 857. AUTHORITY FOR SPECIAL TRIAL JUDGES TO HEAR AND DECIDE CERTAIN
EMPLOYMENT STATUS CASES.
(a) In General.--Section 7443A(b) of the Internal Revenue Code of
1986 (relating to proceedings which may be assigned to special trial
judges) is amended by striking ``and'' at the end of paragraph (4), by
redesignating paragraph (5) as paragraph (6), and by inserting after
paragraph (4) the following new paragraph:
``(5) any proceeding under section 7436(c), and''.
(b) Conforming Amendment.--Section 7443A(c) of such Code is amended
by striking ``or (4)'' and inserting ``(4), or (5)''.
(c) Effective Date.--The amendments made by this section shall
apply to any proceeding under section 7436(c) of the Internal Revenue
Code of 1986 with respect to which a decision has not become final (as
determined under section 7481 of such Code) before the date of the
enactment of this Act.
SEC. 858. CONFIRMATION OF AUTHORITY OF TAX COURT TO APPLY DOCTRINE OF
EQUITABLE RECOUPMENT.
(a) Confirmation of Authority of Tax Court To Apply Doctrine of
Equitable Recoupment.--Section 6214(b) of the Internal Revenue Code of
1986 (relating to jurisdiction over other years and quarters) is
amended by adding at the end the following new sentence:
``Notwithstanding the preceding sentence, the Tax Court may apply the
doctrine of equitable recoupment to the same extent that it is
available in civil tax cases before the district courts of the United
States and the United States Court of Federal Claims.''.
(b) Effective Date.--The amendment made by this section shall apply
to any action or proceeding in the United States Tax Court with respect
to which a decision has not become final (as determined under section
7481 of the Internal Revenue Code of 1986) as of the date of the
enactment of this Act.
SEC. 859. TAX COURT FILING FEE IN ALL CASES COMMENCED BY FILING
PETITION.
(a) In General.--Section 7451 of the Internal Revenue Code of 1986
(relating to fee for filing a Tax Court petition) is amended by
striking all that follows ``petition'' and inserting a period.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
SEC. 860. EXPANDED USE OF TAX COURT PRACTICE FEE FOR PRO SE TAXPAYERS.
(a) In General.--Section 7475(b) of the Internal Revenue Code of
1986 (relating to use of fees) is amended by inserting before the
period at the end ``and to provide services to pro se taxpayers''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
Subtitle F--Other Provisions
SEC. 861. EXTENSION TO ALL GOVERNMENTAL PLANS OF CURRENT MORATORIUM ON
APPLICATION OF CERTAIN NONDISCRIMINATION RULES APPLICABLE
TO STATE AND LOCAL PLANS.
(a) In General.--
(1) Subparagraph (G) of section 401(a)(5) and subparagraph
(G) of section 401(a)(26) of the Internal Revenue Code of 1986
are each amended by striking ``section 414(d))'' and all that
follows and inserting ``section 414(d)).''.
(2) Subparagraph (G) of section 401(k)(3) of such Code and
paragraph (2) of section 1505(d) of the Taxpayer Relief Act of
1997 (Public Law 105-34; 111 Stat. 1063) are each amended by
striking ``maintained by a State or local government or
political subdivision thereof (or agency or instrumentality
thereof)''.
(b) Conforming Amendments.--
(1) The heading of subparagraph (G) of section 401(a)(5) of
the Internal Revenue Code of 1986 is amended by striking
``State and local governmental'' and inserting
``Governmental''.
(2) The heading of subparagraph (G) of section 401(a)(26)
of such Code is amended by striking ``Exception for state and
local'' and inserting ``Exception for''.
(3) Section 401(k)(3)(G) of such Code is amended by
inserting ``Governmental plan.--'' after ``(G)''.
(c) Effective Date.--The amendments made by this section shall
apply to any year beginning after the date of the enactment of this
Act.
SEC. 862. ELIMINATION OF AGGREGATE LIMIT FOR USAGE OF EXCESS FUNDS FROM
BLACK LUNG DISABILITY TRUSTS.
(a) In General.--So much of section 501(c)(21)(C) of the Internal
Revenue Code of 1986 (relating to black lung disability trusts) as
precedes the last sentence is amended to read as follows:
``(C) Payments described in subparagraph (A)(i)(IV)
may be made from such trust during a taxable year only
to the extent that the aggregate amount of such
payments during such taxable year does not exceed the
excess (if any), as of the close of the preceding
taxable year, of--
``(i) the fair market value of the assets
of the trust, over
``(ii) 110 percent of the present value of
the liability described in subparagraph
(A)(i)(I) of such person.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006.
SEC. 863. TREATMENT OF DEATH BENEFITS FROM CORPORATE-OWNED LIFE
INSURANCE.
(a) In General.--Section 101 of the Internal Revenue Code of 1986
(relating to certain death benefits) is amended by adding at the end
the following new subsection:
``(j) Treatment of Certain Employer-Owned Life Insurance
Contracts.--
``(1) General rule.--In the case of an employer-owned life
insurance contract, the amount excluded from gross income of an
applicable policyholder by reason of paragraph (1) of
subsection (a) shall not exceed an amount equal to the sum of
the premiums and other amounts paid by the policyholder for the
contract.
``(2) Exceptions.--In the case of an employer-owned life
insurance contract with respect to which the notice and consent
requirements of paragraph (4) are met, paragraph (1) shall not
apply to any of the following:
``(A) Exceptions based on insured's status.--Any
amount received by reason of the death of an insured
who, with respect to an applicable policyholder--
``(i) was an employee at any time during
the 12-month period before the insured's death,
or
``(ii) is, at the time the contract is
issued--
``(I) a director,
``(II) a highly compensated
employee within the meaning of section
414(q) (without regard to paragraph
(1)(B)(ii) thereof), or
``(III) a highly compensated
individual within the meaning of
section 105(h)(5), except that `35
percent' shall be substituted for `25
percent' in subparagraph (C) thereof.
``(B) Exception for amounts paid to insured's
heirs.--Any amount received by reason of the death of
an insured to the extent--
``(i) the amount is paid to a member of the
family (within the meaning of section
267(c)(4)) of the insured, any individual who
is the designated beneficiary of the insured
under the contract (other than the applicable
policyholder), a trust established for the
benefit of any such member of the family or
designated beneficiary, or the estate of the
insured, or
``(ii) the amount is used to purchase an
equity (or capital or profits) interest in the
applicable policyholder from any person
described in clause (i).
``(3) Employer-owned life insurance contract.--
``(A) In general.--For purposes of this subsection,
the term `employer-owned life insurance contract' means
a life insurance contract which--
``(i) is owned by a person engaged in a
trade or business and under which such person
(or a related person described in subparagraph
(B)(ii)) is directly or indirectly a
beneficiary under the contract, and
``(ii) covers the life of an insured who is
an employee with respect to the trade or
business of the applicable policyholder on the
date the contract is issued.
For purposes of the preceding sentence, if coverage for
each insured under a master contract is treated as a
separate contract for purposes of sections 817(h),
7702, and 7702A, coverage for each such insured shall
be treated as a separate contract.
``(B) Applicable policyholder.--For purposes of
this subsection--
``(i) In general.--The term `applicable
policyholder' means, with respect to any
employer-owned life insurance contract, the
person described in subparagraph (A)(i) which
owns the contract.
``(ii) Related persons.--The term
`applicable policyholder' includes any person
which--
``(I) bears a relationship to the
person described in clause (i) which is
specified in section 267(b) or
707(b)(1), or
``(II) is engaged in trades or
businesses with such person which are
under common control (within the
meaning of subsection (a) or (b) of
section 52).
``(4) Notice and consent requirements.--The notice and
consent requirements of this paragraph are met if, before the
issuance of the contract, the employee--
``(A) is notified in writing that the applicable
policyholder intends to insure the employee's life and
the maximum face amount for which the employee could be
insured at the time the contract was issued,
``(B) provides written consent to being insured
under the contract and that such coverage may continue
after the insured terminates employment, and
``(C) is informed in writing that an applicable
policyholder will be a beneficiary of any proceeds
payable upon the death of the employee.
``(5) Definitions.--For purposes of this subsection--
``(A) Employee.--The term `employee' includes an
officer, director, and highly compensated employee
(within the meaning of section 414(q)).
``(B) Insured.--The term `insured' means, with
respect to an employer-owned life insurance contract,
an individual covered by the contract who is a United
States citizen or resident. In the case of a contract
covering the joint lives of 2 individuals, references
to an insured include both of the individuals.''.
(b) Reporting Requirements.--Subpart A of part III of subchapter A
of chapter 61 of the Internal Revenue Code of 1986 (relating to
information concerning persons subject to special provisions) is
amended by inserting after section 6039H the following new section:
``SEC. 6039I. RETURNS AND RECORDS WITH RESPECT TO EMPLOYER-OWNED LIFE
INSURANCE CONTRACTS.
``(a) In General.--Every applicable policyholder owning 1 or more
employer-owned life insurance contracts issued after the date of the
enactment of this section shall file a return (at such time and in such
manner as the Secretary shall by regulations prescribe) showing for
each year such contracts are owned--
``(1) the number of employees of the applicable
policyholder at the end of the year,
``(2) the number of such employees insured under such
contracts at the end of the year,
``(3) the total amount of insurance in force at the end of
the year under such contracts,
``(4) the name, address, and taxpayer identification number
of the applicable policyholder and the type of business in
which the policyholder is engaged, and
``(5) that the applicable policyholder has a valid consent
for each insured employee (or, if all such consents are not
obtained, the number of insured employees for whom such consent
was not obtained).
``(b) Recordkeeping Requirement.--Each applicable policyholder
owning 1 or more employer-owned life insurance contracts during any
year shall keep such records as may be necessary for purposes of
determining whether the requirements of this section and section 101(j)
are met.
``(c) Definitions.--Any term used in this section which is used in
section 101(j) shall have the same meaning given such term by section
101(j).''.
(c) Conforming Amendments.--
(1) Paragraph (1) of section 101(a) of the Internal Revenue
Code of 1986 is amended by striking ``and subsection (f)'' and
inserting ``subsection (f), and subsection (j)''.
(2) The table of sections for subpart A of part III of
subchapter A of chapter 61 of such Code is amended by inserting
after the item relating to section 6039H the following new
item:
``Sec. 6039I. Returns and records with respect to employer-owned life
insurance contracts.''.
(d) Effective Date.--The amendments made by this section shall
apply to life insurance contracts issued after the date of the
enactment of this Act, except for a contract issued after such date
pursuant to an exchange described in section 1035 of the Internal
Revenue Code of 1986 for a contract issued on or prior to that date.
For purposes of the preceding sentence, any material increase in the
death benefit or other material change shall cause the contract to be
treated as a new contract except that, in the case of a master contract
(within the meaning of section 264(f)(4)(E) of such Code), the addition
of covered lives shall be treated as a new contract only with respect
to such additional covered lives.
SEC. 864. TREATMENT OF TEST ROOM SUPERVISORS AND PROCTORS WHO ASSIST IN
THE ADMINISTRATION OF COLLEGE ENTRANCE AND PLACEMENT
EXAMS.
(a) In General.--Section 530 of the Revenue Reconciliation Act of
1978 is amended by adding at the end the following new subsection:
``(f) Treatment of Test Room Supervisors and Proctors Who Assist in
the Administration of College Entrance and Placement Exams.--
``(1) In general.--In the case of an individual described
in paragraph (2) who is providing services as a test proctor or
room supervisor by assisting in the administration of college
entrance or placement examinations, this section shall be
applied to such services performed after December 31, 2006 (and
remuneration paid for such services) without regard to
subsection (a)(3) thereof.
``(2) Applicability.--An individual is described in this
paragraph if the individual--
``(A) is providing the services described in
subsection (a) to an organization described in section
501(c), and exempt from tax under section 501(a), of
the Internal Revenue Code of 1986, and
``(B) is not otherwise treated as an employee of
such organization for purposes of subtitle C of such
Code (relating to employment taxes).''.
(b) Effective Date.--The amendment made by this section shall apply
to remuneration for services performed after December 31, 2006.
SEC. 865. GRANDFATHER RULE FOR CHURCH PLANS WHICH SELF-ANNUITIZE.
(a) In General.--In the case of any plan year ending after the date
of the enactment of this Act, annuity payments provided with respect to
any account maintained for a participant or beneficiary under a
qualified church plan shall not fail to satisfy the requirements of
section 401(a)(9) of the Internal Revenue Code of 1986 merely because
the payments are not made under an annuity contract purchased from an
insurance company if such payments would not fail such requirements if
provided with respect to a retirement income account described in
section 403(b)(9) of such Code.
(b) Qualified Church Plan.--For purposes of this section, the term
``qualified church plan'' means any money purchase pension plan
described in section 401(a) of such Code which--
(1) is a church plan (as defined in section 414(e) of such
Code) with respect to which the election provided by section
410(d) of such Code has not been made, and
(2) was in existence on April 17, 2002.
SEC. 866. EXEMPTION FOR INCOME FROM LEVERAGED REAL ESTATE HELD BY
CHURCH PLANS.
(a) In General.--Section 514(c)(9)(C) of the Internal Revenue Code
of 1986 is amended by striking ``or'' after clause (ii), by striking
the period at the end of clause (iii) and inserting ``; or'', and by
inserting after clause (iii) the following:
``(iv) a retirement income account
described in section 403(b)(9).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning on or after the date of enactment of
this Act.
SEC. 867. CHURCH PLAN RULE.
(a) In General.--Paragraph (11) of section 415(b) of the Internal
Revenue Code of 1986 is amended by adding at the end the following:
``Subparagraph (B) of paragraph (1) shall not apply to a plan
maintained by an organization described in section 3121(w)(3)(A) except
with respect to highly compensated benefits. For purposes of this
paragraph, the term `highly compensated benefits' means any benefits
accrued for an employee in any year on or after the first year in which
such employee is a highly compensated employee (as defined in section
414(q)) of the organization described in section 3121(w)(3)(A). For
purposes of applying paragraph (1)(B) to highly compensated benefits,
all benefits of the employee otherwise taken into account (without
regard to this paragraph) shall be taken into account.''.
(b) Effective Date.--The amendment made by this section shall apply
to years beginning after December 31, 2006.
SEC. 868. GRATUITOUS TRANSFER FOR BENEFITS OF EMPLOYEES.
(a) In General.--Subparagraph (E) of section 664(g)(3) of the
Internal Revenue Code of 1986 is amended by inserting ``(determined on
the basis of fair market value of securities when allocated to
participants)'' after ``paragraph (7)''.
(b) Effective Date.--The amendment made by this section shall take
effect on the date of the enactment of this Act.
TITLE IX--INCREASE IN PENSION PLAN DIVERSIFICATION AND PARTICIPATION
AND OTHER PENSION PROVISIONS
SEC. 901. DEFINED CONTRIBUTION PLANS REQUIRED TO PROVIDE EMPLOYEES WITH
FREEDOM TO INVEST THEIR PLAN ASSETS.
(a) Amendments of Internal Revenue Code.--
(1) Qualification requirement.--Section 401(a) of the
Internal Revenue Code of 1986 (relating to qualified pension,
profit-sharing, and stock bonus plans) is amended by inserting
after paragraph (34) the following new paragraph:
``(35) Diversification requirements for certain defined
contribution plans.--
``(A) In general.--A trust which is part of an
applicable defined contribution plan shall not be
treated as a qualified trust unless the plan meets the
diversification requirements of subparagraphs (B), (C),
and (D).
``(B) Employee contributions and elective deferrals
invested in employer securities.--In the case of the
portion of an applicable individual's account
attributable to employee contributions and elective
deferrals which is invested in employer securities, a
plan meets the requirements of this subparagraph if the
applicable individual may elect to direct the plan to
divest any such securities and to reinvest an
equivalent amount in other investment options meeting
the requirements of subparagraph (D).
``(C) Employer contributions invested in employer
securities.--In the case of the portion of the account
attributable to employer contributions other than
elective deferrals which is invested in employer
securities, a plan meets the requirements of this
subparagraph if each applicable individual who--
``(i) is a participant who has completed at
least 3 years of service, or
``(ii) is a beneficiary of a participant
described in clause (i) or of a deceased
participant,
may elect to direct the plan to divest any such
securities and to reinvest an equivalent amount in
other investment options meeting the requirements of
subparagraph (D).
``(D) Investment options.--
``(i) In general.--The requirements of this
subparagraph are met if the plan offers not
less than 3 investment options, other than
employer securities, to which an applicable
individual may direct the proceeds from the
divestment of employer securities pursuant to
this paragraph, each of which is diversified
and has materially different risk and return
characteristics.
``(ii) Treatment of certain restrictions
and conditions.--
``(I) Time for making investment
choices.--A plan shall not be treated
as failing to meet the requirements of
this subparagraph merely because the
plan limits the time for divestment and
reinvestment to periodic, reasonable
opportunities occurring no less
frequently than quarterly.
``(II) Certain restrictions and
conditions not allowed.--Except as
provided in regulations, a plan shall
not meet the requirements of this
subparagraph if the plan imposes
restrictions or conditions with respect
to the investment of employer
securities which are not imposed on the
investment of other assets of the plan.
This subclause shall not apply to any
restrictions or conditions imposed by
reason of the application of securities
laws.
``(E) Applicable defined contribution plan.--For
purposes of this paragraph--
``(i) In general.--The term `applicable
defined contribution plan' means any defined
contribution plan which holds any publicly
traded employer securities.
``(ii) Exception for certain esops.--Such
term does not include an employee stock
ownership plan if--
``(I) there are no contributions to
such plan (or earnings thereunder)
which are held within such plan and are
subject to subsection (k) or (m), and
``(II) such plan is a separate plan
for purposes of section 414(l) with
respect to any other defined benefit
plan or defined contribution plan
maintained by the same employer or
employers.
``(iii) Exception for one participant
plans.--Such term does not include a one-
participant retirement plan.
``(iv) One-participant retirement plan.--
For purposes of clause (iii), the term `one-
participant retirement plan' means a retirement
plan that--
``(I) on the first day of the plan
year covered only one individual (or
the individual and the individual's
spouse) and the individual owned 100
percent of the plan sponsor (whether or
not incorporated), or covered only one
or more partners (or partners and their
spouses) in the plan sponsor,
``(II) meets the minimum coverage
requirements of section 410(b) without
being combined with any other plan of
the business that covers the employees
of the business,
``(III) does not provide benefits
to anyone except the individual (and
the individual's spouse) or the
partners (and their spouses),
``(IV) does not cover a business
that is a member of an affiliated
service group, a controlled group of
corporations, or a group of businesses
under common control, and
``(V) does not cover a business
that uses the services of leased
employees (within the meaning of
section 414(n)).
For purposes of this clause, the term `partner'
includes a 2-percent shareholder (as defined in
section 1372(b)) of an S corporation.
``(F) Certain plans treated as holding publicly
traded employer securities.--
``(i) In general.--Except as provided in
regulations or in clause (ii), a plan holding
employer securities which are not publicly
traded employer securities shall be treated as
holding publicly traded employer securities if
any employer corporation, or any member of a
controlled group of corporations which includes
such employer corporation, has issued a class
of stock which is a publicly traded employer
security.
``(ii) Exception for certain controlled
groups with publicly traded securities.--Clause
(i) shall not apply to a plan if--
``(I) no employer corporation, or
parent corporation of an employer
corporation, has issued any publicly
traded employer security, and
``(II) no employer corporation, or
parent corporation of an employer
corporation, has issued any special
class of stock which grants particular
rights to, or bears particular risks
for, the holder or issuer with respect
to any corporation described in clause
(i) which has issued any publicly
traded employer security.
``(iii) Definitions.--For purposes of this
subparagraph, the term--
``(I) `controlled group of
corporations' has the meaning given
such term by section 1563(a), except
that `50 percent' shall be substituted
for `80 percent' each place it appears,
``(II) `employer corporation' means
a corporation which is an employer
maintaining the plan, and
``(III) `parent corporation' has
the meaning given such term by section
424(e).
``(G) Other definitions.--For purposes of this
paragraph--
``(i) Applicable individual.--The term
`applicable individual' means--
``(I) any participant in the plan,
and
``(II) any beneficiary who has an
account under the plan with respect to
which the beneficiary is entitled to
exercise the rights of a participant.
``(ii) Elective deferral.--The term
`elective deferral' means an employer
contribution described in section 402(g)(3)(A).
``(iii) Employer security.--The term
`employer security' has the meaning given such
term by section 407(d)(1) of the Employee
Retirement Income Security Act of 1974.
``(iv) Employee stock ownership plan.--The
term `employee stock ownership plan' has the
meaning given such term by section 4975(e)(7).
``(v) Publicly traded employer
securities.--The term `publicly traded employer
securities' means employer securities which are
readily tradable on an established securities
market.
``(vi) Year of service.--The term `year of
service' has the meaning given such term by
section 411(a)(5).
``(H) Transition rule for securities attributable
to employer contributions.--
``(i) Rules phased in over 3 years.--
``(I) In general.--In the case of
the portion of an account to which
subparagraph (C) applies and which
consists of employer securities
acquired in a plan year beginning
before January 1, 2007, subparagraph
(C) shall only apply to the applicable
percentage of such securities. This
subparagraph shall be applied
separately with respect to each class
of securities.
``(II) Exception for certain
participants aged 55 or over.--
Subclause (I) shall not apply to an
applicable individual who is a
participant who has attained age 55 and
completed at least 3 years of service
before the first plan year beginning
after December 31, 2005.
``(ii) Applicable percentage.--For purposes
of clause (i), the applicable percentage shall
be determined as follows:
``Plan year to which The applicable
subparagraph (C) applies: percentage is:
1st.................................................... 33
2d..................................................... 66
3d and following....................................... 100.''.
(2) Conforming amendments.--
(A) Section 401(a)(28)(B) of such Code (relating to
additional requirements relating to employee stock
ownership plans) is amended by adding at the end the
following new clause:
``(v) Exception.--This subparagraph shall
not apply to an applicable defined contribution
plan (as defined in paragraph (35)(E)).''
(B) Section 409(h)(7) of such Code is amended by
inserting ``or subparagraph (B) or (C) of section
401(a)(35)'' before the period at the end.
(C) Section 4980(c)(3)(A) of such Code is amended
by striking ``if--'' and all that follows and inserting
``if the requirements of subparagraphs (B), (C), and
(D) are met.''
(b) Amendments of ERISA.--
(1) In general.--Section 204 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1054) is amended by
redesignating subsection (j) as subsection (k) and by inserting
after subsection (i) the following new subsection:
``(j) Diversification Requirements for Certain Individual Account
Plans.--
``(1) In general.--An applicable individual account plan
shall meet the diversification requirements of paragraphs (2),
(3), and (4).
``(2) Employee contributions and elective deferrals
invested in employer securities.--In the case of the portion of
an applicable individual's account attributable to employee
contributions and elective deferrals which is invested in
employer securities, a plan meets the requirements of this
paragraph if the applicable individual may elect to direct the
plan to divest any such securities and to reinvest an
equivalent amount in other investment options meeting the
requirements of paragraph (4).
``(3) Employer contributions invested in employer
securities.--In the case of the portion of the account
attributable to employer contributions other than elective
deferrals which is invested in employer securities, a plan
meets the requirements of this paragraph if each applicable
individual who--
``(A) is a participant who has completed at least 3
years of service, or
``(B) is a beneficiary of a participant described
in subparagraph (A) or of a deceased participant,
may elect to direct the plan to divest any such securities and
to reinvest an equivalent amount in other investment options
meeting the requirements of paragraph (4).
``(4) Investment options.--
``(A) In general.--The requirements of this
paragraph are met if the plan offers not less than 3
investment options, other than employer securities, to
which an applicable individual may direct the proceeds
from the divestment of employer securities pursuant to
this subsection, each of which is diversified and has
materially different risk and return characteristics.
``(B) Treatment of certain restrictions and
conditions.--
``(i) Time for making investment choices.--
A plan shall not be treated as failing to meet
the requirements of this paragraph merely
because the plan limits the time for divestment
and reinvestment to periodic, reasonable
opportunities occurring no less frequently than
quarterly.
``(ii) Certain restrictions and conditions
not allowed.--Except as provided in
regulations, a plan shall not meet the
requirements of this paragraph if the plan
imposes restrictions or conditions with respect
to the investment of employer securities which
are not imposed on the investment of other
assets of the plan. This subparagraph shall not
apply to any restrictions or conditions imposed
by reason of the application of securities
laws.
``(5) Applicable individual account plan.--For purposes of
this subsection--
``(A) In general.--The term `applicable individual
account plan' means any individual account plan (as
defined in section 3(34)) which holds any publicly
traded employer securities.
``(B) Exception for certain esops.--Such term does
not include an employee stock ownership plan if--
``(i) there are no contributions to such
plan (or earnings thereunder) which are held
within such plan and are subject to subsection
(k) or (m) of section 401 of the Internal
Revenue Code of 1986, and
``(ii) such plan is a separate plan (for
purposes of section 414(l) of such Code) with
respect to any other defined benefit plan or
individual account plan maintained by the same
employer or employers.
``(C) Exception for one participant plans.--Such
term shall not include a one-participant retirement
plan (as defined in section 101(i)(8)(B)).
``(D) Certain plans treated as holding publicly
traded employer securities.--
``(i) In general.--Except as provided in
regulations or in clause (ii), a plan holding
employer securities which are not publicly
traded employer securities shall be treated as
holding publicly traded employer securities if
any employer corporation, or any member of a
controlled group of corporations which includes
such employer corporation, has issued a class
of stock which is a publicly traded employer
security.
``(ii) Exception for certain controlled
groups with publicly traded securities.--Clause
(i) shall not apply to a plan if--
``(I) no employer corporation, or
parent corporation of an employer
corporation, has issued any publicly
traded employer security, and
``(II) no employer corporation, or
parent corporation of an employer
corporation, has issued any special
class of stock which grants particular
rights to, or bears particular risks
for, the holder or issuer with respect
to any corporation described in clause
(i) which has issued any publicly
traded employer security.
``(iii) Definitions.--For purposes of this
subparagraph, the term--
``(I) `controlled group of
corporations' has the meaning given
such term by section 1563(a) of the
Internal Revenue Code of 1986, except
that `50 percent' shall be substituted
for `80 percent' each place it appears,
``(II) `employer corporation' means
a corporation which is an employer
maintaining the plan, and
``(III) `parent corporation' has
the meaning given such term by section
424(e) of such Code.
``(6) Other definitions.--For purposes of this paragraph--
``(A) Applicable individual.--The term `applicable
individual' means--
``(i) any participant in the plan, and
``(ii) any beneficiary who has an account
under the plan with respect to which the
beneficiary is entitled to exercise the rights
of a participant.
``(B) Elective deferral.--The term `elective
deferral' means an employer contribution described in
section 402(g)(3)(A) of the Internal Revenue Code of
1986.
``(C) Employer security.--The term `employer
security' has the meaning given such term by section
407(d)(1).
``(D) Employee stock ownership plan.--The term
`employee stock ownership plan' has the meaning given
such term by section 4975(e)(7) of such Code.
``(E) Publicly traded employer securities.--The
term `publicly traded employer securities' means
employer securities which are readily tradable on an
established securities market.
``(F) Year of service.--The term `year of service'
has the meaning given such term by section 203(b)(2).
``(7) Transition rule for securities attributable to
employer contributions.--
``(A) Rules phased in over 3 years.--
``(i) In general.--In the case of the
portion of an account to which paragraph (3)
applies and which consists of employer
securities acquired in a plan year beginning
before January 1, 2007, paragraph (3) shall
only apply to the applicable percentage of such
securities. This subparagraph shall be applied
separately with respect to each class of
securities.
``(ii) Exception for certain participants
aged 55 or over.--Clause (i) shall not apply to
an applicable individual who is a participant
who has attained age 55 and completed at least
3 years of service before the first plan year
beginning after December 31, 2005.
``(B) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage shall be
determined as follows:
``Plan year to which The applicable
paragraph (3) applies: percentage is:
1st.................................................... 33
2d..................................................... 66
3d..................................................... 100.''.
(2) Conforming amendment.--Section 407(b)(3) of such Act
(29 U.S.C. 1107(b)(3)) is amended by adding at the end the
following:
``(D) For diversification requirements for qualifying
employer securities held in certain individual account plans,
see section 204(j).''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendments made by this section shall apply to plan
years beginning after December 31, 2006.
(2) Special rule for collectively bargained agreements.--In
the case of a plan maintained pursuant to 1 or more collective
bargaining agreements between employee representatives and 1 or
more employers ratified on or before the date of the enactment
of this Act, paragraph (1) shall be applied to benefits
pursuant to, and individuals covered by, any such agreement by
substituting for ``December 31, 2006'' the earlier of--
(A) the later of--
(i) December 31, 2007, or
(ii) the date on which the last of such
collective bargaining agreements terminates
(determined without regard to any extension
thereof after such date of enactment), or
(B) December 31, 2008.
(3) Special rule for certain employer securities held in an
esop.--
(A) In general.--In the case of employer securities
to which this paragraph applies, the amendments made by
this section shall apply to plan years beginning after
the earlier of--
(i) December 31, 2007, or
(ii) the first date on which the fair
market value of such securities exceeds the
guaranteed minimum value described in
subparagraph (B)(ii).
(B) Applicable securities.--This paragraph shall
apply to employer securities which are attributable to
employer contributions other than elective deferrals,
and which, on September 17, 2003--
(i) consist of preferred stock, and
(ii) are within an employee stock ownership
plan (as defined in section 4975(e)(7) of the
Internal Revenue Code of 1986), the terms of
which provide that the value of the securities
cannot be less than the guaranteed minimum
value specified by the plan on such date.
(C) Coordination with transition rule.--In applying
section 401(a)(35)(H) of the Internal Revenue Code of
1986 and section 204(j)(7) of the Employee Retirement
Income Security Act of 1974 (as added by this section)
to employer securities to which this paragraph applies,
the applicable percentage shall be determined without
regard to this paragraph.
SEC. 902. INCREASING PARTICIPATION THROUGH AUTOMATIC CONTRIBUTION
ARRANGEMENTS.
(a) In General.--Section 401(k) of the Internal Revenue Code of
1986 (relating to cash or deferred arrangement) is amended by adding at
the end the following new paragraph:
``(13) Alternative method for automatic contribution
arrangements to meet nondiscrimination requirements.--
``(A) In general.--A qualified automatic
contribution arrangement shall be treated as meeting
the requirements of paragraph (3)(A)(ii).
``(B) Qualified automatic contribution
arrangement.--For purposes of this paragraph, the term
`qualified automatic contribution arrangement' means
any cash or deferred arrangement which meets the
requirements of subparagraphs (C) through (E).
``(C) Automatic deferral.--
``(i) In general.--The requirements of this
subparagraph are met if, under the arrangement,
each employee eligible to participate in the
arrangement is treated as having elected to
have the employer make elective contributions
in an amount equal to a qualified percentage of
compensation.
``(ii) Election out.--The election treated
as having been made under clause (i) shall
cease to apply with respect to any employee if
such employee makes an affirmative election--
``(I) to not have such
contributions made, or
``(II) to make elective
contributions at a level specified in
such affirmative election.
``(iii) Qualified percentage.--For purposes
of this subparagraph, the term `qualified
percentage' means, with respect to any
employee, any percentage determined under the
arrangement if such percentage is applied
uniformly, does not exceed 10 percent, and is
at least--
``(I) 3 percent during the period
ending on the last day of the first
plan year which begins after the date
on which the first elective
contribution described in clause (i) is
made with respect to such employee,
``(II) 4 percent during the first
plan year following the plan year
described in subclause (I),
``(III) 5 percent during the second
plan year following the plan year
described in subclause (I), and
``(IV) 6 percent during any
subsequent plan year.
``(iv) Automatic deferral for current
employees not required.--Clause (i) may be
applied without taking into account any
employee who--
``(I) was eligible to participate
in the arrangement (or a predecessor
arrangement) immediately before the
date on which such arrangement becomes
a qualified automatic contribution
arrangement (determined after
application of this clause), and
``(II) had an election in effect on
such date either to participate in the
arrangement or to not participate in
the arrangement.
``(D) Matching or nonelective contributions.--
``(i) In general.--The requirements of this
subparagraph are met if, under the arrangement,
the employer--
``(I) makes matching contributions
on behalf of each employee who is not a
highly compensated employee in an
amount equal to the sum of 100 percent
of the elective contributions of the
employee to the extent that such
contributions do not exceed 1 percent
of compensation plus 50 percent of so
much of such compensation as exceeds 1
percent but does not exceed 6 percent
of compensation, or
``(II) is required, without regard
to whether the employee makes an
elective contribution or employee
contribution, to make a contribution to
a defined contribution plan on behalf
of each employee who is not a highly
compensated employee and who is
eligible to participate in the
arrangement in an amount equal to at
least 3 percent of the employee's
compensation.
``(ii) Application of rules for matching
contributions.--The rules of clauses (ii) and
(iii) of paragraph (12)(B) shall apply for
purposes of clause (i)(I).
``(iii) Withdrawal and vesting
restrictions.--An arrangement shall not be
treated as meeting the requirements of clause
(i) unless, with respect to employer
contributions (including matching
contributions) taken into account in
determining whether the requirements of clause
(i) are met--
``(I) any employee who has
completed at least 2 years of service
(within the meaning of section 411(a))
has a nonforfeitable right to 100
percent of the employee's accrued
benefit derived from such employer
contributions, and
``(II) the requirements of
subparagraph (B) of paragraph (2) are
met with respect to all such employer
contributions.
``(iv) Application of certain other
rules.--The rules of subparagraphs (E)(ii) and
(F) of paragraph (12) shall apply for purposes
of subclauses (I) and (II) of clause (i).
``(E) Notice requirements.--
``(i) In general.--The requirements of this
subparagraph are met if, within a reasonable
period before each plan year, each employee
eligible to participate in the arrangement for
such year receives written notice of the
employee's rights and obligations under the
arrangement which--
``(I) is sufficiently accurate and
comprehensive to apprise the employee
of such rights and obligations, and
``(II) is written in a manner
calculated to be understood by the
average employee to whom the
arrangement applies.
``(ii) Timing and content requirements.--A
notice shall not be treated as meeting the
requirements of clause (i) with respect to an
employee unless--
``(I) the notice explains the
employee's right under the arrangement
to elect not to have elective
contributions made on the employee's
behalf (or to elect to have such
contributions made at a different
percentage),
``(II) in the case of an
arrangement under which the employee
may elect among 2 or more investment
options, the notice explains how
contributions made under the
arrangement will be invested in the
absence of any investment election by
the employee, and
``(III) the employee has a
reasonable period of time after receipt
of the notice described in subclauses
(I) and (II) and before the first
elective contribution is made to make
either such election.''.
(b) Matching Contributions.--Section 401(m) of such Code (relating
to nondiscrimination test for matching contributions and employee
contributions) is amended by redesignating paragraph (12) as paragraph
(13) and by inserting after paragraph (11) the following new paragraph:
``(12) Alternative method for automatic contribution
arrangements.--A defined contribution plan shall be treated as
meeting the requirements of paragraph (2) with respect to
matching contributions if the plan--
``(A) is a qualified automatic contribution
arrangement (as defined in subsection (k)(13)), and
``(B) meets the requirements of paragraph
(11)(B).''.
(c) Exclusion From Definition of Top-Heavy Plans.--
(1) Elective contribution rule.--Clause (i) of section
416(g)(4)(H) of such Code is amended by inserting ``or
401(k)(13)'' after ``section 401(k)(12)''.
(2) Matching contribution rule.--Clause (ii) of section
416(g)(4)(H) of such Code is amended by inserting ``or
401(m)(12)'' after ``section 401(m)(11)''.
(d) Treatment of Withdrawals of Contributions During First 90
Days.--
(1) In general.--Section 414 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(w) Special Rules for Certain Withdrawals From Eligible Automatic
Contribution Arrangements.--
``(1) In general.--If an eligible automatic contribution
arrangement allows an employee to elect to make permissible
withdrawals--
``(A) the amount of any such withdrawal shall be
includible in the gross income of the employee for the
taxable year of the employee in which the distribution
is made,
``(B) no tax shall be imposed under section 72(t)
with respect to the distribution, and
``(C) the arrangement shall not be treated as
violating any restriction on distributions under this
title solely by reason of allowing the withdrawal.
In the case of any distribution to an employee by reason of an
election under this paragraph, employer matching contributions
shall be forfeited or subject to such other treatment as the
Secretary may prescribe.
``(2) Permissible withdrawal.--For purposes of this
subsection--
``(A) In general.--The term `permissible
withdrawal' means any withdrawal from an eligible
automatic contribution arrangement meeting the
requirements of this paragraph which--
``(i) is made pursuant to an election by an
employee, and
``(ii) consists of elective contributions
described in paragraph (3)(B) (and earnings
attributable thereto).
``(B) Time for making election.--Subparagraph (A)
shall not apply to an election by an employee unless
the election is made no later than the date which is 90
days after the date of the first elective contribution
with respect to the employee under the arrangement.
``(C) Amount of distribution.--Subparagraph (A)
shall not apply to any election by an employee unless
the amount of any distribution by reason of the
election is equal to the amount of elective
contributions made with respect to the first payroll
period to which the eligible automatic contribution
arrangement applies to the employee and any succeeding
payroll period beginning before the effective date of
the election (and earnings attributable thereto).
``(3) Eligible automatic contribution arrangement.--For
purposes of this subsection, the term `eligible automatic
contribution arrangement' means an arrangement under an
applicable employer plan--
``(A) under which a participant may elect to have
the employer make payments as contributions under the
plan on behalf of the participant, or to the
participant directly in cash,
``(B) under which the participant is treated as
having elected to have the employer make such
contributions in an amount equal to a uniform
percentage of compensation provided under the plan
until the participant specifically elects not to have
such contributions made (or specifically elects to have
such contributions made at a different percentage),
``(C) under which, in the absence of an investment
election by the participant, contributions described in
subparagraph (B) are invested in accordance with
regulations prescribed by the Secretary of Labor under
section 404(c)(5) of the Employee Retirement Income
Security Act of 1974, and
``(D) which meets the requirements of paragraph
(4).
``(4) Notice requirements.--
``(A) In general.--The administrator of a plan
containing an arrangement described in paragraph (3)
shall, within a reasonable period before each plan
year, give to each employee to whom an arrangement
described in paragraph (3) applies for such plan year
notice of the employee's rights and obligations under
the arrangement which--
``(i) is sufficiently accurate and
comprehensive to apprise the employee of such
rights and obligations, and
``(ii) is written in a manner calculated to
be understood by the average employee to whom
the arrangement applies.
``(B) Time and form of notice.--A notice shall not
be treated as meeting the requirements of subparagraph
(A) with respect to an employee unless--
``(i) the notice includes an explanation of
the employee's right under the arrangement to
elect not to have elective contributions made
on the employee's behalf (or to elect to have
such contributions made at a different
percentage),
``(ii) the employee has a reasonable period
of time after receipt of the notice described
in clause (i) and before the first elective
contribution is made to make such election, and
``(iii) the notice explains how
contributions made under the arrangement will
be invested in the absence of any investment
election by the employee.
``(5) Applicable employer plan.--For purposes of this
subsection, the term `applicable employer plan' means--
``(A) an employees' trust described in section
401(a) which is exempt from tax under section 501(a),
``(B) a plan under which amounts are contributed by
an individual's employer for an annuity contract
described in section 403(b), and
``(C) an eligible deferred compensation plan
described in section 457(b) which is maintained by an
eligible employer described in section 457(e)(1)(A).
``(6) Special rule.--A withdrawal described in paragraph
(1) (subject to the limitation of paragraph (2)(C)) shall not
be taken into account for purposes of section 401(k)(3).''.
(2) Vesting conforming amendments.--
(A) Section 411(a)(3)(G) of such Code is amended by
inserting ``an erroneous automatic contribution under
section 414(w),'' after ``402(g)(2)(A),''.
(B) The heading of section 411(a)(3)(G) of such
Code is amended by inserting ``or erroneous automatic
contribution'' before the period.
(C) Section 401(k)(8)(E) of such Code is amended by
inserting ``an erroneous automatic contribution under
section 414(w),'' after ``402(g)(2)(A),''.
(D) The heading of section 401(k)(8)(E) of such
Code is amended by inserting ``or erroneous automatic
contribution'' before the period.
(E) Section 203(a)(3)(F) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1053(a)(3)(F))
is amended by inserting ``an erroneous automatic
contribution under section 414(w) of such Code,'' after
``402(g)(2)(A) of such Code,''.
(e) Excess Contributions.--
(1) Expansion of corrective distribution period for
automatic contribution arrangements.--Subsection (f) of section
4979 of the Internal Revenue Code of 1986 is amended--
(A) by inserting ``(6 months in the case of an
excess contribution or excess aggregate contribution to
an eligible automatic contribution arrangement (as
defined in section 414(w)(3)))'' after ``2\1/2\
months'' in paragraph (1), and
(B) by striking ``2\1/2\ Months of'' in the heading
and inserting ``Specified Period After''.
(2) Year of inclusion.--Paragraph (2) of section 4979(f) of
such Code is amended to read as follows:
``(2) Year of inclusion.--Any amount distributed as
provided in paragraph (1) shall be treated as earned and
received by the recipient in the recipient's taxable year in
which such distributions were made.''.
(3) Simplification of allocable earnings.--
(A) Section 4979.--Paragraph (1) of section 4979(f)
of such Code is amended by adding ``through the end of
the plan year for which the contribution was made''
after ``thereto''.
(B) Section 401(k) and 401(m).--
(i) Clause (i) of section 401(k)(8)(A) of
such Code is amended by adding ``through the
end of such year'' after ``such
contributions''.
(ii) Subparagraph (A) of section 401(m)(6)
of such Code is amended by adding ``through the
end of such year'' after ``to such
contributions''.
(f) Preemption of Conflicting State Regulation.--
(1) In general.--Section 514 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1144) is amended by
adding at the end the following new subsection:
``(e)(1) Notwithstanding any other provision of this section, this
title shall supersede any law of a State which would directly or
indirectly prohibit or restrict the inclusion in any plan of an
automatic contribution arrangement. The Secretary may prescribe
regulations which would establish minimum standards that such an
arrangement would be required to satisfy in order for this subsection
to apply in the case of such arrangement.
``(2) For purposes of this subsection, the term `automatic
contribution arrangement' means an arrangement----
``(A) under which a participant may elect to have the plan
sponsor make payments as contributions under the plan on behalf
of the participant, or to the participant directly in cash,
``(B) under which a participant is treated as having
elected to have the plan sponsor make such contributions in an
amount equal to a uniform percentage of compensation provided
under the plan until the participant specifically elects not to
have such contributions made (or specifically elects to have
such contributions made at a different percentage), and
``(C) under which such contributions are invested in
accordance with regulations prescribed by the Secretary under
section 404(c)(5).
``(3)(A) The plan administrator of an automatic contribution
arrangement shall, within a reasonable period before such plan year,
provide to each participant to whom the arrangement applies for such
plan year notice of the participant's rights and obligations under the
arrangement which--
``(i) is sufficiently accurate and comprehensive to apprise
the participant of such rights and obligations, and
``(ii) is written in a manner calculated to be understood
by the average participant to whom the arrangement applies.
``(B) A notice shall not be treated as meeting the requirements of
subparagraph (A) with respect to a participant unless--
``(i) the notice includes an explanation of the
participant's right under the arrangement not to have elective
contributions made on the participant's behalf (or to elect to
have such contributions made at a different percentage),
``(ii) the participant has a reasonable period of time,
after receipt of the notice described in clause (i) and before
the first elective contribution is made, to make such election,
and
``(iii) the notice explains how contributions made under
the arrangement will be invested in the absence of any
investment election by the participant.''.
(2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended by striking ``or section
302(b)(7)(F)(vi)'' inserting ``, section 302(b)(7)(F)(vi), or
section 514(e)(3)''.
(g) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007, except that the
amendments made by subsection (f) shall take effect on the date of the
enactment of this Act.
SEC. 903. TREATMENT OF ELIGIBLE COMBINED DEFINED BENEFIT PLANS AND
QUALIFIED CASH OR DEFERRED ARRANGEMENTS.
(a) Amendments of Internal Revenue Code.--Section 414 of the
Internal Revenue Code of 1986, as amended by this Act, is amended by
adding at the end the following new subsection:
``(x) Special Rules for Eligible Combined Defined Benefit Plans and
Qualified Cash or Deferred Arrangements.--
``(1) General rule.--Except as provided in this subsection,
the requirements of this title shall be applied to any defined
benefit plan or applicable defined contribution plan which are
part of an eligible combined plan in the same manner as if each
such plan were not a part of the eligible combined plan.
``(2) Eligible combined plan.--For purposes of this
subsection--
``(A) In general.--The term `eligible combined
plan' means a plan--
``(i) which is maintained by an employer
which, at the time the plan is established, is
a small employer,
``(ii) which consists of a defined benefit
plan and an applicable defined contribution
plan,
``(iii) the assets of which are held in a
single trust forming part of the plan and are
clearly identified and allocated to the defined
benefit plan and the applicable defined
contribution plan to the extent necessary for
the separate application of this title under
paragraph (1), and
``(iv) with respect to which the benefit,
contribution, vesting, and nondiscrimination
requirements of subparagraphs (B), (C), (D),
(E), and (F) are met.
For purposes of this subparagraph, the term `small
employer' has the meaning given such term by section
4980D(d)(2), except that such section shall be applied
by substituting `500' for `50' each place it appears.
``(B) Benefit requirements.--
``(i) In general.--The benefit requirements
of this subparagraph are met with respect to
the defined benefit plan forming part of the
eligible combined plan if the accrued benefit
of each participant derived from employer
contributions, when expressed as an annual
retirement benefit, is not less than the
applicable percentage of the participant's
final average pay. For purposes of this clause,
final average pay shall be determined using the
period of consecutive years (not exceeding 5)
during which the participant had the greatest
aggregate compensation from the employer.
``(ii) Applicable percentage.--For purposes
of clause (i), the applicable percentage is the
lesser of--
``(I) 1 percent multiplied by the
number of years of service with the
employer, or
``(II) 20 percent.
``(iii) Special rule for applicable defined
benefit plans.--If the defined benefit plan
under clause (i) is an applicable defined
benefit plan as defined in section
411(a)(13)(B) which meets the interest credit
requirements of section 411(b)(5)(B)(i), the
plan shall be treated as meeting the
requirements of clause (i) with respect to any
plan year if each participant receives a pay
credit for the year which is not less than the
percentage of compensation determined in
accordance with the following table:
``If the participant's age as of
the
beginning of the year is-- The percentage is--
30 or less............................................. 2
Over 30 but less than 40............................... 4
40 or over but less than 50............................ 6
50 or over............................................. 8.
``(iv) Years of service.--For purposes of
this subparagraph, years of service shall be
determined under the rules of paragraphs (4),
(5), and (6) of section 411(a), except that the
plan may not disregard any year of service
because of a participant making, or failing to
make, any elective deferral with respect to the
qualified cash or deferred arrangement to which
subparagraph (C) applies.
``(C) Contribution requirements.--
``(i) In general.--The contribution
requirements of this subparagraph with respect
to any applicable defined contribution plan
forming part of an eligible combined plan are
met if--
``(I) the qualified cash or
deferred arrangement included in such
plan constitutes an automatic
contribution arrangement, and
``(II) the employer is required to
make matching contributions on behalf
of each employee eligible to
participate in the arrangement in an
amount equal to 50 percent of the
elective contributions of the employee
to the extent such elective
contributions do not exceed 4 percent
of compensation.
Rules similar to the rules of clauses (ii) and
(iii) of section 401(k)(12)(B) shall apply for
purposes of this clause.
``(ii) Nonelective contributions.--An
applicable defined contribution plan shall not
be treated as failing to meet the requirements
of clause (i) because the employer makes
nonelective contributions under the plan but
such contributions shall not be taken into
account in determining whether the requirements
of clause (i)(II) are met.
``(D) Vesting requirements.--The vesting
requirements of this subparagraph are met if--
``(i) in the case of a defined benefit plan
forming part of an eligible combined plan an
employee who has completed at least 3 years of
service has a nonforfeitable right to 100
percent of the employee's accrued benefit under
the plan derived from employer contributions,
and
``(ii) in the case of an applicable defined
contribution plan forming part of eligible
combined plan--
``(I) an employee has a
nonforfeitable right to any matching
contribution made under the qualified
cash or deferred arrangement included
in such plan by an employer with
respect to any elective contribution,
including matching contributions in
excess of the contributions required
under subparagraph (C)(i)(II), and
``(II) an employee who has
completed at least 3 years of service
has a nonforfeitable right to 100
percent of the employee's accrued
benefit derived under the arrangement
from nonelective contributions of the
employer.
For purposes of this subparagraph, the rules of
section 411 shall apply to the extent not
inconsistent with this subparagraph.
``(E) Uniform provision of contributions and
benefits.--In the case of a defined benefit plan or
applicable defined contribution plan forming part of an
eligible combined plan, the requirements of this
subparagraph are met if all contributions and benefits
under each such plan, and all rights and features under
each such plan, must be provided uniformly to all
participants.
``(F) Requirements must be met without taking into
account social security and similar contributions and
benefits or other plans.--
``(i) In general.--The requirements of this
subparagraph are met if the requirements of
clauses (ii) and (iii) are met.
``(ii) Social security and similar
contributions.--The requirements of this clause
are met if--
``(I) the requirements of
subparagraphs (B) and (C) are met
without regard to section 401(l), and
``(II) the requirements of sections
401(a)(4) and 410(b) are met with
respect to both the applicable defined
contribution plan and defined benefit
plan forming part of an eligible
combined plan without regard to section
401(l).
``(iii) Other plans and arrangements.--The
requirements of this clause are met if the
applicable defined contribution plan and
defined benefit plan forming part of an
eligible combined plan meet the requirements of
sections 401(a)(4) and 410(b) without being
combined with any other plan.
``(3) Nondiscrimination requirements for qualified cash or
deferred arrangement.--
``(A) In general.--A qualified cash or deferred
arrangement which is included in an applicable defined
contribution plan forming part of an eligible combined
plan shall be treated as meeting the requirements of
section 401(k)(3)(A)(ii) if the requirements of
paragraph (2)(C) are met with respect to such
arrangement.
``(B) Matching contributions.--In applying section
401(m)(11) to any matching contribution with respect to
a contribution to which paragraph (2)(C) applies, the
contribution requirement of paragraph (2)(C) and the
notice requirements of paragraph (5)(B) shall be
substituted for the requirements otherwise applicable
under clauses (i) and (ii) of section 401(m)(11)(A).
``(4) Satisfaction of top-heavy rules.--A defined benefit
plan and applicable defined contribution plan forming part of
an eligible combined plan for any plan year shall be treated as
meeting the requirements of section 416 for the plan year.
``(5) Automatic contribution arrangement.--For purposes of
this subsection--
``(A) In general.--A qualified cash or deferred
arrangement shall be treated as an automatic
contribution arrangement if the arrangement--
``(i) provides that each employee eligible
to participate in the arrangement is treated as
having elected to have the employer make
elective contributions in an amount equal to 4
percent of the employee's compensation unless
the employee specifically elects not to have
such contributions made or to have such
contributions made at a different rate, and
``(ii) meets the notice requirements under
subparagraph (B).
``(B) Notice requirements.--
``(i) In general.--The requirements of this
subparagraph are met if the requirements of
clauses (ii) and (iii) are met.
``(ii) Reasonable period to make
election.--The requirements of this clause are
met if each employee to whom subparagraph
(A)(i) applies--
``(I) receives a notice explaining
the employee's right under the
arrangement to elect not to have
elective contributions made on the
employee's behalf or to have the
contributions made at a different rate,
and
``(II) has a reasonable period of
time after receipt of such notice and
before the first elective contribution
is made to make such election.
``(iii) Annual notice of rights and
obligations.--The requirements of this clause
are met if each employee eligible to
participate in the arrangement is, within a
reasonable period before any year, given notice
of the employee's rights and obligations under
the arrangement.
The requirements of clauses (i) and (ii) of section
401(k)(12)(D) shall be met with respect to the notices
described in clauses (ii) and (iii) of this
subparagraph.
``(6) Coordination with other requirements.--
``(A) Treatment of separate plans.--Section 414(k)
shall not apply to an eligible combined plan.
``(B) Reporting.--An eligible combined plan shall
be treated as a single plan for purposes of sections
6058 and 6059.
``(7) Applicable defined contribution plan.--For purposes
of this subsection--
``(A) In general.--The term `applicable defined
contribution plan' means a defined contribution plan
which includes a qualified cash or deferred
arrangement.
``(B) Qualified cash or deferred arrangement.--The
term `qualified cash or deferred arrangement' has the
meaning given such term by section 401(k)(2).''.
(b) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 210 of the Employee Retirement
Income Security Act of 1974 is amended by adding at the end the
following new subsection:
``(e) Special Rules for Eligible Combined Defined Benefit Plans and
Qualified Cash or Deferred Arrangements.--
``(1) General rule.--Except as provided in this subsection,
this Act shall be applied to any defined benefit plan or
applicable individual account plan which are part of an
eligible combined plan in the same manner as if each such plan
were not a part of the eligible combined plan.
``(2) Eligible combined plan.--For purposes of this
subsection--
``(A) In general.--The term `eligible combined
plan' means a plan--
``(i) which is maintained by an employer
which, at the time the plan is established, is
a small employer,
``(ii) which consists of a defined benefit
plan and an applicable individual account plan
each of which qualifies under section 401(a) of
the Internal Revenue Code of 1986,
``(iii) the assets of which are held in a
single trust forming part of the plan and are
clearly identified and allocated to the defined
benefit plan and the applicable individual
account plan to the extent necessary for the
separate application of this Act under
paragraph (1), and
``(iv) with respect to which the benefit,
contribution, vesting, and nondiscrimination
requirements of subparagraphs (B), (C), (D),
(E), and (F) are met.
For purposes of this subparagraph, the term `small
employer' has the meaning given such term by section
4980D(d)(2) of the Internal Revenue Code of 1986,
except that such section shall be applied by
substituting `500' for `50' each place it appears.
``(B) Benefit requirements.--
``(i) In general.--The benefit requirements
of this subparagraph are met with respect to
the defined benefit plan forming part of the
eligible combined plan if the accrued benefit
of each participant derived from employer
contributions, when expressed as an annual
retirement benefit, is not less than the
applicable percentage of the participant's
final average pay. For purposes of this clause,
final average pay shall be determined using the
period of consecutive years (not exceeding 5)
during which the participant had the greatest
aggregate compensation from the employer.
``(ii) Applicable percentage.--For purposes
of clause (i), the applicable percentage is the
lesser of--
``(I) 1 percent multiplied by the
number of years of service with the
employer, or
``(II) 20 percent.
``(iii) Special rule for applicable defined
benefit plans.--If the defined benefit plan
under clause (i) is an applicable defined
benefit plan as defined in section 203(f)(3)(B)
which meets the interest credit requirements of
section 204(b)(5)(B)(i), the plan shall be
treated as meeting the requirements of clause
(i) with respect to any plan year if each
participant receives pay credit for the year
which is not less than the percentage of
compensation determined in accordance with the
following table:
``If the participant's age as of
the
beginning of the year is-- The percentage is--
30 or less............................................. 2
Over 30 but less than 40............................... 4
40 or over but less than 50............................ 6
50 or over............................................. 8.
``(iv) Years of service.--For purposes of
this subparagraph, years of service shall be
determined under the rules of paragraphs (1),
(2), and (3) of section 203(b), except that the
plan may not disregard any year of service
because of a participant making, or failing to
make, any elective deferral with respect to the
qualified cash or deferred arrangement to which
subparagraph (C) applies.
``(C) Contribution requirements.--
``(i) In general.--The contribution
requirements of this subparagraph with respect
to any applicable individual account plan
forming part of an eligible combined plan are
met if--
``(I) the qualified cash or
deferred arrangement included in such
plan constitutes an automatic
contribution arrangement, and
``(II) the employer is required to
make matching contributions on behalf
of each employee eligible to
participate in the arrangement in an
amount equal to 50 percent of the
elective contributions of the employee
to the extent such elective
contributions do not exceed 4 percent
of compensation.
Rules similar to the rules of clauses (ii) and
(iii) of section 401(k)(12)(B) of the Internal
Revenue Code of 1986 shall apply for purposes
of this clause.
``(ii) Nonelective contributions.--An
applicable individual account plan shall not be
treated as failing to meet the requirements of
clause (i) because the employer makes
nonelective contributions under the plan but
such contributions shall not be taken into
account in determining whether the requirements
of clause (i)(II) are met.
``(D) Vesting requirements.--The vesting
requirements of this subparagraph are met if--
``(i) in the case of a defined benefit plan
forming part of an eligible combined plan an
employee who has completed at least 3 years of
service has a nonforfeitable right to 100
percent of the employee's accrued benefit under
the plan derived from employer contributions,
and
``(ii) in the case of an applicable
individual account plan forming part of
eligible combined plan--
``(I) an employee has a
nonforfeitable right to any matching
contribution made under the qualified
cash or deferred arrangement included
in such plan by an employer with
respect to any elective contribution,
including matching contributions in
excess of the contributions required
under subparagraph (C)(i)(II), and
``(II) an employee who has
completed at least 3 years of service
has a nonforfeitable right to 100
percent of the employee's accrued
benefit derived under the arrangement
from nonelective contributions of the
employer.
For purposes of this subparagraph, the rules of
section 203 shall apply to the extent not
inconsistent with this subparagraph.
``(E) Uniform provision of contributions and
benefits.--In the case of a defined benefit plan or
applicable individual account plan forming part of an
eligible combined plan, the requirements of this
subparagraph are met if all contributions and benefits
under each such plan, and all rights and features under
each such plan, must be provided uniformly to all
participants.
``(F) Requirements must be met without taking into
account social security and similar contributions and
benefits or other plans.--
``(i) In general.--The requirements of this
subparagraph are met if the requirements of
clauses (ii) and (iii) are met.
``(ii) Social security and similar
contributions.--The requirements of this clause
are met if--
``(I) the requirements of
subparagraphs (B) and (C) are met
without regard to section 401(l) of the
Internal Revenue Code of 1986, and
``(II) the requirements of sections
401(a)(4) and 410(b) of the Internal
Revenue Code of 1986 are met with
respect to both the applicable defined
contribution plan and defined benefit
plan forming part of an eligible
combined plan without regard to section
401(l) of the Internal Revenue Code of
1986.
``(iii) Other plans and arrangements.--The
requirements of this clause are met if the
applicable defined contribution plan and
defined benefit plan forming part of an
eligible combined plan meet the requirements of
sections 401(a)(4) and 410(b) of the Internal
Revenue Code of 1986 without being combined
with any other plan.
``(3) Nondiscrimination requirements for qualified cash or
deferred arrangement.--
``(A) In general.--A qualified cash or deferred
arrangement which is included in an applicable
individual account plan forming part of an eligible
combined plan shall be treated as meeting the
requirements of section 401(k)(3)(A)(ii) of the
Internal Revenue Code of 1986 if the requirements of
paragraph (2) are met with respect to such arrangement.
``(B) Matching contributions.--In applying section
401(m)(11) of such Code to any matching contribution
with respect to a contribution to which paragraph
(2)(C) applies, the contribution requirement of
paragraph (2)(C) and the notice requirements of
paragraph (5)(B) shall be substituted for the
requirements otherwise applicable under clauses (i) and
(ii) of section 401(m)(11)(A) of such Code.
``(4) Automatic contribution arrangement.--For purposes of
this subsection--
``(A) In general.--A qualified cash or deferred
arrangement shall be treated as an automatic
contribution arrangement if the arrangement--
``(i) provides that each employee eligible
to participate in the arrangement is treated as
having elected to have the employer make
elective contributions in an amount equal to 4
percent of the employee's compensation unless
the employee specifically elects not to have
such contributions made or to have such
contributions made at a different rate, and
``(ii) meets the notice requirements under
subparagraph (B).
``(B) Notice requirements.--
``(i) In general.--The requirements of this
subparagraph are met if the requirements of
clauses (ii) and (iii) are met.
``(ii) Reasonable period to make
election.--The requirements of this clause are
met if each employee to whom subparagraph
(A)(i) applies--
``(I) receives a notice explaining
the employee's right under the
arrangement to elect not to have
elective contributions made on the
employee's behalf or to have the
contributions made at a different rate,
and
``(II) has a reasonable period of
time after receipt of such notice and
before the first elective contribution
is made to make such election.
``(iii) Annual notice of rights and
obligations.--The requirements of this clause
are met if each employee eligible to
participate in the arrangement is, within a
reasonable period before any year, given notice
of the employee's rights and obligations under
the arrangement.
The requirements of this subparagraph shall not be
treated as met unless the requirements of clauses (i)
and (ii) of section 401(k)(12)(D) of the Internal
Revenue Code of 1986 are met with respect to the
notices described in clauses (ii) and (iii) of this
subparagraph.
``(5) Coordination with other requirements.--
``(A) Treatment of separate plans.--The except
clause in section 3(35) shall not apply to an eligible
combined plan.
``(B) Reporting.--An eligible combined plan shall
be treated as a single plan for purposes of section
103.
``(6) Applicable individual account plan.--For purposes of
this subsection--
``(A) In general.--The term `applicable individual
account plan' means an individual account plan which
includes a qualified cash or deferred arrangement.
``(B) Qualified cash or deferred arrangement.--The
term `qualified cash or deferred arrangement' has the
meaning given such term by section 401(k)(2) of the
Internal Revenue Code of 1986.''.
(2) Conforming changes.--
(A) The heading for section 210 of such Act is
amended to read as follows:
``SEC. 210. MULTIPLE EMPLOYER PLANS AND OTHER SPECIAL RULES.''.
(B) The table of contents in section 1 of such Act
is amended by striking the item relating to section 210
and inserting the following new item:
``Sec. 210. Multiple employer plans and other special rules.''.
(c) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2009.
SEC. 904. FASTER VESTING OF EMPLOYER NONELECTIVE CONTRIBUTIONS.
(a) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Paragraph (2) of section 411(a) of the
Internal Revenue Code of 1986 (relating to employer
contributions) is amended to read as follows:
``(2) Employer contributions.--
``(A) Defined benefit plans.--
``(i) In general.--In the case of a defined
benefit plan, a plan satisfies the requirements
of this paragraph if it satisfies the
requirements of clause (ii) or (iii).
``(ii) 5-year vesting.--A plan satisfies
the requirements of this clause if an employee
who has completed at least 5 years of service
has a nonforfeitable right to 100 percent of
the employee's accrued benefit derived from
employer contributions.
``(iii) 3 to 7 year vesting.--A plan
satisfies the requirements of this clause if an
employee has a nonforfeitable right to a
percentage of the employee's accrued benefit
derived from employer contributions determined
under the following table:
The nonforfeitable
`` Years of service: percentage is:
3...................................................... 20
4...................................................... 40
5...................................................... 60
6...................................................... 80
7 or more.............................................. 100.
``(B) Defined contribution plans.--
``(i) In general.--In the case of a defined
contribution plan, a plan satisfies the
requirements of this paragraph if it satisfies
the requirements of clause (ii) or (iii).
``(ii) 3-year vesting.--A plan satisfies
the requirements of this clause if an employee
who has completed at least 3 years of service
has a nonforfeitable right to 100 percent of
the employee's accrued benefit derived from
employer contributions.
``(iii) 2 to 6 year vesting.--A plan
satisfies the requirements of this clause if an
employee has a nonforfeitable right to a
percentage of the employee's accrued benefit
derived from employer contributions determined
under the following table:
The nonforfeitable
`` Years of service: percentage is:
2...................................................... 20
3...................................................... 40
4...................................................... 60
5...................................................... 80
6 or more.............................................. 100.''.
(2) Conforming amendment.--Section 411(a) of such Code
(relating to general rule for minimum vesting standards) is
amended by striking paragraph (12).
(b) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Paragraph (2) of section 203(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1053(a)(2)) is amended to read as follows:
``(2)(A)(i) In the case of a defined benefit plan, a plan
satisfies the requirements of this paragraph if it satisfies
the requirements of clause (ii) or (iii).
``(ii) A plan satisfies the requirements of this clause if
an employee who has completed at least 5 years of service has a
nonforfeitable right to 100 percent of the employee's accrued
benefit derived from employer contributions.
``(iii) A plan satisfies the requirements of this clause if
an employee has a nonforfeitable right to a percentage of the
employee's accrued benefit derived from employer contributions
determined under the following table:
The nonforfeitable
`` Years of service: percentage is:
3...................................................... 20
4...................................................... 40
5...................................................... 60
6...................................................... 80
7 or more.............................................. 100.
``(B)(i) In the case of an individual account plan, a plan
satisfies the requirements of this paragraph if it satisfies
the requirements of clause (ii) or (iii).
``(ii) A plan satisfies the requirements of this clause if
an employee who has completed at least 3 years of service has a
nonforfeitable right to 100 percent of the employee's accrued
benefit derived from employer contributions.
``(iii) A plan satisfies the requirements of this clause if
an employee has a nonforfeitable right to a percentage of the
employee's accrued benefit derived from employer contributions
determined under the following table:
The nonforfeitable
`` Years of service: percentage is:
2...................................................... 20
3...................................................... 40
4...................................................... 60
5...................................................... 80
6 or more.............................................. 100.''.
(2) Conforming amendment.--Section 203(a) of such Act is
amended by striking paragraph (4).
(c) Effective Dates.--
(1) In general.--Except as provided in paragraphs (2) and
(4), the amendments made by this section shall apply to
contributions for plan years beginning after December 31, 2006.
(2) Collective bargaining agreements.--In the case of a
plan maintained pursuant to one or more collective bargaining
agreements between employee representatives and one or more
employers ratified before the date of the enactment of this
Act, the amendments made by this section shall not apply to
contributions on behalf of employees covered by any such
agreement for plan years beginning before the earlier of--
(A) the later of--
(i) the date on which the last of such
collective bargaining agreements terminates
(determined without regard to any extension
thereof on or after such date of the
enactment); or
(ii) January 1, 2007; or
(B) January 1, 2009.
(3) Service required.--With respect to any plan, the
amendments made by this section shall not apply to any employee
before the date that such employee has 1 hour of service under
such plan in any plan year to which the amendments made by this
section apply.
(4) Special rule for stock ownership plans.--
Notwithstanding paragraph (1) or (2), in the case of an
employee stock ownership plan (as defined in section 4975(e)(7)
of the Internal Revenue Code of 1986) which had outstanding on
September 26, 2005, a loan incurred for the purpose of
acquiring qualifying employer securities (as defined in section
4975(e)(8) of such Code), the amendments made by this section
shall not apply to any plan year beginning before the earlier
of--
(A) the date on which the loan is fully repaid, or
(B) the date on which the loan was, as of September
26, 2005, scheduled to be fully repaid.
SEC. 905. DISTRIBUTIONS DURING WORKING RETIREMENT.
(a) Amendment to the Employee Retirement Income Security Act of
1974.--Subparagraph (A) of section 3(2) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(2)) is amended by adding at
the end the following new sentence: ``A distribution from a plan, fund,
or program shall not be treated as made in a form other than retirement
income or as a distribution prior to termination of covered employment
solely because such distribution is made to an employee who has
attained age 62 and who is not separated from employment at the time of
such distribution.''.
(b) Amendment to the Internal Revenue Code of 1986.--Subsection (a)
of section 401 of the Internal Revenue Code of 1986 (as amended by this
Act) is amended by inserting after paragraph (35) the following new
paragraph:
``(36) Distributions during working retirement.--A trust
forming part of a pension plan shall not be treated as failing
to constitute a qualified trust under this section solely
because the plan provides that a distribution may be made from
such trust to an employee who has attained age 62 and who is
not separated from employment at the time of such
distribution.''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions in plan years beginning after December 31, 2006.
SEC. 906. TREATMENT OF CERTAIN PENSION PLANS OF INDIAN TRIBAL
GOVERNMENTS.
(a) Definition of Government Plan to Include Certain Pension Plans
of Indian Tribal Governments.--
(1) Amendment to internal revenue code of 1986.--Section
414(d) of the Internal Revenue Code of 1986 (defining
governmental plan) is amended by adding at the end the
following: ``The term `governmental plan' includes a plan which
is established and maintained by an Indian tribal government
(as defined in section 7701(a)(40)), a subdivision of an Indian
tribal government (determined in accordance with section
7871(d)), or an agency or instrumentality of either, and all of
the participants of which are employees of such entity
substantially all of whose services as such an employee are in
the performance of essential governmental functions but not in
the performance of commercial activities (whether or not an
essential government function).''.
(2) Amendment to employee retirement income security act of
1974.--
(A) Section 3(32) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(32)) is amended by
adding at the end the following: ``The term
`governmental plan' includes a plan which is
established and maintained by an Indian tribal
government (as defined in section 7701(a)(40) of the
Internal Revenue Code of 1986), a subdivision of an
Indian tribal government (determined in accordance with
section 7871(d) of such Code), or an agency or
instrumentality of either, and all of the participants
of which are employees of such entity substantially all
of whose services as such an employee are in the
performance of essential governmental functions but not
in the performance of commercial activities (whether or
not an essential government function)''.
(B) Section 4021(b)(2) of such Act is amended by
adding at the end the following: ``or which is
described in the last sentence of section 3(32)''.
(b) Clarification That Tribal Governments Are Subject to the Same
Pension Plan Rules and Regulations Applied to State and Other Local
Governments and Their Police and Firefighters.--
(1) Amendments to internal revenue code of 1986.--
(A) Police and firefighters.--Subparagraph (H)
section 415(b)(2) of the Internal Revenue Code of 1986
(defining participant) is amended--
(i) in clause (i), by striking ``State or
political subdivision'' and inserting ``State,
Indian tribal government (as defined in section
7701(a)(40)), or any political subdivision'';
and
(ii) in clause (ii)(I), by striking ``State
or political subdivision'' each place it
appears and inserting ``State, Indian tribal
government (as so defined), or any political
subdivision''.
(B) State and local government plans.--
(i) In general.--Subparagraph (A) of
section 415(b)(10) of such Code (relating to
limitation to equal accrued benefit) is amended
by inserting ``or a governmental plan described
in the last sentence of section 414(d)
(relating to plans of Indian tribal
governments),'' after ``foregoing,''.
(ii) Conforming amendment.--The heading of
paragraph (1) of section 415(b) of such Code is
amended by striking ``Special rule for state
and'' and inserting ``Special rule for state,
indian tribal, and''.
(C) Government pick up contributions.--Paragraph
(2) of section 414(h) of such Code (relating to
designation by units of government) is amended by
inserting ``or a governmental plan described in the
last sentence of section 414(d) (relating to plans of
Indian tribal governments),'' after ``foregoing,''.
(2) Amendments to employee retirement income security act
of 1974.--Section 4021(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1321(b)) is amended--
(A) in paragraph (12), by striking ``or'' at the
end;
(B) in paragraph (13), by striking ``plan.'' and
inserting ``plan; or''; and
(C) by adding at the end the following:
``(14) established and maintained by an Indian tribal
government (as defined in section 7701(a)(40) of the Internal
Revenue Code of 1986), a subdivision of an Indian tribal
government (determined in accordance with section 7871(d) of
such Code), or an agency or instrumentality of either, and all
of the participants of which are employees of such entity
substantially all of whose services as such an employee are in
the performance of essential governmental functions but not in
the performance of commercial activities (whether or not an
essential government function).''.
(c) Effective Date.--The amendments made by this section shall
apply to any year beginning on or after the date of the enactment of
this Act.
TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION
SEC. 1001. REGULATIONS ON TIME AND ORDER OF ISSUANCE OF DOMESTIC
RELATIONS ORDERS.
Not later than 1 year after the date of the enactment of this Act,
the Secretary of Labor shall issue regulations under section 206(d)(3)
of the Employee Retirement Security Act of 1974 and section 414(p) of
the Internal Revenue Code of 1986 which clarify that--
(1) a domestic relations order otherwise meeting the
requirements to be a qualified domestic relations order,
including the requirements of section 206(d)(3)(D) of such Act
and section 414(p)(3) of such Code, shall not fail to be
treated as a qualified domestic relations order solely
because--
(A) the order is issued after, or revises, another
domestic relations order or qualified domestic
relations order; or
(B) of the time at which it is issued; and
(2) any order described in paragraph (1) shall be subject
to the same requirements and protections which apply to
qualified domestic relations orders, including the provisions
of section 206(d)(3)(H) of such Act and section 414(p)(7) of
such Code.
SEC. 1002. ENTITLEMENT OF DIVORCED SPOUSES TO RAILROAD RETIREMENT
ANNUITIES INDEPENDENT OF ACTUAL ENTITLEMENT OF EMPLOYEE.
(a) In General.--Section 2 of the Railroad Retirement Act of 1974
(45 U.S.C. 231a) is amended--
(1) in subsection (c)(4)(i), by striking ``(A) is entitled
to an annuity under subsection (a)(1) and (B)''; and
(2) in subsection (e)(5), by striking ``or divorced wife''
the second place it appears.
(b) Effective Date.--The amendments made by this section shall take
effect 1 year after the date of the enactment of this Act.
SEC. 1003. EXTENSION OF TIER II RAILROAD RETIREMENT BENEFITS TO
SURVIVING FORMER SPOUSES PURSUANT TO DIVORCE AGREEMENTS.
(a) In General.--Section 5 of the Railroad Retirement Act of 1974
(45 U.S.C. 231d) is amended by adding at the end the following:
``(d) Notwithstanding any other provision of law, the payment of
any portion of an annuity computed under section 3(b) to a surviving
former spouse in accordance with a court decree of divorce, annulment,
or legal separation or the terms of any court-approved property
settlement incident to any such court decree shall not be terminated
upon the death of the individual who performed the service with respect
to which such annuity is so computed unless such termination is
otherwise required by the terms of such court decree.''
(b) Effective Date.--The amendment made by this section shall take
effect 1 year after the date of the enactment of this Act.
SEC. 1004. REQUIREMENT FOR ADDITIONAL SURVIVOR ANNUITY OPTION.
(a) Amendments to Internal Revenue Code.--
(1) Election of survivor annuity.--Section 417(a)(1)(A) of
the Internal Revenue Code of 1986 is amended--
(A) in clause (i), by striking ``, and'' and
inserting a comma;
(B) by redesignating clause (ii) as clause (iii);
and
(C) by inserting after clause (i) the following:
``(ii) if the participant elects a waiver under
clause (i), may elect the qualified optional survivor
annuity at any time during the applicable election
period, and''.
(2) Definition.--Section 417 of such Code is amended by
adding at the end the following:
``(g) Definition of Qualified Optional Survivor Annuity.--
``(1) In general.--For purposes of this section, the term
`qualified optional survivor annuity' means an annuity--
``(A) for the life of the participant with a
survivor annuity for the life of the spouse which is
equal to the applicable percentage of the amount of the
annuity which is payable during the joint lives of the
participant and the spouse, and
``(B) which is the actuarial equivalent of a single
annuity for the life of the participant.
Such term also includes any annuity in a form having the effect
of an annuity described in the preceding sentence.
``(2) Applicable percentage.--
``(A) In general.--For purposes of paragraph (1),
if the survivor annuity percentage--
``(i) is less than 75 percent, the
applicable percentage is 75 percent, and
``(ii) is greater than or equal to 75
percent, the applicable percentage is 50
percent.
``(B) Survivor annuity percentage.--For purposes of
subparagraph (A), the term `survivor annuity
percentage' means the percentage which the survivor
annuity under the plan's qualified joint and survivor
annuity bears to the annuity payable during the joint
lives of the participant and the spouse.''.
(3) Notice.--Section 417(a)(3)(A)(i) of such Code is
amended by inserting ``and of the qualified optional survivor
annuity'' after ``annuity''.
(b) Amendments to ERISA.--
(1) Election of survivor annuity.--Section 205(c)(1)(A) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1055(c)(1)(A)) is amended--
(A) in clause (i), by striking ``, and'' and
inserting a comma;
(B) by redesignating clause (ii) as clause (iii);
and
(C) by inserting after clause (i) the following:
``(ii) if the participant elects a waiver under
clause (i), may elect the qualified optional survivor
annuity at any time during the applicable election
period, and''.
(2) Definition.--Section 205(d) of such Act (29 U.S.C.
1055(d)) is amended--
(A) by inserting ``(1)'' after ``(d)'';
(B) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively; and
(C) by adding at the end the following:
``(2)(A) For purposes of this section, the term `qualified optional
survivor annuity' means an annuity--
``(i) for the life of the participant with a survivor
annuity for the life of the spouse which is equal to the
applicable percentage of the amount of the annuity which is
payable during the joint lives of the participant and the
spouse, and
``(ii) which is the actuarial equivalent of a single
annuity for the life of the participant.
Such term also includes any annuity in a form having the effect of an
annuity described in the preceding sentence.
``(B)(i) For purposes of subparagraph (A), if the survivor annuity
percentage--
``(I) is less than 75 percent, the applicable percentage is
75 percent, and
``(II) is greater than or equal to 75 percent, the
applicable percentage is 50 percent.
``(ii) For purposes of clause (i), the term `survivor annuity
percentage' means the percentage which the survivor annuity under the
plan's qualified joint and survivor annuity bears to the annuity
payable during the joint lives of the participant and the spouse.''.
(3) Notice.--Section 205(c)(3)(A)(i) of such Act (29 U.S.C.
1055(c)(3)(A)(i)) is amended by inserting ``and of the
qualified optional survivor annuity'' after ``annuity''.
(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
(2) Special rule for collectively bargained plans.--In the
case of a plan maintained pursuant to 1 or more collective
bargaining agreements between employee representatives and 1 or
more employers ratified on or before the date of the enactment
of this Act, the amendments made by this section shall not
apply to plan years beginning before the earlier of--
(A) the later of--
(i) January 1, 2008, or
(ii) the date on which the last collective
bargaining agreement related to the plan
terminates (determined without regard to any
extension thereof after the date of enactment
of this Act), or
(B) January 1, 2009.
TITLE XI--ADMINISTRATIVE PROVISIONS
SEC. 1101. EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.
(a) In General.--The Secretary of the Treasury shall have full
authority to establish and implement the Employee Plans Compliance
Resolution System (or any successor program) and any other employee
plans correction policies, including the authority to waive income,
excise, or other taxes to ensure that any tax, penalty, or sanction is
not excessive and bears a reasonable relationship to the nature,
extent, and severity of the failure.
(b) Improvements.--The Secretary of the Treasury shall continue to
update and improve the Employee Plans Compliance Resolution System (or
any successor program), giving special attention to--
(1) increasing the awareness and knowledge of small
employers concerning the availability and use of the program;
(2) taking into account special concerns and circumstances
that small employers face with respect to compliance and
correction of compliance failures;
(3) extending the duration of the self-correction period
under the Self-Correction Program for significant compliance
failures;
(4) expanding the availability to correct insignificant
compliance failures under the Self-Correction Program during
audit; and
(5) assuring that any tax, penalty, or sanction that is
imposed by reason of a compliance failure is not excessive and
bears a reasonable relationship to the nature, extent, and
severity of the failure.
SEC. 1102. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.
(a) Expansion of Period.--
(1) Amendment of internal revenue code.--
(A) In general.--Section 417(a)(6)(A) of the
Internal Revenue Code of 1986 is amended by striking
``90-day'' and inserting ``180-day''.
(B) Modification of regulations.--The Secretary of
the Treasury shall modify the regulations under
sections 402(f), 411(a)(11), and 417 of the Internal
Revenue Code of 1986 by substituting ``180 days'' for
``90 days'' each place it appears in Treasury
Regulations sections 1.402(f)-1, 1.411(a)-11(c), and
1.417(e)-1(b).
(2) Amendment of erisa.--
(A) In general.--Section 205(c)(7)(A) of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1055(c)(7)(A)) is amended by striking ``90-day''
and inserting ``180-day''.
(B) Modification of regulations.--The Secretary of
the Treasury shall modify the regulations under part 2
of subtitle B of title I of the Employee Retirement
Income Security Act of 1974 relating to sections 203(e)
and 205 of such Act by substituting ``180 days'' for
``90 days'' each place it appears.
(3) Effective date.--The amendments and modifications made
or required by this subsection shall apply to years beginning
after December 31, 2006.
(b) Notification of Right To Defer.--
(1) In general.--The Secretary of the Treasury shall modify
the regulations under section 411(a)(11) of the Internal
Revenue Code of 1986 and under section 205 of the Employee
Retirement Income Security Act of 1974 to provide that the
description of a participant's right, if any, to defer receipt
of a distribution shall also describe the consequences of
failing to defer such receipt.
(2) Effective date.--
(A) In general.--The modifications required by
paragraph (1) shall apply to years beginning after
December 31, 2006.
(B) Reasonable notice.--A plan shall not be treated
as failing to meet the requirements of section
411(a)(11) of such Code or section 205 of such Act with
respect to any description of consequences described in
paragraph (1) made within 90 days after the Secretary
of the Treasury issues the modifications required by
paragraph (1) if the plan administrator makes a
reasonable attempt to comply with such requirements.
SEC. 1103. REPORTING SIMPLIFICATION.
(a) Simplified Annual Filing Requirement for Owners and Their
Spouses.--
(1) In general.--The Secretary of the Treasury shall modify
the requirements for filing annual returns with respect to one-
participant retirement plans to ensure that such plans with
assets of $250,000 or less as of the close of the plan year
need not file a return for that year.
(2) One-participant retirement plan defined.--For purposes
of this subsection, the term ``one-participant retirement
plan'' means a retirement plan with respect to which the
following requirements are met:
(A) on the first day of the plan year--
(i) the plan covered only one individual
(or the individual and the individual's spouse)
and the individual owned 100 percent of the
plan sponsor (whether or not incorporated), or
(ii) the plan covered only one or more
partners (or partners and their spouses) in the
plan sponsor;
(B) the plan meets the minimum coverage
requirements of section 410(b) of the Internal Revenue
Code of 1986 without being combined with any other plan
of the business that covers the employees of the
business;
(C) the plan does not provide benefits to anyone
except the individual (and the individual's spouse) or
the partners (and their spouses);
(D) the plan does not cover a business that is a
member of an affiliated service group, a controlled
group of corporations, or a group of businesses under
common control; and
(E) the plan does not cover a business that uses
the services of leased employees (within the meaning of
section 414(n) of such Code).
For purposes of this paragraph, the term ``partner'' includes a
2-percent shareholder (as defined in section 1372(b) of such
Code) of an S corporation.
(3) Other definitions.--Terms used in paragraph (2) which
are also used in section 414 of the Internal Revenue Code of
1986 shall have the respective meanings given such terms by
such section.
(4) Effective date.--The provisions of this subsection
shall apply to plan years beginning on or after January 1,
2007.
(b) Simplified Annual Filing Requirement for Plans With Fewer Than
25 Participants.--In the case of plan years beginning after December
31, 2006, the Secretary of the Treasury and the Secretary of Labor
shall provide for the filing of a simplified annual return for any
retirement plan which covers less than 25 participants on the first day
of a plan year and which meets the requirements described in
subparagraphs (B), (D), and (E) of subsection (a)(2).
SEC. 1104. VOLUNTARY EARLY RETIREMENT INCENTIVE AND EMPLOYMENT
RETENTION PLANS MAINTAINED BY LOCAL EDUCATIONAL AGENCIES
AND OTHER ENTITIES.
(a) Voluntary Early Retirement Incentive Plans.--
(1) Treatment as plan providing severance pay.--Section
457(e)(11) of the Internal Revenue Code of 1986 (relating to
certain plans excluded) is amended by adding at the end the
following new subparagraph:
``(D) Certain voluntary early retirement incentive
plans.--
``(i) In general.--If an applicable
voluntary early retirement incentive plan--
``(I) makes payments or supplements
as an early retirement benefit, a
retirement-type subsidy, or a benefit
described in the last sentence of
section 411(a)(9), and
``(II) such payments or supplements
are made in coordination with a defined
benefit plan which is described in
section 401(a) and includes a trust
exempt from tax under section 501(a)
and which is maintained by an eligible
employer described in paragraph (1)(A)
or by an education association
described in clause (ii)(II),
such applicable plan shall be treated for
purposes of subparagraph (A)(i) as a bona fide
severance pay plan with respect to such
payments or supplements to the extent such
payments or supplements could otherwise have
been provided under such defined benefit plan
(determined as if section 411 applied to such
defined benefit plan).
``(ii) Applicable voluntary early
retirement incentive plan.--For purposes of
this subparagraph, the term `applicable
voluntary early retirement incentive plan'
means a voluntary early retirement incentive
plan maintained by--
``(I) a local educational agency
(as defined in section 9101 of the
Elementary and Secondary Education Act
of 1965 (20 U.S.C. 7801)), or
``(II) an education association
which principally represents employees
of 1 or more agencies described in
subclause (I) and which is described in
section 501(c) (5) or (6) and exempt
from tax under section 501(a).''
(2) Age discrimination in employment act.--Section 4(l)(1)
of the Age Discrimination in Employment Act of 1967 (29 U.S.C.
623(l)(1)) is amended--
(A) by inserting ``(A)'' after ``(1)'',
(B) by redesignating subparagraphs (A) and (B) as
clauses (i) and (ii), respectively,
(C) by redesignating clauses (i) and (ii) of
subparagraph (B) (as in effect before the amendments
made by subparagraph (B)) as subclauses (I) and (II),
respectively, and
(D) by adding at the end the following:
``(B) A voluntary early retirement incentive plan that--
``(i) is maintained by--
``(I) a local educational agency (as
defined in section 9101 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C.
7801), or
``(II) an education association which
principally represents employees of 1 or more
agencies described in subclause (I) and which
is described in section 501(c) (5) or (6) of
the Internal Revenue Code of 1986 and exempt
from taxation under section 501(a) of such
Code, and
``(ii) makes payments or supplements described in
subclauses (I) and (II) of subparagraph (A)(ii) in
coordination with a defined benefit plan (as so
defined) maintained by an eligible employer described
in section 457(e)(1)(A) of such Code or by an education
association described in clause (i)(II),
shall be treated solely for purposes of subparagraph (A)(ii) as
if it were a part of the defined benefit plan with respect to
such payments or supplements. Payments or supplements under
such a voluntary early retirement incentive plan shall not
constitute severance pay for purposes of paragraph (2).''.
(b) Employment Retention Plans.--
(1) In general.--Section 457(f)(2) of the Internal Revenue
Code of 1986 (relating to exceptions) is amended by striking
``and'' at the end of subparagraph (D), by striking the period
at the end of subparagraph (E) and inserting ``, and'', and by
adding at the end the following:
``(F) that portion of any applicable employment
retention plan described in paragraph (4) with respect
to any participant.''
(2) Definitions and rules relating to employment retention
plans.--Section 457(f) of such Code is amended by adding at the
end the following new paragraph:
``(4) Employment retention plans.--For purposes of
paragraph (2)(F)--
``(A) In general.--The portion of an applicable
employment retention plan described in this paragraph
with respect to any participant is that portion of the
plan which provides benefits payable to the participant
not in excess of twice the applicable dollar limit
determined under subsection (e)(15).
``(B) Other rules.--
``(i) Limitation.--Paragraph (2)(F) shall
only apply to the portion of the plan described
in subparagraph (A) for years preceding the
year in which such portion is paid or otherwise
made available to the participant.
``(ii) Treatment.--A plan shall not be
treated for purposes of this title as providing
for the deferral of compensation for any year
with respect to the portion of the plan
described in subparagraph (A).
``(C) Applicable employment retention plan.--The
term `applicable employment retention plan' means an
employment retention plan maintained by--
``(i) a local educational agency (as
defined in section 9101 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C.
7801), or
``(ii) an education association which
principally represents employees of 1 or more
agencies described in clause (i) and which is
described in section 501(c) (5) or (6) and
exempt from taxation under section 501(a).
``(D) Employment retention plan.--The term
`employment retention plan' means a plan to pay, upon
termination of employment, compensation to an employee
of a local educational agency or education association
described in subparagraph (C) for purposes of--
``(i) retaining the services of the
employee, or
``(ii) rewarding such employee for the
employee's service with 1 or more such agencies
or associations.''.
(c) Coordination With ERISA.--Section 3(2)(B) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1002(2)(B)) is
amended by adding at the end the following: ``An applicable voluntary
early retirement incentive plan (as defined in section
457(e)(11)(D)(ii) of the Internal Revenue Code of 1986) making payments
or supplements described in section 457(e)(11)(D)(i) of such Code, and
an applicable employment retention plan (as defined in section
457(f)(4)(C) of such Code) making payments of benefits described in
section 457(f)(4)(A) of such Code, shall, for purposes of this title,
be treated as a welfare plan (and not a pension plan) with respect to
such payments and supplements.''
(d) Effective Dates.--
(1) In general.--The amendments made by this Act shall take
effect on the date of the enactment of this Act.
(2) Tax amendments.--The amendments made by subsections
(a)(1) and (b) shall apply to taxable years ending after the
date of the enactment of this Act.
(3) ERISA amendments.--The amendment made by subsection (c)
shall apply to plan years ending after the date of the
enactment of this Act.
(4) Construction.--Nothing in the amendments made by this
section shall alter or affect the construction of the Internal
Revenue Code of 1986, the Employee Retirement Income Security
Act of 1974, or the Age Discrimination in Employment Act of
1967 as applied to any plan, arrangement, or conduct to which
such amendments do not apply.
SEC. 1105. NO REDUCTION IN UNEMPLOYMENT COMPENSATION AS A RESULT OF
PENSION ROLLOVERS.
(a) In General.--Section 3304(a) of the Internal Revenue Code of
1986 (relating to requirements for State unemployment laws) is amended
by adding at the end the following new flush sentence:
``Compensation shall not be reduced under paragraph (15) for any
pension, retirement or retired pay, annuity, or similar payment which
is not includible in gross income of the individual for the taxable
year in which paid because it was part of a rollover distribution.''.
(b) Effective Date.--The amendment made by this section shall apply
to weeks beginning on or after the date of the enactment of this Act.
SEC. 1106. REVOCATION OF ELECTION RELATING TO TREATMENT AS
MULTIEMPLOYER PLAN.
(a) Amendment to ERISA.--Section 3(37) of the Employee Retirement
Income Security Act of 1974 is amended by adding at the end the
following new subparagraph (G):
``(G)(i) Within 1 year after the enactment of the Pension
Protection Act of 2006--
``(I) an election under subparagraph (E) may be
revoked, pursuant to procedures prescribed by the
Pension Benefit Guaranty Corporation, if, for each of
the 3 plan years prior to the date of the enactment of
that Act, the plan would have been a multiemployer plan
but for the election under subparagraph (E), and
``(II) a plan that meets the criteria in clauses
(i) and (ii) of subparagraph (A) of this paragraph or
that is described in clause (vi) may, pursuant to
procedures prescribed by the Pension Benefit Guaranty
Corporation, elect to be a multiemployer plan, if--
``(aa) for each of the 3 plan years
immediately before the date of the enactment of
the Pension Protection Act of 2006, the plan
has met those criteria or is so described,
``(bb) substantially all of the plan's
employer contributions for each of those plan
years were made or required to be made by
organizations that were exempt from tax under
section 501 of the Internal Revenue Code of
1986, and
``(cc) the plan was established prior to
September 2, 1974.
``(ii) An election under this paragraph shall be effective
for all purposes under this Act and under the Internal Revenue
Code of 1986, starting with the first plan year ending after
the date of the enactment of the Pension Protection Act of
2006.
``(iii) Once made, an election under this paragraph shall
be irrevocable, except that a plan described in subclause
(i)(II) shall cease to be a multiemployer plan as of the plan
year beginning immediately after the first plan year for which
the majority of its employer contributions were made or
required to be made by organizations that were not exempt from
tax under section 501 of the Internal Revenue Code of 1986.
``(iv) The fact that a plan makes an election under clause
(i)(II) does not imply that the plan was not a multiemployer
plan prior to the date of the election or would not be a
multiemployer plan without regard to the election.
``(v)(I) No later than 30 days before an election is made
under this paragraph, the plan administrator shall provide
notice of the pending election to each plan participant and
beneficiary, each labor organization representing such
participants or beneficiaries, and each employer that has an
obligation to contribute to the plan, describing the principal
differences between the guarantee programs under title IV and
the benefit restrictions under this title for single employer
and multiemployer plans, along with such other information as
the plan administrator chooses to include.
``(II) Within 180 days after the date of enactment of the
Pension Protection Act of 2006, the Secretary shall prescribe a
model notice under this subparagraph.
``(III) A plan administrator's failure to provide the
notice required under this subparagraph shall be treated for
purposes of section 502(c)(2) as a failure or refusal by the
plan administrator to file the annual report required to be
filed with the Secretary under section 101(b)(4).
``(vi) A plan is described in this clause if it is a plan--
``(I) that was established in Chicago, Illinois, on
August 12, 1881; and
``(II) sponsored by an organization described in
section 501(c)(5) of the Internal Revenue Code of 1986
and exempt from tax under section 501(a) of such
Code.''.
(b) Amendment to Internal Revenue Code.--Subsection (f) of section
414 of the Internal Revenue Code of 1986 is amended by adding at the
end the following new paragraph (6):
``(6) Election with regard to multiemployer status.--
``(A) Within 1 year after the enactment of the
Pension Protection Act of 2006--
``(i) An election under paragraph (5) may
be revoked, pursuant to procedures prescribed
by the Pension Benefit Guaranty Corporation,
if, for each of the 3 plan years prior to the
date of the enactment of that Act, the plan
would have been a multiemployer plan but for
the election under paragraph (5), and
``(ii) a plan that meets the criteria in
subparagraph (A) and (B) of paragraph (1) of
this subsection or that is described in
subparagraph (E) may, pursuant to procedures
prescribed by the Pension Benefit Guaranty
Corporation, elect to be a multiemployer plan,
if--
``(I) for each of the 3 plan years
immediately before the date of
enactment of the Pension Protection Act
of 2006, the plan has met those
criteria or is so described,
``(II) substantially all of the
plan's employer contributions for each
of those plan years were made or
required to be made by organizations
that were exempt from tax under section
501, and
``(III) the plan was established
prior to September 2, 1974.
``(B) An election under this paragraph shall be
effective for all purposes under this Act and under the
Employee Retirement Income Security Act of 1974,
starting with the first plan year ending after the date
of the enactment of the Pension Protection Act of 2006.
``(C) Once made, an election under this paragraph
shall be irrevocable, except that a plan described in
subparagraph (A)(ii) shall cease to be a multiemployer
plan as of the plan year beginning immediately after
the first plan year for which the majority of its
employer contributions were made or required to be made
by organizations that were not exempt from tax under
section 501.
``(D) The fact that a plan makes an election under
subparagraph (A)(ii) does not imply that the plan was
not a multiemployer plan prior to the date of the
election or would not be a multiemployer plan without
regard to the election.
``(E) A plan is described in this subparagraph if
it is a plan--
``(i) that was established in Chicago,
Illinois, on August 12, 1881; and
``(ii) sponsored by an organization
described in section 501(c)(5) and exempt from
tax under section 501(a).''.
SEC. 1107. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) In General.--If this section applies to any pension plan or
contract amendment--
(1) such pension plan or contract shall be treated as being
operated in accordance with the terms of the plan during the
period described in subsection (b)(2)(A), and
(2) except as provided by the Secretary of the Treasury,
such pension plan shall not fail to meet the requirements of
section 411(d)(6) of the Internal Revenue Code of 1986 and
section 204(g) of the Employee Retirement Income Security Act
of 1974 by reason of such amendment.
(b) Amendments to Which Section Applies.--
(1) In general.--This section shall apply to any amendment
to any pension plan or annuity contract which is made--
(A) pursuant to any amendment made by this Act or
pursuant to any regulation issued by the Secretary of
the Treasury or the Secretary of Labor under this Act,
and
(B) on or before the last day of the first plan
year beginning on or after January 1, 2009.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this paragraph
shall be applied by substituting ``2011'' for ``2009''.
(2) Conditions.--This section shall not apply to any
amendment unless--
(A) during the period--
(i) beginning on the date the legislative
or regulatory amendment described in paragraph
(1)(A) takes effect (or in the case of a plan
or contract amendment not required by such
legislative or regulatory amendment, the
effective date specified by the plan), and
(ii) ending on the date described in
paragraph (1)(B) (or, if earlier, the date the
plan or contract amendment is adopted), the
plan or contract is operated as if such plan or
contract amendment were in effect; and
(B) such plan or contract amendment applies
retroactively for such period.
TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS
Subtitle A--Charitable Giving Incentives
SEC. 1201. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS FOR
CHARITABLE PURPOSES.
(a) In General.--Subsection (d) of section 408 (relating to
individual retirement accounts) is amended by adding at the end the
following new paragraph:
``(8) Distributions for charitable purposes.--
``(A) In general.--So much of the aggregate amount
of qualified charitable distributions with respect to a
taxpayer made during any taxable year which does not
exceed $100,000 shall not be includible in gross income
of such taxpayer for such taxable year.
``(B) Qualified charitable distribution.--For
purposes of this paragraph, the term `qualified
charitable distribution' means any distribution from an
individual retirement plan (other than a plan described
in subsection (k) or (p))--
``(i) which is made directly by the trustee
to an organization described in section
170(b)(1)(A) (other than any organization
described in section 509(a)(3) or any fund or
account described in section 4966(d)(2)), and
``(ii) which is made on or after the date
that the individual for whose benefit the plan
is maintained has attained age 70\1/2\.
A distribution shall be treated as a qualified
charitable distribution only to the extent that the
distribution would be includible in gross income
without regard to subparagraph (A).
``(C) Contributions must be otherwise deductible.--
For purposes of this paragraph, a distribution to an
organization described in subparagraph (B)(i) shall be
treated as a qualified charitable distribution only if
a deduction for the entire distribution would be
allowable under section 170 (determined without regard
to subsection (b) thereof and this paragraph).
``(D) Application of section 72.--Notwithstanding
section 72, in determining the extent to which a
distribution is a qualified charitable distribution,
the entire amount of the distribution shall be treated
as includible in gross income without regard to
subparagraph (A) to the extent that such amount does
not exceed the aggregate amount which would have been
so includible if all amounts distributed from all
individual retirement plans were treated as 1 contract
under paragraph (2)(A) for purposes of determining the
inclusion of such distribution under section 72. Proper
adjustments shall be made in applying section 72 to
other distributions in such taxable year and subsequent
taxable years.
``(E) Denial of deduction.--Qualified charitable
distributions which are not includible in gross income
pursuant to subparagraph (A) shall not be taken into
account in determining the deduction under section 170.
``(F) Termination.--This paragraph shall not apply
to distributions made in taxable years beginning after
December 31, 2007.''.
(b) Modifications Relating to Information Returns by Certain
Trusts.--
(1) Returns.--Section 6034 (relating to returns by trusts
described in section 4947(a)(2) or claiming charitable
deductions under section 642(c)) is amended to read as follows:
``SEC. 6034. RETURNS BY CERTAIN TRUSTS.
``(a) Split-Interest Trusts.--Every trust described in section
4947(a)(2) shall furnish such information with respect to the taxable
year as the Secretary may by forms or regulations require.
``(b) Trusts Claiming Certain Charitable Deductions.--
``(1) In general.--Every trust not required to file a
return under subsection (a) but claiming a deduction under
section 642(c) for the taxable year shall furnish such
information with respect to such taxable year as the Secretary
may by forms or regulations prescribe, including--
``(A) the amount of the deduction taken under
section 642(c) within such year,
``(B) the amount paid out within such year which
represents amounts for which deductions under section
642(c) have been taken in prior years,
``(C) the amount for which such deductions have
been taken in prior years but which has not been paid
out at the beginning of such year,
``(D) the amount paid out of principal in the
current and prior years for the purposes described in
section 642(c),
``(E) the total income of the trust within such
year and the expenses attributable thereto, and
``(F) a balance sheet showing the assets,
liabilities, and net worth of the trust as of the
beginning of such year.
``(2) Exceptions.--Paragraph (1) shall not apply to a trust
for any taxable year if--
``(A) all the net income for such year, determined
under the applicable principles of the law of trusts,
is required to be distributed currently to the
beneficiaries, or
``(B) the trust is described in section
4947(a)(1).''.
(2) Increase in penalty relating to filing of information
return by split-interest trusts.--Paragraph (2) of section
6652(c) (relating to returns by exempt organizations and by
certain trusts) is amended by adding at the end the following
new subparagraph:
``(C) Split-interest trusts.--In the case of a
trust which is required to file a return under section
6034(a), subparagraphs (A) and (B) of this paragraph
shall not apply and paragraph (1) shall apply in the
same manner as if such return were required under
section 6033, except that--
``(i) the 5 percent limitation in the
second sentence of paragraph (1)(A) shall not
apply,
``(ii) in the case of any trust with gross
income in excess of $250,000, the first
sentence of paragraph (1)(A) shall be applied
by substituting `$100' for `$20', and the
second sentence thereof shall be applied by
substituting `$50,000' for `$10,000', and
``(iii) the third sentence of paragraph
(1)(A) shall be disregarded.
In addition to any penalty imposed on the trust
pursuant to this subparagraph, if the person required
to file such return knowingly fails to file the return,
such penalty shall also be imposed on such person who
shall be personally liable for such penalty.''.
(3) Confidentiality of noncharitable beneficiaries.--
Subsection (b) of section 6104 (relating to inspection of
annual information returns) is amended by adding at the end the
following new sentence: ``In the case of a trust which is
required to file a return under section 6034(a), this
subsection shall not apply to information regarding
beneficiaries which are not organizations described in section
170(c).''.
(4) Clerical amendment.--The item in the table of sections
for subpart A of part III of subchapter A of chapter 61
relating to section 6034 is amended to read as follows:
``Sec. 6034. Returns by certain trusts.''.
(c) Effective Dates.--
(1) Subsection (a).--The amendment made by subsection (a)
shall apply to distributions made in taxable years beginning
after December 31, 2005.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to returns for taxable years beginning after
December 31, 2006.
SEC. 1202. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION FOR
CONTRIBUTIONS OF FOOD INVENTORY.
(a) In General.--Section 170(e)(3)(C)(iv) (relating to termination)
is amended by striking ``2005'' and inserting ``2007''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made after December 31, 2005.
SEC. 1203. BASIS ADJUSTMENT TO STOCK OF S CORPORATION CONTRIBUTING
PROPERTY.
(a) In General.--Paragraph (2) of section 1367(a) (relating to
adjustments to basis of stock of shareholders, etc.) is amended by
adding at the end the following new flush sentence:
``The decrease under subparagraph (B) by reason of a charitable
contribution (as defined in section 170(c)) of property shall
be the amount equal to the shareholder's pro rata share of the
adjusted basis of such property. The preceding sentence shall
not apply to contributions made in taxable years beginning
after December 31, 2007.''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made in taxable years beginning after December 31,
2005.
SEC. 1204. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION FOR
CONTRIBUTIONS OF BOOK INVENTORY.
(a) In General.--Section 170(e)(3)(D)(iv) (relating to termination)
is amended by striking ``2005'' and inserting ``2007''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made after December 31, 2005.
SEC. 1205. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS TO
CONTROLLING EXEMPT ORGANIZATIONS.
(a) In General.--Paragraph (13) of section 512(b) (relating to
special rules for certain amounts received from controlled entities) is
amended by redesignating subparagraph (E) as subparagraph (F) and by
inserting after subparagraph (D) the following new subparagraph:
``(E) Paragraph to apply only to certain excess
payments.--
``(i) In general.--Subparagraph (A) shall
apply only to the portion of a qualifying
specified payment received or accrued by the
controlling organization that exceeds the
amount which would have been paid or accrued if
such payment met the requirements prescribed
under section 482.
``(ii) Addition to tax for valuation
misstatements.--The tax imposed by this chapter
on the controlling organization shall be
increased by an amount equal to 20 percent of
the larger of--
``(I) such excess determined
without regard to any amendment or
supplement to a return of tax, or
``(II) such excess determined with
regard to all such amendments and
supplements.
``(iii) Qualifying specified payment.--The
term `qualifying specified payment' means a
specified payment which is made pursuant to--
``(I) a binding written contract in
effect on the date of the enactment of
this subparagraph, or
``(II) a contract which is a
renewal, under substantially similar
terms, of a contract described in
subclause (I).
``(iv) Termination.--This subparagraph
shall not apply to payments received or accrued
after December 31, 2007.''.
(b) Reporting.--
(1) In general.--Section 6033 (relating to returns by
exempt organizations) is amended by redesignating subsection
(h) as subsection (i) and by inserting after subsection (g) the
following new subsection:
``(h) Controlling Organizations.--Each controlling organization
(within the meaning of section 512(b)(13)) which is subject to the
requirements of subsection (a) shall include on the return required
under subsection (a)--
``(1) any interest, annuities, royalties, or rents received
from each controlled entity (within the meaning of section
512(b)(13)),
``(2) any loans made to each such controlled entity, and
``(3) any transfers of funds between such controlling
organization and each such controlled entity.''.
(2) Report to congress.--Not later than January 1, 2009,
the Secretary of the Treasury shall submit to the Committee on
Finance of the Senate and the Committee on Ways and Means of
the House of Representatives a report on the effectiveness of
the Internal Revenue Service in administering the amendments
made by subsection (a) and on the extent to which payments by
controlled entities (within the meaning of section 512(b)(13)
of the Internal Revenue Code of 1986) to controlling
organizations (within the meaning of section 512(b)(13) of such
Code) meet the requirements under section 482 of such Code.
Such report shall include the results of any audit of any
controlling organization or controlled entity and
recommendations relating to the tax treatment of payments from
controlled entities to controlling organizations.
(c) Effective Date.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply to payments received or accrued after December 31,
2005.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to returns the due date (determined without regard
to extensions) of which is after the date of the enactment of
this Act.
SEC. 1206. ENCOURAGEMENT OF CONTRIBUTIONS OF CAPITAL GAIN REAL PROPERTY
MADE FOR CONSERVATION PURPOSES.
(a) In General.--
(1) Individuals.--Paragraph (1) of section 170(b) (relating
to percentage limitations) is amended by redesignating
subparagraphs (E) and (F) as subparagraphs (F) and (G),
respectively, and by inserting after subparagraph (D) the
following new subparagraph:
``(E) Contributions of qualified conservation
contributions.--
``(i) In general.--Any qualified
conservation contribution (as defined in
subsection (h)(1)) shall be allowed to the
extent the aggregate of such contributions does
not exceed the excess of 50 percent of the
taxpayer's contribution base over the amount of
all other charitable contributions allowable
under this paragraph.
``(ii) Carryover.--If the aggregate amount
of contributions described in clause (i)
exceeds the limitation of clause (i), such
excess shall be treated (in a manner consistent
with the rules of subsection (d)(1)) as a
charitable contribution to which clause (i)
applies in each of the 15 succeeding years in
order of time.
``(iii) Coordination with other
subparagraphs.--For purposes of applying this
subsection and subsection (d)(1), contributions
described in clause (i) shall not be treated as
described in subparagraph (A), (B), (C), or (D)
and such subparagraphs shall apply without
regard to such contributions.
``(iv) Special rule for contribution of
property used in agriculture or livestock
production.--
``(I) In general.--If the
individual is a qualified farmer or
rancher for the taxable year for which
the contribution is made, clause (i)
shall be applied by substituting `100
percent' for `50 percent'.
``(II) Exception.--Subclause (I)
shall not apply to any contribution of
property made after the date of the
enactment of this subparagraph which is
used in agriculture or livestock
production (or available for such
production) unless such contribution is
subject to a restriction that such
property remain available for such
production. This subparagraph shall be
applied separately with respect to
property to which subclause (I) does
not apply by reason of the preceding
sentence prior to its application to
property to which subclause (I) does
apply.
``(v) Definition.--For purposes of clause
(iv), the term `qualified farmer or rancher'
means a taxpayer whose gross income from the
trade or business of farming (within the
meaning of section 2032A(e)(5)) is greater than
50 percent of the taxpayer's gross income for
the taxable year.
``(vi) Termination.--This subparagraph
shall not apply to any contribution made in
taxable years beginning after December 31,
2007.''.
(2) Corporations.--Paragraph (2) of section 170(b) is
amended to read as follows:
``(2) Corporations.--In the case of a corporation--
``(A) In general.--The total deductions under
subsection (a) for any taxable year (other than for
contributions to which subparagraph (B) applies) shall
not exceed 10 percent of the taxpayer's taxable income.
``(B) Qualified conservation contributions by
certain corporate farmers and ranchers.--
``(i) In general.--Any qualified
conservation contribution (as defined in
subsection (h)(1))--
``(I) which is made by a
corporation which, for the taxable year
during which the contribution is made,
is a qualified farmer or rancher (as
defined in paragraph (1)(E)(v)) and the
stock of which is not readily tradable
on an established securities market at
any time during such year, and
``(II) which, in the case of
contributions made after the date of
the enactment of this subparagraph, is
a contribution of property which is
used in agriculture or livestock
production (or available for such
production) and which is subject to a
restriction that such property remain
available for such production,
shall be allowed to the extent the aggregate of
such contributions does not exceed the excess
of the taxpayer's taxable income over the
amount of charitable contributions allowable
under subparagraph (A).
``(ii) Carryover.--If the aggregate amount
of contributions described in clause (i)
exceeds the limitation of clause (i), such
excess shall be treated (in a manner consistent
with the rules of subsection (d)(2)) as a
charitable contribution to which clause (i)
applies in each of the 15 succeeding years in
order of time.
``(iii) Termination.--This subparagraph
shall not apply to any contribution made in
taxable years beginning after December 31,
2007.
``(C) Taxable income.--For purposes of this
paragraph, taxable income shall be computed without
regard to--
``(i) this section,
``(ii) part VIII (except section 248),
``(iii) any net operating loss carryback to
the taxable year under section 172,
``(iv) section 199, and
``(v) any capital loss carryback to the
taxable year under section 1212(a)(1).''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 170(d) is amended by striking
``subsection (b)(2)'' each place it appears and inserting
``subsection (b)(2)(A)''.
(2) Section 545(b)(2) is amended by striking ``and (D)''
and inserting ``(D), and (E)''.
(c) Effective Date.--The amendments made by this section shall
apply to contributions made in taxable years beginning after December
31, 2005.
SEC. 1207. EXCISE TAXES EXEMPTION FOR BLOOD COLLECTOR ORGANIZATIONS.
(a) Exemption From Imposition of Special Fuels Tax.--Section
4041(g) (relating to other exemptions) is amended by striking ``and''
at the end of paragraph (3), by striking the period in paragraph (4)
and inserting ``; and'', and by inserting after paragraph (4) the
following new paragraph:
``(5) with respect to the sale of any liquid to a qualified
blood collector organization (as defined in section
7701(a)(49)) for such organization's exclusive use in the
collection, storage, or transportation of blood.''.
(b) Exemption From Manufacturers Excise Tax.--
(1) In general.--Section 4221(a) (relating to certain tax-
free sales) is amended by striking ``or'' at the end of
paragraph (4), by adding ``or'' at the end of paragraph (5),
and by inserting after paragraph (5) the following new
paragraph:
``(6) to a qualified blood collector organization (as
defined in section 7701(a)(49)) for such organization's
exclusive use in the collection, storage, or transportation of
blood,''.
(2) No exemption with respect to vaccines and recreational
equipment.--Section 4221(a) is amended by adding at the end the
following new sentence: ``In the case of taxes imposed by
subchapter C or D, paragraph (6) shall not apply.''.
(3) Conforming amendments.--
(A) The second sentence of section 4221(a) is
amended by striking ``Paragraphs (4) and (5)'' and
inserting ``Paragraphs (4), (5), and (6)''.
(B) Section 6421(c) is amended by striking ``or
(5)'' and inserting ``(5), or (6)''.
(c) Exemption From Communication Excise Tax.--
(1) In general.--Section 4253 (relating to exemptions) is
amended by redesignating subsection (k) as subsection (l) and
inserting after subsection (j) the following new subsection:
``(k) Exemption for Qualified Blood Collector Organizations.--Under
regulations provided by the Secretary, no tax shall be imposed under
section 4251 on any amount paid by a qualified blood collector
organization (as defined in section 7701(a)(49)) for services or
facilities furnished to such organization.''.
(2) Conforming amendment.--Section 4253(l), as redesignated
by paragraph (1), is amended by striking ``or (j)'' and
inserting ``(j), or (k)''.
(d) Exemption From Tax on Heavy Vehicles.--Section 4483 is amended
by redesignating subsection (h) as subsection (i) and by inserting
after subsection (g) the following new subsection:
``(h) Exemption for Vehicles Used in Blood Collection.--
``(1) In general.--No tax shall be imposed by section 4481
on the use of any qualified blood collector vehicle by a
qualified blood collector organization.
``(2) Qualified blood collector vehicle.--For purposes of
this subsection, the term `qualified blood collector vehicle'
means a vehicle at least 80 percent of the use of which during
the prior taxable period was by a qualified blood collector
organization in the collection, storage, or transportation of
blood.
``(3) Special rule for vehicles first placed in service in
a taxable period.--In the case of a vehicle first placed in
service in a taxable period, a vehicle shall be treated as a
qualified blood collector vehicle for such taxable period if
such qualified blood collector organization certifies to the
Secretary that the organization reasonably expects at least 80
percent of the use of such vehicle by the organization during
such taxable period will be in the collection, storage, or
transportation of blood.
``(4) Qualified blood collector organization.--The term
`qualified blood collector organization' has the meaning given
such term by section 7701(a)(49).''.
(e) Credit or Refund for Certain Taxes on Sales and Services.--
(1) Deemed overpayment.--
(A) In general.--Section 6416(b)(2) is amended by
redesignating subparagraphs (E) and (F) as
subparagraphs (F) and (G), respectively, and by
inserting after subparagraph (D) the following new
subparagraph:
``(E) sold to a qualified blood collector
organization (as defined in section 7701(a)(49)) for
such organization's exclusive use in the collection,
storage, or transportation of blood;''.
(B) No credit or refund for vaccines or
recreational equipment.--Section 6416(b)(2) is amended
by adding at the end the following new sentence: ``In
the case of taxes imposed by subchapter C or D of
chapter 32, subparagraph (E) shall not apply.''.
(C) Conforming amendments.--Section 6416(b)(2) is
amended--
(i) by striking ``Subparagraphs (C) and
(D)'' in the second sentence and inserting
``Subparagraphs (C), (D), and (E)''.
(ii) by striking ``(B), (C), and (D)'' and
inserting ``(B), (C), (D), and (E)''.
(2) Sales of tires.--Section 6416(b)(4)(B) is amended by
striking ``or'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting ``, or'', and by
adding after clause (ii) the following:
``(iii) sold to a qualified blood collector
organization for its exclusive use in
connection with a vehicle the organization
certifies will be primarily used in the
collection, storage, or transportation of
blood.''.
(f) Definition of Qualified Blood Collector Organization.--Section
7701(a) is amended by inserting at the end the following new paragraph:
``(49) Qualified blood collector organization.--The term
`qualified blood collector organization' means an organization
which is--
``(A) described in section 501(c)(3) and exempt
from tax under section 501(a),
``(B) primarily engaged in the activity of the
collection of human blood,
``(C) registered with the Secretary for purposes of
excise tax exemptions, and
``(D) registered by the Food and Drug
Administration to collect blood.''.
(g) Effective Date.--
(1) In general.--The amendments made by this section shall
take effect on January 1, 2007.
(2) Subsection (d).--The amendment made by subsection (d)
shall apply to taxable periods beginning on or after July 1,
2007.
Subtitle B--Reforming Exempt Organizations
PART 1--GENERAL REFORMS
SEC. 1211. REPORTING ON CERTAIN ACQUISITIONS OF INTERESTS IN INSURANCE
CONTRACTS IN WHICH CERTAIN EXEMPT ORGANIZATIONS HOLD AN
INTEREST.
(a) Reporting Requirements.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 (relating to information concerning transactions
with other persons), as amended by this Act, is amended by
adding at the end the following new section:
``SEC. 6050V. RETURNS RELATING TO APPLICABLE INSURANCE CONTRACTS IN
WHICH CERTAIN EXEMPT ORGANIZATIONS HOLD INTERESTS.
``(a) In General.--Each applicable exempt organization which makes
a reportable acquisition shall make the return described in subsection
(c).
``(b) Time for Making Return.--Any applicable exempt organization
required to make a return under subsection (a) shall file such return
at such time as may be established by the Secretary.
``(c) Form and Manner of Returns.--A return is described in this
subsection if such return--
``(1) is in such form as the Secretary prescribes,
``(2) contains the name, address, and taxpayer
identification number of the applicable exempt organization and
the issuer of the applicable insurance contract, and
``(3) contains such other information as the Secretary may
prescribe.
``(d) Definitions.--For purposes of this section--
``(1) Reportable acquisition.--The term `reportable
acquisition' means the acquisition by an applicable exempt
organization of a direct or indirect interest in any applicable
insurance contract in any case in which such acquisition is a
part of a structured transaction involving a pool of such
contracts.
``(2) Applicable insurance contract.--
``(A) In general.--The term `applicable insurance
contract' means any life insurance, annuity, or
endowment contract with respect to which both an
applicable exempt organization and a person other than
an applicable exempt organization have directly or
indirectly held an interest in the contract (whether or
not at the same time).
``(B) Exceptions.--Such term shall not include a
life insurance, annuity, or endowment contract if--
``(i) all persons directly or indirectly
holding any interest in the contract (other
than applicable exempt organizations) have an
insurable interest in the insured under the
contract independent of any interest of an
applicable exempt organization in the contract,
``(ii) the sole interest in the contract of
an applicable exempt organization or each
person other than an applicable exempt
organization is as a named beneficiary, or
``(iii) the sole interest in the contract
of each person other than an applicable exempt
organization is--
``(I) as a beneficiary of a trust
holding an interest in the contract,
but only if the person's designation as
such beneficiary was made without
consideration and solely on a purely
gratuitous basis, or
``(II) as a trustee who holds an
interest in the contract in a fiduciary
capacity solely for the benefit of
applicable exempt organizations or
persons otherwise described in
subclause (I) or clause (i) or (ii).
``(3) Applicable exempt organization.--The term `applicable
exempt organization' means--
``(A) an organization described in section 170(c),
``(B) an organization described in section
168(h)(2)(A)(iv), or
``(C) an organization not described in paragraph
(1) or (2) which is described in section 2055(a) or
section 2522(a).
``(e) Termination.--This section shall not apply to reportable
acquisitions occurring after the date which is 2 years after the date
of the enactment of this section.''.
(2) Conforming amendment.--The table of sections for
subpart B of part III of subchapter A of chapter 61 is amended
by adding at the end the following new item:
``Sec. 6050V. Returns relating to applicable insurance contracts in
which certain exempt organizations hold
interests.''.
(b) Penalties.--
(1) In general.--Subparagraph (B) of section 6724(d)(1), as
amended by this Act, is amended by redesignating clauses (xiv)
through (xix) as clauses (xv) through (xx) and by inserting
after clause (xiii) the following new clause:
``(xiv) section 6050V (relating to returns
relating to applicable insurance contracts in
which certain exempt organizations hold
interests),''.
(2) Intentional disregard.--Section 6721(e)(2) is amended
by striking ``or'' at the end of subparagraph (B), by striking
``and'' at the end of subparagraph (C) and inserting ``or'',
and by adding at the end the following new subparagraph:
``(D) in the case of a return required to be filed
under section 6050V, 10 percent of the value of the
benefit of any contract with respect to which
information is required to be included on the return,
and''.
(c) Study.--
(1) In general.--The Secretary of the Treasury shall
undertake a study on--
(A) the use by tax exempt organizations of
applicable insurance contracts (as defined under
section 6050V(d)(2) of the Internal Revenue Code of
1986, as added by subsection (a)) for the purpose of
sharing the benefits of the organization's insurable
interest in individuals insured under such contracts
with investors, and
(B) whether such activities are consistent with the
tax exempt status of such organizations.
(2) Report.--Not later than 30 months after the date of the
enactment of this Act, the Secretary of the Treasury shall
report on the study conducted under paragraph (1) to the
Committee on Finance of the Senate and the Committee on Ways
and Means of the House of Representatives.
(d) Effective Date.--The amendments made by this section shall
apply to acquisitions of contracts after the date of enactment of this
Act.
SEC. 1212. INCREASE IN PENALTY EXCISE TAXES RELATING TO PUBLIC
CHARITIES, SOCIAL WELFARE ORGANIZATIONS, AND PRIVATE
FOUNDATIONS.
(a) Taxes on Self-Dealing and Excess Benefit Transactions.--
(1) In general.--Section 4941(a) (relating to initial
taxes) is amended--
(A) in paragraph (1), by striking ``5 percent'' and
inserting ``10 percent'', and
(B) in paragraph (2), by striking ``2\1/2\
percent'' and inserting ``5 percent''.
(2) Increased limitation for managers on self-dealing.--
Section 4941(c)(2) is amended by striking ``$10,000'' each
place it appears in the text and heading thereof and inserting
``$20,000''.
(3) Increased limitation for managers on excess benefit
transactions.--Section 4958(d)(2) is amended by striking
``$10,000'' and inserting ``$20,000''.
(b) Taxes on Failure to Distribute Income.--Section 4942(a)
(relating to initial tax) is amended by striking ``15 percent'' and
inserting ``30 percent''.
(c) Taxes on Excess Business Holdings.--Section 4943(a)(1)
(relating to imposition) is amended by striking ``5 percent'' and
inserting ``10 percent''.
(d) Taxes on Investments Which Jeopardize Charitable Purpose.--
(1) In general.--Section 4944(a) (relating to initial
taxes) is amended by striking ``5 percent'' both places it
appears and inserting ``10 percent''.
(2) Increased limitation for managers.--Section 4944(d)(2)
is amended--
(A) by striking ``$5,000,'' and inserting
``$10,000,'', and
(B) by striking ``$10,000.'' and inserting
``$20,000.''.
(e) Taxes on Taxable Expenditures.--
(1) In general.--Section 4945(a) (relating to initial
taxes) is amended--
(A) in paragraph (1), by striking ``10 percent''
and inserting ``20 percent'', and
(B) in paragraph (2), by striking ``2\1/2\
percent'' and inserting ``5 percent''.
(2) Increased limitation for managers.--Section 4945(c)(2)
is amended--
(A) by striking ``$5,000,'' and inserting
``$10,000,'', and
(B) by striking ``$10,000.'' and inserting
``$20,000.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 1213. REFORM OF CHARITABLE CONTRIBUTIONS OF CERTAIN EASEMENTS IN
REGISTERED HISTORIC DISTRICTS AND REDUCED DEDUCTION FOR
PORTION OF QUALIFIED CONSERVATION CONTRIBUTION
ATTRIBUTABLE TO REHABILITATION CREDIT.
(a) Special Rules With Respect to Buildings in Registered Historic
Districts.--
(1) In general.--Paragraph (4) of section 170(h) (relating
to definition of conservation purpose) is amended by
redesignating subparagraph (B) as subparagraph (C) and by
inserting after subparagraph (A) the following new
subparagraph:
``(B) Special rules with respect to buildings in
registered historic districts.--In the case of any
contribution of a qualified real property interest
which is a restriction with respect to the exterior of
a building described in subparagraph (C)(ii), such
contribution shall not be considered to be exclusively
for conservation purposes unless--
``(i) such interest--
``(I) includes a restriction which
preserves the entire exterior of the
building (including the front, sides,
rear, and height of the building), and
``(II) prohibits any change in the
exterior of the building which is
inconsistent with the historical
character of such exterior,
``(ii) the donor and donee enter into a
written agreement certifying, under penalty of
perjury, that the donee--
``(I) is a qualified organization
(as defined in paragraph (3)) with a
purpose of environmental protection,
land conservation, open space
preservation, or historic preservation,
and
``(II) has the resources to manage
and enforce the restriction and a
commitment to do so, and
``(iii) in the case of any contribution
made in a taxable year beginning after the date
of the enactment of this subparagraph, the
taxpayer includes with the taxpayer's return
for the taxable year of the contribution--
``(I) a qualified appraisal (within
the meaning of subsection (f)(11)(E))
of the qualified property interest,
``(II) photographs of the entire
exterior of the building, and
``(III) a description of all
restrictions on the development of the
building.''.
(b) Disallowance of Deduction for Structures and Land in Registered
Historic Districts.--Subparagraph (C) of section 170(h)(4), as
redesignated by subsection (a), is amended--
(1) by striking ``any building, structure, or land area
which'',
(2) by inserting ``any building, structure, or land area
which'' before ``is listed'' in clause (i), and
(3) by inserting ``any building which'' before ``is
located'' in clause (ii).
(c) Filing Fee for Certain Contributions.--Subsection (f) of
section 170 (relating to disallowance of deduction in certain cases and
special rules) is amended by adding at the end the following new
paragraph:
``(13) Contributions of certain interests in buildings
located in registered historic districts.--
``(A) In general.--No deduction shall be allowed
with respect to any contribution described in
subparagraph (B) unless the taxpayer includes with the
return for the taxable year of the contribution a $500
filing fee.
``(B) Contribution described.--A contribution is
described in this subparagraph if such contribution is
a qualified conservation contribution (as defined in
subsection (h)) which is a restriction with respect to
the exterior of a building described in subsection
(h)(4)(C)(ii) and for which a deduction is claimed in
excess of $10,000.
``(C) Dedication of fee.--Any fee collected under
this paragraph shall be used for the enforcement of the
provisions of subsection (h).''.
(d) Reduced Deduction for Portion of Qualified Conservation
Contribution Attributable to the Rehabilitation Credit.--Subsection (f)
of section 170, as amended by subsection (c), is amended by adding at
the end the following new paragraph:
``(14) Reduction for amounts attributable to rehabilitation
credit.--In the case of any qualified conservation contribution
(as defined in subsection (h)), the amount of the deduction
allowed under this section shall be reduced by an amount which
bears the same ratio to the fair market value of the
contribution as--
``(A) the sum of the credits allowed to the
taxpayer under section 47 for the 5 preceding taxable
years with respect to any building which is a part of
such contribution, bears to
``(B) the fair market value of the building on the
date of the contribution.''.
(e) Effective Dates.--
(1) Special rules for buildings in registered historic
districts.--The amendments made by subsection (a) shall apply
to contributions made after July 25, 2006.
(2) Disallowance of deduction for structures and land;
reduction for rehabilitation credit.--The amendments made by
subsections (b) and (d) shall apply to contributions made after
the date of the enactment of this Act.
(3) Filing fee.--The amendment made by subsection (c) shall
apply to contributions made 180 days after the date of the
enactment of this Act.
SEC. 1214. CHARITABLE CONTRIBUTIONS OF TAXIDERMY PROPERTY.
(a) Denial of Long-Term Capital Gain.--Subparagraph (B) of section
170(e)(1) is amended by striking ``or'' at the end of clause (ii), by
inserting ``or'' at the end of clause (iii), and by inserting after
clause (iii) the following new clause:
``(iv) of any taxidermy property which is
contributed by the person who prepared,
stuffed, or mounted the property or by any
person who paid or incurred the cost of such
preparation, stuffing, or mounting,''.
(b) Treatment of Basis.--Subsection (f) of section 170, as amended
by this Act, is amended by adding at the end the following new
paragraph:
``(15) Special rule for taxidermy property.--
``(A) Basis.--For purposes of this section and
notwithstanding section 1012, in the case of a
charitable contribution of taxidermy property which is
made by the person who prepared, stuffed, or mounted
the property or by any person who paid or incurred the
cost of such preparation, stuffing, or mounting, only
the cost of the preparing, stuffing, or mounting shall
be included in the basis of such property.
``(B) Taxidermy property.--For purposes of this
section, the term `taxidermy property' means any work
of art which--
``(i) is the reproduction or preservation
of an animal, in whole or in part,
``(ii) is prepared, stuffed, or mounted for
purposes of recreating one or more
characteristics of such animal, and
``(iii) contains a part of the body of the
dead animal.''.
(c) Effective Date.--The amendment made by this section shall apply
to contributions made after July 25, 2006.
SEC. 1215. RECAPTURE OF TAX BENEFIT FOR CHARITABLE CONTRIBUTIONS OF
EXEMPT USE PROPERTY NOT USED FOR AN EXEMPT USE.
(a) Recapture of Deduction on Certain Sales of Exempt Use
Property.--
(1) In general.--Clause (i) of section 170(e)(1)(B)
(related to certain contributions of ordinary income and
capital gain property) is amended to read as follows:
``(i) of tangible personal property--
``(I) if the use by the donee is
unrelated to the purpose or function
constituting the basis for its
exemption under section 501 (or, in the
case of a governmental unit, to any
purpose or function described in
subsection (c)), or
``(II) which is applicable property
(as defined in paragraph (7)(C)) which
is sold, exchanged, or otherwise
disposed of by the donee before the
last day of the taxable year in which
the contribution was made and with
respect to which the donee has not made
a certification in accordance with
paragraph (7)(D),''.
(2) Dispositions after close of taxable year.--Section
170(e) is amended by adding at the end the following new
paragraph:
``(7) Recapture of deduction on certain dispositions of
exempt use property.--
``(A) In general.--In the case of an applicable
disposition of applicable property, there shall be
included in the income of the donor of such property
for the taxable year of such donor in which the
applicable disposition occurs an amount equal to the
excess (if any) of--
``(i) the amount of the deduction allowed
to the donor under this section with respect to
such property, over
``(ii) the donor's basis in such property
at the time such property was contributed.
``(B) Applicable disposition.--For purposes of this
paragraph, the term `applicable disposition' means any
sale, exchange, or other disposition by the donee of
applicable property--
``(i) after the last day of the taxable
year of the donor in which such property was
contributed, and
``(ii) before the last day of the 3-year
period beginning on the date of the
contribution of such property,
unless the donee makes a certification in accordance
with subparagraph (D).
``(C) Applicable property.--For purposes of this
paragraph, the term `applicable property' means
charitable deduction property (as defined in section
6050L(a)(2)(A))--
``(i) which is tangible personal property
the use of which is identified by the donee as
related to the purpose or function constituting
the basis of the donee's exemption under
section 501, and
``(ii) for which a deduction in excess of
the donor's basis is allowed.
``(D) Certification.--A certification meets the
requirements of this subparagraph if it is a written
statement which is signed under penalty of perjury by
an officer of the donee organization and--
``(i) which--
``(I) certifies that the use of the
property by the donee was related to
the purpose or function constituting
the basis for the donee's exemption
under section 501, and
``(II) describes how the property
was used and how such use furthered
such purpose or function, or
``(ii) which--
``(I) states the intended use of
the property by the donee at the time
of the contribution, and
``(II) certifies that such intended
use has become impossible or infeasible
to implement.''.
(b) Reporting Requirements.--Paragraph (1) of section 6050L(a)
(relating to returns relating to certain dispositions of donated
property) is amended--
(1) by striking ``2 years'' and inserting ``3 years'', and
(2) by striking ``and'' at the end of subparagraph (D), by
striking the period at the end of subparagraph (E) and
inserting a comma, and by inserting at the end the following:
``(F) a description of the donee's use of the
property, and
``(G) a statement indicating whether the use of the
property was related to the purpose or function
constituting the basis for the donee's exemption under
section 501.
In any case in which the donee indicates that the use of
applicable property (as defined in section 170(e)(7)(C)) was
related to the purpose or function constituting the basis for
the exemption of the donee under section 501 under subparagraph
(G), the donee shall include with the return the certification
described in section 170(e)(7)(D) if such certification is made
under section 170(e)(7).''.
(c) Penalty.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6720A the following new section:
``SEC. 6720B. FRAUDULENT IDENTIFICATION OF EXEMPT USE PROPERTY.
``In addition to any criminal penalty provided by law, any person
who identifies applicable property (as defined in section 170(e)(7)(C))
as having a use which is related to a purpose or function constituting
the basis for the donee's exemption under section 501 and who knows
that such property is not intended for such a use shall pay a penalty
of $10,000.''.
(2) Clerical amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by adding after the
item relating to section 6720A the following new item:
``Sec. 6720B. Fraudulent identification of exempt use property.''.
(d) Effective Date.--
(1) Recapture.--The amendments made by subsection (a) shall
apply to contributions after September 1, 2006.
(2) Reporting.--The amendments made by subsection (b) shall
apply to returns filed after September 1, 2006.
(3) Penalty.--The amendments made by subsection (c) shall
apply to identifications made after the date of the enactment
of this Act.
SEC. 1216. LIMITATION OF DEDUCTION FOR CHARITABLE CONTRIBUTIONS OF
CLOTHING AND HOUSEHOLD ITEMS.
(a) In General.--Subsection (f) of section 170, as amended by this
Act, is amended by adding at the end the following new paragraph:
``(16) Contributions of clothing and household items.--
``(A) In general.--In the case of an individual,
partnership, or corporation, no deduction shall be
allowed under subsection (a) for any contribution of
clothing or a household item unless such clothing or
household item is in good used condition or better.
``(B) Items of minimal value.--Notwithstanding
subparagraph (A), the Secretary may by regulation deny
a deduction under subsection (a) for any contribution
of clothing or a household item which has minimal
monetary value.
``(C) Exception for certain property.--
Subparagraphs (A) and (B) shall not apply to any
contribution of a single item of clothing or a
household item for which a deduction of more than $500
is claimed if the taxpayer includes with the taxpayer's
return a qualified appraisal with respect to the
property.
``(D) Household items.--For purposes of this
paragraph--
``(i) In general.--The term `household
items' includes furniture, furnishings,
electronics, appliances, linens, and other
similar items.
``(ii) Excluded items.--Such term does not
include--
``(I) food,
``(II) paintings, antiques, and
other objects of art,
``(III) jewelry and gems, and
``(IV) collections.
``(E) Special rule for pass-thru entities.--In the
case of a partnership or S corporation, this paragraph
shall be applied at the entity level, except that the
deduction shall be denied at the partner or shareholder
level.''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made after the date of enactment of this Act.
SEC. 1217. MODIFICATION OF RECORDKEEPING REQUIREMENTS FOR CERTAIN
CHARITABLE CONTRIBUTIONS.
(a) Recordkeeping Requirement.--Subsection (f) of section 170, as
amended by this Act, is amended by adding at the end the following new
paragraph:
``(17) Recordkeeping.--No deduction shall be allowed under
subsection (a) for any contribution of a cash, check, or other
monetary gift unless the donor maintains as a record of such
contribution a bank record or a written communication from the
donee showing the name of the donee organization, the date of
the contribution, and the amount of the contribution.''.
(b) Effective Date.--The amendment made by this section shall apply
to contributions made in taxable years beginning after the date of the
enactment of this Act.
SEC. 1218. CONTRIBUTIONS OF FRACTIONAL INTERESTS IN TANGIBLE PERSONAL
PROPERTY.
(a) Income Tax.--Section 170 (relating to charitable, etc.,
contributions and gifts) is amended by redesignating subsection (o) as
subsection (p) and by inserting after subsection (n) the following new
subsection:
``(o) Special Rules for Fractional Gifts.--
``(1) Denial of deduction in certain cases.--
``(A) In general.--No deduction shall be allowed
for a contribution of an undivided portion of a
taxpayer's entire interest in tangible personal
property unless all interest in the property is held
immediately before such contribution by--
``(i) the taxpayer, or
``(ii) the taxpayer and the donee.
``(B) Exceptions.--The Secretary may, by
regulation, provide for exceptions to subparagraph (A)
in cases where all persons who hold an interest in the
property make proportional contributions of an
undivided portion of the entire interest held by such
persons.
``(2) Valuation of subsequent gifts.--In the case of any
additional contribution, the fair market value of such
contribution shall be determined by using the lesser of--
``(A) the fair market value of the property at the
time of the initial fractional contribution, or
``(B) the fair market value of the property at the
time of the additional contribution.
``(3) Recapture of deduction in certain cases; addition to
tax.--
``(A) Recapture.--The Secretary shall provide for
the recapture of the amount of any deduction allowed
under this section (plus interest) with respect to any
contribution of an undivided portion of a taxpayer's
entire interest in tangible personal property--
``(i) in any case in which the donor does
not contribute all of the remaining interest in
such property to the donee (or, if such donee
is no longer in existence, to any person
described in section 170(c)) before the earlier
of--
``(I) the date that is 10 years
after the date of the initial
fractional contribution, or
``(II) the date of the death of the
donor, and
``(ii) in any case in which the donee has
not, during the period beginning on the date of
the initial fractional contribution and ending
on the date described in clause (i)--
``(I) had substantial physical
possession of the property, and
``(II) used the property in a use
which is related to a purpose or
function constituting the basis for the
organizations' exemption under section
501.
``(B) Addition to tax.--The tax imposed under this
chapter for any taxable year for which there is a
recapture under subparagraph (A) shall be increased by
10 percent of the amount so recaptured.
``(4) Definitions.--For purposes of this subsection--
``(A) Additional contribution.--The term
`additional contribution' means any charitable
contribution by the taxpayer of any interest in
property with respect to which the taxpayer has
previously made an initial fractional contribution.
``(B) Initial fractional contribution.--The term
`initial fractional contribution' means, with respect
to any taxpayer, the first charitable contribution of
an undivided portion of the taxpayer's entire interest
in any tangible personal property.''.
(b) Estate Tax.--Section 2055 (relating to transfers for public,
charitable, and religious uses) is amended by redesignating subsection
(g) as subsection (h) and by inserting after subsection (f) the
following new subsection:
``(g) Valuation of Subsequent Gifts.--
``(1) In general.--In the case of any additional
contribution, the fair market value of such contribution shall
be determined by using the lesser of--
``(A) the fair market value of the property at the
time of the initial fractional contribution, or
``(B) the fair market value of the property at the
time of the additional contribution.
``(2) Definitions.--For purposes of this paragraph--
``(A) Additional contribution.--The term
`additional contribution' means a bequest, legacy,
devise, or transfer described in subsection (a) of any
interest in a property with respect to which the
decedent had previously made an initial fractional
contribution.
``(B) Initial fractional contribution.--The term
`initial fractional contribution' means, with respect
to any decedent, any charitable contribution of an
undivided portion of the decedent's entire interest in
any tangible personal property for which a deduction
was allowed under section 170.''.
(c) Gift Tax.--Section 2522 (relating to charitable and similar
gifts) is amended by redesignating subsection (e) as subsection (f) and
by inserting after subsection (d) the following new subsection:
``(e) Special Rules for Fractional Gifts.--
``(1) Denial of deduction in certain cases.--
``(A) In general.--No deduction shall be allowed
for a contribution of an undivided portion of a
taxpayer's entire interest in tangible personal
property unless all interest in the property is held
immediately before such contribution by--
``(i) the taxpayer, or
``(ii) the taxpayer and the donee.
``(B) Exceptions.--The Secretary may, by
regulation, provide for exceptions to subparagraph (A)
in cases where all persons who hold an interest in the
property make proportional contributions of an
undivided portion of the entire interest held by such
persons.
``(2) Valuation of subsequent gifts.--In the case of any
additional contribution, the fair market value of such
contribution shall be determined by using the lesser of--
``(A) the fair market value of the property at the
time of the initial fractional contribution, or
``(B) the fair market value of the property at the
time of the additional contribution.
``(3) Recapture of deduction in certain cases; addition to
tax.--
``(A) In general.--The Secretary shall provide for
the recapture of an amount equal to any deduction
allowed under this section (plus interest) with respect
to any contribution of an undivided portion of a
taxpayer's entire interest in tangible personal
property--
``(i) in any case in which the donor does
not contribute all of the remaining interest in
such property to the donee (or, if such donee
is no longer in existence, to any person
described in section 170(c)) before the earlier
of--
``(I) the date that is 10 years
after the date of the initial
fractional contribution, or
``(II) the date of the death of the
donor, and
``(ii) in any case in which the donee has
not, during the period beginning on the date of
the initial fractional contribution and ending
on the date described in clause (i)--
``(I) had substantial physical
possession of the property, and
``(II) used the property in a use
which is related to a purpose or
function constituting the basis for the
organizations' exemption under section
501.
``(B) Addition to tax.--The tax imposed under this
chapter for any taxable year for which there is a
recapture under subparagraph (A) shall be increased by
10 percent of the amount so recaptured.
``(4) Definitions.--For purposes of this subsection--
``(A) Additional contribution.--The term
`additional contribution' means any gift for which a
deduction is allowed under subsection (a) or (b) of any
interest in a property with respect to which the donor
has previously made an initial fractional contribution.
``(B) Initial fractional contribution.--The term
`initial fractional contribution' means, with respect
to any donor, the first gift of an undivided portion of
the donor's entire interest in any tangible personal
property for which a deduction is allowed under
subsection (a) or (b).''.
(d) Effective Date.--The amendments made by this section shall
apply to contributions, bequests, and gifts made after the date of the
enactment of this Act.
SEC. 1219. PROVISIONS RELATING TO SUBSTANTIAL AND GROSS OVERSTATEMENTS
OF VALUATIONS.
(a) Modification of Thresholds for Substantial and Gross Valuation
Misstatements.--
(1) Substantial valuation misstatement.--
(A) Income taxes.--Subparagraph (A) of section
6662(e)(1) (relating to substantial valuation
misstatement under chapter 1) is amended by striking
``200 percent'' and inserting ``150 percent''.
(B) Estate and gift taxes.--Paragraph (1) of
section 6662(g) is amended by striking ``50 percent''
and inserting ``65 percent''.
(2) Gross valuation misstatement.--
(A) Income taxes.--Clauses (i) and (ii) of section
6662(h)(2)(A) (relating to increase in penalty in case
of gross valuation misstatements) are amended to read
as follows:
``(i) in paragraph (1)(A), `200 percent'
for `150 percent',
``(ii) in paragraph (1)(B)(i)--
``(I) `400 percent' for `200
percent', and
``(II) `25 percent' for `50
percent', and''.
(B) Estate and gift taxes.--Subparagraph (C) of
section 6662(h)(2) is amended by striking ```25
percent' for `50 percent''' and inserting ```40
percent' for `65 percent'''.
(3) Elimination of reasonable cause exception for gross
misstatements.--Section 6664(c)(2) (relating to reasonable
cause exception for underpayments) is amended by striking
``paragraph (1) shall not apply unless'' and inserting
``paragraph (1) shall not apply. The preceding sentence shall
not apply to a substantial valuation overstatement under
chapter 1 if''.
(b) Penalty on Appraisers Whose Appraisals Result in Substantial or
Gross Valuation Misstatements.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6695 the following new section:
``SEC. 6695A. SUBSTANTIAL AND GROSS VALUATION MISSTATEMENTS
ATTRIBUTABLE TO INCORRECT APPRAISALS.
``(a) Imposition of Penalty.--If--
``(1) a person prepares an appraisal of the value of
property and such person knows, or reasonably should have
known, that the appraisal would be used in connection with a
return or a claim for refund, and
``(2) the claimed value of the property on a return or
claim for refund which is based on such appraisal results in a
substantial valuation misstatement under chapter 1 (within the
meaning of section 6662(e)), or a gross valuation misstatement
(within the meaning of section 6662(h)), with respect to such
property, then such person shall pay a penalty in the amount
determined under subsection (b).
``(b) Amount of Penalty.--The amount of the penalty imposed under
subsection (a) on any person with respect to an appraisal shall be
equal to the lesser of--
``(1) the greater of--
``(A) 10 percent of the amount of the underpayment
(as defined in section 6664(a)) attributable to the
misstatement described in subsection (a)(2), or
``(B) $1,000, or
``(2) 125 percent of the gross income received by the
person described in subsection (a)(1) from the preparation of
the appraisal.
``(c) Exception.--No penalty shall be imposed under subsection (a)
if the person establishes to the satisfaction of the Secretary that the
value established in the appraisal was more likely than not the proper
value.''.
(2) Rules applicable to penalty.--Section 6696 (relating to
rules applicable with respect to sections 6694 and 6695) is
amended--
(A) by striking ``6694 and 6695'' each place it
appears in the text and heading thereof and inserting
``6694, 6695, and 6695A'', and
(B) by striking ``6694 or 6695'' each place it
appears in the text and inserting ``6694, 6695, or
6695A''.
(3) Conforming amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by striking the item
relating to section 6696 and inserting the following new items:
``Sec. 6695A. Substantial and gross valuation misstatements
attributable to incorrect appraisals.
``Sec. 6696. Rules applicable with respect to sections 6694, 6695, and
6695A.''.
(c) Qualified Appraisers and Appraisals.--
(1) In general.--Subparagraph (E) of section 170(f)(11) is
amended to read as follows:
``(E) Qualified appraisal and appraiser.--For
purposes of this paragraph--
``(i) Qualified appraisal.--The term
`qualified appraisal' means, with respect to
any property, an appraisal of such property
which--
``(I) is treated for purposes of
this paragraph as a qualified appraisal
under regulations or other guidance
prescribed by the Secretary, and
``(II) is conducted by a qualified
appraiser in accordance with generally
accepted appraisal standards and any
regulations or other guidance
prescribed under subclause (I).
``(ii) Qualified appraiser.--Except as
provided in clause (iii), the term `qualified
appraiser' means an individual who--
``(I) has earned an appraisal
designation from a recognized
professional appraiser organization or
has otherwise met minimum education and
experience requirements set forth in
regulations prescribed by the
Secretary,
``(II) regularly performs
appraisals for which the individual
receives compensation, and
``(III) meets such other
requirements as may be prescribed by
the Secretary in regulations or other
guidance.
``(iii) Specific appraisals.--An individual
shall not be treated as a qualified appraiser
with respect to any specific appraisal unless--
``(I) the individual demonstrates
verifiable education and experience in
valuing the type of property subject to
the appraisal, and
``(II) the individual has not been
prohibited from practicing before the
Internal Revenue Service by the
Secretary under section 330(c) of title
31, United States Code, at any time
during the 3-year period ending on the
date of the appraisal.''.
(2) Reasonable cause exception.--Subparagraphs (B) and (C)
of section 6664(c)(3) are amended to read as follows:
``(B) Qualified appraisal.--The term `qualified
appraisal' has the meaning given such term by section
170(f)(11)(E)(i).
``(C) Qualified appraiser.--The term `qualified
appraiser' has the meaning given such term by section
170(f)(11)(E)(ii).''.
(d) Disciplinary Actions Against Appraisers.--Section 330(c) of
title 31, United States Code, is amended by striking ``with respect to
whom a penalty has been assessed under section 6701(a) of the Internal
Revenue Code of 1986''.
(e) Effective Dates.--
(1) Misstatement penalties.--Except as provided in
paragraph (3), the amendments made by subsection (a) shall
apply to returns filed after the date of the enactment of this
Act.
(2) Appraiser provisions.--Except as provided in paragraph
(3), the amendments made by subsections (b), (c), and (d) shall
apply to appraisals prepared with respect to returns or
submissions filed after the date of the enactment of this Act.
(3) Special rule for certain easements.--In the case of a
contribution of a qualified real property interest which is a
restriction with respect to the exterior of a building
described in section 170(h)(4)(C)(ii) of the Internal Revenue
Code of 1986, and an appraisal with respect to the
contribution, the amendments made by subsections (a) and (b)
shall apply to returns filed after July 25, 2006.
SEC. 1220. ADDITIONAL STANDARDS FOR CREDIT COUNSELING ORGANIZATIONS.
(a) In General.--Section 501 (relating to exemption from tax on
corporations, certain trusts, etc.) is amended by redesignating
subsection (q) as subsection (r) and by inserting after subsection (p)
the following new subsection:
``(q) Special Rules for Credit Counseling Organizations.--
``(1) In general.--An organization with respect to which
the provision of credit counseling services is a substantial
purpose shall not be exempt from tax under subsection (a)
unless such organization is described in paragraph (3) or (4)
of subsection (c) and such organization is organized and
operated in accordance with the following requirements:
``(A) The organization--
``(i) provides credit counseling services
tailored to the specific needs and
circumstances of consumers,
``(ii) makes no loans to debtors (other
than loans with no fees or interest) and does
not negotiate the making of loans on behalf of
debtors,
``(iii) provides services for the purpose
of improving a consumer's credit record, credit
history, or credit rating only to the extent
that such services are incidental to providing
credit counseling services, and
``(iv) does not charge any separately
stated fee for services for the purpose of
improving any consumer's credit record, credit
history, or credit rating.
``(B) The organization does not refuse to provide
credit counseling services to a consumer due to the
inability of the consumer to pay, the ineligibility of
the consumer for debt management plan enrollment, or
the unwillingness of the consumer to enroll in a debt
management plan.
``(C) The organization establishes and implements a
fee policy which--
``(i) requires that any fees charged to a
consumer for services are reasonable,
``(ii) allows for the waiver of fees if the
consumer is unable to pay, and
``(iii) except to the extent allowed by
State law, prohibits charging any fee based in
whole or in part on a percentage of the
consumer's debt, the consumer's payments to be
made pursuant to a debt management plan, or the
projected or actual savings to the consumer
resulting from enrolling in a debt management
plan.
``(D) At all times the organization has a board of
directors or other governing body--
``(i) which is controlled by persons who
represent the broad interests of the public,
such as public officials acting in their
capacities as such, persons having special
knowledge or expertise in credit or financial
education, and community leaders,
``(ii) not more than 20 percent of the
voting power of which is vested in persons who
are employed by the organization or who will
benefit financially, directly or indirectly,
from the organization's activities (other than
through the receipt of reasonable directors'
fees or the repayment of consumer debt to
creditors other than the credit counseling
organization or its affiliates), and
``(iii) not more than 49 percent of the
voting power of which is vested in persons who
are employed by the organization or who will
benefit financially, directly or indirectly,
from the organization's activities (other than
through the receipt of reasonable directors'
fees).
``(E) The organization does not own more than 35
percent of--
``(i) the total combined voting power of
any corporation (other than a corporation which
is an organization described in subsection
(c)(3) and exempt from tax under subsection
(a)) which is in the trade or business of
lending money, repairing credit, or providing
debt management plan services, payment
processing, or similar services,
``(ii) the profits interest of any
partnership (other than a partnership which is
an organization described in subsection (c)(3)
and exempt from tax under subsection (a)) which
is in the trade or business of lending money,
repairing credit, or providing debt management
plan services, payment processing, or similar
services, and
``(iii) the beneficial interest of any
trust or estate (other than a trust which is an
organization described in subsection (c)(3) and
exempt from tax under subsection (a)) which is
in the trade or business of lending money,
repairing credit, or providing debt management
plan services, payment processing, or similar
services.
``(F) The organization receives no amount for
providing referrals to others for debt management plan
services, and pays no amount to others for obtaining
referrals of consumers.
``(2) Additional requirements for organizations described
in subsection (c)(3).--
``(A) In general.--In addition to the requirements
under paragraph (1), an organization with respect to
which the provision of credit counseling services is a
substantial purpose and which is described in paragraph
(3) of subsection (c) shall not be exempt from tax
under subsection (a) unless such organization is
organized and operated in accordance with the following
requirements:
``(i) The organization does not solicit
contributions from consumers during the initial
counseling process or while the consumer is
receiving services from the organization.
``(ii) The aggregate revenues of the
organization which are from payments of
creditors of consumers of the organization and
which are attributable to debt management plan
services do not exceed the applicable
percentage of the total revenues of the
organization.
``(B) Applicable percentage.--
``(i) In general.--For purposes of
subparagraph (A)(ii), the applicable percentage
is 50 percent.
``(ii) Transition rule.--Notwithstanding
clause (i), in the case of an organization with
respect to which the provision of credit
counseling services is a substantial purpose
and which is described in paragraph (3) of
subsection (c) and exempt from tax under
subsection (a) on the date of the enactment of
this subsection, the applicable percentage is--
``(I) 80 percent for the first
taxable year of such organization
beginning after the date which is 1
year after the date of the enactment of
this subsection, and
``(II) 70 percent for the second
such taxable year beginning after such
date, and
``(III) 60 percent for the third
such taxable year beginning after such
date.
``(3) Additional requirement for organizations described in
subsection (c)(4).--In addition to the requirements under
paragraph (1), an organization with respect to which the
provision of credit counseling services is a substantial
purpose and which is described in paragraph (4) of subsection
(c) shall not be exempt from tax under subsection (a) unless
such organization notifies the Secretary, in such manner as the
Secretary may by regulations prescribe, that it is applying for
recognition as a credit counseling organization.
``(4) Credit counseling services; debt management plan
services.--For purposes of this subsection--
``(A) Credit counseling services.--The term `credit
counseling services' means--
``(i) the providing of educational
information to the general public on budgeting,
personal finance, financial literacy, saving
and spending practices, and the sound use of
consumer credit,
``(ii) the assisting of individuals and
families with financial problems by providing
them with counseling, or
``(iii) a combination of the activities
described in clauses (i) and (ii).
``(B) Debt management plan services.--The term
`debt management plan services' means services related
to the repayment, consolidation, or restructuring of a
consumer's debt, and includes the negotiation with
creditors of lower interest rates, the waiver or
reduction of fees, and the marketing and processing of
debt management plans.''.
(b) Debt Management Plan Services Treated as an Unrelated
Business.--Section 513 (relating to unrelated trade or business) is
amended by adding at the end the following:
``(j) Debt Management Plan Services.--The term `unrelated trade or
business' includes the provision of debt management plan services (as
defined in section 501(q)(4)(B)) by any organization other than an
organization which meets the requirements of section 501(q).''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after the date of the enactment of this Act.
(2) Transition rule for existing organizations.--In the
case of any organization described in paragraph (3) or (4)
section 501(c) of the Internal Revenue Code of 1986 and with
respect to which the provision of credit counseling services is
a substantial purpose on the date of the enactment of this Act,
the amendments made by this section shall apply to taxable
years beginning after the date which is 1 year after the date
of the enactment of this Act.
SEC. 1221. EXPANSION OF THE BASE OF TAX ON PRIVATE FOUNDATION NET
INVESTMENT INCOME.
(a) Gross Investment Income.--
(1) In general.--Paragraph (2) of section 4940(c) (relating
to gross investment income) is amended by adding at the end the
following new sentence: ``Such term shall also include income
from sources similar to those in the preceding sentence.''.
(2) Conforming amendment.--Subsection (e) of section 509
(relating to gross investment income) is amended by adding at
the end the following new sentence: ``Such term shall also
include income from sources similar to those in the preceding
sentence.''.
(b) Capital Gain Net Income.--Paragraph (4) of section 4940(c)
(relating to capital gains and losses) is amended--
(1) in subparagraph (A), by striking ``used for the
production of interest, dividends, rents, and royalties'' and
inserting ``used for the production of gross investment income
(as defined in paragraph (2))'',
(2) in subparagraph (C), by inserting ``or carrybacks''
after ``carryovers'', and
(3) by adding at the end the following new subparagraph:
``(D) Except to the extent provided by regulation,
under rules similar to the rules of section 1031
(including the exception under subsection (a)(2)
thereof), no gain or loss shall be taken into account
with respect to any portion of property used for a
period of not less than 1 year for a purpose or
function constituting the basis of the private
foundation's exemption if the entire property is
exchanged immediately following such period solely for
property of like kind which is to be used primarily for
a purpose or function constituting the basis for such
foundation's exemption.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 1222. DEFINITION OF CONVENTION OR ASSOCIATION OF CHURCHES.
Section 7701 (relating to definitions) is amended by redesignating
subsection (o) as subsection (p) and by inserting after subsection (n)
the following new subsection:
``(o) Convention or Association of Churches.--For purposes of this
title, any organization which is otherwise a convention or association
of churches shall not fail to so qualify merely because the membership
of such organization includes individuals as well as churches or
because individuals have voting rights in such organization.''.
SEC. 1223. NOTIFICATION REQUIREMENT FOR ENTITIES NOT CURRENTLY REQUIRED
TO FILE.
(a) In General.--Section 6033 (relating to returns by exempt
organizations), as amended by this Act, is amended by redesignating
subsection (i) as subsection (j) and by inserting after subsection (h)
the following new subsection:
``(i) Additional Notification Requirements.--Any organization the
gross receipts of which in any taxable year result in such organization
being referred to in subsection (a)(3)(A)(ii) or (a)(3)(B)--
``(1) shall furnish annually, in electronic form, and at
such time and in such manner as the Secretary may by
regulations prescribe, information setting forth--
``(A) the legal name of the organization,
``(B) any name under which such organization
operates or does business,
``(C) the organization's mailing address and
Internet web site address (if any),
``(D) the organization's taxpayer identification
number,
``(E) the name and address of a principal officer,
and
``(F) evidence of the continuing basis for the
organization's exemption from the filing requirements
under subsection (a)(1), and
``(2) upon the termination of the existence of the
organization, shall furnish notice of such termination.''.
(b) Loss of Exempt Status for Failure to File Return or Notice.--
Section 6033 (relating to returns by exempt organizations), as amended
by subsection (a), is amended by redesignating subsection (j) as
subsection (k) and by inserting after subsection (i) the following new
subsection:
``(j) Loss of Exempt Status for Failure to File Return or Notice.--
``(1) In general.--If an organization described in
subsection (a)(1) or (i) fails to file an annual return or
notice required under either subsection for 3 consecutive
years, such organization's status as an organization exempt
from tax under section 501(a) shall be considered revoked on
and after the date set by the Secretary for the filing of the
third annual return or notice. The Secretary shall publish and
maintain a list of any organization the status of which is so
revoked.
``(2) Application necessary for reinstatement.--Any
organization the tax-exempt status of which is revoked under
paragraph (1) must apply in order to obtain reinstatement of
such status regardless of whether such organization was
originally required to make such an application.
``(3) Retroactive reinstatement if reasonable cause shown
for failure.--If, upon application for reinstatement of status
as an organization exempt from tax under section 501(a), an
organization described in paragraph (1) can show to the
satisfaction of the Secretary evidence of reasonable cause for
the failure described in such paragraph, the organization's
exempt status may, in the discretion of the Secretary, be
reinstated effective from the date of the revocation under such
paragraph.''.
(c) No Declaratory Judgment Relief.--Section 7428(b) (relating to
limitations) is amended by adding at the end the following new
paragraph:
``(4) Nonapplication for certain revocations.--No action
may be brought under this section with respect to any
revocation of status described in section 6033(j)(1).''.
(d) No Monetary Penalty for Failure to Notify.--Section 6652(c)(1)
(relating to annual returns under section 6033 or 6012(a)(6)) is
amended by adding at the end the following new subparagraph:
``(E) No penalty for certain annual notices.--This
paragraph shall not apply with respect to any notice
required under section 6033(i).''.
(e) Secretarial Outreach Requirements.--
(1) Notice requirement.--The Secretary of the Treasury
shall notify in a timely manner every organization described in
section 6033(i) of the Internal Revenue Code of 1986 (as added
by this section) of the requirement under such section 6033(i)
and of the penalty established under section 6033(j) of such
Code--
(A) by mail, in the case of any organization the
identity and address of which is included in the list
of exempt organizations maintained by the Secretary,
and
(B) by Internet or other means of outreach, in the
case of any other organization.
(2) Loss of status penalty for failure to file return.--The
Secretary of the Treasury shall publicize, in a timely manner
in appropriate forms and instructions and through other
appropriate means, the penalty established under section
6033(j) of such Code for the failure to file a return under
subsection (a)(1) or (i) of section 6033 of such Code.
(f) Effective Date.--The amendments made by this section shall
apply to notices and returns with respect to annual periods beginning
after 2006.
SEC. 1224. DISCLOSURE TO STATE OFFICIALS RELATING TO EXEMPT
ORGANIZATIONS.
(a) In General.--Subsection (c) of section 6104 is amended by
striking paragraph (2) and inserting the following new paragraphs:
``(2) Disclosure of proposed actions related to charitable
organizations.--
``(A) Specific notifications.--In the case of an
organization to which paragraph (1) applies, the
Secretary may disclose to the appropriate State
officer--
``(i) a notice of proposed refusal to
recognize such organization as an organization
described in section 501(c)(3) or a notice of
proposed revocation of such organization's
recognition as an organization exempt from
taxation,
``(ii) the issuance of a letter of proposed
deficiency of tax imposed under section 507 or
chapter 41 or 42, and
``(iii) the names, addresses, and taxpayer
identification numbers of organizations which
have applied for recognition as organizations
described in section 501(c)(3).
``(B) Additional disclosures.--Returns and return
information of organizations with respect to which
information is disclosed under subparagraph (A) may be
made available for inspection by or disclosed to an
appropriate State officer.
``(C) Procedures for disclosure.--Information may
be inspected or disclosed under subparagraph (A) or (B)
only--
``(i) upon written request by an
appropriate State officer, and
``(ii) for the purpose of, and only to the
extent necessary in, the administration of
State laws regulating such organizations.
Such information may only be inspected by or disclosed
to a person other than the appropriate State officer if
such person is an officer or employee of the State and
is designated by the appropriate State officer to
receive the returns or return information under this
paragraph on behalf of the appropriate State officer.
``(D) Disclosures other than by request.--The
Secretary may make available for inspection or disclose
returns and return information of an organization to
which paragraph (1) applies to an appropriate State
officer of any State if the Secretary determines that
such returns or return information may constitute
evidence of noncompliance under the laws within the
jurisdiction of the appropriate State officer.
``(3) Disclosure with respect to certain other exempt
organizations.--Upon written request by an appropriate State
officer, the Secretary may make available for inspection or
disclosure returns and return information of any organization
described in section 501(c) (other than organizations described
in paragraph (1) or (3) thereof) for the purpose of, and only
to the extent necessary in, the administration of State laws
regulating the solicitation or administration of the charitable
funds or charitable assets of such organizations. Such
information may only be inspected by or disclosed to a person
other than the appropriate State officer if such person is an
officer or employee of the State and is designated by the
appropriate State officer to receive the returns or return
information under this paragraph on behalf of the appropriate
State officer.
``(4) Use in civil judicial and administrative
proceedings.--Returns and return information disclosed pursuant
to this subsection may be disclosed in civil administrative and
civil judicial proceedings pertaining to the enforcement of
State laws regulating such organizations in a manner prescribed
by the Secretary similar to that for tax administration
proceedings under section 6103(h)(4).
``(5) No disclosure if impairment.--Returns and return
information shall not be disclosed under this subsection, or in
any proceeding described in paragraph (4), to the extent that
the Secretary determines that such disclosure would seriously
impair Federal tax administration.
``(6) Definitions.--For purposes of this subsection--
``(A) Return and return information.--The terms
`return' and `return information' have the respective
meanings given to such terms by section 6103(b).
``(B) Appropriate state officer.--The term
`appropriate State officer' means--
``(i) the State attorney general,
``(ii) the State tax officer,
``(iii) in the case of an organization to
which paragraph (1) applies, any other State
official charged with overseeing organizations
of the type described in section 501(c)(3), and
``(iv) in the case of an organization to
which paragraph (3) applies, the head of an
agency designated by the State attorney general
as having primary responsibility for overseeing
the solicitation of funds for charitable
purposes.''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 6103(a) is amended by
inserting ``or section 6104(c)'' after ``this section''.
(2) Subparagraph (A) of section 6103(p)(3) is amended by
inserting ``and section 6104(c)'' after ``section'' in the
first sentence.
(3) Paragraph (4) of section 6103(p) is amended--
(A) in the matter preceding subparagraph (A), by
inserting ``, any appropriate State officer (as defined
in section 6104(c)),'' before ``or any other person'',
(B) in subparagraph (F)(i), by inserting ``any
appropriate State officer (as defined in section
6104(c)),'' before ``or any other person'', and
(C) in the matter following subparagraph (F), by
inserting ``, an appropriate State officer (as defined
in section 6104(c)),'' after ``including an agency''
each place it appears.
(4) The heading for paragraph (1) of section 6104(c) is
amended by inserting ``for charitable organizations'' after
``rule''.
(5) Paragraph (2) of section 7213(a) is amended by
inserting ``or under section 6104(c)'' after ``6103''.
(6) Paragraph (2) of section 7213A(a) is amended by
inserting ``or under section 6104(c)'' after ``7213(a)(2)''.
(7) Paragraph (2) of section 7431(a) is amended by
inserting `` or in violation of section 6104(c)'' after
``6103''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act but shall not apply to
requests made before such date.
SEC. 1225. PUBLIC DISCLOSURE OF INFORMATION RELATING TO UNRELATED
BUSINESS INCOME TAX RETURNS.
(a) In General.--Subparagraph (A) of section 6104(d)(1) is amended
by redesignating clauses (ii) and (iii) as clauses (iii) and (iv),
respectively, and by inserting after clause (i) the following new
clause:
``(ii) any annual return filed under
section 6011 which relates to any tax imposed
by section 511 (relating to imposition of tax
on unrelated business income of charitable,
etc., organizations) by such organization, but
only if such organization is described in
section 501(c)(3),''.
(b) Effective Date.--The amendments made by this section shall
apply to returns filed after the date of the enactment of this Act.
SEC. 1226. STUDY ON DONOR ADVISED FUNDS AND SUPPORTING ORGANIZATIONS.
(a) Study.--The Secretary of the Treasury shall undertake a study
on the organization and operation of donor advised funds (as defined in
section 4966(d)(2) of the Internal Revenue Code of 1986, as added by
this Act) and of organizations described in section 509(a)(3) of such
Code. The study shall specifically consider--
(1) whether the deductions allowed for the income, gift, or
estate taxes for charitable contributions to sponsoring
organizations (as defined in section 4966(d)(1) of such Code,
as added by this Act) of donor advised funds or to
organizations described in section 509(a)(3) of such Code are
appropriate in consideration of--
(A) the use of contributed assets (including the
type, extent, and timing of such use), or
(B) the use of the assets of such organizations for
the benefit of the person making the charitable
contribution (or a person related to such person),
(2) whether donor advised funds should be required to
distribute for charitable purposes a specified amount (whether
based on the income or assets of the fund) in order to ensure
that the sponsoring organization with respect to such donor
advised fund is operating consistent with the purposes or
functions constituting the basis for its exemption under
section 501, or its status as an organization described in
section 509(a), of such Code,
(3) whether the retention by donors to organizations
described in paragraph (1) of rights or privileges with respect
to amounts transferred to such organizations (including
advisory rights or privileges with respect to the making of
grants or the investment of assets) is consistent with the
treatment of such transfers as completed gifts that qualify for
a deduction for income, gift, or estate taxes, and
(4) whether the issues raised by paragraphs (1), (2), and
(3) are also issues with respect to other forms of charities or
charitable donations.
(b) Report.--Not later than 1 year after the date of the enactment
of this Act, the Secretary of the Treasury shall submit to the
Committee on Finance of the Senate and the Committee on Ways and Means
of the House of Representatives a report on the study conducted under
subsection (a) and make such recommendations as the Secretary of the
Treasury considers appropriate.
PART 2--IMPROVED ACCOUNTABILITY OF DONOR ADVISED FUNDS
SEC. 1231. EXCISE TAXES RELATING TO DONOR ADVISED FUNDS.
(a) In General.--Chapter 42 (relating to private foundations and
certain other tax-exempt organizations), as amended by the Tax Increase
Prevention and Reconciliation Act of 2005, is amended by adding at the
end the following new subchapter:
``Subchapter G--Donor Advised Funds
``Sec. 4966. Taxes on taxable distributions.
``Sec. 4967. Taxes on prohibited benefits.
``SEC. 4966. TAXES ON TAXABLE DISTRIBUTIONS.
``(a) Imposition of Taxes.--
``(1) On the sponsoring organization.--There is hereby
imposed on each taxable distribution a tax equal to 20 percent
of the amount thereof. The tax imposed by this paragraph shall
be paid by the sponsoring organization with respect to the
donor advised fund.
``(2) On the fund management.--There is hereby imposed on
the agreement of any fund manager to the making of a
distribution, knowing that it is a taxable distribution, a tax
equal to 5 percent of the amount thereof. The tax imposed by
this paragraph shall be paid by any fund manager who agreed to
the making of the distribution.
``(b) Special Rules.--For purposes of subsection (a)--
``(1) Joint and several liability.--If more than one person
is liable under subsection (a)(2) with respect to the making of
a taxable distribution, all such persons shall be jointly and
severally liable under such paragraph with respect to such
distribution.
``(2) Limit for management.--With respect to any one
taxable distribution, the maximum amount of the tax imposed by
subsection (a)(2) shall not exceed $10,000.
``(c) Taxable Distribution.--For purposes of this section--
``(1) In general.--The term `taxable distribution' means
any distribution from a donor advised fund--
``(A) to any natural person, or
``(B) to any other person if--
``(i) such distribution is for any purpose
other than one specified in section
170(c)(2)(B), or
``(ii) the sponsoring organization does not
exercise expenditure responsibility with
respect to such distribution in accordance with
section 4945(h).
``(2) Exceptions.--Such term shall not include any
distribution from a donor advised fund--
``(A) to any organization described in section
170(b)(1)(A) (other than a disqualified supporting
organization),
``(B) to the sponsoring organization of such donor
advised fund, or
``(C) to any other donor advised fund.
``(d) Definitions.--For purposes of this subchapter--
``(1) Sponsoring organization.--The term `sponsoring
organization' means any organization which--
``(A) is described in section 170(c) (other than in
paragraph (1) thereof, and without regard to paragraph
(2)(A) thereof),
``(B) is not a private foundation (as defined in
section 509(a)), and
``(C) maintains 1 or more donor advised funds.
``(2) Donor advised fund.--
``(A) In general.--Except as provided in
subparagraph (B) or (C), the term `donor advised fund'
means a fund or account--
``(i) which is separately identified by
reference to contributions of a donor or
donors,
``(ii) which is owned and controlled by a
sponsoring organization, and
``(iii) with respect to which a donor (or
any person appointed or designated by such
donor) has, or reasonably expects to have,
advisory privileges with respect to the
distribution or investment of amounts held in
such fund or account by reason of the donor's
status as a donor.
``(B) Exceptions.--The term `donor advised fund'
shall not include any fund or account--
``(i) which makes distributions only to a
single identified organization or governmental
entity, or
``(ii) with respect to which a person
described in subparagraph (A)(iii) advises as
to which individuals receive grants for travel,
study, or other similar purposes, if--
``(I) such person's advisory
privileges are performed exclusively by
such person in the person's capacity as
a member of a committee all of the
members of which are appointed by the
sponsoring organization,
``(II) no combination of persons
described in subparagraph (A)(iii) (or
persons related to such persons)
control, directly or indirectly, such
committee, and
``(III) all grants from such fund
or account are awarded on an objective
and nondiscriminatory basis pursuant to
a procedure approved in advance by the
board of directors of the sponsoring
organization, and such procedure is
designed to ensure that all such grants
meet the requirements of paragraphs
(1), (2), or (3) of section 4945(g).
``(C) Secretarial authority.--The Secretary may
exempt a fund or account not described in subparagraph
(B) from treatment as a donor advised fund--
``(i) if such fund or account is advised by
a committee not directly or indirectly
controlled by the donor or any person appointed
or designated by the donor for the purpose of
advising with respect to distributions from
such fund (and any related parties), or
``(ii) if such fund benefits a single
identified charitable purpose.
``(3) Fund manager.--The term `fund manager' means, with
respect to any sponsoring organization--
``(A) an officer, director, or trustee of such
sponsoring organization (or an individual having powers
or responsibilities similar to those of officers,
directors, or trustees of the sponsoring organization),
and
``(B) with respect to any act (or failure to act),
the employees of the sponsoring organization having
authority or responsibility with respect to such act
(or failure to act).
``(4) Disqualified supporting organization.--
``(A) In general.--The term `disqualified
supporting organization' means, with respect to any
distribution--
``(i) any type III supporting organization
(as defined in section 4943(f)(5)(A)) which is
not a functionally integrated type III
supporting organization (as defined in section
4943(f)(5)(B)), and
``(ii) any organization which is described
in subparagraph (B) or (C) if--
``(I) the donor or any person
designated by the donor for the purpose
of advising with respect to
distributions from a donor advised fund
(and any related parties) directly or
indirectly controls a supported
organization (as defined in section
509(f)(3)) of such organization, or
``(II) the Secretary determines by
regulations that a distribution to such
organization otherwise is
inappropriate.
``(B) Type i and type ii supporting
organizations.--An organization is described in this
subparagraph if the organization meets the requirements
of subparagraphs (A) and (C) of section 509(a)(3) and
is--
``(i) operated, supervised, or controlled
by one or more organizations described in
paragraph (1) or (2) of section 509(a), or
``(ii) supervised or controlled in
connection with one or more such organizations.
``(C) Functionally integrated type iii supporting
organizations.--An organization is described in this
subparagraph if the organization is a functionally
integrated type III supporting organization (as defined
under section 4943(f)(5)(B)).
``SEC. 4967. TAXES ON PROHIBITED BENEFITS.
``(a) Imposition of Taxes.--
``(1) On the donor, donor advisor, or related person.--
There is hereby imposed on the advice of any person described
in subsection (d) to have a sponsoring organization make a
distribution from a donor advised fund which results in such
person or any other person described in subsection (d)
receiving, directly or indirectly, a more than incidental
benefit as a result of such distribution, a tax equal to 125
percent of such benefit. The tax imposed by this paragraph
shall be paid by any person described in subsection (d) who
advises as to the distribution or who receives such a benefit
as a result of the distribution.
``(2) On the fund management.--There is hereby imposed on
the agreement of any fund manager to the making of a
distribution, knowing that such distribution would confer a
benefit described in paragraph (1), a tax equal to 10 percent
of the amount of such benefit. The tax imposed by this
paragraph shall be paid by any fund manager who agreed to the
making of the distribution.
``(b) Exception.--No tax shall be imposed under this section with
respect to any distribution if a tax has been imposed with respect to
such distribution under section 4958.
``(c) Special Rules.--For purposes of subsection (a)--
``(1) Joint and several liability.--If more than one person
is liable under paragraph (1) or (2) of subsection (a) with
respect to a distribution described in subsection (a), all such
persons shall be jointly and severally liable under such
paragraph with respect to such distribution.
``(2) Limit for management.--With respect to any one
distribution described in subsection (a), the maximum amount of
the tax imposed by subsection (a)(2) shall not exceed $10,000.
``(d) Person Described.--A person is described in this subsection
if such person is described in section 4958(f)(7) with respect to a
donor advised fund.''.
(b) Conforming Amendments.--
(1) Section 4963 is amended by inserting ``4966, 4967,''
after ``4958,'' each place it appears in subsections (a) and
(c).
(2) The table of subchapters for chapter 42 is amended by
adding at the end the following new item:
``subchapter g. donor advised funds''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 1232. EXCESS BENEFIT TRANSACTIONS INVOLVING DONOR ADVISED FUNDS
AND SPONSORING ORGANIZATIONS.
(a) Disqualified Persons.--
(1) In general.--Paragraph (1) of section 4958(f) is
amended by striking ``and'' at the end of subparagraph (B), by
striking the period at the end of subparagraph (C) and
inserting a comma, and by adding after subparagraph (C) the
following new subparagraphs:
``(D) which involves a donor advised fund (as
defined in section 4966(d)(2)), any person who is
described in paragraph (7) with respect to such donor
advised fund (as so defined), and
``(E) which involves a sponsoring organization (as
defined in section 4966(d)(1)), any person who is
described in paragraph (8) with respect to such
sponsoring organization (as so defined).''.
(2) Donors, donor advisors, and investment advisors treated
as disqualified persons.--Section 4958(f) is amended by adding
at the end the following new paragraphs:
``(7) Donors and donor advisors.--For purposes of paragraph
(1)(E), a person is described in this paragraph if such
person--
``(A) is described in section 4966(d)(2)(A)(iii),
``(B) is a member of the family of an individual
described in subparagraph (A), or
``(C) is a 35-percent controlled entity (as defined
in paragraph (3) by substituting `persons described in
subparagraph (A) or (B) of paragraph (7)' for `persons
described in subparagraph (A) or (B) of paragraph (1)'
in subparagraph (A)(i) thereof).
``(8) Investment advisors.--For purposes of paragraph
(1)(F)--
``(A) In general.--A person is described in this
paragraph if such person--
``(i) is an investment advisor,
``(ii) is a member of the family of an
individual described in clause (i), or
``(iii) is a 35-percent controlled entity
(as defined in paragraph (3) by substituting
`persons described in clause (i) or (ii) of
paragraph (8)(A)' for `persons described in
subparagraph (A) or (B) of paragraph (1)' in
subparagraph (A)(i) thereof).
``(B) Investment advisor defined.--For purposes of
subparagraph (A), the term `investment advisor' means,
with respect to any sponsoring organization (as defined
in section 4966(d)(1)), any person (other than an
employee of such organization) compensated by such
organization for managing the investment of, or
providing investment advice with respect to, assets
maintained in donor advised funds (as defined in
section 4966(d)(2)) owned by such organization.''.
(b) Certain Transactions Treated as Excess Benefit Transactions.--
(1) In general.--Section 4958(c) is amended by
redesignating paragraph (2) as paragraph (3) and by inserting
after paragraph (1) the following new paragraph:
``(2) Special rules for donor advised funds.--In the case
of any donor advised fund (as defined in section 4966(d)(2))--
``(A) the term `excess benefit transaction'
includes any grant, loan, compensation, or other
similar payment from such fund to a person described in
subsection (f)(7) with respect to such fund, and
``(B) the term `excess benefit' includes, with
respect to any transaction described in subparagraph
(A), the amount of any such grant, loan, compensation,
or other similar payment.''.
(2) Special rule for correction of transaction.--Section
4958(f)(6) is amended by inserting ``, except that in the case
of any correction of an excess benefit transaction described in
subsection (c)(2), no amount repaid in a manner prescribed by
the Secretary may be held in any donor advised fund'' after
``standards''.
(c) Effective Date.--The amendments made by this section shall
apply to transactions occurring after the date of the enactment of this
Act.
SEC. 1233. EXCESS BUSINESS HOLDINGS OF DONOR ADVISED FUNDS.
(a) In General.--Section 4943 is amended by adding at the end the
following new subsection:
``(e) Application of Tax to Donor Advised Funds.--
``(1) In general.--For purposes of this section, a donor
advised fund (as defined in section 4966(d)(2)) shall be
treated as a private foundation.
``(2) Disqualified person.--In applying this section to any
donor advised fund (as so defined), the term `disqualified
person' means, with respect to the donor advised fund, any
person who is--
``(A) described in section 4966(d)(2)(A)(iii),
``(B) a member of the family of an individual
described in subparagraph (A), or
``(C) a 35-percent controlled entity (as defined in
section 4958(f)(3) by substituting `persons described
in subparagraph (A) or (B) of section 4943(e)(2)' for
`persons described in subparagraph (A) or (B) of
paragraph (1)' in subparagraph (A)(i) thereof).
``(3) Present holdings.--For purposes of this subsection,
rules similar to the rules of paragraphs (4), (5), and (6) of
subsection (c) shall apply to donor advised funds (as so
defined), except that--
``(A) `the date of the enactment of this
subsection' shall be substituted for `May 26, 1969'
each place it appears in paragraphs (4), (5), and (6),
and
``(B) `January 1, 2007' shall be substituted for
`January 1, 1970' in paragraph (4)(E).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SEC. 1234. TREATMENT OF CHARITABLE CONTRIBUTION DEDUCTIONS TO DONOR
ADVISED FUNDS.
(a) Income.--Section 170(f) (relating to disallowance of deduction
in certain cases and special rules), as amended by this Act, is amended
by adding at the end the following new paragraph:
``(18) Contributions to donor advised funds.--A deduction
otherwise allowed under subsection (a) for any contribution to
a donor advised fund (as defined in section 4966(d)(2)) shall
only be allowed if--
``(A) the sponsoring organization (as defined in
section 4966(d)(1)) with respect to such donor advised
fund is not--
``(i) described in paragraph (3), (4), or
(5) of subsection (c), or
``(ii) a type III supporting organization
(as defined in section 4943(f)(5)(A)) which is
not a functionally integrated type III
supporting organization (as defined in section
4943(f)(5)(B)), and
``(B) the taxpayer obtains a contemporaneous
written acknowledgment (determined under rules similar
to the rules of paragraph (8)(C)) from the sponsoring
organization (as so defined) of such donor advised fund
that such organization has exclusive legal control over
the assets contributed.''.
(b) Estate.--Section 2055(e) is amended by adding at the end the
following new paragraph:
``(5) Contributions to donor advised funds.--A deduction
otherwise allowed under subsection (a) for any contribution to
a donor advised fund (as defined in section 4966(d)(2)) shall
only be allowed if--
``(A) the sponsoring organization (as defined in
section 4966(d)(1)) with respect to such donor advised
fund is not--
``(i) described in paragraph (3) or (4) of
subsection (a), or
``(ii) a type III supporting organization
(as defined in section 4943(f)(5)(A)) which is
not a functionally integrated type III
supporting organization (as defined in section
4943(f)(5)(B)), and
``(B) the taxpayer obtains a contemporaneous
written acknowledgment (determined under rules similar
to the rules of section 170(f)(8)(C)) from the
sponsoring organization (as so defined) of such donor
advised fund that such organization has exclusive legal
control over the assets contributed.''.
(c) Gift.--Section 2522(c) is amended by adding at the end the
following new paragraph:
``(5) Contributions to donor advised funds.--A deduction
otherwise allowed under subsection (a) for any contribution to
a donor advised fund (as defined in section 4966(d)(2)) shall
only be allowed if--
``(A) the sponsoring organization (as defined in
section 4966(d)(1)) with respect to such donor advised
fund is not--
``(i) described in paragraph (3) or (4) of
subsection (a), or
``(ii) a type III supporting organization
(as defined in section 4943(f)(5)(A)) which is
not a functionally integrated type III
supporting organization (as defined in section
4943(f)(5)(B)), and
``(B) the taxpayer obtains a contemporaneous
written acknowledgment (determined under rules similar
to the rules of section 170(f)(8)(C)) from the
sponsoring organization (as so defined) of such donor
advised fund that such organization has exclusive legal
control over the assets contributed.''.
(d) Effective Date.--The amendments made by this section shall
apply to contributions made after the date which is 180 days after the
date of the enactment of this Act.
SEC. 1235. RETURNS OF, AND APPLICATIONS FOR RECOGNITION BY, SPONSORING
ORGANIZATIONS.
(a) Matters Included on Returns.--
(1) In general.--Section 6033, as amended by this Act, is
amended by redesignating subsection (k) as subsection (l) and
by inserting after subsection (j) the following new subsection:
``(k) Additional Provisions Relating to Sponsoring Organizations.--
Every organization described in section 4966(d)(1) shall, on the return
required under subsection (a) for the taxable year--
``(1) list the total number of donor advised funds (as
defined in section 4966(d)(2)) it owns at the end of such
taxable year,
``(2) indicate the aggregate value of assets held in such
funds at the end of such taxable year, and
``(3) indicate the aggregate contributions to and grants
made from such funds during such taxable year.''.
(2) Effective date.--The amendments made by this subsection
shall apply to returns filed for taxable years ending after the
date of the enactment of this Act.
(b) Matters Included on Exempt Status Application.--
(1) In general.--Section 508 is amended by adding at the
end the following new subsection:
``(f) Additional Provisions Relating to Sponsoring Organizations.--
A sponsoring organization (as defined in section 4966(d)(1)) shall give
notice to the Secretary (in such manner as the Secretary may provide)
whether such organization maintains or intends to maintain donor
advised funds (as defined in section 4966(d)(2)) and the manner in
which such organization plans to operate such funds.''.
(2) Effective date.--The amendment made by this subsection
shall apply to organizations applying for tax-exempt status
after the date of the enactment of this Act.
PART 3--IMPROVED ACCOUNTABILITY OF SUPPORTING ORGANIZATIONS
SEC. 1241. REQUIREMENTS FOR SUPPORTING ORGANIZATIONS.
(a) Types of Supporting Organizations.--Subparagraph (B) of section
509(a)(3) is amended to read as follows:
``(B) is--
``(i) operated, supervised, or controlled
by one or more organizations described in
paragraph (1) or (2),
``(ii) supervised or controlled in
connection with one or more such organizations,
or
``(iii) operated in connection with one or
more such organizations, and''.
(b) Requirements for Supporting Organizations.--Section 509
(relating to private foundation defined) is amended by adding at the
end the following new subsection:
``(f) Requirements for Supporting Organizations.--
``(1) Type iii supporting organizations.--For purposes of
subsection (a)(3)(B)(iii), an organization shall not be
considered to be operated in connection with any organization
described in paragraph (1) or (2) of subsection (a) unless such
organization meets the following requirements:
``(A) Responsiveness.--For each taxable year
beginning after the date of the enactment of this
subsection, the organization provides to each supported
organization such information as the Secretary may
require to ensure that such organization is responsive
to the needs or demands of the supported organization.
``(B) Foreign supported organizations.--
``(i) In general.--The organization is not
operated in connection with any supported
organization that is not organized in the
United States.
``(ii) Transition rule for existing
organizations.--If the organization is operated
in connection with an organization that is not
organized in the United States on the date of
the enactment of this subsection, clause (i)
shall not apply until the first day of the
third taxable year of the organization
beginning after the date of the enactment of
this subsection.
``(2) Organizations controlled by donors.--
``(A) In general.--For purposes of subsection
(a)(3)(B), an organization shall not be considered to
be--
``(i) operated, supervised, or controlled
by any organization described in paragraph (1)
or (2) of subsection (a), or
``(ii) operated in connection with any
organization described in paragraph (1) or (2)
of subsection (a),
if such organization accepts any gift or contribution
from any person described in subparagraph (B).
``(B) Person described.--A person is described in
this subparagraph if, with respect to a supported
organization of an organization described in
subparagraph (A), such person is--
``(i) a person (other than an organization
described in paragraph (1), (2), or (4) of
section 509(a)) who directly or indirectly
controls, either alone or together with persons
described in clauses (ii) and (iii), the
governing body of such supported organization,
``(ii) a member of the family (determined
under section 4958(f)(4)) of an individual
described in clause (i), or
``(iii) a 35-percent controlled entity (as
defined in section 4958(f)(3) by substituting
`persons described in clause (i) or (ii) of
section 509(f)(2)(B)' for `persons described in
subparagraph (A) or (B) of paragraph (1)' in
subparagraph (A)(i) thereof).
``(3) Supported organization.--For purposes of this
subsection, the term `supported organization' means, with
respect to an organization described in subsection (a)(3), an
organization described in paragraph (1) or (2) of subsection
(a)--
``(A) for whose benefit the organization described
in subsection (a)(3) is organized and operated, or
``(B) with respect to which the organization
performs the functions of, or carries out the purposes
of.''.
(c) Charitable Trusts Which Are Type III Supporting
Organizations.--For purposes of section 509(a)(3)(B)(iii) of the
Internal Revenue Code of 1986, an organization which is a trust shall
not be considered to be operated in connection with any organization
described in paragraph (1) or (2) of section 509(a) of such Code solely
because--
(1) it is a charitable trust under State law,
(2) the supported organization (as defined in section
509(f)(3) of such Code) is a beneficiary of such trust, and
(3) the supported organization (as so defined) has the
power to enforce the trust and compel an accounting.
(d) Payout Requirements for Type III Supporting Organizations.--
(1) In general.--The Secretary of the Treasury shall
promulgate new regulations under section 509 of the Internal
Revenue Code of 1986 on payments required by type III
supporting organizations which are not functionally integrated
type III supporting organizations. Such regulations shall
require such organizations to make distributions of a
percentage of either income or assets to supported
organizations (as defined in section 509(f)(3) of such Code) in
order to ensure that a significant amount is paid to such
organizations.
(2) Type iii supporting organization; functionally
integrated type iii supporting organization.--For purposes of
paragraph (1), the terms ``type III supporting organization''
and ``functionally integrated type III supporting
organization'' have the meanings given such terms under
subparagraphs (A) and (B) section 4943(f)(5) of the Internal
Revenue Code of 1986 (as added by this Act), respectively.
(e) Effective Dates.--
(1) In general.--The amendments made by subsections (a) and
(b) shall take effect on the date of the enactment of this Act.
(2) Charitable trusts which are type iii supporting
organizations.--Subsection (c) shall take effect--
(A) in the case of trusts operated in connection
with an organization described in paragraph (1) or (2)
of section 509(a) of the Internal Revenue Code of 1986
on the date of the enactment of this Act, on the date
that is one year after the date of the enactment of
this Act, and
(B) in the case of any other trust, on the date of
the enactment of this Act.
SEC. 1242. EXCESS BENEFIT TRANSACTIONS INVOLVING SUPPORTING
ORGANIZATIONS.
(a) Disqualified Persons.--Paragraph (1) of section 4958(f), as
amended by this Act, is amended by redesignating subparagraphs (D) and
(E) as subparagraphs (E) and (F), respectively, and by adding after
subparagraph (C) the following new subparagraph:
``(D) any person who is described in subparagraph
(A), (B), or (C) with respect to an organization
described in section 509(a)(3) and organized and
operated exclusively for the benefit of, to perform the
functions of, or to carry out the purposes of the
applicable tax-exempt organization.''.
(b) Certain Transactions Treated as Excess Benefit Transactions.--
Section 4958(c), as amended by this Act, is amended by redesignating
paragraph (3) as paragraph (4) and by inserting after paragraph (2) the
following new paragraph:
``(3) Special rules for supporting organizations.--
``(A) In general.--In the case of any organization
described in section 509(a)(3)--
``(i) the term `excess benefit transaction'
includes--
``(I) any grant, loan,
compensation, or other similar payment
provided by such organization to a
person described in subparagraph (B),
and
``(II) any loan provided by such
organization to a disqualified person
(other than an organization described
in paragraph (1), (2), or (4) of
section 509(a)), and
``(ii) the term `excess benefit' includes,
with respect to any transaction described in
clause (i), the amount of any such grant, loan,
compensation, or other similar payment.
``(B) Person described.--A person is described in
this subparagraph if such person is--
``(i) a substantial contributor to such
organization,
``(ii) a member of the family (determined
under section 4958(f)(4)) of an individual
described in clause (i), or
``(iii) a 35-percent controlled entity (as
defined in section 4958(f)(3) by substituting
`persons described in clause (i) or (ii) of
section 4958(c)(3)(B)' for `persons described
in subparagraph (A) or (B) of paragraph (1)' in
subparagraph (A)(i) thereof).
``(C) Substantial contributor.--For purposes of
this paragraph--
``(i) In general.--The term `substantial
contributor' means any person who contributed
or bequeathed an aggregate amount of more than
$5,000 to the organization, if such amount is
more than 2 percent of the total contributions
and bequests received by the organization
before the close of the taxable year of the
organization in which the contribution or
bequest is received by the organization from
such person. In the case of a trust, such term
also means the creator of the trust. Rules
similar to the rules of subparagraphs (B) and
(C) of section 507(d)(2) shall apply for
purposes of this subparagraph.
``(ii) Exception.--Such term shall not
include any organization described in paragraph
(1), (2), or (4) of section 509(a).''.
(c) Effective Dates.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply to transactions occurring after the date of the
enactment of this Act.
(2) Subsection (b).--The amendments made by subsection (a)
shall apply to transactions occurring after July 25, 2006.
SEC. 1243. EXCESS BUSINESS HOLDINGS OF SUPPORTING ORGANIZATIONS.
(a) In General.--Section 4943, as amended by this Act, is amended
by adding at the end the following new subsection:
``(f) Application of Tax to Supporting Organizations.--
``(1) In general.--For purposes of this section, an
organization which is described in paragraph (3) shall be
treated as a private foundation.
``(2) Exception.--The Secretary may exempt the excess
business holdings of any organization from the application of
this subsection if the Secretary determines that such holdings
are consistent with the purpose or function constituting the
basis for its exemption under section 501.
``(3) Organizations described.--An organization is
described in this paragraph if such organization is--
``(A) a type III supporting organization (other
than a functionally integrated type III supporting
organization), or
``(B) an organization which meets the requirements
of subparagraphs (A) and (C) of section 509(a)(3) and
which is supervised or controlled in connection with or
one or more organizations described in paragraph (1) or
(2) of section 509(a), but only if such organization
accepts any gift or contribution from any person
described in section 509(f)(2)(B).
``(4) Disqualified person.--
``(A) In general.--In applying this section to any
organization described in paragraph (3), the term
`disqualified person' means, with respect to the
organization--
``(i) any person who was, at any time
during the 5-year period ending on the date
described in subsection (a)(2)(A), in a
position to exercise substantial influence over
the affairs of the organization,
``(ii) any member of the family (determined
under section 4958(f)(4)) of an individual
described in clause (i),
``(iii) any 35-percent controlled entity
(as defined in section 4958(f)(3) by
substituting `persons described in clause (i)
or (ii) of section 4943(f)(4)(A)' for `persons
described in subparagraph (A) or (B) of
paragraph (1)' in subparagraph (A)(i) thereof),
``(iv) any person described in section
4958(c)(3)(B), and
``(v) any organization--
``(I) which is effectively
controlled (directly or indirectly) by
the same person or persons who control
the organization in question, or
``(II) substantially all of the
contributions to which were made
(directly or indirectly) by the same
person or persons described in
subparagraph (B) or a member of the
family (within the meaning of section
4946(d)) of such a person.
``(B) Persons described.--A person is described in
this subparagraph if such person is--
``(i) a substantial contributor to the
organization (as defined in section
4958(c)(3)(C)),
``(ii) an officer, director, or trustee of
the organization (or an individual having
powers or responsibilities similar to those of
the officers, directors, or trustees of the
organization), or
``(iii) an owner of more than 20 percent
of--
``(I) the total combined voting
power of a corporation,
``(II) the profits interest of a
partnership, or
``(III) the beneficial interest of
a trust or unincorporated enterprise,
which is a substantial contributor (as so
defined) to the organization.
``(5) Type iii supporting organization; functionally
integrated type iii supporting organization.--For purposes of
this subsection--
``(A) Type iii supporting organization.--The term
`type III supporting organization' means an
organization which meets the requirements of
subparagraphs (A) and (C) of section 509(a)(3) and
which is operated in connection with one or more
organizations described in paragraph (1) or (2) of
section 509(a).
``(B) Functionally integrated type iii supporting
organization.--The term `functionally integrated type
III supporting organization' means a type III
supporting organization which is not required under
regulations established by the Secretary to make
payments to supported organizations (as defined under
section 509(f)(3)) due to the activities of the
organization related to performing the functions of, or
carrying out the purposes of, such supported
organizations.
``(6) Special rule for certain holdings of type iii
supporting organizations.--For purposes of this subsection, the
term `excess business holdings' shall not include any holdings
of a type III supporting organization in any business
enterprise if, as of November 18, 2005, the holdings were held
(and at all times thereafter, are held) for the benefit of the
community pursuant to the direction of a State attorney general
or a State official with jurisdiction over such organization.
``(7) Present holdings.--For purposes of this subsection,
rules similar to the rules of paragraphs (4), (5), and (6) of
subsection (c) shall apply to organizations described in
section 509(a)(3), except that--
``(A) `the date of the enactment of this
subsection' shall be substituted for `May 26, 1969'
each place it appears in paragraphs (4), (5), and (6),
and
``(B) `January 1, 2007' shall be substituted for
`January 1, 1970' in paragraph (4)(E).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after the date of the enactment of this Act.
SEC. 1244. TREATMENT OF AMOUNTS PAID TO SUPPORTING ORGANIZATIONS BY
PRIVATE FOUNDATIONS.
(a) Qualifying Distributions.--Paragraph (4) of section 4942(g) is
amended to read as follows:
``(4) Limitation on distributions by nonoperating private
foundations to supporting organizations.--
``(A) In general.--For purposes of this section,
the term `qualifying distribution' shall not include
any amount paid by a private foundation which is not an
operating foundation to--
``(i) any type III supporting organization
(as defined in section 4943(f)(5)(A)) which is
not a functionally integrated type III
supporting organization (as defined in section
4943(f)(5)(B)), and
``(ii) any organization which is described
in subparagraph (B) or (C) if--
``(I) a disqualified person of the
private foundation directly or
indirectly controls such organization
or a supported organization (as defined
in section 509(f)(3)) of such
organization, or
``(II) the Secretary determines by
regulations that a distribution to such
organization otherwise is
inappropriate.
``(B) Type i and type ii supporting
organizations.--An organization is described in this
subparagraph if the organization meets the requirements
of subparagraphs (A) and (C) of section 509(a)(3) and
is--
``(i) operated, supervised, or controlled
by one or more organizations described in
paragraph (1) or (2) of section 509(a), or
``(ii) supervised or controlled in
connection with one or more such organizations.
``(C) Functionally integrated type iii supporting
organizations.--An organization is described in this
subparagraph if the organization is a functionally
integrated type III supporting organization (as defined
under section 4943(f)(5)(B)).''.
(b) Taxable Expenditures.--Subparagraph (A) of section 4945(d)(4)
is amended to read as follows:
``(A) such organization--
``(i) is described in paragraph (1) or (2)
of section 509(a),
``(ii) is an organization described in
section 509(a)(3) (other than an organization
described in clause (i) or (ii) of section
4942(g)(4)(A)), or
``(iii) is an exempt operating foundation
(as defined in section 4940(d)(2)), or''.
(c) Effective Date.--The amendments made by this section shall
apply to distributions and expenditures after the date of the enactment
of this Act.
SEC. 1245. RETURNS OF SUPPORTING ORGANIZATIONS.
(a) Requirement to File Return.--Subparagraph (B) of section
6033(a)(3) is amended by inserting ``(other than an organization
described in section 509(a)(3))'' after ``paragraph (1)''.
(b) Matters Included on Returns.--Section 6033, as amended by this
Act, is amended by redesignating subsection (l) as subsection (m) and
by inserting after subsection (k) the following new subsection:
``(l) Additional Provisions Relating to Supporting Organizations.--
Every organization described in section 509(a)(3) shall, on the return
required under subsection (a)--
``(1) list the supported organizations (as defined in
section 509(f)(3)) with respect to which such organization
provides support,
``(2) indicate whether the organization meets the
requirements of clause (i), (ii), or (iii) of section
509(a)(3)(B), and
``(3) certify that the organization meets the requirements
of section 509(a)(3)(C).''.
(c) Effective Date.--The amendments made by this section shall
apply to returns filed for taxable years ending after the date of the
enactment of this Act.
TITLE XIII--OTHER PROVISIONS
SEC. 1301. TECHNICAL CORRECTIONS RELATING TO MINE SAFETY.
Section 110 of the Federal Mine Safety and Health Act of 1977 (30
U.S.C. 820), as amended by the Mine Improvement and New Emergency
Response Act of 2006 (Public Law 109-236), is amended--
(1) by striking subsection (d); and
(2) in subsection (a)--
(A) by striking ``(1)(1) The operator'' and
inserting ``(1) The operator'';
(B) in the paragraph (2) added by section
8(a)(1)(B) of the Mine Improvement and New Emergency
Response Act of 2006 (Public Law 109-236)--
(i) by striking ``paragraph (1)'' and
inserting ``subsection (a)(1)''; and
(ii) by redesignating such paragraph as
subsection (d) and transferring such subsection
so as to appear after subsection (c); and
(3) in subsection (b)--
(A) by striking ``Any operator'' and inserting
``(1) Any operator''; and
(B) in the second sentence, as added by section
8(a)(2) of the Mine Improvement and New Emergency
Response Act of 2006 (Public Law 109-236), by striking
``Violations'' and inserting the following:
``(2) Violations''.
SEC. 1302. GOING-TO-THE-SUN ROAD.
(a) In General.--Section 1940 of the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users (119 Stat.
1511) is amended--
(1) in subsection (a)--
(A) by striking paragraphs (1) and (2);
(B) by redesignating paragraphs (3) through (5) as
paragraphs (1) through (3), respectively; and
(C) by striking ``$10,000,000'' each place that it
appears and inserting ``$16,666,666''; and
(2) by adding at the end the following:
``(c) Contract Authority.--Except as otherwise provided in this
section, funds authorized to be appropriated under this section shall
be available for obligation in the same manner as if the funds were
apportioned under chapter 1 of title 23, United States Code.''.
(b) Rescission.--Section 10212 of the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users (119 Stat.
1937) is amended by striking ``$8,543,000,000'' each place it appears
and inserting ``$8,593,000,000''.
SEC. 1303. EXCEPTION TO THE LOCAL FURNISHING REQUIREMENT OF THE TAX-
EXEMPT BOND RULES.
(a) Snettisham Hydroelectric Facility.--For purposes of determining
whether any private activity bond issued before May 31, 2006, and used
to finance the acquisition of the Snettisham hydroelectric facility is
a qualified bond for purposes of section 142(a)(8) of the Internal
Revenue Code of 1986, the electricity furnished by such facility to the
City of Hoonah, Alaska, shall not be taken into account for purposes of
section 142(f)(1) of such Code.
(b) Lake Dorothy Hydroelectric Facility.--For purposes of
determining whether any private activity bond issued before May 31,
2006, and used to finance the Lake Dorothy hydroelectric facility is a
qualified bond for purposes of section 142(a)(8) of the Internal
Revenue Code of 1986, the electricity furnished by such facility to the
City of Hoonah, Alaska, shall not be taken into account for purposes of
paragraphs (1) and (3) of section 142(f) of such Code.
(c) Definitions.--For purposes of this section--
(1) Lake dorothy hydroelectric facility.--The term ``Lake
Dorothy hydroelectric facility'' means the hydroelectric
facility located approximately 10 miles south of Juneau,
Alaska, and commonly referred to as the ``Lake Dorothy
project''.
(2) Snettisham hydroelectric facility.--The term
``Snettisham hydroelectric facility'' means the hydroelectric
project described in section 1804 of the Small Business Job
Protection Act of 1996.
SEC. 1304. QUALIFIED TUITION PROGRAMS.
(a) Permanent Extension of Modifications.--Section 901 of the
Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to
sunset provisions) shall not apply to section 402 of such Act (relating
to modifications to qualified tuition programs).
(b) Regulatory Authority to Prevent Abuse.--Section 529 (relating
to qualified tuition programs) is amended by adding at the end the
following new subsection:
``(f) Regulations.--Notwithstanding any other provision of this
section, the Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this section and
to prevent abuse of such purposes, including regulations under chapters
11, 12, and 13 of this title.''.
TITLE XIV--TARIFF PROVISIONS
SEC. 1401. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the ``Miscellaneous
Trade and Technical Corrections Act of 2006''.
(b) Table of contents.--The table of contents of this title is as
follows:
TITLE XIV--TARIFF PROVISIONS
Sec. 1401. Short title; table of contents.
Sec. 1402. Reference.
Subtitle A--Temporary Duty Suspensions and Reductions
Chapter 1--New Duty Suspensions and Reductions
Sec. 1411. Certain non-knit gloves designed for use by auto mechanics.
Sec. 1412. Certain microphones for use in automotive interiors.
Sec. 1413. Acrylic or modacrylic synthetic filament tow.
Sec. 1414. Acrylic or modacrylic synthetic staple fibers, carded,
combed, or otherwise processed for
spinning.
Sec. 1415. Nitrocellulose.
Sec. 1416. Potassium sorbate.
Sec. 1417. Sorbic acid.
Sec. 1418. Certain capers.
Sec. 1419. Certain pepperoncini prepared or preserved otherwise than by
vinegar or acetic acid.
Sec. 1420. Certain capers.
Sec. 1421. Certain pepperoncini prepared or preserved by vinegar or
acetic acid in concentrations at 0.5
percent or greater.
Sec. 1422. Certain pepperoncini prepared or preserved otherwise than by
vinegar or acetic acid in concentrations
less than 0.5 percent.
Sec. 1423. Chloral.
Sec. 1424. Imidacloprid technical (imidacloprid).
Sec. 1425. Triadimefon.
Sec. 1426. Polyethylene HE1878.
Sec. 1427. Thiacloprid.
Sec. 1428. Pyrimethanil.
Sec. 1429. Foramsulfuron.
Sec. 1430. Fenamidone.
Sec. 1431. Cyclanilide technical.
Sec. 1432. Para-benzoquinone.
Sec. 1433. O-Anisidine.
Sec. 1434. 2,4-Xylidine.
Sec. 1435. Crotonaldehyde.
Sec. 1436. Butanedioic acid, dimethyl ester, polymer with 4-hydroxy-
2,2,6,6,-tetramethyl-1-piperidineethanol.
Sec. 1437. Mixtures of CAS Nos. 106990-43-6 and 65447-77-0.
Sec. 1438. MCPA.
Sec. 1439. Bronate advanced.
Sec. 1440. Bromoxynil octanoate tech.
Sec. 1441. Bromoxynil meo.
Sec. 1442. Hydraulic control units.
Sec. 1443. Shield asy-steering gear.
Sec. 1444. 2,4-Dichloroaniline.
Sec. 1445. 2-Acetylbutyrolactone.
Sec. 1446. Alkylketone.
Sec. 1447. Cyfluthrin (baythroid).
Sec. 1448. Beta-cyfluthrin.
Sec. 1449. Cyclopropane-1,1-dicarboxylic acid, dimethyl ester.
Sec. 1450. Spiroxamine.
Sec. 1451. Spiromesifen.
Sec. 1452. 4-Chlorobenzaldehyde.
Sec. 1453. Oxadiazon.
Sec. 1454. NAHP.
Sec. 1455. Phosphorus thiochloride.
Sec. 1456. Trifloxystrobin.
Sec. 1457. Phosphoric acid, lanthanum salt, cerium terbium-doped.
Sec. 1458. Lutetium oxide.
Sec. 1459. ACM.
Sec. 1460. Permethrin.
Sec. 1461. Thidiazuron.
Sec. 1462. Flutolanil.
Sec. 1463. Resmethrin.
Sec. 1464. Clothianidin.
Sec. 1465. Certain master cylinder assembles.
Sec. 1466. Certain transaxles.
Sec. 1467. Converter asy.
Sec. 1468. Module and bracket asy-power steering.
Sec. 1469. Unit asy-battery hi volt.
Sec. 1470. Certain articles of natural cork.
Sec. 1471. Glyoxylic acid.
Sec. 1472. Cyclopentanone.
Sec. 1473. Mesotrione technical.
Sec. 1474. Malonic acid-dinitrile 50% NMP.
Sec. 1475. Formulations of NOA 446510.
Sec. 1476. DEMBB distilled-ISO tank.
Sec. 1477. Methylionone.
Sec. 1478. Certain acrylic fiber tow.
Sec. 1479. Certain acrylic fiber tow.
Sec. 1480. MKH 6561 isocyanate.
Sec. 1481. Endosulfan.
Sec. 1482. Tetraconazole.
Sec. 1483. M-alcohol.
Sec. 1484. Certain machines for use in the assembly of motorcycle
wheels.
Sec. 1485. Deltamethrin.
Sec. 1486. Palm fatty acid distillate.
Sec. 1487. 4-Methoxy-2-methyldiphenylamine.
Sec. 1488. 2-Methylhydroquinone.
Sec. 1489. 1-Fluoro-2-nitrobenzene.
Sec. 1490. Cosmetic bags with a flexible outer surface of reinforced or
laminated polyvinyl chloride (PVC).
Sec. 1491. Mixtures of methyl 4-iodo-2-[3-(4-methoxy-6-methyl-1,3,5-
triazin-2-yl)ureidosulfonyl]benzoate,
sodium salt (iodosulfuron methyl, sodium
salt).
Sec. 1492. Ethyl 4,5-dihydro-5,5-diphenyl-1,2-oxazole-3-carboxylate
(isoxadifen-ethyl).
Sec. 1493. (5-cyclopropyl-4-isoxazolyl)[2-(methylsulfonyl)-4-
(trifluoromethyl)phenyl]methanone
(isoxaflutole).
Sec. 1494. Methyl 2-[(4,6-dimethoxypyrimidin-2-ylcarbamoyl)sulfamoyl]-
a-(methanesulfonamido)-p-toluate
(mesosulfuron-methyl) whether or not mixed
with application adjuvants.
Sec. 1495. Mixtures of foramsulfuron and iodosulfuron-methyl-sodium.
Sec. 1496. Vulcuren UPKA 1988.
Sec. 1497. Vullcanox 41010 NA/LG.
Sec. 1498. Vulkazon AFS/LG.
Sec. 1499. P-Anisaldehyde.
Sec. 1500. 1,2-Pentanediol.
Sec. 1501. Agrumex.
Sec. 1502. Cohedur RL.
Sec. 1503. Formulations of prosulfuron.
Sec. 1504. Lewatit.
Sec. 1505. Para-Chlorophenol.
Sec. 1506. Cypermethrin.
Sec. 1507. Ion-exchange resin powder.
Sec. 1508. Ion-exchange resin powder.
Sec. 1509. Desmodur E 14.
Sec. 1510. Desmodur VP LS 2253.
Sec. 1511. Desmodur R-E.
Sec. 1512. Walocel MW 3000 PFV.
Sec. 1513. TSME.
Sec. 1514. Walocel VP-M 20660.
Sec. 1515. Xama 2.
Sec. 1516. Xama 7.
Sec. 1517. Certain cases for toys.
Sec. 1518. Certain cases for toys.
Sec. 1519. Aniline 2.5-disulfonic acid.
Sec. 1520. 1,4-benzenedicarboxylic acid, polymer with n,n,-bis(2-
aminoethyl)-1,2-ethanediamine, cyclized,
methosulfate.
Sec. 1521. Sulfur blue 7.
Sec. 1522. Formaldehyde, reaction products with 1,4-benzenediol and m-
phenylenediamine, sulfurized.
Sec. 1523. Isocyanatosulfonyl.
Sec. 1524. Isocyanatosulfonyl.
Sec. 1525. Gemifloxacin, gemifloxacin mesylate, and gemifloxacin
mesylate sesquihydrate.
Sec. 1526. Butralin.
Sec. 1527. Spirodiclofen.
Sec. 1528. Propamocarb HCL (PREVICUR).
Sec. 1529. Desmodur IL.
Sec. 1530. Chloroacetone.
Sec. 1531. IPN (isophthalonitrile).
Sec. 1532. NOA 446510 technical.
Sec. 1533. Hexythiazox technical.
Sec. 1534. Crelan (self-blocked cycloaliphatic polyuretdione).
Sec. 1535. Aspirin.
Sec. 1536. Desmodur BL XP 2468.
Sec. 1537. Desmodur RF-E.
Sec. 1538. Desmodur HL.
Sec. 1539. D-Mannose.
Sec. 1540. Certain camel hair.
Sec. 1541. Waste of camel hair.
Sec. 1542. Certain camel hair.
Sec. 1543. Woven fabric of vicuna hair.
Sec. 1544. Certain camel hair.
Sec. 1545. Noils of camel hair.
Sec. 1546. Chloroacetic acid, ethyl ester.
Sec. 1547. Chloroacetic acid, sodium salt.
Sec. 1548. Low expansion laboratory glass.
Sec. 1549. Stoppers, lids, and other closures.
Sec. 1550. Pigment yellow 213.
Sec. 1551. Indoxacarb.
Sec. 1552. Dimethyl carbonate.
Sec. 1553. 5-Chloro-1-indanone (EK179).
Sec. 1554. Mixtures of famoxadone and cymoxanil.
Sec. 1555. Decanedioic acid, bis(2,2,6,6-tetramethyl-4-piperidinyl)
ester.
Sec. 1556. Acid blue 80.
Sec. 1557. Pigment brown 25.
Sec. 1558. Formulations of azoxystrobin.
Sec. 1559. Formulations of pinoxaden/cloquintocet.
Sec. 1560. Mixtures of difenoconazole/mefenoxam.
Sec. 1561. Fludioxinil technical.
Sec. 1562. Mixtures of clodinafop-propargyl.
Sec. 1563. Avermectin b, 1,4"-deoxy-4"-methylamino-, (4"r)-, benzoate.
Sec. 1564. Cloquintocet-mexyl.
Sec. 1565. Metalaxyl-M technical.
Sec. 1566. Cyproconazole technical.
Sec. 1567. Pinoxaden technical.
Sec. 1568. Mixtures of tralkoxydim.
Sec. 1569. Certain chemicals.
Sec. 1570. Mixtures of (<plus-minus>)-(cis and trans)-1-[[2-(2,4-
dichlorophenyl)-4-propyl-1,3-dioxolan-2-
yl]-methyl]-1h-1,2,4-triazole.
sec. 1571. Paraquat dichloride.
Sec. 1572. Certain basketballs.
Sec. 1573. Certain leather basketballs.
Sec. 1574. Certain rubber basketballs.
Sec. 1575. Certain volleyballs.
Sec. 1576. 4-Chloro-3-[[3-(4-methoxyphenyl)-1,3-dioxopropyl]-amino]-
dodecyl ester.
Sec. 1577. Linuron.
Sec. 1578. N,N-Dimethylpiperidinium chloride (mepiquat chloride).
Sec. 1579. Diuron.
Sec. 1580. Formulated product Krovar I DF.
Sec. 1581. Triasulfuron technical.
Sec. 1582. Brodifacoum technical.
Sec. 1583. Pymetrozine technical.
Sec. 1584. Formulations of thiamethoxam, difenoconazole, fludioxinil,
and mefenoxam.
Sec. 1585. Trifloxysulfuron-sodium technical.
Sec. 1586. 2 Benzylthio-3-ethyl sulfonyl pyridine.
Sec. 1587. 2-Amino-4-methoxy-6-methyl-1,3,5-triazine.
Sec. 1588. Formulated products containing mixtures of the active
ingredient 2-chloro-n-[[(4-methoxy-6-
methyl-1,3,5-triazin-2yl) amino]carbonyl]
benzenesulfonamide and application
adjuvants.
Sec. 1589. 2-methyl-4-methoxy-6-methylamino-1,3,5-triazine.
Sec. 1590. Mixtures of sodium-2-chloro-6-[(4,6 dimethoxypyrimidin-2-
yl)thio]benzoate and application adjuvants
(pyrithiobac-sodium).
Sec. 1591. Certain decorative plates, decorative sculptures, decorative
plaques, and architectural miniatures.
Sec. 1592. Certain music boxes.
Sec. 1593. 2-Methyl-4-chlorophenoxyacetic acid.
Sec. 1594. Phenmedipham.
Sec. 1595. Desmedipham.
Sec. 1596. Certain footwear with open toes or heels.
Sec. 1597. Certain work footwear.
Sec. 1598. Certain refracting and reflecting telescopes.
Sec. 1600. Certain work footwear.
Sec. 1601. Certain footwear for men.
Sec. 1602. Certain rubber or plastic footwear.
Sec. 1604. Zinc dimethyldithiocarbamate.
Sec. 1605. Certain liquid crystal device (LCD) panel assemblies.
Sec. 1606. Certain watertube boilers and reactor vessel heads.
Chapter 2--Existing Duty Suspensions and Reductions
Sec. 1611. Extension of certain existing duty suspensions and
reductions.
Subtitle B--Other Tariff Provisions
Chapter 1--Liquidation Or Reliquidation of Certain Entries
Sec. 1621. Certain tramway cars and associated spare parts.
Sec. 1622. Reliquidation of certain entries of candles.
Sec. 1623. Certain entries of roller chain.
Sec. 1624. Certain entries of soundspa clock radios.
Chapter 2--Miscellaneous Provisions
Sec. 1631. Vessel repair duties.
Sec. 1632. Suspension of new shipper review provision.
Sec. 1633. Extension and modification of duty suspension on wool
products; wool research fund; wool duty
refunds.
Sec. 1634. Authorities relating to DR-CAFTA Agreement.
Sec. 1635. Technical amendments to Customs modernization.
Subtitle C--Effective Date
Sec. 1641. Effective date.
SEC. 1402. REFERENCE.
Except as otherwise expressly provided, whenever in this title an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a chapter, subchapter, note, additional U.S. note, heading,
subheading, or other provision, the reference shall be considered to be
made to a chapter, subchapter, note, additional U.S. note, heading,
subheading, or other provision of the Harmonized Tariff Schedule of the
United States (19 U.S.C. 3007).
Subtitle A--Temporary Duty Suspensions and Reductions
CHAPTER 1--NEW DUTY SUSPENSIONS AND REDUCTIONS
SEC. 1411. CERTAIN NON-KNIT GLOVES DESIGNED FOR USE BY AUTO MECHANICS.
(a) In General.--Subchapter II of chapter 99 is amended by
inserting in numerical sequence the following new headings:
`` 9902.14.01 Mechanics' work 2.8% No change No change On or before 12/
gloves, valued 31/2009
not over $3.50
per pair
(provided for in
subheading
6216.00.58)......
9902.14.02 Mechanics' work 2.8% No change No change On or before 12/ ''.
gloves, valued 31/2009
over $3.50 but
not over $3.70
per pair
(provided for in
subheading
6216.00.58)......
9902.14.03 Mechanics' work 2.8% No change No change On or before 12/ ''.
gloves, valued 31/2009
over $3.70 but
not over $4.99
per pair
(provided for in
subheading
6216.00.58)......
9902.14.04 Mechanics' work 2.8% No change No change On or before 12/ ''.
gloves, valued 31/2009
over $4.99 but
not over $7.72
per pair
(provided for in
subheading
6216.00.58)......
9902.14.05 Mechanics' work 2.8% No change No change On or before 12/ ''.
gloves, valued 31/2009
over $7.72 per
pair (provided
for in subheading
6216.00.58)......
(b) Amendment to U.S. Notes.--Subchapter II of chapter 99 is
amended by adding at the end of the U.S. Notes to such subchapter the
following new U.S. Note:
``18. For purposes of headings 9902.14.01, 9902.14.02, 9902.14.03,
9902.14.04, and 9902.14.05, the term `mechanics' work gloves' means
gloves, of man-made fibers, having synthetic leather palms and fingers;
fourchettes of synthetic leather or of fabric of nylon or elastomeric
yarn; backs comprising either one layer of knitted fabric of
elastomeric yarn or three layers, with the outer layer of knitted
fabric of elastomeric yarn, the center layer of foam and the inner
layer of tricot fabric; the foregoing, whether or not including an
thermoplastic rubber logo or pad on the back; and elastic wrist straps
with molded thermoplastic rubber hook-and-loop enclosures.''.
SEC. 1412. CERTAIN MICROPHONES FOR USE IN AUTOMOTIVE INTERIORS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.17 Unidirectional Free No change No change On or before 12/ ''.
(cardioid) 31/2009
electret
condenser
microphone
modules for use
in motor vehicles
provided for in
headings 8701
through 8705
(other than such
modules designed
for handheld,
microphone stand,
or lapel use),
the foregoing
each including
wire leads for
external
connection,
whether or not
including a multi-
pin board level
type connector
but not including
a battery
compartment;
having a typical
frequency
response of 250
Hertz through
7,000 Hertz with
no more than a 20
decibel deviation
in that frequency
range and an
electrostatic
discharge
immunity of 4,000
V (contact) and
8,000 V (air);
and capable of
operation and
storage in the
temperature range
of -40C through
85C and a
humidity of not
over 95 percent
(provided for in
subheading
8518.10.80)......
SEC. 1413. ACRYLIC OR MODACRYLIC SYNTHETIC FILAMENT TOW.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.21 Synthetic 6.8% No change No change On or before 12/ ''.
filament tow: 31/2009
acrylic or
modacrylic
(provided for in
subheading
5501.30.00)......
SEC. 1414. ACRYLIC OR MODACRYLIC SYNTHETIC STAPLE FIBERS, CARDED,
COMBED, OR OTHERWISE PROCESSED FOR SPINNING.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.22 Synthetic staple Free No change No change On or before 12/ ''.
fibers, carded, 31/2009
combed, or
otherwise
processed for
spinning: acrylic
or modacrylic
(provided for in
subheading
5506.30.00)......
SEC. 1415. NITROCELLULOSE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.23 Cellulose nitrates 4.4% No change No change On or before 12/ ''.
(nitrocellulose, 31/2009
including
collodions) (CAS
9004-70-0)
(provided for in
subheading
3912.20.00)......
SEC. 1416. POTASSIUM SORBATE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.24 Potassium sorbate 1.4% No change No change On or before 12/ ''.
(CAS No. 24634-61- 31/2009
5) (provided for
in subheading
2916.19.10)......
SEC. 1417. SORBIC ACID.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.25 Sorbic acid (CAS 1.9% No change No change On or before 12/ ''.
No. 110-44-1) 31/2009
(provided for in
subheading
2916.19.20)......
SEC. 1418. CERTAIN CAPERS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.26 Capers, prepared Free No change No change On or before 12/ ''.
or preserved by 31/2009
vinegar other
than such goods
in immediate
containers each
holding 3.4 kg or
less (provided
for in subheading
2001.90.20)......
SEC. 1419. CERTAIN PEPPERONCINI PREPARED OR PRESERVED OTHERWISE THAN BY
VINEGAR OR ACETIC ACID.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.27 Pepperoncini, Free No change No change On or before 12/ ''.
prepared or 31/2009
preserved
otherwise than by
vinegar, not
frozen (provided
for in subheading
2005.90.55)......
SEC. 1420. CERTAIN CAPERS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.28 Capers, prepared Free No change No change On or before 12/ ''.
or preserved by 31/2009
vinegar in
immediate
containers each
holding more than
3.4 kg (provided
for in subheading
2001.90.10)......
SEC. 1421. CERTAIN PEPPERONCINI PREPARED OR PRESERVED BY VINEGAR OR
ACETIC ACID IN CONCENTRATIONS AT 0.5 PERCENT OR GREATER.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.29 Pepperoncini, 2.2% No change No change On or before 12/ ''.
prepared or 31/2009
preserved by
vinegar (provided
for in subheading
2001.90.38)......
SEC. 1422. CERTAIN PEPPERONCINI PREPARED OR PRESERVED OTHERWISE THAN BY
VINEGAR OR ACETIC ACID IN CONCENTRATIONS LESS THAN 0.5
PERCENT.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.30 Giardiniera, Free No change No change On or before 12/ ''.
prepared or 31/2009
preserved
otherwise than by
vinegar, not
frozen (provided
for in subheading
2005.90.55)......
SEC. 1423. CHLORAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.31 Trichloroacetaldeh Free No change No change On or before 12/ ''.
yde (CAS No. 75- 31/2009
87-6) (provided
for in subheading
2913.00.50)......
SEC. 1424. IMIDACLOPRID TECHNICAL (IMIDACLOPRID).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.32 1-[(6-Chloro-3- Free No change No change On or before 12/ ''.
pyrdinyl)methyl]- 31/2009
N-nitro-2-
imidazolidinimine
(Imidacloprid)
(CAS No. 138261-
41-3) (provided
for in subheading
2933.39.27)......
SEC. 1425. TRIADIMEFON.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.33 1-(4- Free No change No change On or before 12/ ''.
Chlorophenoxy)-3, 31/2009
3-dimethyl-1-(1H-
1,2,4-triazol-1-
y1)-2-butanone
(CAS No. 43121-43-
3) (Triadimefon)
(provided for in
subheading
2933.99.22)......
SEC. 1426. POLYETHYLENE HE1878.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.34 Polyethylene 3.6% No change No change On or before 12/ ''.
HE1878 (CAS No. 31/2009
25087-34-7), with
l-butene as
comonomer
(provided for in
subheading
3901.20.50)......
SEC. 1427. THIACLOPRID.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.35 (Z)-[3-[(6-chloro- Free No change No change On or before 12/ ''.
3- 31/2009
pyridinyl)methyl]-
2-
thiazolidinyliden
e]cyanamide
(thiacloprid)
(CAS No. 111988-
49-9) (provided
for in subheading
2934.10.10)......
SEC. 1428. PYRIMETHANIL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.36 4,6-Dimethyl-N- Free No change No change On or before 12/ ''.
phenyl-2- 31/2009
pyrimidinamine
(pyrimethanil)
(CAS No. 53112-28-
0) (provided for
in subheading
2933.59.15)......
SEC. 1429. FORAMSULFURON.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.37 Foramsulfuron 2.6% No change No change On or before 12/ ''.
(Benzamide, 2- 31/2009
(((((4,6-
dimethoxy-2-
pyrimidinyl)amino
)
carbonyl)amino)su
lfonyl)-4-
(formylamino)-
N,N-dimethyl-,)
(CAS No. 173159-
57-4), in bulk or
put up in forms
or packaging for
retail sale
(provided for in
subheading
2935.00.75 or
3808.30.15)......
SEC. 1430. FENAMIDONE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.38 (5S)-3,5-Dihydro-5- Free No change No change On or before 12/ ''.
methyl-2- 31/2009
(methylthio)- 5-
phenyl-3-
(phenylamino)- 4H-
imidazol-4-one
(Fenamidone) (CAS
No. 161326-34-7)
(provided for in
subheading
2933.29.35)......
SEC. 1431. CYCLANILIDE TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.39 1-(2,4- Free No change No change On or before 12/ ''.
Dichlorophenylami 31/2009
nocarbonyl)cyclop
ropanecarboxylic
acid
(Cyclanilide)
(CAS No. 113136-
77-9) (provided
for in subheading
2924.29.47)......
SEC. 1432. PARA-BENZOQUINONE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.40 1,4-Benzoquinone Free No change No change On or before 12/ ''.
(CAS No. 106-51- 31/2009
4) (provided for
in subheading
2914.69.90)......
SEC. 1433. O-ANISIDINE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.41 o-Anisidine (CAS Free No change No change On or before 12/ ''.
No. 90-04-4) 31/2009
(provided for in
subheading
2922.22.10)......
SEC. 1434. 2,4-XYLIDINE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.43 2,4-Xylidine (CAS Free No change No change On or before 12/ ''.
No. 95-68-1) 31/2009
(provided for in
subheading
2921.49.10)......
SEC. 1435. CROTONALDEHYDE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.44 Crotonaldehyde (2- Free No change No change On or before 12/ ''.
butenaldehyde) 31/2009
(CAS No. 4170-30-
3) (provided for
in subheading
2912.19.50)......
SEC. 1436. BUTANEDIOIC ACID, DIMETHYL ESTER, POLYMER WITH 4-HYDROXY-
2,2,6,6,-TETRAMETHYL-1-PIPERIDINEETHANOL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.47 Butanedioic acid, Free No change No change On or before 12/ ''.
dimethyl ester, 31/2009
polymer with 4-
hydroxy-2,2,6,6,-
tetramethyl-1-
piperidineethanol
(CAS No. 65447-77-
0) (provided for
in subheading
3907.99.00)......
SEC. 1437. MIXTURES OF CAS NOS. 106990-43-6 AND 65447-77-0.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.48 1,3,5-Triazine- Free No change No change On or before 12/ ''.
2,4,6-triamine, 31/2009
N,N-[1,2-
ethanediylbis[[[4
,6-bis[butyl
(1,2,2,6,6-
pentamethyl-4-
piperidinyl)amino
]-1,3,5-triazine-
2-yl]imino]-3,1-
propanediyl]]bis[
N,N-dibutyl-N,N-
bis(1,2,2,6,6-
pentamethyl-4-
piperidinyl)-
(CAS No. 106990-
43-6) and
Butanedioic acid,
dimethylester
polymer with 4-
hyroxy-2,2,6,6-
tetramethyl-1-
piperdine ethanol
(CAS No. 65447-77-
0) (Provided for
in subheading
3812.30.90)......
SEC. 1438. MCPA.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.54 2-Ethylhexyl (4- Free No change No change On or before 12/ ''.
chloro-2- 31/2009
methylphenoxy)ace
tate (CAS No.
29450-45-1)
(provided for in
subheading
2918.90.20)......
SEC. 1439. BRONATE ADVANCED.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.55 Formulations of 2.8% No change No change On or before 12/ ''.
2,6-dibromo-4- 31/2009
cyanophenyl
octanoate (CAS
No. 1689-99-2),
2, 6-dibromo-4-
cyanophenyl
heptanoate (CAS
No. 56634-95-8),
and 2-ethylhexyl
(4-chloro-2-
methylphenoxy)ace
tate (CAS No.
29450-45-1)
(provided for in
subheading
3808.30.15)......
SEC. 1440. BROMOXYNIL OCTANOATE TECH.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.56 2,6-dibromo-4- Free No change No change On or before 12/ ''.
cyanophenyl 31/2009
octanoate (CAS
No. 1689-99-2)
(provided for in
subheading
2926.90.25)......
SEC. 1441. BROMOXYNIL MEO.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.57 2,6-Dibromo-4- Free No change No change On or before 12/ ''.
cyanophenyl 31/2009
octanoate/
heptanoate (CAS
Nos.1689-99-2 and
56634-95-8)
(provided for in
subheading
3808.30.15)......
SEC. 1442. HYDRAULIC CONTROL UNITS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.62 Hydraulic control Free No change No change On or before 12/ ''.
units designed 31/2009
for use in
braking systems
of hybrid motor
vehicles of
heading 8703
(provided for in
subheading
9032.89.60)......
SEC. 1443. SHIELD ASY-STEERING GEAR.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.63 Steering gear Free No change No change On or before 12/ ''.
assemblies for 31/2009
single-pinion
constant-ratio
electronic power
assisted steering
systems rated at
80 amperes at
12V, the
foregoing
designed for use
in hybrid motor
vehicles of
heading 8703
(provided for in
subheading
8708.99.73)......
SEC. 1444. 2,4-DICHLOROANILINE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.64 2,4- Free No change No change On or before 12/ ''.
Dichloroaniline 31/2009
(CAS No. 554-00-
7) (provided for
in subheading
2921.42.18)......
SEC. 1445. 2-ACETYLBUTYROLACTONE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.65 2- Free No change No change On or before 12/ ''.
Acetylbutyrolacto 31/2009
ne (CAS No. 517-
23-7) (provided
for in subheading
2932.29.50)......
SEC. 1446. ALKYLKETONE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.66 1-(4-Chlorophenyl)- Free No change No change On or before 12/ ''.
4, 4-dimethyl-3- 31/2009
pentanone (CAS
No. 66346-01-8)
(provided for in
subheading
2914.70.40)......
SEC. 1447. CYFLUTHRIN (BAYTHROID).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.67 Cyano(4-fluoro-3- 3.5% No change No change On or before 12/ ''.
phenoxyphenyl)met 31/2009
hyl 3-(2,2-
dichloroethenyl)-
2,2-
dimethylcycloprop
anecarboxylate
(Cyfluthrin,
excluding b-
Cyfluthrin) (CAS
No. 68359-37-5)
(provided for in
subheading
2926.90.30)......
SEC. 1448. BETA-CYFLUTHRIN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.68 Reaction mixture Free No change No change On or before 12/ ''.
comprising the 31/2009
enantiomeric pair
(R)-a-cyano-4-
fluoro-3-
phenoxybenzyl
(1S,3S)-3-(2,2-
dichlorovinyl)-2,
2-
dimethylcycloprop
anecarboxylate
and (S)-a-cyano-4-
fluoro-3-
phenoxybenzyl
(1R,3R)-3-(2,2-
dichlorovinyl)-2,
2-
dimethylcycloprop
anecarboxylate in
ratio 1:2 with
the enantiomeric
pair (R)-a-cyano-
4-fluoro-3-
phenoxybenzyl
(1S,3R)-3-(2,2-
dichlorovinyl)-2,
2-
dimethylcycloprop
anecarboxylate
and (S)-a-cyano-4-
fluoro-3-
phenoxybenzyl
(1R,3S)-3-(2,2-
dichlorovinyl)-2,
2-
dimethylcycloprop
anecarboxylate (b-
Cyfluthrin) (CAS
No. 68359-37-5)
(provided for in
subheading
2926.90.30)......
SEC. 1449. CYCLOPROPANE-1,1-DICARBOXYLIC ACID, DIMETHYL ESTER.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.69 Cyclopropane-1,1- 1.8% No change No change On or before 12/ ''.
dicarboxylic 31/2009
acid, dimethyl
ester (CAS No.
6914-71-2)
(provided for in
subheading
2917.20.00)......
SEC. 1450. SPIROXAMINE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.70 8-(1,1- Free No change No change On or before 12/ ''.
Dimethylethyl)-N- 31/2009
ethyl-N-propyl-
1,4-
dioxaspiro[4,5]de
cane-2-
methanamine (CAS
118134-30-8)
(provided for in
subheading
2932.99.90)......
SEC. 1451. SPIROMESIFEN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.71 3,3- Free No change No change On or before 12/ ''.
Dimethylbutanoic 31/2009
acid, 2-oxo-3-
(2,4,6-
trimethylphenyl)-
1-
oxaspiro[4.4]non-
3-en-yl ester
(CAS 283594-90-1)
(provided for in
subheading
2932.29.10)......
SEC. 1452. 4-CHLOROBENZALDEHYDE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.72 4- Free No change No change On or before 12/ ''.
Chlorobenzaldehyd 31/2009
e (CAS No. 104-88-
1) (provided for
in subheading
2913.00.40)......
SEC. 1453. OXADIAZON.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.73 5-tert-butyl-3- Free No change No change On or before 12/ ''.
(2,4-dichloro-5- 31/2009
isopropoxyphenyl)
-1,3,4-oxadiazol-
2(3H)-one
(Oxadiazon) (CAS
No. 19666-30-9)
(provided for in
subheading
2934.99.11)......
SEC. 1454. NAHP.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.74 2-(1,1- Free No change No change On or before 12/ ''.
Dimethylethyl)-5- 31/2009
hydroxypyrimidine
, sodium salt
(CAS No. 146237-
62-9) (provided
for in subheading
2933.59.70)......
SEC. 1455. PHOSPHORUS THIOCHLORIDE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.75 Phosphorus Free No change No change On or before 12/ ''.
Thiochloride (CAS 31/2009
No. 3982-91-0)
(provided for in
subheading
2851.00.00)......
SEC. 1456. TRIFLOXYSTROBIN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.76. Methyl (E)- 2.4% No change No change On or before 12/ ''.
methoxyimino-{(E)- 31/2009
a-[1-(a,a,a-
trifluoro-m-
tolyl)ethylidenea
minooxy]-o-
tolyl}acetate
(Trifloxystrobin)
(CAS No. 141517-
21-7) (provided
for in subheading
2929.90.20)......
SEC. 1457. PHOSPHORIC ACID, LANTHANUM SALT, CERIUM TERBIUM-DOPED.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.77 Phosphoric acid, Free No change No change On or before 12/ ''.
lanthanum salt, 31/2009
cerium terbium-
doped (CAS No.
95823-34-0)
(provided for in
subheading
2846.90.80)......
SEC. 1458. LUTETIUM OXIDE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.78 Lutetium oxide Free No change No change On or before 12/ ''.
(CAS No. 12032-20- 31/2009
1) (provided for
in subheading
2846.90.80)......
SEC. 1459. ACM.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.79 (3-Acetoxy-3- 0.7% No change No change On or before 12/ ''.
cyanopropyl) 31/2009
methylphosphinic
acid, butyl ester
(CAS No. 167004-
78-6) (provided
for in subheading
2931.00.90)......
SEC. 1460. PERMETHRIN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.80 (3- Free No change No change On or before 12/ ''.
Phenoxyphenyl)met 31/2009
hyl 3-(2,2-
dichloroethenyl)-
2,2-
dimethylcycloprop
anecarboxylate
(Permethrin) (CAS
No. 52645-53-1)
(provided for in
subheading
2916.20.50)......
SEC. 1461. THIDIAZURON.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.81 N-Phenyl-N - Free No change No change On or before 12/ ''.
(1,2,3-thiadiazol- 31/2009
5-yl)urea
(Thidiazuron) CAS
No. 51707-55-2),
whether or not
mixed with
application
adjuvants
(provided for in
subheading
2934.99.15 or
3808.30.15)......
SEC. 1462. FLUTOLANIL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.82 N-[3-(1- Free No change No change On or before 12/ ''.
Methylethoxy)phen 31/2009
yl]-2-
(trifluoromethyl)
benzamide
(Flutolanil) (CAS
No. 66332-96-5)
(provided for in
subheading
2924.29.47)......
SEC. 1463. RESMETHRIN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.83 [5-(Phenylmethyl)- Free No change No change On or before 12/ ''.
3-furanyl]methyl 31/2009
2,2-dimethyl-3-(2-
methyl-1-
propenyl)
cyclopropanecarbo
xylate
(Resmethrin) (CAS
No. 10453-86-8)
(provided for in
subheading
2932.19.10)......
SEC. 1464. CLOTHIANIDIN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.84 (E)-1-(2-Chloro- 5.4% No change No change On or before 12/ ''.
1,3-thiazol-5- 31/2009
ylmethyl)-3-
methyl-2-
nitroguanidine
(Clothianidin)
(CAS No. 210880-
92-5) (provided
for in subheading
2934.10.90)......
SEC. 1465. CERTAIN MASTER CYLINDER ASSEMBLES.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.92 Master cylinder Free No change No change On or before 12/ ''.
assemblies for 31/2009
braking systems,
not incorporating
a vacuum booster,
the foregoing
designed for use
in hybrid motor
vehicles of
heading 8703
(provided for in
subheading
8708.39.50)......
SEC. 1466. CERTAIN TRANSAXLES.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.93 Transaxles, each 1.5% No change No change On or before 12/ ''.
incorporating an 31/2009
integral
electronic
controller, the
foregoing
designed for use
in hybrid motor
vehicles of
heading 8703
(provided for in
subheading
8708.40.20)......
SEC. 1467. CONVERTER ASY.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.94 Static converters Free No change No change On or before 12/ ''.
capable of 31/2009
converting 300 V
direct current to
12 V direct
current, designed
for use in hybrid
motor vehicles of
heading 8703
(provided for in
subheading
8504.40.95)......
SEC. 1468. MODULE AND BRACKET ASY-POWER STEERING.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.95 Controllers for Free No change No change On or before 12/ ''.
electronic power 31/2009
assisted steering
systems, rated at
80 amperes at 12
V, designed for
use in hybrid
motor vehicles of
heading 8703
(provided for in
subheading
8537.10.90)......
SEC. 1469. UNIT ASY-BATTERY HI VOLT.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.96 Nickel metal- 2.8% No change No change On or before 12/ ''.
hydride storage 31/2009
batteries,
exceeding 300 V,
the foregoing
designed for use
in hybrid motor
vehicles of
heading 8703
(provided for in
subheading
8507.80.80)......
SEC. 1470. CERTAIN ARTICLES OF NATURAL CORK.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.10.99 Articles of 6% No change No change On or before 12/ ''.
natural cork, not 31/2009
elsewhere
specified or
included
(provided for in
subheading
4503.90.60)......
SEC. 1471. GLYOXYLIC ACID.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.01 Glyoxylic acid 1.6% No change No change On or before 12/ ''.
(CAS No. 298-12- 31/2009
4) (provided for
in subheading
2918.30.90)......
SEC. 1472. CYCLOPENTANONE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.02 Cyclopentanone Free No change No change On or before 12/ ''.
(CAS No. 120-92- 31/2009
3) (provided for
in subheading
2914.29.50)......
SEC. 1473. MESOTRIONE TECHNICAL.
(a) Calendar Year 2006.--Subchapter II of chapter 99 is amended by
inserting in numerical sequence the following new heading:
`` 9902.11.03 2-[4- 6.04% No change No change On or before 12/ ''.
(Methylsulfonyl)- 31/2006
2-nitrobenzoyl]-
1,3-
cyclohexanedione
(Mesotrione) (CAS
No. 104206-82-8)
(provided for in
subheading
2930.90.10)......
(b) Calendar Year 2007.--
(1) In general.--Heading 9902.11.03, as added by subsection
(a), is amended--
(A) by striking ``6.04%'' and inserting ``6.08%'';
and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2007''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2007.
(c) Calendar Years 2008 and 2009.--
(1) In general.--Heading 9902.11.03, as added by subsection
(a) and amended by subsection (b), is further amended--
(A) by striking ``6.08%'' and inserting ``6.11%'';
and
(B) by striking ``12/31/2007'' and inserting ``12/
31/2009''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2008.
SEC. 1474. MALONIC ACID-DINITRILE 50% NMP.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.04 50% solution of Free No change No change On or before 12/ ''.
malononitrile in 31/2009
methyl-2-
pyrrolidone
solvent (CAS Nos.
109-77-3 and 872-
50-4) (provided
for in subheading
3824.90.9190)....
SEC. 1475. FORMULATIONS OF NOA 446510.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.05 Formulations of Free No change No change On or before 12/ ''.
NOA 446510 which 31/2009
include NOA
446510 Technical,
2-(4-chloro-
phenyl)-N-[2-(3-
methoxy-4-prop-2-
ynyloxy-
phenyl)ethyl]-2-
prop-2-
ynyloxyacetamide
(CAS No. 374726-
62-2) (provided
for in subheading
3808.20.15)......
SEC. 1476. DEMBB DISTILLED-ISO TANK.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.06 2-Bromo-1,3- Free No change No change On or before 12/ ''.
diethyl-5- 31/2009
methylbenzene
(CAS No. 314084-
61-2) (DEMBB)
(provided for in
subheading
2903.69.80)......
SEC. 1477. METHYLIONONE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.10 3-Methyl-4-(2,6,6- Free No change No change On or before 12/ ''.
trimethylcyclohex- 31/2009
2-enyl)but-3-en-2-
one
(Methylionone)
(CAS No. 1335-46-
2) (provided for
in subheading
2914.23.00.......
SEC. 1478. CERTAIN ACRYLIC FIBER TOW.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.11 Acrylic fiber tow Free No change No change On or before 12/ ''.
(polyacrylonitril 31/2009
e tow) containing
by weight a
minimum of 92
percent
acrylonitrile,
not more than 0.1
percent zinc and
from 4 to 8
percent water,
imported in the
form of from 1 to
12 sub-bundles
crimped together,
each containing
24,000 filaments
(plus or minus
0.06 percent) and
with average
filament denier
of 1.5 decitex
(plus or minus
0.08 percent)
(provided for in
subheading
5501.30.00)......
SEC. 1479. CERTAIN ACRYLIC FIBER TOW.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.12 Acrylic fiber tow Free No change No change On or before 12/ ''.
(polyacrylonitril 31/2009
e tow) containing
by weight a
minimum of 92
percent
acrylonitrile,
not more than 0.1
percent zinc and
from 2 to 8
percent water,
imported in the
form of 6 sub-
bundles crimped
together, each
containing 45,000
filaments (plus
or minus 0.06
percent) and with
average filament
denier of either
1.48 decitex
(plus or minus
0.08 percent) or
1.32 decitex
(plus or minus
0.09 percent)
(provided for in
subheading
5501.30.00)......
SEC. 1480. MKH 6561 ISOCYANATE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.13 2-(Carbomethoxy) Free No change No change On or before 12/ ''.
benzenesulfonyl 31/2009
isocyanate (CAS
No. 74222-95-0)
(provided for in
subheading
2930.90.29)......
SEC. 1481. ENDOSULFAN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.14 6,7,8,9,10,10- Free No change No change On or before 12/ ''.
Hexachlorohexahyd 31/2009
romethano-2,4,3-
benzodioxathiepin-
3-oxide
(Endosulfan) (CAS
No. 115-29-7)
(provided for in
subheading
2920.90.50 or
3808.10.50)......
SEC. 1482. TETRACONAZOLE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.15 1-[2-(2,4- Free No change No change On or before 12/ ''.
dichlorophenyl)-3- 31/2009
(1,1,2,2-
tetrafluoroethoxy
)propyl]-1H-1,2,4-
triazole
(Tetraconazole)
(CAS No. 112281-
77-3) (provided
for in subheading
2933.99.22)......
SEC. 1483. M-ALCOHOL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.16 2-(2,4- 1% No change No change On or before 12/ ''.
Dichlorophenyl)-3- 31/2009
(1H-1,2,4-triazol-
1-yl)propanol
(CAS No. 112281-
82-0) (provided
for in subheading
2933.99.82)......
SEC. 1484. CERTAIN MACHINES FOR USE IN THE ASSEMBLY OF MOTORCYCLE
WHEELS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.17 Wheel spoke Free No change No change On or before 12/ ''.
tightening 31/2009
machines
(provided for in
subheading
8479.89.98), for
use with wheels
of vehicles of
heading 8711.....
SEC. 1485. DELTAMETHRIN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.26 (S)-a-Cyano-3- Free No change No change On or before 12/ ''.
phenoxybenzyl 31/2009
(1R,3R)-3-(2,2-
dibromovinyl)-2,2-
dimethylcycloprop
anecarboxylate
(Deltamethrin)
(CAS No. 52918-63-
5) (provided for
in subheading
2926.90.30)......
SEC. 1486. PALM FATTY ACID DISTILLATE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.32 Monocarboxylic 1% No change No change On or before 12/ ''.
fatty acids 31/2009
derived from palm
oil (provided for
in subheading
3823.19.20)......
SEC. 1487. 4-METHOXY-2-METHYLDIPHENYLAMINE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.35 4-Methoxy-2- 1.1% No change No change On or before 12/ ''.
methyldiphenylami 31/2009
ne (CAS No. 41317-
15-1) (provided
for in subheading
2922.29.60)......
SEC. 1488. 2-METHYLHYDROQUINONE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.36 2- Free No change No change On or before 12/ ''.
Methylhydroquinon 31/2009
e (CAS No. 95-71-
6) (provided for
in subheading
2907.29.90)......
SEC. 1489. 1-FLUORO-2-NITROBENZENE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.37 1-Fluoro-2- Free No change No change On or before 12/ ''.
nitrobenzene (CAS 31/2009
No. 1493-27-2)
(provided for in
subheading
2904.90.30)......
SEC. 1490. COSMETIC BAGS WITH A FLEXIBLE OUTER SURFACE OF REINFORCED OR
LAMINATED POLYVINYL CHLORIDE (PVC).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.43 Vanity cases that 13.3% No change No change On or before 12/ ''.
are of a soft 31/2009
sided
construction, of
reinforced or
laminated
polyvinyl
chloride
plastics, and are
of a kind
normally carried
in the pocket or
in the handbag
and used to
contain and apply
cosmetic
preparations
(provided for in
subheading
4202.12.20)......
SEC. 1491. MIXTURES OF METHYL 4-IODO-2-[3-(4-METHOXY-6-METHYL-1,3,5-
TRIAZIN-2-YL)UREIDOSULFONYL]BENZOATE, SODIUM SALT
(IODOSULFURON METHYL, SODIUM SALT).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.44 Mixtures of Free No change No change On or before 12/ ''.
methyl 4-iodo-2- 31/2009
[3-(4-methoxy-6-
methyl-1,3,5-
triazin-2-
yl)ureidosulfonyl
]benzoate, sodium
salt
(Iodosulfuron
methyl, sodium
salt) (CAS No.
144550-36-7) and
application
adjuvants
(provided for in
subheading
3808.30.15)......
SEC. 1492. ETHYL 4,5-DIHYDRO-5,5-DIPHENYL-1,2-OXAZOLE-3-CARBOXYLATE
(ISOXADIFEN-ETHYL).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.45 Ethyl 4,5-dihydro- Free No change No change On or before 12/ ''.
5,5-diphenyl-1,2- 31/2009
oxazole-3-
carboxylate
(Isoxadifen-
ethyl) (CAS No.
163520-33-0)
(provided for in
subheading
2934.99.39)......
SEC. 1493. (5-CYCLOPROPYL-4-ISOXAZOLYL)[2-(METHYLSULFONYL)-4-
(TRIFLUOROMETHYL)PHENYL]METHANONE (ISOXAFLUTOLE).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.46 (5-cyclopropyl-4- 4.8% No change No change On or before 12/ ''.
isoxazolyl)[2- 31/2009
(methylsulfonyl)-
4-
(trifluoromethyl)
phenyl]methanone
(Isoxaflutole)
(CAS No. 141112-
29-0) (provided
for in subheading
2934.99.15)......
SEC. 1494. METHYL 2-[(4,6-DIMETHOXYPYRIMIDIN-2-YLCARBAMOYL)SULFAMOYL]-
A-(METHANESULFONAMIDO)-P-TOLUATE (MESOSULFURON-METHYL)
WHETHER OR NOT MIXED WITH APPLICATION ADJUVANTS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.48 Methyl 2-[(4,6- Free No change No change On or before 12/ ''.
dimethoxypyrimidi 31/2009
n-2-
ylcarbamoyl)sulfa
moyl]-a-
(methanesulfonami
do)-p-toluate
(Mesosulfuron-
methyl) (CAS No.
208465-21-8)
whether or not
mixed with
application
adjuvants
(provided for in
subheading
2935.00.75 or
3808.30.15)......
SEC. 1495. MIXTURES OF FORAMSULFURON AND IODOSULFURON-METHYL-SODIUM.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.49 Mixtures of N,N- Free No change No change On or before 12/ ''.
dimethyl-2[3-(4,6- 31/2009
dimethoxypyrimidi
n-2-
yl)ureidosulfonyl
]-4-
formylaminobenzam
ide
(Foramsulfuron)
(CAS No. 173159-
57-4), methyl 4-
iodo-2-[3-(4-
methoxy-6-methyl-
1,3,5-triazin-2-
yl)ureidosulfonyl
]benzoate, sodium
salt
(Iodosulfuron-
methyl-sodium)
(CAS No. 144550-
36-7) and
application
adjuvants
(provided for in
subheading
3808.30.15)......
SEC. 1496. VULCUREN UPKA 1988.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.54 1,6-Bis(N,N'- Free No change No change On or before 12/ ''.
dibenzylthiocarba 31/2009
moyldithio)hexane
(CAS No. 151900-
44-6) (provided
for in subheading
2930.20.20)......
SEC. 1497. VULLCANOX 41010 NA/LG.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.55 N-Isopropyl-N'- Free No change No change On or before 12/ ''.
phenyl-p- 31/2009
phenylenediamine
(CAS No. 101-72-
4) (provided for
in subheading
2921.51.50)......
SEC. 1498. VULKAZON AFS/LG.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.56 Pentaerythritolbi Free No change No change On or before 12/ ''.
s(tetrahydrobenza 31/2009
ldehyde acetal)
(CAS No. 6600-31-
3) (provided for
in subheading
2932.99.90)......
SEC. 1499. P-ANISALDEHYDE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.57 P-Anisaldehyde Free No change No change On or before 12/ ''.
(CAS No. 123-11- 31/2009
5) (Benzoldehyde,
4-methoxy-)
(provided for in
subheading
2912.49.10)......
SEC. 1500. 1,2-PENTANEDIOL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.60 1,2-Pentanediol Free No change No change On or before 12/ ''.
(CAS No. 5343-92- 31/2009
0) (provided for
in subheading
2905.39.90)......
SEC. 1501. AGRUMEX.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following:
`` 9902.11.62 o-tert- Free No change No change On or before 12/ ''.
Butylcyclohexyl 31/2009
acetate, cis form
(CAS No. 20298-69-
9) (Agrumex)
(Cyclohexanol, 2-
(1,1-dimethyl-)
(provided for in
subheading
2915.39.45)......
SEC. 1502. COHEDUR RL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.63 Mixtures of Free No change No change On or before 12/ ''.
resorcinol (CAS 31/2009
No. 108-46-3),
hexamethylolmelam
ine ether (CAS
No. 3089-11-0)
and dibutyl
phthalate (CAS
No. 84-74-2)
(provided for in
subheading
3824.90.28)......
SEC. 1503. FORMULATIONS OF PROSULFURON.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.64 Mixtures of Free No change No change On or before 12/ ''.
Prosulfuron (1-(4- 31/2009
methoxy-6-methyl-
1,3,5-triazin-2-
yl)-3-[2-(3,3,3-
trifluoropropyl)-
phenylsulfonyl]ur
ea ) (CAS No.
94125-34-5) and
application
adjuvants
(provided for in
subheading
3808.30.15)......
SEC. 1504. LEWATIT.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.71 Ion-exchange Free No change No change On or before 12/ ''.
resins (cationic 31/2009
H form),
consisting of
copolymers of
acrylic acid and
diethylene glycol
divinyl ether
(CAS No. 359785-
58-3) (provided
for in subheading
3914.00.60)......
SEC. 1505. PARA-CHLOROPHENOL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.72 para-Chlorophenol Free No change No change On or before 12/ ''.
(CAS No. 106-48- 31/2009
9) (provided for
in subheading
2908.10.60)......
SEC. 1506. CYPERMETHRIN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.74 Cyano(3- Free No change No change On or before 12/ ''.
phenoxyphenyl)met 31/2009
hyl 3-(2,2-
dichloroethenyl)-
2,2-
dimethylcycloprop
anecarboxylate
(Cypermethrin)
(CAS No. 52315-07-
8) (provided for
in subheading
2926.90.30)......
SEC. 1507. ION-EXCHANGE RESIN POWDER.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.78 Ion-exchange Free No change No change On or before 12/ ''.
resin powder 31/2009
comprised of a
copolymer of
methacrylic acid
cross-linked with
divinylbenzene,
in the hydrogen
ionic form, of a
nominal partical
size between
0.025mm and 0.150
mm, dried to less
than 5% moisture
(CAS No. 50602-21-
6)(provided for
in subheading
3914.00.60)......
SEC. 1508. ION-EXCHANGE RESIN POWDER.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.79 Ion-exchange Free No change No change On or before 12/ ''.
resin powder 31/2009
comprised of a
copolymer of
methacrylic acid
cross-linked with
divinylbenzene,
in the potassium
ionic form, of a
nominal particle
size between
0.025mm and 0.150
mm, dried to less
than 10% moisture
(CAS No. 65405-55-
2) (provided for
in subheading
3914.00.60)......
SEC. 1509. DESMODUR E 14.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.80 1,2,3- Free No change No change On or before 12/ ''.
Propanetriol, 31/2009
polymer with 2,4-
diisocyanato-1-
methylbenzene, 2-
ethyl-2-
(hydroxymethyl)-1
,3-propanediol,
methyloxirane and
oxirane (CAS No.
127821-00-5)
(provided for in
subheading
3909.50.50)......
SEC. 1510. DESMODUR VP LS 2253.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.82 Hexane, 1,6- Free No change No change On or before 12/ ''.
diisocyanato-, 31/2009
homopolymer, 3,5-
dimethyl-1H-
pyrazole-blocked
(CAS No. 163206-
31-3) (provided
for in subheading
3911.90.90)......
SEC. 1511. DESMODUR R-E.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.83 4,4, 4-TT Desmodur Free No change No change On or before 12/ ''.
R-E in solvent 31/2009
(CAS No. 2422-91-
5) in solvent
(provided for in
subheading
3824.90.28)......
SEC. 1512. WALOCEL MW 3000 PFV.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.84 Methyl Free No change No change On or before 12/ ''.
hydroxyethyl 31/2009
cellulose
products
containing 30% or
greater content
of 2-hydroxyethyl
methyl ether
cellulose
(``MHEC'' )
reaction products
with glyoxal (CAS
No. 68441-63-4)
(provided for in
subheading
3912.39.00)......
SEC. 1513. TSME.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.85 ortho/para- Free No change No change On or before 12/ ''.
Toluenesulfonic 31/2009
acid, methyl
ester (TSME) (CAS
Nos. 23373-38-8
and 80-48-8)
(provided for in
subheading
2904.10.32)......
SEC. 1514. WALOCEL VP-M 20660.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.86 Methyl Free No change No change On or before 12/ ''.
Hydroxyethyl 31/2009
Cellulose with a
77% or greater
content of 2-
hydroxyethyl
methyl ether
cellulose (CAS
No. 9032-42-2)
(provided for in
subheading
3912.39.00)......
SEC. 1515. XAMA 2.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.87 Trimethylopropane Free No change No change On or before 12/ ''.
tris(3- 31/2009
aziridinylpropano
ate) (CAS No.
52234-82-9)
(provided for in
subheading
2933.99.97)......
SEC. 1516. XAMA 7.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.88 Polyfunctional Free No change No change On or before 12/ ''.
aziridine (CAS 31/2009
No. 57116-45-7)
(provided for in
subheading
2933.99.97)......
SEC. 1517. CERTAIN CASES FOR TOYS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.90 Cases or Free No change No change On or before 12/ ''.
containers 31/2009
(provided for in
subheading
4202.92.90 and
not including
goods described
in heading
9902.01.81),
specially shaped
or fitted for,
and with
labeling, logo or
other descriptive
information on
the exterior of
the case or
container
indicating its
intention to be
used for,
electronic
drawing toys or
electronic games
of heading 9503
or 9504..........
SEC. 1518. CERTAIN CASES FOR TOYS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.91 Cases or Free No change No change On or before 12/ ''.
containers 31/2009
(provided for in
subheadings
4402.12.80 or
4202.92.90),
having one or
more molded
plastic holders,
clips or
fasteners, for
holding a doll or
dolls, whether or
not the case or
container is also
capable of
holding other
goods............
SEC. 1519. ANILINE 2.5-DISULFONIC ACID.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.92 Aniline 2,5- Free No change No change On or before 12/ ''.
disulfonic acid 31/2009
(CAS No. 98-44-2)
(1,4-
Benzenedisnlfonic
acid, 2-amino-)
(provided for in
subheading
2921.42.90)......
SEC. 1520. 1,4-BENZENEDICARBOXYLIC ACID, POLYMER WITH N,N'-BIS(2-
AMINOETHYL)-1,2-ETHANEDIAMINE, CYCLIZED, METHOSULFATE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.93 1,4- Free No change No change On or before 12/ ''.
Benzenedicarboxyl 31/2009
ic acid, polymer
With N,N-Bis(2-
aminoethyl)-1,2-
ethanediamine,
cyclized,
methosulfate (CAS
No. 68187-22-4)
(provided for in
subheading
3908.90.70)......
SEC. 1521. SULFUR BLUE 7.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.94 4-[(4-Amino-3- Free No change No change On or before 12/ ''.
methylphenyl)amin 31/2009
o]phenol,
reaction products
with sodium
sulfide (Sulfur
Blue 7) (CAS No.
1327-57-7)
(provided for in
subheading
3204.19.50)......
SEC. 1522. FORMALDEHYDE, REACTION PRODUCTS WITH 1,4-BENZENEDIOL AND M-
PHENYLENEDIAMINE, SULFURIZED.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.95 Formaldehyde, Free No change No change On or before 12/ ''.
reaction products 31/2009
with 1,4-
benzenediol and m-
phenylenediamine,
sulfurized (CAS
No. 110392-46-6)
(provided for in
subheading
3204.19.50)......
SEC. 1523. ISOCYANATOSULFONYL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.96 2- Free No change No change On or before 12/ ''.
(Isocyanatosulfon 31/2009
yl)benzoic acid,
ethyl ester (CAS
No. 77375-79-2)
(provided for in
subheading
2930.90.29)......
SEC. 1524. ISOCYANATOSULFONYL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.97 2- Free No change No change On or before 12/ ''.
(Isocyanatosulfon 31/2009
yl)benzoic acid,
methyl ester (CAS
No. 74222-95-0)
(provided for in
subheading
2930.90.29)......
SEC. 1525. GEMIFLOXACIN, GEMIFLOXACIN MESYLATE, AND GEMIFLOXACIN
MESYLATE SESQUIHYDRATE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.11.99 Gemifloxacin (CAS Free No change No change On or before 12/ ''.
No. 175463-14-6); 31/2009
gemifloxacin
mesylate (CAS No.
210353-53-0 or
204519-65-3); and
gemifloxacin
mesylate
sesquihydrate
(CAS No. 210353-
56-3 ) (the
foregoing
provided for in
subheading
2933.99.46)......
SEC. 1526. BUTRALIN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.01 Butralin (CAS No. Free No change No change On or before 12/ ''.
33629-47-9) 31/2009
(Benzenamine, 4-
(1,1-
dimethylethyl)-N-
(1-methylpropyl)-
2,6-dintro-)
(provided for in
subheading
2921.43.90)......
SEC. 1527. SPIRODICLOFEN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.02 2,2- Free No change No change On or before 12/ ''.
Dimethylbutanoic 31/2009
acid, 3-(2,4-
dichlorophenyl)-2-
oxo-1-
oxaspiro(4.5)dec-
3-en-4-yl ester
(Spirodiclofen)
(CAS No. 148477-
71-8) (provided
for in subheading
2932.29.10)......
SEC. 1528. PROPAMOCARB HCL (PREVICUR).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.03 Mixtures of propyl Free No change No change On or before 12/ ''.
3-(dimethylamino) 31/2009
propylcarbamate
monohydrochloride
(Propamocarb
hydrochloride)
(CAS No. 25606-41-
1) and
application
adjuvants
(provided for in
subheading
3808.20.50)......
SEC. 1529. DESMODUR IL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.04 Poly(toluene Free No change No change On or before 12/ ''.
diisocyanate) 31/2009
(CAS No. 26006-20-
2) dissolved in
organic solvents
(provided for in
subheading
3911.90.45)......
SEC. 1530. CHLOROACETONE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.05 1-Chloro-2- Free No change No change On or before 12/ ''.
propanone (CAS 31/2009
No. 78-95-5)
(provided for in
subheading
2914.70.90)......
SEC. 1531. IPN (ISOPHTHALONITRILE).
(a) Calendar Year 2006.--Subchapter II of chapter 99 is amended by
inserting in numerical sequence the following new heading:
`` 9902.12.06 1,3- 3.04% No change No change On or before 12/ ''.
Benzenedicarbonit 31/2006
rile (CAS No. 626-
17-5) (provided
for in subheading
2926.90.48)......
(b) Calendar Year 2007.--
(1) In general.--Heading 9902.12.06, as added by subsection
(a), is amended--
(A) by striking ``3.04%'' and inserting ``3.23%'';
and
(B) by striking ``On or before 12/31/2006'' and
inserting ``On or before 12/31/2007''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2007.
(c) Calendar Years 2008 and 2009.--
(1) In general.--Heading 9902.12.06, as added by subsection
(a) and amended by subsection (b), is further amended--
(A) by striking ``3.23%'' and inserting ``3.4%'';
and
(B) by striking ``On or before 12/31/2007'' and
inserting ``On or before 12/31/2009''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2008.
SEC. 1532. NOA 446510 TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.07 4-Chloro-N-[2-[3- 1.2% No change No change On or before 12/ ''.
methoxy-4-(2- 31/2009
propynyloxy)pheny
l]ethyl]-a-(2-
propynyloxy)benze
neacetamide
(Mandipropamid)
(CAS No. 374726-
62-2) (provided
for in subheading
2924.29.47)......
SEC. 1533. HEXYTHIAZOX TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.08 trans-5-(4- Free No change No change On or before 12/ ''.
Chlorophenyl)-N- 31/2009
cyclohexyl-4-
methyl-2-
oxothiazolidine-3-
carboxamide
(Hexythiazox
Technical) (CAS
No. 78587-05-0)
(provided for in
subheading
2934.10.10)......
SEC. 1534. CRELAN (SELF-BLOCKED CYCLOALIPHATIC POLYURETDIONE).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.10 2-Oxepanone Free No change No change On or before 12/ ''.
polymer with 1,4- 31/2009
butanediol and 5-
isocyanato-1-
(isocyanatomethyl
)-1,3,3-
trimethylcyclohex
ane, 2-ethyl-1-
hexanol-blocked
(CAS No. 189020-
69-7) (provided
for in subheading
3909.50.50)......
SEC. 1535. ASPIRIN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.11 o-Acetylsalicylic 3.0% No change No change On or before 12/ ''.
acid (aspirin) 31/2009
(CAS No. 50-78-2)
(provided for in
subheading
2918.22.10)......
SEC. 1536. DESMODUR BL XP 2468.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.12 Copolymer of Free No change No change On or before 12/ ''.
methyl ethyl 31/2009
ketoxime and
toluenediisocyana
te (CAS No.
352462-03-4)
(provided for in
subheading
3911.90.45)......
SEC. 1537. DESMODUR RF-E.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.17 Mixtures of tris(4- Free No change No change On or before 12/ ''.
isocyanatophenyl) 31/2009
thiophosphate
(CAS No. 4151-51-
3) and ethyl
acetate and
monochlorobenzene
as solvents
(provided for in
subheading
3824.90.28)......
SEC. 1538. DESMODUR HL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.18 Benzene, 1,3- Free No change No change On or before 12/ ''.
diisocyanatomethy 31/2009
l-, polymer with
1,6-
diisocyanatohexan
e (CAS No. 63368-
95-6) dissolved
in n-butyl
acetate (provided
for in subheading
3911.90.45)......
SEC. 1539. D-MANNOSE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.19 D-Mannose (CAS No. Free No change No change On or before 12/ ''.
3458-28-4) 31/2009
(provided for in
subheading
2940.00.60)......
SEC. 1540. CERTAIN CAMEL HAIR.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.20 Camel hair, Free No change No change On or before 12/ ''.
processed beyond 31/2009
the degreased or
carbonized
condition
(provided for in
subheading
5102.19.90)......
SEC. 1541. WASTE OF CAMEL HAIR.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.21 Waste of camel Free No change No change On or before 12/ ''.
hair (provided 31/2009
for in subheading
5103.20.00)......
SEC. 1542. CERTAIN CAMEL HAIR.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.22 Camel hair carded Free No change No change On or before 12/ ''.
or combed 31/2009
(provided for in
subheading
5105.39.00)......
SEC. 1543. WOVEN FABRIC OF VICUNA HAIR.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.23 Woven fabrics Free No change No change On or before 12/ ''.
containing 85 31/2009
percent or more
by weight of
vicuna hair
(provided for in
subheadings
5111.11.70,
5111.19.60,
5112.11.60, or
5112.19.95)......
SEC. 1544. CERTAIN CAMEL HAIR.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.24 Camel hair, not Free No change No change On or before 12/ ''.
processed in any 31/2009
manner beyond the
degreased or
carbonized
condition
(provided for in
subheading
5102.19.20)......
SEC. 1545. NOILS OF CAMEL HAIR.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.25 Noils of camel Free No change No change On or before 12/ ''.
hair (provided 31/2009
for in subheading
5103.10.00)......
SEC. 1546. CHLOROACETIC ACID, ETHYL ESTER.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.33 Chloroacetic acid, Free No change No change On or before 12/ ''.
ethyl ester (CAS 31/2009
No. 105-39-5)
(provided for in
subheading
2915.40.50)......
SEC. 1547. CHLOROACETIC ACID, SODIUM SALT.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.34 Chloroacetic acid, Free No change No change On or before 12/ ''.
sodium salt (CAS 31/2009
No. 3926-62-3)
(provided for in
subheading
2915.40.50)......
SEC. 1548. LOW EXPANSION LABORATORY GLASS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.39 Laboratory, 3.6% No change No change On or before 12/ ''.
hygienic, or 31/2009
pharmaceutical
glassware,
whether or not
graduated or
calibrated, of
low expansion
borosilicate
glass or alumino-
borosilicate
glass, having a
linear
coefficient of
expansion not
exceeding 3.3 x
10\7\ per Kelvin
within a
temperature range
of 0 to 300 C
(provided for in
subheading
7017.20.00)......
SEC. 1549. STOPPERS, LIDS, AND OTHER CLOSURES.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.40 Stoppers, lids, Free No change No change On or before 12/ ''.
and other 31/2009
closures of low
expansion
borosilicate
glass or alumino-
borosilicate
glass, having a
linear
coefficient of
expansion not
exceeding 3.3 x
10\7\ per Kelvin
within a
temperature range
of 0 to 300 C,
produced by
automatic machine
(provided for in
subheading
7010.20.20) or
produced by hand
(provided for in
subheading
7010.20.30)......
SEC. 1550. PIGMENT YELLOW 213.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.41 1,4- Free No change No change On or before 12/ ''.
Benzenedicarboxyl 31/2009
ic acid, 2-[[2-
oxo-1-[[1,2,3,4-
tetrahydro-7-
methoxy-2,3-dioxo-
6-quinoxalinyl)
amino]carbonyl]pr
opyl]azo]-,
dimethyl ester
(Pigment Yellow
213) (CAS No.
220198-21-0)
(provided for in
subheading
3204.17.60)......
SEC. 1551. INDOXACARB.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.42 (4aS) -7-Chloro-2, Free No change No change On or before 12/ ''.
5-dihydro-2- 31/2009
[[(methoxycarbony
l)[4-
(trifluoromethoxy
) phenyl] amino]
carbonyl]-indeno
[1,2-e][1,3,4]
oxadiazine-4a
(3H)-carboxylic
acid methyl ester
(CAS No. 173584-
44-6) (provided
for in subheading
2934.99.16)......
SEC. 1552. DIMETHYL CARBONATE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.43 Dimethyl carbonate Free No change No change On or before 12/ ''.
(CAS No. 616-38- 31/2009
6) (provided for
in subheading
2920.90.50)......
SEC. 1553. 5-CHLORO-1-INDANONE (EK179).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.44 5-Chloro-1- Free No change No change On or before 12/ ''.
indanone (CAS No. 31/2009
42348-86-7)
(provided for in
subheading
2914.39.90)......
SEC. 1554. MIXTURES OF FAMOXADONE AND CYMOXANIL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.45 Mixtures of 5- Free No change No change On or before 12/ ''.
methyl-5-(4- 31/2009
phenoxyphenyl)-3-
(phenylamino)-2,4-
oxazolidinedione]
(famoxadone) (CAS
No. 131807-57-3),
2-cyano-N-
[(ethylamino)carb
onyl]-2-
(methoxyimino)ace
tamide
(Cymoxanil) (CAS
No. 57966-95-7)
and application
adjuvants
(provided for in
subheading
3808.20.15)......
SEC. 1555. DECANEDIOIC ACID, BIS(2,2,6,6-TETRAMETHYL-4-PIPERIDINYL)
ESTER.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.47 Decanedioic acid, Free No change No change On or Before 12/ ''.
bis(2,2,6,6- 31/2009
tetramethyl-4-
piperidinyl)
ester (CAS No.
52829-07-9)
(provided for in
subheading
2933.39.91)......
SEC. 1556. ACID BLUE 80.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.49 Acid Blue 80 (CAS Free No change No change On or before 12/ ''.
No. 4474-24-2) 31/2009
(provided for in
subheading
3204.12.50)......
SEC. 1557. PIGMENT BROWN 25.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.50 Pigment Brown 25 Free No change No change On or before 12/ ''.
(CAS No. 6992-11- 31/2009
6) (provided for
in subheading
3204.17.04)......
SEC. 1558. FORMULATIONS OF AZOXYSTROBIN.
(a) Calendar Year 2006.--Subchapter II of chapter 99 is amended by
inserting in numerical sequence the following new heading:
`` 9902.12.51 Mixtures of 6.14% No change No change On or before 12/ ''.
benzeneacetic 31/2006
acid, (a E)- 2-
[[6-(2-
cyanophenoxy)-4-
pyrimidinyl]oxy]-
a-
(methoxymethylene
)-, methyl ester
(Azoxystrobin)
(CAS No. 131860-
33-8) and
application
adjuvants
(provided for in
subheading
3808.20.15)......
(b) Calendar Year 2007.--
(1) In general.--Heading 9902.12.51, as added by subsection
(a), is amended--
(A) by striking ``6.14%'' and inserting ``6.15%'';
and
(B) by striking ``On or before 12/31/2006'' and
inserting ``On or before 12/31/2007''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2007.
(c) Calendar Years 2008 and 2009.--
(1) In general.--Heading 9902.12.51, as added by subsection
(a) and amended by subsection (b), is further amended--
(A) by striking ``6.15%'' and inserting ``6.17%'';
and
(B) by striking ``On or before 12/31/2007'' and
inserting ``On or before 12/31/2009''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2008.
SEC. 1559. FORMULATIONS OF PINOXADEN/CLOQUINTOCET.
(a) Calendar Years 2006 and 2007.--Subchapter II of chapter 99 is
amended by inserting in numerical sequence the following new heading:
`` 9902.12.52 Mixtures of 8(2,6- Free No change No change On or before 12/ ''.
diethyl-p-tolyl)- 31/2007
1,2,4,5-
tetrahydro-7-oxo-
7H-pyrazolo[[1,2-
d][1,4,5]
oxadiazepin-9-yl
2,2-
dimethylpropionat
e (Pinoxaden)
(CAS No. 243973-
20-8), acetic
acid, [5-chloro-8-
quinolinyl]oxy]-,
1-methylhexyl
ester
(Cloquintocet)
(CAS No. 99607-70-
2) and
application
adjuvants
(provided for in
subheading
3808.30.15)......
(b) Calendar Years 2008 and 2009.--
(1) In general.--Heading 9902.12.52, as added by subsection
(a), is further amended--
(A) by striking ``Free'' and inserting ``1.74%'';
and
(B) by striking ``On or before 12/31/2007'' and
inserting ``On or before 12/31/2009''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2008.
SEC. 1560. MIXTURES OF DIFENOCONAZOLE/MEFENOXAM.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.53 Mixtures of 1H- Free No change No change On or before 12/ ''.
1,2,4-triazole, 1- 31/2009
((2-
chlorophenoxy)phe
nyl)-4-methyl-1,3-
dioxolan-2-
yl)methyl)-
(Difenoconazole)
(CAS No. 119446-
68-3), (R,S)-2-
((2,6-
dimethylphenyl)
methoxyacetylamin
o) propionic
acid, methyl
ester (Mefenoxam)
(CAS Nos. 70630-
17-0, and 69516-
34-3) and
application
adjuvants
(provided for in
subheading
3808.20.15)......
SEC. 1561. FLUDIOXINIL TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.54 1H-Pyrrole-3- 1.6% No change No change On or before 12/ ''.
carbonitrile, 4- 31/2009
(2,2-difluoro-1,3-
benzodioxol-4-yl)-
(fludioxinil)
(CAS No. 131341-
86-1) (provided
for in subheading
2934.99.12)......
SEC. 1562. MIXTURES OF CLODINAFOP-PROPARGYL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.55 Mixtures of 1.7% No change No change On or before 12/ ''.
propionic acid, 2- 31/2009
(4-((5-chloro-3-
fluoro-2-
pyridynyl)oxy)phe
noxy-2-propynyl
ester,
(clodinafop-
propargyl) (CAS
No. 105512-06-9)
(provided for in
subheading
3808.30.15)......
SEC. 1563. AVERMECTIN B, 1,4"-DEOXY-4"-METHYLAMINO-, (4"R)-, BENZOATE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.56 Avermectin B, 1,4"- Free No change No change On or before 12/ ''.
deoxy-4"- 31/2009
methylamino-,
(4"R)-, benzoate
(CAS No. 155569-
91-8) (provided
for in subheading
3824.90.91 or
2932.29.50)......
SEC. 1564. CLOQUINTOCET-MEXYL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.57 Acetic acid, 5- Free No change No change On or before 12/ ''.
chloro-8- 31/2009
quinolinoxy-, 1-
methylhexyl ester
(Cloquintocet-
mexyl) (CAS No.
99607-70-2)
(provided for in
subheading
2933.49.30)......
SEC. 1565. METALAXYL-M TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.58 (R,S)-2-((2,6- Free No change No change On or before 12/ ''.
Dimethylphenyl) 31/2009
methoxyacetylamin
o) propionic
acid, methyl
ester (Metalaxyl-
M and L-
Metalaxylfenoxam)
(CAS Nos. 70630-
17-0 and 69516-34-
3) (provided for
in subheading
2924.29.47)......
SEC. 1566. CYPROCONAZOLE TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.59 [a-(4- Free No change No change On or before 12/ ''.
Chlorophenyl)-a- 31/2009
(1-
cyclopropylethyl)
-1H-1-1,2,4-
triazole-1-
ethanol
(Cyproconazole)
(CAS No. 94361-06-
5) (provided for
in subheading
2934.99.12)......
SEC. 1567. PINOXADEN TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.60 8-(2,6-Diethyl-4- 1.8% No change No change On or before 12/ ''.
methylphenyl)-1,2 31/2009
,4,5-tetrahydro-7-
oxo-7H-
pyrazolo[1,2-
d][1,4,5]oxadiaze
pin-9-yl 2,2-
dimethylpropanoat
e (Pinoxaden)
(CAS No. 243973-
20-8) (provided
for in subheading
2934.99.15)......
SEC. 1568. MIXTURES OF TRALKOXYDIM.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.12.61 Mixtures of 2-[1- Free No change No change On or before 12/ ''.
(ethoxyimino)prop 31/2009
yl]-3-hydroxy-5-
(2,4,6-
trimethylphenyl)-
2-cyclohexen-1-
one (Tralkoxydim)
(CAS No. 87820-88-
0) as the active
ingredient and
application
adjuvants
(provided for in
subheading
3808.30.15)......
SEC. 1569. CERTAIN CHEMICALS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new headings:
`` 9902.12.72 Mixtures of zinc Free No change No change On or before 12/ ...
dialkyldithiophos 31/2009
phate (CAS No.
6990-43-8) with
an elastomer
binder of
ethylene-
propylene-diene
monomer and ethyl
vinyl acetate,
dispersing agents
and silica
(provided for in
subheading
3812.10.50)......
9902.12.73 Mixtures of Free No change No change On or before 12/ ...
dithiocarbamate, 31/2009
thiazole, thiuram
and thiourea with
an elastomer
binder of
ethylene-
propylene-diene
monomer and ethyl
vinyl acetate,
and dispersing
agents (provided
for in subheading
3812.10.50)......
9902.12.74 Mixtures of Free No change No change On or before 12/ ...
caprolactam 31/2009
disulfide (CAS
No. 23847-08-7)
with an elastomer
binder of
ethylene-
propylene-diene
monomer and ethyl
vinyl acetate,
and dispersing
agents (provided
for in subheading
3812.10.50)......
9902.12.75 Mixtures of N-(3,4- Free No change No change On or before 12/ ...
dichloro-phenyl)- 31/2009
N,N-dimethylurea
(CAS No. 330-54-
1) with acrylate
rubber (provided
for in subheading
3812.10.50)......
9902.12.76 Mixtures of zinc Free No change No change On or before 12/ ...
dicyanato diamine 31/2009
(CAS No. 122012-
52-6) with an
elastomer binder
of ethylene-
propylene-diene
monomer and ethyl
vinyl acetate,
and dispersing
agents (provided
for in subheading
3812.10.50)......
9902.12.77 4,8-Dicyclohexyl - Free No change No change On or before 12/ ...
6-2,10-dimethyl - 31/2009
12H-dibenzo
[d,g][1,3,2]dioxa
phosphocin (CAS
No. 73912-21-7)
(provided for in
subheading
2920.90.50)......
9902.12.78 Mixtures of Free No change No change On or before 12/ ...
benzenesulfonic 31/2009
acid, dodecyl-,
with 2-
aminoethanol (CAS
No. 26836-07-7)
and Poly (oxy-1,2-
ethanediyl), a-[1-
oxo-9-
octadecenyl]-w-
hydroxy-, (9Z)
(CAS No. 9004-96-
0) (provided for
in subheading
3402.90.50)......
9902.12.79 1,3-Dihydro-3,3- Free No change No change On or before 12/ ''.
bis (4-hydroxy-m- 31/2009
tolyl)-2H-indol-2-
one (CAS No.
47465-97-4)
(provided for in
subheading
2933.79.08)......
SEC. 1570. MIXTURES OF (<plus-minus>)-(CIS AND TRANS)-1-[[2-(2,4-
DICHLOROPHENYL)-4-PROPYL-1,3-DIOXOLAN-2-YL]-METHYL]-1H-
1,2,4-TRIAZOLE.
(a) In General.--Subchapter II of chapter 99 is amended by
inserting in numerical sequence the following new heading:
`` 9902.12.80 Mixtures of 1.1% No change No change On or before 12/ ''.
(<plus-minus>)-(c 31/2009
is and trans)-1-
[[2-(2,4-
Dichlorophenyl)-4-
propyl-1,3-
dioxolan-2-yl]-
methyl]-1H-1,2,4-
triazole (CAS No.
60207-90-1) and
application
adjuvants
(provided for in
subheading
3808.20.15)......
(b) Conforming amendment.--Subchapter II of chapter 99 is amended
by striking heading 9902.32.04.
SEC. 1571. PARAQUAT DICHLORIDE.
(a) In General.--Subchapter II of chapter 99 is amended by
inserting in numerical sequence the following new heading:
`` 9902.13.06 Paraquat 3.59% No change No change On or before 12/ ''.
dichloride 31/2006
(1,1'dimethyl-
4,4'-bipyridinium
dichloride) (CAS
No. 1910-42-5)
(provided for in
subheading
2933.39.23)......
(b) Calendar Year 2007.--
(1) In general.--Heading 9902.13.06, as added by subsection
(a), is amended--
(A) by striking ``3.59%'' and inserting ``4.02%'';
and
(B) by striking ``On or before 12/31/2006'' and
inserting ``On or before 12/31/2007''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2007.
(c) Calendar Years 2008 and 2009.--
(1) In general.--Heading 9902.13.06, as added by subsection
(a) and amended by subsection (b), is further amended--
(A) by striking ``4.02%'' and inserting ``4.41%'';
and
(B) by striking ``On or before 12/31/2007'' and
inserting ``On or before 12/31/2009''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2008.
SEC. 1572. CERTAIN BASKETBALLS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.07 Basketballs, 0.9% No change No change On or before 12/ ''.
having an 31/2009
external surface
other than
leather, rubber,
or synthetic
(provided for in
subheading
9506.62.80)......
SEC. 1573. CERTAIN LEATHER BASKETBALLS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.08 Leather Free No change No change On or before 12/ ''.
basketballs 31/2009
(provided for in
subheading
9506.62.80)......
SEC. 1574. CERTAIN RUBBER BASKETBALLS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.09 Rubber 1.5% No change No change On or before 12/ ''.
basketballs 31/2009
(provided for in
subheading
9506.62.80)......
SEC. 1575. CERTAIN VOLLEYBALLS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.10 Volleyballs Free No change No change On or before 12/ ''.
(provided for in 31/2009
subheading
9506.62.80)......
SEC. 1576. 4-CHLORO-3-[[3-(4-METHOXYPHENYL)-1,3-DIOXOPROPYL]-AMINO]-
DODECYL ESTER.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.11 4-Chloro-3-[[3-(4- Free No change No change On or before 12/ ''.
methoxyphenyl)-1, 31/2009
3-dioxopropyl]-
amino]-dodecyl
ester (CAS No.
33942-96-0)
(provided for in
subheading
2924.29.71)......
SEC. 1577. LINURON.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.24 3-(3,4- Free No change No change On or before 12/ ''.
Dichlorophenyl)-1- 31/2009
methoxy-1-
methylurea (CAS
No. 330-55-2)
(Linuron)
(provided for in
subheading
2924.21.16)......
SEC. 1578. N,N-DIMETHYLPIPERIDINIUM CHLORIDE (MEPIQUAT CHLORIDE).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.25 N,N- Free No change No change On or before 12/ ''.
Dimethylpiperidin 31/2009
ium chloride
(Mepiquat
chloride) (CAS
No. 24307-26-4)
(provided for in
subheading
2933.39.25)......
SEC. 1579. DIURON.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.26 Formulations of 3- Free No change No change On or before 12/ ''.
(3,4- 31/2009
dichlorophenyl)-1
,1-dimethylurea
(CAS No. 330-54-
1) (Diuron) and
application
adjuvants
(provided for in
subheading
3808.30.15)......
SEC. 1580. FORMULATED PRODUCT KROVAR I DF.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.27 Formulations 2.5% No change No change On or before 12/ ''.
containing 5- 31/2009
bromo-3-sec-butyl-
6-methyluracil
(Bromacil) (CAS
No. 314-40-9), 3-
(3,4-
Dichlorophenyl)-1
,1-dimethylurea
(Diuron) (CAS No.
330-54-1), and
application
adjuvants
(provided for in
subheading
3808.30.15)......
SEC. 1581. TRIASULFURON TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.28 3-(6-Methoxy-4- Free No change No change On or before 12/ ''.
methyl-1,3,5- 31/2009
triazin-2-yl)-1-
[2-(2-
chloroethoxy)
phenylsulfonyl]ur
ea (Triasulfuron)
(CAS No. 82097-50-
5) (provided for
in subheading
2935.00.75)......
SEC. 1582. BRODIFACOUM TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.29 3-[3-(4'- Free No change No change On or before 12/ ''.
Bromo[1,1'- 31/2009
biphenyl]-4-yl)-
1,2,3,4-
tetrahydro-1-
naphthalenyl]-4-
hydroxy-2H-1-
benzopyran- 2-one
(Brodifacoum)
(CAS No. 56073-10-
0) (provided for
in subheading
2932.29.10)......
SEC. 1583. PYMETROZINE TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.30 1,2,4-Triazin- Free No change No change On or before 12/ ''.
3(2H)-one, 4,5- 31/2009
dihydro-6-methyl-
4-[(3-
pyridinylmethylen
e)amino]-
(Pymetrozine)
(CAS No. 123312-
89-0) (provided
for in subheading
2933.69.60)......
SEC. 1584. FORMULATIONS OF THIAMETHOXAM, DIFENOCONAZOLE, FLUDIOXINIL,
AND MEFENOXAM.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.31 Formulations of 3- Free No change No change On or before 12/ ''.
[(2-chloro-5- 31/2009
thiazolyl)methyl]
tetrahydro-5-
methyl-N-nitro-
1,3,5-oxadiazin-4-
imine)
(Thiamethoxam)
(CAS No. 153719-
23-4 ); 1H-1,2,4-
triazole, 1-[[2-
[2-chloro-4-(4-
chlorophenoxy)phe
nyl]-4-methyl-
1,3-dioxolan-2-
yl]methyl]-
(Difenoconazole)
(CAS No. 119446-
68-3); 1H-Pyrrole-
3-carbonitrile, 4-
(2,2-difluoro-1,3-
benzodioxol-4-yl)-
(Fludioxinil)
(CAS No. 131341-
86-1); and (R,S)-
2-[(2,6-
dimethylphenylmet
hoxy)acetylamino]-
propionic acid
methyl ester
(Mefenoxam) (CAS
Nos. 70630-17-0
and 69516-34-3)
(provided for in
subheading
3808.20.15)......
SEC. 1585. TRIFLOXYSULFURON-SODIUM TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.32 N-[[(4,6- Free No change No change On or before 12/ ''.
Dimethoxy-2- 31/2009
pyrimidinyl)amino
]carbonyl]-3-
(2,2,2-
trifluoroethoxy)-
2-
pyridinesulfonami
de monosodium
salt (CAS No.
199119-58-9)
(trifloxysulfuron-
sodium) (provided
for in subheading
2935.00.75)......
SEC. 1586. 2 BENZYLTHIO-3-ETHYL SULFONYL PYRIDINE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.41 2-Benzylthio-3- Free No change No change On or before 12/ ''.
ethyl sulfonyl 31/2009
pyridine (CAS No.
175729-82-5)
(provided for in
subheading
2933.39.61)......
SEC. 1587. 2-AMINO-4-METHOXY-6-METHYL-1,3,5-TRIAZINE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.42 2-Amino-4-methoxy- Free No change No change On or before 12/ ''.
6-methyl-1,3,5- 31/2009
triazine (CAS No.
1668-54-8)
(provided for in
subheading
2933.69.60)......
SEC. 1588. FORMULATED PRODUCTS CONTAINING MIXTURES OF THE ACTIVE
INGREDIENT 2-CHLORO-N-[[(4-METHOXY-6-METHYL-1,3,5-
TRIAZIN-2YL) AMINO]CARBONYL] BENZENESULFONAMIDE AND
APPLICATION ADJUVANTS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.43 Formulated Free No change No change On or before 12/ ''.
products 31/2009
containing
mixtures of the
active ingredient
2-chloro-N-[[(4-
methoxy-6-methyl-
1,3,5-triazin-
2yl)
amino]carbonyl]
benzenesulfonamid
e and application
adjuvants
(Chlorosulfuon)
(CAS No. 64902-72-
3) (provided for
in subheading
3808.30.15)......
SEC. 1589. 2-METHYL-4-METHOXY-6-METHYLAMINO-1,3,5-TRIAZINE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.44 2-Methyl-4-methoxy- Free No change No change On or before 12/ ''.
6-methylamino- 31/2009
1,3,5-triazine
(CAS No. 5248-39-
5) (provided for
in subheading
2933.69.60)......
SEC. 1590. MIXTURES OF SODIUM-2-CHLORO-6-[(4,6 DIMETHOXYPYRIMIDIN-2-
YL)THIO]BENZOATE AND APPLICATION ADJUVANTS (PYRITHIOBAC-
SODIUM).
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.45 Mixtures of 3.5% No change No change On or before 12/ ''.
sodium-2-chloro-6- 31/2009
[(4,6
dimethoxypyrimidi
n-2-
yl)thio]benzoate
(CAS No. 123343-
16-8) and
application
adjuvants
(Pyrithiobac-
sodium) (provided
for in subheading
3808.30.15)......
SEC. 1591. CERTAIN DECORATIVE PLATES, DECORATIVE SCULPTURES, DECORATIVE
PLAQUES, AND ARCHITECTURAL MINIATURES.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.46 Decorative plates, Free No change No change 12/31/2009 ''.
whether or not
with decorative
rim or attached
sculpture;
decorative
sculptures, each
with plate or
plaque attached,
and decorative
plaques each not
over 7.65 cm in
thickness;
architectural
miniatures,
whether or not
put up in sets;
all the foregoing
of resin
materials and
containing
agglomerated
stone, put up for
mail order retail
sale, whether for
wall or tabletop
display and each
weighing not over
1.36 kg together
with their retail
packaging
(provided for in
subheading
3926.40.00)......
SEC. 1592. CERTAIN MUSIC BOXES.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.47 Music boxes with Free No change No change On or before 12/ ''.
mechanical 31/2009
musical
movements,
presented in the
immediate
packaging for
shipment to the
ultimate
purchaser, and
each weighing not
over 6 kg
together with
retail packaging
(provided for in
subheading
9208.10.00)......
SEC. 1593. 2-METHYL-4-CHLOROPHENOXYACETIC ACID.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.60 2-Methyl-4- Free No change No change On or before 12/ ''.
chlorophenoxyacet 31/2009
ic acid (CAS No.
94-74-6)
(provided for in
subheading
2918.90.20)......
SEC. 1594. PHENMEDIPHAM.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.76 3- Free No change No change On or before 12/ ''.
Methylcarbonylami 31/2009
nophenyl-3-methyl-
carbanilate
(Phenmedipham)
(CAS No. 13684-63-
4) in bulk or
mixed with
application
adjuvants
(provided for in
subheadings
2924.29.47 and
3808.30.15)......
SEC. 1595. DESMEDIPHAM.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.77 3- Free No change No change On or before 12/ ''.
Ethoxycarbonylami 31/2009
nophenyl-N-
phenylcarbamate
(Desmedipham)
(CAS No. 13684-56-
5) in bulk or
mixed with
application
adjuvants
(provided for in
subheadings
2924.29.43 and
3808.30.15)......
SEC. 1596. CERTAIN FOOTWEAR WITH OPEN TOES OR HEELS.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.78 Footwear with Free No change No change On or before 12/ ''.
outer soles of 31/2009
rubber or
plastics and
uppers of
vegetable fibers,
with open toes or
open heels, other
than house
slippers
(provided for in
subheading
6404.19.25)......
SEC. 1597. CERTAIN WORK FOOTWEAR.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.85 House slippers Free No change No change On or before 12/ ''.
with outer soles 31/2009
of rubber,
plastics, leather
or composition
leather and
uppers of
leather, valued
not over $2.50/
pair (provided
for in subheading
6403.99.75);
Sports footwear;
tennis shoes,
basketball shoes,
gym shoes,
training shoes
and the like, all
the foregoing
with outer soles
of rubber or
plastics and
uppers of textile
materials for
women (provided
for in subheading
6404.11.20)......
SEC. 1598. CERTAIN REFRACTING AND REFLECTING TELESCOPES.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.86 Refracting Free No change No change On or before 12/ ''.
telescopes with 31/2009
50 mm or smaller
objective lenses
and reflecting
telescopes with
76 mm or smaller
mirrors, and
parts and
accessories
thereof (provided
for in subheading
9005.80.40 or
9005.90.80)......
SEC. 1600. CERTAIN WORK FOOTWEAR.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.90 Welt footwear with Free No change No change On or before 12/ ''.
outer soles of 31/2009
rubber, plastics,
leather or
composition
leather and
uppers of
pigskin,
incorporating a
protective metal
toe-cap (provided
for in subheading
6403.40.30)......
SEC. 1601. CERTAIN FOOTWEAR FOR MEN.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.91 Other footwear 4.5% No change No change On or before 12/ ''.
with uppers of 31/2009
vegetable fibers,
for men (provided
for in subheading
6405.20.30)......
SEC. 1602. CERTAIN RUBBER OR PLASTIC FOOTWEAR.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.92 Other footwear 6.5% No change No change On or before 12/ ''.
with uppers of 31/2009
vegetable fibers,
other than such
footwear for men
or women
(provided for in
subheading
6405.20.30)......
SEC. 1604. ZINC DIMETHYLDITHIOCARBAMATE.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.13.97 Zinc Free No change No change On or before 12/ ''.
dimethyldithiocar 31/2009
bamate (Ziram)
(CAS No. 137-30-
4) (provided for
in subheading
3808.20.28)......
SEC. 1605. CERTAIN LIQUID CRYSTAL DEVICE (LCD) PANEL ASSEMBLIES.
Subchapter II of chapter 99 is amended by inserting in numerical
sequence the following new heading:
`` 9902.85.21 Liquid Crystal Free No change No change On or before 12/ ''.
Device (LCD) 31/2009
panel assemblies
for use in LCD
direct view
televisions
(provided for in
subheading
9013.80.90)......
SEC. 1606. CERTAIN WATERTUBE BOILERS AND REACTOR VESSEL HEADS.
(a) Watertube Boilers.--Subchapter II of chapter 99 is amended by
inserting in numerical sequence the following new heading:
`` 9902.84.01 Watertube boilers Free No change No change On or before 12/ ''.
with a steam 31/2010
production
exceeding 45 t
per hour, for use
in nuclear
facilities
entered after 12/
31/2008 and on or
before 12/31/2010
if the contract
for the purchase
of such watertube
boilers was
entered into on
or before 7/31/
2006 (provided
for in subheading
8402.11.00)......
(b) Reactor Vessel Heads.--Subchapter II of chapter 99 is amended
by inserting in numerical sequence the following new heading:
`` 9902.84.04 Reactor vessel Free No change No change On or before 12/ ''.
heads and 31/2010
pressurizers for
nuclear reactors
entered after 12/
31/2008 and on or
before 12/31/2010
if the contract
for the purchase
of such heads and
pressurizers was
entered into on
or before 7/31/
2006 (provided
for in subheading
8401.40.00)......
CHAPTER 2--EXISTING DUTY SUSPENSIONS AND REDUCTIONS
SEC. 1611. EXTENSION OF CERTAIN EXISTING DUTY SUSPENSIONS AND
REDUCTIONS.
(a) Existing Duty Suspensions and Reduction.--Each of the following
headings is amended by striking the date in the effective period column
and inserting ``12/31/2009'':
(1) Heading 9902.39.08 (relating to ORGASOL polyamide
powders).
(2) Heading 9902.30.90 (relating to 3-amino-2'-(sulfato-
ethyl sulfonyl) ethyl benzamide).
(3) Heading 9902.32.91 (relating to MUB 738 INT).
(4) Heading 9902.30.31 (relating to 5-amino-N-(2-
hydroxyethyl)-2,3-xylenesulfonamide).
(5) Heading 9902.01.83 (relating to Ethoprop).
(6) Heading 9902.01.73 (relating to Fosetyl-Al).
(7) Heading 9902.03.38 (relating to Flufenacet (FOE
hydroxy)).
(8) Heading 9902.02.02 (relating to Methidathion
Technical).
(9) Heading 9902.02.12 (relating to difenoconazole).
(10) Heading 9902.02.09 (relating to Lambda-Cyhalothrin).
(11) Heading 9902.02.08 (relating to cyprodinil).
(12) Heading 9902.02.04 (relating to Wakil XL).
(13) Heading 9902.02.06 (relating to Azoxystrobin
Technical).
(14) Heading 9902.02.05 (relating to mucochloric acid).
(15) Heading 9902.03.06 (relating to high tenacity multiple
(folded) or cabled yarn of viscose rayon).
(16) Heading 9902.05.07 (relating to high tenacity single
yarn of viscose rayon with a decitex equal to or greater than
1,000).
(17) Heading 9902.38.31 (relating to Vulkalent E/C).
(18) Heading 9902.01.71 (relating to hexanedioic acid,
polymer with 1,3-benzenedimethanamine).
(19) Heading 9902.29.93 (relating to Trinexapac-ethyl).
(20) Heading 9902.38.52 (relating to formulations of
triasulfuron).
(21) Heading 9902.39.30 (relating to certain ion-exchange
resins).
(22) Heading 9902.32.82 (relating to 2,6 Dichlorotoluene).
(23) Heading 9902.02.33 (relating to Ion exchange resin
comprising a compolymer of styrene crosslinked with
ethenylbenzene, aminophosphonic acid sodium form).
(24) Heading 9902.02.32 (relating toIon exchange resin
comprising a copolymer of styrene crosslinked with
divinylbenzene, iminodiacetic acid, sodium form)).
(25) Heading 9902.01.78 (relating to certain bags for
toys).
(26) Heading 9902.01.81 (relating to cases for certain
children's products).
(27) Heading 9902.01.80 (relating to certain children's
products).
(28) Heading 9902.29.34 (relating to certain light
absorbing photo dyes).
(29) Heading 9902.85.04 (relating to certain R-core
transformers).
(30) Heading 9902.03.04 (relating to reduced vat blue 43).
(31) Heading 9902.03.03 (relating to sulfur black 1).
(32) Heading 9902.01.22 (relating to DMSIP).
(33) Heading 9902.29.35 (relating to 2-
(Methoxycarbonyl)benzylsulfonamide).
(34) Heading 9902.02.52 (relating to Imidacloprid
pesticides).
(35) Heading 9902.38.15 (relating to Baytron C-R).
(36) Heading 9902.29.87 (relating to 3,4-
Ethylenedioxythiophene).
(37) Heading 9902.01.90 (relating to certain filament
yarns).
(38) Heading 9902.01.91 (relating to certain filament
yarns).
(39) Heading 9902.71.08 (relating to certain semi-
manufactured forms of gold).
(40) Heading 9902.04.10 (relating to Crotonic Acid).
(41) Heading 9902.04.09 (relating to 3,6,9-
Trioxaundecanedioic acid).
(42) Heading 9902.02.51 (relating to benzoic acid, 2-amino-
4-[[(2,5-dichlorophenyl)amino]carbonyl]-, methyl ester).
(43) Heading 9902.32.73 (relating to Solvent blue 124).
(44) Heading 9902.32.55 (relating to Methyl thioglycolate
(MTG)).
(45) Heading 9902.01.48 (relating to Ethyl pyruvate).
(46) Heading 9902.04.11 (relating to 1,3-
Benzenedicarboxamide, N, N'-Bis (2,2,6,6-tetramethyl-4-
piperidinyl)-).
(47) Heading 9902.04.07 (relating to reaction products of
phosphorus trichloride with 1,1'-biphenyl and 2,4-bis(1,1-
dimethylethyl)phenol).
(48) Heading 9902.04.05 (relating to preparations based on
ethanediamide, N-(2-ethoxyphenyl)-N'-(4-isodecylphenyl)-).
(49) Heading 9902.04.06 (relating to 1-Acetyl-4-(3-dodecyl-
2,5-dioxo-1-pyrrolidinyl)-2,2,6,6-tetramethylpiperidine).
(50) Heading 9902.04.12 (relating to 3-Dodecyl-1-(2,2,6,6-
tetramethyl-4-piperidinyl)-2,5-pyrrolidinedione).
(51) Heading 9902.29.70 (relating to
Tetraacetylethylenediamine).
(52) Heading 9902.34.01 (relating to sodium petroleum
sulfonate).
(53) Heading 9902.02.75 (relating to esters and sodium
esters of parahydroxybenzoic acid).
(54) Heading 9902.30.16 (relating to Diclofop methyl).
(55) Heading 9902.33.61 (relating to ((3-
((Dimethylamino)carbonyl)-2-pyridinyl)sulfonyl) carbamic acid,
phenyl ester).
(56) Heading 9902.01.45 (relating to Esfenvalerate).
(57) Heading 9902.05.01 (relating to Methyl 2-[[[[[4-
(dimethylamino)-6- (2,2,2-trifluoroethoxy)-1,3,5-triazin-2-yl]-
amino]carbonyl]amino]sulfonyl]-3-methylbenzoate and application
adjuvants).
(58) Heading 9902.01.44 (relating to Benzyl carbazate).
(59) Heading 9902.05.14 (relating to Pyromellitic
Dianhydride).
(60) Heading 9902.05.13 (relating to 4,4'-Oxydiphthalic
Anhydride).
(61) Heading 9902.05.12 (relating to 4,4'-Oxydianiline).
(62) Heading 9902.05.11 (relating to 3,3',4,4'-
Biphenyltetracarboxylic Dianhydride).
(63) Heading 9902.29.80 (relating to 1-[[2-(2,4-
dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl]-methyl]-1H-1,2,4-
triazole).
(64) Heading 9902.05.19 (relating to ethofumesate).
(65) Heading 9902.02.60 (relating to Nemacur VL).
(66) Heading 9902.03.77 (relating to thiophanate methyl).
(67) Heading 9902.84.14 (relating to ceiling fans).
(b) Other Modifications.--
(1) 2-Chlorobenzyl chloride.--Heading 9902.01.56 is
amended--
(A) by striking ``2903.69.70'' and inserting
``2903.69.80''; and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2009''.
(2) Triethylene glycol bis[3-(3-tert-butyl-4-hydroxy-5-
methylphenyl)propionate] .--Heading 9902.01.88 is amended--
(A) by striking ``Free'' and inserting ``4.1%'';
and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2009''.
(3) Formulations of triasulfuron and dicamba.--Heading
9902.38.21 is amended--
(A) in the article description column--
(i) by inserting ``(Triasulfuron)'' before
``(CAS No. 82097-50-5)''; and
(ii) by inserting ``(Dicamba)'' before
``(CAS No. 1918-00-9)''; and
(B) by striking ``12/31/2003'' and inserting ``12/
31/2009''.
(4) 11-Aminoundecanoic acid.--Heading 9902.32.49 is
amended--
(A) by striking ``Free'' and inserting ``2.3%'';
and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2009''.
(5) PHBA.--Heading 9902.29.03 is amended--
(A) by striking ``Free'' and inserting ``3.1%'';
and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2009''.
(6) Acetamiprid Technical.--Heading 9902.03.92 is amended--
(A) by striking ``Free'' and inserting ``2.5%'';
and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2009''.
(7) Baytron and baytron p.--Heading 9902.39.15 is amended--
(A) by inserting ``, whether or not containing
binder resin and organic solvent'' before ``(CAS No.'';
and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2009''.
(8) Iprodione.--Heading 9902.01.51 is amended--
(A) by striking ``4.1%'' and inserting ``2.0%'';
and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2009''.
(9) Ethanediamide, N-(2-ethoxyphenyl)-N'-(2-ethylphenyl)-
).--Heading 9902.04.13 is amended--
(A) by striking ``2924.29.76'' and inserting
``2924.29.71''; and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2009''.
(10) Thiamethoxam technical.--Heading 9902.03.11 is
amended--
(A) by striking ``3.2%'' and inserting ``3.0%'';
and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2009''.
(11) 1,3-Bis(4-aminophenoxy)benzene (RODA).--Heading
9902.05.15 is amended--
(A) by inserting ``(RODA)'' after ``benzene''; and
(B) by striking ``12/31/2006'' and inserting ``12/
31/2009''.
(12) Mixtures of n-[[(4,6-dimethoxypyrimidin-2-
yl)amino]carbonyl]-3-(ethylsulfonyl)-2-pyridinesulfonamide and
application adjuvants.--Heading 9902.33.60 is amended--
(A) by striking the article description and
inserting the following: ``Mixtures of N-[[(4,6-
dimethoxypyrimidin-2-yl)amino]carbonyl]-3-
(ethylsulfonyl)-2-pyridinesulfonamide and application
adjuvants (CAS No. 122931-48-0) (provided for in
subheading 3808.30.15)''; and
(B) by striking ``12/31/2003'' and inserting ``12/
31/2009''.
Subtitle B--Other Tariff Provisions
CHAPTER 1--LIQUIDATION OR RELIQUIDATION OF CERTAIN ENTRIES
SEC. 1621. CERTAIN TRAMWAY CARS AND ASSOCIATED SPARE PARTS.
(a) In General.--The Commissioner of the Bureau of Customs and
Border Protection of the Department of Homeland Security shall admit
free of duty 3 tramway cars (provided for in subheading 8603.10.00 of
the Harmonized Tariff Schedule of the United States) manufactured in
Ostrava, Czech Republic, for the use by the city of Portland, Oregon,
and imported pursuant to a contract with the city of Portland, Oregon,
and associated spare parts for such tramway cars (provided for in
applicable subheadings of heading 8607 or other headings of the
Harmonized Tariff Schedule of the United States) imported pursuant to
such contract, the foregoing to be entered into the customs territory
of the United States by not later than December 31, 2006.
(b) Reliquidation; Refund of Amounts Owed.--If the liquidation of
the entry of any of the tramway cars or associated spare parts
described in subsection (a) becomes final before the date of the
enactment of this Act, the Commissioner of the Bureau of Customs and
Border Protection, notwithstanding any other provision of law, shall--
(1) within 15 days after such date, reliquidate the entry
in accordance with the provisions of this section; and
(2) at the time of such reliquidation, make the appropriate
refund of any duty paid with respect to the entry.
SEC. 1622. RELIQUIDATION OF CERTAIN ENTRIES OF CANDLES.
(a) Reliquidation of Entries.--Notwithstanding sections 514 and 520
of the Tariff Act of 1930 (19 U.S.C. 1514 and 1520) or any other
provision of law, the Bureau of Customs and Border Protection shall,
not later than 90 days after the date of the enactment of this Act--
(1) reliquidate the entries listed in subsection (b)
without assessment of antidumping duties or interest; and
(2) refund any antidumping duties and interest which were
previously paid on such entries.
(b) Affected Entries.--The entries referred to in subsection (a)
are the following:
Entry number Date of entry Port
110-3447557-3 03/18/00 Los Angeles
110-3447591-2 03/19/00 Los Angeles
110-3447595-3 03/19/00 Los Angeles
110-1201638-1 03/21/00 Detroit
110-1201639-9 03/21/00 Detroit
110-1201640-7 03/21/00 Detroit
110-3447613-4 03/21/00 Los Angeles
110-1201697-7 03/23/00 Detroit
110-1201695-1 03/23/00 Detroit
110-1201696-9 03/23/00 Detroit
110-1201756-1 03/27/00 Detroit
110-1201757-9 03/27/00 Detroit
110-1201758-7 03/27/00 Detroit
110-1740905-2 03/30/00 Los Angeles
110-1740943-3 03/30/00 Los Angeles
110-1201845-2 03/31/00 Detroit
110-1201813-0 04/03/00 Detroit
110-1201814-8 04/03/00 Detroit
110-1201815-5 04/03/00 Detroit
110-1201875-9 04/04/00 Detroit
110-1201868-4 04/04/00 Detroit
110-1201858-5 04/04/00 Detroit
110-3447959-1 04/11/00 Los Angeles
110-3447958-3 04/11/00 Los Angeles
110-3759536-9 04/12/00 Detroit
110-3759561-7 04/12/00 Detroit
110-3759542-7 04/12/00 Detroit
110-3759540-1 04/12/00 Detroit
110-3447977-3 04/12/00 Los Angeles
110-3759539-3 04/12/00 Detroit
110-3448045-8 04/14/00 Los Angeles
110-3448046-6 04/14/00 Los Angeles
110-3448110-0 04/20/00 Los Angeles
110-3759670-6 04/25/00 Detroit
110-3759673-0 04/25/00 Detroit
110-3759669-8 04/25/00 Detroit
110-3759667-2 04/25/00 Detroit
110-3759671-4 04/25/00 Detroit
110-3759668-0 04/25/00 Detroit
110-3448241-3 04/27/00 Los Angeles
110-3448247-0 04/27/00 Los Angeles
110-3448276-9 04/28/00 Memphis
110-3448274-4 04/28/00 Memphis
110-3448282-7 05/04/00 Memphis
101-4081779-1 05/07/00 Memphis
101-4088945-1 05/23/00 Memphis
101-4089954-3 05/23/00 Memphis
101-4088960-0 05/23/00 Memphis
101-4092192-4 05/25/00 Memphis
101-4089312-3 05/26/00 Detroit
101-4089942-7 05/26/00 Detroit
101-4089893-2 05/26/00 Detroit
101-4092221-1 05/26/00 Memphis
101-4089697-7 05/26/00 Los Angeles
101-4092215-3 05/26/00 Memphis
101-4086053-6 05/26/00 Los Angeles
101-4122700-8 07/27/00 Los Angeles
101-4122707-3 07/27/00 Los Angeles
101-4122712-3 07/27/00 Los Angeles
101-4127147-7 08/03/00 Los Angeles
101-4132485-4 08/09/00 Norfolk
101-4129989-0 08/11/00 Detroit
101-4130345-2 08/17/00 Detroit
101-4129976-7 08/23/00 Detroit
101-4149476-4 09/06/00 Los Angeles
101-4149483-0 09/06/00 Los Angeles
101-4149493-9 09/06/00 Los Angeles
101-4148595-2 09/08/00 Detroit
101-4153301-7 09/18/00 Detroit
101-4154523-5 09/14/00 Los Angeles
101-4153389-2 09/18/00 Detroit
101-4157161-1 09/20/00 Norfolk
101-4153333-0 09/21/00 Detroit
101-4155542-4 09/26/00 Detroit
101-4166291-5 10/07/00 Los Angeles
101-4167325-0 10/09/00 Detroit
101-4167363-1 10/12/00 Detroit
101-4164567-0 10/13/00 Norfolk
101-4168049-5 10/14/00 Los Angeles
101-4172904-5 10/21/00 Los Angeles
101-4175579-2 10/30/00 Los Angeles
101-4183996-8 11/07/00 Detroit
101-4183234-4 11/09/00 Detroit
101-4183251-8 11/09/00 Detroit
101-4183253-4 11/09/00 Detroit
101-4183257-5 11/09/00 Detroit
101-4183264-1 11/09/00 Detroit
101-4183264-1 11/09/00 Detroit
101-4184811-8 11/13/00 Los Angeles
101-4184819-1 11/13/00 Los Angeles
101-4189001-1 11/14/00 Tampa
101-4185526-1 11/16/00 Detroit
101-4185535-2 11/16/00 Detroit
101-4186580-7 11/20/00 Detroit
101-4189830-3 11/20/00 Detroit
101-4189774-3 11/21/00 Detroit
101-4191183-3 11/24/00 Los Angeles
101-4191188-2 11/24/00 Los Angeles
101-4191193-2 11/24/00 Los Angeles
101-4194796-9 11/29/00 Detroit
101-4194801-7 11/29/00 Detroit
101-4196383-4 12/01/00 Los Angeles
101-4196389-1 12/01/00 Los Angeles
101-4199308-8 12/13/00 Detroit
SEC. 1623. CERTAIN ENTRIES OF ROLLER CHAIN.
(a) Liquidation or Reliquidation of Entries.--Notwithstanding
sections 514 and 520 of the Tariff Act of 1930 (19 U.S.C. 1514 and
1520) or any other provision of law, the Bureau of Customs and Border
Protection shall, not later than 90 days after the date of enactment of
this Act, liquidate or reliquidate the entries listed in subsection (b)
without assessment of interest and shall refund any interest which was
previously paid.
(b) Affected Entries.--The entries referred to in subsections (a)
and (b) are the following:
Entry number Date of entry Port
858442975 08/21/85 Chicago
868558147 01/28/86 Chicago
868565499 03/14/86 Chicago
858440922 07/31/85 Chicago
868565499 03/14/86 Chicago
868558147 01/28/86 Chicago
858442975 08/21/85 Chicago
858440922 07/31/85 Chicago
847648353 06/18/84 Chicago
858268324 01/04/85 Chicago
858264302 11/08/84 Chicago
858265107 11/19/84 Chicago
847650150 07/18/84 Chicago
847412877 05/09/84 Chicago
837078386 03/21/83 Chicago
837077691 02/07/83 Chicago
837077701 02/07/83 Chicago
826735834 01/13/82 Chicago
826736309 01/18/82 Chicago
821020081 02/12/82 Chicago
821020052 02/17/82 Chicago
821026768 04/13/82 Chicago
827119569 06/18/82 Chicago
837075114 10/06/82 Chicago
826727088 10/14/81 Chicago
837124777 05/19/83 Chicago
847405240 11/28/83 Chicago
837127606 08/18/83 Chicago
837125132 06/08/83 Chicago
847406100 12/22/83 Chicago
847404034 11/02/83 Chicago
837128090 09/07/83 Chicago
837126762 08/05/83 Chicago
837125569 06/22/83 Chicago
837078991 04/12/83 Chicago
837129222 10/03/83 Chicago
847406414 12/29/83 Chicago
847408014 01/31/84 Chicago
868569204 07/03/86 Chicago
868730813 08/14/86 Chicago
SEC. 1624. CERTAIN ENTRIES OF SOUNDSPA CLOCK RADIOS.
(a) In General.--Notwithstanding section 514 of the Tariff Act of
1930 (19 U.S.C. 1514) or any other provision of law, the Bureau of
Customs and Border Protection shall, not later than 90 days after the
date of the enactment of this Act--
(1) reliquidate each entry described in subsection (c)
containing any merchandise which, on the date of original
liquidation, was classified under subheading 8527.19.50 of the
Harmonized Tariff Schedule of the United States; and
(2) make such reliquidation at the rate of duty that would
have been applicable to such merchandise if the merchandise had
been liquidated under subheading 8527.19.10 of such Schedule on
the date of entry of the merchandise.
(b) Refund of Amounts Owed.--Any amounts owed by the United States
under subsection (a) shall be refunded with interest.
(c) Affected Entries.--The entries referred to in subsection (a)
are as follows:
Entry number
110-1199345-7
110-1199542-9
110-1199558-5
110-1201694-4
110-3759754-8
110-3759785-2
101-4082299-9
101-4088073-2
101-4089053-3
101-4120875-0
101-4133671-8
101-4138302-5
101-4145092-3
101-4148477-3
101-4153108-6
101-4159322-7
101-4158601-5
101-4163243-9
101-4164448-3
101-4168318-4
101-4172197-6
101-4172489-7
101-4193123-7
101-4264820-2
101-4271724-7
101-4277850-4
101-4287672-0
101-4301588-0
101-4306238-7
101-4306235-3
101-6011727-0
101-6012796-4
101-6015492-7
101-6021099-2
101-6026903-0
101-6024120-3
101-6028079-7
101-6027052-5
101-6036728-9
101-6048069-4
101-6079830-1
101-6082949-4
101-6115954-5
101-6119379-1
101-6127048-2
101-6150035-9
101-6148556-9
101-6172630-1
101-6172406-6
101-6186497-9
101-4208407-7
101-6035939-3
CHAPTER 2--MISCELLANEOUS PROVISIONS
SEC. 1631. VESSEL REPAIR DUTIES.
(a) Exemption.--Section 466(h) of the Tariff Act of 1930 (19 U.S.C.
1466(h)) is amended by striking paragraph (4) and inserting the
following:
``(4) the cost of equipment, repair parts, and materials
that are installed on a vessel documented under the laws of the
United States and engaged in the foreign or coasting trade, if
the installation is done by members of the regular crew of such
vessel while the vessel is on the high seas, in foreign waters,
or in a foreign port, and does not involve foreign shipyard
repairs by foreign labor.''.
(b) Amendment to HTS.--The U.S. Notes to subchapter XVIII of
chapter 98 of the Harmonized Tariff Schedule of the United States are
amended by amending U.S. Note 2 to read as follows:
``2. Notwithstanding the provisions of subheadings 9818.00.03
through 9818.00.07, no duty shall apply to the cost of equipment,
repair parts, and materials that are installed in a vessel documented
under the laws of the United States and engaged in the foreign or
coasting trade, if the installation is done by members of the regular
crew of such vessel while the vessel is on the high seas, in foreign
waters, or in a foreign port and does not involve foreign shipyard
repairs by foreign labor. Declaration and entry shall not be required
with respect to such installation, equipment, parts, and materials.''.
(c) Effective Date.--The amendments made by this section apply to
vessel equipment, repair parts, and materials installed on or after
April 25, 2001.
SEC. 1632. SUSPENSION OF NEW SHIPPER REVIEW PROVISION.
(a) Suspension of the Availability of Bonds to New Shippers.--
Clause (iii) of section 751(a)(2)(B) of the Tariff Act of 1930 (19
U.S.C. 1675(a)(2)(B)(iii)) shall not be effective during the period
beginning on April 1, 2006, and ending on June 30, 2009.
(b) Report on the Impact of the Suspension.--Not later than
December 31, 2008, the Secretary of the Treasury, in consultation with
the Secretary of Commerce, the United States Trade Representative, and
the Secretary of Homeland Security, shall submit to the Committee on
Ways and Means of the House of Representatives and the Committee on
Finance of the Senate a report containing--
(1) recommendations on whether the suspension of section
751(a)(2)(B)(iii) of the Tariff Act of 1930 should be extended
beyond the date provided in subsection (a); and
(2) an assessment of the effectiveness of any
administrative measure that was implemented to address the
difficulties that necessitated the suspension under subsection
(a), including--
(A) any problem in the collection of antidumping
duties on imports from new shippers; and
(B) any burden imposed on legitimate trade and
commerce by the suspension of bonds to new shippers.
(c) Report on Collection Problems and Analysis of Proposed
Solutions.--
(1) Report.--Not later than 180 days after the date of the
enactment of this Act, the Secretary of the Treasury, in
consultation with the Secretary of Homeland Security and the
Secretary of Commerce, shall submit to the Committee on Ways
and Means of the House of Representatives and the Committee on
Finance of the Senate a report describing--
(A) any major problem experienced in the collection
of duties during the 4 most recent fiscal years for
which data are available, including any fraudulent
activity intended to avoid payment of duties; and
(B) an estimate of the total amount of duties that
were uncollected during the most recent fiscal year for
which data are available, including, with respect to
each product, a description of why the duties were
uncollected.
(2) Recommendations.--The report shall include--
(A) recommendations on any additional action needed
to address problems related to the collection of
duties; and
(B) for each recommendation--
(i) an analysis of how the recommendation
would address the specific problem; and
(ii) an assessment of the impact that
implementing the recommendation would have on
international trade and commerce (including any
additional costs imposed on United States
businesses).
SEC. 1633. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON WOOL
PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY REFUNDS.
(a) Extension of Temporary Duty Reductions.--Each of the following
headings of the Harmonized Tariff Schedule of the United States is
amended by striking the date in the effective period column and
inserting ``12/31/2009'':
(1) Heading 9902.51.11 (relating to fabrics of worsted
wool).
(2) Heading 9902.51.13 (relating to yarn of combed wool).
(3) Heading 9902.51.14 (relating to wool fiber, waste,
garnetted stock, combed wool, or wool top).
(4) Heading 9902.51.15 (relating to fabrics of combed
wool).
(5) Heading 9902.51.16 (relating to fabrics of combed
wool).
(b) Extension of Duty Refunds and Wool Research Trust Fund.--
(1) In general.--Section 4002(c) of the Wool Suit and
Textile Trade Extension Act of 2004 (Public Law 108-429; 118
Stat. 2603 (7 U.S.C. 7101 note)) is amended--
(A) in paragraph (3)--
(i) by striking ``2 additional payments''
and inserting ``annual additional payments'';
and
(ii) by adding at the end the following:
``(C) Each subsequent annual payment to be made
after January 1 of each subsequent year, but on or
before April 15 of such year through calendar year
2010.''; and
(B) in paragraph (6)--
(i) in subparagraph (A), by striking
``through 2007'' and inserting ``through
2009''; and
(ii) by adding at the end the following:
``(C) Eligible manufacturers.--Only manufacturers
who weave worsted wool fabric in the United States
shall be eligible for a grant under this paragraph.''.
(2) Sunset.--Section 506(f) of the Trade and Development
Act of 2000 (Public 106-200; 114 Stat. 303), as amended by
section 4002(c)(5) of the Wool Suit and Textile Trade Extension
Act of 2004 (Public 108-429; 118 Stat. 2603), is amended by
striking ``2008'' and inserting ``2010''.
SEC. 1634. AUTHORITIES RELATING TO DR-CAFTA AGREEMENT.
(a) Authority to Implement Certain Amendments to DR-CAFTA Agreement
With Nicaragua, El Salvador, Honduras, and Guatemala.--
(1) Proclamation authority.--The President is authorized to
proclaim modifications to the Harmonized Tariff Schedule of the
United States as necessary to carry out amendments proposed by
the United States and the CAFTA-DR countries to the Agreement,
the terms of which are contained in the letters of
understanding described in paragraph (2).
(2) Letters of understanding.--The letters of understanding
referred to in paragraph (1) are the following:
(A) The letter of March 24, 2006, from Nicaraguan
Vice Minister of Trade Julio Teran to United States
Special Textile Negotiator Scott Quesenberry.
(B) The letter of March 27, 2006, from United
States Special Textile Negotiator Scott Quesenberry to
Nicaraguan Vice Minister of Trade Julio Teran.
(C) The letter of January 27, 2006, from El
Salvadoran Vice Minister of Economy Eduardo Ayala to
United States Special Textile Negotiator Scott
Quesenberry.
(D) The letter of January 27, 2006, from United
States Special Textile Negotiator Scott Quesenberry to
El Salvadoran Vice Minister of Economy Eduardo Ayala.
(E) The letter of March 7, 2006, from Honduran Vice
Minister of Foreign Trade Jorge Rosa to United States
Special Textile Negotiator Scott Quesenberry.
(F) The letter of March 7, 2006, from United States
Special Textile Negotiator Scott Quesenberry to
Honduran Vice Minister of Foreign Trade Jorge Rosa.
(G) The letter of June 23, 2006, from Guatemalan
Minister of Economy Marcio Cuevas Quezada to United
States Special Textile Negotiator Scott Quesenberry.
(H) The letter of June 23, 2006, from United States
Special Textile Negotiator Scott Quesenberry to
Guatemalan Minister of Economy Marcio Cuevas Quezada.
(3) Sunset.--The authority of the President to proclaim
modifications pursuant to paragraph (1) expires on December 31,
2007.
(b) Authority to Implement Certain Amendments to DR-CAFTA Agreement
With Costa Rica and the Dominican Republic.--
(1) Proclamation authority.--The President is authorized to
proclaim modifications to the Harmonized Tariff Schedule of the
United States as necessary to carry out amendments proposed by
the United States, Costa Rica, and the Dominican Republic to
the Agreement, the terms of which are contained in the letters
of understanding described in paragraph (2).
(2) Letters of understanding.--
(A) In general.--The letters of understanding
referred to in paragraph (1) are letters of
understanding exchanged between the countries described
in paragraph (1) relating to the rules of origin for
articles containing pocket bag fabric described in
subparagraph (B).
(B) Pocket bag fabric described.--For purposes of
subparagraph (A), the term ``pocket bag fabric'' means
pocket bag fabric used in an apparel article
classifiable under chapter 61 or 62 of the Harmonized
Tariff Schedule of the United States that contains a
pocket or pockets.
(3) Consultation and layover requirements.--Any
modification proclaimed by the President pursuant to paragraph
(1) shall be subject to the consultation and layover provisions
of section 104 of the Dominican Republic-Central America-United
States Free Trade Agreement Implementation Act (Public Law 109-
53; 19 U.S.C. 4014).
(4) Congressional disapproval.--
(A) In general.--Any modification proclaimed by the
President pursuant to paragraph (1) shall not be
effective if a joint resolution described in
subparagraph (B) is enacted into law.
(B) Joint resolution described.--For purposes of
subparagraph (A), the term ``joint resolution'' means a
joint resolution of Congress, the sole matter after the
resolving clause of which is as follows: ``That the
Congress disapproves the modification proclaimed by the
President contained in the report submitted to the
Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives pursuant
to section 104(2) of the Dominican Republic-Central
America-United States Free Trade Agreement
Implementation Act (Public Law 109-53; 19 U.S.C.
4014(2)) on __________.'', with the blank space being
filled with the appropriate date.
(5) Sunset.--The authority of the President to proclaim
modifications pursuant to paragraph (1) expires on December 31,
2007.
(c) Authority Relating to Nicaraguan Tariff Preference Level Under
DR-CAFTA Agreement.--
(1) Certificate of eligibility.--The Commissioner of
Customs may require an importer to submit at the time the
importer files a claim for preferential tariff treatment under
Annex 3.28 of the Agreement a certificate of eligibility,
properly completed and signed, or transmitted pursuant to an
authorized electronic data interchange system, by an authorized
official of the Government of Nicaragua for purposes of
implementing the tariff preference level for Nicaragua provided
in Annex 3.28 of the Agreement.
(2) Enforcement of commitments.--The President is
authorized to proclaim a reduction in the overall limit in the
tariff preference level for Nicaragua provided in Annex 3.28 of
the Agreement if the President determines that Nicaragua has
failed to comply with a commitment under an agreement between
the United States and Nicaragua with regard to the
administration of such tariff preference level.
(3) Effective date.--Paragraph (1) applies with respect to
entries made on or after April 1, 2006.
(d) Technical Correction Relating to Co-Production of Certain
Textile and Apparel Goods.--Section 205(a)(2) of the Dominican
Republic-Central America-United States Free Trade Agreement
Implementation Act (19 U.S.C. 4034(a)(2)) is amended by inserting after
``with respect to that country'' the following: ``or any other CAFTA-DR
country''.
(e) Reporting Requirements on Certain Negotiations and Amendments
to DR-CAFTA Agreement.--
(1) In general.--Not later than 30 days after the date of
the enactment of this Act, and at least quarterly thereafter,
the United States Trade Representative shall submit to the
appropriate congressional committees a report on the status of
negotiations and amendments proposed by the United States,
Nicaragua, El Salvador, Honduras, Guatemala, Costa Rica, and
the Dominican Republic to the Agreement regarding any change to
the rule of origin or alteration of the tariff treatment of
socks described in paragraph (2) or any technical correction
described in paragraph (3). In addition, the United States
Trade Representative shall provide to the appropriate
congressional committees copies of any amendments to be
proposed by the United States before the amendments are offered
and copies of any amendments received by the United States
relating to such negotiations.
(2) Socks described.--For purposes of paragraph (1), the
term ``socks'' means articles classifiable under subheading
6111.20.6050, 6111.30.5050, 6111.90.5050, 6115.91.00,
6115.92.60, 6115.92.90, 6115.93.60, 6115.93.90, 6115.99.14, or
6115.99.18 of the Harmonized Tariff Schedule of the United
States.
(3) Technical corrections described.--Technical corrections
referred to in paragraph (1) are the following:
(A) Clarification of references to ``elastomeric
yarns'' contained in the notes, subheading notes,
additional U.S. notes, and statistical notes to
chapters 50 to 63 (section XI) of the Harmonized Tariff
Schedule of the United States.
(B) Clarification of the ability to apply short
supply provisions to sewing thread, narrow elastics,
and visible linings.
(C) Treatment of women's and girls' woven sleep
bottoms under Annex 4.1 of the Agreement.
(D) Addition of a rule of origin for women's and
girls' woven sleep bottoms to reflect the rule of
origin provided for in subheading 6207.11.00 of the
Harmonized Tariff Schedule of the United States and
contained in Annex 4.1 of the Agreement.
(E) Provision of women's and girls sleep bottoms
under Annex 4.1-A of the Agreement.
(4) Definition.--In this subsection, the term ``appropriate
congressional committees'' means the Committee on Ways and
Means of the House of Representatives and the Committee on
Finance of the Senate
(5) Sunset.--The requirements of paragraph (1) expire on
the date on which any change is made to the rule of origin
pursuant to article 3.25 of the Agreement for any good
described in paragraph (2), or December 31, 2007, whichever
occurs later.
(f) Definitions.--In this section:
(1) Agreement.--The term ``Agreement'' has the meaning
given the term in section 3(1) of the Dominican Republic-
Central America-United States Free Trade Agreement
Implementation Act (Public Law 109-53; 19 U.S.C. 4002(1)).
(2) CAFTA-dr country.--The term ``CAFTA-DR country'' has
the meaning given the term in section 3(2) of the Dominican
Republic-Central America-United States Free Trade Agreement
Implementation Act (Public Law 109-53; 19 U.S.C. 4002(2)).
SEC. 1635. TECHNICAL AMENDMENTS TO CUSTOMS MODERNIZATION.
(a) Entry of Merchandise.--Section 484(a) of the Tariff Act of 1930
(19 U.S.C. 1484(a)) is amended--
(1) in paragraph (1), by amending subparagraph (A) to read
as follows:
``(A) make entry therefor by filing with the Bureau
of Customs and Border Protection such documentation or,
pursuant to an authorized electronic data interchange
system, such information as is necessary to enable the
Bureau of Customs and Border Protection to determine
whether the merchandise may be released from custody of
the Bureau of Customs and Border Protection;''; and
(2) in paragraph (2)(A), in the second sentence, by
inserting after ``covering'' the following: ``merchandise
released under a special delivery permit pursuant to section
448(b) and''.
(b) Refunds and Errors.--Section 520(a) of the Tariff Act of 1930
(19 U.S.C. 1520(a)) is amended--
(1) in paragraph (1), by striking the semicolon at the end
and inserting a period;
(2) in paragraph (2), by striking ``; and'' at the end and
inserting a period; and
(3) in paragraph (4)--
(A) by inserting ``an importer of record declares
or'' before ``it is ascertained''; and
(B) by striking ``by reason of clerical error''.
(c) Entry From Warehouse.--Section 557(a) of the Tariff Act of 1930
(19 U.S.C. 1557(a)) is amended--
(1) in paragraph (1)--
(A) in the second sentence, by inserting after
``the date of importation'' the following: ``, or such
longer period of time as the Bureau of Customs and
Border Protection may at its discretion permit upon
proper request being filed and good cause shown''; and
(B) in subparagraph (A), by inserting after ``the
date of importation'' the following: ``or such longer
period of time as the Bureau of Customs and Border
Protection may at its discretion permit upon proper
request being filed and good cause shown''; and
(2) in paragraph (2), by inserting after ``the date of
importation'' the following: ``, or such longer period of time
as the Bureau of Customs and Border Protection may at its
discretion permit upon proper request being filed and good
cause shown,''.
(d) Abandoned Goods.--Section 559 of the Tariff Act of 1930 (19
U.S.C. 1559) is amended by inserting after ``the date of importation''
each place it appears the following: ``, or such longer period of time
as the Bureau of Customs and Border Protection may at its discretion
permit upon proper request being filed and good cause shown''.
(e) Manipulation in Warehouse.--Section 562 of the Tariff Act of
1930 (19 U.S.C. 1562) is amended--
(1) by amending the first sentence to read as follows:
``Merchandise shall only be withdrawn from a bonded warehouse
in such quantity and in such condition as the Secretary of the
Treasury shall by regulation prescribe.''; and
(2) in the second sentence, by striking ``All merchandise
so withdrawn'' and all that follows through ``except that upon
permission therefor'' and inserting ``Upon permission''.
(f) Other Technical Amendments.--(1) Section 629(e) of the Tariff
Act of 1930 (19 U.S.C. 1629(e)) is amended by striking ``insuring'' and
inserting ``ensuring''.
(2) Section 135(f)(2)(B) of the Trade Act of 1974, as amended by
section 2004(i)(1) of the Miscellaneous Trade and Technical Corrections
Act of 2004, is amended by striking ``their establishment'' and insert
``its establishment''.
(3) Section 245(a) of the Trade Act of 1974 (19 U.S.C. 2317(a)) is
amended by striking ``, other than subchapter D''.
(4) Section 291(2) of the Trade Act of 1974 (19 U.S.C. 2401(2)) is
amended--
(A) by striking ``1001(5)'' and inserting ``1001(e)''; and
(B) by striking ``1308(5)'' and inserting ``1308(e)''.
(5) Section 13031(e)(6)(C)(i) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (19 U.S.C. 58c(e)(6)(C)(i)) is amended by
striking ``commonly know'' and inserting ``commonly known''.
(6) Section 2107(a)(4) of the Bipartisan Trade Promotion Authority
Act of 2002 (19 U.S.C. 3807(a)(4)) is amended--
(A) by striking ``paragraph (2)(A)'' and inserting
``paragraphs (2)(A)''; and
(B) by striking ``paragraph (2)(B)'' and inserting
``paragraphs (2)(B)''.
(7) Section 514(c)(3) of the Tariff Act of 1930 (19 U.S.C.
1514(c)(3)) is amended by moving the last 2 sentences 2 ems to the left
as flush left text.
Subtitle C--Effective Date
SEC. 1641. EFFECTIVE DATE.
Except as otherwise provided in this title, the amendments made by
this title shall apply with respect to goods entered, or withdrawn from
warehouse for consumption, on or after the 15th day after the date of
the enactment of this Act.
Passed the House of Representatives July 28, 2006.
Attest:
KAREN L. HAAS,
Clerk.
Calendar No. 561
109th CONGRESS
2d Session
H. R. 4
_______________________________________________________________________
AN ACT
To provide economic security for all Americans, and for other purposes.
_______________________________________________________________________
July 31, 2006
Received; deemed read the first time on July 28 (legislative day, July
26), 2006, pursuant to the order of July 28, 2006
July 31, 2006
Read the second time and placed on the calendar