[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4275 Enrolled Bill (ENR)]
H.R.4275
One Hundred Thirteenth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Friday,
the third day of January, two thousand and fourteen
An Act
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to provide for cooperative and small
employer charity pension plans.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Cooperative and
Small Employer Charity Pension Flexibility Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings and declarations of policy.
Sec. 3. Effective date.
TITLE I--AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
AND OTHER PROVISIONS
Sec. 101. Definition of cooperative and small employer charity pension
plans.
Sec. 102. Funding rules applicable to cooperative and small employer
charity pension plans.
Sec. 103. Elections.
Sec. 104. Transparency.
Sec. 105. Sponsor education and assistance.
TITLE II--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986
Sec. 201. Definition of cooperative and small employer charity pension
plans.
Sec. 202. Funding rules applicable to cooperative and small employer
charity pension plans.
Sec. 203. Election not to be treated as a CSEC plan.
SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATIONS OF POLICY.
Congress finds as follows:
(1) Defined benefit pension plans are a cost-effective way for
cooperative associations and charities to provide their employees
with economic security in retirement.
(2) Many cooperative associations and charitable organizations
are only able to provide their employees with defined benefit
pension plans because those organizations are able to pool their
resources using the multiple employer plan structure.
(3) The pension funding rules should encourage cooperative
associations and charities to continue to provide their employees
with pension benefits.
SEC. 3. EFFECTIVE DATE.
Unless otherwise specified in this Act, the provisions of this Act
shall apply to years beginning after December 31, 2013.
TITLE I--AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
AND OTHER PROVISIONS
SEC. 101. DEFINITION OF COOPERATIVE AND SMALL EMPLOYER CHARITY
PENSION PLANS.
Section 210 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1060) is amended by adding at the end the following new
subsection:
``(f) Cooperative and Small Employer Charity Pension Plans.--
``(1) In general.--For purposes of this title, except as
provided in this subsection, a CSEC plan is an employee pension
benefit plan (other than a multiemployer plan) that is a defined
benefit plan--
``(A) to which section 104 of the Pension Protection Act of
2006 applies, without regard to--
``(i) section 104(a)(2) of such Act;
``(ii) the amendments to such section 104 by section
202(b) of the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010; and
``(iii) paragraph (3)(B); or
``(B) that, as of June 25, 2010, was maintained by more
than one employer and all of the employers were organizations
described in section 501(c)(3) of the Internal Revenue Code of
1986.
``(2) Aggregation.--All employers that are treated as a single
employer under subsection (b) or (c) of section 414 of the Internal
Revenue Code of 1986 shall be treated as a single employer for
purposes of determining if a plan was maintained by more than one
employer under paragraph (1)(B).''.
SEC. 102. FUNDING RULES APPLICABLE TO COOPERATIVE AND SMALL
EMPLOYER CHARITY PENSION PLANS.
(a) In General.--Part 3 of title I of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1081 et seq.) is amended by
adding at the end the following new section:
``SEC. 306. MINIMUM FUNDING STANDARDS.
``(a) General Rule.--For purposes of section 302, the term
`accumulated funding deficiency' for a CSEC plan means the excess of
the total charges to the funding standard account for all plan years
(beginning with the first plan year to which section 302 applies) over
the total credits to such account for such years or, if less, the
excess of the total charges to the alternative minimum funding standard
account for such plan years over the total credits to such account for
such years.
``(b) Funding Standard Account.--
``(1) Account required.--Each plan to which this section
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 in existence on January 1,
1974, the unfunded past service liability under the plan on
the first day of the first plan year to which section 302
applies, over a period of 40 plan years,
``(ii) in the case of a plan which comes into existence
after January 1, 1974, but before the first day of the
first plan year beginning after December 31, 2013, the
unfunded past service liability under the plan on the first
day of the first plan year to which section 302 applies,
over a period of 30 plan years,
``(iii) 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,
``(iv) separately, with respect to each plan year, the
net experience loss (if any) under the plan, over a period
of 5 plan years, and
``(v) 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 10 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 5 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
paragraph (3)(D), 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 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 5 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 10 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, 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) 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.
``(5) Interest.--
``(A) In general.--Except as provided in subparagraph (B),
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.
``(B) Exception.--The interest rate used for purposes of
computing the amortization charge described in subsection
(b)(2)(C) or for purposes of any arrangement under subsection
(d) for any plan year shall be the greater of--
``(i) 150 percent of the Federal mid-term rate (as in
effect under section 1274 of the Internal Revenue Code of
1986 for the 1st month of such plan year), or
``(ii) the rate of interest determined under
subparagraph (A).
``(6) Amortization schedules in effect.--Amortization schedules
for amounts described in paragraphs (2) and (3) that are in effect
as of the last day of the last plan year beginning before January
1, 2014, by reason of section 104 of the Pension Protection Act of
2006 shall remain in effect pursuant to their terms and this
section, except that such amounts shall not be amortized again
under this section.
``(c) Special Rules.--
``(1) Determinations to be made under funding method.--For
purposes of this section, 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 section, 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) Dedicated bond portfolio.--The Secretary of the
Treasury may by regulations provide that the value of any
dedicated bond portfolio of a plan shall be determined by using
the interest rate under section 302(b)(5) (as in effect on the
day before the enactment of the Pension Protection Act of
2006).
``(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) Funding method and plan year.--
``(A) Funding methods available.--All funding methods
available to CSEC plans under section 302 (as in effect on the
day before the enactment of the Pension Protection Act of 2006)
shall continue to be available under this section.
``(B) Changes.--If the funding method for a plan is
changed, the new funding method shall become the funding method
used to determine costs and liabilities under the plan only if
the change is approved by the Secretary of the Treasury. If the
plan year for a plan is changed, the new plan year shall become
the plan year for the plan only if the change is approved by
the Secretary of the Treasury.
``(C) Approval required for certain changes in assumptions
by certain single-employer plans subject to additional funding
requirement.--
``(i) In general.--No actuarial assumption (other than
the assumptions described in subsection (h)(3)) used to
determine the current liability for a plan to which this
subparagraph applies may be changed without the approval of
the Secretary of the Treasury.
``(ii) Plans to which subparagraph applies.--This
subparagraph shall apply to a plan only if--
``(I) the plan is a CSEC plan,
``(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 current liability of
the plan before such change.
``(6) Full funding.--If, as of the close of a plan year, a plan
would (without regard to this paragraph) have an accumulated
funding deficiency (determined without regard to the alternative
minimum funding standard account permitted under subsection (e)) 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 paragraphs (2)(B), (C), and
(D) and (3)(B) of subsection (b) which are required to be
amortized shall be considered fully amortized for purposes of
such paragraphs.
``(7) Full-funding limitation.--For purposes of paragraph (6),
the term `full-funding limitation' means the excess (if any) of--
``(A) 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
``(B) the lesser of--
``(i) the fair market value of the plan's assets, or
``(ii) the value of such assets determined under
paragraph (2).
``(C) 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
(determined without regard to paragraph (4) of
subsection (h)) of the plan (including the expected
increase in such 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.
``(8) 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.
``(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.
``(9) Time when certain contributions deemed made.--For
purposes of this section, any contributions for a plan year made by
an employer during the period--
``(A) beginning on the day after the last day of such plan
year, and
``(B) ending on the day which is 8\1/2\ months after the
close of the plan year,
shall be deemed to have been made on such last day.
``(10) Anticipation of benefit increases effective in the
future.--In determining projected benefits, the funding method of a
collectively bargained CSEC plan described in section 413(a) of the
Internal Revenue Code of 1986 shall anticipate benefit increases
scheduled to take effect during the term of the collective
bargaining agreement applicable to the plan.
``(d) Extension of Amortization Periods.--The period of years
required to amortize any unfunded liability (described in any clause of
subsection (b)(2)(B)) of any plan may be extended by the Secretary of
the Treasury for a period of time (not in excess of 10 years) if such
Secretary determines that such extension would carry out the purposes
of this Act and provide adequate protection for participants under the
plan and their beneficiaries, and if such Secretary determines that the
failure to permit such extension would result in--
``(1) a substantial risk to the voluntary continuation of the
plan, or
``(2) a substantial curtailment of pension benefit levels or
employee compensation.
``(e) Alternative Minimum Funding Standard.--
``(1) In general.--A CSEC plan which uses a funding method that
requires contributions in all years not less than those required
under the entry age normal funding method may maintain an
alternative minimum funding standard account for any plan year.
Such account shall be credited and charged solely as provided in
this subsection.
``(2) Charges and credits to account.--For a plan year the
alternative minimum funding standard account shall be--
``(A) charged with the sum of--
``(i) the lesser of normal cost under the funding
method used under the plan or normal cost determined under
the unit credit method,
``(ii) the excess, if any, of the present value of
accrued benefits under the plan over the fair market value
of the assets, and
``(iii) an amount equal to the excess (if any) of
credits to the alternative minimum standard account for all
prior plan years over charges to such account for all such
years, and
``(B) credited with the amount considered contributed by
the employer to or under the plan for the plan year.
``(3) Interest.--The alternative minimum funding standard
account (and items therein) shall be charged or credited with
interest in the manner provided under subsection (b)(5) with
respect to the funding standard account.
``(f) Quarterly Contributions Required.--
``(1) In general.--If a CSEC plan which has a funded current
liability percentage for the preceding plan year of less than 100
percent fails to pay the full amount of a required installment for
the plan year, then the rate of interest charged to the funding
standard account under subsection (b)(5) with respect to the amount
of the underpayment for the period of the underpayment shall be
equal to the greater of--
``(A) 175 percent of the Federal mid-term rate (as in
effect under section 1274 of the Internal Revenue Code of 1986
for the 1st month of such plan year), or
``(B) the rate of interest used under the plan in
determining costs.
``(2) Amount of underpayment, period of underpayment.--For
purposes of paragraph (1)--
``(A) 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.
``(B) Period of underpayment.--The period for which
interest is charged under this subsection with regard 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 (determined without regard to subsection
(c)(9)).
``(C) Order of crediting contributions.--For purposes of
subparagraph (A)(ii), contributions shall be credited against
unpaid required installments in the order in which such
installments are required to be paid.
``(3) Number of required installments; due dates.--For purposes
of this subsection--
``(A) Payable in 4 installments.--There shall be 4 required
installments for each plan year.
``(B) Time for payment of installments.--
``In the case of the following required
installments: The due date is:
1st.......................................... April 15
2nd.......................................... July 15
3rd.......................................... October 15
4th.......................................... January 15 of the following year.
``(4) Amount of required installment.--For purposes of this
subsection--
``(A) In general.--The amount of any required installment
shall be 25 percent of the required annual payment.
``(B) Required annual payment.--For purposes of
subparagraph (A), the term `required annual payment' means the
lesser of--
``(i) 90 percent of the amount required to be
contributed to or under the plan by the employer for the
plan year under section 302 (without regard to any waiver
under subsection (c) thereof), or
``(ii) 100 percent of the amount so required for the
preceding plan year.
Clause (ii) shall not apply if the preceding plan year was not
a year of 12 months.
``(5) Liquidity requirement.--
``(A) In general.--A plan to which this paragraph applies
shall be treated as failing to pay the full amount of any
required installment 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 CSEC plan other than a plan described in
section 302(d)(6)(A) (as in effect on the day before the
enactment of the Pension Protection Act of 2006) which--
``(i) is required to pay installments under this
subsection 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
(1), 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 funded current liability percentage
(taking into account the expected increase in current liability
due to benefits accruing 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 the base
amount with respect to such quarter over 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 funded current liability
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.
``(6) Fiscal years and short years.--
``(A) Fiscal years.--In applying this subsection to a plan
year beginning on any date other than January 1, there shall be
substituted for the months specified in this subsection, the
months which correspond thereto.
``(B) Short plan year.--This subsection shall be applied to
plan years of less than 12 months in accordance with
regulations prescribed by the Secretary of the Treasury.
``(g) Imposition of Lien Where Failure To Make Required
Contributions.--
``(1) In general.--In the case of a plan to which this section
applies, if--
``(A) any person fails to make a required installment under
subsection (f) or any other payment required under this section
before the due date for such installment or other payment, and
``(B) the unpaid balance of such installment or other
payment (including interest), when added to the aggregate
unpaid balance of all preceding such installments or other
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 CSEC plan for any plan year for which the funded current
liability percentage of such plan is less than 100 percent. This
subsection shall not apply to any plan to which section 4021 does
not apply (as such section is in effect on the date of the
enactment of the Retirement Protection Act of 1994).
``(3) Amount of lien.--For purposes of paragraph (1), the
amount of the lien shall be equal to the aggregate unpaid balance
of required installments and other payments required under this
section (including interest)--
``(A) for plan years beginning after 1987, and
``(B) 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 installment or other payment.
``(B) Period of lien.--The lien imposed by paragraph (1)
shall arise on the due date for the required installment or
other 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 any contributing employer (or any member of the
controlled group of the contributing employer).
``(6) Definitions.--For purposes of this subsection--
``(A) Due date; required installment.--The terms `due date'
and `required installment' have the meanings given such terms
by subsection (f), 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 this section.
``(B) 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.
``(h) Current Liability.--For purposes of this section--
``(1) In general.--The term `current liability' means all
liabilities to employees and their beneficiaries under the plan.
``(2) Treatment of unpredictable contingent event benefits.--
``(A) In general.--For purposes of paragraph (1), any
unpredictable contingent event benefit shall not be taken into
account until the event on which the benefit is contingent
occurs.
``(B) Unpredictable contingent event benefit.--The term
`unpredictable contingent event benefit' means 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).
``(3) Interest rate and mortality assumptions used.--
``(A) Interest rate.--The rate of interest used to
determine current liability under this section shall be the
third segment rate determined under section 303(h)(2)(C).
``(B) Mortality tables.--
``(i) Secretarial authority.--The Secretary of the
Treasury may by regulation prescribe 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 of
the Treasury shall take into account results of available
independent studies of mortality of individuals covered by
pension plans.
``(ii) Periodic review.--The Secretary of the Treasury
shall periodically (at least every 5 years) review any
tables in effect under this subsection and shall, to the
extent the Secretary of the Treasury determines necessary,
by regulation update the tables to reflect the actual
experience of pension plans and projected trends in such
experience.
``(C) Separate mortality tables for the disabled.--
Notwithstanding subparagraph (B)--
``(i) In general.--In the case of plan years beginning
after December 31, 1995, the Secretary of the Treasury
shall establish mortality tables which may be used (in lieu
of the tables under subparagraph (B)) to determine current
liability 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.
``(4) Certain service disregarded.--
``(A) In general.--In the case of a participant to whom
this paragraph applies, only the applicable percentage of the
years of service before such individual became a participant
shall be taken into account in computing the current liability
of the plan.
``(B) Applicable percentage.--For purposes of this
subparagraph, the applicable percentage shall be determined as
follows:
``If the years of participation are: The applicable percentage is:
1....................................... 20
2....................................... 40
3....................................... 60
4....................................... 80
5 or more............................... 100.
``(C) Participants to whom paragraph applies.--This
subparagraph shall apply to any participant who, at the time of
becoming a participant--
``(i) has not accrued any other benefit under any
defined benefit plan (whether or not terminated) maintained
by the employer or a member of the same controlled group of
which the employer is a member,
``(ii) who first becomes a participant under the plan
in a plan year beginning after December 31, 1987, and
``(iii) has years of service greater than the minimum
years of service necessary for eligibility to participate
in the plan.
``(D) Election.--An employer may elect not to have this
subparagraph apply. Such an election, once made, may be revoked
only with the consent of the Secretary of the Treasury.
``(i) Funded Current Liability Percentage.--For purposes of this
section, the term `funded current liability percentage' means, with
respect to any plan year, the percentage which--
``(1) the value of the plan's assets determined under
subsection (c)(2), is of
``(2) the current liability under the plan.
``(j) Funding Restoration Status.--Notwithstanding any other
provisions of this section--
``(1) Normal cost payment.--
``(A) In general.--In the case of a CSEC plan that is in
funding restoration status for a plan year, for purposes of
section 302, the term `accumulated funding deficiency' means,
for such plan year, the greater of--
``(i) the amount described in subsection (a), or
``(ii) the excess of the normal cost of the plan for
the plan year over the amount actually contributed to or
under the plan for the plan year.
``(B) Normal cost.--In the case of a CSEC plan that uses a
spread gain funding method, for purposes of this subsection,
the term `normal cost' means normal cost as determined under
the entry age normal funding method.
``(2) Plan amendments.--In the case of a CSEC plan that is in
funding restoration status for a plan year, no amendment to such
plan may take effect during such plan year if such amendment has
the effect of increasing liabilities of the plan by means of
increases in benefits, establishment of new benefits, changing the
rate of benefit accrual, or changing the rate at which benefits
become nonforfeitable. This paragraph shall not apply to any plan
amendment that is required to comply with any applicable law. This
paragraph 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 to the plan (in addition to any contribution
required under this section without regard to this paragraph) in an
amount equal to the increase in the funding liability of the plan
attributable to the plan amendment.
``(3) Funding restoration plan.--The sponsor of a CSEC plan
shall establish a written funding restoration plan within 180 days
of the receipt by the plan sponsor of a certification from the plan
actuary that the plan is in funding restoration status for a plan
year. Such funding restoration plan shall consist of actions that
are calculated, based on reasonably anticipated experience and
reasonable actuarial assumptions, to increase the plan's funded
percentage to 100 percent over a period that is not longer than the
greater of 7 years or the shortest amount of time practicable. Such
funding restoration plan shall take into account contributions
required under this section (without regard to this paragraph). If
a plan remains in funding restoration status for 2 or more years,
such funding restoration plan shall be updated each year after the
1st such year within 180 days of receipt by the plan sponsor of a
certification from the plan actuary that the plan remains in
funding restoration status for the plan year.
``(4) Annual certification by plan actuary.--Not later than the
90th day of each plan year of a CSEC plan, the plan actuary shall
certify to the plan sponsor whether or not the plan is in funding
restoration status for the plan year, based on the plan's funded
percentage as of the beginning of the plan year. For this purpose,
the actuary may conclusively rely on an estimate of--
``(A) the plan's funding liability, based on the funding
liability of the plan for the preceding plan year and on
reasonable actuarial estimates, assumptions, and methods, and
``(B) the amount of any contributions reasonably
anticipated to be made for the preceding plan year.
Contributions described in subparagraph (B) shall be taken into
account in determining the plan's funded percentage as of the
beginning of the plan year.
``(5) Definitions.--For purposes of this subsection--
``(A) Funding restoration status.--A CSEC plan shall be
treated as in funding restoration status for a plan year if the
plan's funded percentage as of the beginning of such plan year
is less than 80 percent.
``(B) Funded percentage.--The term `funded percentage'
means the ratio (expressed as a percentage) which--
``(i) the value of plan assets (as determined under
subsection (c)(2)), bears to
``(ii) the plan's funding liability.
``(C) Funding liability.--The term `funding liability' for
a plan year means the present value of all benefits accrued or
earned under the plan as of the beginning of the plan year,
based on the assumptions used by the plan pursuant to this
section, including the interest rate described in subsection
(b)(5)(A) (without regard to subsection (b)(5)(B)).
``(D) Spread gain funding method.--The term `spread gain
funding method' has the meaning given such term under rules and
forms issued by the Secretary of the Treasury.''.
(b) Separate Rules for CSEC Plans.--
(1) In general.--Paragraph (2) of section 302(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082(a))
is amended by striking ``and'' at the end of subparagraph (B), by
striking the period at the end of subparagraph (C) and inserting
``, and'', and by inserting at the end thereof the following new
subparagraph:
``(D) in the case of a CSEC 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 306 as of
the end of the plan year.''.
(2) Conforming amendments.--Section 302 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1082) is
amended--
(A) by striking ``multiemployer plan'' the first place it
appears in clause (i) of subsection (c)(1)(A) and the last
place it appears in paragraph (2) of subsection (d), and
inserting ``multiemployer plan or a CSEC plan'',
(B) by striking ``303(j)'' in paragraph (1) of subsection
(b) and inserting ``303(j) or under section 306(f)'',
(C)(i) by striking ``and'' at the end of clause (i) of
subsection (c)(1)(B),
(ii) by striking the period at the end of clause (ii) of
subsection (c)(1)(B), and inserting ``, and'', and
(iii) by inserting the following new clause after clause
(ii) of subsection (c)(1)(B):
``(iii) in the case of a CSEC plan, the funding
standard account shall be credited under section
306(b)(3)(C) with the amount of the waived funding
deficiency and such amount shall be amortized as required
under section 306(b)(2)(C).'',
(D) by striking ``under paragraph (1)'' in clause (i) of
subsection (c)(4)(A) and inserting ``under paragraph (1) or for
granting an extension under section 306(d)'',
(E) by striking ``waiver under this subsection'' in
subparagraph (B) of subsection (c)(4) and inserting ``waiver
under this subsection or an extension under 306(d)'',
(F) by striking ``waiver or modification'' in subclause (I)
of subsection (c)(4)(B)(i) and inserting ``waiver,
modification, or extension'',
(G) by striking ``waivers'' in the heading of subsection
(c)(4)(C) and of clause (ii) of subsection (c)(4)(C) and
inserting ``waivers or extensions'',
(H) by striking ``section 304(d)'' in subparagraph (A) of
subsection (c)(7) and in paragraph (2) of subsection (d) and
inserting ``section 304(d) or section 306(d)'',
(I) by striking ``and'' at the end of subclause (I) of
subsection (c)(4)(C)(i) and adding ``or the accumulated funding
deficiency under section 306, whichever is applicable,'',
(J) by striking ``303(e)(2),'' in subclause (II) of
subsection (c)(4)(C)(i) and inserting ``303(e)(2) or
306(b)(2)(C), whichever is applicable, and'',
(K) by adding immediately after subclause (II) of
subsection (c)(4)(C)(i) the following new subclause:
``(III) the total amounts not paid by reason of an
extension in effect under section 306(d),'',
(L) by striking ``for waivers of'' in clause (ii) of
subsection (c)(4)(C) and inserting ``for waivers or extensions
with respect to'', and
(M) by striking ``single-employer plan'' in subparagraph
(A) of subsection (a)(2) and in clause (i) of subsection
(c)(1)(B) and inserting ``single-employer plan (other than a
CSEC plan)''.
(3) Benefit restrictions.--Subsection (g) of section 206 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1056) is
amended by adding at the end thereof the following new paragraph:
``(12) CSEC plans.--This subsection shall not apply to a CSEC
plan (as defined in section 210(f)).''.
(4) Benefit increases.--Paragraph (3) of section 204(i) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054(i))
is amended by striking ``multiemployer plans'' and inserting
``multiemployer plans or CSEC plans''.
(5) Section 103.--Subparagraph (B) of section 103(d)(8) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1023(d)(8)) is amended by striking ``303(h) and 304(c)(3)'' and
inserting ``303(h), 304(c)(3), and 306(c)(3)''.
(6) Section 502.--Subsection (c) of section 502 of the Employee
Retirement Income Security Act of 1974 is amended--
(A) by redesignating the last paragraph as paragraph (11),
and
(B) by adding at the end the following new paragraph:
``(12) The Secretary may assess a civil penalty against any
sponsor of a CSEC plan of up to $100 a day from the date of the
plan sponsor's failure to comply with the requirements of section
306(j)(3) to establish or update a funding restoration plan.''.
(7) Section 4003.--Subparagraph (B) of section 4003(e)(1) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1303(e)(1)) is amended by striking ``303(k)(1)(A) and (B) of this
Act or section 430(k)(1)(A) and (B) of the Internal Revenue Code of
1986'' and inserting ``303(k)(1)(A) and (B) or 306(g)(1)(A) and (B)
of this Act or section 430(k)(1)(A) and (B) or 433(g)(1)(A) and (B)
of the Internal Revenue Code of 1986''.
(8) Section 4010.--Paragraph (2) of section 4010(b) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1310(b))
is amended by striking ``303(k)(1)(A) and (B) of this Act or
section 430(k)(1)(A) and (B) of the Internal Revenue Code of 1986''
and inserting ``303(k)(1)(A) and (B) or 306(g)(1)(A) and (B) of
this Act or section 430(k)(1)(A) and (B) or 433(g)(1)(A) and (B) of
the Internal Revenue Code of 1986''.
(9) Section 4071.--Section 4071 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1371) is amended by striking
``section 303(k)(4)'' and inserting ``section 303(k)(4) or
306(g)(4)''.
SEC. 103. ELECTIONS.
(a) Election Not To Be Treated as a CSEC Plan.--Subsection (f) of
section 210 of the Employee Retirement Income Security Act of 1974, as
added by section 101, is amended by adding at the end the following new
paragraph:
``(3) Election.--
``(A) In general.--If a plan falls within the definition of
a CSEC plan under this subsection (without regard to this
paragraph), such plan shall be a CSEC plan unless the plan
sponsor elects not later than the close of the first plan year
of the plan beginning after December 31, 2013, not to be
treated as a CSEC plan. An election under the preceding
sentence shall take effect for such plan year and, once made,
may be revoked only with the consent of the Secretary of the
Treasury.
``(B) Special rule.--If a plan described in subparagraph
(A) is treated as a CSEC plan, section 104 of the Pension
Protection Act of 2006, as amended by the Preservation of
Access to Care for Medicare Beneficiaries and Pension Relief
Act of 2010, shall cease to apply to such plan as of the first
date as of which such plan is treated as a CSEC plan.''.
(b) Election To Cease To Be Treated as an Eligible Charity Plan.--
Subsection (d) of section 104 of the Pension Protection Act of 2006, as
added by section 202 of the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010, is amended--
(1) by striking ``For purposes of'' and inserting ``(1) In
general.--For purposes of'', and
(2) by adding at the end the following:
``(2) Election not to be an eligible charity plan.--A plan
sponsor may elect for a plan to cease to be treated as an eligible
charity plan for plan years beginning after December 31, 2013. Such
election shall be made at such time and in such form and manner as
shall be prescribed by the Secretary of the Treasury. Any such
election may be revoked only with the consent of the Secretary of
the Treasury.
``(3) Election to use funding options available to other plan
sponsors.--
``(A) A plan sponsor that makes the election described in
paragraph (2) may elect for a plan to apply the rules described
in subparagraphs (B), (C), and (D) for plan years beginning
after December 31, 2013. Such election shall be made at such
time and in such form and manner as shall be prescribed by the
Secretary of the Treasury. Any such election may be revoked
only with the consent of the Secretary of the Treasury.
``(B) Under the rules described in this subparagraph, for
the first plan year beginning after December 31, 2013, a plan
has--
``(i) an 11-year shortfall amortization base,
``(ii) a 12-year shortfall amortization base, and
``(iii) a 7-year shortfall amortization base.
``(C) Under the rules described in this subparagraph,
section 303(c)(2)(A) and (B) of the Employee Retirement Income
Security Act of 1974, and section 430(c)(2)(A) and (B) of the
Internal Revenue Code of 1986 shall be applied by--
``(i) in the case of an 11-year shortfall amortization
base, substituting `11-plan-year period' for `7-plan-year
period' wherever such phrase appears, and
``(ii) in the case of a 12-year shortfall amortization
base, substituting `12-plan-year period' for `7-plan-year
period' wherever such phrase appears.
``(D) Under the rules described in this subparagraph,
section 303(c)(7) of the Employee Retirement Income Security
Act of 1974 and section 430(c)(7) of the Internal Revenue Code
of 1986 shall apply to a plan for which an election has been
made under subparagraph (A). Such provisions shall apply in the
following manner:
``(i) The first plan year beginning after December 31,
2013, shall be treated as an election year, and no other
plan years shall be so treated.
``(ii) All references in section 303(c)(7) of such Act
and section 430(c)(7) of such Code to `February 28, 2010'
or `March 1, 2010' shall be treated as references to
`February 28, 2013' or `March 1, 2013', respectively.
``(E) For purposes of this paragraph, the 11-year
amortization base is an amount, determined for the first plan
year beginning after December 31, 2013, equal to the
unamortized principal amount of the shortfall amortization base
(as defined in section 303(c)(3) of the Employee Retirement
Income Security Act of 1974 and section 430(c)(3) of the
Internal Revenue Code of 1986) that would have applied to the
plan for the first plan beginning after December 31, 2009, if--
``(i) the plan had never been an eligible charity plan,
``(ii) the plan sponsor had made the election described
in section 303(c)(2)(D)(i) of the Employee Retirement
Income Security Act of 1974 and in section 430(c)(2)(D)(i)
of the Internal Revenue Code of 1986 to have section
303(c)(2)(D)(i) of such Act and section 430(c)(2)(D)(iii)
of such Code apply with respect to the shortfall
amortization base for the first plan year beginning after
December 31, 2009, and
``(iii) no event had occurred under paragraph (6) or
(7) of section 303(c) of such Act or paragraph (6) or (7)
of section 430(c) of such Code that, as of the first day of
the first plan year beginning after December 31, 2013,
would have modified the shortfall amortization base or the
shortfall amortization installments with respect to the
first plan year beginning after December 31, 2009.
``(F) For purposes of this paragraph, the 12-year
amortization base is an amount, determined for the first plan
year beginning after December 31, 2013, equal to the
unamortized principal amount of the shortfall amortization base
(as defined in section 303(c)(3) of the Employee Retirement
Income Security Act of 1974 and section 430(c)(3) of the
Internal Revenue Code of 1986) that would have applied to the
plan for the first plan beginning after December 31, 2010, if--
``(i) the plan had never been an eligible charity plan,
``(ii) the plan sponsor had made the election described
in section 303(c)(2)(D)(i) of the Employee Retirement
Income Security Act of 1974 and in section 430(c)(2)(D)(i)
of the Internal Revenue Code of 1986 to have section
303(c)(2)(D)(i) of such Act and section 430(c)(2)(D)(iii)
of such Code apply with respect to the shortfall
amortization base for the first plan year beginning after
December 31, 2010, and
``(iii) no event had occurred under paragraph (6) or
(7) of section 303(c) of such Act or paragraph (6) or (7)
of section 430(c) of such Code that, as of the first day of
the first plan year beginning after December 31, 2013,
would have modified the shortfall amortization base or the
shortfall amortization installments with respect to the
first plan year beginning after December 31, 2010.
``(G) For purposes of this paragraph, the 7-year shortfall
amortization base is an amount, determined for the first plan
year beginning after December 31, 2013, equal to--
``(i) the shortfall amortization base for the first
plan year beginning after December 31, 2013, without regard
to this paragraph, minus
``(ii) the sum of the 11-year shortfall amortization
base and the 12-year shortfall amortization base.
``(4) Retroactive election.--Not later than December 31, 2014,
a plan sponsor may make a one-time, irrevocable, retroactive
election to not be treated as an eligible charity plan. Such
election shall be effective for plan years beginning after December
31, 2007, and shall be made by providing reasonable notice to the
Secretary of the Treasury.''.
(c) Deemed Election.--For purposes of the Internal Revenue Code of
1986, sections 4(b)(2) and 4021(b)(3) of the Employee Retirement Income
Security Act of 1974, and all other purposes, a plan shall be deemed to
have made an irrevocable election under section 410(d) of the Internal
Revenue Code of 1986 if--
(1) the plan was established before January 1, 2014;
(2) the plan falls within the definition of a CSEC plan;
(3) the plan sponsor does not make an election under section
210(f)(3)(A) of the Employee Retirement Income Security Act of 1974
and section 414(y)(3)(A) of the Internal Revenue Code of 1986, as
added by this Act; and
(4) the plan, plan sponsor, administrator, or fiduciary remits
one or more premium payments for the plan to the Pension Benefit
Guaranty Corporation for a plan year beginning after December 31,
2013.
(d) Effective Date.--The amendments made by this section shall
apply as of the date of enactment of this Act.
SEC. 104. TRANSPARENCY.
(a) Notice to Participants.--
(1) In general.--Paragraph (2) of section 101(f) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1021(f))
is amended by adding at the end the following new subparagraph:
``(E) Effect of csec plan rules on plan funding.--In the
case of a CSEC plan, each notice under paragraph (1) shall
include--
``(i) a statement that different rules apply to CSEC
plans than apply to single-employer plans,
``(ii) for the first 2 plan years beginning after
December 31, 2013, a statement that, as a result of changes
in the law made by the Cooperative and Small Employer
Charity Pension Flexibility Act, the contributions to the
plan may have changed, and
``(iii) in the case of a CSEC plan that is in funding
restoration status for the plan year, a statement that the
plan is in funding restoration status for such plan year.
A copy of the statement required under clause (iii) shall be
provided to the Secretary, the Secretary of the Treasury, and
the Director of the Pension Benefit Guaranty Corporation.''.
(2) Model notice.--The Secretary of Labor may modify the model
notice required to be published under section 501(c) of the Pension
Protection Act of 2006 to include the information described in
section 101(f)(2)(E) of the Employee Retirement Income Security Act
of 1974, as added by this subsection.
(b) Notice of Failure To Meet Minimum Funding Standards.--
(1) Pending waivers.--Paragraph (2) of section 101(d) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1021(d))
is amended by striking ``303'' and inserting ``303 or 306''.
(2) Definitions.--Paragraph (3) of section 101(d) of the
Employee Retirement Income Security Act of 1974 (21 U.S.C. 1021(d))
is amended by striking ``303(j)'' and inserting ``303(j) or 306(f),
whichever is applicable''.
(c) Additional Reporting Requirements.--Section 103 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1023) is amended by
adding at the end the following new subsection:
``(g) Additional Information With Respect to Multiple Employer
Plans.--With respect to any multiple employer plan, an annual report
under this section for a plan year shall include a list of
participating employers and a good faith estimate of the percentage of
total contributions made by such participating employers during the
plan year.''.
SEC. 105. SPONSOR EDUCATION AND ASSISTANCE.
(a) Definition.--In this section, the term ``CSEC plan'' has the
meaning given that term in subsection (f)(1) of section 210 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1060(f)(1))
(as added by this Act).
(b) Education.--The Participant and Plan Sponsor Advocate
established under section 4004 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1304) shall make itself available to
assist CSEC plan sponsors and participants as part of the duties it
performs under the general supervision of the Board of Directors under
section 4004(b) of such Act (29 U.S.C. 1304(b)).
TITLE II--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986
SEC. 201. DEFINITION OF COOPERATIVE AND SMALL EMPLOYER CHARITY
PENSION PLANS.
Section 414 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new subsection:
``(y) Cooperative and Small Employer Charity Pension Plans.--
``(1) In general.--For purposes of this title, except as
provided in this subsection, a CSEC plan is a defined benefit plan
(other than a multiemployer plan)--
``(A) to which section 104 of the Pension Protection Act of
2006 applies, without regard to--
``(i) section 104(a)(2) of such Act;
``(ii) the amendments to such section 104 by section
202(b) of the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010; and
``(iii) paragraph (3)(B); or
``(B) that, as of June 25, 2010, was maintained by more
than one employer and all of the employers were organizations
described in section 501(c)(3).
``(2) Aggregation.--All employers that are treated as a single
employer under subsection (b) or (c) shall be treated as a single
employer for purposes of determining if a plan was maintained by
more than one employer under paragraph (1)(B).''.
SEC. 202. FUNDING RULES APPLICABLE TO COOPERATIVE AND SMALL
EMPLOYER CHARITY PENSION PLANS.
(a) In General.--Subpart A of part III of subchapter D of chapter 1
of subtitle A of the Internal Revenue Code of 1986 is amended by adding
at the end the following new section:
``SEC. 433. MINIMUM FUNDING STANDARDS.
``(a) General Rule.--For purposes of section 412, the term
`accumulated funding deficiency' for a CSEC plan means the excess of
the total charges to the funding standard account for all plan years
(beginning with the first plan year to which section 412 applies) over
the total credits to such account for such years or, if less, the
excess of the total charges to the alternative minimum funding standard
account for such plan years over the total credits to such account for
such years.
``(b) Funding Standard Account.--
``(1) Account required.--Each plan to which this section
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 in existence on January 1,
1974, the unfunded past service liability under the plan on
the first day of the first plan year to which section 412
applies, over a period of 40 plan years,
``(ii) in the case of a plan which comes into existence
after January 1, 1974, but before the first day of the
first plan year beginning after December 31, 2013, the
unfunded past service liability under the plan on the first
day of the first plan year to which section 412 applies,
over a period of 30 plan years,
``(iii) 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,
``(iv) separately, with respect to each plan year, the
net experience loss (if any) under the plan, over a period
of 5 plan years, and
``(v) 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 10 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 5 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
paragraph (3)(D), 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 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 5 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 10 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, 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) 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.
``(5) Interest.--
``(A) In general.--Except as provided in subparagraph (B),
the funding standard account (and items therein) shall be
charged or credited (as determined under regulations prescribed
by the Secretary) with interest at the appropriate rate
consistent with the rate or rates of interest used under the
plan to determine costs.
``(B) Exception.--The interest rate used for purposes of
computing the amortization charge described in subsection
(b)(2)(C) or for purposes of any arrangement under subsection
(d) for any plan year shall be the greater of--
``(i) 150 percent of the Federal mid-term rate (as in
effect under section 1274 for the 1st month of such plan
year), or
``(ii) the rate of interest determined under
subparagraph (A).
``(6) Amortization schedules in effect.--Amortization schedules
for amounts described in paragraphs (2) and (3) that are in effect
as of the last day of the last plan year beginning before January
1, 2014, by reason of section 104 of the Pension Protection Act of
2006 shall remain in effect pursuant to their terms and this
section, except that such amounts shall not be amortized again
under this section.
``(c) Special Rules.--
``(1) Determinations to be made under funding method.--For
purposes of this section, 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 section, 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) Dedicated bond portfolio.--The Secretary may by
regulations provide that the value of any dedicated bond
portfolio of a plan shall be determined by using the interest
rate under section 412(b)(5) (as in effect on the day before
the enactment of the Pension Protection Act of 2006).
``(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) Funding method and plan year.--
``(A) Funding methods available.--All funding methods
available to CSEC plans under section 412 (as in effect on the
day before the enactment of the Pension Protection Act of 2006)
shall continue to be available under this section.
``(B) Changes.--If the funding method for a plan is
changed, the new funding method shall become the funding method
used to determine costs and liabilities under the plan only if
the change is approved by the Secretary. If the plan year for a
plan is changed, the new plan year shall become the plan year
for the plan only if the change is approved by the Secretary.
``(C) Approval required for certain changes in assumptions
by certain single-employer plans subject to additional funding
requirement.--
``(i) In general.--No actuarial assumption (other than
the assumptions described in subsection (h)(3)) used to
determine the current liability for a plan to which this
subparagraph applies may be changed without the approval of
the Secretary.
``(ii) Plans to which subparagraph applies.--This
subparagraph shall apply to a plan only if--
``(I) the plan is a CSEC plan,
``(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 current liability of
the plan before such change.
``(6) Full funding.--If, as of the close of a plan year, a plan
would (without regard to this paragraph) have an accumulated
funding deficiency (determined without regard to the alternative
minimum funding standard account permitted under subsection (e)) 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 paragraphs (2)(B), (C), and
(D) and (3)(B) of subsection (b) which are required to be
amortized shall be considered fully amortized for purposes of
such paragraphs.
``(7) Full-funding limitation.--For purposes of paragraph (6),
the term `full-funding limitation' means the excess (if any) of--
``(A) 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
``(B) the lesser of--
``(i) the fair market value of the plan's assets, or
``(ii) the value of such assets determined under
paragraph (2).
``(C) 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
(determined without regard to paragraph (4) of
subsection (h)) of the plan (including the expected
increase in such 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.
``(8) 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.
``(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.
``(9) Time when certain contributions deemed made.--For
purposes of this section, any contributions for a plan year made by
an employer during the period--
``(A) beginning on the day after the last day of such plan
year, and
``(B) ending on the day which is 8\1/2\ months after the
close of the plan year,
shall be deemed to have been made on such last day.
``(10) Anticipation of benefit increases effective in the
future.--In determining projected benefits, the funding method of a
collectively bargained CSEC plan described in section 413(a) shall
anticipate benefit increases scheduled to take effect during the
term of the collective bargaining agreement applicable to the plan.
``(d) Extension of Amortization Periods.--The period of years
required to amortize any unfunded liability (described in any clause of
subsection (b)(2)(B)) of any plan may be extended by the Secretary for
a period of time (not in excess of 10 years) if the Secretary
determines that such extension would carry out the purposes of the
Employee Retirement Income Security Act of 1974 and provide adequate
protection for participants under the plan and their beneficiaries, and
if the Secretary determines that the failure to permit such extension
would result in--
``(1) a substantial risk to the voluntary continuation of the
plan, or
``(2) a substantial curtailment of pension benefit levels or
employee compensation.
``(e) Alternative Minimum Funding Standard.--
``(1) In general.--A CSEC plan which uses a funding method that
requires contributions in all years not less than those required
under the entry age normal funding method may maintain an
alternative minimum funding standard account for any plan year.
Such account shall be credited and charged solely as provided in
this subsection.
``(2) Charges and credits to account.--For a plan year the
alternative minimum funding standard account shall be--
``(A) charged with the sum of--
``(i) the lesser of normal cost under the funding
method used under the plan or normal cost determined under
the unit credit method,
``(ii) the excess, if any, of the present value of
accrued benefits under the plan over the fair market value
of the assets, and
``(iii) an amount equal to the excess (if any) of
credits to the alternative minimum standard account for all
prior plan years over charges to such account for all such
years, and
``(B) credited with the amount considered contributed by
the employer to or under the plan for the plan year.
``(3) Interest.--The alternative minimum funding standard
account (and items therein) shall be charged or credited with
interest in the manner provided under subsection (b)(5) with
respect to the funding standard account.
``(f) Quarterly Contributions Required.--
``(1) In general.--If a CSEC plan which has a funded current
liability percentage for the preceding plan year of less than 100
percent fails to pay the full amount of a required installment for
the plan year, then the rate of interest charged to the funding
standard account under subsection (b)(5) with respect to the amount
of the underpayment for the period of the underpayment shall be
equal to the greater of--
``(A) 175 percent of the Federal mid-term rate (as in
effect under section 1274 for the 1st month of such plan year),
or
``(B) the rate of interest used under the plan in
determining costs.
``(2) Amount of underpayment, period of underpayment.--For
purposes of paragraph (1)--
``(A) 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.
``(B) Period of underpayment.--The period for which
interest is charged under this subsection with regard 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 (determined without regard to subsection
(c)(9)).
``(C) Order of crediting contributions.--For purposes of
subparagraph (A)(ii), contributions shall be credited against
unpaid required installments in the order in which such
installments are required to be paid.
``(3) Number of required installments; due dates.--For purposes
of this subsection--
``(A) Payable in 4 installments.--There shall be 4 required
installments for each plan year.
``(B) Time for payment of installments.--
``In the case of the following required
installments: The due date is:
1st.......................................... April 15
2nd.......................................... July 15
3rd.......................................... October 15
4th.......................................... January 15 of the following year.
``(4) Amount of required installment.--For purposes of this
subsection--
``(A) In general.--The amount of any required installment
shall be 25 percent of the required annual payment.
``(B) Required annual payment.--For purposes of
subparagraph (A), the term `required annual payment' means the
lesser of--
``(i) 90 percent of the amount required to be
contributed to or under the plan by the employer for the
plan year under section 412 (without regard to any waiver
under subsection (c) thereof), or
``(ii) 100 percent of the amount so required for the
preceding plan year.
Clause (ii) shall not apply if the preceding plan year was not
a year of 12 months.
``(5) Liquidity requirement.--
``(A) In general.--A plan to which this paragraph applies
shall be treated as failing to pay the full amount of any
required installment 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 CSEC plan other than a plan described in
section 412(l)(6)(A) (as in effect on the day before the
enactment of the Pension Protection Act of 2006) which--
``(i) is required to pay installments under this
subsection 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
(1), 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 funded current liability percentage
(taking into account the expected increase in current liability
due to benefits accruing 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 the base
amount with respect to such quarter over 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 funded current liability
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.
``(6) Fiscal years and short years.--
``(A) Fiscal years.--In applying this subsection to a plan
year beginning on any date other than January 1, there shall be
substituted for the months specified in this subsection, the
months which correspond thereto.
``(B) Short plan year.--This subsection shall be applied to
plan years of less than 12 months in accordance with
regulations prescribed by the Secretary.
``(g) Imposition of Lien Where Failure To Make Required
Contributions.--
``(1) In general.--In the case of a plan to which this section
applies, if--
``(A) any person fails to make a required installment under
subsection (f) or any other payment required under this section
before the due date for such installment or other payment, and
``(B) the unpaid balance of such installment or other
payment (including interest), when added to the aggregate
unpaid balance of all preceding such installments or other
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 CSEC plan for any plan year for which the funded current
liability percentage of such plan is less than 100 percent. This
subsection shall not apply to any plan to which section 4021 of the
Employee Retirement Income Security Act of 1974 does not apply (as
such section is in effect on the date of the enactment of the
Retirement Protection Act of 1994).
``(3) Amount of lien.--For purposes of paragraph (1), the
amount of the lien shall be equal to the aggregate unpaid balance
of required installments and other payments required under this
section (including interest)--
``(A) for plan years beginning after 1987, and
``(B) 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 installment or other payment.
``(B) Period of lien.--The lien imposed by paragraph (1)
shall arise on the due date for the required installment or
other 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 any contributing employer (or any member of the
controlled group of the contributing employer).
``(6) Definitions.--For purposes of this subsection--
``(A) Due date; required installment.--The terms `due date'
and `required installment' have the meanings given such terms
by subsection (f), 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 this section.
``(B) Controlled group.--The term `controlled group' means
any group treated as a single employer under subsections (b),
(c), (m), and (o) of section 414.
``(h) Current Liability.--For purposes of this section--
``(1) In general.--The term `current liability' means all
liabilities to employees and their beneficiaries under the plan.
``(2) Treatment of unpredictable contingent event benefits.--
``(A) In general.--For purposes of paragraph (1), any
unpredictable contingent event benefit shall not be taken into
account until the event on which the benefit is contingent
occurs.
``(B) Unpredictable contingent event benefit.--The term
`unpredictable contingent event benefit' means 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).
``(3) Interest rate and mortality assumptions used.--
``(A) Interest rate.--The rate of interest used to
determine current liability under this section shall be the
third segment rate determined under section 430(h)(2)(C).
``(B) Mortality tables.--
``(i) Secretarial authority.--The Secretary may by
regulation prescribe 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.
``(ii) Periodic review.--The Secretary shall
periodically (at least every 5 years) review any tables in
effect under this subsection and shall, to the extent the
Secretary determines necessary, by regulation update the
tables to reflect the actual experience of pension plans
and projected trends in such experience.
``(C) Separate mortality tables for the disabled.--
Notwithstanding subparagraph (B)--
``(i) In general.--In the case of plan years beginning
after December 31, 1995, the Secretary shall establish
mortality tables which may be used (in lieu of the tables
under subparagraph (B)) 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 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.
``(4) Certain service disregarded.--
``(A) In general.--In the case of a participant to whom
this paragraph applies, only the applicable percentage of the
years of service before such individual became a participant
shall be taken into account in computing the current liability
of the plan.
``(B) Applicable percentage.--For purposes of this
subparagraph, the applicable percentage shall be determined as
follows:
``If the years of participation are: The applicable percentage is:
1....................................... 20
2....................................... 40
3....................................... 60
4....................................... 80
5 or more............................... 100.
``(C) Participants to whom paragraph applies.--This
subparagraph shall apply to any participant who, at the time of
becoming a participant--
``(i) has not accrued any other benefit under any
defined benefit plan (whether or not terminated) maintained
by the employer or a member of the same controlled group of
which the employer is a member,
``(ii) who first becomes a participant under the plan
in a plan year beginning after December 31, 1987, and
``(iii) has years of service greater than the minimum
years of service necessary for eligibility to participate
in the plan.
``(D) Election.--An employer may elect not to have this
subparagraph apply. Such an election, once made, may be revoked
only with the consent of the Secretary.
``(i) Funded Current Liability Percentage.--For purposes of this
section, the term `funded current liability percentage' means, with
respect to any plan year, the percentage which--
``(1) the value of the plan's assets determined under
subsection (c)(2), is of
``(2) the current liability under the plan.
``(j) Funding Restoration Status.--Notwithstanding any other
provisions of this section--
``(1) Normal cost payment.--
``(A) In general.--In the case of a CSEC plan that is in
funding restoration status for a plan year, for purposes of
section 412, the term `accumulated funding deficiency' means,
for such plan year, the greater of--
``(i) the amount described in subsection (a), or
``(ii) the excess of the normal cost of the plan for
the plan year over the amount actually contributed to or
under the plan for the plan year.
``(B) Normal cost.--In the case of a CSEC plan that uses a
spread gain funding method, for purposes of this subsection,
the term `normal cost' means normal cost as determined under
the entry age normal funding method.
``(2) Plan amendments.--In the case of a CSEC plan that is in
funding restoration status for a plan year, no amendment to such
plan may take effect during such plan year if such amendment has
the effect of increasing liabilities of the plan by means of
increases in benefits, establishment of new benefits, changing the
rate of benefit accrual, or changing the rate at which benefits
become nonforfeitable. This paragraph shall not apply to any plan
amendment that is required to comply with any applicable law. This
paragraph 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 to the plan (in addition to any contribution
required under this section without regard to this paragraph) in an
amount equal to the increase in the funding liability of the plan
attributable to the plan amendment.
``(3) Funding restoration plan.--The sponsor of a CSEC plan
shall establish a written funding restoration plan within 180 days
of the receipt by the plan sponsor of a certification from the plan
actuary that the plan is in funding restoration status for a plan
year. Such funding restoration plan shall consist of actions that
are calculated, based on reasonably anticipated experience and
reasonable actuarial assumptions, to increase the plan's funded
percentage to 100 percent over a period that is not longer than the
greater of 7 years or the shortest amount of time practicable. Such
funding restoration plan shall take into account contributions
required under this section (without regard to this paragraph). If
a plan remains in funding restoration status for 2 or more years,
such funding restoration plan shall be updated each year after the
1st such year within 180 days of receipt by the plan sponsor of a
certification from the plan actuary that the plan remains in
funding restoration status for the plan year.
``(4) Annual certification by plan actuary.--Not later than the
90th day of each plan year of a CSEC plan, the plan actuary shall
certify to the plan sponsor whether or not the plan is in funding
restoration status for the plan year, based on the plan's funded
percentage as of the beginning of the plan year. For this purpose,
the actuary may conclusively rely on an estimate of--
``(A) the plan's funding liability, based on the funding
liability of the plan for the preceding plan year and on
reasonable actuarial estimates, assumptions, and methods, and
``(B) the amount of any contributions reasonably
anticipated to be made for the preceding plan year.
Contributions described in subparagraph (B) shall be taken into
account in determining the plan's funded percentage as of the
beginning of the plan year.
``(5) Definitions.--For purposes of this subsection--
``(A) Funding restoration status.--A CSEC plan shall be
treated as in funding restoration status for a plan year if the
plan's funded percentage as of the beginning of such plan year
is less than 80 percent.
``(B) Funded percentage.--The term `funded percentage'
means the ratio (expressed as a percentage) which--
``(i) the value of plan assets (as determined under
subsection (c)(2)), bears to
``(ii) the plan's funding liability.
``(C) Funding liability.--The term `funding liability' for
a plan year means the present value of all benefits accrued or
earned under the plan as of the beginning of the plan year,
based on the assumptions used by the plan pursuant to this
section, including the interest rate described in subsection
(b)(5)(A) (without regard to subsection (b)(5)(B)).
``(D) Spread gain funding method.--The term `spread gain
funding method' has the meaning given such term under rules and
forms issued by the Secretary.
``(E) Plan sponsor.--The term `plan sponsor' means, with
respect to a CSEC plan, the association, committee, joint board
of trustees, or other similar group of representatives of the
parties who establish or maintain the plan.''.
(b) CSEC Plans.--Section 413 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(d) CSEC Plans.--Notwithstanding any other provision of this
section, in the case of a CSEC plan--
``(1) Funding.--The requirements of section 412 shall be
determined as if all participants in the plan were employed by a
single employer.
``(2) Application of provisions.--Paragraphs (1), (2), (3), and
(5) of subsection (c) shall apply.
``(3) Deduction limitations.--Each applicable limitation
provided by section 404(a) shall be determined as if all
participants in the plan were employed by a single employer. The
amounts contributed to or under the plan by each employer who
maintains the plan (for the portion of the taxable year included
within a plan year) shall be considered not to exceed such
applicable limitation if the anticipated employer contributions for
such plan year of all employers (determined in a reasonable manner
not inconsistent with regulations prescribed by the Secretary) do
not exceed such limitation. If such anticipated contributions
exceed such limitation, the portion of each such employer's
contributions which is not deductible under section 404 shall be
determined in accordance with regulations prescribed by the
Secretary.
``(4) Allocations.--Allocations of amounts under paragraph (3)
and subsection (c)(5) among the employers maintaining the plan
shall not be inconsistent with the regulations prescribed for this
purpose by the Secretary.''.
(c) Separate Rules for CSEC Plans.--
(1) In general.--Paragraph (2) of section 412(a) of the
Internal Revenue Code of 1986 is amended by striking ``and'' at the
end of subparagraph (B), by striking the period at the end of
subparagraph (C) and inserting ``, and'', and by inserting at the
end thereof the following new subparagraph:
``(D) in the case of a CSEC 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 433 as of
the end of the plan year.''.
(2) Conforming amendments.--Section 412 of such Code is
amended--
(A) by striking ``multiemployer plan'' in paragraph (A) of
subsection (a)(2), in clause (i) of subsection (c)(1)(B), the
first place it appears in clause (i) of subsection (c)(1)(A),
and the last place it appears in paragraph (2) of subsection
(d), and inserting ``multiemployer plan or a CSEC plan'',
(B) by striking ``430(j)'' in paragraph (1) of subsection
(b) and inserting ``430(j) or under section 433(f)'',
(C)(i) by striking ``and'' at the end of clause (i) of
subsection (c)(1)(B),
(ii) by striking the period at the end of clause (ii) of
subsection (c)(1)(B) and inserting ``, and'', and
(iii) by inserting the following new clause after clause
(ii) of subsection (c)(1)(B):
``(iii) in the case of a CSEC plan, the funding
standard account shall be credited under section
433(b)(3)(C) with the amount of the waived funding
deficiency and such amount shall be amortized as required
under section 433(b)(2)(C).'',
(D) by striking ``under paragraph (1)'' in clause (i) of
subsection (c)(4)(A) and inserting ``under paragraph (1) or for
granting an extension under section 433(d)'',
(E) by striking ``waiver under this subsection'' in
subparagraph (B) of subsection (c)(4) and inserting ``waiver
under this subsection or an extension under 433(d)'',
(F) by striking ``waiver or modification'' in subclause (I)
of subsection (c)(4)(B)(i) and inserting ``waiver,
modification, or extension'',
(G) by striking ``waivers'' in the heading of subsection
(c)(4)(C) and of clause (ii) of subsection (c)(4)(C) and
inserting ``waivers or extensions'',
(H) by striking ``section 431(d)'' in subparagraph (A) of
subsection (c)(7) and in paragraph (2) of subsection (d) and
inserting ``section 431(d) or section 433(d)'',
(I) by striking ``and'' at the end of subclause (I) of
subsection (c)(4)(C)(i) and inserting ``or the accumulated
funding deficiency under section 433, whichever is
applicable,'',
(J) by striking ``430(e)(2),'' in subclause (II) of
subsection (c)(4)(C)(i) and inserting ``430(e)(2) or
433(b)(2)(C), whichever is applicable, and'',
(K) by adding immediately after subclause (II) of
subsection (c)(4)(C)(i) the following new subclause:
``(III) the total amounts not paid by reason of an
extension in effect under section 433(d),'', and
(L) by striking ``for waivers of'' in clause (ii) of
subsection (c)(4)(C) and inserting ``for waivers or extensions
with respect to''.
(3) Benefit restrictions.--
(A) In general.--Paragraph (29) of section 401(a) of such
Code is amended by striking ``multiemployer plan'' and
inserting ``multiemployer plan or a CSEC plan''.
(B) Conforming change.--Subsection (a) of section 436 of
such Code is amended by striking ``single-employer plan'' and
inserting ``single-employer plan (other than a CSEC plan)''.
(4) Benefit increases.--Subparagraph (C) of section 401(a)(33)
of such Code is amended by striking ``multiemployer plans'' and
inserting ``multiemployer plans or CSEC plans''.
(5) Liquidity shortfalls.--
(A) In general.--Subparagraph (A) of section 401(a)(32) of
such Code is amended by striking ``430(j)(4)'' each place it
appears and inserting ``430(j)(4) or 433(f)(5)''.
(B) Period of shortfall.--Subparagraph (C) of section
401(a)(32) of such Code is amended by striking ``430(j)(3) by
reason of section 430(j)(4)(A) thereof'' and inserting
``430(j)(3) or 433(f) by reason of section 430(j)(4)(A) or
433(f)(5), respectively''.
(6) Deduction limits.--Subsection (o) of section 404 of such
Code is amended by adding at the end the following new paragraph:
``(8) CSEC plans.--Solely for purposes of this subsection, a
CSEC plan shall be treated as though section 430 applied to such
plan and the minimum required contribution for any plan year shall
be the amount described in section 412(a)(2)(D).''.
(7) Section 420.--Paragraph (5) of section 420(e) of such Code
is amended by striking ``section 430'' each place it appears and
inserting ``sections 430 and 433''.
(8) Coordination with section 4971.--
(A) Subsection (a) of section 4971 of such Code is amended
by striking ``and'' at the end of paragraph (1), by striking
the period at the end of paragraph (2) and inserting ``, and'',
and by adding at the end thereof the following new paragraph:
``(3) in the case of a CSEC plan, 10 percent of the CSEC
accumulated funding deficiency as of the end of the plan year
ending with or within the taxable year.''.
(B) Subsection (b) of section 4971 of such Code is
amended--
(i) by striking ``or'' at the end of paragraph (1), by
adding ``or'' at the end of paragraph (2), and by inserting
immediately after paragraph (2) the following new
paragraph:
``(3) a tax is imposed under subsection (a)(3) on any CSEC
accumulated funding deficiency and the CSEC accumulated funding
deficiency is not corrected within the taxable period,'', and
(ii) by striking ``minimum required contributions or
accumulated funding deficiency'' and inserting ``minimum
required contribution, accumulated funding deficiency, or
CSEC accumulated funding deficiency''.
(C) Subsection (c) of section 4971 of such Code is
amended--
(i) by striking ``accumulated funding deficiency'' each
place it appears in paragraph (2) and inserting
``accumulated funding deficiency or CSEC accumulated
funding deficiency'',
(ii) by striking ``accumulated funding deficiency or
unpaid minimum required contribution'' each place it
appears in paragraph (3) and inserting ``accumulated
funding deficiency, CSEC accumulated funding deficiency, or
unpaid minimum required contribution'', and
(iii) by adding at the end the following new paragraph:
``(5) CSEC accumulated funding deficiency.--The term `CSEC
accumulated funding deficiency' means the accumulated funding
deficiency determined under section 433.''.
(D) Paragraph (1) of section 4971(d) of such Code is
amended by striking ``accumulated funding deficiency or unpaid
minimum required contribution'' and inserting ``accumulated
funding deficiency, CSEC accumulated funding deficiency, or
unpaid minimum required contribution''.
(E) Subsection (f) of section 4971 of such Code is
amended--
(i) by striking ``430(j)(4)'' in paragraph (1) and
inserting ``430(j)(4) or 433(f)'',
(ii) by striking ``430(j)'' in paragraph (1)(B) and
inserting ``430(j) or 433(f), whichever is applicable'',
and
(iii) by striking ``412(m)(5)'' in paragraph (3)(A) and
inserting ``430(j) or 433(f), whichever is applicable''.
(9) Excise tax on failure to adopt funding restoration plan.--
Section 4971 of such Code is amended by redesignating subsection
(h) as subsection (i), and by inserting after subsection (g) the
following new subsection:
``(h) Failure of a CSEC Plan Sponsor To Adopt Funding Restoration
Plan.--
``(1) In general.--In the case of a CSEC plan that is in
funding restoration status (within the meaning of section
433(j)(5)(A)), there is hereby imposed a tax on the failure of such
plan to adopt a funding restoration plan within the time prescribed
under section 433(j)(3).
``(2) Amount of tax.--The amount of the tax imposed under
paragraph (1) with respect to any plan sponsor for any taxable year
shall be the amount equal to $100 multiplied by the number of days
during the taxable year which are included in the period beginning
on the day following the close of the 180-day period described in
section 433(j)(3) and ending on the day on which the funding
restoration plan is adopted.
``(3) Waiver by secretary.--In the case of a failure described
in paragraph (1) which the Secretary determines is due to
reasonable cause and not to willful neglect, the Secretary may
waive a portion or all of the tax imposed by such paragraph.
``(4) Liability for tax.--The tax imposed by paragraph (1)
shall be paid by the plan sponsor (within the meaning of section
433(j)(5)(E)).''.
(10) Reporting.--
(A) In general.--Paragraph (2) of section 6059(b) of such
Code is amended by striking ``430,'' and inserting ``430, the
accumulated funding deficiency under section 433,''.
(B) Assumptions.--Subparagraph (B) of section 6059(b)(3) of
such Code is amended by striking ``430(h)(1) or 431(c)(3)'' and
inserting ``430(h)(1), 431(c)(3), or 433(c)(3)''.
SEC. 203. ELECTION NOT TO BE TREATED AS A CSEC PLAN.
(a) In General.--Section 414(y) of the Internal Revenue Code of
1986, as added by section 201, is amended by adding at the end the
following new paragraph:
``(3) Election.--
``(A) In general.--If a plan falls within the definition of
a CSEC plan under this subsection (without regard to this
paragraph), such plan shall be a CSEC plan unless the plan
sponsor elects not later than the close of the first plan year
of the plan beginning after December 31, 2013, not to be
treated as a CSEC plan. An election under the preceding
sentence shall take effect for such plan year and, once made,
may be revoked only with the consent of the Secretary.
``(B) Special rule.--If a plan described in subparagraph
(A) is treated as a CSEC plan, section 104 of the Pension
Protection Act of 2006, as amended by the Preservation of
Access to Care for Medicare Beneficiaries and Pension Relief
Act of 2010, shall cease to apply to such plan as of the first
date as of which such plan is treated as a CSEC plan.''.
(b) Effective Date.--The amendment made by this section shall apply
as of the date of enactment of this Act.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.