[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4275 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 4275
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 18, 2014
Mrs. Brooks of Indiana (for herself and Mr. Kind) introduced the
following bill; which was referred to the Committee on Education and
the Workforce, and in addition to the Committee on Ways and Means, for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
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.
<all>